Chapter 8.44
TOBACCO DISTRIBUTION EXCISE TAX

Sections:

8.44.010    Definitions.

8.44.020    Imposition of excise tax on tobacco products.

8.44.030    Exemptions.

8.44.040    Registration.

8.44.050    Prohibited acts and associated penalties.

8.44.060    Procedures and forms.

8.44.070    Monthly reports and payment.

8.44.080    Penalties and interest.

8.44.090    Estimated tax.

8.44.100    Lien for tax, interest and penalty due.

8.44.110    Administrative appeals.

8.44.120    Refunds.

8.44.130    Record keeping.

8.44.140    Confidentiality of reports and associated documents.

8.44.150    Sale of business – Final tax report – Liability of purchaser.

8.44.160    Severability.

8.44.010 Definitions.

The following words, terms and phrases, when used in this chapter, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Cigarette” means a roll for smoking of any size or shape, made wholly or partly of tobacco, whether the tobacco is flavored, adulterated, or mixed with another ingredient, if the wrapper or cover of the roll is made of paper or a material other than tobacco.

Distributor” means a person who (1) brings tobacco products, or causes them to be brought, into the borough and who sells or distributes them to others for resale in the borough or (2) ships or transports a tobacco product to a retailer in the borough for sale by the retailer.

Sale” means a sale, barter, exchange, and every other manner of transferring the ownership of personal property.

Tobacco product” means:

1. A cigar;

2. A cheroot;

3. A stogie;

4. A perique;

5. Snuff and snuff flour;

6. Smoking tobacco, including granulated, plug-cut, crimp-cut, ready-ruffed, and any form of tobacco suitable for smoking in a pipe or cigarette;

7. Chewing tobacco, including Cavendish, twist, plug, scrap, and tobacco suitable for chewing;

8. An article or product made of tobacco or a tobacco substitute, but not including a tobacco cessation substitute, including but not limited to those prescribed by a licensed physician; or

9. A cigarette.

Wholesale price” means the price the distributor pays for a cigarette or other tobacco product after deduction of a discount, reduction, or other financial consideration such as 2/10 net receivables, received by the distributor for early payment, quantity or cash. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.010.)

8.44.020 Imposition of excise tax on tobacco products.

A. The borough hereby levies an excise tax on the distribution of tobacco products brought into the borough after July 1, 2004, measured at the rate of eight percent times the wholesale price of such tobacco products.

B. It is the intent and purpose of this chapter to provide for the collection of the excise tax from the person who brings or causes to be brought tobacco products into the borough. The excise tax is levied when:

1. A person brings, or causes to be brought, tobacco products into the borough from outside the borough for sale; or

2. A person ships or transports cigarettes or tobacco products to a retailer in the borough for sale by a retailer.

C. Products upon which a tax is imposed under this section are not again subject to the tax when acquired by another person. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.020.)

8.44.030 Exemptions.

The tax imposed under this chapter does not apply to:

A. Tobacco products brought into the borough by an exchange, commissary, or ship’s stores operated by one of the uniformed services of the United States as defined in 5 USC 2101 if the tobacco products are sold to and for the sole use of authorized personnel according to current military regulations.

B. Tobacco products if the United States Constitution or other federal or state laws prohibit the levying of the tax on the product by the borough.

C. Tobacco products brought into the borough for sale outside the borough. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.030.)

8.44.040 Registration.

A. No person may sell, purchase, possess or bring tobacco products in the borough as a distributor without first registering with the borough and obtaining a certificate of registration. The application for registration shall be on a form provided by the borough and must include the information requested by the borough.

B. The registration required by this chapter is in addition to any other registration or license required by law. An applicant for registration shall provide proof of a valid tobacco product distribution license required by state law.

C. A distributor shall display the certificate of registration prominently at the distributor’s place of business.

D. A certificate of registration is neither assignable nor transferable. It shall be surrendered to the borough if the distributor ceases to do business or if the distributor otherwise sells, assigns, transfers, conveys, leases, forfeits, or abandons the distributor’s business to any person.

E. The borough may revoke a certificate of registration if a distributor fails to comply with any of the provisions of this chapter. If a certificate has not been issued to the distributor or the distributor’s certificate has been revoked, the borough may seek injunctive relief to prevent the distributor from engaging in any act prohibited by this chapter. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.040.)

8.44.050 Prohibited acts and associated penalties.

In addition to the other requirements of this chapter:

A. No distributor shall fail or refuse to pay the tax when it is due and payable as required by this chapter.

B. No distributor shall fail or refuse to make and file any reports required by this chapter.

C. No distributor shall attempt to assign or transfer a certificate of registration.

D. No person may import tobacco products into the borough or participate in the importation into the borough of tobacco products in violation of the provisions of this chapter.

