REPORT TITLE:
Cigarette Stamping


DESCRIPTION:
Establishes a procedure for the payment of taxes through the
stamping of cigarettes.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        3180
THE SENATE                              S.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     A BILL FOR AN ACT

RELATING TO TAXATION.



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

 1      SECTION 1.  Chapter 245, Hawaii Revised Statutes, is amended
 
 2 by adding two new parts to be appropriately designated and to
 
 3 read as follows:
 
 4                 "PART  .  STAMPING OF CIGARETTES
 
 5      §245-A  Payment of tax through use of stamps.  (a)  The tax
 
 6 imposed under section 245-3 upon the sale or use of cigarettes
 
 7 shall be paid by licensees through the use of stamps.
 
 8  (b) The department shall furnish stamps for sale.
 
 9      §245-B  Sales through financial institutions; rules.  The
 
10 department may enter into agreements to permit the sale of stamps
 
11 by designated financial institutions located within the State.  A
 
12 list of financial institutions designated to sell stamps shall be
 
13 made available at the department.  The department may adopt rules
 
14 as necessary for this purpose pursuant to chapter 91.
 
15      §245-C  Designs, specifications, and denominations of
 
16 stamps; affixation; cancellation.  Stamps shall be of such
 
17 designs, specifications, and denominations as may be prescribed
 
18 by the department.  The department shall adopt rules pursuant to
 
19 chapter 91, on the method and manner in which stamps are to be
 

 
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 1 affixed to packages of cigarettes, and may provide or the
 
 2 cancellation of stamps.
 
 3      §245-D  Affixation prior to distribution.  (a)  Beginning
 
 4 December 15, 2000, a licensee, or designee of a licensee, may
 
 5 apply to the department for stamps as provided in this section.
 
 6      (b)  Beginning January 1, 2001, a licensee or the authorized
 
 7 agent or designee of a licensee, shall affix a stamp to the
 
 8 bottom of each individual package of cigarettes, prior to
 
 9 distribution.
 
10      (c)  Beginning April 1, 2001, an individual package of
 
11 cigarettes, not affixed with the stamp required under this
 
12 section, shall not be sold or offered for sale to the general
 
13 public.
 
14      (d)  Beginning April 1, 2001, a cigarette package, not
 
15 affixed with the stamp required under this section, shall not be
 
16 placed or stored in a vending machine.
 
17      §245-E  Approval of department required for transfer of
 
18 stamps.  Unaffixed stamps shall not be sold, exchanged, or in any
 
19 manner transferred by a licensee to another person without prior
 
20 written approval of the department.  Any person who violates this
 
21 section shall be fined not less than $500 and not more than
 
22 $1,000 for each violation.
 
23      §245-F  Authority to order purchases for wholesaler or
 

 


 

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 1 dealer; duration; revocation.  A licensee shall, in writing,
 
 2 authorize those persons who may order purchases of stamps for the
 
 3 licensee at a location where stamps are sold.  The authorization
 
 4 shall continue in effect until written notice of revocation of
 
 5 the authority is delivered at the sales location in the manner
 
 6 prescribed by rules adopted by the department pursuant to chapter
 
 7 91.
 
 8      §245-G  Payment of tax without use of stamps in certain
 
 9 transactions; rules.  The department may provide by rule pursuant
 
10 to chapter 91 that the tax imposed by this chapter with respect
 
11 to cigarettes may be paid without the use of stamps in connection
 
12 with a particular type of transaction.
 
13      §245-H  Price; payment; deferred payment purchases.  (a)
 
14 Stamps shall be sold to licensees at their denominated values,
 
15 plus a state stamp fee of .2 per cent of the denominated value of
 
16 the stamp to pay for the cost to the State of providing the
 
17 stamps; provided that the department may adopt rules, pursuant to
 
18 chapter 91, to modify the state stamp fee to reflect the actual
 
19 costs incurred by the State in providing the stamps.
 
20      (b)  Payment for stamps shall be made at the time of
 
21 purchase; provided that the department may adopt rules pursuant
 
22 to chapter 91 to permit a licensee to defer payments therefor as
 
23 provided for in section 245-1.
 

 
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 1      §245-I  Application to fix maximum amount and time of
 
 2 deferred-payment purchases; bonding; designation of sales
 
 3 locations.  (a)  A licensee may apply to the department to set
 
 4 the maximum amount of deferred-payment purchases of stamps that
 
 5 may remain unpaid by the licensee during the time specified under
 
 6 section 245-J.  Upon receipt of the application and any bond
 
 7 required pursuant to subsection (b), the department shall set the
 
 8 amount for deferred-payment purchases.
 
 9      (b)  The department may require that a licensee who submits
 
10 an application for deferred-payment purchases of stamps post a
 
11 bond in an amount of up to one hundred per cent of the maximum
 
12 amount of allowed deferred-payment purchases as a condition of
 
13 approval of the application by the department.
 
14      §245-J  Time for payment of deferred-payment purchases;
 
15 manner of payment.  Amounts owing for stamps purchased on the
 
16 deferred-payment basis in any calendar month shall be due and
 
17 payable on or before the last day of the following calendar
 
18 month.  Payment shall be made by a remittance payable to the
 
19 department.
 
20      §245-K  Suspension of privilege to purchase on deferred
 
21 payment basis or reduction of amount of permissible purchases.
 
