HB-5668, As Passed Senate, December 8, 2004                                 

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

    SUBSTITUTE FOR                                                              

                                                                                

    HOUSE BILL NO. 5668                                                         

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                

                                                                                 A bill to amend 1993 PA 327, entitled                                             

                                                                                

    "Tobacco products tax act,"                                                 

                                                                                

    by amending sections 2, 8, 9, and 11 (MCL 205.422, 205.428,                 

                                                                                

    205.429, and 205.431), sections 2, 8, and 9 as amended by 1997 PA           

                                                                                

    187.                                                                        

                                                                                

    THE PEOPLE OF THE STATE OF MICHIGAN ENACT:                                  

                                                                                

1       Sec. 2.  As used in this act:                                               

                                                                                

2       (a) "Cigarette" means a roll for smoking made wholly or in                  

                                                                                

3   part of tobacco, irrespective of size or shape and irrespective             

                                                                                

4   of the tobacco being flavored, adulterated, or mixed with any               

                                                                                

5   other ingredient, which roll has a wrapper or cover made of paper           

                                                                                

6   or any other material.  Cigarette does not include cigars.                  

                                                                                

7       (b) "Commissioner" means the  revenue commissioner  state                   

                                                                                

8   treasurer.                                                                  

                                                                                

9       (c) "Counterfeit cigarette" means a cigarette in an                         

                                                                                


                                                                                

1   individual package of cigarettes or other container with a false            

                                                                                

2   manufacturing label or a cigarette in an individual package of              

                                                                                

3   cigarettes or other container with a counterfeit stamp.                     

                                                                                

4       (d)  (c)  "Counterfeit stamp" means any stamp, label, or                    

                                                                                

5   print, indicium, or character, that evidences, or purports to               

                                                                                

6   evidence, the payment of any tax levied under this act and that             

                                                                                

7   has not been printed, manufactured, or made by authority of the             

                                                                                

8   department as provided in this act and has not been issued, sold,           

                                                                                

9   or circulated by the department.                                            

                                                                                

10      (e)  (d)  "Department" means the department of treasury.                    

                                                                                

11      (f)  (e)  "Financially sound" means a determination by the                  

                                                                                

12  department that the wholesaler or unclassified acquirer is able             

                                                                                

13  to pay for its stamps in the ordinary course of business based on           

                                                                                

14  criteria including, but not limited to, all of the following:               

                                                                                

15                                                                               (i) Past filing and payment history with the department.                            

                                                                                

16      (ii) Outstanding liabilities.                                                

                                                                                

17      (iii) Review of current financial statements including, but                  

                                                                                

18  not limited to, balance sheets and income statements.                       

                                                                                

19      (iv) Duration that the wholesaler or unclassified acquirer                   

                                                                                

20  has been licensed under this act.                                           

                                                                                

21      (g)  (f)  "Individual package" means an individual packet or                

                                                                                

22  pack used to contain or to convey cigarettes to the consumer.               

                                                                                

23  Individual package does not include cartons, cases, or shipping             

                                                                                

24  or storage containers that contain smaller packaging units of               

                                                                                

25  cigarettes.                                                                 

                                                                                

26      (h)  (g)  "Licensee" means a person licensed under this act.                

                                                                                

27      (i)  (h)  "Manufacturer" means a person who manufactures or                 


                                                                                

1   produces a tobacco product.                                                 

                                                                                

2       (j)  (i)  "Noncigarette smoking tobacco" means tobacco sold                 

                                                                                

3   in loose or bulk form that is intended for consumption by smoking           

                                                                                

4   and includes roll-your-own cigarette tobacco.                               

                                                                                

5       (k)  (j)  "Person" means an individual, partnership,                        

                                                                                

6   fiduciary, association, limited liability company, corporation,             

                                                                                

7   or other legal entity.                                                      

                                                                                

8                                                                                (l)  (k)  "Place of business" means a place where a tobacco                          

                                                                                

9   product is sold or where a tobacco product is brought or kept for           

                                                                                

10  the purpose of sale or consumption, including a vessel, airplane,           

                                                                                

11  train, or vending machine.                                                  

                                                                                

12      (m)  (l)  "Retailer" means a person other than a                            

                                                                                

13  transportation company who operates a place of business for the             

                                                                                

14  purpose of making sales of a tobacco product at retail.                     

                                                                                

15      (n)  (m)  "Sale" means a transaction by which the ownership                 

                                                                                

16  of tangible personal property is transferred for consideration              

                                                                                

17  and applies also to use, gifts, exchanges, barter, and theft.               

