SB 1812

REFERENCE TITLE: luxury tax; ready-to-drink spirits product
State of Arizona
Senate
Fifty-seventh Legislature
Second Regular Session
2026
SB 1812
Introduced by
Senator
  Gowan
AN
ACT
amending sections 42-3001, 42-3052,
42-3351, 42-3354 and 43-3355, Arizona Revised Statutes;
relating to luxury tax.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 42-3001, Arizona Revised
Statutes, is amended to read:
START_STATUTE42-3001. Definitions
In this chapter, unless the context otherwise requires:
1. "Affix" and "affixed" include
imprinting tax meter stamps on packages and individual containers as authorized
by the department.
2. "Brand family" has the same meaning
prescribed in section 44-7111.
3. "Cavendish" means a tobacco product
that is smoked from a pipe and that meets one of the following criteria:
(a) Is described as cavendish, as containing
cavendish or as a cavendish blend on its packaging, labeling or promotional
materials.
(b) Appears to have been processed or manufactured
with an amount of flavorings and humectants that exceeds twenty percent of the
weight of the tobacco contained in the product.
(c) Appears to be blended with or contain a tobacco
product described in subdivision (b) of this paragraph.
4. "Cider" means vinous liquor that is
made from the normal alcoholic fermentation of the juice of sound, ripe apples,
pears or other pome fruit, including flavored, sparkling and carbonated cider
and cider made from condensed apple, pear or other pome fruit must, and that
contains more than one-half of one percent of alcohol by volume but not more
than seven percent of alcohol by volume.
5. "Cigar" means any roll of tobacco
wrapped in leaf tobacco or in any substance containing tobacco other than any
roll of tobacco that is a cigarette, as defined in paragraph 6 ,
subdivision (b) of this section.
6. "Cigarette" means either of the
following:
(a) Any roll of tobacco wrapped in paper or any
substance not containing tobacco.
(b) Any roll of tobacco wrapped in any substance
containing tobacco 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 subdivision (a) of this
paragraph.� This subdivision shall be interpreted consistently with the
classification guidelines established by the federal alcohol and tobacco tax
and trade bureau.
7. "Consumer" means a person in this state
that comes into possession of any luxury subject to the tax imposed by this
chapter and that, on coming into possession of the luxury, is not a distributor
intending to sell or distribute the luxury, a retailer or a wholesaler.
8. "Craft distiller" means a distiller in
the United States or in a territory or possession of the United States that
holds a license pursuant to section 4-205.10.
9. "Distributor" means any person that
manufactures, produces, ships, transports or imports into this state or in any
manner acquires or possesses for the purpose of making the first sale of the
following:
(a) Cigarettes without Arizona tax stamps affixed as
required by this article.
(b) Roll-your-own tobacco or other
tobacco products on which the taxes have not been paid as required by this
chapter.
10. "Farm winery" has the same meaning
prescribed in section 4-101.
11. "First sale" means the initial sale or
distribution in intrastate commerce or the initial use or consumption of
cigarettes, roll-your-own tobacco or other tobacco products.
12. "Luxury" means any article, object or
device on which a tax is imposed under this chapter.
13. "Malt liquor" means any liquid that
contains more than one-half of one percent alcohol by volume and that is
made by the process of fermentation and not distillation of hops or grains, but
not including:
(a) Liquids made by the process of distillation of
such substances.
(b) Medicines that are unsuitable for beverage
purposes.
14. "Master settlement agreement" has the
same meaning prescribed in section 44-7101.
15. "Microbrewery" has the same meaning
prescribed in section 4-101.
16. "Nonparticipating manufacturer" has
the same meaning prescribed in section 44-7111.
17. "Other tobacco products" means tobacco
products other than cigarettes and roll-your-own tobacco.
18. "Participating manufacturer" has the
same meaning prescribed in section 44-7111.
19. "Person" means any individual, firm,
partnership, joint venture, association, corporation, municipal corporation,
estate, trust, club, society or other group or combination acting as a unit,
and the plural as well as the singular number.
20. "Place of business":
(a) Means
a building, facility site or location where an order is received or where
tobacco products are sold, distributed or transferred.� Place of
business
(b) Does
not include a vehicle.
21. "Ready-to-drink spirits
product" means distilled spirits as defined in seCTION 4-101 that
are mixed with another beverage that may contain flavoring or coloring
materials and other ingredients, that do not exceed ten percent alcohol by
volume, that are sealed in an original container of not more than sixteen
ounces and that are sold in the manufacturer's original packaging.
21. 22. "Retailer"
means any person that comes into possession of any luxury subject to the taxes
imposed by this chapter for the purpose of selling it for consumption and not
for resale.
22. 23. "Roll-your-own
tobacco" means any tobacco that, because of its appearance, type,
packaging or labeling, is suitable for use and likely to be offered to or
purchased by consumers as tobacco for making cigarettes. This
paragraph shall be interpreted consistently with the term as used in section 44-7101. This
paragraph shall be interpreted consistently with the classification guidelines
established by the federal alcohol and tobacco tax and trade bureau.
