103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3112

 

Introduced 2/17/2023, by Rep. Amy Elik

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 143/10-5
35 ILCS 143/10-10
35 ILCS 143/10-30

    Amends the Tobacco Products Tax Act of 1995. Provides that certain retailers maintaining a place of business in the State, as described in the Use Tax Act, may be considered distributors. Provides that, beginning on January 1, 2024, the tax per cigar or other rolled tobacco product shall not exceed $0.50 per cigar or roll. Provides that distributors are allowed a discount in the amount of 2% of the distributor's tax liability, but not to exceed $2,000 per return.


LRB103 29795 HLH 56202 b

 

 

A BILL FOR

 

HB3112LRB103 29795 HLH 56202 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Tobacco Products Tax Act of 1995 is amended
5by changing Sections 10-5, 10-10, and 10-30 as follows:
 
6    (35 ILCS 143/10-5)
7    Sec. 10-5. Definitions. For purposes of this Act:
8    "Business" means any trade, occupation, activity, or
9enterprise engaged in, at any location whatsoever, for the
10purpose of selling tobacco products.
11    "Cigarette" has the meaning ascribed to the term in
12Section 1 of the Cigarette Tax Act.
13    "Contraband little cigar" means:
14        (1) packages of little cigars containing 20 or 25
15    little cigars that do not bear a required tax stamp under
16    this Act;
17        (2) packages of little cigars containing 20 or 25
18    little cigars that bear a fraudulent, imitation, or
19    counterfeit tax stamp;
20        (3) packages of little cigars containing 20 or 25
21    little cigars that are improperly tax stamped, including
22    packages of little cigars that bear only a tax stamp of
23    another state or taxing jurisdiction; or

 

 

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1        (4) packages of little cigars containing other than 20
2    or 25 little cigars in the possession of a distributor,
3    retailer or wholesaler, unless the distributor, retailer,
4    or wholesaler possesses, or produces within the time frame
5    provided in Section 10-27 or 10-28 of this Act, an invoice
6    from a stamping distributor, distributor, or wholesaler
7    showing that the tax on the packages has been or will be
8    paid.
9    "Correctional Industries program" means a program run by a
10State penal institution in which residents of the penal
11institution produce tobacco products for sale to persons
12incarcerated in penal institutions or resident patients of a
13State operated mental health facility.
14    "Department" means the Illinois Department of Revenue.
15    "Distributor" means any of the following:
16        (1) Any manufacturer or wholesaler in this State
17    engaged in the business of selling tobacco products who
18    sells, exchanges, or distributes tobacco products to
19    retailers or consumers in this State.
20        (2) Any manufacturer, or wholesaler, or retailer
21    engaged in the business of selling tobacco products from
22    without this State who sells, exchanges, distributes,
23    ships, or transports tobacco products to retailers or
24    consumers located in this State, so long as that
25    manufacturer, retailer, or wholesaler (i) has or maintains
26    within this State, directly or by subsidiary, an office,

 

 

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1    sales house, or other place of business, or any agent or
2    other representative operating within this State under the
3    authority of the person or subsidiary, irrespective of
4    whether the place of business or agent or other
5    representative is located here permanently or temporarily
6    or (ii) beginning on January 1, 2024, is a "retailer
7    maintaining a place of business in the State" as described
8    in Section 2 of the Use Tax Act.
9        (3) Any retailer who receives tobacco products on
10    which the tax has not been or will not be paid by another
11    distributor.
12    "Distributor" does not include any person, wherever
13resident or located, who makes, manufactures, or fabricates
14tobacco products as part of a Correctional Industries program
15for sale to residents incarcerated in penal institutions or
16resident patients of a State operated mental health facility.
17    "Electronic cigarette" means:
18        (1) any device that employs a battery or other
19    mechanism to heat a solution or substance to produce a
20    vapor or aerosol intended for inhalation, except for (A)
21    any device designed solely for use with cannabis that
22    contains a statement on the retail packaging that the
23    device is designed solely for use with cannabis and not
24    for use with tobacco or (B) any device that contains a
25    solution or substance that contains cannabis subject to
26    tax under the Compassionate Use of Medical Cannabis

 

 