                                                                                

18      (o)  (n)  "Secondary wholesaler" means a person who sells a                 

                                                                                

19  tobacco product for resale, who purchases a tobacco product from            

                                                                                

20  a wholesaler or unclassified acquirer licensed under this act,              

                                                                                

21  and who maintains an established place of business in this state            

                                                                                

22  where a substantial portion of the business is the sale of                  

                                                                                

23  tobacco products and related merchandise at wholesale, and where            

                                                                                

24  at all times a substantial stock of tobacco products and related            

                                                                                

25  merchandise is available to retailers for resale.                           

                                                                                

26      (p)  (o)  "Smokeless tobacco" means snuff, chewing tobacco,                 

                                                                                

27  and any other tobacco that is intended to be consumed by means              


                                                                                

1   other than smoking.                                                         

                                                                                

2       (q)  (p)  "Stamp" means a distinctive character, indication,                

                                                                                

3   or mark, as determined by the department, attached or affixed to            

                                                                                

4   an individual package of cigarettes by mechanical device or other           

                                                                                

5   means authorized by the department to indicate that the tax                 

                                                                                

6   imposed under this act has been paid.                                       

                                                                                

7       (r)  (q)  "Stamping agent" means a wholesaler or unclassified               

                                                                                

8   acquirer other than a manufacturer who is licensed and authorized           

                                                                                

9   by the department to affix stamps to individual packages of                 

                                                                                

10  cigarettes on behalf of themselves and other wholesalers or                 

                                                                                

11  unclassified acquirers other than manufacturers.                            

                                                                                

12      (s)  (r)  "Tobacco product" means cigarettes, cigars,                       

                                                                                

13  noncigarette smoking tobacco, or smokeless tobacco.                         

                                                                                

14      (t)  (s)  "Transportation company" means a person operating,                

                                                                                

15  or supplying to common carriers, cars, boats, or other vehicles             

                                                                                

16  for the transportation or accommodation of passengers and engaged           

                                                                                

17  in the sale of a tobacco product at retail.                                 

                                                                                

18      (u)  (t)  "Transporter" means a person importing or                         

                                                                                

19  transporting into this state, or transporting in this state, a              

                                                                                

20  tobacco product obtained from a source located outside this                 

                                                                                

21  state, or from any person not duly licensed under this act.                 

                                                                                

22  Transporter does not include an interstate commerce carrier                 

                                                                                

23  licensed by the interstate commerce commission to carry                     

                                                                                

24  commodities in interstate commerce, or a licensee maintaining a             

                                                                                

25  warehouse or place of business outside of this state if the                 

                                                                                

26  warehouse or place of business is licensed under this act.                  

                                                                                

27      (v)  (u)  "Unclassified acquirer" means a person, except a                  


                                                                                

1   transportation company or a purchaser at retail from a retailer             

                                                                                

2   licensed under the general sales tax act, 1933 PA 167, MCL 205.51           

                                                                                

3   to 205.78, who imports or acquires a tobacco product from a                 

                                                                                

4   source other than a wholesaler or secondary wholesaler licensed             

                                                                                

5   under this act for use, sale, or distribution.  Unclassified                

                                                                                

6   acquirer also means a person who receives cigars, noncigarette              

                                                                                

7   smoking tobacco, or smokeless tobacco directly from a                       

                                                                                

8   manufacturer licensed under this act or from another source                 

                                                                                

9   outside this state, which source is not licensed under this act.            

                                                                                

10  An unclassified acquirer does not include a wholesaler.                     

                                                                                

11      (w)  (v)  "Vending machine operator" means a person who                     

                                                                                

12  operates 1 or more vending machines for the sale of a tobacco               

                                                                                

13  product and who purchases a tobacco product from a manufacturer,            

                                                                                

14  licensed wholesaler, or secondary wholesaler.                               

                                                                                

15      (x)  (w)  "Wholesale price" means the actual price paid for a               

                                                                                

16  tobacco product, including any tax, by a wholesaler or                      

                                                                                

17  unclassified acquirer to a manufacturer, excluding any discounts            

                                                                                

18  or reductions.                                                              

                                                                                

19      (y)  (x)  "Wholesaler" means a person who purchases all or                  

                                                                                

20  part of his or her tobacco products from a manufacturer, who                

                                                                                

21  sells 75% or more of those tobacco products to others for resale,           

                                                                                

22  and who maintains an established business where substantially all           

                                                                                

23  of the business is the sale of tobacco products or cigarettes and           

                                                                                

24  related merchandise at wholesale and where at all times a                   

                                                                                

25  substantial stock of tobacco products and related merchandise is            

                                                                                

26  available to retailers for resale.  Wholesaler includes a chain             

                                                                                

