2003 WISCONSIN ACT 73
An Act to amend 895.10 (2) (b) 2. b.; and to create 895.12 of the statutes; relating to: tobacco settlement agreement enforcement and providing penalties.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
895.10 (2) (b) 2. b. of the statutes is amended to read:
895.10 (2) (b) 2. b. To the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow on account of the units sold in a particular year was greater than the state's allocable share of the total payments that the manufacturer would have been required to make in that year under the master settlement agreement had it been a participating manufacturer, as those payments are determined under section IX (i) (2) of the master settlement agreement and before any of the adjustments or offsets described in section IX (i) (3) of that agreement other than the inflation adjustment master settlement agreement payments, as determined under section IX (i) of that agreement including after the final determination of all adjustments, that the manufacturer would have been required to make on account of such units sold had it been a participating manufacturer, the excess shall be released from escrow and revert to that tobacco product manufacturer.
895.12 of the statutes is created to read:
895.12 Certification under the tobacco settlement agreement.
(1) Definitions. In this section:
(a) "Brand family" means all styles of cigarettes sold under the same trademark and differentiated from one another by means of additional modifiers or descriptors, including "menthol," "lights," "kings," and "100s," and includes any brand name, alone or in conjunction with any other word; trademark; logo; symbol; motto; selling message; recognizable pattern of colors; or other indicia of product identification identical or similar to, or identifiable with, a previously known brand of cigarettes.
(b) "Cigarette" has the meaning given in s. 895.10 (1) (d).
(c) "Department" means the department of revenue.
(d) "Distributor" means a person that is authorized to affix tax stamps to packages or other containers of cigarettes under subch. II of ch. 139 or any person that is required to pay the tax imposed on tobacco products under subch. III of ch. 139.
(e) "Master settlement agreement" has the meaning given in s. 895.10 (1) (e).
(f) "Nonparticipating manufacturer" means any tobacco product manufacturer that is not a participating manufacturer.
(g) "Participating manufacturer" has the meaning given in section II (jj) of the master settlement agreement.
(h) "Qualified escrow fund" has the meaning given in s. 895.10 (1) (f).
(j) "Tobacco product manufacturer" has the meaning given in s. 895.10 (1) (i).
(k) "Units sold" has the meaning given in s. 895.10 (1) (j).
(2) Certifications; directory; tax stamps.
(a) Certification. 1. Every tobacco product manufacturer whose cigarettes are sold in this state, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, shall execute and deliver in the manner prescribed by the attorney general a certification to the department and attorney general, no later than the 30th day of April each year, certifying that as of that date the tobacco product manufacturer is either a participating manufacturer or is in full compliance with s. 895.10 (2) (b).
2. A participating manufacturer shall include in its certification a list of its brand families. The participating manufacturer shall update that list at least 30 calendar days prior to any addition to or modification of its brand families by executing and delivering a supplemental certification to the department and attorney general.
3. A nonparticipating manufacturer shall include all of the following in its certification:
a. A list of all of its brand families and the number of units sold for each brand family that were sold in the state during the preceding calendar year.
b. A list of all of its brand families that have been sold in the state at any time during the current calendar year.
c. A list of any brand families sold in the state during the preceding calendar year that are no longer being sold in the state as of the date of such certification.
d. The name and address of any other manufacturer of the brand families in the preceding or current calendar year.
4. The nonparticipating manufacturer shall update the list under subd. 3. at least 30 calendar days before any addition to or modification of its brand families by executing and delivering a supplemental certification to the department and attorney general.
5. The nonparticipating manufacturer shall further certify all of the following:
a. That the nonparticipating manufacturer is registered to do business in the state or has appointed an agent for service of process and provided notice of that appointment as required by sub. (3).
b. That the nonparticipating manufacturer has established and continues to maintain a qualified escrow fund and has executed a qualified escrow agreement that has been reviewed and approved by the attorney general and that governs the qualified escrow fund.
c. That the nonparticipating manufacturer is in full compliance with this section and s. 895.10.
d. The name, address, and telephone number of the financial institution where the nonparticipating manufacturer has established the qualified escrow fund required under s. 895.10 (2) (b).
e. The account number of the qualified escrow fund and any subaccount number for the state.
f. The amount the nonparticipating manufacturer placed into the fund for cigarettes sold in the state during the preceding calendar year, the date and amount of each deposit, and any evidence or verification as required by the attorney general.
g. The amount and date of any withdrawal or transfer of funds the nonparticipating manufacturer made at any time from the fund or from any other qualified escrow fund into which it ever made escrow payments under s. 895.10 (2) (b).
6. A participating manufacturer may not include a brand family in its certification unless the participating manufacturer affirms that the brand family constitutes its cigarettes for purposes of calculating its payments under the master settlement agreement for the relevant year, in the volume and shares determined under the master settlement agreement.
7. A nonparticipating manufacturer may not include a brand family in its certification unless it affirms that the brand family constitutes its cigarettes for purposes of s. 895.10.
8. Nothing in this section shall be construed as limiting or otherwise affecting the state's right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the master settlement agreement or for purposes of s. 895.10.
9. Tobacco product manufacturers shall maintain all invoices and documentation of sales and other such information relied upon for the certification under subd. 5. for a period of 5 years, unless otherwise required by law to maintain them for a greater period of time.
(b) Directory of cigarettes approved for stamping and sale. Not later than the first day of the 4th month after the effective date of this paragraph .... [revisor inserts date], the attorney general shall develop and make available for public inspection a directory listing all tobacco product manufacturers that have provided current and accurate certifications conforming to the requirements of par. (a) and all brand families that are listed in the certifications, except as follows:
1. The attorney general shall not include or retain in the directory the name or brand families of any nonparticipating manufacturer that has failed to provide the required certification or whose certification the attorney general determines is not in compliance with par. (a) 3. to 5., unless the attorney general has determined that the violation has been cured.
