HB5108 103RD GENERAL ASSEMBLY

LRB103 37757 HLH 67885 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5108

Introduced 2/8/2024, by Rep. Robert "Bob" Rita

SYNOPSIS AS INTRODUCED:

35 ILCS 143/10-5
35 ILCS 143/10-10
35 ILCS 143/10-24 new
35 ILCS 143/10-25
35 ILCS 143/10-30
35 ILCS 143/10-35
35 ILCS 143/10-37
35 ILCS 143/10-38
35 ILCS 143/10-45
35 ILCS 143/10-50

Amends the Tobacco Products Tax Act of 1995. Provides that remote retail sellers that meet certain sales criteria are required to collect and remit the tax under the Act. Provides that, beginning on January 1, 2025, the tax under the Act is 36% of (i) the actual cost paid by a distributor or remote retail seller for the stock keeping unit or (ii) if documentation of the actual cost is not available due to matters beyond the distributor or remote retail seller's control, the actual cost list paid by the distributor or remote retail seller for the stock keeping unit. Effective January 1, 2025.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Tobacco Products Tax Act of 1995 is amended by changing Sections 10-5, 10-10, 10-25, 10-30, 10-35, 10-37, 10-38, 10-45, and 10-50 and by adding Section 10-24 as follows:

(35 ILCS 143/10-5)

Sec. 10-5. Definitions. For purposes of this Act:

"Actual cost" means the actual price paid for each individual SKU by a distributor or a remote retail seller.

"Actual cost list" means the average actual price paid by a distributor or a remote retail seller to a manufacturer, wholesaler, or distributor for a SKU during the calendar year immediately preceding the calendar year in which the sale occurs.

"Business" means any trade, occupation, activity, or enterprise engaged in, at any location whatsoever, for the purpose of selling tobacco products.

"Cigar" means any roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco. "Cigar" does not include a little cigar or any roll of tobacco that is classified as a cigarette within the meaning of Section 1 of the Cigarette Tax Act.

"Cigarette" has the meaning ascribed to the term in Section 1 of the Cigarette Tax Act.

"Contraband little cigar" means:

(1) packages of little cigars containing 20 or 25 little cigars that do not bear a required tax stamp under this Act;

(2) packages of little cigars containing 20 or 25 little cigars that bear a fraudulent, imitation, or counterfeit tax stamp;

(3) packages of little cigars containing 20 or 25 little cigars that are improperly tax stamped, including packages of little cigars that bear only a tax stamp of another state or taxing jurisdiction; or

(4) packages of little cigars containing other than 20 or 25 little cigars in the possession of a distributor, retailer or wholesaler, unless the distributor, retailer, or wholesaler possesses, or produces within the time frame provided in Section 10-27 or 10-28 of this Act, an invoice from a stamping distributor, distributor, or wholesaler showing that the tax on the packages has been or will be paid.

"Consumer" means a person who acquires ownership of tangible personal property, including tobacco products, for use or consumption in this State and not for resale.

"Correctional Industries program" means a program run by a State penal institution in which residents of the penal institution produce tobacco products for sale to persons incarcerated in penal institutions or resident patients of a State operated mental health facility.

"Department" means the Illinois Department of Revenue.

"Distributor" means any of the following:

(1) Any manufacturer or wholesaler in this State engaged in the business of selling tobacco products who sells, exchanges, or distributes tobacco products to retailers or consumers in this State.

(2) Any manufacturer or wholesaler engaged in the business of selling tobacco products from without this State who sells, exchanges, distributes, ships, or transports tobacco products to retailers or consumers located in this State, so long as that manufacturer or wholesaler has or maintains within this State, directly or by subsidiary, an office, sales house, or other place of business, or any agent or other representative operating within this State under the authority of the person or subsidiary, irrespective of whether the place of business or agent or other representative is located here permanently or temporarily.

(3) Any retailer who receives tobacco products on which the tax has not been or will not be paid by another distributor.

"Distributor" does not include any person, wherever resident or located, who makes, manufactures, or fabricates tobacco products as part of a Correctional Industries program for sale to residents incarcerated in penal institutions or resident patients of a State operated mental health facility.

"Electronic cigarette" means:

(1) any device that employs a battery or other mechanism to heat a solution or substance to produce a vapor or aerosol intended for inhalation, except for (A) any device designed solely for use with cannabis that contains a statement on the retail packaging that the device is designed solely for use with cannabis and not for use with tobacco or (B) any device that contains a solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act;

(2) any cartridge or container of a solution or substance intended to be used with or in the device or to refill the device, except for any cartridge or container of a solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act; or

(3) any solution or substance, whether or not it contains nicotine, intended for use in the device, except for any solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act.

The changes made to the definition of "electronic cigarette" by this amendatory Act of the 102nd General Assembly apply on and after June 28, 2019, but no claim for credit or refund is allowed on or after the effective date of this amendatory Act of the 102nd General Assembly for such taxes paid during the period beginning June 28, 2019 and the effective date of this amendatory Act of the 102nd General Assembly.

