MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Ways and Means

By: Representative Holland

AN ACT TO PROHIBIT UNFAIR AND DECEPTIVE PACKAGING OF CIGARETTES; TO PROVIDE PENALTIES FOR VIOLATIONS OF THIS ACT; TO PROVIDE FOR THE ENFORCEMENT OF THIS ACT; TO PROVIDE EXCEPTIONS; TO AMEND SECTIONS 27-69-27, 27-69-35 AND 27-69-37, MISSISSIPPI CODE OF 1972, IN CONFORMITY; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. It shall be unlawful for any person:

(a) To sell or distribute in this state or to acquire, hold, own, possess, or transport, for sale or distribution in this state, or to import, or cause to be imported, into this state for sale or distribution in this state:

(i) Any cigarettes the package of which:

1. Bears any statement, label, stamp, sticker, or notice indicating that manufacturer did not intend the cigarettes to be sold, distributed, or used in the United States, including, but not limited to, labels stating, "For Export Only," "U.S. Tax Exempt," "For Use Outside U.S.," or similar wording; or

2. Does not comply with:

a. All requirements imposed by or pursuant to federal law regarding warnings and other information on packages of cigarettes manufactured, packaged, or imported for resale, distribution, or use in the United States, including but not limited to the precise warning labels specified in the Federal Cigarette Labeling and Advertising Act, 15 USCS 1333; and

b. All federal trademark and copyright laws;

(ii) Any cigarettes imported into the United States on or after January 1, 2000, in violation of 26 USCS 5754 or any other federal law, or implementing federal regulations;

(iii) Any cigarettes that such person otherwise knows or has reason to know the manufacturer did not intend to be sold, distributed, or used in the United States; or

(iv) Any cigarettes for which there has not been submitted to the Secretary of the United States Department of Health and Human Services the list or lists of the ingredients added to tobacco in the manufacture of such cigarettes as required by the Federal Cigarette Labeling and Advertising Act, 15 USCS 1335a;

(b) To alter the package of any cigarettes, prior to sale or distribution to the ultimate consumer, so as to remove, conceal or obscure:

(i) Any statement, label, stamp, sticker, or notice described in paragraph (a)(i) 1. of this section;

(ii) Any health warning that is not specified in, or does not conform with the requirements of, the Federal Cigarette Labeling and Advertising Act, 15 USCS 1333; or

(c) To affix any stamp required pursuant to Chapter 69, Title 27, Mississippi Code of 1972, to the package of any cigarettes described in paragraph (a) of this section or altered in violation of paragraph (b) of this section.

SECTION 2. Any person that commits any of the acts prohibited by Section 1 of this act, either knowing or having reason to know that he is doing so, or that fails to comply with any of the requirements of Sections 27-69-27, 27-69-35 or 27-69-37 is guilty of a felony, punishable by a fine of not more than Five Thousand Dollars ($5,000.00) or imprisonment of not more than five (5) years, or both such fine and imprisonment.

SECTION 3. (1) Upon finding a violation by a permittee of this act or a regulation promulgated hereunder, the State Tax Commissioner may revoke or suspend the license or licenses of any permittee pursuant to the procedures set forth in Section 27-69-9 and may also impose on the permittee a civil penalty in an amount not to exceed the greater of five hundred percent (500%) of the retail value of the cigarettes involved or Five Thousand Dollars ($5,000.00).

(2) Cigarettes that are acquired, held, owned, possessed, transported in, imported into, or sold or distributed in this state in violation of this act shall be deemed contraband under Sections 27-69-53 through 27-69-57 and are subject to seizure and forfeiture as provided therein. Such cigarettes shall be deemed contraband whether the violation of this act is knowing or otherwise. The proceeds of any sale of tobacco deemed contraband shall be distributed the same as provided by law for the distribution of sales of beer which is confiscated that was sold to minors.

SECTION 4. For purposes of Chapter 23, Title 75, cigarettes imported or reimported into the United States for sale or distribution under any trade name, trade dress, or trademark that is the same as, or is confusingly similar to, any trade name, trade dress, or trademark used for cigarettes manufactured in the United States for sale or distribution in the United States shall be presumed to have been purchased outside of the ordinary channels of trade.