2. Neither a tobacco product manufacturer nor brand family may be included or retained in the directory if the attorney general concludes, in the case of a nonparticipating manufacturer, that any of the following apply:
a. An escrow payment required under s. 895.10 (2) (b) for any period for any brand family, whether or not listed by such nonparticipating manufacturer, has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement that has been approved by the attorney general.
b. Any outstanding final judgment, including interest on that judgment, for a violation of s. 895.10 has not been fully satisfied for the brand family or manufacturer.
3. The attorney general shall update the directory as necessary to correct mistakes and to add or remove a tobacco product manufacturer or brand family to keep the directory in conformity with the requirements under this paragraph.
4. Every distributor shall provide and update as necessary an electronic mail address to the attorney general for the purpose of receiving any notifications as may be required under this section.
(c) Prohibition against stamping or sale of cigarettes not in the directory. It shall be unlawful for any person to affix a stamp to a package or other container of cigarettes of a tobacco product manufacturer or brand family not included in the directory or to sell, or offer or possess for sale, in this state cigarettes of a tobacco product manufacturer or brand family not included in the directory.
(3) Agent for service of process. (a) Requirement for agent for service of process. Any nonresident or foreign nonparticipating manufacturer that has not registered to do business in this state as a foreign corporation or business entity shall, as a condition precedent to having its brand families included or retained in the directory under sub. (2) (b), appoint and continually engage the services of an agent in this state to act as agent for the service of process on whom all processes, and any action or proceeding against it concerning or arising out of the enforcement of this section and s. 895.10, may be served in any manner authorized by law. That service shall constitute legal and valid service of process on the nonparticipating manufacturer. The nonparticipating manufacturer shall provide the name, address, phone number, and proof of the appointment and availability of the agent to the attorney general.
(b) Notification of termination of agent. The nonparticipating manufacturer shall provide notice to the department and attorney general 30 calendar days before termination of the authority of an agent under par. (a) and shall provide proof to the satisfaction of the attorney general of the appointment of a new agent no less than 5 calendar days before the termination of an existing agent appointment. In the event an agent terminates an agency appointment, the nonparticipating manufacturer shall notify the department and attorney general of that termination within 5 calendar days and shall include proof to the satisfaction of the attorney general of the appointment of a new agent.
(c) Service on secretary of state. Any nonparticipating manufacturer whose cigarettes are sold in this state, who has not appointed and engaged an agent as required in this subsection, shall be considered to have appointed the secretary of state as that agent and may be proceeded against in courts of this state by service of process upon the secretary of state provided, however, that the appointment of the secretary of state as that agent does not satisfy the condition precedent for having the brand families of the nonparticipating manufacturer included or retained in the directory under sub. (2) (b).
(4) Reporting of information; escrow installments. (a) Reporting by distributors. Not later than 20 calendar days after the end of each calendar quarter, and more frequently if so directed by the department, each distributor shall submit a report that includes any information that the department requires to facilitate compliance with this section, including a list by brand family of the total number of cigarettes, or, in the case of roll-your-own tobacco, the equivalent stick count, for which the distributor affixed stamps during the previous calendar quarter or otherwise paid the tax due for those cigarettes. The distributor shall maintain, and make available to the department, all invoices and documentation of sales of all nonparticipating manufacturer cigarettes and any other information relied upon in reporting to the department for a period of 5 years.
(b) Disclosure of information. The department is authorized to disclose to the attorney general any information received under this section and requested by the attorney general for purposes of determining compliance with and enforcing the provisions of this section. The department and attorney general shall share with each other the information received under this section, and may share such information with other federal, state, or local agencies only for purposes of enforcement of this section, s. 895.10, or corresponding laws of other states.
(c) Verification of qualified escrow fund. The attorney general may require at any time from the nonparticipating manufacturer proof, from the financial institution in which the manufacturer has established a qualified escrow fund for the purpose of compliance with s. 895.10, of the amount of money in that fund, exclusive of interest, the amount and date of each deposit into the fund, and the amount and date of each withdrawal from the fund.
(d) Requests for additional information. In addition to the information required to be submitted under par. (c), the attorney general may require a distributor or tobacco product manufacturer to submit any additional information, including samples of the packaging or labeling of each brand family, as is necessary to enable the attorney general to determine whether a tobacco product manufacturer is in compliance with this section.
(e) Quarterly escrow installments. To promote compliance with this section, the attorney general may promulgate rules requiring a tobacco product manufacturer subject to the requirements of sub. (2) (a) 3. to make the escrow deposits required in quarterly installments during the year in which the sales covered by such deposits are made. The attorney general may require production of information sufficient to enable the attorney general to determine the adequacy of the amount of the installment deposit.
(5) Penalties and other remedies. (a) License revocation and civil penalty. Upon a determination that a distributor has violated sub. (2) (c), the department may revoke or suspend the license of the distributor in the manner provided under s. 139.44 (4) and (7). Each stamp affixed and each sale of cigarettes or offer or possession to sell cigarettes in violation of sub. (2) (c) shall constitute a separate violation. For each violation the department may also impose a forfeiture in an amount not to exceed the greater of 500% of the retail value of the cigarettes or $5,000.
(b) Contraband and seizure. Any cigarettes that have been sold, offered for sale, or possessed for sale, in this state, in violation of sub. (2) (c) shall be deemed contraband and such cigarettes shall be subject to seizure as provided under s. 139.40. All cigarettes that are seized shall be destroyed and not resold.