GENERAL ASSEMBLY OF NORTH CAROLINA
1993 SESSION
CHAPTER 442
AN ACT TO PROVIDE FOR PAYMENT OF THE CIGARETTE TAX BY REPORTING RATHER THAN BY TAX STAMPS.
The General Assembly of North Carolina enacts:
Section 1. G.S. 105-113.4 reads as rewritten:
"§ 105-113.4. Definitions.
The following definitions apply in this Article:
(1) Cigar. - A roll of tobacco wrapped in a substance that contains tobacco, other than a cigarette.
(1a) Cigarette. - Any of the following:
a. A roll of tobacco wrapped in paper or in a substance that does not contain tobacco.
b. A roll of tobacco wrapped in a substance that contains tobacco and that, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to or purchased by a consumer as a cigarette described in subpart a. of this subdivision.
(2) Cost price. - The price a person liable for the tax on tobacco products imposed by Part 3 of this Article paid for the products, before any discount, rebate, or allowance or the tax imposed by that Part.
(3) Distributor. - Any Either
of the following:
a. A
person, wherever resident or located, who purchases unstamped non-tax-paid
cigarettes directly from the manufacturer thereof of the
cigarettes and stores, sells sells, or otherwise disposes of
the same; and also any cigarettes.
b. A person who manufactures or produces cigarettes or causes them to be manufactured or produced.
(4) Repealed by Session Laws 1991, c. 689, s. 267.
(5) Licensed distributor. - A distributor licensed under Part 2 of this Article.
(6) Manufacturer. - A person who manufactures or produces tobacco products.
(7) Package. - The individual packet, can, box, or other container used to contain and to convey tobacco products to the consumer.
(8) Person. - An individual, a firm, a partnership, an association, a corporation, or any other organization or group acting as a unit.
(9) Retail dealer. - A person who sells a tobacco product to the ultimate consumer of the product.
(10) Sale. - A transfer, a trade, an exchange, or a barter, in any manner or by any means, with or without consideration.
(10a) Secretary. - The Secretary of Revenue.
(11) Stamp. - Any
impression, device, stamp, label, or print manufactured, printed, or made as
prescribed by the Secretary under Part 2 of this Article.
(11a) Tobacco product. - A cigarette, a cigar, or any other product that contains tobacco and is intended for inhalation or oral use.
(12) Unstamped. Not
bearing a North Carolina cigarette tax stamp.
(13) Use. - The exercise of any right or power over cigarettes, incident to the ownership or possession thereof, other than the making of a sale thereof in the course of engaging in a business of selling cigarettes. The term includes the keeping or retention of cigarettes for use.
(14) Wholesale dealer. - A person who makes tobacco products other than cigarettes or who acquires tobacco products other than cigarettes for sale to another wholesale dealer or to a retail dealer."
Sec. 2. G.S. 105-113.6 reads as rewritten:
"§ 105-113.6. Use tax levied.
In addition to all other taxes and fees, a A tax
is hereby levied upon the sale or possession for sale by all
persons other than distributors, a person other than a distributor, and
upon the use, consumption, and possession for use or consumption of cigarettes
within this State at the rate set forth in G.S. 105-113.5; provided,
that the 105-113.5. This tax levied by this section shall
not be applicable to the sale or possession for sale by persons other than
distributors, or to the use, consumption or possession for use or consumption
of does not apply, however, to cigarettes with respect to upon
which the tax levied by the provisions of in G.S.
105-113.5 has been computed and paid."
Sec. 3. G.S. 105-113.9 reads as rewritten:
"§ 105-113.9. Out-of-state shipments.
Any distributor engaged in interstate business shall be
permitted to set aside such part of his the stock as may
be necessary for the to conduct of such interstate
business without paying the tax or affixing the stamps otherwise required by
this Article, otherwise required by this Part, but only if such the
distributor complies with the regulations and administrative rules requirements
prescribed by the Secretary concerning keeping of records, making of
reports, posting of bond and such other rules and regulations as may be
promulgated by the Secretary for the administration of this Article. bond,
and other matters for administration of this Part.
'Interstate business' as used in this section shall mean: means:
(1) The sale of cigarettes to a nonresident where the cigarettes are delivered by the distributor to the business location of the nonresident purchaser in another state; and
(2) The sale of cigarettes to a nonresident wholesaler or retailer registered through the Secretary who has no place of business in North Carolina and who purchases the cigarettes for the purposes of resale not within this State and where the cigarettes are delivered to the purchaser at the business location in North Carolina of the distributor who is also licensed as a distributor under the laws of the state of the nonresident purchaser."
Sec. 4. G.S. 105-113.10 reads as rewritten:
"§ 105-113.10. Manufacturers shipping to distributors exempt.
