Full Text of SB0850 100th General Assembly
SB0850 100TH GENERAL ASSEMBLY |
| | 100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018 SB0850 Introduced 2/7/2017, by Sen. Toi W. Hutchinson SYNOPSIS AS INTRODUCED: |
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Amends the Cigarette Tax Act. Requires the Department of Revenue to issue a request for proposal to acquire and use digital tax stamps. Provides that, upon implementation of the digital stamps, a stamp is considered affixed if 90% or more of the stamp is affixed to the individual package. Contains provisions concerning reimbursement of licensed distributors for costs associated with the initial purchase of a tax stamping machine, and provides a tax collection discount for licensed distributors.
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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Cigarette Tax Act is amended by adding | 5 | | Section 3-3 as follows: | 6 | | (35 ILCS 130/3-3 new) | 7 | | Sec. 3-3. Digital tax stamps. | 8 | | (a) Within 180 days after the effective date of this | 9 | | amendatory Act of the 100th General Assembly, the Department | 10 | | shall issue a request for proposal to acquire and use digital | 11 | | stamps that contain a unique nonrepeating code that can be read | 12 | | by a device that identifies the taxed product and also contains | 13 | | other security and enforcement features as determined by the | 14 | | Department. The request for proposal shall include a provision | 15 | | that requires the successful bidder on the proposal to share | 16 | | digital stamp technology so that handheld devices, including, | 17 | | but not limited to, smartphones, can be readily utilized in | 18 | | furtherance of the implementation of the use of digital stamps, | 19 | | and so that the technology and equipment used by licensed | 20 | | distributors to affix the stamps to packages of cigarettes can | 21 | | be supplied, as may be permitted by the Department, by the | 22 | | successful bidder on the proposal or by any other provider. The | 23 | | request for proposal shall also include a provision permitting |
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| 1 | | the Department to manage or restrict access rights to all or | 2 | | part of the information contained within, or accessible from, | 3 | | the stamps and a provision requiring the successful bidder on | 4 | | the proposal to guarantee that the stamps will be designed and | 5 | | manufactured to ensure that stamps can be affixed to individual | 6 | | packages of cigarettes in accordance with the requirements of | 7 | | this Act. | 8 | | (b) Upon implementation of the digital stamps as provided | 9 | | in this amendatory Act of the 100th General Assembly, a stamp | 10 | | is considered affixed if 90% or more of the stamp is affixed to | 11 | | the individual package. | 12 | | (c) Beginning in the first calendar month following the | 13 | | implementation of the use of digital stamps as provided in this | 14 | | Section, and continuing for the immediately succeeding 17 | 15 | | months, licensed distributors are entitled to reimbursement of | 16 | | direct costs actually incurred by the distributor, as | 17 | | determined by the Department, for the initial purchase of | 18 | | eligible equipment in an amount equal to 5.5% of the total net | 19 | | purchase price of the eligible equipment necessary to affix the | 20 | | digital stamp. The reimbursement provided under this | 21 | | subsection shall also
include any applicable use or occupation | 22 | | taxes paid, and shipping and
crating charges actually incurred, | 23 | | by the distributor in
connection with the purchase, but shall
| 24 | | exclude reimbursement for any other costs incurred by the | 25 | | distributor that are not otherwise expressly provided for
in | 26 | | this Section, including, but not limited to, charges for |
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| 1 | | installation and ongoing maintenance related to eligible | 2 | | equipment. A distributor may only receive reimbursement under | 3 | | this subsection to the extent that the eligible equipment | 4 | | purchased by the distributor does not exceed the total number | 5 | | of the distributor's existing equipment, as certified by the | 6 | | distributor on a form prescribed by the Department. | 7 | | The total reimbursement available under this subsection | 8 | | shall not exceed $60,000 for all distributors combined. | 9 | | (d) Beginning with the first calendar month following the | 10 | | implementation of the use of digital stamps as provided in this | 11 | | Section, a discount of 0.5% is allowed to each licensed | 12 | | distributor until the licensed distributor is compensated in an | 13 | | amount equal to the direct cost actually incurred by the | 14 | | distributor for the purchase of upgrades to technology and | 15 | | equipment, excluding the equipment reimbursed under subsection | 16 | | (c) of this Section, that are necessary to affix the digital | 17 | | stamp as determined by the Department. | 18 | | Compensation under this subsection may also be
