HB5440sam001 97TH GENERAL ASSEMBLY

Sen. Terry Link

Filed: 5/16/2012

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 5440

2    AMENDMENT NO. ______. Amend House Bill 5440 by replacing
3everything after the enacting clause with the following:
 
4    "Section 1. Short title. This Act may be cited as the
5Cigarette Machine Operators' Occupation Tax Act.
 
6    Section 5. Definitions. As used in this Act:
7    "Business" means any trade, occupation, activity or
8enterprise engaged in for the purpose of selling cigarettes in
9this State.
10    "Cigarette" means any roll for smoking made wholly or in
11part of tobacco, irrespective of size or shape and whether or
12not such tobacco is flavored, adulterated or mixed with any
13other ingredient, and the wrapper or cover of which is made of
14paper or any other substance or material except tobacco.
15    "Cigarette machine" means any machine, equipment or device
16used to make or fabricate cigarettes.

 

 

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1    "Cigarette machine" shall not include a handheld manually
2operated device used by consumers to make roll-your-own
3cigarettes for personal consumption.
4    "Cigarette machine operator" means any person who is
5engaged in the business of operating a cigarette machine in
6this State and is licensed by the Department as a cigarette
7machine operator under Section 15 of this Act.
8    "Contraband cigarettes" means:
9        (1) cigarettes for which any required federal taxes
10    have not been paid;
11        (2) cigarettes that do not meet the requirements of
12    this Act;
13        (3) cigarettes that are made or fabricated by a person
14    holding a cigarette machine operator license under Section
15    15 of this Act and that are in the possession of
16    manufacturers, distributors, secondary distributors,
17    manufacturer representatives, or retailers, all as defined
18    by the Cigarette Tax Act, for the purpose of resale;
19        (4) cigarettes that are in the possession of a
20    cigarette machine operator and that are made or fabricated
21    with cigarette tubes that do not meet the requirements of
22    Section 30 of this Act;
23        (5) cigarettes that are in the possession of an
24    individual and that are made or fabricated with cigarette
25    tubes that do not meet the requirements of Section 30 of
26    this Act, unless the cigarettes were made or fabricated by

 

 

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1    an individual for the individual's own use and consumption
2    without the aid or use of a cigarette machine in the
3    possession of a cigarette machine operator holding a
4    license under Section 15 of this Act; or
5        (6) cigarettes that (i) are made or fabricated by a
6    person holding a cigarette machine operator license under
7    Section 15 of this Act, (ii) are in the possession of a
8    person, and (iii) contain tobacco of a brand family and
9    manufacturer that are not identified on the State of
10    Illinois Directory of Participating Manufacturers or the
11    Illinois Directory of Compliant Non-Participating
12    Manufacturers maintained by the Office of the Attorney
13    General.
14    "Department" means the Department of Revenue.
15    "Operate or operating a cigarette machine" means to possess
16a cigarette machine for the purpose of engaging in the business
17of making the cigarette machine available to individuals who
18use the cigarette machine to make or fabricate cigarettes for
19their own use or consumption, and not for resale. For purposes
20of this Act, the cigarette machine is operated by the person
21possessing the cigarette machine. For purposes of this Act,
22cigarettes made or fabricated by the use of a cigarette machine
23in the possession of a cigarette machine operator holding a
24license under Section 15 of this Act are considered to be made
25or fabricated by the person holding the cigarette machine
26operator license and not the individual.

 

 

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1    "Original package" means the individual packet, box, or
2other container used to contain and convey cigarettes to the
3consumer.
4    "Person" means any natural individual, firm, partnership,
5association, joint stock company, joint adventure, public or
6private corporation, however formed, limited liability
7company, or a receiver, executor, administrator, trustee,
8guardian, or other representative appointed by order of any
9court.
10    "Place of business" means any place where cigarettes are
11made or fabricated by a cigarette machine operator holding a
12license under Section 15 of this Act.
13    "Possess or possessing a cigarette machine" means to own,
14lease, rent or have on one's premises a cigarette machine for
15the purpose of engaging in the business of making the cigarette
16machine available to individuals who use the cigarette machine
17to make or fabricate cigarettes for their own use or
18consumption, and not for resale.
19    "Prior continuous compliance taxpayer" means any person
20who is licensed under this Act and who, having been a licensee
21for a continuous period of 5 years, is determined by the
22Department not to have been either delinquent or deficient in
23the payment of tax liability during that period or otherwise in
24violation of this Act. "Prior continuous compliance taxpayer"
25also means any taxpayer who has, as verified by the Department,
26continuously complied with the condition of his bond or other

 

 

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1security under provisions of this Act for a period of 5
2consecutive years.
3    "Retailer" means any person who engages in the making of
4transfers of the ownership of, or title to, tobacco or
5cigarettes to a purchaser for use or consumption and not for
6resale in any form, for a valuable consideration.
7    "Sale" means any transfer, exchange, or barter in any
8manner or by any means whatsoever for a consideration, and
9includes and means all sales made by any person.
 
10    Section 10. Tax imposed.
11    (a) A tax is imposed upon all persons engaged in the
12business of operating a cigarette machine. The tax is imposed
13at the rate of 49 mills per cigarette made or fabricated by a
14cigarette machine possessed by a cigarette machine operator.
15    (b) If, on or after the effective date of this amendatory
16Act of the 97th General Assembly, the General Assembly
17increases the rate of tax imposed under Section 2 of the
18Cigarette Tax Act, then the tax imposed under subsection (a) of
19this Section shall be increased by the same amount beginning on
20the effective date of the Cigarette Tax increase.
21    (c) The tax herein imposed shall be in addition to all
22other occupation or privilege taxes imposed by the State of
23Illinois or by any municipal corporation or political
24subdivision thereof.
25    (d) Persons subject to the tax imposed by this Act may

 

 

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1reimburse themselves for their tax liability under this Act by
2separately stating such tax, less any credit the machine
3operator claims under subsection (b) of Section 40 of this Act
4on tobacco sold to and used by users of a cigarette machine to
5make or fabricate cigarettes, as an additional charge to users
6of cigarette machines.
7    (e) If any cigarette machine operator collects an amount
8(however designated) which purports to reimburse such operator
9for his or her cigarette machine operators' occupation tax
10liability under this Act with respect to cigarettes that are
11not subject to cigarette machine operators' occupation tax
12under this Act, or if any cigarette machine operator, in
13collecting an amount (however designated) which purports to
14reimburse such operator for his or her cigarette machine
15operators' occupation tax liability measured by cigarettes
16made or fabricated by a cigarette machine that are subject to
17tax under this Act, collects more from the customer than the
18cigarette machine operators' cigarette machine operators'
19occupation tax liability in the transaction, the customer shall
20have a legal right to claim a refund of that amount from the
21cigarette machine operator. However, if such amount is not
22refunded to the customer for any reason, the cigarette machine
23operator is liable to pay such amount to the Department.
 
24    Section 15. Cigarette machine operator license. No person
25may engage in the business of operating a cigarette machine in

 

 

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1this State without first having obtained a license from the
2Department. Application for a license shall be made to the
3Department on a form furnished and prescribed by the
4Department. Each applicant for a license under this Section
5shall furnish the following information to the Department on a
6form signed and verified by the applicant under penalty of
7perjury:
8        (1) the name and address of the applicant;
9        (2) the address of the location at which the applicant
10    proposes to engage in the business of operating a cigarette
11    machine in this State; and
12        (3) any other additional information the Department
13    may reasonably require.
14    The annual license fee payable to the Department for each
15cigarette machine operator license is $250. Each applicant for
16a license shall pay that fee to the Department at the time of
17submitting an application for license to the Department.
18    Every applicant who is required to procure a cigarette
19machine operator license shall file with his or her application
20a joint and several bond. Such bond shall be executed to the
21Department of Revenue, with good and sufficient surety or
22sureties residing or licensed to do business within the State
23of Illinois, in the amount of $2,500, conditioned upon the true
24and faithful compliance by the licensee with all of the
25provisions of this Act. Such bond, or a reissue thereof, or a
26substitute therefore, shall be kept in effect during the entire

 

 

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1period covered by the license. A separate application for
2license shall be made, a separate annual license fee paid, and
3a separate bond filed, for each place of business at which a
4person who is required to procure a cigarette machine operator
5license under this Section proposes to engage in business as a
6cigarette machine operator in Illinois under this Act.
7    The following are ineligible to receive a cigarette machine
8operator license under this Act:
9        (1) a person who is not of good character and
10    reputation in the community in which he resides;
11        (2) a person who has been convicted of a felony under
12    any federal or State law, if the Department, after
13    investigation and a hearing, if requested by the applicant,
14    determines that such person has not been sufficiently
15    rehabilitated to warrant the public trust;
16        (3) a corporation, if any officer, manager, or director
17    thereof, or any stockholder or stockholders owning in the
18    aggregate more than 5% of the stock of such corporation,
19    would not be eligible to receive a license under this Act
20    for any reason; or
21        (4) a person, or any person who owns more than 15% of
22    the ownership interests in an entity or a related party,
23    who:
24            (A) owes, at the time of application, any
25        delinquent cigarette taxes or tobacco taxes that have
26        been determined by law to be due and unpaid, unless the

 

 

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1        license applicant has entered into an agreement
2        approved by the Department to pay the amount due;
3            (B) has had a license under this Act, the Cigarette
4        Tax Act, the Cigarette Use Tax Act, or the Tobacco
5        Products Tax Act of 1995 revoked within the past 2
6        years by the Department for misconduct relating to
7        stolen or contraband cigarettes or has been convicted
8        of a State or federal crime, punishable by imprisonment
9        of one year or more, relating to stolen or contraband
10        cigarettes;
11            (C) has been found by the Department, after notice
12        and a hearing, to have imported or caused to be
13        imported into the United States for sale or
14        distribution any cigarette in violation of 19 U.S.C.
15        1681a;
16            (D) has been found by the Department, after notice
17        and a hearing, to have imported or caused to be
18        imported into the United States for sale or
19        distribution, or manufactured for sale or distribution
20        in the United States, any cigarette that does not fully
21        comply with the Federal Cigarette Labeling and
22        Advertising Act (15 U.S.C. 1331, et seq.); or
23            (E) has been found by the Department, after notice
24        and a hearing, to have made a material false statement
25        in the application or has failed to produce records
26        required to be maintained by this Act.