"Electronic cigarette" includes, but is not limited to, any electronic nicotine delivery system, electronic cigar, electronic cigarillo, electronic pipe, electronic hookah, vape pen, or similar product or device, and any component or part that can be used to build the product or device. "Electronic cigarette" does not include: cigarettes, as defined in Section 1 of the Cigarette Tax Act; any product approved by the United States Food and Drug Administration for sale as a tobacco cessation product, a tobacco dependence product, or for other medical purposes that is marketed and sold solely for that approved purpose; any asthma inhaler prescribed by a physician for that condition that is marketed and sold solely for that approved purpose; or any therapeutic product approved for use under the Compassionate Use of Medical Cannabis Program Act.

"Little cigar" means and includes any roll, made wholly or in part of tobacco, where such roll has an integrated cellulose acetate filter and weighs less than 4 pounds per thousand and the wrapper or cover of which is made in whole or in part of tobacco.

"Manufacturer" means any person, wherever resident or located, who manufactures and sells tobacco products, except a person who makes, manufactures, or fabricates tobacco products as a part of a Correctional Industries program for sale to persons incarcerated in penal institutions or resident patients of a State operated mental health facility.

Beginning on January 1, 2013, "moist snuff" means any finely cut, ground, or powdered tobacco that is not intended to be smoked, but shall not include any finely cut, ground, or powdered tobacco that is intended to be placed in the nasal cavity.

"Person" means any natural individual, firm, partnership, association, joint stock company, joint venture, limited liability company, or public or private corporation, however formed, or a receiver, executor, administrator, trustee, conservator, or other representative appointed by order of any court.

"Pipe tobacco" means any tobacco that, because of its appearance, type, packaging, or labeling, is suitable for use in a pipe and is likely to be offered to or purchased by a consumer as tobacco to be smoked in a pipe.

"Place of business" means and includes any place where tobacco products are sold or where tobacco products are manufactured, stored, or kept for the purpose of sale or consumption, including any vessel, vehicle, airplane, train, or vending machine.

"Remote retail sale" means a sale by a remote retail seller of cigars or pipe tobacco to a consumer in this State when:

(1) the buyer submits the order for the sale by means of a telephone or other method of voice transmission, by first class mail, or by using the Internet or other online service, or if the seller is otherwise not in the physical presence of the buyer when the request for purchase or order is made; or

(2) the cigars or pipe tobacco are delivered to the buyer by common carrier, private delivery service, or other method of remote delivery, or the seller is not in the physical presence of the buyer when the buyer obtains possession of the cigars or pipe tobacco.

"Remote retail seller" means a person located outside of this State who makes remote retail sales of cigars or pipe tobacco, so long as that person does not maintain within this State, directly or by a subsidiary, an office, distribution house, sales house, warehouse, or other place of business, or any agent or other representative operating within this State under the authority of the person or its subsidiary, irrespective of whether the place of business or the agent is located here permanently or temporarily or whether the person or subsidiary is licensed to do business in this State.

"Retailer" means any person in this State engaged in the business of selling tobacco products to consumers in this State, regardless of quantity or number of sales.

"Sale" means any transfer, exchange, or barter in any manner or by any means whatsoever for a consideration and includes all sales made by persons.

"Stamp" or "stamps" mean the indicia required to be affixed on a package of little cigars that evidence payment of the tax on packages of little cigars containing 20 or 25 little cigars under Section 10-10 of this Act. These stamps shall be the same stamps used for cigarettes under the Cigarette Tax Act.

"Stamping distributor" means a distributor licensed under this Act and also licensed as a distributor under the Cigarette Tax Act or Cigarette Use Tax Act.

"Stock keeping unit" or "SKU" means the unique identifier assigned by a manufacturer, distributor, or remote retail seller to various tobacco products in order to track inventory.

"Tobacco products" means any cigars, including little cigars; cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff (including moist snuff) or snuff flour; cavendish; plug and twist tobacco; fine-cut and other chewing tobaccos; shorts; refuse scraps, clippings, cuttings, and sweeping of tobacco; and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking; but does not include cigarettes as defined in Section 1 of the Cigarette Tax Act or tobacco purchased for the manufacture of cigarettes by cigarette distributors and manufacturers defined in the Cigarette Tax Act and persons who make, manufacture, or fabricate cigarettes as a part of a Correctional Industries program for sale to residents incarcerated in penal institutions or resident patients of a State operated mental health facility.

Beginning on July 1, 2019, "tobacco products" also includes electronic cigarettes.

"Wholesale price" means the established list price for which a manufacturer sells tobacco products to a distributor, before the allowance of any discount, trade allowance, rebate, or other reduction. In the absence of such an established list price, the manufacturer's invoice price at which the manufacturer sells the tobacco product to unaffiliated distributors, before any discounts, trade allowances, rebates, or other reductions, shall be presumed to be the wholesale price.

"Wholesaler" means any person, wherever resident or located, engaged in the business of selling tobacco products to others for the purpose of resale. "Wholesaler", when used in this Act, does not include a person licensed as a distributor under Section 10-20 of this Act unless expressly stated in this Act.

(Source: P.A. 101-31, eff. 6-28-19; 101-593, eff. 12-4-19; 102-40, eff. 6-25-21.)

(35 ILCS 143/10-10)

Sec. 10-10. Tax imposed.