27  of stores retailing a tobacco product to the consumer if 75% of             


                                                                                

1   its stock of tobacco products is purchased directly from the                

                                                                                

2   manufacturer.                                                               

                                                                                

3       Sec. 8.  (1) A person, other than a licensee, who is in                     

                                                                                

4   control or in possession of a tobacco product contrary to this              

                                                                                

5   act, who after August 31, 1998 is in control or in possession of            

                                                                                

6   an individual package of cigarettes without a stamp in violation            

                                                                                

7   of this act, or who offers to sell or does sell a tobacco product           

                                                                                

8   to another for purposes of resale without being licensed to do so           

                                                                                

9   under this act, shall be personally liable for the tax imposed by           

                                                                                

10  this act, plus a penalty of  100%  500% of the amount of tax due            

                                                                                

11  under this act.                                                             

                                                                                

12      (2) The  commissioner of revenue  department may permit a                   

                                                                                

13  representative of a licensed manufacturer of tobacco products               

                                                                                

14  whose duties require travel in this state to transport up to                

                                                                                

15  138,000 cigarettes, of which not more than 36,000 cigarettes may            

                                                                                

16  bear no tax indicia or the tax indicia of another state.  All               

                                                                                

17  138,000 cigarettes must bear the stamp approved by the department           

                                                                                

18  or the tax indicia of another state, if any.  The total value of            

                                                                                

19  tobacco products, excluding cigarettes, carried by a                        

                                                                                

20  representative shall not exceed a wholesale value of $5,000.00.             

                                                                                

21  A manufacturer shall notify the department of the manufacturer's            

                                                                                

22  representatives that it currently employs who carry cigarettes or           

                                                                                

23  tobacco products other than cigarettes in performing work duties            

                                                                                

24  in this state.  The manufacturer shall maintain a record of each            

                                                                                

25  transaction by the manufacturer's representative for a period of            

                                                                                

26  4 years immediately following the transaction and shall produce             

                                                                                

27  the records upon request of the  commissioner  state treasurer or           


                                                                                

1   the  commissioner's  state treasurer's authorized agent.  Each              

                                                                                

2   record shall identify the quantity and identity of the tobacco              

                                                                                

3   products, detail whether exchanged, received, removed, or                   

                                                                                

4   otherwise disposed of and the identity of the retailer,                     

                                                                                

5   wholesaler, secondary wholesaler, vending machine operator, or              

                                                                                

6   unclassified acquirer involved.  The representative of the                  

                                                                                

7   manufacturer shall provide a copy of the record to the retailer,            

                                                                                

8   wholesaler, secondary wholesaler, vending machine operator, or              

                                                                                

9   unclassified acquirer at the time of the exchange or disposal.              

                                                                                

10  The retailer, wholesaler, secondary wholesaler, vending machine             

                                                                                

11  operator, or unclassified acquirer shall retain the copy of the             

                                                                                

12  record in the same place and for the same time period as other              

                                                                                

13  records required by this section.  A representative shall not               

                                                                                

14  exchange, or otherwise dispose of, within this state tobacco                

                                                                                

15  products bearing the tax indicia of another state or receive                

                                                                                

16  tobacco products bearing the tax indicia of another state from              

                                                                                

17  retailers located within this state.  A representative who sells,           

                                                                                

18  exchanges, or otherwise disposes of cigarettes or tobacco                   

                                                                                

19  products other than cigarettes that do not bear the stamp or                

                                                                                

20  other marking required by the department or sells, exchanges, or            

                                                                                

21  otherwise disposes of cigarettes or tobacco products other than             

                                                                                

22  cigarettes bearing the tax indicia of another state is guilty of            

                                                                                

23  a felony, punishable by a fine of not more than $5,000.00 or                

                                                                                

24  imprisonment for not more than 5 years, or both.                            

                                                                                

25      (3) A person who possesses, acquires, transports, or offers                 

                                                                                

26  for sale contrary to this act 3,000 or more cigarettes,  or                 

                                                                                

27  tobacco products other than cigarettes with an aggregate                    


                                                                                

1   wholesale price of $250.00 or more, or 3,000 or more counterfeit            

                                                                                

2   cigarettes is guilty of a felony, punishable by a fine of not               

                                                                                

3   more than $50,000.00 or imprisonment for not more than 5 years,             

                                                                                

4   or both.                                                                    

                                                                                

5       (4) A person who possesses, acquires, transports, or offers                 

                                                                                

6   for sale contrary to this act 1,200 or more, but not more than              

                                                                                

7   2,999, cigarettes,  or  tobacco products other than cigarettes              

                                                                                