E. In addition to all other penalties provided under this chapter, any distributor that violates any requirement of this section is subject to a penalty of $1,000.

F. Any person who violates or fails to comply with the provisions of this chapter shall be personally liable for all costs, interest, penalties and taxes due under this chapter. For good cause shown, the chief financial officer may waive or reduce all or part of any penalty or interest imposed under this chapter. (Ord. 2014-12 § 4, 2014; Ord. 2013-65 § 6, 2013; Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.050.)

8.44.060 Procedures and forms.

A. All tobacco products brought into the borough, unless explicitly exempted by this chapter, shall be presumed to be subject to the tax imposed hereunder in any action to enforce the provisions of this chapter.

B. The chief financial officer and/or his or her designee shall take all lawful and necessary actions to administer this chapter including, but not limited to, adopting and revising procedures, regulations, fees, and written guidelines for taxability determinations. Adopted regulations may also provide for the application and interpretation of this chapter and provide for methods and forms for reporting, collecting, and paying the tax imposed by this chapter.

C. The chief financial officer and/or his or her designee may also take other lawful actions to administer this chapter including, but not limited to, issuing written determinations of the taxability of specific actions upon request, contracting services for collection of delinquent accounts, compromising and abating penalties and interest, and/or negotiating and entering into payment plans for delinquent taxes, penalties and interest. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.060.)

8.44.070 Monthly reports and payment.

A. Every distributor shall, on or before the fifteenth day of each month, sign, complete and transmit an excise tax report and pay all taxes due for the preceding month. The excise tax report shall be upon forms to be furnished by the borough. The report must include the wholesale price of the tobacco products brought into the borough during the preceding month, the amount of excise tax due, and the wholesale price of the tobacco products for which an exemption is claimed, and other information and supporting documentation as the borough may require. The distributor shall file the report even if the distributor has not performed any act taxable under this chapter.

B. If the due date is a Saturday, Sunday, or a federal or borough holiday, the due dates under this chapter shall be extended until the next business day.

C. A report is considered filed and taxes are considered paid on the date received by the borough’s collection office or on the date mailed via certified mail, U.S. Postal Service. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.070.)

8.44.080 Penalties and interest.

A. Penalties. All penalties and remedies enumerated in this chapter are cumulative.

B. Any distributor that fails to pay taxes to the borough as required by this chapter or fails to file an excise tax report as required by this chapter shall incur the following penalties:

Month Filing For

Report/Remittance Due Date

Late Report/Late Payment Penalty – 10% of the taxes due. If no taxes are due, the penalty is $50.00.

Additional Late Report/Late Payment Penalty – 25% of taxes due

January

February 15

February 16 – March 15

March 16

February

March 15

March 16 – April 15

April 16

March

April 15

April 16 – May 15

May 16

April

May 15

May 16 – June 15

June 16

May

June 15

June 16 – July 15

July 16

June

July 15

July 16 – August 15

August 16

July

August 15

August 16 – September 15

September 16

August

September 15

September 16 – October 15

October 16

September

October 15

October 16 – November 15

November 16

October

November 15

November 16 – December 15

December 16

November

December 15

December 16 – January 15

January 16

December

January 15

January 16 – February 15

February 16

C. If a distributor is required under this chapter to submit a report or pay taxes to the borough, such distributor shall pay an additional $1,000 penalty if the distributor’s report or payment is not received by the borough within 60 days of the original due date provided under this section.

D. In addition to any other penalties imposed under this chapter, a distributor shall pay any administrative fees, outside collection agency fees, attorney fees, and other costs and fees incurred by the borough or its agent(s) in connection with any collection, or attempted collection, from the distributor of any unpaid tax, unpaid interest, and/or unpaid penalties due under this chapter.

E. Simple interest at a rate of 15 percent per year, or a lesser rate if required by law, shall accrue on all unpaid taxes, not including penalty and administrative fees, from the original due date provided under this section until paid in full.

F. The borough will apply a distributor’s payment to the most delinquent excise tax report in the following order: first, to any unpaid administrative fees, outside collection agency fees, attorney fees, and other collection costs and fees; second, to any unpaid penalties; third, to any unpaid interest that has accrued on unpaid taxes; and fourth, to the principal of any unpaid taxes.

G. Any person who holds an ownership interest in a distributor, or any other person who is a distributor, is personally liable for all taxes, penalties and interest due from such distributor under this chapter. (Ord. 2004-59 § 2, 2004; Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.080.)

