August 21, 2007, Introduced by Reps. Sak, Scott, Johnson, Marleau, Wojno, Bieda, Ward, Virgil Smith, Tobocman, Farrah, Gaffney and Dean and referred to the Committee on Regulatory Reform.
A bill to amend 1993 PA 327, entitled
"Tobacco products tax act,"
by amending sections 6a and 9 (MCL 205.426a and 205.429), section
6a as added by 1997 PA 187 and section 9 as amended by 2004 PA 474.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 6a. (1) Beginning April 15, 1998, a wholesaler or
unclassified acquirer other than a manufacturer may apply to the
department for stamps to affix as provided in this act. The
department may prescribe the method of shipment of the stamps. The
department shall keep a record of all stamps disbursed, name of
wholesaler or unclassified acquirer, and date of disbursement. The
department may release the identity of the wholesaler or
unclassified acquirer to whom specific stamps were disbursed to
state or local police agencies.
(2) Beginning May 1, 1998, before delivery, sale, or transfer
to any person in this state, a wholesaler or an unclassified
acquirer shall place or cause to be placed on the bottom of each
individual package of cigarettes to be sold within this state a
stamp provided by the department. Stamps shall be firmly affixed in
such a manner that the stamps cannot be removed without being
mutilated or destroyed. A stamp shall be affixed to each individual
package in an aggregate denomination equal to the amount of the tax
upon the contents of the individual package of cigarettes. A stamp
is considered affixed if more than 50% of the stamp is affixed to
the individual package, as determined by the department.
(3) Beginning May 1, 1998, a retailer or person licensed under
this act, other than a wholesaler or unclassified acquirer or a
person acting as a transporter for a wholesaler or unclassified
acquirer, shall not acquire for resale an individual package of
cigarettes or a cigarette from an individual package unless that
individual package of cigarettes has affixed to it a stamp as
provided in this act.
(4) Beginning September 1, 1998, a retailer or vending machine
operator shall not sell or offer for sale an individual package of
cigarettes to the general public that does not have affixed the
stamp required by this act. Beginning September 1, 1998, cigarettes
without stamps may not be placed or stored in a vending machine.
(5)
The For purposes of this
act and the fire safety standard
and firefighter protection act, the department or its authorized
agents may inspect or conduct an inventory of a wholesaler's or
unclassified acquirer's stock of cigarettes, tobacco products other
than cigarettes, and stamps during regular business hours and
inspect the related statements and other records required in
section 6.
(6)
The For purposes of this
act and the fire safety standard
and firefighter protection act, the department or its authorized
agents may inspect the operations of a secondary wholesaler,
vending machine operator, or retailer, or the contents of a
specific vending machine, during regular business hours. This
inspection shall include inspection of all statements and other
records required by section 6 of this act, of packages of
cigarettes and tobacco products other than cigarettes, and of the
contents of cartons and shipping or storage containers to ascertain
that all individual packages of cigarettes have an affixed stamp of
proper denomination as required by this act and that all cigarettes
are marked as required under section 11 of the fire safety standard
and firefighter protection act. This inspection may also verify
that all the stamps were produced under the authority of the
department. The department shall notify the department of labor and
economic growth if it finds any cigarettes that are not marked as
required under section 11 of the fire safety standard and
firefighter protection act.
(7) A person shall not prevent or hinder the department or its
authorized agents from making a full inspection of any place or
vending machine where cigarettes or tobacco products other than
cigarettes subject to the tax under this act are sold or stored, or
prevent or hinder the full inspection of invoices, books, records,
or
other papers required to be kept by under this act or the fire
safety standard and firefighter protection act.
(8) The department may require wholesalers and unclassified
acquirers to exchange unaffixed stamps with the department as the
department considers necessary. The department may require
wholesalers, unclassified acquirers, secondary wholesalers, vending
machine operators and retailers to discontinue offering for sale
any unsold individual packages of cigarettes bearing a prior
version of the stamp that the department has withdrawn from
circulation. The department may set a reasonable timeline after
which the prior version of the stamp may no longer be offered for
sale and the new version of the stamp is required. A secondary
wholesaler, retailer, or vending machine operator may return
cigarette packages bearing discontinued stamps to a wholesaler for
credit. A wholesaler or unclassified acquirer may take credit on
its tax returns for individual packages of cigarettes bearing
discontinued stamps that are returned to the manufacturer for
credit less the appropriate discount paid.
(9) Except as provided in subsection (10), a wholesaler or
unclassified acquirer shall not give, sell, or lend any unaffixed
stamps to another person and except as otherwise provided in this
act, a person shall not accept, purchase, or borrow any unaffixed
stamps from another person.