8   with an aggregate wholesale value of $100.00 or more but less               

                                                                                

9   than $250.00, or 1,200 or more, but not more than 2,999,                    

                                                                                

10  counterfeit cigarettes, is guilty of a misdemeanor punishable by            

                                                                                

11  a fine of not more than $5,000.00 or imprisonment of not more               

                                                                                

12  than 1 year, or both.                                                       

                                                                                

13      (5) A person who violates a provision of this act for which a               

                                                                                

14  criminal punishment is not otherwise provided is guilty of a                

                                                                                

15  misdemeanor, punishable by a fine of not more than $1,000.00 or 5           

                                                                                

16  times the retail value of the tobacco products involved,                    

                                                                                

17  whichever is greater, or imprisonment for not more than 1 year,             

                                                                                

18  or both.                                                                    

                                                                                

19      (6) A person who manufactures, possesses, or uses a stamp or                

                                                                                

20  manufactures, possesses, or uses a counterfeit stamp or writing             

                                                                                

21  or device intended to replicate a stamp without authorization of            

                                                                                

22  the department,  or  a licensee who purchases or obtains a stamp            

                                                                                

23  from any person other than the department, or who falsifies a               

                                                                                

24  manufacturer's label on cigarettes or counterfeit cigarettes, is            

                                                                                

25  guilty of a felony and shall be punished by imprisonment for not            

                                                                                

26  less than 1 year or more than 10 years and may be punished by a             

                                                                                

27  fine of not more than $50,000.00.                                           


                                                                                

1       (7) A person who falsely makes, counterfeits, or alters a                   

                                                                                

2   license, vending machine disc, or marker, or who purchases or               

                                                                                

3   receives a false or altered license, vending machine disc, or               

                                                                                

4   marker, or who assists in or causes to be made a false or altered           

                                                                                

5   license, vending machine disc, or marker, or who possesses a                

                                                                                

6   device used to forge, alter, or counterfeit a license, vending              

                                                                                

7   machine disc, or marker is guilty of a felony punishable by a               

                                                                                

8   fine of not more than $5,000.00 or imprisonment for not more than           

                                                                                

9   5 years, or both.  A person who alters or falsifies records or              

                                                                                

10  markings required under this act is guilty of a felony punishable           

                                                                                

11  by a fine of not more than $5,000.00 or imprisonment for not more           

                                                                                

12  than 5 years, or both.                                                      

                                                                                

13      (8) The attorney general has concurrent power with the                      

                                                                                

14  prosecuting attorneys of the state to enforce this act.                     

                                                                                

15      (9) At the request of the department or its duly authorized                 

                                                                                

16  agent, the state police and all local police authorities shall              

                                                                                

17  enforce the provisions of this act.                                         

                                                                                

18      Sec. 9.  (1) A tobacco product held, owned, possessed,                      

                                                                                

19  transported, or in control of a person in violation of this act,            

                                                                                

20  and a vending machine, vehicle, and other tangible personal                 

                                                                                

21  property containing a tobacco product in violation of this act              

                                                                                

22  and any related books and records are contraband and may be                 

                                                                                

23  seized and confiscated by the department as provided in this                

                                                                                

24  section.                                                                    

                                                                                

25      (2) If an authorized inspector of the department or a police                

                                                                                

26  officer has reasonable cause to believe and does believe that a             

                                                                                

27  tobacco product is being acquired, possessed, transported, kept,            


    House Bill No. 5668 as amended December 7, 2004                             

1   sold, or offered for sale in violation of this act for which the            

                                                                                

2   penalty is a felony, the inspector or police officer may                    

                                                                                

3   investigate or search the vehicle of transportation in which the            

                                                                                

4   tobacco product is believed to be located.  If a tobacco product            

                                                                                

5   is found in a vehicle searched under this subsection <<                     

                                                                                

6                                                                               

                                                                                

7                                                               >> or in        

                                                                                

8   a place of business inspected under this act, the tobacco                   

                                                                                

9   product, vending machine, vehicle, <<other than a vehicle owned or operated by a transportation company otherwise transporting tobacco products in compliance with this act,>> or other tangible personal                                          

10  property containing those tobacco products and any books and                

                                                                                

11  records in possession of the person in control or possession of             

                                                                                

12  the tobacco product may be seized by the inspector or police                

                                                                                

13  officer and are subject to forfeiture as contraband as provided             

                                                                                

14  in this section.                                                            

                                                                                

15      (3) As soon as possible, but not more than 5 business days                  

                                                                                

16  after seizure of any alleged contraband, the person making the              

                                                                                

17  seizure shall deliver personally or by registered mail to the               

                                                                                