22 The department may suspend, without prior notice, a licensee's
 
23 privilege to purchase stamps on the deferred-payment basis, or
 

 
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                                     S.B. NO.           
                                                        
                                                        

 
 1 may reduce the amount of deferred-payment purchases allowed the
 
 2 licensee, if:
 
 3      (1)  The licensee fails to promptly pay for stamps when
 
 4           payment is due;
 
 5      (2)  The bond or bonds required of the licensee are
 
 6           canceled, become void, impaired, or unenforceable for
 
 7           any reason; or
 
 8      (3)  In the opinion of the department, collection of any
 
 9           amounts unpaid or due from the licensee under this
 
10           chapter is jeopardized.
 
11      §245-L  Penalty for failure to make timely payment.  A
 
12 licensee who fails to pay any amount owing for the purchase of
 
13 stamps within the time required shall pay a penalty of ten per
 
14 cent of the amount due in addition to the amount due plus
 
15 interest at the rate specified in section 231-39, from the date
 
16 on which the amount became due and payable until the date of
 
17 payment.
 
18      §245-M  Unused stamps.  The department shall adopt rules
 
19 pursuant to chapter 91 for a refund or credit to a licensee in
 
20 the amount of the denominated values of any unused stamps.
 
21      §245-N  Cigarettes and tobacco products shipped outside the
 
22 State for sale or use outside the State; refund or credit of
 
23 taxes.  (a)  The department shall adopt rules pursuant to chapter
 

 
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 1 91 to provide a tobacco tax refund or credit to a licensee who
 
 2 has paid a tobacco tax on the distribution of cigarettes or
 
 3 tobacco products that are shipped to a point outside the State
 
 4 for subsequent sale or use outside the State.
 
 5      (b)  This part shall not apply to cigarettes or tobacco
 
 6 products that are distributed in this State to consumers and that
 
 7 are subsequently taken outside the State.
 
 8      §245-0  Monthly report on distributions of cigarettes and
 
 9 tobacco products, and purchases of stamps.  (a)  On or before the
 
10 1ast day of each month, every licensee shall file, on forms
 
11 prescribed by the department, a report of the licensee's
 
12 distributions of cigarettes and purchases of stamps during the
 
13 preceding month, and any other information that the department
 
14 may require to carry out this section.
 
15      (b)  On or before the last day of each month, every licensee
 
16 shall file, on forms prescribed by the department, a report of
 
17 the licensee's distributions of tobacco products and the
 
18 wholesale costs of tobacco products during the preceding month,
 
19 and any other information that the department may require to
 
20 carry out this part.
 
21      §245-P  Counterfeiting stamps.  Any person who:
 
22      (1)  Falsely or fraudulently makes, forges, alters, reuses,
 
23           or counterfeits any stamp provided for or authorized
 

 
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 1           under this part;
 
 2      (2)  Causes any stamp to be falsely or fraudulently made,
 
 3           forged, altered, reused, or counterfeited; or 
 
 4      (3)  Knowingly and wilfully utters, publishes, passes, or
 
 5           tenders as genuine, any false, forged, altered, reused,
 
 6           or counterfeited stamp, is guilty of a class B felony
 
 7           and shall be imprisoned for not less than one year and
 
 8           not more than ten years, and may be fined not more than
 
 9           $ 50,000, or both.
 
10      §245-Q  Sale or purchase of packages of cigarettes without
 
11 stamps; fines and penalties.  (a)  Beginning April 1, 2001, a
 
12 person who knowingly possesses, keeps, stores, acquires,
 
13 transports, or retains for the purpose of sale, or sells or
 
14 offers to sell, three thousand or more cigarettes with an
 
15 aggregate wholesale price of $250 or more, to which there are not
 
16 affixed the stamps required under this part, regardless of the
 
17 source of, or method of obtaining the cigarettes, is guilty of a
 
18 class C felony, and upon conviction thereof, shall be fined not
 
19 more than $10,000, and may be imprisoned not less than one year
 
20 and not more than five years, or both; provided that a
 
21 corporation shall be fined not more than $50,000.
 
22      (b)  Beginning April 1, 2001, a person who knowingly
 
23 possesses, keeps, stores, acquires, transports, or retains for
 

 
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 1 the purpose of sale, or sells or offers to sell, one thousand two
 
 2 hundred or more, but not more than two thousand nine hundred
 
 3 ninety-nine, cigarettes with an aggregate wholesale value of $100
 
 4 or more, but less than $250, to which there are not affixed the
 
 5 stamps required under this part, regardless of the source of, or
 
 6 method of obtaining the cigarettes, is guilty of a misdemeanor,
 
 7 and upon conviction thereof, shall be fined not more than $5,000,
 
 8 and may be imprisoned not more than one year, or both; provided
 
 9 that a corporation shall be fined not more than $25,000.
 
10      (c)  Beginning April 1, 2001, a person who knowingly
 
11 violates a provision of this part for which a criminal punishment
 
12 is not otherwise provided is guilty of a misdemeanor, and may be
 
13 fined not more than $2,000 or imprisoned not more than one year,
 
14 or both.
 
15      §245-R  Vending unstamped cigarettes; offense; punishment.
 
16 Beginning April 1, 2001, a person in possession or control of, or
 
17 having access to, a cigarette vending machine, who knowingly or
 
18 wilfully places for sale in the vending machine any cigarettes
 
19 not contained in packages to which are affixed Hawaii tax stamps,
 
20 shall be guilty of a class C felony, and upon conviction thereof:
 
21      (1)  Shall be fined not more than $10,000;
 
22      (2)  May be imprisoned not less than one year and not more
 
23           than ten years; or
 

 
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 1      (3)  Both;
 
 2 provided that a corporation shall be fined not more than $50,000.
 