SECTION 5. (1) This act shall be enforced by the Office of the Attorney General, district attorneys and county prosecuting attorneys. The authority enforcing this act may request the assistance of local law enforcement agencies, and local law enforcement agencies receiving a request for assistance in the enforcement of this act shall provide the necessary assistance.

(2) The State Tax Commissioner may provide assistance to the enforcing authority, including but not limited to, the providing of information to the enforcing authority. The commissioner and any enforcing authority may request information from each other and from any other state agency, local or federal agency or permittee.

(3) In addition to any other remedy provided by law, any person may bring an action for appropriate injunctive or equitable relief, actual damages, if any, sustained by reason of a violation of this act, interest, reasonable attorney's fees and court costs.

(4) If the trier of fact determines that a violation of this act is flagrant, it may award additional damages in an amount not to exceed twice the amount of the award of actual damages.

SECTION 6. (1) This act does not apply to:

(a) Cigarettes allowed to be imported or brought into the United States for personal use free of federal tax or duty or voluntarily abandoned to the United States Secretary of the Treasury at the time of entry; and

(b) Cigarettes sold or intended to be sold as duty-free merchandise by a duty-free sales enterprise in accordance with the provisions of 19 USCS 1555(b) and any regulations promulgated thereunder, provided, however, that this act shall apply to any such cigarettes that are brought back into the customs territory for resale with the customs territory.

(2) The penalties imposed under this act are in addition to any other penalties provided for by law.

SECTION 7. The State Tax Commissioner is authorized to promulgate any regulations necessary for the implementation of this act.

SECTION 8. Section 27-69-27, Mississippi Code of 1972, is amended as follows:

27-69-27. The payment of the tax imposed by this chapter shall be evidenced by affixing stamps to each individual package of cigarettes usually sold to consumers, as distinguished from cartons or larger units which are composed of a number of individual packages.

The stamp shall be affixed within seventy-two (72) hours after the receipt of the cigarettes by the wholesaler, and within forty-eight (48) hours after receipt of the cigarettes by the retailer; provided, that in the case a dealer conducts a wholesale and retail business at one (1) place of business, stamps shall be affixed within forty-eight (48) hours after receipt of the cigarettes. The stamp must be so securely affixed as to require the continued application of water or of steam to remove it, or so that it cannot be otherwise removed without destruction or mutilation.

The excise tax imposed on cigars, smoking tobacco, chewing tobacco, snuff and all other tobacco products except cigarettes shall be computed by the application of the excise tax rate to the manufacturer's list price on all purchases of such tobacco. The excise tax shall be due and payable on or before the fifteenth day of the month next succeeding the month in which the tax accrues. The tax shall be filed with the commissioner on forms prescribed by the commissioner.

Provided, however, manufacturers or other wholesale distributors of tobacco, which are subject to the excise taxes imposed by Section 27-69-13 of this chapter for the privilege of selling or using such tobaccos within this state, who maintain "terminals" or warehouses in which such tobaccos are stored, and who sell only to licensed wholesale dealers within the state who are qualified to purchase and affix the stamps required, may maintain such "spot stocks," intended only for such sales, without affixing the stamps or filing returns and paying the tax.

Any person desiring to maintain such "terminal" or warehouse, shall make application to the commissioner and obtain a permit to maintain such stocks without affixing stamps thereto, for sale exclusively to out-of-state purchasers, or licensed wholesale dealers within this state, and the commissioner is hereby authorized to grant such permit upon the execution and filing with the commissioner, by the applicant, a bond with surety companies, authorized to do business in Mississippi, as surety thereon, and conditioned for the strict compliance by the applicant, with the following conditions under which said privilege may be granted.

The person maintaining such stock of untaxed tobacco shall supply to the commissioner monthly, or at such times as the commissioner may require, complete invoices of all tobaccos received, and shall also supply correct invoices of all tobaccos removed from such "terminal" or warehouse, said invoices to contain the correct name and address of all persons to whom such tobacco shall be delivered or consigned, whether within or without the State of Mississippi.

The penalty of such bond shall be determined by the commissioner, in an amount sufficient to protect the State of Mississippi from any loss of revenue which might occur by reason of the failure of principal to strictly adhere to the requirement that no tobacco would be sold from such stock within the State of Mississippi, except to licensed wholesale dealers.

