Analysis by the Legislative Reference Bureau
taxation
Other taxation
Under current law, generally, a person may not sell cigarettes in this state as a distributor, jobber, vending machine operator, or multiple retailer without having a permit from DOR. A "jobber" is any person who acquires cigarettes from manufacturers or distributors, stores the cigarettes, and sells the cigarettes to retailers for resale.
Current law also prohibits a direct marketer from selling cigarettes to consumers in this state unless the direct marketer fulfills certain requirements. Current law defines "direct marketing" as publishing or making accessible an offer for the sale of cigarettes to consumers in this state, or selling cigarettes, using any means by which the consumer is not physically present on a premise that sells cigarettes.
Under current law, a direct marketer must certify to DOR: that the person will register with debit and credit card companies; that the invoices for all shipments of cigarettes will bear the direct marketer's name and address; and that the direct marketer will provide DOR any information that DOR considers necessary. The direct marketer may not sell any cigarettes unless the sales tax, use tax, or cigarette tax, as appropriate, has been paid on the sale of the cigarettes.
Current law requires a direct marketer who sells cigarettes to consumers in this state to verify the consumer's name and address and that the consumer is at least 18 years of age. In addition, any person who delivers such cigarettes to consumers in this state must verify that the person who purchased the cigarettes, and who receives the delivery, is at least 18 years of age.
Under this bill, generally, the same provisions under current law that apply to the direct marketing of cigarettes also apply to the direct marketing of tobacco products. In addition, no person may sell cigarettes or tobacco products to consumers in this state unless the person applies to DOR for a permit.
Under current law, a person may not sell cigarettes or tobacco products to consumers in this state unless the person obtains a license from each city, village, or town in which the person intends to sell cigarettes or tobacco products. Under the bill, no city, village, or town may issue a license to any person who has an arrest or conviction record related to selling cigarettes or tobacco products. Under the bill, a direct marketer who holds a valid permit to sell cigarettes or tobacco products to consumers in this state is not required to obtain a license from each city, village, or town in which the cigarettes or tobacco products are sold.
Because this bill creates a new crime or revises a penalty for an existing crime, the Joint Review Committee on Criminal Penalties may be requested to prepare a report concerning the proposed penalty and the costs or savings that are likely to result if the bill is enacted.
For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
SECTION 1. 77.61 (11) of the statutes is amended to read:
77.61 (11) Any city, village or town clerk or other official whose duty it is to issue licenses or permits to engage in a business involving the sale at retail of tangible personal property subject to tax under this subchapter, or the furnishing of services so subject to tax, shall, before issuing such license or permit, require proof that the person to whom such license or permit is to be issued is the holder of a seller's permit as required by or is registered to collect, report, and remit use tax under this subchapter or has been informed by an employee of the department that the department will issue a seller's permit to that person or register that person to collect, report, and remit use tax.
SECTION 2. 100.20 (1n) of the statutes is amended to read:
100.20 (1n) It is an unfair method of competition or an unfair trade practice for any person to sell cigarettes to consumers in this state in violation of s. 139.345 or to sell tobacco products to consumers in this state in violation of s. 139.795.
SECTION 3. 100.30 (2) (c) 1. b. of the statutes is amended to read:
100.30 (2) (c) 1. b. For every person holding a permit as a bonded direct marketer as defined in s. 139.30 (1d), as a distributor as defined in s. 139.30 (3), or as a multiple retailer as defined in s. 139.30 (8), with respect to that portion of the person's business which involves the purchase and sale of cigarettes "cost to wholesaler" means the cost charged by the cigarette manufacturer, disregarding any manufacturer's discount or any discount under s. 139.32 (5), plus the amount of tax imposed under s. 139.31. Except for a sale at wholesale between wholesalers, a markup to cover a proportionate part of the cost of doing business shall be added to the cost to wholesaler. In the absence of proof of a lesser cost, this markup shall be 3% of the cost to wholesaler as set forth in this subd. 1. b.
SECTION 4. 100.30 (2) (L) (intro.) of the statutes is amended to read:
100.30 (2) (L) (intro.) "Wholesaler" includes every person holding a permit as a bonded direct marketer as defined in s. 139.30 (1d) or as a multiple retailer under s. 139.30 (8) and every person engaged in the business of making sales at wholesale, other than sales of motor vehicle fuel at wholesale, within this state except as follows:
SECTION 5. 100.30 (2) (L) 2. of the statutes is amended to read:
100.30 (2) (L) 2. In the case of a person holding a permit as a bonded direct marketer as defined in s. 139.30 (1d) or as a multiple retailer as defined in s. 139.30 (8), "wholesaler" applies to that portion of the person's business involving the purchase and sale of cigarettes and to any wholesale portion of that person's business.