Any manufacturer shipping cigarettes to other distributors
who are licensed to affix stamps as provided in this Article under
G.S. 105-113.12 may, upon application to the Secretary and upon compliance
with such regulations and administrative rules in regard thereto as may be
promulgated requirements prescribed by the Secretary, be relieved of
the requirement of paying the taxes and affixing the stamps required by this
Article, but no paying the taxes levied in this Part. No manufacturer
may be relieved of the requirement to be licensed as a distributor in order to make
shipments, including drop shipments, to a retail dealer or ultimate user.
However, the Secretary may permit monthly reports from the manufacturer
instead of requiring stamps to be affixed to packages of free cigarettes given
as complimentary samples by the manufacturer, but only if the package has been
imprinted with the word 'State tax paid.'"
Sec. 5. G.S. 105-113.12 reads as rewritten:
"§ 105-113.12. Distributor must obtain license.
(a) A distributor shall obtain for each place of business a continuing distributor's license and shall pay a tax of twenty-five dollars ($25.00) for the license.
(b) For the purposes of
this section, a 'place of business' means any is a place
where unstamped packages of cigarettes are received or stored by a
distributor receives or stores non-tax-paid cigarettes. for the
purposes of affixing stamps thereto, and any place where a distributor actually
affixes stamps to unstamped packages of cigarettes.
(c) An out-of-state distributor may obtain a distributor's license upon compliance with the provisions of G.S. 105-113.24 and payment of a tax of twenty-five dollars ($25.00)."
Sec. 6. G.S. 105-113.13(b) reads as rewritten:
"(b) Bond. - The Secretary
may require a distributor to furnish a bond in an amount that adequately
protects the State from loss if the distributor fails to pay taxes due under
this Part. A bond shall be conditioned on compliance with this Part,
shall be payable to the State, and shall be in the form required by the
Secretary. A bond shall be executed by the distributor as principal
and by an indemnity company licensed to do business under the insurance laws of
this State as surety. The Secretary shall set the bond amount
based on the anticipated tax liability of the distributor. The Secretary
shall periodically review the sufficiency of bonds required of the distributor
and shall increase the amount of a required bond if the bond amount no longer
covers the anticipated tax liability of the distributor. The Secretary
shall decrease the amount of a required bond if the Secretary finds that a
lower bond amount will protect the State adequately from loss."
Sec. 7. G.S. 105-113.18 reads as rewritten:
"§
105-113.18. Reports. Payment of tax; reports.
The taxes levied in this Part are payable when a report is required to be filed. The following reports are required to be filed with the Secretary:
(1) Every
distributor required to affix stamps as prescribed herein shall file a report
on or before the twentieth day of each month, in such form as the
Secretary shall prescribe, which report shall disclose the quantity of
cigarettes on hand on the first and last days of the calendar month immediately
preceding the month in which such report is required, the amount of stamps
purchased, used and on hand during the report period, and such other
information as the Secretary shall prescribe.
(1) Distributor's Report. - A distributor shall file a monthly report in the form prescribed by the Secretary. The report covers sales and other activities occurring in a calendar month and is due within 20 days after the end of the month covered by the report. The report shall state the amount of tax due and shall identify any transactions to which the tax does not apply.
(1a) Report of Free Cigarettes. - A manufacturer who distributes cigarettes without charge shall file a monthly report in the form prescribed by the Secretary. The report covers cigarettes distributed without charge in a calendar month and is due within 20 days after the end of the month covered by the report. The report shall state the number of cigarettes distributed without charge and the amount of tax due.
(2) Use Tax Report. - Every
other person who has acquired unstamped non-tax-paid cigarettes
for sale, use use, or consumption subject to the tax imposed by
this Article Part shall, within 96 hours after receipt of same,
complete and file, in such form as the Secretary shall prescribe, the
cigarettes, file a report in the form prescribed by the Secretary showing
the amount of cigarettes so received and such any other
information as the Secretary shall prescribe. Said required by the
Secretary. The report shall be accompanied by a remittance payment
of the full amount of the tax.
(3) Any person, except a
licensed distributor, who transports cigarettes upon the public highways, roads
roads, or streets of this State, upon notice from the Secretary,
shall file a report in such form, on such dates, and containing such
information as the Secretary shall prescribe. the form prescribed by the
Secretary and containing the information required by the Secretary.
(4) Repealed by Session Laws 1981 (Regular Session, 1982), c. 1209, s. 1."
Sec. 8. G.S. 105-113.19, 105-113.20, 105-113.22 through 105-113.23, 105-113.25, 105-113.28, and 105-113.34 are repealed.
Sec. 9. G.S. 105-113.21 reads as rewritten:
"§
105-113.21. Discount on sales of stamps. Discount;
refund.
