AN ACT TO AMEND CHAPTER 53, TITLE 30, DELAWARE CODE, RELATING TO CIGARETTE TAXES AND LICENSES.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. Chapter 53, Title 30, Delaware Code, is amended to read:
CHAPTER 53. CIGARETTE TAX
SUB-CHAPTER I. DEFINITIONS
§ 5301. Definitions
As used in this chapter-
(a) "Affixing Agent"--means any cigarette dealer or other person within or without this State, appointed by the Tax Department as agents to affix the stamps to be used in paying the excise tax imposed by this chapter. The first vendor who has possession of unstamped cigarettes in this State, for sale in this State, shall be deemed an affixing agent.
(b) "Cigarette"--means any roll for smoking made wholly or in part of tobacco, irrespective of size or shape, and irrespective of the tobacco being flavored, adultered or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material except tobacco.
(c) "Cigarette Tax Stamps"--means any adhesive stamps, tax meter impressions or other stamps, labels or prints authorized by the Tax Department to evidence the payment of the tax imposed by this Chapter.
(d) "Cigarette Vending Machine"--means any mechanical device from which cigarettees are dispensed for a consideration.
(e) "Consumer"--means any person who has possession of cigarettes for any purpose other than transportation or sale thereof.
() "Package"--means the smallest individual package, box or other container in or from which retail sales or cigarettes are normally made or intended to be made.
(e) "Place of Business"--means any place where cigarettes are sold, or where cigarettes are bought or kept for the purpose of sale or consumption, including so far as applicable, any vessel, airplane, train or vending machine dispensing cigarettes.
() "Retail Dealer"--means any person who purchases or receives stamped cigarettes from any source whatsoever for the purpose of sale to the ultimate consumer.
(a) "Sale"--means in addition to its usual meaning, any sale, transfer, exchange, theft, barter, gift, or offer for sale and distribution, in any manner or by any means whatsoever.
(b) "Tax Department" or "Department"--means the State Tax Department.
(c) "Tax Commissioner" or "Commissioner"--means the State Tax Commissioner.
(I) "Unstamped Cigarettes"--means any pack of cigarettes to which the proper amount of genuine Delaware Cigarette Tax Stamps has not been affixed.
(m) "Use"--means the exercise of any right or power over cigarettes including the retention for any length of time for any purpose other than sale of transportation as allowed under the provisions of this Chapter.
(n) "Wholesale Dealer"--means any person who regularly sells cigarettes within this State to others who buy for the purpose of resale.
(o) "Vending Machine Operator"--means any person who places one or more vending machines, owned, leased or operated by him, at locations where cigarettes are sold therefrom. The owner or lessee of the premises upon which a vending machine is placed, shall not be considered the operator of the machine, if he does not own or lease the machine and if his sole remunerations therefrom is a flat rental fee or a commission, based upon the number or value of cigarettes sold from the machine, or a combination of both.
SUB-CHAPTER II. LEVY AND COLLECTION OF TAX,
§ 5305. Levy of tax; limitation; exemptions
(a) An excise tax is imposed and assessed upon the sale or use of cigarettes within this State at the rate of two and one-half per cent per ten cigarettes, or fraction thereof.
(b) This tax shall apply only once to the same pack of cigarettes.
(c) No tax imposed by this Chapter shall be levied upon the possession or sale of cigarettes which this State is prohibited from taxing under the Constitution or Statutes of the United States.
(d) If the seller and purchaser have registered with the Department and obtained exemption certificates, the following sales are exempt;
(1) Sales to veterans' organizations approved by the Department, if the cigarettes are being purchased by the organization for gratuitous issue to veteran patients in Federal, State, or State-aided hospitals.
(2) Sales to patients in Veterans Administration Hospitals by retail dealers located in such hospitals.
§ 5306. Liability for payment of tax
(a) The tax shall be paid and the stamp shall be affixed by the first person who has possession of cigarettes in this State.
§ 5307. License for sales of cigarettes
(a) No person shall engage in or conduct the business of manufacturing, purchasing, selling, consigning, or distributing cigarettes in this State or acting as an affixing agent without having first obtained the appropriate license or licenses for that purpose as prescribed by this Chapter.