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1    Program Act or the Cannabis Regulation and Tax Act;
2        (2) any cartridge or container of a solution or
3    substance intended to be used with or in the device or to
4    refill the device, except for any cartridge or container
5    of a solution or substance that contains cannabis subject
6    to tax under the Compassionate Use of Medical Cannabis
7    Program Act or the Cannabis Regulation and Tax Act; or
8        (3) any solution or substance, whether or not it
9    contains nicotine, intended for use in the device, except
10    for any solution or substance that contains cannabis
11    subject to tax under the Compassionate Use of Medical
12    Cannabis Program Act or the Cannabis Regulation and Tax
13    Act.
14    The changes made to the definition of "electronic
15cigarette" by this amendatory Act of the 102nd General
16Assembly apply on and after June 28, 2019, but no claim for
17credit or refund is allowed on or after the effective date of
18this amendatory Act of the 102nd General Assembly for such
19taxes paid during the period beginning June 28, 2019 and the
20effective date of this amendatory Act of the 102nd General
21Assembly.
22    "Electronic cigarette" includes, but is not limited to,
23any electronic nicotine delivery system, electronic cigar,
24electronic cigarillo, electronic pipe, electronic hookah, vape
25pen, or similar product or device, and any component or part
26that can be used to build the product or device. "Electronic

 

 

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1cigarette" does not include: cigarettes, as defined in Section
21 of the Cigarette Tax Act; any product approved by the United
3States Food and Drug Administration for sale as a tobacco
4cessation product, a tobacco dependence product, or for other
5medical purposes that is marketed and sold solely for that
6approved purpose; any asthma inhaler prescribed by a physician
7for that condition that is marketed and sold solely for that
8approved purpose; or any therapeutic product approved for use
9under the Compassionate Use of Medical Cannabis Program Act.
10    "Little cigar" means and includes any roll, made wholly or
11in part of tobacco, where such roll has an integrated
12cellulose acetate filter and weighs less than 4 pounds per
13thousand and the wrapper or cover of which is made in whole or
14in part of tobacco.
15    "Manufacturer" means any person, wherever resident or
16located, who manufactures and sells tobacco products, except a
17person who makes, manufactures, or fabricates tobacco products
18as a part of a Correctional Industries program for sale to
19persons incarcerated in penal institutions or resident
20patients of a State operated mental health facility.
21    Beginning on January 1, 2013, "moist snuff" means any
22finely cut, ground, or powdered tobacco that is not intended
23to be smoked, but shall not include any finely cut, ground, or
24powdered tobacco that is intended to be placed in the nasal
25cavity.
26    "Person" means any natural individual, firm, partnership,

 

 

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1association, joint stock company, joint venture, limited
2liability company, or public or private corporation, however
3formed, or a receiver, executor, administrator, trustee,
4conservator, or other representative appointed by order of any
5court.
6    "Place of business" means and includes any place where
7tobacco products are sold or where tobacco products are
8manufactured, stored, or kept for the purpose of sale or
9consumption, including any vessel, vehicle, airplane, train,
10or vending machine.
11    "Retailer" means any person in this State engaged in the
12business of selling tobacco products to consumers in this
13State, regardless of quantity or number of sales.
14    "Sale" means any transfer, exchange, or barter in any
15manner or by any means whatsoever for a consideration and
16includes all sales made by persons.
17    "Stamp" or "stamps" mean the indicia required to be
18affixed on a package of little cigars that evidence payment of
19the tax on packages of little cigars containing 20 or 25 little
20cigars under Section 10-10 of this Act. These stamps shall be
21the same stamps used for cigarettes under the Cigarette Tax
22Act.
23    "Stamping distributor" means a distributor licensed under
24this Act and also licensed as a distributor under the
25Cigarette Tax Act or Cigarette Use Tax Act.
26    "Tobacco products" means any cigars, including little

 

 

