46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO TOBACCO; ENACTING THE CIGARETTE DELIVERY SALES ACT; PROVIDING REPORTING AND SHIPPING REQUIREMENTS; AMENDING AND ENACTING SECTIONS OF THE CIGARETTE TAX ACT; EXPANDING REPORTING AND LICENSING REQUIREMENTS; ENHANCING CIGARETTE TAX STAMP PROCEDURES AND PENALTIES; PROVIDING FOR TAX-EXEMPT STAMPS; PROVIDING CIVIL AND CRIMINAL PENALTIES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 10 of this act may be cited as the "Cigarette Delivery Sales Act".

Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the Cigarette Delivery Sales Act:

A. "cigarette" means a roll of tobacco wrapped in paper or in a substance not containing tobacco, and "cigarette" includes bidis and kreteks;

B. "delivery sale" means a sale of cigarettes to a consumer in New Mexico when the consumer submits the order for the sale by written, telephonic or electronic means or where the cigarettes are delivered by use of the mail or other delivery service;

C. "delivery service" means a person, including the United States postal service, that is engaged in the commercial delivery of letters, packages or other containers; and

D. "department" means the taxation and revenue department, the secretary of taxation and revenue or an employee of the department exercising authority lawfully delegated to that employee.

Section 3. [NEW MATERIAL] REQUIREMENTS.--

A. A person taking a delivery sale order shall comply with all the requirements set forth in the Cigarette Delivery Sales Act, the Cigarette Tax Act and all other laws applicable to sales of cigarettes that occur entirely within New Mexico, including laws imposing excise tax, sales tax, licensing, stamping, escrow payment and other payment obligations.

B. A delivery sale of cigarettes to an individual in New Mexico shall be treated as a sale to a consumer unless the individual is licensed as a distributor or a retailer of cigarettes by the department.

Section 4. [NEW MATERIAL] AGE VERIFICATION.--

A. A person shall not make a delivery sale of cigarettes to an individual who is under eighteen years of age.

B. Before mailing or shipping cigarettes in connection with a delivery sale order, a person shall:

(1) obtain from the prospective purchaser reliable confirmation that the prospective purchaser is at least eighteen years old;

(2) obtain a statement in writing from the prospective purchaser, signed under penalty of perjury, that:

(a) states the prospective purchaser's address and date of birth; and

(b) confirms that the prospective purchaser understands that signing another person's name is illegal, that a sale of cigarettes to individuals under the age of eighteen is illegal and that a purchase of cigarettes by individuals under the age of eighteen is illegal;

(3) make a good-faith effort to verify the information provided pursuant to Paragraphs (1) and (2) of this subsection, including verification against a database, if available;

(4) send to the prospective purchaser, by email or other means, a notice that meets the requirements of Section 5 of the Cigarette Delivery Sales Act and that requests confirmation that the delivery sale order was placed by the prospective purchaser;

(5) receive confirmation from the prospective purchaser in response to the notice described in Paragraph (4) of this subsection; and

(6) receive payment for the delivery sale from the prospective purchaser by a credit or debit card issued in the purchaser's name.

C. A person taking delivery sale orders may request that prospective purchasers provide their email addresses.

Section 5. [NEW MATERIAL] DISCLOSURE REQUIREMENTS.--The notice required under Paragraph (4) of Subsection B of Section 4 of the Cigarette Delivery Sales Act shall include a prominent and legible statement that:

A. cigarette sales to individuals under the age of eighteen are illegal;

B. includes one of the warnings set forth in 15 USCA 1333(a)(1), rotated quarterly;

C. sales of cigarettes are restricted to individuals who provide verifiable proof of age in accordance with Section 4 of the Cigarette Delivery Sales Act; and

D. cigarette sales are taxable under the Cigarette Tax Act with an explanation of how such tax has been or will be paid with respect to the delivery sale.

Section 6. [NEW MATERIAL] SHIPPING REQUIREMENTS.--

A. A person who mails or ships cigarettes in connection with a delivery sale order shall:

(1) include as part of the shipping documents a clear and conspicuous statement as follows: "CIGARETTES: NEW MEXICO LAW PROHIBITS SHIPPING TO INDIVIDUALS UNDER THE AGE OF 18 AND REQUIRES PAYMENT OF ALL APPLICABLE TAXES";

(2) use a method of shipping that obligates the delivery service to require:

(a) the purchaser who placed the delivery sale order, or an adult designated by the purchaser, to sign for and accept delivery of the shipping container; and

(b) proof, in the form of a valid government-issued identification bearing a photograph of the individual who signs for and accepts delivery, that demonstrates that: 1) the individual is either the addressee or an adult designated by the addressee; and 2) the individual is at least eighteen years old; provided that such proof shall be required only if the individual appears to be under twenty-seven years of age; and

(3) provide to the delivery service evidence of full compliance with Section 8 of the Cigarette Delivery Sales Act.