(a) Except as otherwise provided in this Section with respect to little cigars, on the first day of the third month after the month in which this Act becomes law, a tax is imposed on any person engaged in business as a distributor of tobacco products, as defined in Section 10-5, at the rate of:

(1) (i) 18% of the wholesale price of tobacco products sold or otherwise disposed of to retailers or consumers located in this State prior to July 1, 2012;

(2) and (ii) 36% of the wholesale price of tobacco products sold or otherwise disposed of to retailers or consumers located in this State beginning on July 1, 2012 and before January 1, 2025; and

(3) beginning on January 1, 2025, 36% of:

(A) the actual cost paid by a distributor or remote retail seller for the stock keeping unit sold or otherwise disposed of to a retailer or consumer in the State; or

(B) if documentation of the actual cost paid by a distributor or remote retail seller is not available due to matters beyond the distributor or remote retail seller's control, the actual cost list paid by a distributor or remote retail seller for the stock keeping unit sold or otherwise disposed of to retailers or consumers located in this State for which documentation is not available. ; except that, beginning

Notwithstanding the provisions of this subsection (a), beginning on January 1, 2013, the tax on moist snuff shall be imposed at a rate of $0.30 per ounce, and a proportionate tax at the like rate on all fractional parts of an ounce, sold or otherwise disposed of to retailers or consumers located in this State. Notwithstanding the provisions of subsection (a), beginning on ; and except that, beginning July 1, 2019, the tax on electronic cigarettes shall be imposed at the rate of 15% of the wholesale price of electronic cigarettes sold or otherwise disposed of to retailers or consumers located in this State.

The tax imposed under this subsection (a) is in addition to all other occupation or privilege taxes imposed by the State of Illinois, by any political subdivision thereof, or by any municipal corporation. However, the tax is not imposed upon any activity in that business in interstate commerce or otherwise, to the extent to which that activity may not, under the Constitution and Statutes of the United States, be made the subject of taxation by this State, and except that, beginning July 1, 2013, the tax on little cigars shall be imposed at the same rate, and the proceeds shall be distributed in the same manner, as the tax imposed on cigarettes under the Cigarette Tax Act. The tax is also not imposed on sales made to the United States or any entity thereof.

If the Department determines that the actual cost list for a SKU is not indicative of the actual cost paid for the SKU, then the Department may determine the distributor's or remote retailer seller's tax liability for the SKU based on the distributor's or remote retail seller's books and records or from information on invoices obtained from the distributor's or remote retail seller's suppliers.

(a-5) Beginning January 1, 2025, the tax imposed under subsection (a) is also imposed upon persons who are engaged in business as remote retail sellers of cigars and pipe tobacco and who make sales to Illinois consumers on which the tax has not been paid by a distributor, if:

(1) the cumulative gross receipts of the remote retailer seller from sales of tangible personal property to consumers in this State are $100,000 or more; or

(2) the remote retail seller enters into 200 or more separate transactions for the sale of tangible personal property to consumers in this State.

A remote retail seller that meets or exceeds the threshold in either paragraph (1) or (2) of this subsection shall be liable for taxes imposed by this Act on all sales made by that remote retailer seller of taxable products under this Act to Illinois consumers on which the tax has not been paid by a distributor.

The remote retail seller shall determine on a quarterly basis, ending on the last day of March, June, September, and December, whether it meets the criteria of either paragraph (1) or (2) of this subsection for the preceding 12-month period. If the remote retail seller meets the criteria of either paragraph (1) or (2) for a 12-month period, then the remote retail seller is considered to be engaged in business as a remote retail seller in this State and is required to collect and remit the tax imposed under this Act and to file all applicable returns for the next 12-month period. At the end of that 12-month period, the remote retail seller shall determine whether the remote retail seller met the criteria of either paragraph (1) or (2) for the preceding 12-month period. If the remote retail seller met the criteria in either paragraph (1) or (2) for the preceding 12-month period, the remote retail seller is considered to be engaged in business as a remote retail seller in this State and is required to collect and remit the tax imposed under this Act and file returns for the subsequent year. If, at the end of a one-year period, a remote retail seller that was required to collect and remit the tax imposed under this Act determines that the remote retail seller did not meet the criteria in either paragraph (1) or (2) during the preceding 12-month period, then the remote retail seller shall certify to the Department, in the form and manner required by the Department, that the remote retail seller did not meet the criteria in either paragraph (1) or (2) during the preceding 12-month period and shall subsequently determine on a quarterly basis, ending on the last day of March, June, September, and December, whether the remote retail seller meets the criteria of either paragraph (1) or (2) for the preceding 12-month period.

(b) Notwithstanding subsection (a) of this Section, stamping distributors of packages of little cigars containing 20 or 25 little cigars sold or otherwise disposed of in this State shall remit the tax by purchasing tax stamps from the Department and affixing them to packages of little cigars in the same manner as stamps are purchased and affixed to cigarettes under the Cigarette Tax Act, unless the stamping distributor sells or otherwise disposes of those packages of little cigars to another stamping distributor. Only persons meeting the definition of "stamping distributor" contained in Section 10-5 of this Act may affix stamps to packages of little cigars containing 20 or 25 little cigars. Stamping distributors may not sell or dispose of little cigars at retail to consumers or users at locations where stamping distributors affix stamps to packages of little cigars containing 20 or 25 little cigars.