On sales of stamps, the Secretary shall allow a discount
of seven twenty-fourths cent (7/24¢) per stamp as compensation for the services
and expenses of the licensed distributor in handling and affixing such stamps
to packages. No discount shall be allowed or given on any sales of stamps in
amounts less than one hundred dollars ($100.00).
(a) Discount. - A distributor who files a timely report under G.S. 105-113.18 may deduct from the amount due with the report a discount of four percent (4%). This discount covers expenses incurred in preparing the records and reports required by this Part, and the expense of furnishing a bond.
(b) Refund. - A distributor in possession of packages of stale or otherwise unsalable cigarettes upon which the tax has been paid may return the cigarettes to the manufacturer and apply to the Secretary for refund of the tax. The application shall be in the form prescribed by the Secretary and shall be accompanied by an affidavit from the manufacturer stating the number of cigarettes returned to the manufacturer by the applicant. The Secretary shall refund the tax paid on the unsalable cigarettes, less the discount allowed, to the applicant."
Sec. 9.1. (a) The catchline to G.S. 105-113.24 reads as rewritten:
"§
105-113.24. Sale of stamps to out-of-state distributors. Out-of-State
distributors to register and remit tax."
(b) G.S. 105-113.24 reads as rewritten:
"(a) In case the
Secretary shall find that the collection of any tax imposed by this Article
would be facilitated thereby, he may authorize, under reasonable conditions, The
Secretary may authorize any distributor outside this State engaged in the
business of selling and shipping cigarettes into the State, upon complying
with the rules and regulations of the Secretary, to purchase and affix or cause
to be affixed on behalf of any purchaser of cigarettes, who would otherwise be
taxable therefor, the stamps required by this Article, or may authorize the use
of a machine by such person in the same manner and under the same conditions as
set forth in G.S. 105-113.23. State to obtain a license and report and
pay taxes required by this Part."
Sec. 10. G.S. 105-113.26 reads as rewritten:
"§ 105-113.26. Records to be kept.
Every person required to be licensed under this Article and
every person required to make reports under this Article shall keep complete
and accurate records of all sales and such other information as is required
under this Article. The kind and form of such records may be shall
be in the form prescribed by the Secretary and all records shall be so kept
as to be adequate to enable him to determine any tax liability. Secretary.
All such These records shall be safely
preserved for a period of three years in such a manner to insure ensure
their security and accessibility for inspection by the Secretary or his
duly authorized agents. Department. The Secretary may, in
his discretion, may consent to the destruction of any such records
at any time within said this three-year period."
Sec. 11. G.S. 105-113.27 reads as rewritten:
"§
105-113.27. Unstamped Non-tax-paid cigarettes.
(a) Except as otherwise
provided in this Article, licensed distributors shall not sell, borrow, loan
loan, or exchange unstamped non-tax-paid cigarettes
to, from from, or with other licensed distributors.
(b) No person shall sell
or offer for sale unstamped non-tax-paid cigarettes.
(c) The possession of
more than six hundred unstamped cigarettes bearing the tax stamp of
another state or country, by any person other than a licensed distributor,
shall be prima facie evidence that such the cigarettes are
possessed in violation of the provisions of this Article. this Part."
Sec. 12. G.S. 105-113.31 reads as rewritten:
"§
105-113.31. Possession and transportation of unstamped non-tax-paid
cigarettes; seizure and confiscation of vehicle or vessel.
(a) It shall be unlawful
for any person to transport unstamped non-tax-paid cigarettes in
violation of the provisions of this Article, or to fail or refuse to comply
with regulations and administrative rules promulgated by the Secretary in
regard thereto. this Part. The Secretary may make
reasonable adopt rules and regulations governing allowing quantities
of untaxed non-tax-paid cigarettes, not exceeding six hundred, which
may to be brought into this State by any a transient, a
tourist, or a person returning to this State after traveling outside
this State, for the use of such transient, tourist or person; and the their
own use. The possession or transportation of such quantities shall
not be these cigarettes is not subject to the penalties imposed by
this section.
(b)
(1) Every person who shall transport
cigarettes not stamped as required by this Article upon transports
non-tax-paid cigarettes on the public highways, roads, streets streets,
or waterways of this State shall have in his actual possession must
transport with the cigarettes invoices or delivery tickets for such the
cigarettes which shall show showing the true name and
complete and exact address of the consignee or purchaser, the quantity and
brands of the cigarettes transported transported, and the true
name and complete and exact address of the person who has paid or who shall
assume the payment of will pay the tax imposed by this Article
Part or the tax, if any, of the state or foreign country at the
point of ultimate destination.