18  last known address of the person from whom the seizure was made,            

                                                                                

19  if known, an inventory statement of the property seized.  A copy            

                                                                                

20  of the inventory statement shall also be filed with the                     

                                                                                

21  commissioner  state treasurer.  The inventory statement shall              

                                                                                

22  also contain a notice to the effect that unless demand for                  

                                                                                

23  hearing as provided in this section is made within 10 business              

                                                                                

24  days, the designated property is forfeited to the state.  If the            

                                                                                

25  person from whom the seizure was made is not known, the person              

                                                                                

26  making the seizure shall cause a copy of the inventory statement,           

                                                                                

27  together with the notice provided for in this subsection, to be             


                                                                                

1   published at least 3 times in a newspaper of general circulation            

                                                                                

2   in the county where the seizure was made.  Within 10 business               

                                                                                

3   days after the date of service of the inventory statement, or in            

                                                                                

4   the case of publication, within 10 business days after the date             

                                                                                

5   of last publication, the person from whom the property was seized           

                                                                                

6   or any person claiming an interest in the property may by                   

                                                                                

7   registered mail, facsimile transmission, or personal service file           

                                                                                

8   with the  commissioner  state treasurer a demand for a hearing              

                                                                                

9   before the  commissioner  state treasurer or a person designated            

                                                                                

10  by the  commissioner  state treasurer for a determination as to             

                                                                                

11  whether the property was lawfully subject to seizure and                    

                                                                                

12  forfeiture.  The person shall verify a request for hearing filed            

                                                                                

13  by facsimile transmission by also providing a copy of the                   

                                                                                

14  original request for hearing by registered mail or personal                 

                                                                                

15  service.  The person or persons are entitled to appear before the           

                                                                                

16  department, to be represented by counsel, and to present                    

                                                                                

17  testimony and argument.  Upon receipt of a request for hearing,             

                                                                                

18  the department shall hold the hearing within 15 business days.              

                                                                                

19  The hearing is not a contested case proceeding and is not subject           

                                                                                

20  to the administrative procedures act of 1969, 1969 PA 306, MCL              

                                                                                

21  24.201 to 24.328.  After the hearing, the department shall render           

                                                                                

22  its decision in writing within 10 business days of the hearing              

                                                                                

23  and, by order, shall either declare the seized property subject             

                                                                                

24  to seizure and forfeiture, or declare the property returnable in            

                                                                                

25  whole or in part to the person entitled to possession.  If,                 

                                                                                

26  within 10 business days after the date of service of the                    

                                                                                

27  inventory statement, the person from whom the property was seized           


                                                                                

1   or any person claiming an interest in the property does not file            

                                                                                

2   with the  commissioner  state treasurer a demand for a hearing              

                                                                                

3   before the department, the property seized shall be considered              

                                                                                

4   forfeited to the state by operation of law and may be disposed of           

                                                                                

5   by the department as provided in this section.  If, after a                 

                                                                                

6   hearing before the  commissioner  state treasurer or person                 

                                                                                

7   designated by the  commissioner  state treasurer, the department            

                                                                                

8   determines that the property is lawfully subject to seizure and             

                                                                                

9   forfeiture and the person from whom the property was seized or              

                                                                                

10  any persons claiming an interest in the property do not take an             

                                                                                

11  appeal to the circuit court of the county in which the seizure              

                                                                                

12  was made within the time prescribed in this section, the property           

                                                                                

13  seized shall be considered forfeited to the state by operation of           

                                                                                

14  law and may be disposed of by the department as provided in this            

                                                                                

15  section.                                                                    

                                                                                

16      (4) If a person is aggrieved by the decision of the                         

                                                                                

17  department, that person may appeal to the circuit court of the              

                                                                                

18  county where the seizure was made to obtain a judicial                      

                                                                                

19  determination of the lawfulness of the seizure and forfeiture.              

                                                                                

20  The action shall be commenced within 20 days after notice of the            

                                                                                

21  department's determination is sent to the person or persons                 

                                                                                

22  claiming an interest in the seized property.  The court shall               

                                                                                

23  hear the action and determine the issues of fact and law involved           

                                                                                

24  in accordance with rules of practice and procedure as in other in           

                                                                                

25  rem proceedings.  If a judicial determination of the lawfulness             

                                                                                

26  of the seizure and forfeiture cannot be made before deterioration           

                                                                                

27  of any of the property seized, the court shall order the                    


                                                                                

1   destruction or sale of the property with public notice as                   

                                                                                

2   determined by the court and require the proceeds to be deposited            

                                                                                

3   with the court until the lawfulness of the seizure and forfeiture           

                                                                                