(c) The impact of the tax levied by this Act is imposed upon distributors engaged in the business of selling tobacco products to retailers or consumers in this State. Beginning January 1, 2025, the impact of the tax levied by this Act is also imposed upon remote retail sellers that meet the criteria in subsection (a-5) of this Section. A remote retail seller shall pay the tax on all sales of cigars and pipe tobacco to consumers in this State on which the tax has not been paid by a distributor. Whenever a stamping distributor brings or causes to be brought into this State from without this State, or purchases from without or within this State, any packages of little cigars containing 20 or 25 little cigars upon which there are no tax stamps affixed as required by this Act, for purposes of resale or disposal in this State to a person not a stamping distributor, then such stamping distributor shall pay the tax to the Department and add the amount of the tax to the price of such packages sold by such stamping distributor. Payment of the tax shall be evidenced by a stamp or stamps affixed to each package of little cigars containing 20 or 25 little cigars.

Stamping distributors paying the tax to the Department on packages of little cigars containing 20 or 25 little cigars sold to other distributors, wholesalers or retailers shall add the amount of the tax to the price of the packages of little cigars containing 20 or 25 little cigars sold by such stamping distributors.

(d) Beginning on January 1, 2013, the tax rate imposed per ounce of moist snuff may not exceed 15% of the tax imposed upon a package of 20 cigarettes pursuant to the Cigarette Tax Act.

(d-5) Notwithstanding any other provisions of this Section to the contrary, beginning January 1, 2025, and continuing through December 31, 2027, the tax per cigar sold or otherwise disposed of shall not exceed $0.75 per cigar. This subsection shall not apply to little cigars.

(e) All moneys received by the Department under this Act from sales occurring prior to July 1, 2012 shall be paid into the Long-Term Care Provider Fund of the State Treasury. Of the moneys received by the Department from sales occurring on or after July 1, 2012, except for moneys received from the tax imposed on the sale of little cigars, 50% shall be paid into the Long-Term Care Provider Fund and 50% shall be paid into the Healthcare Provider Relief Fund. Beginning July 1, 2013, all moneys received by the Department under this Act from the tax imposed on little cigars shall be distributed as provided in Section 2 of the Cigarette Tax Act.

(Source: P.A. 101-31, eff. 6-28-19.)

(35 ILCS 143/10-24 new)

Sec. 10-24. Remote retail seller's license. Beginning on January 1, 2025, it shall be unlawful for any person who meets the criteria established in subsection (a-5) of Section 10-10 to engage in business as a remote retail seller within the meaning of this Act without first having obtained a license to do so from the Department. Application for that license shall be made to the Department, by electronic means, in a form prescribed by the Department. Each applicant for a license shall furnish to the Department, in an electronic format established by the Department, the following information:

(1) the name and address of the applicant;

(2) the address of the location at which the applicant proposes to engage in business as a remote retail seller outside this State; and

(3) such other additional information as the Department may lawfully require by rule.

Beginning on January 1, 2025, in addition to obtaining a license to engage in business as a remote retail seller in this State, no remote retail seller who meets the criteria established in subsection (a-5) of Section 10-10 may engage in business as a remote retail seller within the meaning of this Act without registering under the Retailers' Occupation Tax Act pursuant to Section 2a of that Act.

A separate annual license shall be obtained for each place of business at which a person who is required to procure a remote retail seller's license under this Section proposes to engage in business as a remote retail seller in Illinois under this Act. All licenses issued by the Department under this Section shall be valid for a period not to exceed one year after issuance unless sooner revoked, canceled, or suspended as provided in this Act. All licenses must be renewed on an annual basis. An application submitted by a remote retail seller shall include an acknowledgement consenting to the jurisdiction of the Department and the courts of this State concerning the enforcement of this Act and any related laws, rules, and regulations, including authorizing the Department of Revenue to conduct inspections and audits for the purpose of ensuring compliance with this Act and to issue penalties for violations of this Act.

Each remote retail seller must perform age verification through an independent, third-party age verification service that compares information available from a commercially available database, or aggregate of databases, that are regularly used by government agencies and businesses for the purpose of age and identity verification to the personal information entered by the individual during the ordering process that establishes that the individual is of age.

If the provisions of subsection (a-5) of Section 10-10 are met, and the tax imposed under this Act is being remitted using the actual cost list method to calculate the tax, each remote retailer seller must provide the remote retail sellers's certified actual cost list to the Department for each SKU to be offered for remote retail sale in the subsequent calendar year. The actual cost list shall be updated by the remote retailer seller quarterly as new SKUs are added to the remote retail seller's inventory. New SKUs will be added using the actual cost first paid for the SKU.

The following are ineligible to receive a remote retail seller's license under this Act:

(1) a person who has been convicted of a felony under any federal or State law for smuggling cigarettes or tobacco products or tobacco tax evasion, if the Department, after investigation and a hearing if requested by the applicant, determines that such person has not been sufficiently rehabilitated to warrant the public trust;

(2) a corporation, if any officer, manager or director thereof, or any stockholder or stockholders owning in the aggregate more than 5% of the stock of such corporation, would not be eligible to receive a license under this Act for any reason; and

(3) any person who is in default to the State of Illinois for moneys due under this Act or any other tax Act administered by the Department.