 3      §245-S  Treatment of unstamped cigarettes.  Beginning
 
 4 April 1, 2001, all persons in possession or control of unstamped
 
 5 cigarettes shall destroy the unstamped cigarettes or return the
 
 6 unstamped cigarettes to the manufacturers.  Failure to comply may
 
 7 subject persons in possession or control of unstamped cigarettes
 
 8 to the criminal penalties and administrative fines provided for
 
 9 in sections 245-Q, 245-R, 245-U, 245-V, 245-W, and 245-X.
 
10      §245-T  Enforcement; injunction; disposition of fines.(a)
 
11 Enforcement of this part and part     of this chapter shall be
 
12 under the concurrent jurisdiction of the attorney general, liquor
 
13 commission, prosecuting attorney, and police department.
 
14      (b)  Notwithstanding the existence of other remedies at law,
 
15 the attorney general or prosecuting attorney may apply for, and
 
16 the court may grant, a temporary or permanent injunction
 
17 restraining any person from violating or continuing to violate
 
18 this part or part     of this chapter.  The injunction shall be
 
19 issued without bond.
 
20      (c) Where a police department, working with either the
 
21 attorney general or prosecuting attorney, initiates and conducts
 
22 an investigation resulting in the imposition and collection of a
 
23 criminal fine pursuant to this part, one hundred per cent of the
 

 
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 1 fine shall be equally distributed between the police department
 
 2 whose officers or employees initiated and conducted the
 
 3 investigation, and either the office of the attorney general or
 
 4 of the prosecuting attorney, whichever obtained the underlying
 
 5 conviction.
 
 6      §245-U  Liquor commission hearing, counterfeiting stamps, or
 
 7 selling, purchasing, or vending unstamped cigarettes.  (a)  The
 
 8 liquor commission or liquor control adjudication board may assess
 
 9 and collect a fine against, or reprimand any person who
 
10 counterfeits Hawaii tax stamps, or sells, purchases, or vends
 
11 unstamped cigarettes in violation of this part, or of any rule or
 
12 regulation applicable thereto, or sells or distribute export
 
13 cigarettes in violation of section 245-BB or cigarettes in
 
14 altered packages in violation of section 245-CC.  Any reprimand
 
15 or fine imposed by the commission or board pursuant to this
 
16 section shall be in addition to any other fine that may be
 
17 imposed by law.  The fine assessed and collected pursuant to this
 
18 section shall not exceed the sum of $2,000 for each violation.
 
19      (b)  In every case where proceedings under this section in
 
20 which a fine may be imposed are conducted, the person subject to
 
21 those proceedings shall be entitled to notice and hearing in
 
22 conformity with chapter 91.  The person shall be entitled to be
 
23 heard in person or through counsel, and shall be given a full and
 

 
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 1 fair opportunity to present facts showing that the alleged cause
 
 2 or causes for the proposed action do not exist, or to show any
 
 3 other reason why no fine should be imposed.  Testimony taken at
 
 4 the hearing shall be under oath and recorded stenographically, or
 
 5 by machine.  The parties shall not be bound by strict rules of
 
 6 evidence.  At the request of the person subject to the
 
 7 proceedings, certified copies of any transcript and of any other
 
 8 record made of, or at the hearing, shall be provided upon payment
 
 9 by the requester of the costs of providing the certified copies.
 
10      (c)  The notice required by this section shall be served in
 
11 the following manner:
 
12      (1)  Written notice of the violation shall-be given to the
 
13           person charged with the violation within a reasonable
 
14           period of time after the alleged violation is
 
15           discovered, and the person charged shall be requested
 
16           to acknowledge receipt of the notice;
 
17      (2)  If the person charged cannot be found after diligent
 
18           search, notice may be served by leaving a certified
 
19           copy of the written notice at the person's dwelling
 
20           house or usual place of abode with any person of
 
21           suitable age and discretion residing therein;
 
22      (3)  If the person charged cannot be found after diligent
 
23           search, and service cannot be made, then service may be
 

 
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 1           made by mailing a certified copy of the written notice
 
 2           by way of the United States post office certified mail,
 
 3           postage prepaid, and addressed to the person at the
 
 4           person's last known residence address; and
 
 5      (4)  Where a partnership, corporation, unincorporated
 
 6           association, or limited liability company is charged,
 
 7           service may be made upon any partner, officer, or
 
 8           member thereof.
 
 9      §245-V  Seizure and confiscation of unstamped or illegal
 
10 export or foreign cigarettes.  The attorney general, liquor
 
11 commission, prosecuting attorney, and the police department may
 
12 seize and confiscate any cigarette, package of cigarettes, or
 
13 carton of cigarettes that is possessed, kept, stored, acquired,
 
14 transported, or retained for the purpose of sale, or sold or
 
15 offered for sale in violation of this part or part    , subject
 
16 to the requirements of chapter 281.
 
17      §245-W  Arrest; abetters.  The owner, keeper, and any person
 
18 having custody of any cigarette, package of cigarettes, or carton
 
19 of cigarettes seized as provided in section 245-V, may be
 
20 arrested without necessity of warrant and brought before the
 
21 district court of the circuit in which the seizure occurred.  If
 
22 the owner or keeper of the cigarette, package of cigarettes, or
 
23 carton of cigarettes seized is unknown to the police officer
 

 
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 1 making the seizure, or if no person is found in apparent
 
 2 possession or custody of them, the police officer may arrest and
 
 3 bring before the court the owner or occupant of the building,
 
 4 place, or premises, or the driver, operator, owner, or other
 
 5 person in charge of the conveyance in which the cigarette,
 
 6 package of cigarettes, or carton of cigarettes is found, if such
 
 7 person is known or can be ascertained. Any person who has
 
 8 knowingly engaged in, aided, assisted, or abetted the obtaining,
 
 9 keeping, or sale of any cigarette, package of cigarettes, or
 
10 carton of cigarettes seized as provided in section 245-V, or has
 
11 been privy thereto, or has knowingly permitted the use of any
 
12 place, building, premises, or conveyance for such unlawful
 
13 purpose, shall be guilty of a misdemeanor and be punished as
 
14 provided in section 245-Q(c).
 