§ 5308. License charges
(a) Wholesale License--for each wholesale license issued there shall be paid the Tax Department a fee of $200.00. If a wholesaler sells or intends to sell cigarettes at two or more places of business, whether established or temporary, a separate license shall be required for each place of business.
(b) Retail License--for each retail license there shall be paid to the State Tax Department a fee of $1.00. If a retail dealer sells or intends to sell cigarettes at two or more places of business, whether established or temporary, or whether in the same building or not, a separate license shall be required for each place of business.
(c) Vending Machine License--every vending machine from which cigarettes are offered for sale shall have affixed thereto a license for which a fee of $1.00 shall be charged. Where two or more cigarette vending machines are fastened together, each set of mechanisms shall require a separate vending machine license.
(d) Affixing Agent License--for each affixing agent's license issued there shall be paid to the Tax Department a fee of $200, but only one license fee of $200 shall be required of any person who is both a wholesale dealer and an affixing agent.
§ 5309. Application for license
(a) Every person, desiring to engage in the sale of cigarettes at wholesale, retail or by cigarette vending machines within this State, except those persons who are exempt under Section 5305 (d) of this Chapter and every person desiring to become an affixing agent shall file an application for a license with the Tax Department. Every application for a cigarette license shall be made upon a form prescribed, prepared, and furnished by the Department, and shall set forth the name under which the applicant transacts or intends to transact business, the location of his place of business, whether within or without the State, whether or not the applicant is the holder of a mercantile or business license in effect when the application is made, and if so the number of such license and the county for which such license was issued, and such other information as the Department may require. If the applicant has or intends to have more than one place of business within the State the application shall state the location of each place of business. If the applicant is an association, the application shall set forth the names and address of the persons constituting the association, and if a corporation, the names and address of the principal officers thereof, and any other information prescribed by the Department for purposes of identification. The application shall be signed and verified by oath or affirmation by the owner, if a natural person, and in the case of an association, by a member or partner thereof, and in the case of a corporation, by an executive officer thereof, or some person specifically authorized to sign the application, to which shall be attached the written evidence of his authority.
(b) A single application may be filed for more than one license. The operator of vending machines shall list all locations at which he has machines at the time of the application. He may also request extra licenses for new machines to be placed in new locations up to ten percentum of the listed locations on file with the department without submitting actual locations. As the new machines are placed on location for sale of cigarettes, the operator shall immediately notify the department and the operator shall become eligible to apply for licenses for an additional ten percentum of his new totals. Failure to notify the department when and where new machines are placed in operation shall give cause for suspension and seizure of all licenses and cigarette vending machines.
§ 5310. Issuance of licenses; display
Upon approval of the application and payment of the fees, the Department shall issue the proper licenses for each place of business set forth in the application. Every license shall be conspicuously displayed at the place for which issued.
§ 5311. Expiration of licenses
Every license shall expire on the first of June next succeeding the date upon which it was issued, unless sooner suspended, surrendered, revoked, or renewed.
§ 5312. Replacement of licenses
Whenever any license issued under the provisions of this Chapter is defaced, destroyed or lost, the Tax Department may issue a duplicate to the holder of the defaced, destroyed or lost license by the payment of a fee of one dollar.
§ 5313. Suspension or Revocation of license
The Tax Department after a hearing before the Commissioner may suspend or revoke a license issued pursuant to the provisions of this Chapter whenever it finds that the holder thereof has failed to comply with any of the provisions of this Chapter or any regulations of the Department adopted pursuant to the provisions hereof. Whenever the Department intends to suspend a license for any violation under this Chapter, it shall immediately notify the holder in writing stating the violations charged and giving the licensee the right of a hearing before the Commissioner within five days after receipt of such written notice. After such hearing the Department shall either rescind the notice of the suspension, enforce the suspension or revoke the license. Upon the suspension or revocation of any license, the holder thereof shall forthwith surrender all licenses to the Department issued to him under this Chapter and no refund of fees shall be paid.