 

 

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1     The Department, upon receipt of an application, license
2fee, and bond in proper form from a person who is eligible to
3receive a cigarette machine operator license under this Act,
4shall issue to such applicant a license in a form as prescribed
5by the Department. That license shall permit the applicant to
6whom it is issued to engage in business as a cigarette machine
7operator at the place shown in his or her application. All
8licenses issued by the Department under this Section shall be
9valid for a period not to exceed one year after issuance unless
10sooner revoked, canceled, or suspended as provided in this Act.
11No license issued under this Section is transferable or
12assignable. Such license shall be conspicuously displayed in
13the place of business conducted by the licensee in Illinois
14under such license. No cigarette machine operator acquires any
15vested interest or compensable property right in a license
16issued under this Act.
17    A cigarette machine operator shall notify the Department of
18any change in the information contained on the application
19form, including any change in ownership, and shall do so within
2030 days after that change.
21    Every prior continuous compliance taxpayer shall be exempt
22from all requirements under this Section concerning the
23furnishing of bond as a condition precedent to his being
24authorized to engage in the business licensed under this Act.
25This exemption shall continue for each prior continuous
26compliance taxpayer until such time as he may be determined by

 

 

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1the Department to be delinquent in the filing of any returns,
2or is determined by the Department (either through the
3Department's issuance of a final assessment which has become
4final under the Act, or by the taxpayer's filing of a return
5which admits tax to be due that is not paid) to be delinquent
6or deficient in the paying of any tax under this Act, at which
7time that taxpayer shall become subject to the bond
8requirements of this Section and, as a condition of being
9allowed to continue to engage in the business licensed under
10this Act, shall be required to furnish bond to the Department
11in such form as provided in this Section. The taxpayer shall
12furnish such bond for a period of 2 years, after which, if the
13taxpayer has not been delinquent in the filing of any returns,
14or delinquent or deficient in the paying of any tax under this
15Act, the Department may reinstate that person as a prior
16continuance compliance taxpayer. Any taxpayer who fails to pay
17an admitted or established liability under this Act may also be
18required by the Department to post bond or other acceptable
19security with the Department guaranteeing the payment of that
20admitted or established liability.
21    The Department shall discharge any surety and shall release
22and return any bond or security deposited, assigned, pledged,
23or otherwise provided to it by a taxpayer under this Section
24within 30 days after:
25        (1) that taxpayer becomes a prior continuous
26    compliance taxpayer; or

 

 

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1        (2) that taxpayer has ceased to collect receipts on
2    which he is required to remit tax to the Department, has
3    filed a final tax return, and has paid to the Department an
4    amount sufficient to discharge his remaining tax liability
5    as determined by the Department under this Act. The
6    Department shall make a final determination of the
7    taxpayer's outstanding tax liability as expeditiously as
8    possible after his final tax return has been filed. If the
9    Department cannot make the final determination within 45
10    days after receiving the final tax return, it shall so
11    notify the taxpayer within that period, stating its reasons
12    therefore.
13    Any person aggrieved by any decision of the Department
14under this Section may, within 20 days after receiving notice
15of the decision, protest and request a hearing. Upon receiving
16a written request for a hearing, the Department shall give
17notice to the person requesting the hearing of the time and
18place fixed for the hearing and shall hold a hearing in
19conformity with the provisions of this Act and then issue its
20final administrative decision in the matter to that person. In
21the absence of a protest and request for a hearing within 20
22days, the Department's decision shall become final without any
23further determination being made or notice given.
 
24    Section 20. Revocation, cancellation, or suspension of
25license. The Department may, after notice and hearing as

 

 

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1provided for by this Act, revoke, cancel, or suspend the
2license of any cigarette machine operator for the violation of
3any provision of this Act, or for noncompliance with the
4provisions of this Act, or for any noncompliance with any
5lawful rule or regulation promulgated by the Department under
6this Act, or because the licensee is determined to be
7ineligible for a cigarette machine operator's license for any
8one or more of the reasons provided for in Section 15 of this
9Act.
10    Any cigarette machine operator aggrieved by any decision of
11the Department under this Section may, within 20 days after
12notice of the decision, protest and request a hearing. Upon
13receiving a written request for a hearing, the Department shall
14give notice in writing to the cigarette machine operator
15requesting the hearing that contains a statement of the charges
16preferred against the cigarette machine operator and that
17states the time and place fixed for the hearing. The Department
18shall hold the hearing in conformity with the provisions of
19this Act and then issue its final administrative decision in
20the matter to the cigarette machine operator. In the absence of
21a written protest and request for a hearing within 20 days, the
22Department's decision shall become final without any further
23determination being made or notice given.
24    No license so revoked shall be reissued to any cigarette
25machine operator for a period of 6 months after the date of the
26final determination of such revocation. No license shall be

 

 

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1reissued at all so long as the person who would receive the
2license is ineligible to receive a cigarette machine operator's
3license under this Act for any one or more of the reasons
4provided for in Section 15 of this Act.
5    The Department, upon complaint filed in the circuit court,
6may, by injunction, restrain any person who fails or refuses to
7comply with any of the provisions of this Act from acting as a
8cigarette machine operator in this State.
 
9    Section 25. Restriction on tobacco used in cigarette
10machines.
11    (a) Only roll-your-own tobacco products of a brand family
12and manufacturer identified on the State of Illinois Directory
13of Participating Manufacturers or the Illinois Directory of
14Compliant Non-Participating Manufacturers maintained by the
15Office of the Attorney General may be sold by cigarette machine
16operators to customers for use in cigarette machines possessed
17by the cigarette machine operator.
18    (b) Only roll-your-own tobacco products meeting the
19requirements of subsection (a) and purchased at the place of
20business of the cigarette machine operator may be used in a
21cigarette machine at that location.
 
22    Section 30. Cigarette tubes used in cigarette machines.
23    (a) All cigarette tubes used in cigarette machines in the
24possession of cigarette machine operators licensed under

 

 

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1Section 15 of this Act shall be constructed of paper of a type
2determined by the Attorney General, pursuant to rules
3promulgated by the Attorney General under the provisions of the
4Administrative Procedure Act, to reduce the likely ignition
5propensity of cigarettes made by those tubes.
6    (b) A cigarette machine operator is not required to comply
7with subsection (a) of this Section until the Attorney General
8has promulgated rules implementing subsection (a) and the rules
9have become effective. The effective date for such rules shall
10be no earlier than January 1, 2014.
 
11    Section 35. Cigarette machine operators; sale of
12cigarettes.
13    (a) The cigarette machine operator is responsible for
14complying with all State and federal laws and regulations
15regarding packaging and labeling of original packages of
16cigarettes.
17    (b) A person possessing a cigarette machine operator
18license may not purchase unstamped cigarettes from an in-State
19or out-of-State manufacturer or distributor of cigarettes.
20    (c) Cigarettes made or fabricated by a cigarette machine
21may not be sold or distributed to, or possessed by,
22manufacturers, distributors, secondary distributors,
23manufacturer representatives, or retailers, except the
24cigarette machine operator.
25    (d) A cigarette machine possessed by a cigarette machine

 

 

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1operator shall have a secure meter that counts the number of
2cigarettes made or fabricated by the cigarette machine and that
3cannot be accessed, altered, or reset by the machine operator,
4except for the sole purpose of taking meter readings.
 
5    Section 40. Returns.
6    (a) Cigarette machine operators shall file a return and
7remit the tax imposed by Section 10 by the 15th day of each
8month covering the preceding calendar month. Each such return
9shall show: the quantity of cigarettes made or fabricated
10during the period covered by the return; the beginning and
11ending meter reading for each cigarette machine for the period
12covered by the return; the quantity of such cigarettes sold or
13otherwise disposed of during the period covered by the return;
14the brand family and manufacturer and quantity of tobacco
15products used to make or fabricate cigarettes by use of a
16cigarette machine; the license number of each distributor from
17whom tobacco products are purchased; the type and quantity of
18cigarette tubes purchased for use in a cigarette machine; the
19type and quantity of cigarette tubes used in a cigarette
20machine; and such other information as the Department may
21require. Such returns shall be filed on forms prescribed and
22furnished by the Department. The Department may promulgate
23rules to require that the cigarette machine operator's return
24be accompanied by appropriate computer-generated magnetic
25media supporting schedule data in the format required by the

 

 

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1Department, unless, as provided by rule, the Department grants
2an exception upon petition of a cigarette machine operator.
3    Cigarette machine operators shall send a copy of those
4returns, together with supporting schedule data, to the
5Attorney General's Office by the 15th day of each month for the
6period covering the preceding calendar month.
7    (b) Cigarette machine operators may take a credit against
8any tax due under Section 10 of this Act for taxes imposed and
9paid under the Tobacco Products Tax Act of 1995 on tobacco
10products sold to a customer and used in a rolling machine
11located at the cigarette machine operator's place of business.
12To be eligible for such credit, the tobacco product must meet
13the requirements of Section 25(a) of this Act. This subsection
14(c) is exempt from the provisions of Section 155 of this Act.
 
