AB 1901, as amended, Quirk. Taxation: cigarettes: unaffixed stamps.
The Cigarette and Tobacco Products Tax Law imposes a tax on distributors of cigarettes at the rate of $0.87 per package of 20 cigarettes. That law requires that tax be paid through the use of stamps or meter impressions, and requires that these stamps or meter impressions be affixed to each package of cigarettes distributed. That law also imposes a fine of up to $50,000, as specified, or imprisonment not to exceed one year in county jail, or both, for possessing, selling, or buying false or fraudulent cigarette tax stamps or meter impressions, and requires the destruction by the State Board of Equalization of any stamps seized. Existing law requires any fines assessed to be deposited in the Cigarette and Tobacco Products Compliance Fund, amounts in which are available for specified expenditure upon appropriation by the Legislature.
This bill would extend those penalties for possessing, selling, or buying unaffixed cigarette tax stamps, and would require any fines assessed to be deposited in the Cigarette and Tobacco Products Compliance Fund. This bill would require the board to destroy any unaffixed cigarette tax stamps.
By expanding the scope of existing crimes, this bill imposes a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
begin insertThe Legislature finds and declares all of the
2following:end insert
3
(a) Existing law does not allow the State Board of Equalization
4to seize and destroy used cigarette tax stamps aggregated for reuse
5purposes nor does it provide criminal sanctions or penalties related
6to a person’s possession, sale, or purchase of used cigarette tax
7stamps.
8
(b) Unlike postage stamps or trading cards that are collectibles
9with value, used cigarette tax stamp collections have value for
10purposes solely related to tax evasion. Board staff has identified
11some significant tax evasion incidents. During enforcement
12operations at retail shops, board staff found unaffixed and used
13stamps in storage units that were prepared for affixation to
14cigarette packs. One of these cases uncovered a collection of
15unaffixed and used stamps with a cumulative value of over
16$178,000.
17
(c) Criminalizing the possession, sale, or purchase of unaffixed,
18used cigarette stamps aggregated for reuse purposes and
19authorizing the board to seize and destroy those stamps will combat
20tax evasion before it occurs and assist in making the marketplace
21fair and equitable
for those distributors who legitimately pay their
22cigarette excise taxes.
Section 30473.5 of the Revenue and Taxation Code is
25amended to read:
(a) Any person who possesses, sells, or offers to sell,
27or buys or offers to buy, any false, fraudulent, or unaffixed stamps
28or meter impressions provided for or authorized under this part in
P3 1a quantity of less than 2,000 is guilty of a misdemeanor, punishable
2by a fine not to exceed five thousand dollars ($5,000) or
3imprisonment not exceeding one year in a county jail, or by both
4the fine and imprisonment.
5(b) Any person who possesses, sells, or offers to sell, or buys
6or offers tobegin delete buyend deletebegin insert buy,end insert
any false, fraudulent, or unaffixed stamps or
7meter impressions provided for or authorized under this part in a
8quantity of 2,000 or greater, is guilty of a misdemeanor, punishable
9by a fine not to exceed fifty thousand dollars ($50,000) or
10imprisonment not exceeding one year in a county jail, or by both
11the fine and imprisonment. The court shall order any fines assessed
12be deposited in the Cigarette and Tobacco Products Compliance
13Fund.
14(c) For purposes of this section, “unaffixed stamps” means
15stamps for which the tax has previously been paid by a licensed
16distributor and previously affixed to a package. “Unaffixed stamps”
17do not include any unused and unapplied rolls of stamps or loose
18stamps acquired from the board or its authorized agent and in the
19possession of a licensed distributor.
20(d) The board shall destroy any stamps seized under this section.
No reimbursement is required by this act pursuant to
23Section 6 of Article XIII B of the California Constitution because
24the only costs that may be incurred by a local agency or school
25district will be incurred because this act creates a new crime or
26infraction, eliminates a crime or infraction, or changes the penalty
27for a crime or infraction, within the meaning of Section 17556 of
28the Government Code, or changes the definition of a crime within
29the meaning of Section 6 of Article XIII B of the California
30Constitution.
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