SB186: relative to sale of tobacco products.

SB 186-FN - AS INTRODUCED

2003 SESSION

03-1144

09/01

SENATE BILL 186-FN

AN ACT relative to sale of tobacco products.

SPONSORS: Sen. Johnson, Dist 2

COMMITTEE: Interstate Cooperation

ANALYSIS

This bill makes a variety of changes to the laws governing sale of tobacco products in this state and establishes specific requirements for delivery sales of cigarettes.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03-1144

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Three

AN ACT relative to sale of tobacco products.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Definition; Manufacturer. Amend RSA 78:1, III to read as follows:

III. "Manufacturer" means any person engaged in the business of [importing,] exporting, producing, or manufacturing tobacco products [who sells his product only to licensed wholesalers].

2 Definition; Wholesaler. Amend RSA 78:1, V to read as follows:

V. "Wholesaler" means any person [doing business in this state who shall purchase all of his unstamped tobacco products directly from a licensed manufacturer, and who shall sell all of his products to licensed wholesalers, sub-jobbers, vending machine operators, retailers, and those persons exempted from the tobacco tax under RSA 78:7-b] whether located within or outside of New Hampshire, other than a retailer, who sells or distributes tobacco products within or into New Hampshire. Such term shall not include any manufacturer, export warehouse proprietor, or importer with a valid permit under 26 U.S.C. § 5712, if such person sells or distributes cigarettes in New Hampshire only to distributors who hold valid and current licenses under RSA 78:2, or to an export warehouse proprietor or another manufacturer with a valid permit under 26 U.S.C. § 5712.

3 Definition; Sub-jobber. Amend RSA 78:1, VII to read as follows:

VII. "Sub-jobber" means any person doing business in this state who buys stamped tobacco products from a [licensed] wholesaler and who sells all of his tobacco products to other [licensed] sub-jobbers, vending machine operators, and retailers.

4 Definition; Retailer. Amend RSA 78:1, XI to read as follows:

XI. "Retailer" means any person, whether located within or outside of New Hampshire, who sells tobacco products to consumers in New Hampshire, and any vending machine in which tobacco products are sold in New Hampshire.

5 New Paragraphs; Definitions. Amend RSA 78:1 by inserting after paragraph XX the following new paragraphs:

XXI. "Importer" means any person who imports into the United States, either directly or indirectly, finished tobacco products for sale or distribution.

XXII. "Licensed importer" means an importer licensed hereunder.

XXIII. "Stamp" or "stamps" means the indicia required to be placed on a cigarette package that evidences payment of the tax on cigarettes under RSA 78:7.

6 Licenses. RSA 78:2, I and I-a are repealed and reenacted to read as follows:

I. Each manufacturer, importer, wholesaler, sub-jobber, vending machine operator, retailer, and sampler shall secure a license from the commissioner before engaging in, or continuing to engage in, such business. Each manufacturing, importing, wholesale, sub-job and retail outlet within this state shall have a separate license regardless of the fact that one or more outlets may be owned or controlled by a single person. If the applicant does not have a place of business in New Hampshire, the license shall be issued for such applicant's principal place of business, wherever located. Each tobacco products vending machine to be operated in this state shall be licensed by the commissioner and shall be appropriately identified as being licensed. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the licensing and identification of each tobacco products vending machine, and the information required in an application for a license. The commissioner shall issue a license upon application stating such information necessary to identify the outlet and the character of business transacted, including the name and address of the applicant; the address of the applicant's principal place of business; each place of business where the applicant's business will be conducted within the state; and any other information the commissioner may require. If the applicant is a firm, partnership, or association, the application shall state the name and address of each of its members. If the applicant is a corporation, the application shall state the name and address of each of its officers. The fees for licenses shall be: $100 for a manufacturer's license; $100 for an importer's license; $250 for a wholesaler's license; $150 for a sub-jobber's license; $70 for a vending machine operator's license; $10 for a retailer's license; $10 for a sampler's license; and $10 for each vending machine location, for the purpose of helping to pay the cost of administering this chapter. Each license shall be prominently displayed on the premises described in it. Any person who shall sell, offer for sale or possess with intent to sell any tobacco products without such license as provided in this section shall be subject to the penalty provisions of RSA 21-J:39.