15    Section 45. Examination and correction of returns.
16    (a) As soon as practicable after any return is filed, the
17Department shall examine that return and shall correct the
18return according to its best judgment and information, which
19return so corrected by the Department shall be prima facie
20correct and shall be prima facie evidence of the correctness of
21the amount of tax due, as shown on the corrected return.
22Instead of requiring the cigarette machine operator to file an
23amended return, the Department may simply notify the cigarette
24machine operator of the correction or corrections it has made.
25Proof of the correction by the Department may be made at any

 

 

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1hearing before the Department or in any legal proceeding by a
2reproduced copy of the Department's record relating thereto in
3the name of the Department under the certificate of the
4Director of Revenue. Such reproduced copy shall, without
5further proof, be admitted into evidence before the Department
6or in any legal proceeding and shall be prima facie proof of
7the correctness of the amount of tax due, as shown on the
8reproduced copy. If the Department finds that any amount of tax
9is due from the cigarette machine operator, the Department
10shall issue the cigarette machine operator a notice of tax
11liability for the amount of tax claimed by the Department to be
12due, together with a penalty in an amount determined in
13accordance with Sections 3-3, 3-5 and 3-6 of the Uniform
14Penalty and Interest Act. If, in administering the provisions
15of this Act, comparison of a return or returns of a cigarette
16machine operator with the books, records, and inventories of
17such cigarette machine operator discloses a deficiency that
18cannot be allocated by the Department to a particular month or
19months, the Department shall issue the cigarette machine
20operator a notice of tax liability for the amount of tax
21claimed by the Department to be due for a given period, but
22without any obligation upon the Department to allocate that
23deficiency to any particular month or months, together with a
24penalty in an amount determined in accordance with Sections
253-3, 3-5, and 3-6 of the Uniform Penalty and Interest Act,
26under which circumstances the aforesaid notice of tax liability

 

 

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1shall be prima facie correct and shall be prima facie evidence
2of the correctness of the amount of tax due, as shown therein;
3and proof of such correctness may be made in accordance with,
4and the admissibility of a reproduced copy of such notice of
5tax liability shall be governed by, all the provisions of this
6Act applicable to corrected returns. If any cigarette machine
7operator filing any return dies or becomes a person under legal
8disability at any time before the Department issues its notice
9of tax liability, such notice shall be issued to the
10administrator, executor, or other legal representative of the
11cigarette machine operator.
12    (b) If, within 60 days after such notice of tax liability,
13the cigarette machine operator or his or her legal
14representative files a written protest to such notice of tax
15liability and requests a hearing thereon, the Department shall
16give notice to such cigarette machine operator or legal
17representative of the time and place fixed for such hearing,
18and shall hold a hearing in conformity with the provisions of
19this Act, and pursuant thereto shall issue a final assessment
20to such cigarette machine operator or legal representative for
21the amount found to be due as a result of such hearing. If a
22written protest to the notice of tax liability and a request
23for a hearing thereon is not filed within 60 days after such
24notice of tax liability, such notice of tax liability shall
25become final without the necessity of a final assessment being
26issued and shall be deemed to be a final assessment.

 

 

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1    (c) In case of failure to pay the tax, or any portion
2thereof, or any penalty provided for in this Act, when due, the
3Department may bring suit to recover the amount of such tax, or
4portion thereof, or penalty; or, if the taxpayer dies or
5becomes incompetent, by filing claim therefore against his or
6her estate; provided that no such action with respect to any
7tax, or portion thereof, or penalty, shall be instituted more
8than 2 years after the cause of action accrues, except with the
9consent of the person from whom such tax or penalty is due.
10    After the expiration of the period within which the person
11assessed may file an action for judicial review under the
12Administrative Review Law without such an action being filed, a
13certified copy of the final assessment or revised final
14assessment of the Department may be filed with the circuit
15court of the county in which the taxpayer has his or her
16principal place of business, or of Sangamon County in those
17cases in which the taxpayer does not have his or her principal
18place of business in this State. The certified copy of the
19final assessment or revised final assessment shall be
20accompanied by a certification which recites facts that are
21sufficient to show that the Department complied with the
22jurisdictional requirements of the law in arriving at its final
23assessment or its revised final assessment and that the
24taxpayer had his or her opportunity for an administrative
25hearing and for judicial review, whether he or she availed
26himself or herself of either or both of these opportunities or

 

 

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1not. If the court is satisfied that the Department complied
2with the jurisdictional requirements of the law in arriving at
3its final assessment or its revised final assessment and that
4the taxpayer had his or her opportunity for an administrative
5hearing and for judicial review, whether he or she availed
6himself or herself of either or both of these opportunities or
7not, the court shall enter judgment in favor of the Department
8and against the taxpayer for the amount shown to be due by the
9final assessment or the revised final assessment, and such
10judgment shall be filed of record in the court. Such judgment
11shall bear the rate of interest set in the Uniform Penalty and
12Interest Act, but otherwise shall have the same effect as other
13judgments. The judgment may be enforced, and all laws
14applicable to sales for the enforcement of a judgment shall be
15applicable to sales made under such judgments. The Department
16shall file the certified copy of its assessment, as herein
17provided, with the circuit court within 2 years after such
18assessment becomes final except when the taxpayer consents in
19writing to an extension of such filing period.
20    If, when the cause of action for a proceeding in court
21accrues against a person, he or she is out of the State, the
22action may be commenced within the times herein limited, after
23his or her coming into or returning to the State; and if, after
24the cause of action accrues, he or she departs from and remains
25out of the State, the time of his or her absence is no part of
26the time limited for the commencement of the action; but the

 

 

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1foregoing provisions concerning absence from the State shall
2not apply to any case in which, at the time the cause of action
3accrues, the party against whom the cause of action accrues is
4not a resident of this State. The time within which a court
5action is to be commenced by the Department hereunder shall not
6run while the taxpayer is a debtor in any proceeding under the
7federal Bankruptcy Code nor thereafter until 90 days after the
8Department is notified by such debtor of being discharged in
9bankruptcy.
10    No claim shall be filed against the estate of any deceased
11person or a person under legal disability for any tax or
12penalty or part of either except in the manner prescribed and
13within the time limited by the Probate Act of 1975, as amended.
14    The remedies provided for herein shall not be exclusive,
15but all remedies available to creditors for the collection of
16debts shall be available for the collection of any tax or
17penalty due hereunder.
18    The collection of tax or penalty by any means provided for
19herein shall not be a bar to any prosecution under this Act.
20    The certificate of the Director of the Department to the
21effect that a tax or amount required to be paid by this Act has
22not been paid, that a return has not been filed, or that
23information has not been supplied pursuant to the provisions of
24this Act, shall be prima facie evidence thereof.
25    All of the provisions of Sections 5a, 5b, 5c, 5d, 5e, 5f,
265g, 5i and 5j of the Retailers' Occupation Tax Act, which are

 

 

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1not inconsistent with this Act, shall apply, as far as
2practicable, to the subject matter of this Act to the same
3extent as if such provisions were included herein. References
4in such incorporated Sections of the Retailers' Occupation Tax
5Act to retailers, to sellers, or to persons engaged in the
6business of selling tangible personal property shall mean
7cigarette machine operator when used in this Act.
 
8    Section 50. Failure to file return or pay tax; penalty;
9protest.
10    In case any person who is required to file a return under
11this Act fails to file a return, or files a return and fails to
12remit the correct amount of tax, the Department shall determine
13the amount of tax due from him according to its best judgment
14and information, which amount so fixed by the Department shall
15be prima facie correct and shall be prima facie evidence of the
16correctness of the amount of tax due, as shown in such
17determination. Proof of such determination by the Department
18may be made at any hearing before the Department or in any
19legal proceeding by a reproduced copy of the Department's
20record relating thereto in the name of the Department under the
21certificate of the Director of Revenue. Such reproduced copy
22shall, without further proof, be admitted into evidence before
23the Department or in any legal proceeding and shall be prima
24facie proof of the correctness of the amount of tax due, as
25shown therein. The Department shall issue such person a notice

 

 

09700HB5440sam001- 24 -LRB097 17684 HLH 69622 a

1of tax liability for the amount of tax claimed by the
2Department to be due, together with a penalty in an amount
3determined in accordance with Sections 3-3, 3-5 and 3-6 of the
4Uniform Penalty and Interest Act. If such person or the legal
5representative of such person, within 60 days after such
6notice, files a written protest to such notice of tax liability
7and requests a hearing thereon, the Department shall give
8notice to such person or the legal representative of such
9person of the time and place fixed for such hearing and shall
10hold a hearing in conformity with the provisions of this Act,
11and pursuant thereto shall issue a final assessment to such
12person or to the legal representative of such person for the
13amount found to be due as a result of such hearing. If a
14written protest to the notice of tax liability and a request
15for a hearing thereon is not filed within 60 days after such
16notice of tax liability, such notice of tax liability shall
17become final without the necessity of a final assessment being
18issued and shall be deemed to be a final assessment.
 