B. If a person taking a delivery sale order delivers cigarettes without using a third-party delivery service, that person shall comply with all requirements of the Cigarette Delivery Sales Act applicable to a delivery service.

C. A delivery service shall fulfill the requirements described in Paragraph (2) of Subsection A of this section if it is obligated to do so under a method of shipping.

D. A delivery service that has reason to know it is delivering a package that contains cigarettes shall not:

(1) ship or deliver cigarettes without first receiving evidence of full compliance with Section 8 of the Cigarette Delivery Sales Act; or

(2) ship or deliver cigarettes without requiring the cigarettes to be shipped in accordance with the method of shipping described in Paragraph (2) of Subsection A of this section.

E. Failure to comply with the provisions of this section is a violation of the Cigarette Delivery Sales Act.

Section 7. [NEW MATERIAL] REGISTRATION AND REPORTING REQUIREMENTS.--

A. A person who sells or transfers cigarettes for profit by means of a delivery sale shall file with the department a statement setting forth that person's name, trade name and address of the person's principal place of business and any other place of business.

B. No later than the tenth day of each calendar month, a person who has sold or transferred cigarettes for profit by means of a delivery sale during the previous calendar month shall file with the department a memorandum or a copy of an invoice from each delivery sale made, providing:

(1) the name and address of the individual to whom the delivery sale was made; and

(2) the brands and quantity of cigarettes sold in the delivery sale.

C. Satisfaction of the requirements of 15 USCA 376 meets the requirements of this section.

Section 8. [NEW MATERIAL] COLLECTION OF TAXES.--A person who sells or transfers cigarettes for profit by means of a delivery sale shall collect and remit to the department all taxes levied by New Mexico with respect to the delivery sale, except that the remission of excise taxes shall not be required to the extent that there are New Mexico tax stamps affixed to the cigarettes as required under the Cigarette Tax Act.

Section 9. [NEW MATERIAL] PENALTIES.--

A. A civil fine of not more than one thousand dollars ($1,000) shall be imposed the first time a person violates a provision of the Cigarette Delivery Sales Act. In case of a second or subsequent violation, the person shall be fined not less than one thousand dollars ($1,000) and not more than five thousand dollars ($5,000).

B. A person who knowingly violates a provision of the Cigarette Delivery Sales Act or who knowingly and falsely submits a certification in another person's name under Paragraph (2) of Subsection B of Section 4 of the Cigarette Delivery Sales Act is guilty of a fourth degree felony and shall be sentenced in accordance with the provisions of Section 31-18-15 NMSA 1978.

C. A person who fails to pay a tax required in connection with a delivery sale shall pay, in addition to any other penalty, a penalty of five hundred percent of the tax due but unpaid.

D. Cigarettes sold or attempted to be sold in a delivery sale in violation of the Cigarette Delivery Sales Act shall be forfeited to the department pursuant to the Forfeiture Act.

E. All fixtures, equipment, materials and personal property on the premises of a person who, with intent to defraud, fails to satisfy a requirement of the Cigarette Delivery Sales Act shall be forfeited to the department pursuant to the Forfeiture Act.

Section 10. [NEW MATERIAL] ENFORCEMENT.--The attorney general or a person holding a permit under 26 USCA 5713 may bring an action to prevent or restrain violations of the Cigarette Delivery Sales Act.

Section 11. Section 7-12-2 NMSA 1978 (being Laws 1971, Chapter 77, Section 2, as amended) is amended to read:

"7-12-2. DEFINITIONS.--As used in the Cigarette Tax Act:

A. "cigarette" means [any] a roll of tobacco [or any substitute therefor] wrapped in paper or [any] a substance [other than] not containing tobacco, and "cigarette" includes bidis and kreteks;

[B. "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, joint venture, syndicate or other entity;

C.] B. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee; [by the secretary;

D. "secretary" means the secretary of taxation and revenue;]

C. "distributor" means a person, other than a retailer, who sells or distributes cigarettes in New Mexico. "Distributor" does not include:

(1) a cigarette manufacturer, export warehouse proprietor or an importer with a valid permit under 26 USCA 5713 if such a person sells cigarettes in New Mexico only to distributors who hold valid licenses under the laws of a state or sells to an export warehouse proprietor or to another manufacturer; or

(2) a common or contract carrier transporting cigarettes under a bill of lading or freight bill, or a person who ships cigarettes through the state by a common or contract carrier under a bill of lading or freight bill;

D. "license" means a license granted under the Cigarette Tax Act that authorizes the holder to conduct business as a manufacturer, distributor or retailer of cigarettes;

E. "manufacturer" means a person that manufactures, fabricates, assembles, processes or labels a cigarette or that imports from outside the United States, directly or indirectly, a finished cigarette for sale or distribution in the United States;

F. "master settlement agreement" means the settlement agreement and related documents entered into on November 23, 1998 by the state and leading United States tobacco product manufacturers;

G. "package" means the individual pack, box or other container that contains cigarettes, but "package" does not include a container that itself contains other containers, such as a carton of cigarettes;

H. "retailer" means a person, whether located within or outside New Mexico, that sells or distributes cigarettes to a consumer in New Mexico; and

[E.] I. "stamp" means [any authorized label which is issued to cover the tax in multiples of five cigarettes] an adhesive label issued and authorized by the department to be affixed to cigarette packages for excise tax purposes or to indicate that the cigarettes are intended for sale or distribution in a transaction that is exempt from the cigarette tax and upon which is printed the words "State of New Mexico" and "tobacco tax" [and which is coated with an adhesive to affix the stamp to a package so that the stamp, once affixed, cannot be removed without destroying it;

F. "stamped" means a package or container of cigarettes to which a cigarette tax stamp has been affixed as provided in the Cigarette Tax Act; and

G. "unstamped" means a package or container of cigarettes to which the cigarette tax stamp provided for in the Cigarette Tax Act has not been affixed]."

Section 12. Section 7-12-3.1 NMSA 1978 (being Laws 1986, Chapter 13, Section 3, as amended) is amended to read:

"7-12-3.1. CIGARETTE INVENTORY TAX--IMPOSITION OF TAX--DATE PAYMENT OF TAX DUE.--

A. A cigarette inventory tax is imposed, measured by the quantity of cigarette stamps, whether or not affixed to packages of cigarettes, in the possession of a person who is required by Subsection [C] A of Section 7-12-5 NMSA 1978 to affix stamps on the date on which an increase in the excise tax imposed by Section 7-12-3 NMSA 1978 is effective. The taxable event is the existence of an inventory of cigarette stamps, whether or not affixed to packages of cigarettes, in the possession of a person who is required by Subsection [C] A of Section 7-12-5 NMSA 1978 to affix stamps on the date on which an increase in the excise tax imposed by Section 7-12-3 NMSA 1978 is effective. The rate of the cigarette inventory tax to apply to cigarette stamps held in inventory shall be the amount of the increase in the cigarette tax imposed by Section 7-12-3 NMSA 1978.

B. The cigarette inventory tax is to be paid to the department on or before the twenty-fifth day of the month following the month in which the taxable event occurs."

Section 13. Section 7-12-3.2 NMSA 1978 (being Laws 1986, Chapter 13, Section 4) is amended to read:

"7-12-3.2. CIGARETTE INVENTORIES.--

A. On any date on which the excise tax imposed by Section 7-12-3 NMSA 1978 is increased, each person who is required by Subsection [C] A of Section 7-12-5 NMSA 1978 to affix stamps shall take inventory of cigarette stamps on hand, including stamps affixed to packages of cigarettes.

B. Each person required to take an inventory by Subsection A of this section shall report the total number of cigarette stamps in inventory on the date on which the tax imposed by Section 7-12-3 NMSA 1978 changes and pay any tax due imposed by Section 7-12-3.1 NMSA 1978."

Section 14. Section 7-12-5 NMSA 1978 (being Laws 1971, Chapter 77, Section 5, as amended) is amended to read:

"7-12-5. AFFIXING STAMPS.--

A. Except as provided in Section 7-12-6 NMSA 1978, all cigarettes [the sale, gift or consumption of which is subject to the cigarette tax] shall be placed in packages or containers to which a stamp may be affixed. Only a distributor with a valid license issued pursuant to the Cigarette Tax Act may purchase or obtain cigarette stamps. Stamps shall be applied by the licensed distributor to each package of cigarettes to be sold or distributed in New Mexico within seventy-two hours of receipt of those packages. A distributor shall not sell or provide cigarette stamps to another distributor or person.