The Department, upon receipt of an application and license fee, in proper form, from a person who is eligible to receive a remote retail seller's license under this Act, shall issue to such applicant a license in form as prescribed by the Department, which license shall permit the applicant to which it is issued to engage in business as a remote retail seller under this Act at the place shown in the remote retail seller's application. All licenses issued by the Department under this Section shall be valid for a period not to exceed one year after issuance unless sooner revoked, canceled or suspended as provided in this Act. No license issued under this Section is transferable or assignable. A person who obtains a license as a retailer who ceases to do business as specified in the license, or who never commenced business, or whose license is suspended or revoked, shall immediately surrender the license to the Department.

The Department may, in its discretion, upon application, authorize the payment of the tax imposed under Section 10-10 by any remote retail seller not otherwise subject to the tax imposed under this Act who, to the satisfaction of the Department, furnishes adequate security to ensure payment of the tax. The remote retail seller shall be issued, without charge, a license to remit the tax. When so authorized, it shall be the duty of the remote retail seller to remit the tax imposed upon the actual cost or actual cost list price of the cigars or pipe tobacco sold or otherwise disposed of to consumers located in this State, in the same manner and subject to the same requirements as any other remote retail seller required to be licensed under this Act. It shall be the duty of the remote retail seller to remit the tax imposed upon the actual cost or actual cost list price of cigar or pipe tobacco, sold or otherwise disposed of to consumers located in this State, in the same manner and subject to the same requirements as any other remote retail seller required to be licensed under this Act.

Any person aggrieved by any decision of the Department under this Section may, within 30 days after notice of the decision, protest and request a hearing. Upon receiving a request for a hearing, the Department shall give notice to the person requesting the hearing of the time and place fixed for the hearing and shall hold a hearing in conformity with the provisions of this Act and then issue its final administrative decision in the matter to that person. In the absence of a protest and request for a hearing within 30 days, the Department's decision shall become final without any further determination being made or notice given.

(35 ILCS 143/10-25)

Sec. 10-25. License actions.

(a) The Department may, after notice and a hearing, revoke, cancel, or suspend the license of any distributor, or retailer, or remote retail seller who violates any of the provisions of this Act, fails to keep books and records as required under this Act, fails to make books and records available for inspection upon demand by a duly authorized employee of the Department, or violates a rule or regulation of the Department for the administration and enforcement of this Act. The notice shall specify the alleged violation or violations upon which the revocation, cancellation, or suspension proceeding is based.

(a-5) The Department may, after notice and a hearing, revoke, cancel, or suspend the license of a distributor or remote retail seller that fails to properly register and remit tax under the Retailers' Occupation Tax Act for all tobacco products that are sold to consumers in this State.

(a-10) The Department may, after notice and a hearing, revoke, cancel, or suspend the license of a distributor or remote retail seller who is found in violation of any law, rule, or regulation of the state where the business is located as listed on the license issued by the Department. The notice shall specify the alleged violation or violations upon which the revocation, cancellation, or suspension proceeding is based.

(b) The Department may revoke, cancel, or suspend the license of any distributor for a violation of the Tobacco Product Manufacturers' Escrow Enforcement Act as provided in Section 20 of that Act.

(c) If the retailer has a training program that facilitates compliance with minimum-age tobacco laws, the Department shall suspend for 3 days the license of that retailer for a fourth or subsequent violation of the Prevention of Tobacco Use by Persons under 21 Years of Age and Sale and Distribution of Tobacco Products Act, as provided in subsection (a) of Section 2 of that Act. For the purposes of this Section, any violation of subsection (a) of Section 2 of the Prevention of Tobacco Use by Persons under 21 Years of Age and Sale and Distribution of Tobacco Products Act occurring at the retailer's licensed location, during a 24-month period, shall be counted as a violation against the retailer.

If the retailer does not have a training program that facilitates compliance with minimum-age tobacco laws, the Department shall suspend for 3 days the license of that retailer for a second violation of the Prevention of Tobacco Use by Persons under 21 Years of Age and Sale and Distribution of Tobacco Products Act, as provided in subsection (a-5) of Section 2 of that Act.

If the retailer does not have a training program that facilitates compliance with minimum-age tobacco laws, the Department shall suspend for 7 days the license of that retailer for a third violation of the Prevention of Tobacco Use by Persons under 21 Years of Age and Sale and Distribution of Tobacco Products Act, as provided in subsection (a-5) of Section 2 of that Act.

If the retailer does not have a training program that facilitates compliance with minimum-age tobacco laws, the Department shall suspend for 30 days the license of a retailer for a fourth or subsequent violation of the Prevention of Tobacco Use by Persons under 21 Years of Age and Sale and Distribution of Tobacco Products Act, as provided in subsection (a-5) of Section 2 of that Act.