19    Section 55. Claims; credit memorandum or refunds. If it
20appears, after claim is filed with the Department, that an
21amount of tax or penalty has been paid which was not due under
22this Act, whether as the result of a mistake of fact or an
23error of law, except as hereinafter provided, then the
24Department shall issue a credit memorandum or refund to the
25person who made the erroneous payment or, if that person has

 

 

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1died or become a person under legal disability, to his or her
2legal representative.
3    If it is determined that the Department should issue a
4credit or refund under this Act, the Department may first apply
5the amount thereof against any amount of tax or penalty due
6under this Act, the Cigarette Tax Act, the Cigarette Use Tax
7Act, or the Tobacco Products Act of 1995 from the person
8entitled to that credit or refund. For this purpose, if
9proceedings are pending to determine whether or not any tax or
10penalty is due under this Act or under the Cigarette Tax Act,
11Cigarette Use Tax Act, or the Tobacco Products Act of 1995 from
12the person, the Department may withhold issuance of the credit
13or refund pending the final disposition of such proceedings and
14may apply such credit or refund against any amount found to be
15due to the Department under this Act, the Cigarette Tax Act,
16the Cigarette Use Tax Act, or the Tobacco Products Act of 1995
17as a result of such proceedings. The balance, if any, of the
18credit or refund shall be issued to the person entitled
19thereto.
20    If no tax or penalty is due and no proceeding is pending to
21determine whether such taxpayer is indebted to the Department
22for the payment of a tax or penalty, the credit memorandum or
23refund shall be issued to the claimant; or (in the case of a
24credit memorandum) the credit memorandum may be assigned and
25set over by the lawful holder thereof, subject to reasonable
26rules of the Department, to any other person who is subject to

 

 

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1this Act, the Cigarette Tax Act, the Cigarette Use Tax Act, or
2the Tobacco Products Act of 1995, and the amount thereof shall
3be applied by the Department against any tax or penalty due or
4to become due under this Act, the Cigarette Tax Act, the
5Cigarette Use Tax Act, or the Tobacco Products Act of 1995 from
6such assignee.
7    As to any claim filed hereunder with the Department on and
8after each January 1 and July 1, no amount of tax or penalty
9erroneously paid (either in total or partial liquidation of a
10tax or penalty under this Act) more than 3 years prior to such
11January 1 and July 1, respectively, shall be credited or
12refunded, except that, if both the Department and the taxpayer
13have agreed to an extension of time to issue a notice of tax
14liability under this Act, the claim may be filed at any time
15prior to the expiration of the period agreed upon.
16    Any credit or refund that is allowed under this Act shall
17bear interest at the rate and in the manner set forth in the
18Uniform Penalty and Interest Act.
19    In case the Department determines that the claimant is
20entitled to a refund, such refund shall be made only from
21appropriations available for that purpose. If it appears
22unlikely that the amount appropriated would permit everyone
23having a claim allowed during the period covered by such
24appropriation to elect to receive a cash refund, the
25Department, by rule or regulation, shall provide for the
26payment of refunds in hardship cases and shall define what

 

 

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1types of cases qualify as hardship cases.
2    The provisions of Sections 6a, 6b, and 6c of the Retailers'
3Occupation Tax Act which are not inconsistent with this Act
4shall apply, as far as practicable, to the subject matter of
5this Act to the same extent as if such provisions were included
6herein.
 
7    Section 60. Investigations and hearings. The Department,
8or any officer or employee designated in writing by the
9Director thereof, for the purpose of administering and
10enforcing the provisions of this Act, may hold investigations
11and hearings concerning any matters covered by this Act, and
12may examine books, papers, records, or memoranda bearing upon
13the sale or other disposition of cigarettes or tobacco products
14by a cigarette machine operator, and may issue subpoenas
15requiring the attendance of a cigarette machine operator, or
16any officer or employee of a cigarette machine operator, or any
17person having knowledge of the facts, and may take testimony
18and require proof, and may issue subpoenas duces tecum to
19compel the production of relevant books, papers, records, and
20memoranda, for the information of the Department.
21    In the conduct of any investigation or hearing provided for
22by this Act, neither the Department, nor any officer or
23employee thereof, shall be bound by the technical rules of
24evidence, and no informality in the proceedings nor in the
25manner of taking testimony shall invalidate any rule, order,

 

 

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1decision, or regulation made, approved, or confirmed by the
2Department.
3    The Director of Revenue, or any duly authorized officer or
4employee of the Department, shall have the power to administer
5oaths to such persons required by this Act to give testimony
6before the Department.
7     The books, papers, records, and memoranda of the
8Department, or parts thereof, may be proved in any hearing,
9investigation or legal proceeding by a reproduced copy thereof
10under the certificate of the Director of Revenue. Such
11reproduced copy shall, without further proof, be admitted into
12evidence before the Department or in any legal proceeding.
 
13    Section 65. Testimony and production of documents;
14immunity. No person shall be excused from testifying or from
15producing any books, papers, records, or memoranda in any
16investigation or upon any hearing, when ordered to do so by the
17Department or any officer or employee thereof, upon the ground
18that the testimony or evidence, documentary or otherwise, may
19tend to incriminate him or subject him to a criminal penalty,
20but no person shall be prosecuted or subjected to any criminal
21penalty for or on account of the subject matter of his or her
22testimony or the evidence produced before the Department or an
23officer or employee of the Department; provided that such
24immunity shall extend only to a natural person who, in
25obedience to a subpoena, gives testimony under oath or produces

 

 

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1evidence under oath. No person so testifying shall be exempt
2from prosecution and punishment for perjury committed in so
3testifying.
 
4    Section 70. Confidentiality; official purposes. All
5information received by the Department from returns or reports
6filed under this Act, or from any investigation conducted under
7this Act, shall be confidential, except for official purposes,
8and any person who divulges any such information in any manner,
9except in accordance with a proper judicial order or as
10otherwise provided by law, shall be guilty of a Class A
11misdemeanor.
12    Nothing in this Act prevents the Director of Revenue from
13publishing or making available to the public the names and
14addresses of persons filing returns or reports under this Act,
15or reasonable statistics concerning the operation of the tax by
16grouping the contents of returns or reports so that the
17information in any individual return or report is not
18disclosed.
19    Nothing in this Act prevents the Director of Revenue from
20divulging to the United States government or the government of
21any other state, or any officer or agency thereof, for
22exclusively official purposes, information received by the
23Department in administering this Act, provided that such other
24governmental agency agrees to divulge requested tax
25information to the Department.

 

 

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1    The furnishing upon request of the Auditor General, or his
2authorized agents, for official use, of returns or reports
3filed and information related thereto under this Act is deemed
4to be an official purpose within the meaning of this Section.
5    The furnishing of financial information to a home rule unit
6with a population in excess of 2,000,000 that has imposed a tax
7similar to that imposed by this Act under its home rule powers,
8upon request of the Chief Executive of the home rule unit, is
9an official purpose within the meaning of this Section,
10provided the home rule unit agrees in writing to the
11requirements of this Section. Information so provided is
12subject to all confidentiality provisions of this Section. The
13written agreement shall provide for reciprocity, limitations
14on access, disclosure, and procedures for requesting
15information.
16    The Director may make available to any State agency,
17including the Illinois Supreme Court, that licenses persons to
18engage in any occupation, information that a person licensed by
19such agency has failed to file returns under this Act or pay
20the tax, penalty, and interest shown therein, or has failed to
21pay any final assessment of tax, penalty, or interest due under
22this Act or has failed to file reports under this Act. An
23assessment is final when all proceedings in court for review of
24such assessment have terminated or the time for the taking
25thereof has expired without such proceedings being instituted.
26    The Director shall make available for public inspection in

 

 

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1the Department's principal office and for publication, at cost,
2administrative decisions issued on or after January 1, 2013.
3These decisions are to be made available in a manner so that
4the following taxpayer or licensee information is not
5disclosed:
6        (1) The names, addresses, and identification numbers
7    of the taxpayer or licensee, related entities, and
8    employees.
9        (2) At the sole discretion of the Director, trade
10    secrets or other confidential information identified as
11    such by the taxpayer or licensee no later than 30 days
12    after receipt of an administrative decision, by such means
13    as the Department shall provide by rule.
14    The Director shall determine the appropriate extent of the
15deletions allowed in paragraph (2). In the event the taxpayer
16or licensee does not submit deletions, the Director shall make
17only the deletions specified in paragraph (1).
18    The Director shall make available for public inspection and
19publication each administrative decision within 180 days after
20the issuance of the administrative decision. The term
21"administrative decision" has the same meaning as defined in
22Section 3-101 of Article III of the Code of Civil Procedure.
23Costs collected under this Section shall be paid into the Tax
24Compliance and Administration Fund.
25    Nothing contained in this Act shall prevent the Director
26from divulging information to any person pursuant to a request

 

 

09700HB5440sam001- 32 -LRB097 17684 HLH 69622 a

1or authorization made by the taxpayer or licensee or by an
2authorized representative of the taxpayer or licensee.
 