(10) Upon written authorization of the department, a
wholesaler or unclassified acquirer licensed under this act may
appoint a stamping agent to affix stamps to individual packages of
cigarettes.
Sec. 9. (1) A tobacco product held, owned, possessed,
transported, or in control of a person in violation of this act or
the fire safety standard and firefighter protection act, and a
vending machine, vehicle, and other tangible personal property
containing a tobacco product in violation of this act or the fire
safety standard and firefighter protection act and any related
books and records are contraband and may be seized and confiscated
by the department as provided in this section.
(2) If an authorized inspector of the department or a police
officer has reasonable cause to believe and does believe that a
tobacco product is being acquired, possessed, transported, kept,
sold, or offered for sale in violation of this act for which the
penalty is a felony, the inspector or police officer may
investigate or search the vehicle of transportation in which the
tobacco product is believed to be located. If a tobacco product is
found in a vehicle searched under this subsection or in a place of
business inspected under this act, the tobacco product, vending
machine, vehicle, other than a vehicle owned or operated by a
transportation company otherwise transporting tobacco products in
compliance with this act, or other tangible personal property
containing those tobacco products and any books and records in
possession of the person in control or possession of the tobacco
product may be seized by the inspector or police officer and are
subject to forfeiture as contraband as provided in this section.
(3) As soon as possible, but not more than 5 business days
after seizure of any alleged contraband, the person making the
seizure shall deliver personally or by registered mail to the last
known address of the person from whom the seizure was made, if
known, an inventory statement of the property seized. If the
contraband is cigarettes seized because of an allegation that the
cigarettes violate the fire safety standard and firefighter
protection act, the person making the seizure shall also provide
notice of the seizure and an inventory of the cigarettes seized to
the manufacturer that certified that brand of cigarettes under
section 7 of the fire safety standard and firefighter protection
act, if any. A copy of the inventory statement shall also be filed
with the state treasurer. The inventory statement shall also
contain a notice to the effect that unless demand for hearing as
provided in this section is made within 10 business days, the
designated property is forfeited to the state. If the person from
whom the seizure was made is not known, the person making the
seizure shall cause a copy of the inventory statement, together
with the notice provided for in this subsection, to be published at
least 3 times in a newspaper of general circulation in the county
where the seizure was made. Within 10 business days after the date
of service of the inventory statement, or in the case of
publication, within 10 business days after the date of last
publication, the person from whom the property was seized or any
person claiming an interest in the property may by registered mail,
facsimile transmission, or personal service file with the state
treasurer a demand for a hearing before the state treasurer or a
person designated by the state treasurer for a determination as to
whether the property was lawfully subject to seizure and
forfeiture. The person shall verify a request for hearing filed by
facsimile transmission by also providing a copy of the original
request for hearing by registered mail or personal service. The
person or persons are entitled to appear before the department, to
be represented by counsel, and to present testimony and argument.
Upon receipt of a request for hearing, the department shall hold
the hearing within 15 business days. The hearing is not a contested
case proceeding and is not subject to the administrative procedures
act of 1969, 1969 PA 306, MCL 24.201 to 24.328. After the hearing,
the department shall render its decision in writing within 10
business days of the hearing and, by order, shall either declare
the seized property subject to seizure and forfeiture, or declare
the property returnable in whole or in part to the person entitled
to possession. If, within 10 business days after the date of
service of the inventory statement, the person from whom the
property was seized or any person claiming an interest in the
property does not file with the state treasurer a demand for a
hearing before the department, the property seized shall be
considered forfeited to the state by operation of law and may be
disposed of by the department as provided in this section. If,
after a hearing before the state treasurer or person designated by
the state treasurer, the department determines that the property is
lawfully subject to seizure and forfeiture and the person from whom
the property was seized or any persons claiming an interest in the
property do not take an appeal to the circuit court of the county
in which the seizure was made within the time prescribed in this
section, the property seized shall be considered forfeited to the
state by operation of law and may be disposed of by the department
as provided in this section.
(4) If a person is aggrieved by the decision of the
department, that person may appeal to the circuit court of the
county where the seizure was made to obtain a judicial
determination of the lawfulness of the seizure and forfeiture. The
action shall be commenced within 20 days after notice of the
department's determination is sent to the person or persons
claiming an interest in the seized property. The court shall hear
the action and determine the issues of fact and law involved in
accordance with rules of practice and procedure as in other in rem
proceedings. If a judicial determination of the lawfulness of the
seizure and forfeiture cannot be made before deterioration of any
of the property seized, the court shall order the destruction or
sale of the property with public notice as determined by the court
and require the proceeds to be deposited with the court until the
lawfulness of the seizure and forfeiture is finally adjudicated.