A training program that facilitates compliance with minimum-age tobacco laws must include at least the following elements: (i) it must explain that only individuals displaying valid identification demonstrating that they are 21 years of age or older shall be eligible to purchase cigarettes or tobacco products and (ii) it must explain where a clerk can check identification for a date of birth. The training may be conducted electronically. Each retailer that has a training program shall require each employee who completes the training program to sign a form attesting that the employee has received and completed tobacco training. The form shall be kept in the employee's file and may be used to provide proof of training.

(d) The Department may, by application to any circuit court, obtain an injunction restraining any person who engages in business as a distributor or remote retailer of tobacco products without a license (either because the his or her license has been revoked, canceled, or suspended or because of a failure to obtain a license in the first instance) from engaging in that business until that person, as if that person were a new applicant for a license, complies with all of the conditions, restrictions, and requirements of Section 10-20 or Section 10-24 of this Act and qualifies for and obtains a license. Refusal or neglect to obey the order of the court may result in punishment for contempt.

(Source: P.A. 100-940, eff. 8-17-18; 101-2, eff. 7-1-19.)

(35 ILCS 143/10-30)

Sec. 10-30. Returns.

(a) Every distributor shall, on or before the 15th day of each month, file a return with the Department covering the preceding calendar month. The return shall disclose the wholesale price, or beginning on January 1, 2025, the actual cost or actual cost list price for all tobacco products other than electronic cigarettes, little cigars or moist snuff and the quantity in ounces of moist snuff sold or otherwise disposed of and other information that the Department may reasonably require. The return shall be filed upon a form prescribed and furnished by the Department.

(a-5) Beginning February 1, 2025, every remote retail seller shall, on or before the 15th day of each month, file a return with the Department covering the preceding calendar month. The remote retail seller's return must report all cigars or pipe tobacco brought in or caused to be brought in from outside the State or shipped or transported to consumers within the State during the preceding calendar month. The return must include further information as the Department may prescribe and must show the total actual cost or actual cost list price paid by a remote retail seller for a stock keeping unit for the previous calendar month. The return must show the amount of tax due for all remote retail sales made from outside the State, to a consumer within the State during the preceding calendar month. It is the intent and purpose of this amendatory Act of the 103rd General Assembly that the remote retail seller remit the tax at the time the return is filed. It is further the intent and purpose of this amendatory Act of the 103rd General Assembly to impose the tax under this Act only once on all tobacco products, including cigars and pipe tobacco, sold in the State.

(b) In addition to the information required under subsection (a), on or before the 15th day of each month, covering the preceding calendar month, each stamping distributor shall, on forms prescribed and furnished by the Department, report the quantity of little cigars sold or otherwise disposed of, including the number of packages of little cigars sold or disposed of during the month containing 20 or 25 little cigars.

(c) At the time when any return of any distributor or remote retail seller is due to be filed with the Department, the distributor shall also remit to the Department the tax liability that the distributor or remote retail seller has incurred for transactions occurring in the preceding calendar month, less a discount of 1.75%, not to exceed $1,000 per month, which is allowed to reimburse the distributor or remote retail seller for the expenses incurred in keeping records, preparing and filing returns, remitting the tax, and supplying data to the Department on request. No discount may be claimed by a taxpayer on returns not timely filed and for taxes not timely remitted. No discount may be claimed by a taxpayer for any return that is not filed electronically.

(d) The Department may adopt rules to require the electronic filing of any return or document required to be filed under this Act. Those rules may provide for exceptions from the filing requirement set forth in this paragraph for persons who demonstrate that they do not have access to the Internet and petition the Department to waive the electronic filing requirement.

(e) If any payment provided for in this Section exceeds the distributor's liabilities under this Act, as shown on an original return, the distributor may credit such excess payment against liability subsequently to be remitted to the Department under this Act, in accordance with reasonable rules adopted by the Department.

(Source: P.A. 100-1171, eff. 1-4-19.)

(35 ILCS 143/10-35)

Sec. 10-35. Record keeping.

(a) Every distributor, as defined in Section 10-5, shall keep complete and accurate records of tobacco products held, purchased, manufactured, brought in or caused to be brought in from without the State, and tobacco products sold, or otherwise disposed of, and shall preserve and keep all invoices, bills of lading, sales records, and copies of bills of sale, the wholesale price, and beginning January 1, 2025 the actual cost or actual cost list price for tobacco products sold or otherwise disposed of, an inventory of tobacco products prepared as of December 31 of each year or as of the last day of the distributor's fiscal year if the distributor he or she files federal income tax returns on the basis of a fiscal year, and other pertinent papers and documents relating to the manufacture, purchase, sale, or disposition of tobacco products. Every sales invoice issued by a licensed distributor to a retailer in this State shall contain the distributor's Tobacco Products License number unless the distributor has been granted a waiver by the Department in response to a written request in cases where (i) the distributor sells little cigars or other tobacco products only to licensed retailers that are wholly-owned by the distributor or owned by a wholly-owned subsidiary of the distributor; (ii) the licensed retailer obtains little cigars or other tobacco products only from the distributor requesting the waiver; and (iii) the distributor affixes the tax stamps to the original packages of little cigars or has or will pay the tax on the other tobacco products sold to the licensed retailer. The distributor shall file a written request with the Department, and, if the Department determines that the distributor meets the conditions for a waiver, the Department shall grant the waiver.