3    Section 75. Records. Every cigarette machine operator who
4is required to procure a license under this Act shall keep
5within Illinois, at his licensed address: complete and accurate
6records of the quantity of such cigarettes made or fabricated;
7meter readings for each cigarette machine; the quantity of such
8cigarettes sold or otherwise disposed of; the brand family and
9manufacturer and quantity of tobacco products purchased and the
10brand family and manufacturer and quantity of tobacco products
11used to make or fabricate cigarettes by use of a cigarette
12machine; the name, address, and license number of each
13distributor from whom the cigarette machine operator purchases
14tobacco products; the type and quantity of cigarette tubes
15purchased for use in a cigarette machine; the type and quantity
16of cigarette tubes used in a cigarette machine; and such other
17information as the Department may require, and shall preserve
18and keep within Illinois at his licensed address all invoices,
19bills of lading, sales records, copies of bills of sale,
20inventory at the close of each period for which a return is
21required of all cigarettes, tobacco products and cigarette
22tubes on hand, and other pertinent papers and documents
23relating to the manufacture, purchase, sale, or disposition of
24cigarettes and tobacco products. All books and records and
25other papers and documents that are required by this Act to be

 

 

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1kept shall be kept in the English language, and shall, at all
2times during the usual business hours of the day, be subject to
3inspection by the Department or its duly authorized agents and
4employees. The Department may adopt rules that establish
5requirements, including record forms and formats, for records
6required to be kept and maintained by taxpayers. For purposes
7of this Section, "records" means all data maintained by the
8taxpayer, including data on paper, microfilm, microfiche or any
9type of machine-sensible data compilation. Those books,
10records, papers and documents shall be preserved for a period
11of at least 3 years after the date of the documents, or the
12date of the entries appearing in the records, unless the
13Department, in writing, authorizes their destruction or
14disposal at an earlier date. At all times during the usual
15business hours of the day any duly authorized agent or employee
16of the Department may enter any place of business of the
17cigarette machine operator, without a search warrant, and
18inspect the premises and the stock or packages of cigarettes,
19tobacco products, cigarette tubes, and the cigarette machines
20therein contained, to determine whether any of the provisions
21of this Act are being violated. If such agent or employee is
22denied free access or is hindered or interfered with in making
23such examination as herein provided, the license of the
24cigarette machine operator at such premises shall be subject to
25revocation by the Department.
 

 

 

09700HB5440sam001- 34 -LRB097 17684 HLH 69622 a

1    Section 80. Subpoenas and witnesses; depositions. The
2Department, or any officer or employee of the Department
3designated in writing by the Director, shall, at its, his, or
4her own instance, or on the written request of any cigarette
5machine operator or other interested party to the proceeding,
6issue subpoenas requiring the attendance of and the giving of
7testimony by witnesses, and subpoenas duces tecum requiring the
8production of books, papers, records or memoranda. All
9subpoenas and subpoenas duces tecum issued under the terms of
10this Act may be served by any person of full age. The fees of
11witnesses for attendance and travel shall be the same as the
12fees of witnesses before the circuit court of this State; such
13fees to be paid when the witness is excused from further
14attendance. When the witness is subpoenaed at the instance of
15the Department or any officer or employee thereof, such fees
16shall be paid in the same manner as other expenses of the
17Department, and when the witness is subpoenaed at the instance
18of any other party to any such proceeding, the cost of service
19of the subpoena or subpoena duces tecum and the fee of the
20witness shall be borne by the party at whose instance the
21witness is summoned. In such case, the Department, in its
22discretion, may require a deposit to cover the cost of such
23service and witness fees. A subpoena or subpoena duces tecum so
24issued shall be served in the same manner as a subpoena or
25subpoena duces tecum issued out of a court.
26    Any circuit court of this State, upon the application of

 

 

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1the Department or any officer or employee thereof, or upon the
2application of any other party to the proceeding, may, in its
3discretion, compel the attendance of witnesses, the production
4of books, papers, records or memoranda and the giving of
5testimony before the Department or any officer or employee
6thereof conducting an investigation or holding a hearing
7authorized by this Act, by an attachment for contempt, or
8otherwise, in the same manner as production of evidence may be
9compelled before the court.
10    The Department or any officer or employee thereof, or any
11other party in an investigation or hearing before the
12Department, may cause the depositions of witnesses within the
13State to be taken in the manner prescribed by law for like
14depositions, or depositions for discovery in civil actions in
15courts of this State, and to that end compel the attendance of
16witnesses and the production of books, papers, records or
17memoranda, in the same manner provided herein.
 
18    Section 85. Regulations and rules; notice; hearings. The
19Department may adopt and enforce such reasonable rules and
20regulations relating to the administration and enforcement of
21this Act as may be deemed expedient.
22    Whenever notice is required by this Act, such notice may be
23given by United States certified or registered mail, addressed
24to the person concerned at his last known address, and proof of
25such mailing shall be sufficient for the purposes of this Act.

 

 

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1Notice of any hearing provided for by this Act shall be so
2given not less than 7 days prior to the day fixed for the
3hearing.
4    Hearings provided for in this Act shall be held:
5        (1) in Cook County, if the taxpayer's or licensee's
6    principal place of business is in that county;
7        (2) at the Department's office nearest the taxpayer's
8    or licensee's principal place of business, if the
9    taxpayer's or licensee's principal place of business is in
10    Illinois but outside Cook County; or
11        (3) in Sangamon County, if the taxpayer's or licensee's
12    principal place of business is outside Illinois.
13    The circuit court of the county wherein the hearing is held
14has power to review all final administrative decisions of the
15Department in administering this Act. The provisions of the
16Administrative Review Law, and all amendments and
17modifications thereof, and the rules adopted pursuant thereto,
18shall apply to and govern all proceedings for the judicial
19review of final administrative decisions of the Department
20under this Act. The term "administrative decision" is defined
21as in Section 3-101 of the Code of Civil Procedure.
22    Service upon the Director of Revenue or Assistant Director
23of Revenue of summons issued in any action to review a final
24administrative decision shall be service upon the Department.
25The Department shall certify the record of its proceedings if
26the cigarette machine operator pays to it the sum of 75 per

 

 

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1page of testimony taken before the Department and 25 per page
2of all other matters contained in such record, except that
3these charges may be waived where the Department is satisfied
4that the aggrieved party is an indigent person who cannot
5afford to pay such charges. Before the delivery of such record
6to the person applying for it, payment of these charges must be
7made, and if the record is not paid for within 30 days after
8notice that such record is available, the complaint may be
9dismissed by the court upon motion of the Department.
10    No stay order shall be entered by the circuit court unless
11the cigarette machine operator files with the court a bond, in
12an amount fixed and approved by the court, to indemnify the
13State against all loss and injury which may be sustained by it
14on account of the review proceedings and to secure all costs
15which may be occasioned by such proceedings.
16    Whenever any proceeding provided by this Act is begun
17before the Department, either by the Department or by a person
18subject to this Act, and such person thereafter dies or becomes
19a person under legal disability before such proceeding is
20concluded, the legal representative of the deceased person or
21of the person under legal disability shall notify the
22Department of such death or legal disability. Such legal
23representative, as such, shall then be substituted by the
24Department for such person. If the legal representative fails
25to notify the Department of his or her appointment as such
26legal representative, the Department may, upon its own motion,

 

 

09700HB5440sam001- 38 -LRB097 17684 HLH 69622 a

1substitute such legal representative in the proceeding pending
2before the Department for the person who died or became a
3person under legal disability.
 
4    Section 90. The Illinois Administrative Procedure Act. The
5Illinois Administrative Procedure Act is hereby expressly
6adopted and shall apply to all administrative rules and
7procedures of the Department of Revenue under this Act, except
8that: (1) paragraph (b) of Section 5-10 of the Illinois
9Administrative Procedure Act does not apply to final orders,
10decisions and opinions of the Department; (2) subparagraph
11(a)(ii) of Section 5-10 of the Illinois Administrative
12Procedure Act does not apply to forms established by the
13Department for use under this Act; and (3) the provisions of
14Section 10-45 of the Illinois Administrative Procedure Act
15regarding proposals for decision are excluded and not
16applicable to the Department under this Act.
 
17    Section 95. Legal proceedings. All legal proceedings under
18this Act, whether civil or criminal, shall be instituted and
19prosecuted by the Attorney General or by the State's Attorney
20for the county in which an offense under this Act is committed,
21and all civil actions may be brought in the name of the
22Department of Revenue.
 
23    Section 100. Arrest and seizure. Any duly authorized

 

 

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1employee of the Department may: arrest without warrant any
2person committing in his presence a violation of any of the
3provisions of this Act; may without a search warrant inspect
4all cigarettes and cigarette machines located in any place of
5business; and may seize any contraband cigarettes and any
6cigarette machines in which such contraband cigarettes may be
7found or may be made, and such packages or cigarette machines
8so seized shall be subject to confiscation and forfeiture as
9provided in Section 105 of this Act.
 