I-a. Notwithstanding RSA 21-J:14, information regarding licenses issued pursuant to this section and information regarding enforcement actions taken pursuant to this chapter and RSA 126-I shall be public records. The commissioner shall create and maintain a web site setting forth the identity of persons holding valid and current licenses under RSA 78:2, and shall update the site no less frequently than once per month.

7 Term of License; Renewals. RSA 78:4 is repealed and reenacted to read as follows:

78:4 Term of License; Issuance; Renewals; List of Licensees.

I. Licenses issued under RSA 78:2 shall expire on June 30 in each even- numbered year, unless sooner revoked or unless the business in respect to which the license was issued should change ownership. Licenses may be renewed upon signed application as provided in RSA 78:2 and upon paying the prescribed fee.

II. No license may be granted, maintained, or renewed if the applicant, or any combination of persons owning directly or indirectly, in the aggregate, more than 10 percent of the ownership interests in the applicant:

(a) Has unpaid fees, fines, or penalties resulting from violations of this chapter or RSA 126-I;

(b) Owes $500 or more in delinquent tobacco products taxes;

(c) Had a manufacturer, importer, retailer, sub-jobber, vending machine operator, sampler, or wholesaler license revoked by the commissioner within the past 2 years;

(d) Has been convicted of a crime relating to tobacco products, including but not limited to, selling stolen or counterfeit tobacco products, receiving stolen or counterfeit tobacco products, or involvement in the smuggling or counterfeiting of tobacco products;

(e) Has been convicted of a felony;

(f) Is a cigarette manufacturer or importer that is neither (i) a participating manufacturer as defined in subsection II(jj) of the "Master Settlement Agreement" as defined in RSA 541:C:2, V; nor (ii) in full compliance with RSA 78:45-51 and RSA 541-C;

(g) Has imported, or caused to be imported, into the United States any cigarette in violation of 19 U.S.C. 1681a ; or

(h) Has imported, or caused to be imported, or manufactured for sale or distribution in the United States any cigarette that does not fully comply with the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1331, et. seq).

8 Suspension and Revocation of License by Commissioner. Amend RSA 78:6 to read as follows:

78:6 Suspension and Revocation of License by Commissioner. The commissioner may adopt rules pursuant to RSA 541-A relative to accomplishing the purpose of RSA 78. In addition to any civil or criminal penalty provided by law, the commissioner [may] shall suspend or revoke any license issued under RSA 78:2 for failure to comply with the provisions of this chapter and with any rules which the commissioner may adopt. The commissioner shall make such revocation or suspension pursuant to the procedures applicable to revocation of a license set forth in N.H. Code Admin. Rev. 207.05. The commissioner shall suspend or revoke any license issued under RSA 78:2 if ordered to do so pursuant to RSA [126-I] 126-K.

9 Nature of Tax. Amend RSA 78:7-a to read as follows:

78:7-a Nature of Tax. All taxes upon tobacco products under this chapter are declared to be a direct tax upon the consumer at retail and shall conclusively be presumed to be pre-collected for the purpose of convenience [and], facility [only] and effective enforcement of this chapter.

10 Stamps. Amend RSA 78:9 to read as follows:

78:9 Stamps.

I. The commissioner shall adopt rules pursuant to RSA 541-A relative to the design and denomination of stamps to be secured by him or her for affixing to packages of tobacco products as evidence of the payment of the tax imposed by this chapter. Each roll of stamps, or group of sheets, shall have a separate serial number, which shall be legible at the point of sale. The commissioner shall keep records of which wholesaler purchases each roll or group of sheets identified by serial number. If the commissioner permits wholesalers to purchase partial rolls or sheets, in no case may stamps bearing the same serial number be sold to more than one wholesaler. The remainder of the roll or sheet, if any, shall either be retained for later purchases by the same wholesaler or destroyed.

II. Only wholesalers with a valid, current license issued pursuant to RSA 78:2 may purchase or obtain tobacco product stamps. The commissioner shall sell such stamps on a cash basis to each licensed wholesaler at a discount of 2- 3/4 percent up to the first $500,000, 2- 3/8 percent from $500,001 to $1,000,000 and 2 percent for all sales in excess of $1,000,000 of their face value on an annual basis from July 1 to June 30 to encourage each wholesaler to affix such stamps and compensate them for so doing. The commissioner may, in his discretion, permit a licensed wholesaler to pay for such stamps within 30 days after the date of purchase, provided a bond satisfactory to the commissioner in an amount not less than the sale price of such stamps shall have been filed with the commissioner, conditioned upon the payment of such stamps. The commissioner shall keep accurate records of all stamps sold to each wholesaler and shall pay over all receipts from the sale of such stamps to the state treasurer daily.