The provisions of Sections 1 through 7 of House Bill No.__, 2000 Regular Session shall apply to the unfair sales of cigarettes.

SECTION 9. Section 27-69-35, Mississippi Code of 1972, is amended as follows:

27-69-35. It shall be the duty of every person subject to the provisions of this chapter, to keep an accurate set of records, showing all transactions had with reference to the purchase, sale or gift of cigars, cigarettes, or smoking tobacco, and such person shall keep separately all invoices of cigars, cigarettes or smoking tobacco, and shall keep a record of all stamps purchased, and such records, and all stocks of cigars, cigarettes or smoking tobacco on hand, shall be open to inspection at all reasonable times to the commissioner; provided, however, that all retail dealers, transient vendors, distributing agents, or other dealers purchasing, or receiving cigars, cigarettes, or smoking tobacco from without the state, whether the same shall have been ordered through a wholesaler, or jobber in this state, or by drop shipment, or otherwise, shall within five (5) days after receipt of the same, mail a duplicate invoice of all such purchases, or receipts, to the commissioner, and failure to furnish such duplicate invoices shall be deemed a misdemeanor.

It is further provided that all manufacturers, distributors and wholesalers of cigars, cigarettes or smoking tobacco, who have a permit required by this chapter shall furnish the commissioner with a statement monthly, showing the amount of taxable tobacco received, and must also furnish the commissioner with duplicate invoices covering stamps affixed to drop shipments purchased by retailers.

In the examination of such books, records, etc., the commissioner shall have the power to administer oaths to any person, and any person answering falsely, under oath, any of such questions, shall be guilty of perjury.

If any person being so examined, fails to answer questions propounded to him by the commissioner, or if any person, being summoned to appear and answer such questions, shall fail or refuse to do so, or if any person shall fail or refuse to permit the inspection of his stock of merchandise, or invoices, or books, or papers pertaining to any dealers in cigars, cigarettes or smoking tobacco, the commissioner may make such fact known to the circuit court of the county in which such failure or refusal occurs, or judge thereof in termtime or in vacation, by petition, and such circuit court, or judge thereof, shall issue a summons for such person so refusing, returnable on a date to be fixed by said court, or said judge, and on said date, the said circuit court, or the circuit judge, shall proceed to examine into the truth of the matter set out in said petition, and if the same be found to be true, the said circuit court, or circuit judge, shall issue a writ of subpoena duces tecum ordering and directing the person so summoned to bring into court, and exhibit for the inspection of the commissioner, all such books, records, invoices, etc., as the court may deem proper from all the facts and circumstances in the case. Any person failing or refusing to present such books, records, invoices, etc., or failing or refusing to testify, shall be punished for contempt as provided by Section 9-1-17 of the Mississippi Code of 1972.

The provisions of Sections 1 through 7 of House Bill No.____, 2000 Regular Session, shall apply to the unfair sales of cigarettes and the records required by this section shall be available in the enforcement thereof.

SECTION 10. Section 27-69-37, Mississippi Code of 1972, is amended as follows:

27-69-37. Each person engaged as a wholesaler or retailer in the sale, use or consumption of tobacco, shall keep and preserve separately from all other invoices, for a period of three (3) years, all invoices of tobacco and of stamps bought by him, and shall permit the commissioner to inspect and examine all merchandise, invoices, books, papers and memoranda as may be necessary in ascertaining whether or not the tax levied herein has been paid, or to determine the amount of such tax that may be due, or due and unpaid. The failure of any person required to pay the tax herein levied, to preserve said invoices as above provided, or to permit the inspection and examination of merchandise, invoices, books, papers and memoranda, at the request of the commissioner, or his authorized agent, shall be deemed a violation of this chapter, and the commissioner may revoke the permit issued to such person as provided under Section 27-69-5 of this chapter, and also punishable as hereinafter set out. And the record of said invoices shall be open for inspection by the commissioner for the purpose of enforcing the provisions of this chapter and Sections 1 through 7 of House Bill No._____, 2000 Regular Session, regarding unfair sales of cigarettes.

SECTION 11. Sections 1 through 7 of this act shall be codified in Chapter 23, Title 75, Mississippi Code of 1972.

SECTION 12. This act shall take effect and be in force from and after its passage.