§ 5314. Transfer of license
Any licensed dealer may transfer a license from one location to another or from one cigarette vending machine to another in accordance with the rules and regulations of the Department.
§ 5315. Cigarette Tax Stamps; affixing; amount; cancellation
(a) Within the time prescribed, every authorized affixing agent shall affix to each pack of cigarettes received by him and shall cancel Delaware cigarette tax stamps to evidence payment of the tax imposed by this Chapter, unless such stamps have been affixed to the packs of cigarettes and cancelled before such authorized Affixing Agent received them.
(b) Stamps in an amount not less than the tax thereon, shall be affixed to each pack of cigarettes in such manner that they will be visible to the purchaser. The authorized affixing agent, affixing such stamps shall cancel them immediately in such manner as may be prescribed by the Department.
§ 5316. Design and sale of stamps
(a) Delaware cigarette tax stamps shall be adhesive stamps, tax meter impressions or other stamps, labels or prints of such designs and denominations as may be prescribed by the Department.
(b) The Department shall make provisions for the sale of Delaware cigarette tax stamps in such places and at such times as it deems necessary. All stamps shall be paid for at the time of purchase. No persons shall purchase cigarette stamps from any person other than the Tax Department or its authorized agents except in accordance with the Tax Department's regulations relating to the stamping of floor stock.
§ 5317. Time for affixing stamps
Within 72 hours after his receipt thereof and prior to the sale of such unstamped cigarettes, unless such cigarettes are exempt by other provisions of this Chapter, the authorized affixing agent shall affix the required amount of Delaware cigarette tax stamps. Whenever any cigarettes are found in the place of business of the authorized affixing agent without the stamps affixed as herein provided, or not segregated or marked as having been received within the preceding 72 hours, or not segregated or marked as exempt from requirement of Delaware cigarette tax stamp under other provisions of this Chapter, a prima facie presumption shall arise that such cigarettes are possessed in violations of the provisions of the Chapter.
§ 5318. Appointment of stamp affixing agents; commission
(a) The Department may appoint any manufacturer of cigarettes or wholesaler within this State and may appoint any other person within or without this State as its agent to affix Delaware Cigarette Tax Stamps. Tax affixing agents located outside the State of Delaware must apply the stamps to all taxable cigarettes before bringing them into this State.
(b) Whenever the Department shall sell, consign or deliver Delaware cigarette tax stamps to any authorized stamp affixing agent, such agent shall be entitled to receive as compensation for his services and expenses a commission of 5% of the total value thereof. The commission is to be retained out of the moneys to be paid by him for such stamps purchased from the Department.
SUB-CHAPTER III. GENERAL PROVISIONS
§ 5321. Duties imposed on Licensed Cigarette Dealers; lists
(a) A licensed cigarette dealer shall not sell cigarettes or purchase cigarettes from any person required to be licensed, who is not so licensed or is improperly licensed, except that:
(1) A licensed wholesale dealer may sell tax paid cigarettes to a cigarette manufacturer's representative, provided that the manufacturer's representative presents valid proof that he is a bona fide sales representative of the cigarette manufacturer.
(b) All holders of wholesale licenses shall maintain at every licensed location a list of the name and license numbers of holders of wholesale and retail licenses to whom cigarettes are sold and/or delivered.
§ 5322. Duties imposed on manufacturer's representatives
A cigarette manufacturer's representative may sell only to a licensed cigarette dealer, unless he obtains a dealer's license under the provisions of the Chapter and the rules and regulations promulgated thereunder. Provided, however, that a manufacturer's representative who participates in promotional activities involving the sale of cigarettes to persons other than licensees shall be presumed to be acting as agent of the licensee who furnished the cigarettes.
§ 5323. Appeals
Any person who feels he is aggrieved by any act, rule, ruling, suspension or revocation by the Department or Commissioner shall be entitled to further remedies as provided in Section 326 of this Title.