10    Section 105. Hearings regarding seized cigarettes and
11cigarette machines. After seizing any cigarettes or cigarette
12machines, as provided in Section 100 of this Act, the
13Department shall hold a hearing and shall determine whether
14such cigarettes, at the time of their seizure by the
15Department, were contraband cigarettes, or whether such
16cigarette machines, at the time of their seizure by the
17Department, contained or made contraband cigarettes. The
18Department shall give not less than 7 days' notice of the time
19and place of such hearing to the owner of such property, if he
20is known, and also to the person in whose possession the
21property so taken was found, if such person is known and if
22such person in possession is not the owner of said property. In
23case neither the owner nor the person in possession of such
24property is known, the Department shall cause publication of
25the time and place of such hearing to be made at least once in

 

 

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1each week for 3 weeks successively in a newspaper of general
2circulation in the county where such hearing is to be held.
3    If, as the result of such hearing, the Department
4determines that the cigarettes seized were, at the time of
5seizure, contraband cigarettes, or that any cigarette machine
6at the time of its seizure contained or made contraband
7cigarettes, the Department shall enter an order declaring such
8cigarettes or such cigarette machine confiscated and forfeited
9to the State, and to be held by the Department for disposal as
10provided in this Section. The Department shall give notice of
11such order to the owner of such property if he is known, and
12also to the person in whose possession the property so taken
13was found, if such person is known, and if such person in
14possession is not the owner of the property. In case neither
15the owner nor the person in possession of such property is
16known, the Department shall cause publication of such order to
17be made at least once in each week for 3 weeks successively in
18a newspaper of general circulation in the county where such
19hearing was held.
20    When any cigarettes or any cigarette machine shall have
21been declared forfeited to the State by the Department, as
22provided hereunder, and when all proceedings for the judicial
23review of the Department's decision have terminated, the
24Department shall, to the extent that its decision is sustained
25on review, destroy or maintain and use such property in an
26undercover capacity.
 

 

 

09700HB5440sam001- 41 -LRB097 17684 HLH 69622 a

1    Section 110. Filing of a complaint.
2    Whenever any peace officer of the State or any duly
3authorized officer or employee of the Department shall have
4reason to believe that any violation of this Act has occurred
5and that the person so violating the Act has in that person's
6possession contraband cigarettes, or any cigarette machine
7containing or making contraband cigarettes, he or she may file
8or cause to be filed his complaint in writing, verified by
9affidavit, with any court within whose jurisdiction the
10premises to be searched are situated, stating the facts upon
11which such belief is founded, the premises to be searched, and
12the property to be seized, and procure a search warrant and
13execute the same. Upon the execution of such search warrant,
14the peace officer, or officer or employee of the Department,
15executing such search warrant shall make due return thereof to
16the court issuing the same, together with an inventory of the
17property taken thereunder. The court shall thereupon issue
18process against the owner of such property if he is known;
19otherwise, such process shall be issued against the person in
20whose possession the property so taken is found, if such person
21is known. In case of inability to serve such process upon the
22owner or the person in possession of the property at the time
23of its seizure, notice of the proceedings before the court
24shall be given as required by the statutes of the State
25governing cases of attachment. Upon the return of the process

 

 

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1duly served or upon the posting or publishing of notice made,
2as herein provided, the court or jury, if a jury shall be
3demanded, shall proceed to determine whether or not such
4property so seized was held or possessed in violation of this
5Act, or whether, if a cigarette machine has been so seized, it
6contained or was making at the time of its seizure contraband
7cigarettes. In case of a finding that any cigarette machine so
8seized contained or was making at the time of its seizure
9contraband cigarettes, judgment shall be entered confiscating
10and forfeiting the property to the State and ordering its
11delivery to the Department, and, in addition thereto, the court
12shall have power to tax and assess the costs of the
13proceedings.
14    When any cigarettes or any cigarette machine is declared
15forfeited to the State by any court, and when such confiscated
16and forfeited property is delivered to the Department as
17provided in this Act, the Department shall destroy or maintain
18and use such property in an undercover capacity.
 
19    Section 115. False or fraudulent reports. Any person
20required by this Act to make, file, render, sign, or verify any
21report or return, or any officer, agent, or employee of that
22person, who makes any false or fraudulent report or return or
23files any false or fraudulent report or return, or who fails to
24make such report or return or file such report or return when
25due, is guilty of a Class 4 felony.
 

 

 

09700HB5440sam001- 43 -LRB097 17684 HLH 69622 a

1    Section 120. Possession of more than 200 contraband
2cigarettes; penalty. Any person possessing more than 200
3contraband cigarettes is liable to pay, to the Department, for
4deposit into the Tax Compliance and Administration Fund, a
5penalty of $1 for each such cigarette in excess of 200, unless
6reasonable cause can be established by the person upon whom the
7penalty is imposed. This penalty is in addition to the taxes
8imposed by this Act. Reasonable cause shall be determined in
9each situation in accordance with rules adopted by the
10Department. The provisions of the Uniform Penalty and Interest
11Act do not apply to this Section.
 
12    Section 125. Possession of not less than 20 and not more
13than 200 contraband cigarettes; penalty. Any person possessing
14not less than 20 and not more than 200 contraband cigarettes is
15liable to pay to the Department, for deposit into the Tax
16Compliance and Administration Fund, a penalty of $0.50 for each
17such cigarette, unless reasonable cause can be established by
18the person upon whom the penalty is imposed. Reasonable cause
19shall be determined in each situation in accordance with rules
20adopted by the Department. The provisions of the Uniform
21Penalty and Interest Act do not apply to this Section.
 
22    Section 130. Punishment for sale or possession of
23contraband cigarettes.

 

 

09700HB5440sam001- 44 -LRB097 17684 HLH 69622 a

1    (a) Possession or sale of 200 or less contraband
2cigarettes. Any person who has in his or her possession or
3sells 200 or less contraband cigarettes is guilty of a Class A
4misdemeanor.
5    (b) Possession or sale of more than 200 and not more 1000
6contraband cigarettes. Any person who has in his or her
7possession or sells more than 200 and not more than 1000
8contraband cigarettes is guilty of a Class A misdemeanor for a
9first offense and a Class 4 felony for each subsequent offense.
10    (c) Possession or sale of more than 1000 contraband
11cigarettes. Any person who has in his or her possession or
12sells more than 1000 contraband cigarettes is guilty of a Class
134 felony.
 
14    Section 135. Unlawful operation of cigarette machines.
15Whoever operates a cigarette machine without a license is
16guilty of a Class 4 felony. Notwithstanding this Section, and
17any other provisions of this Act, an individual may own a
18cigarette machine for that individual's own use, and not for
19the purpose of resale of cigarettes.
 
20    Section 140. Failure to keep records; penalty. Any person
21required by this Act to keep records of any kind, who fails to
22keep the required records or falsifies those records, is guilty
23of a Class 4 felony.
 

 

 

09700HB5440sam001- 45 -LRB097 17684 HLH 69622 a

1    Section 145. Failure to preserve records; penalty. Any
2person who fails to safely preserve the records required by
3Section 75 of this Act for the period of 3 years, as required
4by that Section, in such manner as to insure permanency and
5accessibility for inspection by the Department, shall be guilty
6of a business offense and may be fined up to $5,000.
 
7    Section 150. Forfeit of bond. If a cigarette machine
8operator is convicted of the violation of any of the provisions
9of this Act, or if his or her license is revoked and no review
10is had of the order or revocation, or if on review thereof the
11decision is adverse to the cigarette machine operator, or if a
12cigarette machine operator fails to pay an assessment as to
13which no judicial review is sought and which has become final,
14or pursuant to which, upon review thereof, the circuit court
15has entered a judgment that is in favor of the Department and
16that has become final, the bond filed pursuant to this Act
17shall thereupon be forfeited, and the Department may institute
18a suit upon such bond in its own name for the entire amount of
19such bond and costs. Such suit upon the bond shall be in
20addition to any other remedy provided for herein.
 
21    Section 155. Sunset of exemptions, credits, and
22deductions. The application of every exemption, credit, and
23deduction against tax imposed by this Act that becomes law
24after the effective date of this Act shall be limited by a

 

 

09700HB5440sam001- 46 -LRB097 17684 HLH 69622 a

1reasonable and appropriate sunset date. A taxpayer is not
2entitled to take the exemption, credit, or deduction beginning
3on the sunset date and thereafter. If a reasonable and
4appropriate sunset date is not specified in the Public Act that
5creates the exemption, credit, or deduction, a taxpayer shall
6not be entitled to take the exemption, credit, or deduction
7beginning 5 years after the effective date of the Public Act
8creating the exemption, credit, or deduction and thereafter.
 
9    Section 160. Distribution of receipts by the Department.
10All moneys received by the Department under this Act shall be
11distributed as provided in subsection (a) of Section 2 of the
12Cigarette Tax Act.
 
13    Section 165. Exemption. Persons who are not operating
14cigarette machines as defined in this Act and are engaged in
15the business of renting, leasing or selling cigarette machines
16to persons are exempt from the provisions of this Act.
 
17    Section 170. Notice. Any person who distributes or offers
18for sale or rent a cigarette machine in this State shall
19provide notice to any potential purchaser, lessee, or lessor of
20that cigarette machine or any retail space containing a
21cigarette machine. The notice shall contain information about
22this Act, including: (i) licensure requirements for cigarette
23machine operators; (ii) tax collection and remittance duties of

 

 

09700HB5440sam001- 47 -LRB097 17684 HLH 69622 a

1cigarette machine operators; (iii) any product limitations
2imposed on cigarette machines by this Act; and (iv) packaging
3and labeling requirements.
 
