HF 2664

House
File
2664
-
Introduced
HOUSE
FILE
2664
BY
BAETH
,
LEVIN
,
WILBURN
,
B.
MEYER
,
CROKEN
,
BROWN-POWERS
,
GJERDE
,
and
MATSON
A
BILL
FOR
An
Act
increasing
the
tax
on
cigarettes
and
vapor
products.
1
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
2
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DIVISION
I
1
TAXATION
OF
CIGARETTES
AND
VAPOR
PRODUCTS
2
Section
1.
Section
453A.6,
subsection
1,
Code
2026,
is
3
amended
to
read
as
follows:
4
1.
There
is
imposed,
and
shall
be
collected
and
paid
to
the
5
department,
a
tax
on
all
cigarettes
used
or
otherwise
disposed
6
of
in
this
state
for
any
purpose
equal
to
six
fourteen
and
7
eight-tenths
three-tenths
cents
on
each
cigarette.
8
Sec.
2.
Section
453A.6,
subsection
8,
paragraph
a,
Code
9
2026,
is
amended
to
read
as
follows:
10
a.
Pay
directly
to
the
department,
in
lieu
of
the
tax
under
11
subsection
1
,
a
tax
equal
to
three
and
six
six
and
forty-three
12
hundredths
cents
on
each
cigarette
dispensed
from
such
machine.
13
Payments
made
under
this
paragraph
shall
be
remitted
to
the
14
department
electronically.
15
Sec.
3.
Section
453A.40,
subsection
1,
Code
2026,
is
amended
16
to
read
as
follows:
17
1.
All
persons
required
to
obtain
a
permit
or
to
be
licensed
18
under
section
453A.13
or
section
453A.44
having
in
their
19
possession
and
held
for
resale
on
the
effective
date
of
an
20
increase
in
the
tax
rate
cigarettes,
little
cigars,
or
tobacco
21
products
,
or
vapor
products
upon
which
the
tax
under
section
22
453A.6
or
453A.43
has
been
paid,
unused
cigarette
tax
stamps
23
which
have
been
paid
for
under
section
453A.8
,
unused
metered
24
imprints
which
have
been
paid
for
under
section
453A.12
,
or
25
tobacco
products
for
which
the
tax
has
not
been
paid
under
26
section
453A.46
shall
be
subject
to
an
inventory
tax
on
the
27
items
as
provided
in
this
section
.
28
Sec.
4.
Section
453A.43,
subsection
1,
paragraphs
a
and
b,
29
Code
2026,
are
amended
to
read
as
follows:
30
a.
A
tax
is
imposed
upon
all
tobacco
products
and
vapor
31
products
in
this
state
and
upon
any
person
engaged
in
business
32
as
a
distributor
of
tobacco
products
or
vapor
products
,
at
the
33
rate
of
twenty-two
percent
of
the
wholesale
sales
price
of
the
34
tobacco
products
or
vapor
products
,
except
little
cigars
and
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snuff
as
defined
in
section
453A.42
.
1
b.
In
addition
to
the
tax
imposed
under
paragraph
“a”
,
a
2
tax
is
imposed
upon
all
tobacco
products
and
vapor
products
3
in
this
state
and
upon
any
person
engaged
in
business
as
a
4
distributor
of
tobacco
products
or
vapor
products
,
at
the
rate
5
of
twenty-eight
percent
of
the
wholesale
sales
price
of
the
6
tobacco
products
or
vapor
products
,
except
little
cigars
and
7
snuff
as
defined
in
section
453A.42
.
8
Sec.
5.
Section
453A.43,
subsection
2,
paragraphs
a
and
b,
9
Code
2026,
are
amended
to
read
as
follows:
10
a.
A
tax
is
imposed
upon
the
use
or
storage
by
consumers
of
11
tobacco
products
and
vapor
products
in
this
state,
and
upon
the
12
consumers,
at
the
rate
of
twenty-two
percent
of
the
cost
of
the
13
tobacco
products
or
vapor
products
.
14
b.