23. 24 "Smoking
tobacco":
(a) Means
any tobacco that, because of its appearance, type, packaging, labeling or
promotion, is suitable for use and likely to be offered to or purchased by
consumers as tobacco for making cigarettes or otherwise consumed by
burning. Smoking tobacco
(b) Includes
pipe tobacco and roll-your-own tobacco.
24. 25. "Spirituous
liquor":
(a) Means
any liquid that contains more than one-half of one percent alcohol by
volume, that is produced by distillation of any fermented substance and that is
used or prepared for use as a beverage.� Spirituous liquor
(b) Does
not include medicines that are unsuitable for beverage purposes.
25. 26. "Tobacco
product manufacturer" has the same meaning prescribed in section 44-7101.
26. 27. "Tobacco
products" means all luxuries included in section 42-3052, paragraphs
5 through 9.
27. 28. "Vehicle"
means a device in, on or by which a person or property is or may be transported
or drawn on the roads of this state regardless of the means by which it is
propelled or whether it runs on a track.
28. 29. "Vinous
liquor":
(a) Means
any liquid that contains more than one-half of one percent alcohol by
volume and that is made by the process of fermentation of grapes, berries,
fruits, vegetables or other substances. But
(b) Does
not include:
(a) (i) Liquids in which hops or grains are used in the
process of fermentation.
(b) (ii) Liquids made by the process of distillation of
hops or grains.
(c) (iii) Medicines that are unsuitable for beverage
purposes.
29. 30. "Wholesaler" means a person that sells
any spirituous, vinous or malt liquor taxed under this chapter to retail
dealers or for the purposes of resale only. END_STATUTE
Sec. 2. Section 42-3052, Arizona Revised Statutes, is amended to read:
START_STATUTE42-3052. Classifications of luxuries; rates of tax
The taxes under this chapter are imposed at the following
rates:
1. On each sealed container of spirituous liquor, at the rate of three dollars $3 per gallon and at a proportionate rate for any lesser or
greater quantity than one gallon.
2. On each container of vinous liquor, except cider,
of which the alcoholic content is not greater than twenty-four per cent percent by volume,
at the rate of eighty-four cents $.84
per gallon and at a proportionate rate for any lesser or greater
quantity than one gallon.
3. On each container of vinous liquor of which the
alcoholic content is greater than twenty-four per cent
percent by volume, containing eight ounces or less, twenty-five cents $.25, and for each
eight ounces for containers containing more than eight ounces, twenty-five
cents $.25.
4. On each gallon of malt liquor or cider, sixteen cents $.16, and at a proportionate
rate for any lesser or greater quantity than one gallon.
5. On each cigarette, nine-tenths
cent $.009.
6. On smoking tobacco, snuff, fine cut chewing
tobacco, cut and granulated tobacco, shorts and refuse of fine cut chewing
tobacco, and refuse, scraps, clippings, cuttings and sweepings of tobacco,
excluding tobacco powder or tobacco products used exclusively for agricultural
or horticultural purposes and unfit for human consumption, two
cents $.02 per ounce or major fraction of an
ounce.
7. On all cavendish, plug or twist tobacco, one-half cent $.005 per ounce or
fractional part of an ounce.
8. On each twenty small cigars or fractional part
weighing not more than three pounds per thousand, four cents
$.04.
9. On cigars of all descriptions except those
included in paragraph 8 of this section, made of tobacco or any tobacco
substitute:
(a) If manufactured to retail at not more than five cents $.05 each, two
cents $.02 on each three cigars.
(b) If manufactured to retail at more than five cents $.05 each, two
cents $.02 on each cigar.
10. On each sealed container of a
ready-to-drink spirits product, $1.50 per gallon and a
proportionate rate for any lesser or greater quantity than one gallon. END_STATUTE
Sec. 3. Section 42-3351, Arizona Revised Statutes, is amended to read:
START_STATUTE42-3351. Bonds required of liquor and ready-to-drink spirits products
wholesalers; exemption
A. Every wholesaler
of spirituous liquors, vinous and liquors, malt liquors or ready-to-drink
spirits products shall file with the department, in such form as the
department prescribes, a bond or bonds,  duly
executed by the wholesaler as principal,  and with a
corporation duly authorized to execute and write bonds within the state as
surety, payable to the state,  and conditioned upon on the payment of all taxes,
penalties and other obligations of the wholesaler arising under this chapter.
B. The department shall fix the total amount of the
bond or bonds required of the wholesaler and may increase or reduce the amount
at any time. In fixing the total amount, the department shall require a bond or
bonds equivalent in total amount to twice the wholesaler's estimated monthly
tax, ascertained in such manner as the department deems proper.� The total
amount of the bond or bonds required of any wholesaler shall not be less than two thousand dollars $2,000.
