Illinois General Assembly - Full Text of SB3619
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Full Text of SB3619  102nd General Assembly




State of Illinois
2021 and 2022


Introduced 1/19/2022, by Sen. Donald P. DeWitte


35 ILCS 143/10-5
35 ILCS 143/10-20

    Amends the Tobacco Products Tax Act of 1995. Provides that the Department of Revenue shall discharge any surety and shall release and return any bond provided to it by a taxpayer in connection with a distributor's license 90 days after: (1) that taxpayer becomes a prior continuous compliance taxpayer; or (2) that taxpayer has ceased to collect receipts on which he is required to remit tax to the Department, has filed a final tax return, and has paid to the Department an amount sufficient to discharge his remaining tax liability as determined by the Department. Defines "prior continuous compliance taxpayer". Effective January 1, 2023.

LRB102 23408 HLH 32577 b





SB3619LRB102 23408 HLH 32577 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 and 10-20 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 engaged in the
21    business of selling tobacco products from without this
22    State who sells, exchanges, distributes, ships, or
23    transports tobacco products to retailers or consumers
24    located in this State, so long as that manufacturer or
25    wholesaler has or maintains within this State, directly or
26    by subsidiary, an office, sales house, or other place of



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



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



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1cessation product, a tobacco dependence product, or for other
2medical purposes that is marketed and sold solely for that
3approved purpose; any asthma inhaler prescribed by a physician
4for that condition that is marketed and sold solely for that
5approved purpose; or any therapeutic product approved for use
6under the Compassionate Use of Medical Cannabis Program Act.
7    "Little cigar" means and includes any roll, made wholly or
8in part of tobacco, where such roll has an integrated
9cellulose acetate filter and weighs less than 4 pounds per
10thousand and the wrapper or cover of which is made in whole or
11in part of tobacco.
12    "Manufacturer" means any person, wherever resident or
13located, who manufactures and sells tobacco products, except a
14person who makes, manufactures, or fabricates tobacco products
15as a part of a Correctional Industries program for sale to
16persons incarcerated in penal institutions or resident
17patients of a State operated mental health facility.
18    Beginning on January 1, 2013, "moist snuff" means any
19finely cut, ground, or powdered tobacco that is not intended
20to be smoked, but shall not include any finely cut, ground, or
21powdered tobacco that is intended to be placed in the nasal
23    "Person" means any natural individual, firm, partnership,
24association, joint stock company, joint venture, limited
25liability company, or public or private corporation, however
26formed, or a receiver, executor, administrator, trustee,



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1conservator, or other representative appointed by order of any
3    "Place of business" means and includes any place where
4tobacco products are sold or where tobacco products are
5manufactured, stored, or kept for the purpose of sale or
6consumption, including any vessel, vehicle, airplane, train,
7or vending machine.
8    "Prior continuous compliance taxpayer" means any person
9who is licensed under this Act and who, having been a licensee
10for a continuous period of 2 years, is determined by the
11Department not to have been either delinquent or deficient in
12the payment of tax liability during that period or otherwise
13in violation of this Act. Also, any taxpayer who has, as
14verified by the Department, continuously complied with the
15condition of his bond or other security under provisions of
16this Act for a period of 2 consecutive years shall be
17considered to be a "prior continuous compliance taxpayer". In
18calculating the consecutive period of time described in this
19definition for qualification as a "prior continuous compliance
20taxpayer", a consecutive period of time of qualifying
21compliance immediately prior to the effective date of this
22amendatory Act of the 102nd General Assembly shall be credited
23to any licensee who became licensed on or before the effective
24date of this amendatory Act of the 102nd General Assembly. A
25distributor that is a prior continuous compliance taxpayer and
26becomes a successor as the result of an acquisition, merger,