In
addition
to
the
tax
imposed
in
paragraph
“a”
,
a
tax
15
is
imposed
upon
the
use
or
storage
by
consumers
of
tobacco
16
products
and
vapor
products
in
this
state,
and
upon
the
17
consumers,
at
a
rate
of
twenty-eight
percent
of
the
cost
of
the
18
tobacco
products.
19
DIVISION
II
20
CONFORMING
CHANGES
21
Sec.
6.
Section
331.303,
subsection
3,
Code
2026,
is
amended
22
to
read
as
follows:
23
3.
Act
upon
applications
for
cigarette
,
tobacco
product,
24
and
vapor
product
tax
permits
in
accordance
with
chapter
453A
.
25
Sec.
7.
Section
331.653,
subsection
11,
Code
2026,
is
26
amended
to
read
as
follows:
27
11.
Carry
out
duties
relating
to
the
seizure
and
forfeiture
28
of
cigarettes,
tobacco
products,
and
vapor
products,
vehicles,
29
and
other
property
used
in
violation
of
cigarette
,
tobacco
30
product,
alternative
nicotine
product,
and
vapor
product
tax
31
laws
as
provided
in
section
453A.32
.
32
Sec.
8.
Section
331.756,
subsection
19,
Code
2026,
is
33
amended
to
read
as
follows:
34
19.
Assist,
at
the
request
of
the
director
of
revenue,
in
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the
enforcement
of
cigar
and
cigarette,
tobacco
product,
and
1
vapor
product
tax
laws
as
provided
in
sections
453A.32
and
2
453A.49
.
3
Sec.
9.
Section
453A.1,
subsection
21,
Code
2026,
is
amended
4
to
read
as
follows:
5
21.
“Place
of
business”
is
construed
to
mean
and
include
any
6
place
where
cigarettes
,
tobacco
products,
alternative
nicotine
7
products,
or
vapor
products
are
sold
or
where
cigarettes
,
8
tobacco
products,
alternative
nicotine
products,
or
vapor
9
products
are
stored
within
or
without
the
state
of
Iowa
by
the
10
holder
of
an
Iowa
permit
or
kept
for
the
purpose
of
sale
or
11
consumption;
or
if
sold
from
any
vehicle
or
train,
the
vehicle
12
or
train
on
which
or
from
which
such
cigarettes
,
tobacco
13
products,
alternative
nicotine
products,
or
vapor
products
are
14
sold
shall
constitute
a
place
of
business;
or
for
a
business
15
within
or
without
the
state
that
conducts
delivery
sales,
any
16
place
where
alternative
nicotine
products
or
vapor
products
are
17
sold
or
where
alternative
nicotine
products
or
vapor
products
18
are
kept
for
the
purpose
of
sale.
19
Sec.
10.
Section
453A.15,
subsections
1,
2,
and
4,
Code
20
2026,
are
amended
to
read
as
follows:
21
1.
The
director
may
prescribe
the
forms
necessary
for
the
22
efficient
administration
of
this
subchapter
and
may
require
23
uniform
books
and
records
to
be
used
and
kept
by
each
permit
24
holder
or
other
person
as
deemed
necessary.
The
director
may
25
also
require
each
permit
holder
or
other
person
to
keep
and
26
retain
in
the
director’s
possession
evidence
on
prescribed
27
forms
of
all
transactions
involving
the
purchase
and
sale
of
28
cigarettes
,
tobacco
products,
alternative
nicotine
products,
29
or
vapor
products,
or
the
purchase
and
use
of
stamps.
The
30
evidence
shall
be
kept
for
a
period
of
three
years
from
the
31
date
of
each
transaction,
for
the
inspection
at
all
times
by
32
the
department.
33
2.
Where
a
state
permit
holder
sells
cigarettes
,
tobacco
34
products,
alternative
nicotine
products,
or
vapor
products
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at
retail,
the
holder
shall
be
required
to
maintain
detailed
1
records
for
sales
of
cigarettes
,
tobacco
products,
alternative
2
nicotine
products,
or
vapor
products
to
be
sold
at
retail
and
3
the
cigarette
such
sales
records
shall
be
kept
separate
and
4
apart.
5
4.
