BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1901 (Quirk) - Taxation:  cigarettes:  unaffixed stamps
          
           ----------------------------------------------------------------- 
          |                                                                 |
          |                                                                 |
          |                                                                 |
           ----------------------------------------------------------------- 
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Version: August 1, 2016         |Policy Vote: GOV. & F. 7 - 0    |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Urgency: No                     |Mandate: Yes                    |
          |                                |                                |
          |--------------------------------+--------------------------------|
          |                                |                                |
          |Hearing Date: August 1, 2016    |Consultant: Robert Ingenito     |
          |                                |                                |
           ----------------------------------------------------------------- 

          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  







          AB 1901 (Quirk)                                        Page 1 of  
          ?
          
          
          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.


                                      -- END --

          








          AB 1901 (Quirk)                                        Page 2 of  
          ?