§ 5324. Sample packs
The Department shall promulgate regulations governing the receipt, distribution of any payment of tax on sample packs of cigarettes used for free distribution. Such regulations may provide that any licensed dealer may receive and make free distribution of sample packs of cigarettes containing not more than 5 cigarettes per pack without affixing Delaware cigarette tax stamps thereto so long as the proper tax thereon has been paid.
§ 5325. Late filing penalty
Every Stamp Affixing Agent shall file with the Department on or before the 20th day of each month, a report in such form as the Tax Commissioner shall prescribe, which report shall disclose the number of cigarettes on hand on the first and last days of the calendar month immediately preceding the month in which such report is required; together with such information concerning the amount of stamps purchased, used, and on hand during the report period; together with any other information for the report period that the Tax Commissioner shall prescribe. Any Tax Affixing Agent who shall fail to file any report on the day when it shall be due, shall forfeit as a penalty, for each day thereafter until the report is filed, the sum of $1 to be collected in the manner provided in this Chapter for the collection of penalties. The Tax Commissioner, if satisfied that the failure to comply with any provision of this section was excusable, may remit the whole or any part of said penalty.
§ 5326. Refunds
Whenever any packs of cigarettes upon which stamps have been placed have been sold and shipped into another State for sale or use therein or have been sold to persons exempt under Section 5305 (d) hereof for resale to authorized purchasers, or have been returned to manufacturer for credit because they became unfit for use and consumption or unsalable by reason of fire, flood or other causes beyond the control of the person who sold the cigarettes and shipped them into another state for sale or for use therein or who sold the cigarettes to persons exempt under Section 5305 (d) for resale to authorized purchasers or who owned the cigarettes at the time they were returned to manufacturer because they became unfit for use and consumption or unsalable by reason of fire, flood or other cause beyond the control of the person seeking the refund, shall be entitled to a refund of the actual amount of cigarette tax paid with respect to such cigarettes. If the Department is satisfied that a refund is proper, it shall certify the proposed amount of refund and thereafter shall issue to the person seeking the refund stamps and/or cash of sufficient value to cover the refund.
§ 5327. Exempt Sales
The Department may promulgate regulations to relieve authorized Affixing Agents from affixing stamps to packs of cigarettes to be sold and delivered to points outside the State for use outside the State, or to be sold to purchasers designated as exempt under Section 5305 (d) hereof for resale to authorized purchasers. All sales, however, shalt be presumed to be taxable and the burden shall be upon the person claiming an exemption to prove his right thereto.
§ 5328. Invoices or Delivery Tickets Required in Certain Cases
Every person who shall possess or transport 200 or more unstamped cigarettes upon the public highways, roads or streets of this State for the purpose of delivery, sale or disposition shall be required to have in his possession invoices or delivery tickets for such cigarettes which shall show the true name and complete and exact address of the consignor or seller, the true name and complete and exact address of the consignee or purchaser, the quantity and brand of the cigarettes transported and the true name and complete and exact address of the person who has been licensed to assume the payment of the Delaware tax or the tax, if any, of the State or foreign country at the point of ultimate destination; provided, that any common carrier which has issued a bill of lading for shipment of cigarettes and is without notice to itself or to any of its agents or employees that said cigarettes are not stamped as required by this Chapter, shall be deemed to have complied with this Chapter. The absence of such proper invoices or delivery tickets shall be prima facie evidence that such person is in violation of this Chapter and subject to the penalties of this Chapter.
§ 5329. Administration by Department; rules and regulations
The administration, enforcement and collection of all taxes, permits, licenses and fees under this Chapter are vested in the Tax Department and the Tax Commissioner of the State of Delaware and the powers conferred upon the Department and the Commissioner under Chapter 3 of this Title shall so far as applicable be exercisable with respects to the provisions of this Chapter. The Department may prescribe, adopt, promulgate and enforce rules and regulations relating thereto, including:
(a) The method and means to be used in the cancellation of stamps;
(b) The denominations and sale of stamps;
(c) The time and manner of filing reports;
(d) Any other matter of thing pertaining to the administration and enforcement of the provisions of this Chapter.