8.44.090 Estimated tax.

A. If the borough believes a report contains inaccurate reporting or is unable to ascertain the tax due from a distributor because the distributor failed to file a report, pay taxes, keep accurate books, allow inspection, or maintain the records as required by this chapter, the borough shall estimate the tax due based on any available evidence. The borough shall mail to the distributor’s last known address the borough’s estimated tax assessment and a written demand for submission of the corrected or required excise tax report and payment within 10 days. Unless the distributor files an accurate excise tax report covering the time period subject to the borough’s estimate or files an appeal within 30 days of the mailing of the borough’s estimate, the borough’s estimate shall become final for the purpose of determining the distributor’s tax liability.

B. If the distributor files an appeal of the estimated tax assessment as permitted in FNSBC 8.44.110, the distributor shall, in addition to any other requirements of this chapter, make available for examination the books, papers, records and other relevant documents pertaining to the period involved in the assessment.

C. Following any requested hearing, the chief financial officer shall issue an amended estimated tax assessment if he or she subsequently determines that an amendment should be made. The amended estimated assessment, or the original estimated assessment if no amendment is made within 30 days of the hearing, shall be the final assessment for the purpose of determining the distributor’s liability to the borough.

D. The borough may file a civil action for collection of any taxes, penalty or interest due after making a demand or assessment under subsection (A) of this section. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.090.)

8.44.100 Lien for tax, interest and penalty due.

The tax, costs, interest and penalty due from a distributor under this chapter shall constitute a lien in favor of the borough upon the assets or property of such distributor. The lien arises upon delinquency and continues until liability for the amount or judgment is satisfied. The lien is not valid as against a mortgagee, pledgee, purchaser, or judgment creditor until notice of the lien is filed in the records of the appropriate recording office. After such filing, it is a lien prior, paramount, and superior to all other liens, mortgages, hypothecations, conveyances, and assignments on all the real and personal property of the person liable for the tax, and upon all the real and personal property used with the permission of the owner to carry on the business that is subject to the tax. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.100.)

8.44.110 Administrative appeals.

A. A distributor may appeal to the chief financial officer any estimated tax, penalties, costs, fees, or other decision under this chapter made by a borough employee other than the chief financial officer. Any appeal must be filed within the earlier of 30 days after the notice of any decision or action taken is mailed to the distributor, or 30 days after the notice of any decision or action taken is otherwise communicated to the distributor.

B. The appeal must state the legal and factual basis for the appeal and include all written evidence relevant to the appeal within the appellant’s possession. If the appeal raises relevant questions of fact, the chief financial officer shall conduct a hearing. The chief financial officer may require production of any potentially relevant documents not submitted with the appeal. The chief financial officer may also issue subpoenas and subpoenas duces tecum and may exercise any other powers not prohibited by law. At the hearing, the parties shall have the right to present testimony and cross-examine witnesses. The chief financial officer shall thereafter issue a written or recorded decision that includes findings of fact and conclusions.

C. An administrative appeal decision by the chief financial officer is a final decision that shall be enforced under this chapter unless stayed by court order or by agreement of the borough and appellant. The chief financial officer’s final decision may be appealed to Superior Court in the Fourth Judicial District as provided by state law.

D. At the option of the chief financial officer, any hearing held under this chapter may be conducted by a hearing officer, selected by the chief financial officer or the borough mayor, who shall conduct the hearing and prepare findings and conclusions. These findings and conclusions shall be forwarded to the chief financial officer for adoption, modification or rejection and issuance of a final decision by the chief financial officer. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.110.)

8.44.120 Refunds.

A. A distributor may within 60 days of filing an excise tax report submit an amended report along with a written claim for a refund. The distributor claiming the refund bears the burden of proving, by clear and convincing evidence, any overpayment to the borough.

B. The borough shall investigate all refund claims and shall present findings and recommendations to the chief financial officer or his or her designee within 60 days of a distributor’s filing of a written claim for refund. If the chief financial officer determines that clear and convincing evidence supports the distributor’s refund claim, the chief financial officer or his or her designee shall issue a refund to the distributor. Within 120 days of distributor’s filing of a written claim for refund, the chief financial officer or his or her designee shall issue a refund, or notify the distributor that no refund shall be issued. The borough shall not pay, and shall not otherwise be held liable for, any interest on any refund. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.120.)

8.44.130 Record keeping.

A. In order to facilitate the administration and enforcement of the provisions of this chapter, each distributor shall maintain and keep for a period of six years all of the monthly excise tax reports, forms and other records prescribed by this chapter or as prescribed hereafter by the chief financial officer or his or her designee.