(2) Any A common
carrier which that has issued a bill of lading for a shipment of
cigarettes and is without notice to itself or to any of its agents or employees
that said the cigarettes are not stamped as required by non-tax-paid
in violation of this Article shall be deemed Part is considered to
have complied with this Article Part and the vehicle or vessel in
which said the cigarettes are being transported shall not be
subject to confiscation hereunder. is not subject to confiscation under
this section. In the absence of such the required invoices,
delivery tickets tickets, or bills of lading, as the case may
be, the cigarettes so transported, the vehicle or vessel in which the
cigarettes are being transported transported, and any
paraphernalia or devices used in connection with the unstamped non-tax-paid
cigarettes are declared to be contraband goods and may be seized by any
officer of the law, who shall take possession of the vehicle or vessel and unstamped
cigarettes therein, and shall arrest any person in charge thereof.
of the vehicle or vessel and cigarettes.
(3) Such The officer
shall at once proceed against the person arrested, under the provisions of this
Article, Part, in any court having competent jurisdiction; but
the said vehicle or vessel shall be returned to the owner upon execution
by him the owner of a good and valid bond, with sufficient
sureties, in a sum double the value of the property, which said bond
shall be approved by said the officer and shall be conditioned to
return said the property to the custody of said the officer
on the day of trial to abide the judgment of the court. All unstamped non-tax-paid
cigarettes seized under this section shall be held and shall, upon the
acquittal of the person so charged, be returned to the established owner.
(4) Unless the claimant
can show that the unstamped non-tax-paid cigarettes seized were
not transported in violation of this Article Part and that the
property seized is his property, belongs to the claimant or that
in the case of property other than cigarettes, such the property
was used in transporting unstamped non-tax-paid cigarettes in
violation of this Article Part without his the
claimant's knowledge or consent, with the right on the part of the claimant
to have a jury pass upon his this claim, the court shall order a
sale by public auction of the property seized, and the officer making the sale,
after deducting the cost of stamps the tax due, which he the
officer shall affix to said cigarettes pay upon sale,
expenses of keeping the property, the fee for the seizure, and the costs of the
sale, shall pay all liens according to their priorities, which are established,
by intervention or otherwise, at said the hearing or in other another
proceeding brought for said the purpose as being bona fide
and as having been created without the lien or having any notice that the
vehicle or vessel was being used for the unlawful transportation of unstamped
non-tax-paid cigarettes, and shall pay the balance of the proceeds
to the State Treasurer for the general fund. General Fund.
(5) All liens against
property sold under the provisions of this section shall be transferred from
the property to the proceeds of the sale of the property. If, however, no
one shall be is found claiming the cigarettes, or the vehicle or
vessel, then the taking of the same, with a description thereof, cigarettes,
vehicle, or vessel, along with a description, shall be advertised in some
newspaper published in the city or county where taken, or, if there be no
newspaper published in such city or county, in a newspaper having
circulation in the county, county where the items were taken, once
a week for two weeks and by notices posted in three public places near the
place of seizure, and if no claimant shall appear appears within
ten days after the last publication of the advertisement, the property shall be
sold, and the proceeds, after deducting the expenses and costs, shall be paid
to the State Treasurer for the general fund. General Fund.
(6) Nothing in this
section shall be construed to This section does not authorize any
an officer to search any vehicle or vessel or baggage of any person
without a search warrant duly issued, except where the officer sees or has
knowledge that there are unstamped non-tax-paid cigarettes in such
the vehicle or vessel."
Sec. 13. G.S. 105-113.32 reads as rewritten:
"§
105-113.32. Unstamped Non-tax-paid cigarettes subject to
confiscation.
All non-tax-paid cigarettes subject to the tax imposed
by this Article, to which stamps have not been affixed as required by this
Article, Part, together with any container in which they are stored,
stored or displayed for sale (including but not limited to vending machines)
machines), are declared to be contraband goods and may be seized by
any officer of the law, who law. The officer shall arrest
any person in charge thereof. Such officer of the contraband goods
and shall at once proceed against the person arrested, under the provisions
of this Article, Part, in any court having competent jurisdiction
and the jurisdiction. The disposition of said unstamped the
seized cigarettes and container shall be governed and controlled by
the provisions of G.S. 105-113.31."
Sec. 14. The Secretary of Revenue shall redeem any unused or mutilated but identifiable tax stamps purchased pursuant to Article 2 of Chapter 105 of the General Statutes that a taxpayer presents for redemption and shall refund the face value of the stamps less the discount allowed at the time of the purchase of the stamps by the taxpayer.
Sec. 15. This act does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this act before its amendment or repeal; nor does it affect the right to any refund or credit of a tax that would otherwise have been available under the amended or repealed statute before its amendment or repeal.
Sec. 16. This act becomes effective January 1, 1994.
In the General Assembly read three times and ratified this the 22nd day of July, 1993.
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Dennis A. Wicker
President of the Senate
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Daniel Blue, Jr.
Speaker of the House of Representatives