B. Distributors shall apply stamps only to cigarette packages that they have received directly from a manufacturer or importer of cigarettes who possesses a valid and current permit under 26 USCA 5713.

[B.] C. Packages or containers [to which a stamp is required to be affixed and which] that contain cigarettes that are not in multiples of five cigarettes shall have affixed a stamp of the next higher multiple of five cigarettes.

[C.] D. Unless the requirements of this section are waived pursuant to Section 7-12-6 NMSA 1978, a tax stamp shall be affixed to each package [or container of cigarettes, the sale, gift or consumption of which is subject to the cigarette tax. The stamp shall be affixed by any person who sells in New Mexico cigarettes manufactured by that person or who receives on consignment or buys unstamped cigarettes for sale, gift or consumption in New Mexico] of cigarettes subject to the cigarette tax pursuant to Section 7-12-3 NMSA 1978, and a tax-exempt stamp shall be affixed to each package of cigarettes not subject to the cigarette tax pursuant to Section 7-12-4 NMSA 1978.

[D.] E. Stamps shall be affixed inside the boundaries of New Mexico, unless the department has granted a license allowing a person to affix stamps outside New Mexico."

Section 15. Section 7-12-6 NMSA 1978 (being Laws 1971, Chapter 77, Section 6, as amended) is amended to read:

"7-12-6. WAIVER OF REQUIREMENT THAT STAMPS BE AFFIXED.--The requirement imposed in Section 7-12-5 NMSA 1978 that stamps be affixed to packages or containers of cigarettes is waived if:

A. the cigarettes are sold on railroad passenger trains in New Mexico. When unstamped cigarettes are sold on railroad passenger trains in New Mexico, the seller shall remit to the department the tax imposed in Section 7-12-3 NMSA 1978 on or before the twenty-fifth day of the month following the month in which sales of unstamped cigarettes are made on railroad passenger trains in New Mexico; [or]

B. the cigarettes are distributed by a [cigarette] manufacturer to consumers within [the state of] New Mexico as free samples. When unstamped cigarettes are distributed by a [cigarette] manufacturer in New Mexico as free samples, the manufacturer shall remit to the department the tax imposed in Section 7-12-3 NMSA 1978 on or before the twenty-fifth day of the month following the month in which distributions of unstamped cigarettes are made; or

C. the cigarettes are distributed by a manufacturer pursuant to federal regulations and are exempt from tax under 26 USCA 5704."

Section 16. Section 7-12-7 NMSA 1978 (being Laws 1971, Chapter 77, Section 7, as amended) is amended to read:

"7-12-7. SALE OF STAMPS--NUMBERING--PRICES.--

A. The department shall sell stamps [to any person who sells in New Mexico cigarettes manufactured by that person and to any person who receives on consignment or buys unstamped cigarettes for sale, gift or consumption in New Mexico, provided such persons are registered with the department under the provisions of Section 7-1-12 NMSA 1978] only to distributors licensed pursuant to the Cigarette Tax Act.

B. Each roll or group of sheets of stamps shall have a separate serial number that shall be legible at the point of sale. The department shall keep records of which distributor purchases each roll or group of sheets. Stamps bearing the same serial number shall not be sold to more than one distributor.

C. Tax stamps shall be sold at their face value with the following discounts:

(1) four percent less than the face value of the first thirty thousand dollars ($30,000) of stamps purchased in one calendar month;

(2) three percent less than the face value of the second thirty thousand dollars ($30,000) of stamps purchased in one calendar month; and

(3) two percent less than the face value of all stamps purchased in excess of sixty thousand dollars ($60,000) in one calendar month.

[B.] D. If the face value of stamps sold in a single sale is less than one thousand dollars ($1,000), the discount provided for in this section shall not be allowed.

[C.] E. Payment for stamps shall be made on or before the twenty-fifth day of the month following the month in which the sale of stamps by the department is made.

F. Tax-exempt stamps shall be provided only to licensed distributors and shall be free of charge; provided that the distributor is in full compliance with the reporting requirements of the Cigarette Tax Act and rules promulgated pursuant to that act."

