BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1901 (Quirk) - Taxation: cigarettes: unaffixed stamps
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|Version: August 1, 2016 |Policy Vote: GOV. & F. 7 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: August 1, 2016 |Consultant: Robert Ingenito |
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This bill does not meet the criteria for referral to the
Suspense File.
Bill
Summary: AB 1901 would (1) make it a misdemeanor to buy, sell,
or possess unaffixed cigarette stamps, and (2) authorize the
Board of Equalization (BOE) to seize and destroy these stamps
aggregated for reuse purposes.
Fiscal
Impact: BOE estimates that based on current trends, enactment of
this bill could deter tax evasion of about $400,000 annually
(special funds). BOE would incur absorbable administrative costs
to notify affected retailers, amend appropriate publications,
and answer inquiries.
Background: Current law imposes a tax on cigarette distributors at the rate
of $0.87 per package of 20 cigarettes. The cigarette tax must be
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paid through the use of stamps or meter impressions.
Specifically, these stamps or meter impressions must be affixed
to each package of cigarettes distributed.
State law (1) imposes a fine of up to $50,000, 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 (2) requires BOE to destroy any stamps
seized. Any fines assessed are deposited in the Cigarette and
Tobacco Products Compliance Fund.
Proposed Law:
This bill would provide that any person who possesses, sells,
or offers to sell, or who buys or offers to buy, "unaffixed
stamps" is guilty of a misdemeanor, punishable by a fine or
imprisonment in county jail for up to a year, or both. The bill
would require BOE to destroy any unaffixed stamps.
The bill defines "unaffixed stamps" as cigarette stamps for
which the tax has previously been paid by a licensed distributor
and previously affixed to a package. The term does not include
any unused and unapplied rolls of stamps or loose stamps
acquired from BOE or its authorized agent and in the possession
of a licensed distributor.
Staff
Comments: BOE notes that in one enforcement operation alone,
staff found a storage unit containing nearly 206,000 unaffixed
used stamps with a tax value of about $179,000 placed on
transfer sheets and prepared for affixation to cigarette packs.
Any local government costs resulting from the mandate in this
measure are not state-reimbursable because the mandate only
involves the definition of a crime or the penalty for conviction
of a crime.
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