4   is finally adjudicated.                                                     

                                                                                

5       (5) The department shall destroy all cigarettes forfeited to                

                                                                                

6   this state. The department may sell  a  all tobacco  product or             

                                                                                

7   products, except cigarettes, and other property forfeited                   

                                                                                

8   pursuant to this section at public sale.  Public notice of the              

                                                                                

9   sale shall be given at least 5 days before the day of sale.  The            

                                                                                

10  department may pay an amount not to exceed 25% of the proceeds of           

                                                                                

11  the sale to the local governmental unit whose law enforcement               

                                                                                

12  agency performed the seizure.  The balance of the proceeds                  

                                                                                

13  derived from the sale by the department shall be credited to the            

                                                                                

14  general fund of the state.                                                  

                                                                                

15      (6) The seizure and destruction or sale of a tobacco product                

                                                                                

16  or other property under this section does not relieve a person              

                                                                                

17  from a fine, imprisonment, or other penalty for violation of this           

                                                                                

18  act.                                                                        

                                                                                

19      (7) A person who is not an employee or officer of this state                

                                                                                

20  or a political subdivision of this state who furnishes to the               

                                                                                

21  department or to any law enforcement agency original information            

                                                                                

22  concerning a violation of this act, which information results in            

                                                                                

23  the collection and recovery of any tax or penalty or leads to the           

                                                                                

24  forfeiture of any cigarettes, or other property, may be awarded             

                                                                                

25  and paid by the state treasurer,  upon the certification of the             

                                                                                

26  commissioner,  compensation of not more than 10% of the net                 

                                                                                

27  amount received from the sale of any forfeited cigarettes or                


                                                                                

1   other property, but not to exceed $5,000.00 which shall be paid             

                                                                                

2   out of the receipts from the sale of the property.  If any amount           

                                                                                

3   is issued to the local governmental unit under subsection (5),              

                                                                                

4   the amount awarded under this subsection to a person who provides           

                                                                                

5   original information that results in a seizure of cigarettes or             

                                                                                

6   other property by a local law enforcement agency shall be paid              

                                                                                

7   from that amount issued under subsection (5).  If in the opinion            

                                                                                

8   of the attorney general  , the commissioner,  and the director of           

                                                                                

9   the department of state police it is deemed necessary to preserve           

                                                                                

10  the identity of the person furnishing the information, the                  

                                                                                

11  attorney general  , the commissioner,  and the director of the              

                                                                                

12  department of state police shall file with the state treasurer an           

                                                                                

13  affidavit setting forth that necessity and a warrant may be                 

                                                                                

14  issued jointly to the attorney general  , the commissioner,  and            

                                                                                

15  the director of the department of state police.  Upon payment to            

                                                                                

16  the person furnishing that information, the attorney general  ,             

                                                                                

17  the commissioner,  and the director of the department of state              

                                                                                

18  police shall file with the state treasurer an affidavit that the            

                                                                                

19  money has been by them paid to the person entitled to the money             

                                                                                

20  under this section.                                                         

                                                                                

21      (8) Beginning September 1, 1998, if a retailer possesses or                 

                                                                                

22  sells cigarettes on which the tax imposed under this act has not            

                                                                                

23  been paid or accrued to a wholesaler, secondary wholesaler, or              

                                                                                

24  unclassified acquirer licensed under this act, the retailer shall           

                                                                                

25  be prohibited from purchasing, possessing, or selling any                   

                                                                                

26  cigarettes or other tobacco products as follows:                            

                                                                                

27      (a) For a first violation, for a period of not more than 6                  


                                                                                

1   months.                                                                     

                                                                                

2       (b) For a second violation within a period of 5 years, for a                

                                                                                

3   period of at least 6 months and not more than 36 months.                    

                                                                                

4       (c) For a third or subsequent violation within a period of 5                

                                                                                

5   years, for a period of at least 1 year and not more than 5                  

                                                                                

6   years.                                                                      

                                                                                

7       (9) The prohibition described in subsection (8) shall be                    

                                                                                

8   effective upon service by certified mail or personal service on             

                                                                                

9   the retailer of notice issued by the department ordering the                

                                                                                

10  retailer to cease all sales and purchases of cigarettes and other           

                                                                                

11  tobacco products.  Upon receipt of this notice, the retailer may            

                                                                                

12  return any tobacco products in the possession of the retailer               

                                                                                

13  upon which the tax imposed by this act has been paid or accrued             

                                                                                

14  to a wholesaler, secondary wholesaler, or unclassified acquirer             

                                                                                

15  licensed under this act.  The department shall notify all                   

                                                                                