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1or consolidation of a distributor shall be deemed to be a prior
2continuous compliance taxpayer with respect to the acquired,
3merged, or consolidated entity.
4    "Retailer" means any person in this State engaged in the
5business of selling tobacco products to consumers in this
6State, regardless of quantity or number of sales.
7    "Sale" means any transfer, exchange, or barter in any
8manner or by any means whatsoever for a consideration and
9includes all sales made by persons.
10    "Stamp" or "stamps" mean the indicia required to be
11affixed on a package of little cigars that evidence payment of
12the tax on packages of little cigars containing 20 or 25 little
13cigars under Section 10-10 of this Act. These stamps shall be
14the same stamps used for cigarettes under the Cigarette Tax
16    "Stamping distributor" means a distributor licensed under
17this Act and also licensed as a distributor under the
18Cigarette Tax Act or Cigarette Use Tax Act.
19    "Tobacco products" means any cigars, including little
20cigars; cheroots; stogies; periques; granulated, plug cut,
21crimp cut, ready rubbed, and other smoking tobacco; snuff
22(including moist snuff) or snuff flour; cavendish; plug and
23twist tobacco; fine-cut and other chewing tobaccos; shorts;
24refuse scraps, clippings, cuttings, and sweeping of tobacco;
25and other kinds and forms of tobacco, prepared in such manner
26as to be suitable for chewing or smoking in a pipe or



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1otherwise, or both for chewing and smoking; but does not
2include cigarettes as defined in Section 1 of the Cigarette
3Tax Act or tobacco purchased for the manufacture of cigarettes
4by cigarette distributors and manufacturers defined in the
5Cigarette Tax Act and persons who make, manufacture, or
6fabricate cigarettes as a part of a Correctional Industries
7program for sale to residents incarcerated in penal
8institutions or resident patients of a State operated mental
9health facility.
10    Beginning on July 1, 2019, "tobacco products" also
11includes electronic cigarettes.
12    "Wholesale price" means the established list price for
13which a manufacturer sells tobacco products to a distributor,
14before the allowance of any discount, trade allowance, rebate,
15or other reduction. In the absence of such an established list
16price, the manufacturer's invoice price at which the
17manufacturer sells the tobacco product to unaffiliated
18distributors, before any discounts, trade allowances, rebates,
19or other reductions, shall be presumed to be the wholesale
21    "Wholesaler" means any person, wherever resident or
22located, engaged in the business of selling tobacco products
23to others for the purpose of resale. "Wholesaler", when used
24in this Act, does not include a person licensed as a
25distributor under Section 10-20 of this Act unless expressly
26stated in this Act.



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1(Source: P.A. 101-31, eff. 6-28-19; 101-593, eff. 12-4-19;
2102-40, eff. 6-25-21.)
3    (35 ILCS 143/10-20)
4    Sec. 10-20. Distributor's licenses. It shall be unlawful
5for any person to engage in business as a distributor of
6tobacco products within the meaning of this Act without first
7having obtained a license to do so from the Department.
8Application for that license shall be made to the Department
9in a form prescribed and furnished by the Department. Each
10applicant for a license shall furnish to the Department on a
11form, signed and verified by the applicant, the following
13        (1) The name of the applicant.
14        (2) The address of the location at which the applicant
15    proposes to engage in business as a distributor of tobacco
16    products.
17        (3) Other information the Department may reasonably
18    require.
19    Except as otherwise provided in this Section, every
20applicant who is required to procure a distributor's license
21shall file with his or her application a joint and several
22bond. The bond shall be executed to the Department of Revenue,
23with good and sufficient surety or sureties residing or
24licensed to do business within the State of Illinois,
25conditioned upon the true and faithful compliance by the