15      §245-X  Forfeitures; disposition.  (a)  Any cigarette,
 
16 package of cigarettes, or carton of cigarettes unlawfully
 
17 possessed, kept, stored, acquired, transported, or retained for
 
18 the purpose of sale, or sold or offered for sale, in violation of
 
19 this part or part     of this chapter, may be ordered forfeited
 
20 pursuant to chapter 281 by an appropriate administrative or
 
21 judicial proceeding.
 
22      (b)  Any cigarette, package of cigarettes, or carton of
 
23 cigarettes forfeited pursuant to this section shall be sold to a
 

 
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 1 licensed wholesaler or dealer; provided, however, that any
 
 2 cigarette, package of cigarettes, or carton of cigarettes
 
 3 forfeited for a violation of part     of this chapter shall be
 
 4 destroyed.
 
 5      (c)  All proceeds from the sale of any cigarette, package of
 
 6 cigarettes, or carton of cigarettes forfeited as provided in this
 
 7 section shall, after payment of expenses of administration and
 
 8 sale, be distributed equally between:
 
 9      (1)  Either the county police department or county liquor
 
10           commission whose officers, investigators, or employees
 
11           initiated and conducted an investigation resulting in
 
12           the forfeiture and sale of cigarettes pursuant to this
 
13           section; and
 
14      (2)  The attorney general or prosecuting attorney who
 
15           instituted the action producing the forfeiture.
 
16      (d)  Money distributed to the attorney general, liquor
 
17 commission, police department, or prosecuting attorney shall be
 
18 used for law enforcement purposes, and shall complement but not
 
19 supplant the funds regularly appropriated for such purposes.
 
20      §245-Y  Appeals.  A claimant of a cigarette, package of
 
21 cigarettes, or carton of cigarettes forfeited pursuant to section
 
22 245-X, may appeal the forfeiture in the same manner as appeals
 
23 are allowed in other cases governed by chapter 281.  If the
 

 
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 1 claimant fails to appear, or to diligently prosecute the appeal,
 
 2 or fails to secure a reversal of the judgment in the appellate
 
 3 court, the judgment appealed from shall be carried out.
 
 4      §245-Z  Claims.  If the owner or possessor of any cigarette,
 
 5 package of cigarettes, or carton of cigarettes seized under this
 
 6 part appears and makes claim to the item, the owner or possessor
 
 7 shall file with the court before whom the proceedings are
 
 8 pending, a claim in writing, setting forth the claimant's
 
 9 interest therein, and the reason why the items claimed should not
 
10 be forfeited.  The claimant shall also give bond in favor of the
 
11 State, sufficient in amount and sureties, as required by the
 
12 court, and conditioned so that if the claim is diligently
 
13 prosecuted and decided against the claimant, the claimant shall
 
14 pay the costs of the proceedings conducted to resolve the claim.
 
15 If the judgment is against the claimant, the cigarette, package
 
16 of cigarettes, carton of cigarettes, and all containers thereof
 
17 shall be forfeited and shall be disposed of as provided in
 
18 section 245-X.
 
19      §245-AA  Prosecutions not to exclude other remedies
 
20 affecting goods.  The criminal penalties and administrative fines
 
21 authorized under this part shall be in addition to any
 
22 forfeitures imposed pursuant to section 245-X.
 
23              PART   .  EXPORT AND FOREIGN CIGARETTES
 

 
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 1      §245-BB  Sale of export cigarettes prohibited.  It shall be
 
 2 unlawful for a person to sell or distribute in the State, or to
 
 3 acquire, hold, own, possess, or transport for sale or
 
 4 distribution in the State, or to import or cause to be imported
 
 5 into the State for sale or distribution in the State any of the
 
 6 following:
 
 7      (1)  Cigarettes the package of which bears any statement,
 
 8           label, stamp, sticker, or notice indicating that the
 
 9           manufacturer did not intend the cigarettes to be sold,
 
10           distributed, or used in the United States, including,
 
11           but not limited to, labels stating "for export only",
 
12           "U.S. tax-exempt", "for use outside U.S.", or similar
 
13           wording; 
 
14      (2)  Cigarettes the package of which does not comply with
 
15           all requirements imposed by federal law regarding
 
16           warnings and other information on packages of
 
17           cigarettes manufactured, packaged, or imported for
 
18           sale, distribution, or use in the United States,
 
19           including, but not limited to, the specific warning
 
20           labels specified in the Federal Cigarette Labeling and
 
21           Advertising Act, 15 U.S.C. 1333; 
 
22      (3)  Cigarettes the package of which does not comply with
 
23           all federal trademark and copyright laws; 
 

 
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 1      (4)  Cigarettes imported into the United States on or after
 
 2           January 1, 2000, in violation of 26 U.S.C. 5754 or any
 
 3           other federal law or regulation; 
 
 4      (5)  Cigarettes that such person otherwise knows or has
 
 5           reason to know the manufacturer did not intend to be
 
 6           sold, distributed, or used in the United States; or
 
 7      (6)  Cigarettes for which there has not been submitted to
 
 8           the Secretary of the United States Department of Health
 
 9           and Human Services the list of the ingredients added to
 
10           tobacco in the manufacture of such cigarettes required
 
11           by the Federal Cigarette Labeling and Advertising Act,
 
12           15 U.S.C. 1335a.
 