[II.] III. Any wholesaler who fails to pay any amount owing to the purchase of stamps or meter-registered settings within the time required shall pay, in addition to the amount, interest as prescribed in RSA 21-J:28.

11 Metering Machines. Amend RSA 78:11 to read as follows:

78:11 Metering Machines.

I. The commissioner shall adopt rules pursuant to RSA 541-A relative to the authorization of any [licensee] wholesaler to use a metering machine in lieu of stamps and the insuring of the payment of all taxes properly due under RSA 78. The commissioner shall not permit the use of any such machine until prepayment covering the cost of the tax less discount, for which the meter is set, shall have been made or unless a bond satisfactory to the commissioner shall have been filed, conditioned upon the payment of said amount. Cash may be used as security in place of surety bond.

II. Each wholesaler making a meter impression shall be assigned a unique meter impression number, which number shall be legible on the impression at the point of sale. The commissioner shall keep records of which wholesaler is assigned which meter impression number. In no case may more than one wholesaler be assigned the same meter impression number.

12 Affixing Stamps. RSA 78:12 is repealed and reenacted to read as follows:

78:12 Affixing Stamps.

I. Wholesalers may apply stamps only to tobacco products that they have received directly from a manufacturer or importer of tobacco products who possesses a valid and current license under RSA 78:2. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the affixing of stamps to each package of tobacco products sold or distributed by a licensed wholesaler. Wholesalers located within New Hampshire shall apply stamps to all applicable tobacco products within 72 hours of the receipt of those products. Wholesalers located outside of New Hampshire shall apply stamps to all applicable tobacco products before sending such packages into New Hampshire. Stamps shall be affixed, at the location for which the license is issued, to each package of tobacco products sold or distributed.

(a) A tax stamp shall be applied by a licensed cigarette wholesaler to all cigarette packages containing cigarettes subject to state tax under RSA 78:7.

(b) No stamp shall be applied to any cigarette package exempt from tax under 26 U.S.C. § 5701 or RSA 78:7-b that is distributed in accordance with federal regulations.

II. Except as provided in paragraph III:

(a) Wholesalers shall be permitted to set aside, without application of stamps, only such part of the wholesaler's stock that is identified for sale or distribution outside of New Hampshire.

(b) If a wholesaler, as permitted under this paragraph, maintains stocks of unstamped tobacco products, such unstamped tobacco products shall be stored separately from stamped product packages.

(c) No unstamped tobacco products shall be transferred by a wholesaler to another facility of the wholesaler within New Hampshire or to another person within New Hampshire.

III. The commissioner is authorized to exempt such tobacco products other than cigarettes from the requirement of affixing stamps to their packages under paragraph I, as to which he or she finds that the affixing of stamps is physically impractical due to the size or nature of the package or that the cost of affixing the stamps is unreasonably disproportionate to the tax revenue to be collected. In lieu of stamps, the commissioner may, by rules adopted under RSA 541-A, require the submission of periodic reports to the commissioner by wholesalers thereof exempted under this paragraph, setting forth the total amount of such unstamped tobacco products distributed and transmitting payment of the tax due under this chapter.

IV. Any person who violates the provisions of this section by failing to make the reports and to pay the taxes due shall be guilty of a felony.

13 Authorized and Unauthorized Sales. RSA 78:12-a is repealed and reenacted to read as follows:

78:12-a Unauthorized and Authorized Sales.

I. Manufacturers and importers shall not sell tobacco products to any person located or doing business within New Hampshire unless such person is a wholesaler with a valid or current license issued by the commissioner under RSA 78:2. An importer may obtain tobacco products from a person only if such person is a manufacturer with a valid, current license under RSA 78:2. A wholesaler or sub-jobber may sell or distribute tobacco products to a person located or doing business within New Hampshire only if such person is a wholesaler with a valid, current license under RSA 78:2. A wholesaler may obtain tobacco products only from a manufacturer, importer or wholesaler with a valid, current license under RSA 78:2. A retailer may obtain tobacco products only from a wholesaler or sub-jobber with a valid, current license under RSA 78:2

II. Any person who violates the provisions of this section shall be subject to the penalty provisions of RSA 21-J:39.

14 New Section; Persons Doing Business as Both Distributor and Retailer. Amend RSA 78 by inserting after section 12-e the following new section:

78:12-f Persons Doing Business as Both Distributor and Retailer. Any person who is doing business as both a wholesaler and a retailer shall maintain separate areas for stamped and unstamped product.