claimed by a | 19 | | distributor for the direct costs actually incurred
by the | 20 | | distributor, as determined by the Department and
reflected in | 21 | | the net purchase price, for the initial and one-time
purchase | 22 | | of case packers or similar machines or conveyors as
follows: | 23 | | (1) case packers or similar machines to be used | 24 | | exclusively to
repack cigarette cartons into case | 25 | | boxes after digital stamps have
been applied by | 26 | | eligible equipment to the individual packages of
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| 1 | | cigarettes contained within those cigarette cartons; | 2 | | compensation
under this paragraph (1) may only be | 3 | | claimed by a distributor if
the case packers or similar | 4 | | machines are in addition to, and not a
replacement for, | 5 | | one or more case packers or similar machines used in
| 6 | | connection with cigarette stamping machines that do | 7 | | not use digital stamps authorized under this Section; | 8 | | (2) conveyors to be used exclusively for that | 9 | | portion of a
cigarette stamping line that is necessary | 10 | | for and dedicated to
cigarette stamping operations | 11 | | using eligible equipment to affix digital stamps to | 12 | | individual packages of cigarettes to be sold in
this | 13 | | State; compensation under this paragraph may be
| 14 | | claimed by a distributor only if the cigarette stamping | 15 | | line served
by the conveyors is in addition to one or | 16 | | more distinct and existing
cigarette stamping lines | 17 | | using stamping machines that do not use
the digital | 18 | | stamps authorized under this Section, and that | 19 | | compensation
shall not exceed a total of 50% of the | 20 | | amount reimbursed under
subsection (c) for any | 21 | | particular distributor; and | 22 | | (3) compensation under paragraphs (1) and (2) | 23 | | shall also
include any applicable sales or use taxes | 24 | | paid, and shipping and
crating charges actually | 25 | | incurred, by the distributor in
connection with the | 26 | | purchase, but shall exclude any other costs
incurred by |
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| 1 | | the distributor not otherwise expressly provided for
| 2 | | in this subsection, including, but not limited to, | 3 | | charges for
installation and ongoing maintenance. | 4 | | (e) As used in this Section: | 5 | | "Eligible equipment" means a cigarette tax stamping | 6 | | machine that meets all of the following conditions: | 7 | | (1) it was purchased by a licensed distributor on or | 8 | | after December 31, 2014; | 9 | | (2) it enables the distributor to affix digital stamps | 10 | | to individual packages of cigarettes in accordance with the | 11 | | requirements of this Act; and | 12 | | (3) it was purchased to be used for the primary purpose | 13 | | of permitting the distributor to affix digital stamps to | 14 | | individual packages of cigarettes to be sold in this State | 15 | | following the implementation of the use of digital stamps | 16 | | under this Section. | 17 | | "Existing equipment" means a cigarette tax stamping | 18 | | machine that meets all of the following conditions: | 19 | | (1) it was owned by a licensed distributor as of | 20 | | December 31, 2014; and | 21 | | (2) it was a cigarette tax stamping machine used prior | 22 | | to January 1, 2015 by the distributor to apply stamps using | 23 | | stamp rolls of 30,000 stamps. | 24 | | "Qualified Equipment" means equipment that was placed in | 25 | | service by a distributor during the first 8 months of digital | 26 | | stamp implementation that includes conveyors and additional |
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| 1 | | associated electrical lines and compressed air lines in | 2 | | connection with the implementation of a digital stamping line | 3 | | approved by the Department. "Qualified equipment" does not | 4 | | include the cost of installation of a conveyor. | 5 | | "Smartphone" means a device that combines a cell phone with | 6 | | a handheld computer and is capable of internet access, which | 7 | | allows a user, in conjunction with an encrypted digital tax | 8 | | stamp, to open a public portal.
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