Every
permit
holder
or
other
person
shall,
when
requested
6
by
the
department,
make
additional
reports
as
the
department
7
deems
necessary
and
proper
and
shall
at
the
request
of
the
8
department
furnish
full
and
complete
information
pertaining
to
9
any
transaction
of
the
permit
holder
or
other
person
involving
10
the
purchase
or
sale
or
use
of
cigarettes
,
tobacco
products,
11
alternative
nicotine
products,
or
vapor
products,
or
purchase
12
of
cigarette
stamps.
13
Sec.
11.
Section
453A.24,
Code
2026,
is
amended
to
read
as
14
follows:
15
453A.24
Carrier
to
permit
access
to
records.
16
1.
Every
common
carrier
or
person
in
this
state
having
17
custody
of
books
or
records
showing
the
transportation
of
18
cigarettes
,
tobacco
products,
alternative
nicotine
products,
or
19
vapor
products,
both
interstate
and
intrastate
,
shall
give
and
20
allow
the
department
free
access
to
those
books
and
records.
21
2.
The
director
may
require
by
rule
that
common
carriers
22
or
the
appropriate
persons
provide
monthly
reports
to
the
23
department
detailing
all
information
the
department
deems
24
necessary
on
shipments
into
and
out
of
Iowa
of
cigarettes
,
25
and
tobacco
products
,
alternative
nicotine
products,
or
vapor
26
products
as
set
forth
in
this
subchapter
I
and
subchapter
27
II
of
this
chapter
.
A
report
required
to
be
submitted
28
by
the
director
pursuant
to
this
section
shall
be
filed
29
electronically.
30
Sec.
12.
Section
453A.32,
subsection
6,
Code
2026,
is
31
amended
to
read
as
follows:
32
6.
The
provisions
of
this
section
applying
to
cigarettes
33
shall
also
apply
to
tobacco
products
and
vapor
products
taxed
34
under
subchapter
II
of
this
chapter
.
35
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Sec.
13.
Section
453A.33,
Code
2026,
is
amended
to
read
as
1
follows:
2
453A.33
Seizure
not
to
affect
criminal
prosecution.
3
The
seizure,
forfeiture,
and
sale
of
cigarettes,
tobacco
4
products,
vapor
products,
and
other
property
under
the
5
terms
and
conditions
set
out
in
section
453A.32
,
shall
not
6
constitute
any
defense
to
the
person
owning
or
having
control
7
or
possession
of
the
property
from
criminal
prosecution
for
any
8
act
or
omission
made
or
offense
committed
under
this
chapter
or
9
from
liability
to
pay
penalties
provided
by
this
chapter
.
10
Sec.
14.
Section
453A.35,
subsection
1,
paragraph
b,
Code
11
2026,
is
amended
to
read
as
follows:
12
b.
The
revenues
generated
from
the
tax
on
cigarettes
13
pursuant
to
section
453A.6,
subsection
1
subsections
1
and
14
8
,
from
the
tax
on
tobacco
products
as
specified
in
section
15
453A.43,
subsections
1,
2,
3,
and
4
,
and
from
the
fees
and
16
penalties
specified
in
subchapter
III
shall
be
credited
to
the
17
health
care
trust
fund
created
in
section
453A.35A
.
18
Sec.
15.
Section
453A.35A,
subsection
1,
Code
2026,
is
19
amended
to
read
as
follows:
20
1.
A
health
care
trust
fund
is
created
in
the
office
of
21
the
treasurer
of
state.
The
fund
consists
of
the
revenues
22
generated
from
the
tax
on
cigarettes
pursuant
to
section
23
453A.6,
subsection
1
subsections
1
and
8
,
from
the
tax
on
24
tobacco
products
and
vapor
products
as
specified
in
section
25
453A.43,
subsections
1,
2,
3,
and
4
,
and
from
the
fees
and
26
penalties
specified
in
subchapter
III
,
that
are
credited
to
the
27
health
care
trust
fund,
annually,
pursuant
to
section
453A.35
.
28
Moneys
in
the
fund
shall
be
separate
from
the
general
fund
29
of
the
state
and
shall
not
be
considered
part
of
the
general
30
fund
of
the
state.
Moneys
in
the
fund
shall
be
used
only
as
31
specified
in
this
section
and
shall
be
appropriated
only
for
32
the
uses
specified.