SECTION 6. 134.65 (1) of the statutes is amended to read:
134.65 (1) No person shall in any manner, or upon any pretense, or by any device, directly or indirectly sell, expose for sale, possess with intent to sell, exchange, barter, dispose of or give away any cigarettes or tobacco products to any person not holding a license as herein provided or a permit under ss. 139.30 to 139.41 or, 139.79, or 139.795 without first obtaining a license from the clerk of the city, village, or town wherein such privilege is sought to be exercised. This subsection does not apply to a person who holds a valid permit under s. 139.345 or 139.795 and who sells cigarettes or tobacco products solely as a direct marketer.
SECTION 7. 134.65 (1n) of the statutes is created to read:
134.65 (1n) (a) The department of revenue shall prepare an application form for licenses issued under this section. In addition to the information required under sub. (1m), the form shall require all of the following information:
1. The applicant's history relevant to the applicant's fitness to hold a license under this section.
2. The kind of license for which the applicant is applying.
3. The premises where cigarettes or tobacco products will be sold or stored.
4. If the applicant is a corporation, the identity of the corporate officers and agent.
5. If the applicant is a limited liability company, the identity of the company members or managers and agent.
6. The applicant's trade name, if any.
7. Any other information required by the department.
(b) The department of revenue shall provide one copy of the application form prepared under this subsection to each city, village, and town.
(c) Each applicant for a license under this section shall use the application form prepared under this subsection.
(d) 1. Each application for a license under this section shall be sworn to by the applicant and the applicant shall submit the application with the clerk of the city, village, or town where the intended place of sale is located.
2. Within 10 days of any change in any fact set forth in an application, the applicant or license holder shall file a written description of the change with the clerk of the city, village, or town where the application was submitted.
3. Any person may inspect applications submitted under this paragraph. The clerk of each city, village, or town where such applications are submitted shall retain all applications submitted under this paragraph, but may destroy all applications that have been retained for 4 years or longer.
SECTION 8. 134.65 (1r) of the statutes is created to read:
134.65 (1r) (a) Subject to ss. 111.321, 111.322, and 111.335, no license under sub. (1) may be issued to any person to whom any of the following applies:
1. The person has an arrest record or a conviction record.
2. The person has been convicted of a felony, or as a repeat or habitual offender, unless pardoned.
3. The person has not submitted proof as provided under s. 77.61 (11).
4. The person is not 18 years of age or older.
(b) The requirements under par. (a) apply to all partners of a partnership, all members of limited liability company, all agents of a limited liability company or corporation, and all officers of a corporation. Subject to ss. 111.321, 111.322, and 111.335, if a business entity has been convicted of a crime, the entity may not be issued a license under sub. (1) unless the entity has terminated its relationship with the individuals whose actions directly contributed to the conviction.
SECTION 9. 134.65 (2) (a) of the statutes is amended to read:
134.65 (2) (a) Except Subject to sub. (1r), and except as provided in par. (b), upon filing of a proper written application a license shall be issued on July 1 of each year or when applied for and continue in force until the following June 30 unless sooner revoked. The city, village or town may charge a fee for the license of not less than $5 nor more than $100 per year which shall be paid to the city, village or town treasurer before the license is issued.
SECTION 10. 134.65 (5) of the statutes is renumbered 134.65 (5) (a) and amended to read:
134.65 (5) (a) Any Except as provided in par. (b), any person violating this section shall be fined not more than $100 $1,000 nor less than $25 $500 for the first offense and shall be fined not more than $200 $5,000 nor less than $25 $1,000 or imprisoned for not more than 180 days or both for the 2nd or subsequent offense. If upon such 2nd or subsequent violation, the person so violating this section was personally guilty of a failure to exercise due care to prevent violation thereof, the person shall be fined not more than $300 nor less than $25 or imprisoned not exceeding 60 days or both. Conviction Upon conviction of a 2nd or subsequent offense, the court shall immediately terminate the license of the person convicted of being personally guilty of such failure to exercise due care and the person shall not be entitled to another license hereunder for a period of 5 years thereafter, nor shall the person in that period act as the servant or agent of a person licensed hereunder for the performance of the acts authorized by such license.