13      §245-CC  Alteration of packaging prohibited.  It shall be
 
14 unlawful for any person to alter the package of any cigarettes,
 
15 prior to sale or distribution to remove, conceal, or obscure:
 
16      (1)  Any statement, label, stamp, sticker, or notice
 
17           indicating that the manufacturer did not intend the
 
18           cigarettes to be sold, distributed, or used in the
 
19           United States, including, but not limited to, labels
 
20           stating "for export only", "U.S. tax-exempt", "for use
 
21           outside U.S.", or similar wording; or
 
22      (2)  Any health warning that is not specified in or does not
 
23           conform with the requirements of the Federal Cigarette
 

 
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 1           Labeling and Advertising Act, 15 U.S.C. 1333.
 
 2      §245-DD  Affixing of cigarette tax stamps to export
 
 3 cigarettes or altered packages prohibited.  It shall be unlawful
 
 4 for any person to affix any cigarette tax stamp required under
 
 5 this chapter to the package of any cigarettes described in
 
 6 section 245-BB or to any package altered in violation of section
 
 7 245-CC.
 
 8      §245-EE  Documentation of foreign cigarettes.  On the first
 
 9 business day of each month, each person licensed to affix any
 
10 cigarette tax stamp under this chapter shall file with the
 
11 department of taxation all of the following for all cigarettes
 
12 imported into the United States to which such person has affixed
 
13 a cigarette tax stamp in the preceding month:
 
14      (1)  A copy of a permit issued pursuant to the Internal
 
15           Revenue Code, 26 U.S.C. 5713, to the person importing
 
16           such cigarettes into the United States permitting such
 
17           person to import such cigarettes; 
 
18      (2)  A copy of the Unites States Customs Service form
 
19           containing, with respect to such cigarettes, the
 
20           internal revenue tax information required by the United
 
21           States Bureau of Alcohol, Tobacco and Firearms;
 
22      (3)  A statement, signed by such person under penalty of
 
23           perjury, which shall be treated as confidential by the
 

 
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 1           department of taxation, and which shall be exempt from
 
 2           disclosure under the chapter 92F, identifying the brand
 
 3           and brand styles of all such cigarettes, the quantity
 
 4           of each brand style of such cigarettes, the supplier of
 
 5           such cigarettes and the person or persons, if any, to
 
 6           whom such cigarettes have been conveyed for resale; and
 
 7      (4)  A statement, signed under penalty of perjury by an
 
 8           officer of the manufacturer or importer of such
 
 9           cigarettes, certifying that the manufacturer or
 
10           importer has complied with (A) the package health
 
11           warning and ingredient reporting requirements of the
 
12           Federal Cigarette Labeling and Advertising Act, 15
 
13           U.S.C. 1333 and 1335a, with respect to such cigarettes;
 
14           and (2) chapter 675, including a statement of whether
 
15           the manufacturer is or is not a participating
 
16           manufacturer within the meaning of section 675-3.
 
17      §245-FF  Illegal sale of export or foreign cigarettes;
 
18 revocation or suspension of license; civil penalties. The
 
19 director of taxation may revoke or suspend the license of any
 
20 licensee pursuant to the procedures complying with chapter 91,
 
21 and impose on the licensee a civil penalty in an amount not to
 
22 exceed the greater of five times the retail value of the
 
23 cigarettes involved or $5,000, upon finding a violation by such
 

 
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 1 licensee of this part or any implementing rule prescribed by the
 
 2 director.
 
 3      §245-GG  Unfair trade practices.  Any violation of this part
 
 4 shall constitute an unfair method of competition and unfair and
 
 5 deceptive acts or practices in the conduct of any trade of
 
 6 commerce under section 480-2 and shall be subject to a civil
 
 7 penalty as provided in section 480-3.1.  Each package of
 
 8 cigarettes sold in violation of part shall constitute a separate
 
 9 violation. 
 
10      §245-HH  Deceptive cigarette sales.  The importation or
 
11 reimportation of cigarettes into the United States for sale or
 
12 distribution under any trade name, trade dress, or trademark that
 
13 is the same as, or is confusingly similar to, any trade name,
 
14 trade dress, or trademark used for cigarettes manufactured in the
 
15 United States for sale or distribution in the United States shall
 
16 be deemed to violate section 481A-3.
 
17      §245-II  Private right of action.  In addition to any other
 
18 remedy provided by law, any person may bring an action for
 
19 appropriate injunctive or other equitable relief for a violation
 
20 of this part and for damages sustained by the person, and, if the
 
21 judgment is for the plaintiff, the plaintiff shall be awarded a
 
22 sum not less than $1,000 or threefold damages by the plaintiff
 
23 sustained, whichever sum is the greater, and reasonable attorneys
 

 
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 1 fees together with the costs of suit.
 
 2      §245-JJ  Applicability.  This part shall not apply to:
 
 3      (1)  Cigarettes allowed to be imported or brought into the
 
 4           United States for personal use free of federal tax or
 
 5           duty or voluntarily abandoned to the U.S. Secretary of
 
 6           Treasury at the time of entry; or
 
 7      (2)  Cigarettes sold or intended to be sold as duty-free
 
 8           merchandise by a duty-free sales enterprise in
 
 9           accordance with the provisions of 19 U.S.C. 1555(b) and
 
10           any implementing regulations; provided, however, that
 
11           this part shall apply to any such cigarettes that are
 
12           brought back into the customs territory for resale
 
13           within the customs territory.
 
14      §245-KK  Penalties cumulative.  The penalties provided in
 
15 this part are in addition to any other penalties imposed under
 
16 other law."
 
