SENATE BILL 225
50th legislature - STATE OF NEW MEXICO - second session, 2012
INTRODUCED BY
Lynda M. Lovejoy
ENDORSED BY THE TOBACCO SETTLEMENT REVENUE OVERSIGHT COMMITTEE AND THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE
AN ACT
RELATING TO TOBACCO SALES; CLARIFYING THAT CIGARETTE PACKS STAMPED WITH TAX-CREDIT STAMPS ARE "UNITS SOLD" FOR THE PURPOSE OF DETERMINING ESCROW PAYMENTS DUE PURSUANT TO THE MASTER SETTLEMENT AGREEMENT; AMENDING THE CIGARETTE TAX ACT; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 6-4-12 NMSA 1978 (being Laws 1999, Chapter 208, Section 1, as amended) is amended to read:
"6-4-12. DEFINITIONS.--As used in Sections 6-4-12 [and 6-4-13] through 6-4-13.2 NMSA 1978:
A. "adjusted for inflation" means increased in accordance with the formula for inflation adjustment set forth in Exhibit C to the Master Settlement Agreement;
B. "affiliate" means a person who directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, another person. Solely for purposes of this definition, the terms "owns", "is owned" and "ownership" mean ownership of an equity interest, or the equivalent thereof, of ten percent or more, and the term "person" means an individual, partnership, committee, association, corporation or any other organization or group of persons;
C. "allocable share" means "Allocable Share" as that term is defined in the Master Settlement Agreement;
D. "cigarette" means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use and consists of or contains:
(1) any roll of tobacco wrapped in paper or in any substance not containing tobacco;
(2) tobacco, in any form, that is functional in the product [which] 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, consumers as a cigarette; or
(3) any roll of tobacco wrapped in any substance containing tobacco [which] 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, consumers as a cigarette described in Paragraph (1) of this subsection. The term "cigarette" includes "roll-your-own" (i.e., any tobacco [which] 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). For purposes of this definition of "cigarette", 0.09 ounces of "roll-your-own" tobacco shall constitute one individual "cigarette";
E. "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;
F. "qualified escrow fund" means an escrow arrangement with a federally chartered or state-chartered financial institution having no affiliation with any tobacco product manufacturer and having assets of at least one billion dollars ($1,000,000,000) where such arrangement requires that such financial institution hold the escrowed funds' principal for the benefit of releasing parties and prohibits the tobacco product manufacturer placing the funds into escrow from using, accessing or directing the use of the funds' principal except as consistent with Subsection B of Section 6-4-13 NMSA 1978;
G. "released claims" means "Released Claims" as that term is defined in the Master Settlement Agreement;
H. "releasing parties" means "Releasing Parties" as that term is defined in the Master Settlement Agreement;
I. "tobacco product manufacturer" means an entity that, after the date of enactment of this act, directly (and not exclusively through any affiliate):
(1) manufactures cigarettes anywhere that such manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer (except where such importer is an original participating manufacturer (as that term is defined in the Master Settlement Agreement) that will be responsible for the payments under the Master Settlement Agreement with respect to such cigarettes as a result of the provisions of Subsection II(mm) of the Master Settlement Agreement and that pays the taxes specified in Subsection II(z) of the Master Settlement Agreement, and provided that the manufacturer of such cigarettes does not market or advertise such cigarettes in the United States);
(2) is the first purchaser anywhere for resale in the United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or
(3) becomes a successor of an entity described in Paragraph (1) or (2) of this subsection.
The term "tobacco product manufacturer" shall not include an affiliate of a tobacco product manufacturer unless such affiliate itself falls within Paragraph (1), (2) or (3) of this subsection; and
J. "units sold" means the number of individual cigarettes sold in the state by the applicable tobacco product manufacturer, whether directly or through a distributor, retailer or similar intermediary or intermediaries, during the year in question, as measured by [excise taxes collected, ounces of "roll-your-own" tobacco sold and sales of products bearing tax-exempt stamps on packs or "roll-your-own" tobacco containers. The secretary of taxation and revenue shall promulgate such rules as are necessary to ascertain the amount of state excise tax paid on the cigarettes of such tobacco product manufacturer for each year]:
(1) the excise tax due from cigarettes sold bearing tax stamps pursuant to the Cigarette Tax Act;
(2) ounces of "roll-your-own" tobacco sold on which the tobacco products tax is due pursuant to the Tobacco Products Tax Act; or
(3) cigarettes sold bearing tax-exempt or tax-credit stamps pursuant to the Cigarette Tax Act."
SECTION 2. A new Section 6-4-13.2 NMSA 1978 is enacted to read:
"6-4-13.2. [NEW MATERIAL] RULES--AMOUNT OF STATE EXCISE TAX PAID ON CIGARETTES OF TOBACCO PRODUCT MANUFACTURER.--The secretary of taxation and revenue shall adopt rules regarding how to determine for each year:
A. the amount of state excise tax paid on the cigarettes of a tobacco product manufacturer and on the number of ounces of "roll-your-own" tobacco sold; and
B. the number of cigarettes bearing tax-exempt or tax-credit stamps that are sold."
SECTION 3. 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 shall be placed in packages or containers to which a stamp shall be affixed. Only a distributor with a valid license issued pursuant to the Cigarette Tax Act may purchase or obtain unaffixed tax-exempt stamps, tax-credit stamps or tax stamps. A distributor shall not sell or provide unaffixed stamps to another distributor, manufacturer, export warehouse proprietor or importer with a valid permit pursuant to 26 U.S.C. 5713 or any other person.
B. Stamps shall be affixed by the distributor to
each package of cigarettes to be sold or distributed in New Mexico within thirty days of receipt of those packages.
C. A distributor shall apply stamps only to packages of cigarettes that the distributor has received directly from another distributor or from a manufacturer or importer of cigarettes that possesses a valid and current permit pursuant to 26 U.S.C. 5713.
D. A distributor shall not affix a tax stamp, a tax-exempt stamp or a tax-credit stamp to a package of cigarettes of a manufacturer or a brand family that is not included in the directory or sell, offer or possess for sale cigarettes of a manufacturer or brand family that is not included in the directory.
E. Packages shall contain cigarettes in lots of five, ten, twenty or twenty-five.
F. 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 of cigarettes subject to the cigarette tax, a tax-credit stamp shall be affixed to each package of cigarettes subject to a qualifying tribal cigarette tax 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.
[G. A tax-exempt stamp or tax-credit stamp is not an excise tax stamp for purposes of determining units sold pursuant to Section 6-4-12 NMSA 1978.
H.] G. 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 4. APPLICABILITY.--The provisions of this act shall apply to units sold on or after January 1, 2010 pursuant to Section 6-4-13 NMSA 1978.
SECTION 5. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.
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