Section 17. Section 7-12-8 NMSA 1978 (being Laws 1971, Chapter 77, Section 8, as amended) is amended to read:

"7-12-8. REDEMPTION OF STAMPS.--The department shall redeem unused or destroyed stamps at the price paid by the [buyer] licensed distributor, provided acceptable proof of [such] destruction is provided the department. The department shall redeem licensed distributors for stamps affixed to packages of cigarettes that have become unfit for use, unsalable, destroyed, returned for credit or replaced, upon presentation of evidence by the distributor that the cigarettes will not be sold to consumers in New Mexico. It is presumed that the stamps presented for redemption were the last stamps bought in the month in which the sale of the stamps was made. If the month in which the sale was made is unknown, the amount to be paid by the department upon redemption shall be computed as if the stamps presented for redemption were the last stamps bought in the average monthly number of stamps bought during the preceding calendar year."

Section 18. Section 7-12-9 NMSA 1978 (being Laws 1971, Chapter 77, Section 9, as amended) is amended to read:

"7-12-9. LICENSE NECESSARY TO ENGAGE IN BUSINESS OF SELLING CIGARETTES IN NEW MEXICO.--

A. A person shall not engage in business as a manufacturer, distributor or retailer of cigarettes without first obtaining a license from the department.

B. A manufacturer or distributor shall sell or distribute cigarettes within New Mexico only to a distributor or a retailer with a valid current license. A distributor or retailer shall obtain cigarettes within New Mexico only from a manufacturer or distributor with a valid current license.

C. The department shall, by rule, specify the length of time for which a license remains in effect, except that a license issued under this section shall not remain in effect for longer than three years.

D. An application for a license shall be submitted on a form established by the department and shall provide:

(1) the name and address of the applicant and, if the applicant is a firm, partnership or association, the name and address of each of its members and, if the applicant is a corporation, the name and address of each of its officers; (2) the address of the applicant's principal place of business and every location where the applicant's business is conducted; and

(3) any other information the department may require.

E. A person engaging in business as a retailer, distributor or manufacturer or a combination of these activities shall obtain a separate license for each activity.

F. A license may not be granted, maintained or renewed if any of the following conditions applies to the applicant:

(1) the applicant owes five hundred dollars ($500) or more in delinquent cigarette taxes;

(2) the applicant had a manufacturer, distributor or retailer license revoked by the department within the past two years;

(3) the applicant was convicted of a crime relating to cigarettes;

(4) the applicant was convicted of a felony;

(5) the applicant is a manufacturer but not a participating manufacturer as defined in Section II(jj) of the master settlement agreement and the applicant is not in compliance with Section 6-4-13 NMSA 1978; or

(6) the applicant is a manufacturer and imports cigarettes into the United States that are in violation of 19 USCA 1681a, or manufactures cigarettes that do not comply with the federal Cigarette Labeling and Advertising Act.

G. As used in Subsection F of this section, "applicant" includes a person or persons owning, directly or indirectly, in the aggregate, more than ten percent of the ownership interest in the business holding or applying for a license.

H. In addition to any civil or criminal penalty provided by law, upon a finding that a licensee has violated a provision of the Cigarette Tax Act, the department may revoke or suspend the license or licenses of the licensee.

I. The department shall create and maintain a web site listing all current licensees and the licenses they hold pursuant to the Cigarette Tax Act.

J. [Each] A person engaged in the business of selling cigarettes in New Mexico shall register and comply with the provisions of Section 7-1-12 NMSA 1978.

K. Every person selling cigarettes in New Mexico shall furnish [such] information [as may be] requested by the department concerning that person's vending machines or other places of business where cigarettes are sold."

Section 19. Section 7-12-10 NMSA 1978 (being Laws 1971, Chapter 77, Section 10, as amended) is amended to read:

"7-12-10. RETENTION OF INVOICES AND RECORDS--INSPECTION BY DEPARTMENT.--

[A. Each person who sells cigarettes in New Mexico for resale in New Mexico shall maintain a file of copies of the invoices of sale for three years from the end of the year in which the sale was made. The invoices shall indicate the date of sale, quantity of cigarettes sold, the price received and the name and address of the buyer.

B. Each person who sells cigarettes in New Mexico shall maintain a file of copies of the invoices under which the cigarettes were purchased for three years from the end of the year during which cigarettes were purchased. The invoices shall indicate the date of purchase, the quantity of cigarettes purchased, the price paid and the name and address of the seller.

C. All invoices required to be kept under this section may be inspected by the department along with any stock of cigarettes in the possession of the seller.]