Moneys
in
the
fund
are
not
subject
to
33
section
8.33
and
shall
not
be
transferred,
used,
obligated,
34
appropriated,
or
otherwise
encumbered,
except
as
provided
in
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this
section
.
Notwithstanding
section
12C.7,
subsection
2
,
1
interest
or
earnings
on
moneys
deposited
in
the
fund
shall
be
2
credited
to
the
fund.
3
Sec.
16.
Section
453A.39,
subsection
1,
Code
2026,
is
4
amended
to
read
as
follows:
5
1.
A
manufacturer,
distributor,
wholesaler,
retailer,
or
6
distributing
agent,
or
an
agent
thereof
of
a
manufacturer,
7
distributor,
wholesaler,
retailer,
or
distributing
agent
,
shall
8
not
give
away
cigarettes
,
or
tobacco
products
,
alternative
9
nicotine
products,
or
vapor
products
at
any
time
in
connection
10
with
the
manufacturer’s,
distributor’s,
wholesaler’s,
11
retailer’s,
or
distributing
agent’s
business
or
for
promotion
12
of
the
business
or
product,
except
as
provided
in
subsection
2
.
13
Sec.
17.
Section
453A.42,
subsections
1,
2,
8,
9,
10,
12,
14
14,
and
17,
Code
2026,
are
amended
to
read
as
follows:
15
1.
“Business”
means
any
trade,
occupation,
activity,
16
or
enterprise
engaged
in
for
the
purpose
of
selling
or
17
distributing
tobacco
products
,
alternative
nicotine
products,
18
or
vapor
products
in
this
state.
19
2.
“Consumer”
means
any
person
who
has
title
to
or
20
possession
of
tobacco
products
,
alternative
nicotine
products,
21
or
vapor
products
in
storage,
for
use
or
other
consumption
in
22
this
state.
23
8.
“Person”
means
any
individual,
firm,
association,
24
partnership,
joint
stock
company,
joint
adventure
venture
,
25
corporation,
trustee,
agency,
or
receiver,
or
any
legal
26
representative
of
any
of
the
foregoing
individual,
firm,
27
association,
partnership,
joint
stock
company,
joint
venture,
28
corporation,
trustee,
agency,
or
receiver
.
29
9.
“Place
of
business”
means
any
place
where
tobacco
30
products
are
sold
or
where
tobacco
products
,
alternative
31
nicotine
products,
or
vapor
products
are
manufactured,
stored,
32
or
kept
for
the
purpose
of
sale
or
consumption,
including
any
33
vessel,
vehicle,
airplane,
train,
or
vending
machine;
or
for
34
a
business
within
or
without
the
state
that
conducts
delivery
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sales,
any
place
where
alternative
nicotine
products
or
vapor
1
products
are
sold
or
where
alternative
nicotine
products
or
2
vapor
products
are
kept
for
the
purpose
of
sale,
including
3
delivery
sales.
4
10.
“Retail
outlet”
means
each
place
of
business
from
which
5
tobacco
products
,
alternative
nicotine
products,
or
vapor
6
products
are
sold
to
consumers.
7
12.
“Sale”
means
any
transfer,
exchange,
or
barter,
in
any
8
manner
or
by
any
means
whatsoever,
for
a
consideration,
and
9
includes
and
means
all
sales
made
by
any
person.
It
includes
10
a
gift
by
a
person
engaged
in
the
business
of
selling
tobacco
11
products,
alternative
nicotine
products,
or
vapor
products
12
for
advertising,
as
a
means
of
evading
the
provisions
of
this
13
subchapter
,
or
for
any
other
purposes
whatsoever.
14
14.
“Storage”
means
any
keeping
or
retention
of
tobacco
15
products
,
alternative
nicotine
products,
or
vapor
products
for
16
use
or
consumption
in
this
state.
17
17.
“Use”
means
the
exercise
of
any
right
or
power
18
incidental
to
the
ownership
of
tobacco
products
or
vapor
19
products
.
20
Sec.
18.
Section
453A.45,
subsection
3,
Code
2026,
is
21
amended
to
read
as
follows:
22
3.
Every
retailer
and
subjobber
shall
procure
itemized
23
invoices
of
all
tobacco
products
,
alternative
nicotine
24
products,
and
vapor
products
purchased.
The
invoices
shall
25
show
the
name
and
address
of
the
seller
and
the
date
of
26
purchase.
The
retailer
and
subjobber
shall
preserve
a
legible
27
copy
of
each
invoice
for
three
years
from
the
date
of
purchase.
28
Invoices
shall
be
available
for
inspection
by
the
director
or
29
the
director’s
authorized
agents
or
employees
at
the
retailer’s
30
or
subjobber’s
place
of
business.
31
Sec.
19.
Section
453A.48,
subsection
3,
Code
2026,
is
32
amended
to
read
as
follows:
33
3.
The
director
may
exchange
information
with
the
officers
34
and
agencies
of
other
states
administering
laws
relating
to
the
35
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taxation
of
tobacco
products
or
vapor
products
.
1
Sec.
20.
Section
453A.51,
Code
2026,
is
amended
to
read
as
2
follows:
3
453A.51
Assessment
of
cost
of
audit.
4
The
department
may
employ
auditors
or
other
persons
to
5
audit
and
examine
the
books
and
records
of
a
permit
holder
or
6
other
person
dealing
in
tobacco
products
and
vapor
products
7
to
ascertain
whether
the
permit
holder
or
other
person
has
8
paid
the
amount
of
the
taxes
required
to
be
paid
by
the
permit
9
holder
or
other
person
under
the
provisions
of
this
chapter
.
10
If
the
taxes
have
not
been
paid,
as
required,
the
department
11
shall
assess
against
the
permit
holder
or
other
person,
as
12
additional
penalty,
the
reasonable
expenses
and
costs
of
the
13
investigation
and
audit.
14
EXPLANATION
15
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
16
the
explanation’s
substance
by
the
members
of
the
general
assembly.
17
This
bill
increases
the
tax
on
cigarettes
and
vapor
18
products.
19
DIVISION
I
——
CIGARETTE
AND
VAPOR
PRODUCT
TAXATION.
The
20
bill
increases
the
cigarette
tax
from
6.8
cents
per
cigarette
21
to
14.3
cents
per
cigarette.
The
overall
tax
on
a
pack
of
22
cigarettes
(20
cigarettes)
goes
from
$1.36
to
$2.86.
The
bill
23
also
raises
the
tax
on
loose
tobacco
products
inserted
into
a
24
vending
machine
from
which
assembled
cigarettes
are
dispensed.
25
The
tax
is
increased
from
3.06
cents
on
each
cigarette
26
dispensed
from
the
vending
machine
to
6.43
cents.
27
Currently,
a
tax
is
imposed
on
the
distributor
of
all
tobacco
28
products
(excluding
cigarettes,
little
cigars,
and
snuff)
at
29
a
rate
of
22
percent
of
the
wholesale
sales
price
under
Code
30
section
453A.43(1)(a)
and
at
a
rate
of
28
percent
under
Code
31
section
453A.43(1)(b)
for
a
combined
rate
of
50
percent.
The
32
bill
applies
this
combined
50
percent
wholesale
tax
rate
to
the
33
wholesale
sales
price
on
vapor
products.
Vapor
products
remain
34
subject
to
sales
and
use
taxes.
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By
increasing
the
cigarette
tax
in
the
bill,
the
inventory
1
tax
is
also
assessed
on
cigarettes
remaining
in
inventories
2
taxed
under
the
previous
tax
rate
that
is
equal
to
the
3
difference
between
the
previous
tax
rate
and
the
new
tax
rate.
4
The
bill
also
imposes
the
inventory
tax
on
vapor
products
5
remaining
in
inventories
that
have
not
been
taxed
under
the
new
6
tax
that
is
equal
to
the
difference
between
the
previous
tax
7
rate
and
the
new
tax
rate.
8
DIVISION
II
——
CONFORMING
CHANGES.
The
bill
makes
9
numerous
conforming
changes
including
inserting
references
to
10
alternative
nicotine
products
in
some
instances
where
vapor
11
product
references
are
inserted.
Alternative
nicotine
products
12
are
not
subject
to
additional
taxation
in
the
bill.
13
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