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1licensee with all of the provisions of this Act. The
2Department shall fix the amount of the bond for each
3applicant, taking into consideration the amount of money
4expected to become due from the applicant under this Act. The
5amount of bond required by the Department shall be an amount
6that, in its opinion, will protect the State of Illinois
7against failure to pay the amount that may become due from the
8applicant under this Act, but the amount of the security
9required by the Department shall not exceed 3 times the amount
10of the applicant's average monthly tax liability, or $50,000,
11whichever amount is lower. Except as otherwise provided in
12this Section, the The bond, a reissue, or a substitute shall be
13kept in full force and effect during the entire period covered
14by the license. A separate application for license shall be
15made, and bond filed, for each place of business at which a
16person who is required to procure a distributor's license
17proposes to engage in business as a distributor under this
19    The Department, upon receipt of an application and bond in
20proper form, shall issue to the applicant a license, in a form
21prescribed by the Department, which shall permit the applicant
22to whom it is issued to engage in business as a distributor at
23the place shown on his or her application. The license shall be
24issued by the Department without charge or cost to the
25applicant. No license issued under this Act is transferable or
26assignable. The license shall be conspicuously displayed in



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1the place of business conducted by the licensee under the
3    The bonding requirement in this Section does not apply to
4an applicant for a distributor's license who is already bonded
5under the Cigarette Tax Act or the Cigarette Use Tax Act.
6Licenses issued by the Department under this Act shall be
7valid for a period not to exceed one year after issuance unless
8sooner revoked, canceled, or suspended as provided in this
10    No license shall be issued to any person who is in default
11to the State of Illinois for moneys due under this Act or any
12other tax Act administered by the Department.
13    The Department shall discharge any surety and shall
14release and return any bond provided to it by a taxpayer under
15this Section within 90 days after:
16        (1) that taxpayer becomes a prior continuous
17    compliance taxpayer; or
18        (2) that taxpayer has ceased to collect receipts on
19    which he is required to remit tax to the Department, has
20    filed a final tax return, and has paid to the Department an
21    amount sufficient to discharge his remaining tax liability
22    as determined by the Department under this Act.
23    The Department shall make a final determination of the
24taxpayer's outstanding tax liability as expeditiously as
25possible after his final tax return has been filed. If the
26Department cannot make that final determination within 45 days



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1after receiving the final tax return, within such period it
2shall so notify the taxpayer, stating its reasons therefor.
3    The Department may, in its discretion, upon application,
4authorize the payment of the tax imposed under Section 10-10
5by any distributor or manufacturer not otherwise subject to
6the tax imposed under this Act who, to the satisfaction of the
7Department, furnishes adequate security to ensure payment of
8the tax. The distributor or manufacturer shall be issued,
9without charge, a license to remit the tax. When so
10authorized, it shall be the duty of the distributor or
11manufacturer to remit the tax imposed upon the wholesale price
12of tobacco products sold or otherwise disposed of to retailers
13or consumers located in this State, in the same manner and
14subject to the same requirements as any other distributor or
15manufacturer licensed under this Act.
16    The Department may revoke, suspend, or cancel the license
17of a distributor of roll-your-own tobacco (as that term is
18used in Section 10 of the Tobacco Product Manufacturers'
19Escrow Act) under this Act if the tobacco product
20manufacturer, as defined in Section 10 of the Tobacco Product
21Manufacturers' Escrow Act, that made or sold the roll-your-own
22tobacco has failed to become a participating manufacturer, as
23defined in subdivision (a)(1) of Section 15 of the Tobacco
24Product Manufacturers' Escrow Act, or has failed to create a
25qualified escrow fund for any roll-your-own tobacco
26manufactured by the tobacco product manufacturer and sold in



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1this State or otherwise failed to bring itself into compliance
2with subdivision (a)(2) of Section 15 of the Tobacco Product
3Manufacturers' Escrow Act.
4    Any person aggrieved by any decision of the Department
5under this Section may, within 20 days after notice of that
6decision, protest and request a hearing, whereupon the
7Department must give notice to that person of the time and
8place fixed for the hearing and must hold a hearing in
9conformity with the provisions of this Act and then issue its
10final administrative decision in the matter to that person. In
11the absence of such a protest within 20 days, the Department's
12decision becomes final without any further determination being
13made or notice given.
14(Source: P.A. 98-1055, eff. 1-1-16.)
15    Section 99. Effective date. This Act takes effect January
161, 2023.