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SPONSOR: |
Garcia |
DATE
TYPED: |
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HB |
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SHORT
TITLE: |
Tobacco
Escrow Fund Act |
SB |
801/a
SJC |
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ANALYST: |
Smith |
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APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
FY03 |
FY04 |
FY03 |
FY04 |
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See Narrative |
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|
|
|
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|
(Parenthesis
( ) Indicate Expenditure Decreases)
REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
|
See Narrative |
Recurring |
New Fund |
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(Parenthesis
( ) Indicate Revenue Decreases)
Responses
Received From
TRD
SUMMARY
The
Senate Judiciary Committee amendments to Senate bill 801 make a number of technical
changes to the bill.
Synopsis of Original Bill
Senate Bill 801 creates
a “Tobacco Escrow Fund Act” (TEFA) to improve compliance with the master
settlement agreement between the states and the tobacco companies. TEFA requires that tobacco product
manufacturers whose cigarettes are sold in NM provide to the attorney general
various information about their businesses and brands on an annual basis. Non-participating manufacturers (defined in
Section II(jj)) must verify that they are maintaining an escrow account in compliance
with Section
The attorney general
shall publish on its web site a directory listing of all tobacco product manufacturers
that have provided current, accurate and complete certifications. The attorney general shall keep this list
current and inform a manufacturer if they are in jeopardy of being removed from
the list.
Section 8 of the Act requires
distributors to submit, on a monthly basis, to the Taxation and Revenue
Department a list of brand families and the total number of cigarettes for
which the distributor affixed stamps or otherwise paid tax due. A distributor shall also provide documentation
of sales of all non-participating manufacturer cigarettes. Further, the attorney general may require
information from a financial institution about the status and balance of an
escrow account established by a non-participating manufacturer on behalf of the
state.
Section 9 makes it
illegal to sell, offer or possess for sale cigarettes of a tobacco product manufacturer
that is not included in the attorney general’s directory.
ADMINISTRATIVE
IMPLICATIONS
TRD notes that the department’s cigarette tax unit is responsible for
compiling information from the cigarette distributors/wholesalers per the
tobacco settlement agreement on behalf of the attorney general. There will be a moderate impact for the
special tax unit. The bill will require modifications to the current reporting
form and instructions since additional information will need to be collected.
Initially, additional resources (2 FTE) will be
needed to change the forms, instructions, and to assist with the education of
and compliance from cigarette wholesalers/distributors. Prior changes to the reporting requirements
resulted in compliance issues with the wholesalers and distributors. Longer-term, one additional FTE will be
required to manage the additional data entry requirements.
Additionally, a tracking
system would need to be created and maintained for the existing clients within
the cigarette tax system. A report would
have to be developed and maintained so as to link information from the cigarette
client to the attorney general via a web interface. A small database would also have to be
devised to handle the reports and penalties for non-compliance. The estimated cost for this would be $16,800.
TECHNICAL
ISSUES
Sections 8(f), 9(f) and
10(B) of this bill provides the state shall be entitled to costs, expenses and
attorneys fees if the state files suit under those sections to enforce the
Act. This should probably state that the
State can recover costs, expenses and attorneys fees if it brings suit and
substantially prevails.
SS/njw:yr