(b) Every retailer, as defined in Section 10-5, whether or not the retailer has obtained a retailer's license pursuant to Section 4g, shall keep complete and accurate records of tobacco products held, purchased, sold, or otherwise disposed of, and shall preserve and keep all invoices, bills of lading, sales records, and copies of bills of sale, returns and other pertinent papers and documents relating to the purchase, sale, or disposition of tobacco products. Such records need not be maintained on the licensed premises, but must be maintained in the State of Illinois; however, if access is available electronically, the records may be maintained out of state. However, all original invoices or copies thereof covering purchases of tobacco products must be retained on the licensed premises for a period of 90 days after such purchase, unless the Department has granted a waiver in response to a written request in cases where records are kept at a central business location within the State of Illinois or in cases where records that are available electronically are maintained out of state. The Department shall adopt rules regarding the eligibility for a waiver, revocation of a waiver, and requirements and standards for maintenance and accessibility of records located at a central location out-of-State pursuant to a waiver provided under this Section.

(b-5) Every remote retail seller, as defined in Section 10-5, whether or not the remote retail seller has obtained a remote retail seller's license pursuant to Section 4g, shall keep complete and accurate records of tobacco products held, purchased, sold, or otherwise disposed of, and shall preserve and keep all invoices, bills of lading, sales records, and copies of bills of sale, returns and other pertinent papers and documents relating to the purchase, sale, or disposition of tobacco products. Such records must be on the remote retail seller's premises but need not be maintained in the State of Illinois; however, remote retail sellers shall also provide access electronically. However, all original invoices or copies thereof covering purchases of tobacco products must be retained on the remote retail seller's premises for a period of 365 days after such purchase.

(c) Books, records, papers, and documents that are required by this Act to be kept shall, at all times during the usual business hours of the day, be subject to inspection by the Department or its duly authorized agents and employees. The books, records, papers, and documents for any period with respect to which the Department is authorized to issue a notice of tax liability shall be preserved until the expiration of that period.

(Source: P.A. 99-192, eff. 1-1-16; 100-940, eff. 8-17-18.)

(35 ILCS 143/10-37)

Sec. 10-37. Proof of payment of tax imposed by this Act. Every licensed distributor of tobacco products in this State is required to show proof of the tax having been paid as required by this Act by displaying its Tobacco Products License number on every sales invoice issued to a retailer in this State. Every licensed remote retail seller of tobacco products in this State is required to show proof of the tax having been paid as required by this Act by displaying its Tobacco Products License number on every sales invoice issued to a consumer in this State. No retailer shall possess tobacco products without either a proper invoice indicating that the tobacco products tax was paid by a distributor for the tobacco products in the retailer's possession or other proof that the tax was paid by the retailer if it has purchased tobacco products on which tax has not been paid as required by this Act. Failure to comply with the provisions of this paragraph may be grounds for revocation of a distributor's, remote retail seller's, or retailer's license in accordance with Section 10-25 of this Act or Section 6 of the Cigarette Tax Act. In addition, the Department may impose a civil penalty not to exceed $1,000 for the first violation and $3,000 for each subsequent violation, which shall be deposited into the Tax Compliance and Administration Fund.

(Source: P.A. 100-940, eff. 8-17-18.)

(35 ILCS 143/10-38)

Sec. 10-38. Presumption for unlicensed distributors, remote retail sellers, or persons. Whenever any person obtains tobacco products from an unlicensed in-state or out-of-state distributor, remote retail seller, or person, a prima facie presumption shall arise that the tax imposed by this Act on such tobacco products has not been paid in violation of this Act. Invoices or other documents kept in the normal course of business in the possession of a person reflecting purchases of tobacco products from an unlicensed in-state or out-of-state distributor, remote retail seller, or person or invoices or other documents kept in the normal course of business obtained by the Department from in-state or out-of-state distributors, remote retail sellers, or persons, are sufficient to raise the presumption that the tax imposed by this Act has not been paid. If a presumption is raised, the Department may assess tax, penalty, and interest on the tobacco products. In addition, any person who violates this Section is liable to pay to the Department, for deposit in the Tax Compliance and Administration Fund, a penalty of $1,000 for the first violation and $3,000 for any subsequent violation. The Department may adopt rules to administer the penalties under this Section.

(Source: P.A. 100-940, eff. 8-17-18.)

(35 ILCS 143/10-45)

Sec. 10-45. Incorporation by reference. All of the provisions of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5h, 5i, 5j, 6, 6a, 6b, 6c, 8, 9, 10, 11, 11a, and 12 of the Retailers' Occupation Tax Act, and all applicable provisions of the Uniform Penalty and Interest Act that are not inconsistent with this Act, apply to distributors and remote retail sellers of tobacco products to the same extent as if those provisions were included in this Act. References in the incorporated Sections of the Retailers' Occupation Tax Act to retailers, to sellers, or to persons engaged in the business of selling tangible personal property mean distributors or remote retail sellers when used in this Act. References in the incorporated Sections to sales of tangible personal property mean sales of tobacco products when used in this Act.