15 Authorization to Affix Stamps or Use Metering Machine. Amend RSA 78:13 to read as follows:

78:13 Authorization to Affix Stamps or Use Metering Machine. The commissioner may adopt rules, pursuant to RSA 541-A, relative to authorizing any [person] wholesaler resident or located outside this state [and engaged in a business which would make such person if he carried it on in this state a wholesaler as defined in this chapter], to affix the stamps required by this chapter on behalf of the purchasers of such tobacco products. The commissioner may sell stamps to such person or the commissioner may authorize the use of a metering machine as provided in this chapter. No stamps shall be sold or no such authorization shall issue, however, until such nonresident person shall have appointed the secretary of state his attorney for the service of process in this state in the same manner as provided in RSA 300. Service shall be made on the secretary of state as agent of such person in the same manner as is provided in RSA 300. The commissioner may adopt rules pursuant to RSA 541-A relative to the conditions which must be met upon a grant of authorization to a nonresident to affix stamps. Such conditions shall include the right to inspect the books of the nonresident and the posting of a bond by the nonresident conditioned upon the payment of all taxes imposed under this chapter.

16 Unstamped Tobacco Products. RSA 78:14 is repealed and reenacted to read as follows:

I. No person other than a manufacturer importer, or wholesaler that holds a valid, current license under RSA 78:2, I and that receives unstamped tobacco products directly from a cigarette manufacturer or importer in accordance with RSA 78:12 and 78:12-f shall, hold, sell, offer for sale, display for sale, ship, store, import, transport, carry or possess with or without intent to sell, any tobacco products not properly stamped under RSA 78:12 or 78:13. Any person who ships cigarettes other than in packages bearing tax stamps into New Hampshire other than to a wholesaler holding a valid current license pursuant to RSA 78:2 shall first file with the commissioner notice of such shipment. The provisions of this paragraph shall not apply to common or contract carriers transporting unstamped tobacco products through this state to another location under a proper bill of lading or freight bill, which states the quantity, source, and destination of such cigarettes.

II. Any person transporting unstamped tobacco products into or within New Hampshire, other than those exempt from stamping under RSA 78:12, III, shall carry, in the vehicle used to convey the shipment, invoices or equivalent documentation of the shipment for all tobacco products in the shipment. The invoices or documentation shall show the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of the tobacco products so transported.

III. Any person who violates the provisions of this section shall be guilty of a felony.

17 Forfeiture. Amend RSA 78:16 to read as follows:

78:16 Forfeiture.

I. Unless the tobacco products are subject to the exemption under RSA 78:12, II, tobacco products found at any place in this state without the necessary stamps affixed to them, unless they shall be in the possession of a licensed manufacturer or wholesaler, or unless they shall be in the course of transit by common carrier from a bonded warehouse and consigned to a licensed manufacturer, wholesaler or anyone exempted by statute, shall be declared to be contraband goods and [subject to forfeiture] shall be forfeited to the state. All cigarettes forfeited to New Hampshire shall be destroyed. The commissioner, his or her authorized agents, sheriffs, deputy sheriffs and policemen shall have the power to seize such tobacco products in the manner provided under RSA 617.

II. All fixtures, equipment, and all other materials and personal property on the premises of any wholesaler or retailer who, with intent to defraud the state, fails to keep or make any record, return, report, or inventory; keeps or makes any false or fraudulent record, return, report, or inventory required by this chapter refuses to pay any tax imposed by this chapter; or attempts in any manner to evade or defeat the requirements of this chapter shall be forfeited to New Hampshire.

18 Required Taxpayer Records. Amend RSA 78:18 to read as follows:

78:18 Required Taxpayer Records.

I. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the form for records of all tobacco products manufactured, produced, purchased, and sold. Each manufacturer, wholesaler, sub-jobber, vending machine operator and retailer shall keep complete and accurate records of all such tobacco products. With respect to cigarettes, such products shall be itemized for each of its facilities for each transaction, other than a transaction with a consumer, involving the sale, purchase, transfer, consignment, or receipt of cigarettes. The invoices or documentation shall show the name and address of the other party and the quantity by brand style of the cigarettes involved in the transaction.

II. Such records shall be safely preserved for [3] 5 years on the premises described in the relevant license in such manner as to insure permanency and accessibility for inspection by the commissioner and the commissioner's authorized agents. With the commissioner's permission, persons with multiple places of business may retain centralized records, but shall transmit duplicates of the invoices or equivalent documentation to each place of business within 24 hours upon the request of the commissioner or his or her designee.

III. The commissioner and the authorized agents and the Untied States Secretary of the treasury or his or her designee, may examine the books, papers and records of any manufacturer, wholesaler, sub-jobber, vending machine operator or retailer doing business in this state, for the purpose of determining whether the tax imposed by this chapter has been fully paid, and they may investigate and examine the stock of tobacco products in or upon any premises where such tobacco products are possessed, stored or sold, for the purpose of determining whether the provisions of this chapter are being obeyed. Each sampler shall keep complete and accurate records of tobacco products distributed free to consumers in New Hampshire for promotional purposes. The commissioner and the commissioner's authorized agents may examine such records.

IV. The commissioner at his or her sole discretion may share the records and reports required under RSA 78:18 and 18-b with law enforcement officials of the federal government or other states.

19 Inspection Authorized. Amend RSA 78:26 to read as follows:

78:26 Inspection Authorized.

I. The commissioner or any agent or employee of the department of revenue administration, and any policeman, constable, sheriff or deputy sheriff, may enter in [and upon] and inspect the facilities and records of any manufacturer, wholesaler, or retailer, any place or premises where tobacco products are held, kept, located or stored for the purpose of inspecting such products and ascertaining that the tobacco products at such premises, or any portion thereof, shall not be sold, used or consumed in this state without the tobacco products tax first having been paid.

II. In any case where the commissioner or his or her duly authorized agent, or any police officer of New Hampshire, has knowledge or reasonable grounds to believe that any vehicle is transporting tobacco products in violation of this chapter, the commissioner, such agent, or such police officer, is authorized to stop such vehicle and to inspect the same for contraband tobacco products.

20 New Subdivision; Delivery Sales of Cigarettes. Amend RSA 78 by inserting after section 34 the following new subdivision:

Delivery Sales of Cigarettes

78:35 Definitions. In this subdivision:

I.(a) "Delivery sale" means any sale of cigarettes to a consumer in New Hampshire where either:

(1) The purchaser submits the order for such sale by means of a telephonic or other method of voice transmission, the mails or any other delivery service, or the Internet or other online service; or

(2) The cigarettes are delivered by use of the mails or other delivery service.

(b) For purposes of this paragraph, any sale of cigarettes to an individual in New Hampshire shall be treated as a sale to a consumer unless such individual is licensed as a wholesaler or retailer of cigarettes by the commissioner.

II. "Delivery service" means any person, including the United States Postal Service, that is engaged in the commercial delivery of letters, packages, or other containers.

III. "Minor" means any individual to whom the sale of cigarettes are prohibited by RSA 126-K:4.

IV. "Shipping container" means a container in which cigarettes are shipped in connection with a delivery sale.

V. "Shipping documents" means bills of lading, airbills, United States Postal Service forms, or any other documents used to evidence the undertaking by a delivery service to deliver letters, packages, or other containers.

78:36 Requirements for Delivery Sales.

I. No person shall make a delivery sale of cigarettes to any minor.

II. Each person taking a delivery sale order shall comply with:

(a) The age verification requirements set forth in RSA 78:37;

(b) The disclosure requirements set forth in RSA 78:38;

(c) The shipping requirements set forth RSA 78:39;

(d) The registration and reporting requirements set forth in RSA 78:40;

(e) The tax collection requirements set forth in RSA 78:41; and

(f) All other laws of New Hampshire generally applicable to sales of cigarettes that occur entirely within New Hampshire, including, but not limited to, those laws imposing:

(1) Excise taxes.

(2) Sales taxes.

(3) Licensing and tax-stamping requirements; and

(4) Escrow or other payment obligations.