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1cigars; cheroots; stogies; periques; granulated, plug cut,
2crimp cut, ready rubbed, and other smoking tobacco; snuff
3(including moist snuff) or snuff flour; cavendish; plug and
4twist tobacco; fine-cut and other chewing tobaccos; shorts;
5refuse scraps, clippings, cuttings, and sweeping of tobacco;
6and other kinds and forms of tobacco, prepared in such manner
7as to be suitable for chewing or smoking in a pipe or
8otherwise, or both for chewing and smoking; but does not
9include cigarettes as defined in Section 1 of the Cigarette
10Tax Act or tobacco purchased for the manufacture of cigarettes
11by cigarette distributors and manufacturers defined in the
12Cigarette Tax Act and persons who make, manufacture, or
13fabricate cigarettes as a part of a Correctional Industries
14program for sale to residents incarcerated in penal
15institutions or resident patients of a State operated mental
16health facility.
17    Beginning on July 1, 2019, "tobacco products" also
18includes electronic cigarettes.
19    "Wholesale price" means the established list price for
20which a manufacturer sells tobacco products to a distributor,
21before the allowance of any discount, trade allowance, rebate,
22or other reduction. In the absence of such an established list
23price, the manufacturer's invoice price at which the
24manufacturer sells the tobacco product to unaffiliated
25distributors, before any discounts, trade allowances, rebates,
26or other reductions, shall be presumed to be the wholesale

 

 

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1price.
2    "Wholesaler" means any person, wherever resident or
3located, engaged in the business of selling tobacco products
4to others for the purpose of resale. "Wholesaler", when used
5in this Act, does not include a person licensed as a
6distributor under Section 10-20 of this Act unless expressly
7stated in this Act.
8(Source: P.A. 101-31, eff. 6-28-19; 101-593, eff. 12-4-19;
9102-40, eff. 6-25-21.)
 
10    (35 ILCS 143/10-10)
11    Sec. 10-10. Tax imposed.
12    (a) Except as otherwise provided in this Section with
13respect to little cigars, on the first day of the third month
14after the month in which this Act becomes law, a tax is imposed
15on any person engaged in business as a distributor of tobacco
16products, as defined in Section 10-5, at the rate of (i) 18% of
17the wholesale price of tobacco products sold or otherwise
18disposed of to retailers or consumers located in this State
19prior to July 1, 2012 and (ii) 36% of the wholesale price of
20tobacco products sold or otherwise disposed of to retailers or
21consumers located in this State beginning on July 1, 2012;
22except that, beginning on January 1, 2013, the tax on moist
23snuff shall be imposed at a rate of $0.30 per ounce, and a
24proportionate tax at the like rate on all fractional parts of
25an ounce, sold or otherwise disposed of to retailers or

 

 

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1consumers located in this State; and except that, beginning
2July 1, 2019, the tax on electronic cigarettes shall be
3imposed at the rate of 15% of the wholesale price of electronic
4cigarettes sold or otherwise disposed of to retailers or
5consumers located in this State. The tax is in addition to all
6other occupation or privilege taxes imposed by the State of
7Illinois, by any political subdivision thereof, or by any
8municipal corporation. However, the tax is not imposed upon
9any activity in that business in interstate commerce or
10otherwise, to the extent to which that activity may not, under
11the Constitution and Statutes of the United States, be made
12the subject of taxation by this State, and except that,
13beginning July 1, 2013, the tax on little cigars shall be
14imposed at the same rate, and the proceeds shall be
15distributed in the same manner, as the tax imposed on
16cigarettes under the Cigarette Tax Act. The tax is also not
17imposed on sales made to the United States or any entity
18thereof.
19    (b) Notwithstanding subsection (a) of this Section,
20stamping distributors of packages of little cigars containing
2120 or 25 little cigars sold or otherwise disposed of in this
22State shall remit the tax by purchasing tax stamps from the
23Department and affixing them to packages of little cigars in
24the same manner as stamps are purchased and affixed to
25cigarettes under the Cigarette Tax Act, unless the stamping
26distributor sells or otherwise disposes of those packages of

 

 