17      SECTION 2.  Section 245-1, Hawaii Revised Statutes, is
 
18 amended by adding eleven new definitions to be appropriately
 
19 inserted and to read as follows:
 
20      ""Attorney general" means the attorney general or deputy
 
21 attorneys general of the State of Hawaii.
 
22      "Department" means the department of taxation.
 
23      "Importer" means "importer" as that term is defined in 26
 

 
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 1 U.S.C. 5702(1).
 
 2      "License" means any license granted under this chapter.
 
 3      "Licensee" means a holder of a license granted under this
 
 4 chapter.
 
 5      "Liquor commission" means the liquor commission of the
 
 6 various counties.
 
 7      "Liquor control adjudication board" or "board" means a board
 
 8 established by county charter, within a county, that shall have
 
 9 the jurisdiction to hear and determine complaints or violations
 
10 of chapter 281 and to impose penalties as may be provided in
 
11 chapter 281.
 
12      "Package" means "package" as that term is defined in 15
 
13 U.S.C. 1332(4).
 
14      "Police department" means the police department of the
 
15 various counties.
 
16      "Prosecuting attorney" means the prosecuting attorney or
 
17 deputy prosecuting attorneys of the various counties.
 
18      "Stamp" means a stamp printed, manufactured, or made by
 
19 authority of the department, as provided in this chapter, which
 
20 is issued, sold, or circulated by the department, and by the use
 
21 of which the tax levied under this chapter is paid."
 
22      SECTION 3.  Section 245-3, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
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 1      "§245-3  Taxes[; limitations].(a)  Every licensee,
 
 2 wholesaler, or dealer, in addition to any other taxes provided by
 
 3 law, shall pay for the privilege of conducting business and other
 
 4 activities in the State an:
 
 5      (1)  Excise tax equal to[:
 
 6           (A)  4.00 cents for each cigarette sold, used, or
 
 7                possessed by the wholesaler or dealer, after
 
 8                August 31, 1997; and
 
 9           (B)] 5.00 cents for each cigarette sold, used, or
 
10                possessed by a licensee, wholesaler, or dealer
 
11                after June 30, 1998,
 
12           whether or not sold at wholesale, or if not sold then
 
13           at the same rate upon the use by the licensee,
 
14           wholesaler, or dealer; and
 
15      (2)  Excise tax equal to forty per cent of the wholesale
 
16           price of each article or item of tobacco products sold
 
17           by the licensee, wholesaler, or dealer, whether or not
 
18           sold at wholesale, or if not sold then at the same rate
 
19           upon the use by the licensee, wholesaler, or dealer.
 
20      Where the tax imposed has been paid on cigarettes or tobacco
 
21 products which thereafter become the subject of a casualty loss
 
22 deduction allowable under chapter 235, the tax paid shall be
 
23 refunded or credited to the account of the licensee, wholesaler,
 

 
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 1 or dealer.  [In applying the tax, the tax shall be applied
 
 2 against the latest of the activities of selling, using, or
 
 3 possessing.  The tax shall be imposed at the time of the last of
 
 4 the following activities to occur:  the sale; the use; or the
 
 5 possession of cigarettes or tobacco products.] The tax shall be
 
 6 applied to cigarettes through the use of stamps.
 
 7      (b)  The taxes, however, are subject to the following
 
 8 limitations:
 
 9      (1)  The measure of the taxes shall not include any
 
10           cigarettes or tobacco products exempted, and so long as
 
11           the same are exempted, from the imposition of taxes by
 
12           the Constitution or laws of the United States;
 
13      (2)  The measure of taxes shall exempt and exclude all sales
 
14           of cigarettes and tobacco products to the United States
 
15           (including any agency or instrumentality thereof that
 
16           is wholly owned or otherwise so constituted as to be
 
17           immune from the levy of a tax under this chapter), sold
 
18           by any person licensed under this chapter; and
 
19      (3)  The taxes shall be paid only once in respect of the
 
20           same cigarettes or tobacco product.  This limitation
 
21           shall not prohibit the imposition of the excise tax on
 
22           receipts from sales of tobacco products under
 
23           subsection (a)(2); provided that the amount subject to
 

 
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 1           the tax on each sale shall not include amounts
 
 2           previously taxed under this chapter."
 
 3      SECTION 4.  Section 245-5, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "§245-5 Returns.  Every licensee, wholesaler, or dealer, on
 
 6 or before the last day of each month, shall file with the
 
 7 department [of taxation] a return showing the cigarettes and
 
 8 tobacco products sold, possessed, or used by the licensee,
 
 9 wholesaler, or dealer, during the preceding calendar month and of
 
10 the taxes chargeable against the taxpayer in accordance with this
 
11 chapter.  The form of the return shall be prescribed by the
 
12 department and shall [contain such information, including a]:
 
13      (1)  A separate statement of the number and wholesale price
 
14           of cigarettes[, and the];
 
15      (2)  The amount of stamps purchased and used;
 
16      (3)  The wholesale price of tobacco products, sold,
 
17           possessed, or used[, as it]; and
 
18      (4)  Any other information that the department may deem
 
19           necessary;
 
20 for the proper administration of this chapter."
 
21      SECTION 5.  Section 245-6, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 
23      "§245-6 Payment of taxes; penalties.  At the time of the
 

 
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 1 filing of the return required under section 245-5 and within the
 
 2 time prescribed therefor, each licensee, wholesaler, or dealer
 
 3 shall pay to the department [of taxation] the taxes imposed by
 
 4 this chapter, required to be shown by the return[.], including
 
 5 the unpaid amount of taxes imposed by this chapter.
 
