NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9874
SPONSOR: Stern PURPOSE OR GENERAL IDEA OF BILL:
This bill increases the credit terms for when payment on a roll of tax
stamps is owed by a licensed cigarette agent from 30 days to 45 days.
SUMMARY OF PROVISIONS:
Section 1: Amends subdivision 1 of section 472 of the tax law, as
amended by chapter 629 of the laws of 1996, and as further amended by
section 104 of part A of chapter 62 of the laws of 2011.
Section 2: sets the effective date.
JUSTIFICATION:
In New York State, the Department of Taxation and Finance licenses
agents to collect the tax revenue on cigarette sales for the State and
City of New York. The Department sells rolls of tax stamps to these
agents and requires them to pay for such stamps within thirty days after
the date of purchase, provided a credit bond or other acceptable securi-
ty has been filed or deposited with the department.
The size of these bonds and securities varies depending on the location
of the agent in question, however, it is not uncommon for New York City
based agents to secure bonds worth several million dollars, which is
mostly attributable to New York City's existing $15 per carton cigarette
tax. Due to the exceedingly large number of illegal cigarette sales and
slowdown in retail business from the Covid-19 pandemic, licensed New
York City based agents have been unable to use all their existing secu-
rity bonds in the thirty-day period that is now required for full
payment of the tax stamps. Unfortunately, this often leads to cash
crunches and financial instability for these agents.
Accordingly, increasing the credit terms for when payment on a roll of
tax stamps is owed by a licensed cigarette agent from 30 to 45 days
would allow these agents to use more of the bonds they already have in
place and put them in a healthier cash flow position.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
This act shall take effect on the sixtieth day after it shall have
become a law.
STATE OF NEW YORK
________________________________________________________________________
9874
IN ASSEMBLY
April 24, 2024
___________
Introduced by M. of A. STERN -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to the sale of cigarette tax
stamps
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 1 of section 472 of the tax law, as amended by
2 chapter 629 of the laws of 1996, and as further amended by section 104
3 of part A of chapter 62 of the laws of 2011, is amended to read as
4 follows:
5 1. The commissioner shall prescribe, prepare and furnish stamps of
6 such denominations and quantities as may be necessary for the payment of
7 the tax on cigarettes imposed by this article, and may from time to time
8 and as often as [he deems] deemed advisable provide for the issuance and
9 exclusive use of stamps of a new design and forbid the use of stamps of
10 any other design, in the manner and with the effect provided in section
11 two hundred seventy-four of this chapter. The commissioner shall make
12 provisions for the sale of such stamps at such places and at such times
13 as [he may deem] deemed necessary and may license agents for such
14 purpose. The commissioner may license dealers in cigarettes, who main-
15 tain separate warehousing facilities for the purpose of receiving and
16 distributing cigarettes and conducting their business, who have received
17 commitments from at least two cigarette manufacturers whose aggregate
18 market share is at least forty percent of the New York state cigarette
19 market, and importers, exporters and manufacturers of cigarettes, and
20 other persons within or without the state as agents to buy or affix
21 stamps to be used in paying the tax herein imposed, but an agent shall
22 at all times have the right to appoint the person in [his] their employ
23 who is to affix the stamps to any cigarettes under the agent's control.
24 The fee for filing such application for an agent's license shall be one
25 thousand five hundred dollars, unless such fee has been paid during the
26 preceding twelve months, in which case, the fee for a new license shall
27 be one thousand dollars. All of the provisions of section four hundred
28 eighty relating to wholesale dealers' licenses, including the procedure
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD15131-01-4
A. 9874 2
1 for suspension, revocation, refusal to license and for hearings, except
2 for paragraphs (c) and (g) of subdivision one of such section, shall be
3 applicable to agents' licenses applied for or granted pursuant to this
4 section, as if such provisions had been set forth in full in this subdi-
5 vision and had expressly referred to the applicant for, or the holder
6 of, an agent's license. Whenever the commissioner shall sell and deliver
7 to any such agent any such stamps, such agent shall be entitled to
8 receive as compensation for [his] their services and expenses as such
9 agent in selling or affixing such stamps, and to retain out of the
10 moneys to be paid by [him] such agent for such stamps, a commission on
11 the par value thereof. The commissioner is hereby authorized to
12 prescribe a schedule of commissions, not exceeding five per centum,
13 allowable to such agent for buying and affixing such stamps. Such sched-
14 ule shall be uniform with respect to the different types of stamps used,
15 and may be on a graduated scale with respect to the number of stamps
16 purchased. The commissioner may, in [his] their discretion, permit an
17 agent to pay for such stamps within [thirty] forty-five days after the
18 date of purchase and may require any such agent to file with the depart-
19 ment of taxation and finance a bond issued by a surety company approved
20 by the superintendent of financial services as to solvency and responsi-
21 bility and authorized to transact business in the state or other securi-
22 ty acceptable to the commissioner, in such amount as the commissioner
23 may fix, to secure the payment of any sums due from such agent pursuant
24 to this article. If securities are deposited as security under this
25 subdivision, such securities shall be kept in the custody of the commis-
26 sioner and may be sold by the commissioner if it becomes necessary so to
27 do in order to recover any sums due from such agent pursuant to this
28 article, but no such sale shall be had until after such agent shall have
29 had opportunity to litigate the validity of any tax if it elects so to
30 do. Upon any such sale, the surplus, if any, above the sums due under
31 this article shall be returned to such agent.
32 § 2. This act shall take effect on the sixtieth day after it shall
33 have become a law.