78:37 Age Verification Requirements.

I. No person shall mail or ship cigarettes in connection with a delivery sale order unless before mailing or shipping such cigarettes the person accepting the delivery sale order first:

(a) Obtains from the prospective customer a certification which includes:

(1) Reliable confirmation that the purchaser is not a minor; and

(2) A statement signed by the prospective purchaser in writing and under penalty of perjury which:

(A) Certifies the prospective purchaser's address and date of birth; and

(B) Confirms that the prospective purchaser understands that signing another person's name to such certification is illegal, and that the sale of cigarettes to minors is illegal, and that the purchase of cigarettes by minors is illegal under RSA 126-K-6.

(b) Makes a good-faith effort to verify the information contained in the certification provided by the prospective purchaser pursuant to subparagraph (a) against a federal database established for such purpose if one exists, or a commercially available database;

(c) Sends to the prospective purchaser, via e-mail or other means, a notice which meets the requirements of RSA 78:37 and requests confirmation that the delivery sale order was placed by the prospective purchaser;

(d) Receives from the prospective purchaser confirmation, pursuant to the request described in subparagraph (c), that such individual placed the delivery sale order; and

(e) Receives payment for the delivery sale from the prospective purchaser by a credit or debit card that has been issued in such purchaser's name.

II. Persons taking delivery sale orders may request that prospective purchasers provide their e-mail addresses.

78:38 Disclosure Requirements. The notice required under RSA 78:37, I(c) shall include:

I. A prominent and clearly legible statement that cigarette sales to minors are illegal;

II. A prominent and clearly legible statement that consists of one of the warnings set forth in section 4(a)(1) of the Federal Cigarette Labeling and Advertising Act (15 U.S.C. § 1333(a)(1)) rotated on a quarterly basis;

III. A prominent and clearly legible statement that sales of cigarettes are restricted to those individuals who provide verifiable proof of age in accordance with RSA 78:37; and

IV. A prominent and clearly legible statement that cigarette sales are taxable under RSA 78:7, and an explanation of how such tax has been, or is to be, paid with respect to such delivery sale.

78:39 Shipping Requirements.

I. Each person who mails or ships cigarettes in connection with a delivery sale order:

(a) Shall include as part of the shipping documents a clear and conspicuous statement providing as follows: "CIGARETTES: NEW HAMPSHIRE LAW PROHIBITS SHIPPING TO INDIVIDUALS UNDER 18 AND REQUIRES THE PAYMENT OF ALL APPLICABLE TAXES";

(b) Shall use a method of mailing or shipping that obligates the delivery service to require:

(1) The purchaser placing the delivery sale order, or an adult designated by such customer, to sign to accept delivery of the shipping container; and

(2) Proof, in the form of a valid, government-issued identification bearing a photograph of the individual who signs to accept delivery of the shipping container, demonstrating that (A) they are either the addressee or the adult designated by the addressee and (B) such individual is not a minor, but such proof shall be required only if that individual appears to be under 27 years of age; and

(c) Shall provide to the delivery service retained to deliver such delivery sale evidence of full compliance with RSA 78:41.

II. A delivery service, including the United States Postal Service, shall be in violation of the delivery sales provisions of this chapter, if it ships or delivers cigarettes in connection with a delivery sale without first receiving the evidence of compliance with RSA 78:41 that is described in subparagraph I(c), or if it fails to comply with the requirements described in subparagraph I(b) or RSA 78:39:

(a) When obligated to do so under a method of shipping;

(b) When delivering any container pursuant to shipping documents containing the statement described in subparagraph I(a) of this section; or

(c) When delivering any container that such delivery service otherwise has reason to know contains cigarettes.

III. If the person taking a delivery sale order delivers the cigarettes without using a third-party delivery service, such person shall comply with all requirements of this chapter applicable to a delivery service and shall be in violation of the delivery sales provisions of this chapter it fails to comply with any such requirement.

78:40 Registration and Reporting Requirements.

I. Prior to making delivery sales or shipping cigarettes in connection with any such sales, every person shall file with the commissioner a statement setting forth such person's name, trade name, and the address of such person's principal place of business and any other place of business.