16  licensed wholesalers, manufacturers, secondary wholesalers,                 

                                                                                

17  vending machine operators, and unclassified acquirers of any                

                                                                                

18  retailer who has been prohibited from purchasing cigarettes or              

                                                                                

19  other tobacco products and the duration of the prohibition.  A              

                                                                                

20  wholesaler, secondary wholesaler, or unclassified acquirer shall            

                                                                                

21  not sell cigarettes or other tobacco products to a retailer after           

                                                                                

22  receipt of notice from the department that the retailer is                  

                                                                                

23  prohibited from purchasing tobacco products.  Any cigarettes or             

                                                                                

24  other tobacco products found on the premises of the retailer                

                                                                                

25  during the period of prohibition shall be considered contraband             

                                                                                

26  and subject to seizure under this section, and shall constitute             

                                                                                

27  an additional improper possession under this subsection.  The               


     House Bill No. 5668 (H-5) as amended November 30, 2004

   

1   retailer may contest the order prohibiting purchase, possession,            

                                                                                

2   or sale of tobacco products in accordance with the appeal                   

                                                                                

3   procedures and time limits provided in subsection (3) of this               

                                                                                

4   section.  After completion of the appeals provided or upon                  

                                                                                

5   expiration of the period to request such appeal, the department             

                                                                                

6   shall issue a final order and make service upon the retailer of             

                                                                                

7   an order to cease all purchases, possession, and sale of all                

                                                                                

8   cigarettes and other tobacco products for a specified period as             

                                                                                

9   appropriate.  This order does not relieve the retailer from                 

                                                                                

10  seizure and sale of a tobacco product or other property under               

                                                                                

11  this section, or relieve the retailer from a fine, imprisonment,            

                                                                                

12  or other penalty for violation of this act.                                 

                                                                                

13      Sec. 11.  (1)  Beginning May 1, 1994, a  A person, either as                

                                                                                

14  principal or agent, shall not sell or solicit  orders for  a sale           

                                                                                

15  of a tobacco product to be shipped, mailed, or otherwise sent or            

                                                                                

16  brought into the state, to a person not a licensed manufacturer,            

                                                                                

17  licensed wholesaler, licensed secondary wholesaler, licensed                

                                                                                

18  vending machine operator, licensed unclassified acquirer,                   

                                                                                

19  licensed transporter, or licensed transportation company, unless            

                                                                                

20  the tobacco product is to be sold to or through a licensed                  

                                                                                

21  wholesaler.   Each violation of this act is a separate offense.             

                                                                                

22      (2) All sales conducted through the internet, by telephone,                 

                                                                                

23  or in a mail-order transaction shall not be completed unless,               

                                                                                

24  before each delivery of cigarettes is made, whether through the             

                                                                                

25  mail, through a transportation company, or through any other                

                                                                                

26  delivery system, the seller has obtained from the purchaser an              

                                                                                

27  affirmation that includes a [copy of a] valid government-issued document that    


                                                                                

1   confirms the purchaser's name, address, and date of birth showing           

                                                                                

2   that the purchaser is at least the legal minimum age to purchase            

                                                                                

3   cigarettes; that the cigarettes purchased are not intended for              

                                                                                

4   consumption by an individual who is younger than the legal                  

                                                                                

5   minimum age to purchase cigarettes; and a written statement                 

                                                                                

6   signed by the purchaser that affirms the purchaser's address and            

                                                                                

7   that the purchaser is at least the minimum legal age to purchase            

                                                                                

8   cigarettes.  The statement shall also confirm that the purchaser            

                                                                                

9   understands that signing another person's name to the affirmation           

                                                                                

10  is illegal; that the sale of cigarettes to individuals under the            

                                                                                

11  legal minimum purchase age is illegal; and that the purchase of             

                                                                                

12  cigarettes by individuals under the legal minimum purchase age is           

                                                                                

13  illegal under the laws of the state of Michigan.  The seller                

                                                                                

14  shall verify the information contained in the affirmation                   

                                                                                

15  provided by the purchaser against a commercially available                  

                                                                                

16  database of governmental records, or obtain a photocopy, fax                

                                                                                

17  copy, or other image of the valid, government-issued                        

                                                                                

18  identification stating the date of birth or age of the                      

                                                                                

19  purchaser.                                                                  

                                                                                

20      (3) All invoices, bills of lading, sales receipts, or other                 

                                                                                

21  documents related to cigarette sales conducted through the                  

                                                                                

22  internet, by telephone, or in a mail-order transaction shall                

                                                                                

23  contain the current seller's valid Michigan sales tax                       

                                                                                