(5) The department shall destroy all cigarettes forfeited to
this state. However, before destroying cigarettes forfeited because
the cigarettes violated the fire safety standard and firefighter
protection act, the department shall provide a manufacturer that
certified that brand of cigarettes under section 7 of the fire
safety standard and firefighter protection act an opportunity to
inspect the cigarettes.
(6) The department may sell all tobacco products, except
cigarettes, and other property forfeited pursuant to this section
at public sale. Public notice of the sale shall be given at least 5
days before the day of sale. The department may pay an amount not
to exceed 25% of the proceeds of the sale to the local governmental
unit whose law enforcement agency performed the seizure. The
balance of the proceeds derived from the sale by the department
shall be credited to the general fund of the state.
(7) (6)
The seizure and destruction or sale
of a tobacco
product or other property under this section does not relieve a
person from a fine, imprisonment, or other penalty for violation of
this act or the fire safety standard and firefighter protection
act.
(8) (7)
A person who is not an employee or
officer of this
state or a political subdivision of this state who furnishes to the
department or to any law enforcement agency original information
concerning a violation of this act or the fire safety standard and
firefighter protection act, which information results in the
collection and recovery of any tax or penalty or leads to the
forfeiture of any cigarettes, or other property, may be awarded and
paid by the state treasurer, compensation of not more than 10% of
the net amount received from the sale of any forfeited cigarettes
or other property, but not to exceed $5,000.00 which shall be paid
out of the receipts from the sale of the property. If any amount is
issued
paid to the local governmental unit under subsection (5)
(6), the amount awarded under this subsection to a person who
provides original information that results in a seizure of
cigarettes or other property by a local law enforcement agency
shall
be paid from that amount issued paid
under subsection (5)
(6). If in the opinion of the attorney general and the director of
the department of state police it is deemed necessary to preserve
the identity of the person furnishing the information, the attorney
general and the director of the department of state police shall
file with the state treasurer an affidavit setting forth that
necessity and a warrant may be issued jointly to the attorney
general and the director of the department of state police. Upon
payment to the person furnishing that information, the attorney
general and the director of the department of state police shall
file with the state treasurer an affidavit that the money has been
by them paid to the person entitled to the money under this
section.
(9) (8)
Beginning September 1, 1998, if a
retailer possesses
or sells cigarettes on which the tax imposed under this act has not
been paid or accrued to a wholesaler, secondary wholesaler, or
unclassified acquirer licensed under this act, the retailer shall
be prohibited from purchasing, possessing, or selling any
cigarettes or other tobacco products as follows:
(a) For a first violation, for a period of not more than 6
months.
(b) For a second violation within a period of 5 years, for a
period of at least 6 months and not more than 36 months.
(c) For a third or subsequent violation within a period of 5
years, for a period of at least 1 year and not more than 5 years.
(10) (9)
The prohibition described in
subsection (8) shall be
(9) is effective upon service by certified mail or personal service
on the retailer of notice issued by the department ordering the
retailer to cease all sales and purchases of cigarettes and other
tobacco products. Upon receipt of this notice, the retailer may
return any tobacco products in the possession of the retailer upon
which the tax imposed by this act has been paid or accrued to a
wholesaler, secondary wholesaler, or unclassified acquirer licensed
under this act. The department shall notify all licensed
wholesalers, manufacturers, secondary wholesalers, vending machine
operators, and unclassified acquirers of any retailer who has been
prohibited from purchasing cigarettes or other tobacco products and
the duration of the prohibition. A wholesaler, secondary
wholesaler, or unclassified acquirer shall not sell cigarettes or
other tobacco products to a retailer after receipt of notice from
the department that the retailer is prohibited from purchasing
tobacco products. Any cigarettes or other tobacco products found on
the premises of the retailer during the period of prohibition shall
be considered contraband and subject to seizure under this section,
and shall constitute an additional improper possession under this
subsection. The retailer may contest the order prohibiting
purchase, possession, or sale of tobacco products in accordance
with the appeal procedures and time limits provided in subsection
(3) of this section. After completion of the appeals provided or
upon expiration of the period to request such appeal, the
department shall issue a final order and make service upon the
retailer of an order to cease all purchases, possession, and sale
of all cigarettes and other tobacco products for a specified period
as appropriate. This order does not relieve the retailer from
seizure and sale of a tobacco product or other property under this
section, or relieve the retailer from a fine, imprisonment, or
other penalty for violation of this act.
Enacting section 1. This amendatory act takes effect 1 year
after the date this amendatory act is enacted.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No.____ or House Bill No. 5110(request no.
02225'07 **) of the 94th Legislature is enacted into law.