 6      Penalties and interest shall be added to and become a part
 
 7 of the taxes, when and as provided by section 231-39."
 
 8      SECTION 6.  Section 245-8, Hawaii Revised Statutes, is
 
 9 amended by amending subsection (a) to read as follows:
 
10      "(a)  Every licensee, wholesaler, and dealer shall keep a
 
11 record of [every]:
 
12      (1)  Every sale or use of cigarettes and tobacco products by
 
13           the licensee, wholesaler, or dealer[, the];
 
14      (2)  The number and wholesale price of cigarettes[, and
 
15           the];
 
16      (3)  The wholesale price of tobacco products, sold,
 
17           possessed, or used[, and of the];
 
18      (4)  The taxes payable [thereon,] on the tobacco products
 
19           sold, possessed, or used, if any[,]; and
 
20      (5)  The amounts of stamps purchased and used;
 
21 in such form as the department [of taxation] may prescribe.  The
 
22 records shall be offered for inspection and examination at any
 
23 time upon demand by the department and shall be preserved for a
 

 
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 1 period of five years, except that the department, in writing, may
 
 2 consent to their destruction within the five-year period or may
 
 3 require that they be kept longer.  The department, by rule, may
 
 4 require the licensee, wholesaler, or dealer to keep such other
 
 5 records as it may deem necessary for the proper enforcement of
 
 6 this chapter."
 
 7      SECTION 7.  Section 245-15, Hawaii Revised Statutes, is
 
 8 amended to read as follows:
 
 9      "§245-15  Disposition of revenues.  All moneys collected
 
10 pursuant to this chapter shall be paid into the state treasury as
 
11 state realizations to be kept and accounted for as provided by
 
12 law[.], except for the amounts designated by section 245-T,
 
13 245-U, and 245-X, for distribution to the liquor commission, the
 
14 police department, or the prosecuting attorney."
 
15      SECTION 8.  Section 281-17, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "§281-17  Jurisdiction and powers.  The liquor commission,
 
18 within its own county, shall have the sole jurisdiction, power,
 
19 authority, and discretion, subject only to this chapter[:] and
 
20 chapter 245:
 
21      (1)  To grant, refuse, suspend, and revoke any licenses for
 
22           the manufacture, importation, and sale of liquors;
 
23      (2)  To take appropriate action against a person who,
 

 
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 1           directly or indirectly, manufactures or sells any
 
 2           liquor without being authorized pursuant to this
 
 3           chapter; provided that in counties which have
 
 4           established by charter a liquor control adjudication
 
 5           board, the board shall have the jurisdiction, power,
 
 6           authority, and discretion to hear and determine
 
 7           administrative complaints of the director regarding
 
 8           violations of the liquor laws of the State or of the
 
 9           rules of the liquor commission, and impose penalties
 
10           [[]for[]] violations thereof as may be provided by law;
 
11      (3)  To take appropriate action against a person who
 
12           counterfeits stamps, or sells, purchases, or vends
 
13           unstamped cigarette packages in violation of chapter
 
14           245 or any rule thereof;
 
15     [(3)] (4)  To control, supervise, and regulate the
 
16           manufacture, importation, and sale of liquors by
 
17           investigation, enforcement, and education; provided
 
18           that any educational program shall be limited to
 
19           licensees and their employees and shall be financed
 
20           through the money collected from the assessment of
 
21           fines against licensees;
 
22     [(4)] (5)  From time to time to make, amend, and repeal such
 
23           rules, not inconsistent with this chapter, as in the
 

 
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 1           judgment of the commission seem appropriate for
 
 2           carrying out this chapter and for the efficient
 
 3           administration thereof, and the proper conduct of the
 
 4           business of all licensees, including every matter or
 
 5           thing required to be done or which may be done with the
 
 6           approval or consent or by order or under the direction
 
 7           or supervision of or as prescribed by the commission;
 
 8           which rules, when adopted as provided in chapter 91
 
 9           shall have the force and effect of law;
 
10     [(5)] (6)  Subject to chapters 76 and 77, to appoint and
 
11           remove an administrator, who may also be appointed an
 
12           investigator and who shall be responsible for the
 
13           operations and activities of the staff.  The
 
14           administrator may hire and remove hearing officers,
 
15           investigators, and clerical or other assistants as its
 
16           business may from time to time require, to prescribe
 
17           their duties, and fix their compensation; to engage the
 
18           services of experts and persons engaged in the practice
 
19           of a profession, if deemed expedient.  Every
 
20           investigator, within the scope of the investigator's
 
21           duties, shall have the powers of a police officer.  No
 
22           employee of any commission, aside from exercising the
 
23           right to vote, shall support, advocate, or aid in the
 

 
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 1           election or defeat of any candidate for public office,
 
 2           and upon satisfactory proof of such prohibited activity
 
 3           the offender shall be summarily dismissed;
 
 4     [(6)] (7)  To limit the number of licenses of any class or
 
 5           kind within the county, or the number of licenses of
 
 6           any class or kind to do business in any given locality,
 
 7           when in the judgment of the commission such limitations
 
 8           are in the public interest;
 
 9     [(7)] (8)  To prescribe the nature of the proof to be
 
10           furnished, the notices to be given, and the conditions
 
11           to be met or observed in case of the issuance of a
 
12           duplicate license in place of one alleged to have been
 
13           lost or destroyed, including a requirement of any
 
14           indemnity deemed appropriate to the case;
 
15     [(8)] (9)  To fix the hours between which licensed premises
 
16           of any class or classes may regularly be open for the
 
17           transaction of business, which shall be uniform
 
18           throughout the county as to each class respectively;
 