24  registration number, business name and address of the seller, and           

                                                                                

25  a statement as to whether all sales taxes and taxes levied under            

                                                                                

26  this act have been paid.  All packages of cigarettes shipped from           

                                                                                

27  a cigarette seller to purchasers who reside in Michigan shall               


                                                                                

1   clearly print or stamp the package with the word "CIGARETTES" on            

                                                                                

2   the outside of all sides of the package so it is clearly visible            

                                                                                

3   to the shipper.  In addition, the package shall contain an                  

                                                                                

4   externally visible and clearly legible notice located on the same           

                                                                                

5   side of the package as the address to which the package is                  

                                                                                

6   delivered, as follows:                                                      

                                                                                

7   "IF THESE CIGARETTES HAVE BEEN SHIPPED TO YOU FROM A SELLER                 

                                                                                

8   LOCATED OUTSIDE OF THE STATE IN WHICH YOU RESIDE, THE SELLER HAS            

                                                                                

9   REPORTED UNDER FEDERAL LAW THE SALE OF THESE CIGARETTES TO OUR              

                                                                                

10  STATE TAX COLLECTION AGENCY, INCLUDING YOUR NAME AND ADDRESS.               

                                                                                

11  YOU ARE LEGALLY RESPONSIBLE FOR ALL APPLICABLE UNPAID STATE TAXES           

                                                                                

12  ON THESE CIGARETTES."                                                       

                                                                                

13  If an order is made as a result of advertisement over the                   

                                                                                

14  internet, the tobacco retailer shall request the electronic mail            

                                                                                

15  address of the purchaser and shall receive payment by credit card           

                                                                                

16  or check before shipping.  This subsection and subsection (2) do            

                                                                                

17  not apply to sales by wholesalers and unclassified acquirers.               

                                                                                

18      (4) The deliverer of the cigarettes is required to obtain                   

                                                                                

19  proof from a valid government-issued document that the person               

                                                                                

20  signing for the cigarettes is the purchaser.                                

                                                                                

21      (5) As used in this section:                                                

                                                                                

22      (a) "Computer" means any connected, directly interoperable or               

                                                                                

23  interactive device, equipment, or facility that uses a computer             

                                                                                

24  program or other instructions to perform specific operations,               

                                                                                

25  including logical, arithmetic, or memory functions with or on               

                                                                                

26  computer data or a computer program, and that can store,                    

                                                                                

27  retrieve, alter, or communicate the results of the operations to            


                                                                                

1   a person, computer program, computer, computer system, or                   

                                                                                

2   computer network.                                                           

                                                                                

3       (b) "Computer network" means the interconnection of hardwire                

                                                                                

4   or wireless communication lines with a computer through remote              

                                                                                

5   terminals or a complex consisting of 2 or more interconnected               

                                                                                

6   computers.                                                                  

                                                                                

7       (c) "Computer program" means a series of internal or external               

                                                                                

8   instructions communicated in a form acceptable to a computer that           

                                                                                

9   directs the functioning of a computer, computer system, or                  

                                                                                

10  computer network in a manner designed to provide or produce                 

                                                                                

11  products or results from the computer, computer system, or                  

                                                                                

12  computer network.                                                           

                                                                                

13      (d) "Computer system" means related, connected or                           

                                                                                

14  unconnected, computer equipment, devices, software, or hardware.            

                                                                                

15      (e) "Credit card" means a card or device issued by a person                 

                                                                                

16  licensed under 1984 PA 379, MCL 493.101 to 493.114, or under the            

                                                                                

17  consumer financial services act, 1988 PA 161, MCL 487.2051 to               

                                                                                

18  487.2072, or issued by a depository financial institution as                

                                                                                

19  defined in section 1a of the mortgage brokers, lenders, and                 

                                                                                

20  services licensing act, 1987 PA 173, MCL 445.1651a, under a                 

                                                                                

21  credit card arrangement.                                                    

                                                                                

22      (f) "Device" includes, but is not limited to, an electronic,                

                                                                                

23  magnetic, electrochemical, biochemical, hydraulic, optical, or              

                                                                                

24  organic object that performs input, output, or storage functions            

                                                                                

25  by the manipulation of electronic, magnetic, or other impulses.             

                                                                                

26      (g) "Internet" means the connection to the world wide web                   

                                                                                

27  through the use of a computer, a computer network, or a computer            


                                                                                

1   system.                                                                     

                                                                                

2       (h) "Sale conducted through the internet" means a sale of, a                

                                                                                

3   solicitation to sell, a purchase of, or an offer to purchase                

                                                                                

4   cigarettes conducted all or in part by accessing an internet                

                                                                                

5   website.