§ 5331. Bonds
When the Commissioner, in his discretion, deems it necessary to protect the revenues to be obtained under the provisions of this Chapter he may require any person liable for the payment of the cigarette tax to furnish a bond executed by a surety company authorized to do business in this State and approved by the State Insurance Commissioner as to solvency and responsibility, in such amounts as the Commissioner may fix, to secure the payment of any tax and interest or penalties due or which may become due from such taxpayer. In the event that the Commissioner determines that such person is to file such a bond, he shall give notice to such person to that effect, specifying the amount of the bond required. The bond shall be filed 5 days after the giving of such notice unless within 5 days thereof a request in writing for a hearing before the Tax Commissioner shall be made at which hearing the necessity, propriety and amount of the bond shall be reviewed and determined by the Tax Commissioner. Such determination by the Commissioner shall be final and shall be complied with within 15 days after the notice thereof is sent by the Commissioner to the person requesting the hearing.
SUB-CHAPTER IV. PENALTIES AND ENFORCEMENT
§ 5341. Sale of unstamped cigarettes; refusal to permit inspection; counterfeited or re-use stamps
(a) Whoever sells any pack of cigarettes which does not have affixed thereto the proper amount of Delaware cigarette tax stamps or;
(b) Whoever being a dealer refuses to permit the Department to examine his books and records, his stock of cigarettes or his premises and equipment in order to verify the accuracy of the tax payments imposed by this Chapter or;
(c) Whoever falsely or fraudulently makes, forges, alters or counterfeits any stamp prescribed by the Department under the provisions of this Chapter or causes or procures to be falsely or fraudulently made, forged, altered or counterfeited any stamp, or knowingly and willfully utters, publishes, passes, or tenders as true any such false, altered, forged, or counterfeited stamp, or uses more than once any stamp provided for and required by this Chapter for the purpose of evading the tax hereby imposed and assessed, shall be deemed guilty of a misdemeanor and fined not more than $1,000 or imprisoned for not more than 1 year, or both.
§ 5342. Possession of untaxed cigarettes
(a) No person not being an affixing agent, or not holding an unexpired exemption certificate, shall have in his possession within this State 200 or more cigarettes upon which the Delaware cigarette tax has not been paid, or to the packs of which Delaware cigarette tax stamps are not affixed in the amount required.
(b) Whenever any cigarettes are found at the place of business of a dealer whether a stamp affixing agent or not and such cigarettes do not have the proper amount of stamps affixed and cancelled and the boxes, cartons or other containers have not been marked as having been received within 72 hours, such dealer shall be deemed guilty of a misdemeanor and shall be fined not more than $25 for each 200 unstamped and unmarked cigarettes found in his possession and upon default in payment of the fine shall be imprisoned one day for each dollar fine.
§ 5343. Penalties not specifically provided for
Whoever violates any provision of this Chapter for which a specific penalty is not otherwise provided and whoever violates any regulation promulgated pursuant to this Chapter shall be guilty of a misdemeanor and shall be fined $25 and in default of payment shall be imprisoned for not more than 10 days.
§ 5344. Liability joint and several
Whenever it is provided in this Chapter that a duty or liability is imposed on the owner or operator of cigarette vending machines, the owner and operator shall be jointly and severally liable for the performance of such duty or satisfaction of such liability.
§ 5345. Police powers; arrests
(a) Such employees of the State Tax Department as are designated "cigarette tax enforcement officers" shall be peace officers and are given the same police power and authority throughout the State as Constables;
(b) They may arrest on view, except in private homes, without warrant, any person actually engaged in the unlawful sale of unstamped cigarettes or unlawfully having in his possession unstamped cigarettes contrary to the provisions of this Chapter.
SUB-CHAPTER V. FORFEITURES
§ 5351. Forfeiture of cigarettes
Whenever any conviction occurs under Section 5342 of this Chapter, the cigarettes which were the subject of the violation shall be automatically forfeited to the State.
§ 5352. Disposal of forfeited cigarettes
The Department shall donate to any non-profit hospital for the use of its patients any cigarettes forfeited to the State under the provisions of the Chapter.