C. A wholesaler is exempt from the requirements of
this section if the wholesaler has made timely payment of the taxes imposed by
this chapter for the twenty-four consecutive months immediately preceding
the current month. END_STATUTE
Sec. 4. Section 42-3354, Arizona Revised
Statutes, is amended to read:
START_STATUTE42-3354. Return and payment by spirituous or vinous liquor and
ready-to-drink spirits products wholesalers
A. Every wholesaler of spirituous liquors selling
spirituous liquors within the this
state shall pay the tax under this chapter on all such liquor sold within the this state and add the amount of the
tax to the sales price.
B. Every wholesaler of vinous liquors selling vinous
liquors other than ciders as defined in section 42-3001
within this state shall pay the tax under this chapter on all such liquors sold
within this state and add the amount of tax to the sales price.
c. Every wholesaler of ready-to-drink
spirits products selling ready-to-drink spirits products within
this state shall pay the tax under this chapter on all ready-to-drink
spirits products sold within this state and add the amount of the tax to the
sales price.
C. d. The
wholesaler shall pay the tax to the department monthly on or before the
twentieth day of the month next succeeding the month in which the tax accrues.
D. e. On
or before the date prescribed by subsection C  D of this section, the wholesaler shall prepare a sworn return
for the month in which the tax accrues in the form prescribed by the
department, showing:
1. The amount of spirituous liquors sold in this
state during the month in which the tax accrues.
2. The amount of vinous liquors other than ciders as defined in section 42-3001 sold in the this state during the month in which the tax accrues.
3. The amount of tax for the period covered by the
return.
4. Any other information that the department deems
necessary for the proper administration of this chapter.
E. F. The
wholesaler shall deliver the return, together with a remittance of the amount
of the tax due, to the department.
F. G. Any
taxpayer that fails to pay the tax within ten days from after the date on which the payment becomes due is subject to
and shall pay a penalty determined under section 42-1125, plus interest
at the rate determined pursuant to section 42-1123 from the time the tax
was due and payable until paid.
G. H. For
reporting periods beginning from and after December 31, 2019, or when the
department has established an electronic filing program, whichever is later,
each taxpayer shall file electronically any report or return required under
this chapter.� The report or return is considered to be filed and received by
the department on the date of the electronic postmark pursuant to section 42-1105.02.
END_STATUTE
Sec. 5. Section 42-3355, Arizona Revised
Statutes, is amended to read:
START_STATUTE42-3355. Return and payment by farm wineries, manufacturers, direct
shipment licensees, microbreweries and craft distillers
A. A farm winery selling vinous liquor at retail or
to a retail licensee pursuant to title 4, chapter 2 that is manufactured or
produced on the premises, a producer of vinous liquor that sells at retail
pursuant to section 4-243.02 or a direct shipment licensee that sells
pursuant to section 4-203.04 shall pay the tax under this chapter on all
such liquor sold at retail or to a retail licensee within this state and add
the amount of the tax to the sales price.
B. A microbrewery selling malt liquor at retail or
to a retail licensee pursuant to title 4, chapter 2 that is manufactured or
produced on the premises or a manufacturer of beer that sells at retail
pursuant to section 4-243.02 shall pay the tax under this chapter on all
malt liquor sold at retail or to a retail licensee within this state and add
the amount of the tax to the sales price.
C. A craft distiller selling spirituous liquor or ready-to-drink spirits products at retail or to
a retail licensee pursuant to title 4, chapter 2 that is manufactured or
produced on the premises or a distiller of spirituous liquor or
ready-to-drink spirits products that sells at retail
pursuant to section 4-243.02 shall pay the tax under this chapter on all
spirituous liquor or ready-to-drink spirits products
sold at retail or to a retail licensee within this state and add the amount of
the tax to the sales price.
D. The farm winery, manufacturer, microbrewery,
craft distiller or direct shipment licensee shall pay the tax to the department
annually on or before the twentieth day of the first month of the year
succeeding the year in which the tax accrues.
E. On or before that date, the farm winery,
manufacturer, microbrewery, craft distiller or direct shipment licensee shall
prepare a sworn return for the year in which the tax accrues in the form
prescribed by the department, showing:
1. The amount of liquors, or beer or ready-to-drink spirits
products sold in this state during the year in which the tax accrues.
2. The amount of tax for the period covered by the
return.
3. Any other information that the department deems
necessary for the proper administration of this chapter.
F. The farm winery, manufacturer, microbrewery,
craft distiller or direct shipment licensee shall deliver the return, together
with a remittance of the amount of the tax due, to the department.
G. Any taxpayer that fails to pay the tax within ten
days after the date on which the payment becomes due is subject to and shall
pay a penalty determined under section 42-1125, plus interest at the rate
determined pursuant to section 42-1123 from the time the tax was due and
payable until paid.
H. For reporting periods beginning from and after
December 31, 2019, or when the department has established an electronic filing
program, whichever is later, each taxpayer shall file electronically any report
or return required under this chapter.� The report or return is considered to
be filed and received by the department on the date of the electronic postmark
pursuant to section 42-1105.02. END_STATUTE
Sec. 6. Applicability
This act applies to taxable periods
beginning on or after the first day of the month following the general
effective date.