B. A distributor shall keep complete and accurate books, records, and accounts, showing all inventory purchases and distribution of tobacco products within the borough, for a period of six years from the date of each sale. In addition to all other record keeping requirements under this chapter, a distributor shall maintain all written and electronic records relating to the distribution of tobacco products, for a period of six years after such distribution, including but not limited to:

1. All local, state, and federal tax reports and forms;

2. All inventory, shipping, and accounting records;

3. All sales receipts; and

4. All documentary evidence supporting any exemption provided under this chapter.

C. The borough may conduct investigations or audit any distributor’s reports by examining any of the records and materials specified in this subsection or other relevant record or material. The chief financial officer, or his or her designee, is specifically authorized and empowered to examine and inspect at all reasonable hours and upon reasonable notice the books, records, products, materials and other documents of any distributor, including the distributor’s state business license, in order to carry out the provisions of this chapter. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.130.)

8.44.140 Confidentiality of reports and associated documents.

A. Documents in the possession of the borough by operation of this chapter are available to the public for inspection and copying except as otherwise provided in this section, FNSBC 1.16.010 and state or federal law.

B. If a distributor makes a showing satisfactory to the chief financial officer that a report, record, application or other information submitted by the distributor would, if made public, divulge information entitled to protection as trade secrets under state law, the borough will treat the record, report, application, or other information as confidential. This showing requires, but is not limited to, the distributor’s certification under oath that:

1. Public disclosure would tend to affect adversely the distributor’s competitive position; and

2. The records, reports, application or other information submitted would divulge sales figures, processes, techniques or other financial data of the distributor that are entitled to protection as trade secrets under state law.

C. It is unlawful for any person to divulge to another any documents or information obtained from any records or documents filed with the borough that have been determined by the chief financial officer or his or her designee to be confidential unless otherwise provided by state law or this chapter.

D. The chief financial officer or his or her designee shall maintain all records and information deemed confidential under this section secure from public inspection and release.

E. The borough shall not destroy any materials submitted to the borough under this chapter until at least six years have elapsed since the submission of such materials.

F. Notwithstanding other provisions of this chapter, the borough may, even for records deemed confidential,

1. Compile and publish general statistical records concerning the data submitted by distributor;

2. Release names, owners, mailing addresses, any past penalty or interest assessments under this chapter, and the filing status of distributor to the public. Filing status for this purpose includes whether a distributor is exempt, delinquent, or current in payment of taxes;

3. Provide any records to an auditor, collection agency or attorney, acting as an agent of the borough, for the review and use in performing services for the borough;

4. Exchange confidential information about a distributor with another jurisdiction, which has a similar tax, if that other jurisdiction has similar provisions protecting the confidentiality of the distributor’s records;

5. Release records with the permission of the distributor; and

6. Use any records in any criminal or civil action brought under this chapter.

G. Hearings conducted by the chief financial officer or a hearing officer under this chapter are public. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.140.)

8.44.150 Sale of business – Final tax report – Liability of purchaser.

A. If a distributor sells, assigns, transfers, conveys, leases, forfeits or abandons the business to another person, the distributor shall make a final excise tax report and pay all outstanding taxes within 15 days after the date of selling, assigning, transferring, conveying, leasing, forfeiting or abandoning the business. The report shall show that any and all tax obligations imposed by this chapter are paid concurrently with the filing of the report or have been paid. The purchaser, successor, transferee, lessee, assignee, creditor or secured party shall withhold a sufficient portion of the purchase money to pay the amount of any excise taxes, penalties and interest as may be due and unpaid to the borough. If the purchaser, assignee, transferee, lessee, successor, creditor or secured party fails to withhold from the purchase money, or fails to otherwise provide for or make the payment of the taxes, interest and penalty owed by distributor as provided in this chapter, the purchaser, assignee, transferee, lessee, successor, creditor or secured party shall be personally liable for the payment of the taxes, penalties and interest accruing and unpaid to the borough on account of the operation of the distributorship of any former owner, owners, operators or assigns.

B. Before the sale, lease, assignment, transfer, or other disposition of the business is completed, the distributor shall file with the borough an informational notice identifying the name and address of each person involved in the transaction, the nature of the transaction, and the effective date of the transaction. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.150.)

8.44.160 Severability.

If any section, subsection, paragraph, sentence, clause, or phrase of this chapter is held to be unconstitutional or in violation of law, then that holding shall not affect the validity of the remainder of this chapter. (Ord. 2004-18 § 2, 2004. 2004 Code § 3.57.160.)