A. A distributor, retailer or manufacturer shall maintain copies of invoices for each of its facilities for every transaction involving a cigarette sale, purchase, transfer, receipt or consignment. The invoices shall show the name and address of the seller, purchaser, consignor or consignee, or the address of another facility of the same distributor, retailer or manufacturer, the date, the price and the quantity by each brand of cigarettes involved in each transaction.

B. The records required under Subsection A of this section shall be preserved on the premises described in the license in such a manner as to ensure permanency and accessibility for inspection at reasonable hours by the department. With the department's permission, manufacturers, distributors and retailers with multiple places of business may retain centralized records, but shall transmit duplicates of the records to each place of business within twenty-four hours upon the request of the department.

C. The records required by Subsection A of this section shall be retained for a period of three years from the end of the year in which the transaction occurred unless otherwise required by law to be retained for a longer period of time.

D. The department and the secretary of the United States department of treasury, or a designee, may inspect the reports and records required under the Cigarette Tax Act along with any stock of cigarettes in the possession of the manufacturer, distributor or retailer. The department at its sole discretion may share those records and reports with law enforcement officials of the federal government, other states and international authorities.

E. The department shall have the authority to enter and inspect, without a warrant during normal business hours and with a warrant during non-business hours, the facilities and records of a manufacturer, distributor or retailer.

F. If the department or a law enforcement officer has reasonable grounds to believe that a vehicle is transporting cigarettes in violation of the Cigarette Tax Act, the department or the law enforcement officer is authorized to stop the vehicle and to inspect it for contraband cigarettes."

Section 20. Section 7-12-11 NMSA 1978 (being Laws 1971, Chapter 77, Section 11) is amended to read:

"7-12-11. EXPORT SELLERS--PHYSICAL SEGREGATION OF CIGARETTES TO BE EXPORTED.--[Any person]

A. A distributor selling and shipping cigarettes outside New Mexico may maintain unstamped cigarettes on [his] the distributor's premises if the unstamped cigarettes to be shipped outside the state are kept in a separate part of [his] the distributor's place of business, physically segregated from cigarettes to be sold inside New Mexico and clearly identified as cigarettes for shipment outside the state. Unstamped cigarette packages shall not be transferred by a distributor to another facility of the distributor or to another person within New Mexico. If cigarettes to be sold outside New Mexico are intermingled with cigarettes to be sold inside New Mexico, they shall be stamped and treated for purposes of the Cigarette Tax Act as cigarettes to be sold inside New Mexico.

B. A person doing business as both a distributor and a retailer shall maintain separate areas for stamped and unstamped cigarette packages."

Section 21. Section 7-12-12 NMSA 1978 (being Laws 1971, Chapter 77, Section 12, as amended) is amended to read:

"7-12-12. SHIPMENT OF UNSTAMPED CIGARETTES IN NEW MEXICO.--

A. A person who ships unstamped cigarette packages into New Mexico other than to a licensed distributor shall first file a notice of the shipment with the department.

B. A person who transports unstamped cigarette packages into or within New Mexico shall carry, in the transporting vehicle, invoices or equivalent documents applicable to all cigarettes in the shipment. The invoices or documents shall show the name and address of the consignor or seller, the name and address of the consignee or purchaser and the quantity of each brand of cigarettes transported.

C. Subsections A and B of this section shall not apply to a common or contract carrier transporting cigarettes through New Mexico to another location under a proper bill of lading or freight bill that states the quantity, source and destination of the cigarettes.

D. The [secretary] department may, by [regulation] rule, require and prescribe the contents of reports to be filed with the department by persons transporting unstamped cigarettes in New Mexico."

Section 22. Section 7-12-13 NMSA 1978 (being Laws 1971, Chapter 77, Section 13, as amended) is amended to read:

"7-12-13. CIVIL PENALTIES.--

[A. Any person selling cigarettes in New Mexico and required by the provisions of Section 7-12-10 NMSA 1978 to retain invoices who willfully fails to retain such invoices shall, upon conviction, be fined not less than twenty-five dollars ($25.00) or more than two hundred dollars ($200). Jurisdiction over such actions is granted to the magistrate courts.

B. Any person not a manufacturer of cigarettes who sells cigarettes in New Mexico without the stamps required by Section 7-12-5 NMSA 1978 affixed thereto and without that requirement having been waived under Section 7-12-6 NMSA 1978 shall, upon conviction, be fined not less than one hundred dollars ($100) or more than five hundred dollars ($500) or imprisoned not more than ninety days in the county jail, or both. Jurisdiction over such actions is granted to the magistrate courts.

C. The department shall seize and sell cigarettes which are not stamped as required by the Cigarette Tax Act. The sale shall be made pursuant to the provisions of Sections 7-1-41 through 7-1-49 and 7-1-51 NMSA 1978. The department shall collect the amount of cigarette tax due on such unstamped cigarettes, plus fifty percent thereof as penalty, from the proceeds of sale.]

A. Whoever knowingly omits, neglects or refuses to comply with the Cigarette Tax Act shall, in addition to any other penalty provided in that act, be liable for a penalty up to one thousand dollars ($1,000) to be recovered, with costs of suit, in a civil action.

B. Whoever fails to pay a tax imposed by the Cigarette Tax Act at the time due shall, in addition to any other penalty provided in that act, be liable for a penalty of five hundred percent of the tax due but unpaid.

C. Cigarettes held for sale or distribution within New Mexico that are in violation of the Cigarette Tax Act, and the machinery used to manufacture the cigarettes, shall be subject to seizure, forfeiture and destruction.

D. Fixtures, equipment and all other materials and personal property on the premises of a distributor or retailer shall be forfeited to the state if, with intent to defraud the state, the distributor or retailer:

(1) fails to keep or make a record, return, report or inventory required by the Cigarette Tax Act;

(2) keeps or makes a false or fraudulent record, return, report or inventory required by the Cigarette Tax Act;

(3) refuses to pay a tax imposed by the Cigarette Tax Act; or

(4) attempts to evade or defeat the requirements of the Cigarette Tax Act."

Section 23. A new section of the Cigarette Tax Act is enacted to read:

"[NEW MATERIAL] POSSESSION OF UNSTAMPED CIGARETTE PACKAGE.--Except as otherwise provided in the Cigarette Tax Act, it is unlawful to own, possess, sell or offer for sale an unstamped cigarette package."

Section 24. A new section of the Cigarette Tax Act is enacted to read:

"[NEW MATERIAL] REPORTS.--

A. A distributor shall submit periodic reports to the department, in the manner and on the form prescribed by the department. A distributor shall submit a separate report for each of its facilities. The information in the report shall be itemized and shall clearly disclose cigarette brands, quantities and the type of stamp applied to cigarette packages. A report shall include the:

(1) inventory of stamped and unstamped cigarette packages held for sale or distribution within New Mexico at the beginning of the reporting period;

(2) quantity of stamped cigarette packages held for sale or distribution within New Mexico that were received from another person during the reporting period and the name and address of each person from whom each quantity was received;

(3) quantity of New Mexico stamped cigarette packages that were distributed or shipped to another distributor or retailer within New Mexico during the reporting period and the name and address of each person to whom each quantity was distributed or shipped;

(4) quantity of New Mexico stamped cigarette packages that were distributed or shipped to another facility of the same distributor within New Mexico during the reporting period and the address of the facility;

(5) quantity of stamped cigarette packages that were distributed or shipped within New Mexico to Indian tribal entities or to instrumentalities of the federal government during the reporting period and the name and address of each person, entity or instrumentality to whom each quantity was distributed or shipped;

(6) inventory of stamped and unstamped cigarette packages held for sale or distribution within New Mexico at the end of the reporting period;

(7) inventory of cigarette packages held for sale or distribution outside New Mexico at the beginning of the reporting period;

(8) quantity of cigarette packages held for sale or distribution outside New Mexico that were received from another person during the reporting period and the name and address of each person from whom each quantity was received;

(9) quantity of cigarette packages that were distributed or shipped outside New Mexico during the reporting period;

(10) inventory of cigarette packages held for sale or distribution outside New Mexico at the end of the reporting period;

(11) number of each type of stamp on hand at the beginning of the reporting period;

(12) number of each type of stamp purchased or received during the reporting period;

(13) number of each type of stamp applied during the reporting period; and

(14) number of each type of stamp on hand at the end of the reporting period.

B. A retailer shall submit periodic reports to the department, in the manner and on the form prescribed by the department. A retailer shall submit a separate report for each facility operated by the retailer. The information in the report shall be itemized and clearly disclose cigarette brands, quantities and the type of stamp applied to the cigarette packages. A report shall contain:

(1) the inventory of stamped cigarette packages on hand at the beginning of the reporting period;

(2) the quantity of stamped cigarette packages received by the retailer from another person during the reporting period and the name and address of each person from whom each quantity was received;

(3) the quantity of stamped cigarette packages distributed or shipped to another retailer during the reporting period and the name and address of each person to whom each quantity was distributed or shipped;

(4) the quantity of stamped cigarette packages distributed or shipped to another facility of the same retailer during the reporting period and the address of the facility to which each quantity was distributed or shipped;

(5) the quantity of stamped cigarette packages sold to consumers during the reporting period;

(6) the inventory of stamped cigarette packages on hand at the end of the reporting period; and

(7) each sale of more than four hundred cigarettes, or two cartons, to a person in a single transaction.