4    Section 180. The Cigarette Tax Act is amended by changing
5Sections 1 and 2 as follows:
 
6    (35 ILCS 130/1)  (from Ch. 120, par. 453.1)
7    Sec. 1. For the purposes of this Act:
8    "Brand Style" means a variety of cigarettes distinguished
9by the tobacco used, tar and nicotine content, flavoring used,
10size of the cigarette, filtration on the cigarette or
11packaging.
12    "Cigarette", means any roll for smoking made wholly or in
13part of tobacco irrespective of size or shape and whether or
14not such tobacco is flavored, adulterated or mixed with any
15other ingredient, and the wrapper or cover of which is made of
16paper or any other substance or material except tobacco.
17    "Contraband cigarettes" means:
18        (a) cigarettes that do not bear a required tax stamp
19    under this Act;
20        (b) cigarettes for which any required federal taxes
21    have not been paid;
22        (c) cigarettes that bear a counterfeit tax stamp;
23        (d) cigarettes that are manufactured, fabricated,
24    assembled, processed, packaged, or labeled by any person

 

 

09700HB5440sam001- 48 -LRB097 17684 HLH 69622 a

1    other than (i) the owner of the trademark rights in the
2    cigarette brand or (ii) a person that is directly or
3    indirectly authorized by such owner;
4        (e) cigarettes imported into the United States, or
5    otherwise distributed, in violation of the federal
6    Imported Cigarette Compliance Act of 2000 (Title IV of
7    Public Law 106-476);
8        (f) cigarettes that have false manufacturing labels;
9        (g) cigarettes identified in Section 3-10(a)(1) of
10    this Act; or
11        (h) cigarettes that are improperly tax stamped,
12    including cigarettes that bear a tax stamp of another state
13    or taxing jurisdiction; or .
14        (i) cigarettes made or fabricated by a person holding a
15    cigarette machine operator license under Section 20 of the
16    Cigarette Machine Operators' Occupation Tax Act in the
17    possession of manufacturers, distributors, secondary
18    distributors, manufacturer representatives or other
19    retailers for the purpose of resale, regardless of whether
20    the tax has been paid on such cigarettes.
21    "Person" means any natural individual, firm, partnership,
22association, joint stock company, joint adventure, public or
23private corporation, however formed, limited liability
24company, or a receiver, executor, administrator, trustee,
25guardian or other representative appointed by order of any
26court.

 

 

09700HB5440sam001- 49 -LRB097 17684 HLH 69622 a

1    "Prior Continuous Compliance Taxpayer" means any person
2who is licensed under this Act and who, having been a licensee
3for a continuous period of 5 years, is determined by the
4Department not to have been either delinquent or deficient in
5the payment of tax liability during that period or otherwise in
6violation of this Act. Also, any taxpayer who has, as verified
7by the Department, continuously complied with the condition of
8his bond or other security under provisions of this Act for a
9period of 5 consecutive years shall be considered to be a
10"Prior continuous compliance taxpayer". In calculating the
11consecutive period of time described herein for qualification
12as a "prior continuous compliance taxpayer", a consecutive
13period of time of qualifying compliance immediately prior to
14the effective date of this amendatory Act of 1987 shall be
15credited to any licensee who became licensed on or before the
16effective date of this amendatory Act of 1987.
17    "Department" means the Department of Revenue.
18    "Sale" means any transfer, exchange or barter in any manner
19or by any means whatsoever for a consideration, and includes
20and means all sales made by any person.
21    "Original Package" means the individual packet, box or
22other container whatsoever used to contain and to convey
23cigarettes to the consumer.
24    "Distributor" means any and each of the following:
25        (1) Any person engaged in the business of selling
26    cigarettes in this State who brings or causes to be brought

 

 

09700HB5440sam001- 50 -LRB097 17684 HLH 69622 a

1    into this State from without this State any original
2    packages of cigarettes, on which original packages there is
3    no authorized evidence underneath a sealed transparent
4    wrapper showing that the tax liability imposed by this Act
5    has been paid or assumed by the out-of-State seller of such
6    cigarettes, for sale or other disposition in the course of
7    such business.
8        (2) Any person who makes, manufactures or fabricates
9    cigarettes in this State for sale in this State, except a
10    person who makes, manufactures or fabricates cigarettes as
11    a part of a correctional industries program for sale to
12    residents incarcerated in penal institutions or resident
13    patients of a State-operated mental health facility.
14        (3) Any person who makes, manufactures or fabricates
15    cigarettes outside this State, which cigarettes are placed
16    in original packages contained in sealed transparent
17    wrappers, for delivery or shipment into this State, and who
18    elects to qualify and is accepted by the Department as a
19    distributor under Section 4b of this Act.
20    "Place of business" shall mean and include any place where
21cigarettes are sold or where cigarettes are manufactured,
22stored or kept for the purpose of sale or consumption,
23including any vessel, vehicle, airplane, train or vending
24machine.
25    "Manufacturer representative" means a director, officer,
26or employee of a manufacturer who has obtained authority from

 

 

09700HB5440sam001- 51 -LRB097 17684 HLH 69622 a

1the Department under Section 4f to maintain representatives in
2Illinois that provide or sell original packages of cigarettes
3made, manufactured, or fabricated by the manufacturer to
4retailers in compliance with Section 4f of this Act to promote
5cigarettes made, manufactured, or fabricated by the
6manufacturer.
7    "Business" means any trade, occupation, activity or
8enterprise engaged in for the purpose of selling cigarettes in
9this State.
10    "Retailer" means any person who engages in the making of
11transfers of the ownership of, or title to, cigarettes to a
12purchaser for use or consumption and not for resale in any
13form, for a valuable consideration. "Retailer" does not include
14a person:
15        (1) who transfers to residents incarcerated in penal
16    institutions or resident patients of a State-operated
17    mental health facility ownership of cigarettes made,
18    manufactured, or fabricated as part of a correctional
19    industries program; or
20        (2) who transfers cigarettes to a not-for-profit
21    research institution that conducts tests concerning the
22    health effects of tobacco products and who does not offer
23    the cigarettes for resale.
24    "Retailer" shall be construed to include any person who
25engages in the making of transfers of the ownership of, or
26title to, cigarettes to a purchaser, for use or consumption by

 

 

09700HB5440sam001- 52 -LRB097 17684 HLH 69622 a

1any other person to whom such purchaser may transfer the
2cigarettes without a valuable consideration, except a person
3who transfers to residents incarcerated in penal institutions
4or resident patients of a State-operated mental health facility
5ownership of cigarettes made, manufactured or fabricated as
6part of a correctional industries program.
7    "Secondary distributor" means any person engaged in the
8business of selling cigarettes who purchases stamped original
9packages of cigarettes from a licensed distributor under this
10Act or the Cigarette Use Tax Act, sells 75% or more of those
11cigarettes to retailers for resale, and maintains an
12established business where a substantial stock of cigarettes is
13available to retailers for resale.
14    "Stamp" or "stamps" mean the indicia required to be affixed
15on a pack of cigarettes that evidence payment of the tax on
16cigarettes under Section 2 of this Act.
17    "Related party" means any person that is associated with
18any other person because he or she:
19        (a) is an officer or director of a business; or
20        (b) is legally recognized as a partner in business.
21(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
2297-587, eff. 8-26-11.)
 
23    (35 ILCS 130/2)  (from Ch. 120, par. 453.2)
24    Sec. 2. Tax imposed; rate; collection, payment, and
25distribution; discount.

 

 

09700HB5440sam001- 53 -LRB097 17684 HLH 69622 a

1    (a) A tax is imposed upon any person engaged in business as
2a retailer of cigarettes in this State at the rate of 5 1/2
3mills per cigarette sold, or otherwise disposed of in the
4course of such business in this State. In addition to any other
5tax imposed by this Act, a tax is imposed upon any person
6engaged in business as a retailer of cigarettes in this State
7at a rate of 1/2 mill per cigarette sold or otherwise disposed
8of in the course of such business in this State on and after
9January 1, 1947, and shall be paid into the Metropolitan Fair
10and Exposition Authority Reconstruction Fund or as otherwise
11provided in Section 29. On and after December 1, 1985, in
12addition to any other tax imposed by this Act, a tax is imposed
13upon any person engaged in business as a retailer of cigarettes
14in this State at a rate of 4 mills per cigarette sold or
15otherwise disposed of in the course of such business in this
16State. Of the additional tax imposed by this amendatory Act of
171985, $9,000,000 of the moneys received by the Department of
18Revenue pursuant to this Act shall be paid each month into the
19Common School Fund. On and after the effective date of this
20amendatory Act of 1989, in addition to any other tax imposed by
21this Act, a tax is imposed upon any person engaged in business
22as a retailer of cigarettes at the rate of 5 mills per
23cigarette sold or otherwise disposed of in the course of such
24business in this State. On and after the effective date of this
25amendatory Act of 1993, in addition to any other tax imposed by
26this Act, a tax is imposed upon any person engaged in business

 

 