19     [(9)] (10)  To prescribe all forms to be used for the
 
20           purposes of this chapter not otherwise provided for in
 
21           this chapter, or in chapter 245, and the character and
 
22           manner of keeping of books, records, and accounts to be
 
23           kept by licensees of this chapter and chapter 245 in
 

 
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 1           any matter pertaining to their business;
 
 2    [(10)] (11)  To investigate violations of this chapter,
 
 3           chapter 244D, and chapter 245 and, notwithstanding any
 
 4           law to the contrary, violations of the applicable
 
 5           department of health's allowable noise levels, through
 
 6           its investigators or otherwise, to include covert
 
 7           operations, and to report violations to the prosecuting
 
 8           officer for prosecution and, where appropriate, the
 
 9           director of taxation to hear and determine complaints
 
10           against any licensee;
 
11    [(11)] (12)  To prescribe, by rule, the terms, conditions, and
 
12           circumstances under which persons or any class of
 
13           persons may be employed by holders of licenses;
 
14    [(12)] (13)  To prescribe, by rule, the term of any license or
 
15           solicitor's and representative's permit authorized by
 
16           this chapter, the annual or prorated amount, the manner
 
17           of payment of fees for the licenses and permits, and
 
18           the amount of filing fees; and
 
19    [(13)] (14)  To prescribe, by rule, the circumstances and
 
20           penalty for the unauthorized manufacturing or selling
 
21           of any liquor.
 
22      Subject only to this chapter, the commission or board and
 
23 each member thereof shall have the same powers respecting the
 

 
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 1 administering of oaths, compelling the attendance of witnesses
 
 2 and the production of documentary evidence, and examining the
 
 3 witnesses as are possessed by a circuit court, except that the
 
 4 commission or board and each member thereof shall not be bound by
 
 5 the strict legal rules of evidence.  In addition, the commission
 
 6 or board shall have the power to require the production of, and
 
 7 to examine any books, papers, and records of any [licensee]
 
 8 person licensed under this chapter or chapter 245, which may
 
 9 pertain to the licensee's business under the license or which may
 
10 pertain to a matter at a hearing before the commission or board
 
11 or to an investigation by the commission or board.
 
12      The exercise by the commission or board of the power,
 
13 authority, and discretion vested in it pursuant to this chapter
 
14 shall be final and shall not be reviewable by or appealable to
 
15 any court or tribunal, except as otherwise provided in this
 
16 chapter or chapter 91."
 
17      SECTION 9.  Chapter 245, Hawaii Revised Statutes, is amended
 
18 by designating sections 245-1 to 245-15 as part I and inserting a
 
19 title before section 245-1 to read as follows:
 
20                   "PART I.  GENERAL PROVISIONS"
 
21      SECTION 10.  There is appropriated out of the general
 
22 revenues of the State of Hawaii the sum of $          , or so
 
23 much thereof as may be necessary for fiscal year 2000-2001, for
 

 
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 1 start-up costs for implementing the cigarette stamp tax system,
 
 2 including a one year supply of stamps and stamp cylinders.
 
 3      The sum appropriated shall be expended by the department of
 
 4 taxation for the purposes of this Act.
 
 5      SECTION 11.  There is appropriated out of the general
 
 6 revenues of the State of Hawaii the sum of $          , or so
 
 7 much thereof as may be necessary for fiscal year 2000-2001, to be
 
 8 apportioned to the following county liquor commissions:
 
 9      Honolulu                 $
 
10      Hawaii                   $
 
11      Maui                     $
 
12      Kauai                    $
 
13      SECTION 12.  There is appropriated out of the general
 
14 revenues of the State of Hawaii the sum of $          , or so
 
15 much thereof as may be necessary for fiscal year 2001-2002, to be
 
16 apportioned to the following county liquor commissions:
 
17      Honolulu                 $
 
18      Hawaii                   $
 
19      Maui                     $
 
20      Kauai                    $
 
21      The sums appropriated shall be expended by the respective
 
22 liquor commissions of each county for the purposes of this Act.
 
23      SECTION 13.  This Act does not affect rights and duties that
 

 
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 1 matured, penalties that were incurred, and proceedings that were
 
 2 begun, before its effective date.
 
 3      SECTION 14.  In codifying the new part added to chapter 245,
 
 4 Hawaii Revised Statutes, by section 1 of this Act, the revisor of
 
 5 statutes shall substitute the appropriate section numbers for the
 
 6 letters used in designating the new sections in this Act.
 
 7      SECTION 15.  Statutory material to be repealed is bracketed.
 
 8 New statutory material is underscored.
 
 9      SECTION 16.  The director of taxation shall submit findings
 
10 and recommendations to the legislature twenty days prior to the
 
11 regular session of 2006 as to the effectiveness of this Act is
 
12 reducing the loss of cigarette tax revenue to the State from
 
13 illegal sales of untaxed cigarettes.  The director of taxation
 
14 may submit an interim report to the legislature on any findings
 
15 relating to the effectiveness of this Act before 2006.
 
16      SECTION 17.  The county liquor commission for each of the
 
17 counties of Honolulu, Hawaii, Maui, and Kauai shall report to the
 
18 legislature not later than twenty days before the convening of
 
19 each of the regular sessions of 2002 and 2003 on their respective
 
20 activities relating to this Act, including expenses, fines, and
 
21 penalties collected, and forfeitures.
 
22      SECTION 18.  This Act shall take effect upon its approval;
 

 
 
 
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 1 provided that sections 10 and 11 shall take effect on July 1,
 
 2 2000.
 
 3 
 
 4                       INTRODUCED BY:_____________________________