C. A manufacturer shall submit periodic reports, in the manner and on the form prescribed by the department. The information in the report shall be itemized to clearly disclose cigarette brands and quantities. The reports shall be provided separately with respect to each of the facilities operated by the manufacturer. A report shall contain the:

(1) quantity of cigarette packages that were distributed or shipped to a manufacturer, distributor or retailer within New Mexico during the reporting period and the name and address of each person to whom each quantity was distributed or shipped;

(2) quantity of cigarette packages that were distributed or shipped to another facility within New Mexico of the same manufacturer during the reporting period and the address of the facility; and

(3) quantity of cigarette packages that were distributed or shipped within New Mexico to Indian tribal entities or instrumentalities of the federal government during the reporting period and the name and address of each person to whom each quantity was distributed or shipped.

D. The department may require additional information to be submitted. The department shall establish the reporting period, which shall be no longer than three calendar months and no shorter than one calendar month."

Section 25. A new section of the Cigarette Tax Act is enacted to read:

"[NEW MATERIAL] CRIMINAL PENALTIES.--

A. Whoever, with the intent to defraud, fails to keep or make a record, return, report or inventory required by the Cigarette Tax Act or by rule promulgated pursuant to that act is guilty of a fourth degree felony and shall be sentenced in accordance with the provisions of Section 31-18-15 NMSA 1978.

B. Whoever, with the intent to defraud, keeps or makes a fraudulent record, return, report or inventory required by the Cigarette Tax Act or by rule promulgated pursuant to that act is guilty of a fourth degree felony and shall be sentenced in accordance with the provisions of Section 31-18-15 NMSA 1978.

C. Whoever, with the intent to defraud, refuses to pay or attempts to evade or defeat payment of the tax imposed by the Cigarette Tax Act is guilty of a fourth degree felony and shall be sentenced in accordance with the provisions of Section 31-18-15 NMSA 1978.

D. Whoever, with the intent to defraud, fails to comply with a requirement of the Cigarette Tax Act is guilty of a fourth degree felony and shall be sentenced in accordance with the provisions of Section 31-18-15 NMSA 1978.

E. Notwithstanding any other provision of law, the sale or possession for sale of counterfeit cigarettes shall result in the seizure of the product and related machinery by the department or a law enforcement agency and shall be punishable as follows:

(1) a first violation with a quantity of less than two cartons of counterfeit cigarettes, or the equivalent, shall be punished by a fine of not more than one thousand dollars ($1,000) or imprisonment for a definite term not to exceed eighteen months, or both;

(2) a second and subsequent violation with a quantity of less than two cartons of counterfeit cigarettes, or the equivalent, shall be punished by a fine not to exceed five thousand dollars ($5,000) or imprisonment for a definite term not to exceed eighteen months, or both, and shall also result in the revocation by the department of the manufacturer's, distributor's or retailer's license;

(3) a first violation with a quantity of two cartons or more of counterfeit cigarettes, or the equivalent, shall be punished by a fine not to exceed two thousand dollars ($2,000) or imprisonment for a definite term not to exceed eighteen months, or both; or

(4) a second and subsequent violation with a quantity of two cartons or more of counterfeit cigarettes, or the equivalent, shall be punished by a fine not to exceed fifty thousand dollars ($50,000) or imprisonment for a definite term not to exceed eighteen months, or both, and shall also result in the revocation by the department of the manufacturer's, distributor's or retailer's license.

F. As used this section, "counterfeit cigarettes" include cigarette packs with counterfeit stamps, cigarettes that have false manufacturing labels or cigarette packs without tax or tax-exempt stamps.

G. A counterfeit cigarette seized by the department or by a law enforcement agency shall be destroyed.

H. Except for those violations described in Subsections A through E of this section, whoever violates a provision of the Cigarette Tax Act or a rule promulgated pursuant to that act is guilty of a misdemeanor and shall be sentenced in accordance with Section 31-19-1 NMSA 1978."