09700HB5440sam001- 54 -LRB097 17684 HLH 69622 a

1as a retailer of cigarettes at the rate of 7 mills per
2cigarette sold or otherwise disposed of in the course of such
3business in this State. On and after December 15, 1997, in
4addition to any other tax imposed by this Act, a tax is imposed
5upon any person engaged in business as a retailer of cigarettes
6at the rate of 7 mills per cigarette sold or otherwise disposed
7of in the course of such business of this State. All of the
8moneys received by the Department of Revenue pursuant to this
9Act and the Cigarette Use Tax Act from the additional taxes
10imposed by this amendatory Act of 1997, shall be paid each
11month into the Common School Fund. On and after July 1, 2002,
12in addition to any other tax imposed by this Act, a tax is
13imposed upon any person engaged in business as a retailer of
14cigarettes at the rate of 20.0 mills per cigarette sold or
15otherwise disposed of in the course of such business in this
16State. The payment of such taxes shall be evidenced by a stamp
17affixed to each original package of cigarettes, or an
18authorized substitute for such stamp imprinted on each original
19package of such cigarettes underneath the sealed transparent
20outside wrapper of such original package, as hereinafter
21provided. However, such taxes are not imposed upon any activity
22in such business in interstate commerce or otherwise, which
23activity may not under the Constitution and statutes of the
24United States be made the subject of taxation by this State.
25    Beginning on the effective date of this amendatory Act of
26the 92nd General Assembly and through June 30, 2006, all of the

 

 

09700HB5440sam001- 55 -LRB097 17684 HLH 69622 a

1moneys received by the Department of Revenue pursuant to this
2Act and the Cigarette Use Tax Act, other than the moneys that
3are dedicated to the Common School Fund, shall be distributed
4each month as follows: first, there shall be paid into the
5General Revenue Fund an amount which, when added to the amount
6paid into the Common School Fund for that month, equals
7$33,300,000, except that in the month of August of 2004, this
8amount shall equal $83,300,000; then, from the moneys
9remaining, if any amounts required to be paid into the General
10Revenue Fund in previous months remain unpaid, those amounts
11shall be paid into the General Revenue Fund; then, beginning on
12April 1, 2003, from the moneys remaining, $5,000,000 per month
13shall be paid into the School Infrastructure Fund; then, if any
14amounts required to be paid into the School Infrastructure Fund
15in previous months remain unpaid, those amounts shall be paid
16into the School Infrastructure Fund; then the moneys remaining,
17if any, shall be paid into the Long-Term Care Provider Fund. To
18the extent that more than $25,000,000 has been paid into the
19General Revenue Fund and Common School Fund per month for the
20period of July 1, 1993 through the effective date of this
21amendatory Act of 1994 from combined receipts of the Cigarette
22Tax Act and the Cigarette Use Tax Act, notwithstanding the
23distribution provided in this Section, the Department of
24Revenue is hereby directed to adjust the distribution provided
25in this Section to increase the next monthly payments to the
26Long Term Care Provider Fund by the amount paid to the General

 

 

09700HB5440sam001- 56 -LRB097 17684 HLH 69622 a

1Revenue Fund and Common School Fund in excess of $25,000,000
2per month and to decrease the next monthly payments to the
3General Revenue Fund and Common School Fund by that same excess
4amount.
5    Beginning on July 1, 2006, all of the moneys received by
6the Department of Revenue pursuant to this Act, and the
7Cigarette Use Tax Act, and the Cigarette Machine Operators'
8Occupation Tax Act, other than the moneys that are dedicated to
9the Common School Fund, shall be distributed each month as
10follows: first, there shall be paid into the General Revenue
11Fund an amount that, when added to the amount paid into the
12Common School Fund for that month, equals $29,200,000; then,
13from the moneys remaining, if any amounts required to be paid
14into the General Revenue Fund in previous months remain unpaid,
15those amounts shall be paid into the General Revenue Fund; then
16from the moneys remaining, $5,000,000 per month shall be paid
17into the School Infrastructure Fund; then, if any amounts
18required to be paid into the School Infrastructure Fund in
19previous months remain unpaid, those amounts shall be paid into
20the School Infrastructure Fund; then the moneys remaining, if
21any, shall be paid into the Long-Term Care Provider Fund.
22    When any tax imposed herein terminates or has terminated,
23distributors who have bought stamps while such tax was in
24effect and who therefore paid such tax, but who can show, to
25the Department's satisfaction, that they sold the cigarettes to
26which they affixed such stamps after such tax had terminated

 

 

09700HB5440sam001- 57 -LRB097 17684 HLH 69622 a

1and did not recover the tax or its equivalent from purchasers,
2shall be allowed by the Department to take credit for such
3absorbed tax against subsequent tax stamp purchases from the
4Department by such distributor.
5    The impact of the tax levied by this Act is imposed upon
6the retailer and shall be prepaid or pre-collected by the
7distributor for the purpose of convenience and facility only,
8and the amount of the tax shall be added to the price of the
9cigarettes sold by such distributor. Collection of the tax
10shall be evidenced by a stamp or stamps affixed to each
11original package of cigarettes, as hereinafter provided.
12    Each distributor shall collect the tax from the retailer at
13or before the time of the sale, shall affix the stamps as
14hereinafter required, and shall remit the tax collected from
15retailers to the Department, as hereinafter provided. Any
16distributor who fails to properly collect and pay the tax
17imposed by this Act shall be liable for the tax. Any
18distributor having cigarettes to which stamps have been affixed
19in his possession for sale on the effective date of this
20amendatory Act of 1989 shall not be required to pay the
21additional tax imposed by this amendatory Act of 1989 on such
22stamped cigarettes. Any distributor having cigarettes to which
23stamps have been affixed in his or her possession for sale at
2412:01 a.m. on the effective date of this amendatory Act of
251993, is required to pay the additional tax imposed by this
26amendatory Act of 1993 on such stamped cigarettes. This

 

 

09700HB5440sam001- 58 -LRB097 17684 HLH 69622 a

1payment, less the discount provided in subsection (b), shall be
2due when the distributor first makes a purchase of cigarette
3tax stamps after the effective date of this amendatory Act of
41993, or on the first due date of a return under this Act after
5the effective date of this amendatory Act of 1993, whichever
6occurs first. Any distributor having cigarettes to which stamps
7have been affixed in his possession for sale on December 15,
81997 shall not be required to pay the additional tax imposed by
9this amendatory Act of 1997 on such stamped cigarettes.
10    Any distributor having cigarettes to which stamps have been
11affixed in his or her possession for sale on July 1, 2002 shall
12not be required to pay the additional tax imposed by this
13amendatory Act of the 92nd General Assembly on those stamped
14cigarettes.
15    Distributors making sales of cigarettes to secondary
16distributors shall add the amount of the tax to the price of
17the cigarettes sold by the distributors. Secondary
18distributors making sales of cigarettes to retailers shall
19include the amount of the tax in the price of the cigarettes
20sold to retailers. The amount of tax shall not be less than the
21amount of taxes imposed by the State and all local
22jurisdictions. The amount of local taxes shall be calculated
23based on the location of the retailer's place of business shown
24on the retailer's certificate of registration or
25sub-registration issued to the retailer pursuant to Section 2a
26of the Retailers' Occupation Tax Act. The original packages of

 

 

09700HB5440sam001- 59 -LRB097 17684 HLH 69622 a

1cigarettes sold to the retailer shall bear all the required
2stamps, or other indicia, for the taxes included in the price
3of cigarettes.
4    The amount of the Cigarette Tax imposed by this Act shall
5be separately stated, apart from the price of the goods, by
6distributors, manufacturer representatives, secondary
7distributors, and retailers, in all bills and sales invoices.
8    (b) The distributor shall be required to collect the taxes
9provided under paragraph (a) hereof, and, to cover the costs of
10such collection, shall be allowed a discount during any year
11commencing July 1st and ending the following June 30th in
12accordance with the schedule set out hereinbelow, which
13discount shall be allowed at the time of purchase of the stamps
14when purchase is required by this Act, or at the time when the
15tax is remitted to the Department without the purchase of
16stamps from the Department when that method of paying the tax
17is required or authorized by this Act. Prior to December 1,
181985, a discount equal to 1 2/3% of the amount of the tax up to
19and including the first $700,000 paid hereunder by such
20distributor to the Department during any such year; 1 1/3% of
21the next $700,000 of tax or any part thereof, paid hereunder by
22such distributor to the Department during any such year; 1% of
23the next $700,000 of tax, or any part thereof, paid hereunder
24by such distributor to the Department during any such year, and
252/3 of 1% of the amount of any additional tax paid hereunder by
26such distributor to the Department during any such year shall

 

 

09700HB5440sam001- 60 -LRB097 17684 HLH 69622 a

1apply. On and after December 1, 1985, a discount equal to 1.75%
2of the amount of the tax payable under this Act up to and
3including the first $3,000,000 paid hereunder by such
4distributor to the Department during any such year and 1.5% of
5the amount of any additional tax paid hereunder by such
6distributor to the Department during any such year shall apply.
7    Two or more distributors that use a common means of
8affixing revenue tax stamps or that are owned or controlled by
9the same interests shall be treated as a single distributor for
10the purpose of computing the discount.
11    (c) The taxes herein imposed are in addition to all other
12occupation or privilege taxes imposed by the State of Illinois,
13or by any political subdivision thereof, or by any municipal
14corporation.
15(Source: P.A. 96-1027, eff. 7-12-10; 97-587, eff. 8-26-11.)
 
16    Section 185. The Cigarette Fire Safety Standard Act is
17amended by adding Section 65 as follows:
 
18    (425 ILCS 8/65 new)
19    Sec. 65. Cigarette Machine Operators. Cigarettes made or
20fabricated by cigarette machine operators possessing valid
21licenses under Section 20 of the Cigarette Machine Operators'
22Occupation Tax Act are exempt from the provisions of this Act.
 
23    Section 999. Effective date. This Act takes effect July 1,

 

 

09700HB5440sam001- 61 -LRB097 17684 HLH 69622 a

12012.".