§ 5353. Cigarette Vending Machine Forfeiture Proceedings
(a) The proceedings for the forfeiture of any cigarette vending machine in which are found untaxed cigarettes shall be in rem, in which the State shall be the plaintiff and the property the defendant. A petition shall be filed in the Superior Court of the county in which the machine was found, verified by the oath or affirmation of any cigarette tax enforcement officer or other person. The petition shall contain the following: (1) a description of the machine seized, (2) a statement of the time when and place where seized, (3) the name and address of the owner, if known, (4) the name and address of the person in possession, if known, (5) a statement of the circumstances under which the machine was found and the number and a description of the unstamped cigarettes found therein, and (6) a prayer for an order forfeiting the machine to the State, unless cause be shown to the contrary.
() A copy of the petition shall be served personally on the owner if he can be found within the State, or upon the person in possession at the time of the seizure. The copy shall have endorsed thereon a notice substantially similar to the following:
"To the claimant of the within cigarette vending machine: You are required to file an answer to this petition setting forth your title in and right to possession of said machine, within twenty (20) days from the service hereof, and you are also notified that if you fail to file said answer, a decree of forfeiture will be entered against said machine."
The notice shall be signed by the Tax Commissioner or the Attorney General or a Deputy Attorney General.
(c) If the owner of the machine is unknown or outside the State and there was no person in possession of the machine when seized, or the person in possession cannot be found within the State, a copy of the petition shall be sent by registered or certified mail, return receipt requested, to his last known address, if any, and notice of the petition shall also be given by an advertisement in one newspaper of general circulation published in the county where the machine was seized, once a week for 2 successive weeks. No other advertisement of any sort shall be necessary, any other law to the contrary notwithstanding. The notice shall contain a statement of the seizure, of the machine with a description thereof, the place and date of seizure, and shall direct any claimants thereof to file a claim therefor, on or before a date given in the notice, which shall not be less than 10 days from the date of the last publication.
(d) Thirty days after the filing of any claim for the machine setting forth a right of possession thereof, the case shall be deemed at issue and a time fixed for the hearing thereof.
(e) At the time of the hearing, if the State shall produce evidence that the machine in question was found to contain unstamped cigarettes, the burden shall be upon the claimant to show (1) that he is the owner of the machine and (2) that all cigarettes found in the machine at the time of seizure did contain the proper amounts of Delaware cigarette tax stamps.
(f) In the event the claimant shall prove by competent evidence, to the satisfaction of the court that the machine did not contain unstamped cigarettes, the Court shall order the machine returned to the claimant; otherwise the Court shall order it forfeited to the State.
§ 5354. Seizure of untaxed cigarettes and machines
Whenever any law enforcement officer, the Department or its agents have reasonable grounds to believe that any untaxed cigarettes are unlawfully in the State or that a vending machine is being used to hold untaxed cigarettes, they may seize such cigarettes or machines and hold them in custody pending a decision of the Court. No cigarettes or machines being held in custody shall be seized or taken therefrom on any writ of replevin or like judicial process.
Section 2. This Act shall be deemed to be a continuation of prior law and all cigarette tax stamps, licenses and permits sold or issued pursuant to any act repealed hereby shall continue in full force and effect in accordance with their terms and any cigarettes upon which tax has once been paid shall not be taxed a second time. All licenses issued after the effective date of this Act shall be issued in accordance with the requirements of and schedule of fees provided in this Act. The enactment of this Act shall not affect or impair any act done or right existing or accrued or affect any civil or criminal suit, action, proceeding or prosecution to enforce any right acquired or prosecute any violation committed under the provisions of any law repealed hereby.
Section 3. The effective date of this Act shall be the first day of June, 1964.
Section 4. The sum of $20,000.00 is hereby appropriated to carry out the administration and enforcement of the provisions of this Act for the fiscal year ending June 30, 1965. This is a supplementary appropriation act for the fiscal year commencing July 1, 1964, and the funds shall be appropriated from the General Fund of the State of Delaware to the State Tax Department. All funds remaining unexpended as of June 30, 1965, shall revert to the General Fund.
Approved May 20, 1964.