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1little cigars to another stamping distributor. Only persons
2meeting the definition of "stamping distributor" contained in
3Section 10-5 of this Act may affix stamps to packages of little
4cigars containing 20 or 25 little cigars. Stamping
5distributors may not sell or dispose of little cigars at
6retail to consumers or users at locations where stamping
7distributors affix stamps to packages of little cigars
8containing 20 or 25 little cigars.
9    (c) The impact of the tax levied by this Act is imposed
10upon distributors engaged in the business of selling tobacco
11products to retailers or consumers in this State. Whenever a
12stamping distributor brings or causes to be brought into this
13State from without this State, or purchases from without or
14within this State, any packages of little cigars containing 20
15or 25 little cigars upon which there are no tax stamps affixed
16as required by this Act, for purposes of resale or disposal in
17this State to a person not a stamping distributor, then such
18stamping distributor shall pay the tax to the Department and
19add the amount of the tax to the price of such packages sold by
20such stamping distributor. Payment of the tax shall be
21evidenced by a stamp or stamps affixed to each package of
22little cigars containing 20 or 25 little cigars.
23    Stamping distributors paying the tax to the Department on
24packages of little cigars containing 20 or 25 little cigars
25sold to other distributors, wholesalers or retailers shall add
26the amount of the tax to the price of the packages of little

 

 

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1cigars containing 20 or 25 little cigars sold by such stamping
2distributors.
3    (d) Beginning on January 1, 2013, the tax rate imposed per
4ounce of moist snuff may not exceed 15% of the tax imposed upon
5a package of 20 cigarettes pursuant to the Cigarette Tax Act.
6    (d-5) Notwithstanding the provisions of this Section,
7beginning January 1, 2024, the tax per cigar or other rolled
8tobacco product sold or otherwise disposed of shall not exceed
9$0.50 per cigar or roll. This subsection (d-5) does not apply
10to little cigars.
11    (e) All moneys received by the Department under this Act
12from sales occurring prior to July 1, 2012 shall be paid into
13the Long-Term Care Provider Fund of the State Treasury. Of the
14moneys received by the Department from sales occurring on or
15after July 1, 2012, except for moneys received from the tax
16imposed on the sale of little cigars, 50% shall be paid into
17the Long-Term Care Provider Fund and 50% shall be paid into the
18Healthcare Provider Relief Fund. Beginning July 1, 2013, all
19moneys received by the Department under this Act from the tax
20imposed on little cigars shall be distributed as provided in
21Section 2 of the Cigarette Tax Act.
22(Source: P.A. 101-31, eff. 6-28-19.)
 
23    (35 ILCS 143/10-30)
24    Sec. 10-30. Returns.
25    (a) Every distributor shall, on or before the 15th day of

 

 

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1each month, file a return with the Department covering the
2preceding calendar month. The return shall disclose the
3wholesale price for all tobacco products other than moist
4snuff and the quantity in ounces of moist snuff sold or
5otherwise disposed of and other information that the
6Department may reasonably require. The return shall be filed
7upon a form prescribed and furnished by the Department.
8    (b) In addition to the information required under
9subsection (a), on or before the 15th day of each month,
10covering the preceding calendar month, each stamping
11distributor shall, on forms prescribed and furnished by the
12Department, report the quantity of little cigars sold or
13otherwise disposed of, including the number of packages of
14little cigars sold or disposed of during the month containing
1520 or 25 little cigars.
16    (c) At the time when any return of any distributor is due
17to be filed with the Department, the distributor shall also
18remit to the Department the tax liability that the distributor
19has incurred for transactions occurring in the preceding
20calendar month, less the discount allowed.
21    (d) The Department may adopt rules to require the
22electronic filing of any return or document required to be
23filed under this Act. Those rules may provide for exceptions
24from the filing requirement set forth in this paragraph for
25persons who demonstrate that they do not have access to the
26Internet and petition the Department to waive the electronic

 

 

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1filing requirement.
2    (e) If any payment provided for in this Section exceeds
3the distributor's liabilities under this Act, as shown on an
4original return, the distributor may credit such excess
5payment against liability subsequently to be remitted to the
6Department under this Act, in accordance with reasonable rules
7adopted by the Department.
8    (f) The distributor required to pay the tax under Section
910-10 shall be entitled to a discount to reimburse the
10distributor for the expenses incurred in keeping and
11maintaining records, preparing and filing the returns,
12remitting the tax, and supplying the data to the Department
13upon request. The discount shall be 2% of the distributor's
14tax liability under this Act, but not to exceed $2,000 per
15return.
16(Source: P.A. 100-1171, eff. 1-4-19.)