II. Not later than the 10th day of each calendar month, each person that has made a delivery sale or shipped or delivered cigarettes in connection with any such sale during the previous calendar month shall file with the commissioner a memorandum or a copy of the invoice which provides for each and every such delivery sale:

(a) The name and address of the individual to whom such delivery sale was made;

(b) The brand or brands of the cigarettes that were sold in such delivery sale; and

(c) The quantity of cigarettes that were sold in such delivery sale.

78:41 Collection of Taxes. Each person making a delivery sale shall collect and remit to the commissioner any taxes levied by New Hampshire with respect to such delivery sale, except that such collection and remission shall not be required to the extent such person has obtained proof, in the form of the presence of applicable tax stamps or meter impressions as authorized by RSA 78:11, that such taxes already have been paid to New Hampshire.

78:42 Penalties.

I.(a) Except as otherwise provided in this section, the first time a person violates any of the delivery sales provisions of this subdivision, such person shall be fined $1,000 or 5 times the retail value of the cigarettes involved, whichever is greater.

(b) In the case of a second or subsequent violation of this subdivision, such person shall be fined $5,000 or five times the retail value of the cigarettes involved, whichever is greater.

II. Any person who knowingly violates any provision of this subdivision, or who knowingly and falsely submits a certification under RSA 78:37, I(a) in another person's name, shall, for each such offense, be fined $10,000 or 5 times the retail value of the cigarettes involved, whichever is greater, or imprisoned not more than 5 years, or both the fine and imprisonment.

III. Whoever fails to pay any tax required in connection with a delivery sale shall pay, in addition to any other penalty, a penalty of 5 times the amount of the tax due but unpaid.

IV.(a) Any cigarettes sold or attempted to be sold in a delivery sale that does not meet the requirements of this subdivision shall be forfeited to New Hampshire and destroyed.

(b) All fixtures, equipment, and all other materials and personal property on the premises of any person who, with the intent to defraud New Hampshire, fails to satisfy any of the requirements of this subdivision shall be forfeited to New Hampshire.

78:43 Enforcement. The attorney general or his or her designee, or any person who holds a permit under section 5712 of title 26 of the United States Code, may bring an action in the appropriate court in New Hampshire to prevent or restrain violations of this subdivision by any person or any person controlling such person.

21 Effective Date. This act shall take effect January 1, 2004.

LBAO

03-1144

Revised 2/25/03

SB 186 FISCAL NOTE

AN ACT relative to sale of tobacco products.

FISCAL IMPACT:

The Judicial Branch, Judicial Council, and Departments of Justice and Corrections state that this bill may increase state expenditures by an indeterminable amount in FY 2004 and each year thereafter. There will be no fiscal impact on county and local expenditures or state, county and local revenues.

METHODOLOGY:

The Judicial Branch states that this bill amends RSA 78, the tobacco tax statute. This RSA contains enforcement provisions that provide for fines, forfeiture of assets, and enforcement actions by the attorney general. The judicial branch has no information to estimate how much judicial activity will be required as a result of this bill, but the potential exists for a fiscal impact in excess of the statutory threshold.

The Judicial Council stated it is not possible to accurately predict the number of cases that may result from the enactment of the new proposed felony-based penalty section of the tobacco tax statutes. It is likewise not possible to place an exact dollar figure on the potential cost associated with the enactment of this legislation. Otherwise, the usual assumptions apply. It is assumed that the individual so charged has been determined to be indigent, at which time the court will proceed to appoint an attorney to represent the defendant. If a public defender or contract attorney is appointed to the case, the fixed contract rate of $687.50 will apply to each case so charged. If an assigned counsel attorney, (the third tier in the scheme of statutory appointment of counsel) must be used, due to either conflict of interest or for reasons of caseload limitations, the $60 per hour rate will apply to the case, with a fee cap of $3,000. This fee cap may be waived upon motion filed in advance with the court. If any "services other than counsel" are filed as a necessary part of the defense of a case, they would also be payable from Indigent Defense Funds, class 094.

The Department of Justice stated that there would be no additional cost to this agency should this bill become law. The Department assumed that the agency assigned the responsibility under this bill would be in compliance with the requirements of this bill, and the Department would not have to become involved defending that agency for failure to comply with the provisions of this bill.

The Department of Corrections states this bill could result in a sentence that would be served at a state facility. The average cost of incarceration at the state prison is $24,866 per offender per year.

The Department of Revenue Administration states that this bill will not impact their Department.