All of the provisions of Sections 7, 8, 8a, 16, 18a, 18b, 18c, 22, 23, 24, 26, 27, and 28a of the Cigarette Tax Act which are not inconsistent with this Act shall apply, as far as practicable, to the subject matter of this Act to the same extent as if those provisions were included in this Act. References in the incorporated Sections to sales of cigarettes mean sales of little cigars in packages of 20 or 25 little cigars.

(Source: P.A. 98-273, eff. 8-9-13.)

(35 ILCS 143/10-50)

Sec. 10-50. Violations and penalties. When the amount due is under $300, any distributor or remote retail seller who fails to file a return, willfully fails or refuses to make any payment to the Department of the tax imposed by this Act, or files a fraudulent return, or any officer or agent of a corporation engaged in the business of distributing or engaging in remote retail sales of tobacco products to retailers or and consumers located in this State who signs a fraudulent return filed on behalf of the corporation, or any accountant or other agent who knowingly enters false information on the return of any taxpayer under this Act is guilty of a Class 4 felony.

Any person who violates any provision of Section 10-20, 10-21, or 10-22, or 10-24 of this Act, fails to keep books and records as required under this Act, or willfully violates a rule or regulation of the Department for the administration and enforcement of this Act is guilty of a Class 4 felony. A person commits a separate offense on each day that he or she engages in business in violation of Section 10-20, 10-21, or 10-22, or 10-24 of this Act. If a person fails to produce the books and records for inspection by the Department upon request, a prima facie presumption shall arise that the person has failed to keep books and records as required under this Act. A person who is unable to rebut this presumption is in violation of this Act and is subject to the penalties provided in this Section.

When the amount due is under $300, any person who accepts money that is due to the Department under this Act from a taxpayer for the purpose of acting as the taxpayer's agent to make the payment to the Department, but who fails to remit the payment to the Department when due, is guilty of a Class 4 felony.

Any person who violates any provision of Sections 10-20, 10-21 and 10-22 of this Act, fails to keep books and records as required under this Act, or willfully violates a rule or regulation of the Department for the administration and enforcement of this Act is guilty of a business offense and may be fined up to $5,000. If a person fails to produce books and records for inspection by the Department upon request, a prima facie presumption shall arise that the person has failed to keep books and records as required under this Act. A person who is unable to rebut this presumption is in violation of this Act and is subject to the penalties provided in this Section. A person commits a separate offense on each day that he or she engages in business in violation of Sections 10-20, 10-21 and 10-22 of this Act.

When the amount due is $300 or more, any distributor or remote retail seller who files, or causes to be filed, a fraudulent return, or any officer or agent of a corporation engaged in the business of distributing or engaging in remote retail sales of tobacco products to retailers or and consumers located in this State who files or causes to be filed or signs or causes to be signed a fraudulent return filed on behalf of the corporation, or any accountant or other agent who knowingly enters false information on the return of any taxpayer under this Act is guilty of a Class 3 felony.

When the amount due is $300 or more, any person engaged in the business of distributing or engaging in remote retail sales of tobacco products to retailers or and consumers located in this State who fails to file a return, willfully fails or refuses to make any payment to the Department of the tax imposed by this Act, or accepts money that is due to the Department under this Act from a taxpayer for the purpose of acting as the taxpayer's agent to make payment to the Department but fails to remit such payment to the Department when due is guilty of a Class 3 felony.

When the amount due is under $300, any retailer who fails to file a return, willfully fails or refuses to make any payment to the Department of the tax imposed by this Act, or files a fraudulent return, or any officer or agent of a corporation engaged in the retail business of selling tobacco products to purchasers of tobacco products for use and consumption located in this State who signs a fraudulent return filed on behalf of the corporation, or any accountant or other agent who knowingly enters false information on the return of any taxpayer under this Act is guilty of a Class A misdemeanor for a first offense and a Class 4 felony for each subsequent offense.

When the amount due is $300 or more, any retailer who fails to file a return, willfully fails or refuses to make any payment to the Department of the tax imposed by this Act, or files a fraudulent return, or any officer or agent of a corporation engaged in the retail business of selling tobacco products to purchasers of tobacco products for use and consumption located in this State who signs a fraudulent return filed on behalf of the corporation, or any accountant or other agent who knowingly enters false information on the return of any taxpayer under this Act is guilty of a Class 4 felony.

Any person whose principal place of business is in this State and who is charged with a violation under this Section shall be tried in the county where his or her principal place of business is located unless he or she asserts a right to be tried in another venue. If the taxpayer does not have his or her principal place of business in this State, however, the hearing must be held in Sangamon County unless the taxpayer asserts a right to be tried in another venue.

Any taxpayer or agent of a taxpayer who with the intent to defraud purports to make a payment due to the Department by issuing or delivering a check or other order upon a real or fictitious depository for the payment of money, knowing that it will not be paid by the depository, is guilty of a deceptive practice in violation of Section 17-1 of the Criminal Code of 2012.

A prosecution for a violation described in this Section may be commenced within 3 years after the commission of the act constituting the violation.

(Source: P.A. 100-201, eff. 8-18-17; 100-940, eff. 8-17-18.)

Section 99. Effective date. This Act takes effect upon becoming law.