SECTION 11. 134.65 (5) (b) of the statutes is created to read:
134.65 (5) (b) No penalty shall be imposed under par. (a) if any of the following apply:
1. The secretary of revenue determines that imposing a penalty would be inequitable because of inadvertent acts, mistakes, or unusual circumstances related to the violation.
2. The person who is subject to a penalty under par. (a) had good cause to violate this section, and such violation did not result from the person's neglect.
SECTION 12. 134.66 (2) (d) of the statutes is created to read:
134.66 (2) (d) No retailer, direct marketer, manufacturer, distributor, jobber or subjobber, no agent, employee or independent contractor of a retailer, direct marketer, manufacturer, distributor, jobber or subjobber, and no agent or employee of an independent contractor may provide cigarettes or tobacco products for nominal or no consideration to any person under the age of 18.
SECTION 13. 134.66 (3m) of the statutes is created to read:
134.66 (3m) DEFENSE OF DIRECT MARKETER. Proof of all of the following facts by a direct marketer who sells cigarettes or tobacco products to a person under the age of 18 is a defense to any prosecution for a violation under sub. (2) (a):
(a) That the direct marketer used a mechanism, approved by the department of revenue, for verifying the age of the purchaser.
(b) That the purchaser falsely represented that he or she had attained the age of 18 and presented a copy or facsimile of an identification card.
(c) That the name and birthdate of the purchaser, as indicated by the purchaser, matched the name and birthdate on the identification presented under par. (b).
(d) That the sale was made in good faith, in reasonable reliance on the mechanism described in par. (a) and the representation and identification under pars. (b) and (c), and in the belief that the purchaser had attained the age of 18.
SECTION 14. 139.30 (4n) of the statutes is repealed and recreated to read:
139.30 (4n) "Identification card" has the meaning given in s. 134.66 (1) (c).
SECTION 15. 139.30 (7) of the statutes is amended to read:
139.30 (7) "Manufacturer" means any person who directly manufactures cigarettes for the purpose of sale, including the authorized agent of a person who directly manufactures cigarettes for the purpose of sale.
SECTION 16. 139.30 (8s) of the statutes is created to read:
139.30 (8s) "Person" means any individual, sole proprietorship, partnership, limited liability company, corporation, or association, or any owner of a single-owner entity that is disregarded as a separate entity under ch. 71.
SECTION 17. 139.32 (4) of the statutes is amended to read:
139.32 (4) In lieu of stamps the secretary may authorize impressions applied by the use of meter machines. The secretary shall prescribe by rule the type of impression and the kind of machines which may be used.
SECTION 18. 139.321 (1) (intro.) of the statutes is amended to read:
139.321 (1) (intro.) It is unlawful for any person to purchase or possess cigarettes unless the required stamps are properly affixed as provided in ss. 139.32 (1) and 139.33 (4).
SECTION 19. 139.321 (1) (a) 1. of the statutes is amended to read:
139.321 (1) (a) 1. Manufacturers, bonded direct marketers, distributors or warehouse operators possessing valid permits issued by the secretary.
SECTION 20. 139.34 (1) (a) of the statutes is amended to read:
139.34 (1) (a) No person may manufacture cigarettes in this state or sell cigarettes in this state as a distributor, manufacturer, jobber, vending machine operator, direct marketer, or multiple retailer and no person may operate a warehouse in this state for the storage of cigarettes for another person without first filing an application for and obtaining the proper permit to perform such operations from the department.
SECTION 21. 139.34 (1) (b) of the statutes is repealed.
SECTION 22. 139.34 (1) (c) 1. of the statutes is repealed.
SECTION 23. 139.34 (1) (c) 1m. of the statutes is created to read:
139.34 (1) (c) 1m. The person has an arrest record or a conviction record.
SECTION 24. 139.34 (1) (c) 2. of the statutes is amended to read:
139.34 (1) (c) 2. The person has been convicted of a felony, or as a repeat or habitual offender, unless pardoned.
SECTION 25. 139.34 (1) (c) 3. of the statutes is repealed.
SECTION 26. 139.34 (1) (c) 4. of the statutes is repealed.
SECTION 27. 139.34 (1) (c) 4m. of the statutes is created to read:
139.34 (1) (c) 4m. The person is not 18 years of age or older.
SECTION 28. 139.34 (1) (c) 5. of the statutes is repealed.
SECTION 29. 139.34 (1) (c) 6. of the statutes is repealed.
SECTION 30. 139.34 (1) (c) 7. of the statutes is renumbered 139.34 (1) (c) 5m.
SECTION 31. 139.34 (1) (cm) of the statutes is created to read:
