H 5040 General Bill, By McGee, Battle, J.R. Smith and A. Young
 A BILL TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION
 12-21-830 SO AS TO PROVIDE THAT A PERSON MAY NOT PAY THE STATE TAX ON
 CIGARETTES OR ROLL-YOUR-OWN TOBACCO, OR SELL OR POSSESS FOR SALE TO A PERSON
 FOR RESALE IN THIS STATE THOSE PRODUCTS, UNLESS THE MANUFACTURER AND BRAND
 FAMILY OF THOSE PRODUCTS ARE ON A LIST DEVELOPED BY THE ATTORNEY GENERAL, TO
 PROVIDE FOR SEIZURE AND DESTRUCTION OF ILLEGAL PACKAGES OF CIGARETTES AND
 ROLL-YOUR-OWN TOBACCO, AND TO PROVIDE PENALTIES FOR VIOLATIONS.

   04/09/02  House  Introduced and read first time HJ-5
   04/09/02  House  Referred to Committee on Ways and Means HJ-5

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION 12-21-830 SO AS TO PROVIDE THAT A PERSON MAY NOT PAY THE STATE TAX ON CIGARETTES OR ROLL-YOUR-OWN TOBACCO, OR SELL OR POSSESS FOR SALE TO A PERSON FOR RESALE IN THIS STATE THOSE PRODUCTS, UNLESS THE MANUFACTURER AND BRAND FAMILY OF THOSE PRODUCTS ARE ON A LIST DEVELOPED BY THE ATTORNEY GENERAL, TO PROVIDE FOR SEIZURE AND DESTRUCTION OF ILLEGAL PACKAGES OF CIGARETTES AND ROLL-YOUR-OWN TOBACCO, AND TO PROVIDE PENALTIES FOR VIOLATIONS.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    The 1976 Code is amended by adding:

    "Section 12-21-830.    (A)    A person may not pay, directly or indirectly, the required tax on cigarettes or roll-your-own tobacco imposed pursuant to Section 12-21-620, or sell or possess for sale to a person for resale in this State, cigarettes or roll-your-own tobacco unless the brand family of the cigarettes or roll-your-own tobacco and the tobacco product manufacturer that makes or sells the cigarettes or roll-your-own tobacco are included on the list described in subsection (B).

    (B)    Not later than May 15, 2002, the Attorney General shall develop and post on his website a list of all tobacco product manufacturers that are participating manufacturers as defined in Section 11-47-30(a) and all tobacco product manufacturers that the Attorney General has determined have made all escrow payments required by Section 11-47-30(b)(1). The list must include all brand families, and only brand families, identified by the manufacturers pursuant to subsection (C). The Attorney General shall update the list as necessary.

    (C)    To be included on the list described in subsection (B), a tobacco product manufacturer shall submit to the Attorney General a certification, under penalty of perjury, that it is a participating manufacturer as defined in Section 11-47-30(a) or has made all escrow payments required by Section 11-47-30(b)(1). The submitted list also must include all brand families, and only brand families, that are counted in calculating the manufacturer's annual payments under the Master Settlement Agreement or its escrow payments under Section 11-47-30(b)(1), whichever is applicable to the manufacturer. This section does not affect the calculation of volume pursuant to the Master Settlement Agreement with respect to a brand family included on a list submitted by a participating manufacturer. A manufacturer may update the list as necessary.

    (D)    Before excluding or removing a tobacco product manufacturer and its brand families from the list described in subsection (B) based on a determination that the manufacturer has not made all escrow payments required by Section 11-47-30(b)(1), the Attorney General shall notify the manufacturer of his determination. Upon receipt of the notice from the Attorney General, the manufacturer may challenge the determination as erroneous and seek relief from it by bringing an action to challenge the determination in the circuit court in which the Attorney General's office maintains its headquarters or where a party resides, or as otherwise provided by law. The filing of an action operates to stay the Attorney General's determination if the manufacturer pays into escrow, pending the resolution of the action, the full amount of a deficiency in the escrow payments as determined by the Attorney General.

    (E)(1)    A person who knowingly pays the tax imposed pursuant to Section 12-21-620 in violation of subsection (A) is guilty of a misdemeanor and, upon conviction, must be imprisoned not more than three years or fined not more than one thousand dollars, or both.

        (2)    In addition to or instead of another civil or criminal penalty provided by law, the Department of Revenue may suspend or revoke the license or licenses of the license holder after providing notice and an opportunity for a hearing and upon a finding that a holder of a license as a distributor required to pay the tax imposed pursuant to Section 12-21-620 has violated subsection (A).

    (F)    Any cigarettes or roll-your-own tobacco for which tax imposed pursuant to Section 12-21-620 has been paid or which is sold or possessed for sale to a person for resale in this State in violation of subsection (A) is contraband goods and is subject to seizure and forfeiture in the same manner as untaxed cigarettes pursuant to Section 12-21-2870, except that seized and forfeited cigarettes and roll-your-own tobacco must be destroyed. The cigarettes or roll-your-own tobacco is contraband whether or not the violation of subsection (A) is a knowing violation.

    (G)(1)    The Department of Revenue may require distributors and other persons required to pay the tax imposed pursuant to Section 12-21-620 to submit additional information as necessary to enable the Attorney General to determine if a tobacco product manufacturer has made the escrow payments required by Section 11-47-30(b)(1), if applicable to the manufacturer.

        (2)    The Attorney General may require tobacco product manufacturers to submit information the Attorney General determines necessary to enable the Attorney General to determine if a manufacturer has made the escrow payments required by Section 11-47-30(b)(1), if applicable to the manufacturer.

    (H)    The Attorney General shall require each tobacco product manufacturer subject to the requirements of Section 11-47-30(b)(1) to make the required escrow payments in quarterly installments during the year in which the sales covered by the payments are made, and to appoint a registered agent for service of process in the State and identify the registered agent to the Attorney General. The Attorney General also shall require each tobacco product manufacturer subject to the requirements of Section 11-47-30(b)(1) to certify, under penalty of perjury, that all required escrow payments have been made by all other tobacco product manufacturers that previously made or sold brand families identified pursuant to subsection (C) or brand styles included within the brand families; except that, if the brand family or brand style was made or sold by the manufacturer making the certification before the effective date of this section, the manufacturer is required to identify only the predecessor manufacturer or manufacturers.

    (I)    A tobacco product manufacturer is guilty of a misdemeanor and, upon conviction, must be imprisoned not more than three years or fined not more than one thousand dollars, or both, for each false representation to a person:

        (1)    of any information specified in subsection (C);

        (2)    that it is a participating manufacturer as defined in Section 11-47-30(a);

        (3)    that it or another person has made all escrow payments required by Section 11-47-30(b)(1), if applicable to the manufacturer; or

        (4)    that it has made any installment payments or appointed the registered agent required by subsection (H), if applicable to the manufacturer.

    (J)    The Department of Revenue and the Attorney General may enter into a written agreement authorizing the exchange of information reasonably necessary to the enforcement and administration of this section.

    (K)    For purposes of this section, the terms 'cigarette' and 'roll-your-own' have the meaning given to the terms in Section 11-47-20(d)."

SECTION    2.    This act takes effect upon approval by the Governor.