STATE OF NEW YORK
________________________________________________________________________
8177
IN SENATE
June 14, 2000
___________
Introduced by Sen. FUSCHILLO -- (at request of the Governor) -- read
twice and ordered printed, and when printed to be committed to the
Committee on Rules
AN ACT to amend the public health law, in relation to the shipment of
cigarettes; and to amend the tax law and the administrative code of
the city of New York, in relation to penalties for violations of the
cigarette tax
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative findings. The legislature finds and declares
2 that the shipment of cigarettes sold via the internet or by telephone or
3 by mail order to residents of this state poses a serious threat to
4 public health, safety, and welfare, to the funding of health care pursu-
5 ant to the health care reform act of 2000, and to the economy of the
6 state. The legislature also finds that when cigarettes are shipped
7 directly to a consumer, adequate proof that the purchaser is of legal
8 age cannot be obtained by the vendor, which enables minors to avoid the
9 provisions of article 13-F of the public health law. It is also the
10 legislature's finding that by preventing shipment of cigarettes directly
11 to consumers, the State will be better able to measure and monitor ciga-
12 rette consumption and to better determine the public health and fiscal
13 consequences of smoking. The legislature further finds that existing
14 penalties for cigarette bootlegging are inadequate. Therefore, the bill
15 enhances existing penalties for possession of unstamped or unlawfully
16 stamped cigarettes.
17 § 2. The public health law is amended by adding a new section 1399-ll
18 to read as follows:
19 § 1399-ll. Unlawful shipment or transport of cigarettes. 1. It shall
20 be unlawful for any person engaged in the business of selling cigarettes
21 to ship or cause to be shipped any cigarettes to any person in this
22 state who is not: (a) a person licensed as a cigarette tax agent or
23 wholesale dealer under article twenty of the tax law or registered
24 retail dealer under section four hundred eighty-a of the tax law; (b) an
25 export warehouse proprietor pursuant to chapter 52 of the internal
26 revenue code or an operator of a customs bonded warehouse pursuant to
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD12415-03-0
S. 8177 2
1 section 1311 or 1555 of title 19 of the United States Code; or (c) a
2 person who is an officer, employee or agent of the United States govern-
3 ment, this state or a department, agency, instrumentality or political
4 subdivision of the United States or this state, when such person is
5 acting in accordance with his or her official duties. For purposes of
6 this subdivision, a person is a licensed or registered agent or dealer
7 described in paragraph (a) of this subdivision if his or her name
8 appears on a list of licensed or registered agents or dealers published
9 by the department of taxation and finance, or if such person is licensed
10 or registered as an agent or dealer under article twenty of the tax law.
11 2. It shall be unlawful for any common or contract carrier to knowing-
12 ly transport cigarettes to any person in this state reasonably believed
13 by such carrier to be other than a person described in paragraph (a),
14 (b) or (c) of subdivision one of this section. For purposes of the
15 preceding sentence, if cigarettes are transported to a home or resi-
16 dence, it shall be presumed that the common or contract carrier knew
17 that such person was not a person described in paragraph (a), (b) or (c)
18 of subdivision one of this section. It shall be unlawful for any other
19 person to knowingly transport cigarettes to any person in this state,
20 other than to a person described in paragraph (a), (b) or (c) of subdi-
21 vision one of this section. Nothing in this subdivision shall be
22 construed to prohibit a person other than a common or contract carrier
23 from transporting not more than eight hundred cigarettes at any one time
24 to any person in this state.
25 3. When a person engaged in the business of selling cigarettes ships
26 or causes to be shipped any cigarettes to any person in this state,
27 other than in the cigarette manufacturer's original container or wrap-
28 ping, the container or wrapping must be plainly and visibly marked with
29 the word "cigarettes".
30 4. Whenever a police officer designated in section 1.20 of the crimi-
31 nal procedure law or a peace officer designated in subdivision four of
32 section 2.10 of such law, acting pursuant to his or her special duties,
33 shall discover any cigarettes which have been or which are being shipped
34 or transported in violation of this section, such person is hereby
35 empowered and authorized to seize and take possession of such ciga-
36 rettes, and such cigarettes shall be subject to a forfeiture action
37 pursuant to the procedures provided for in article thirteen-A of the
38 civil practice law and rules, as if such article specifically provided
39 for forfeiture of cigarettes seized pursuant to this section as a pre-
40 conviction forfeiture crime.
41 5. Any person who violates the provisions of subdivision one or two of
42 this section shall be guilty of a class A misdemeanor and for a second
43 or subsequent violation shall be guilty of a class E felony. In addi-
44 tion to the criminal penalty, the commissioner may impose a civil fine
45 not to exceed five thousand dollars for each such violation on any
46 person who violates subdivision one or two of this section. The commis-
47 sioner may impose a civil fine not to exceed five thousand dollars for
48 each violation of subdivision three of this section on any person
49 engaged in the business of selling cigarettes who ships or causes to be
50 shipped any such cigarettes to any person in this state.
51 § 3. Paragraph (k) of subdivision 1 of section 480 of the tax law, as
52 amended by chapter 629 of the laws of 1996, is amended to read as
53 follows:
54 (k) No agent shall sell cigarettes and no distributor shall sell
55 tobacco products to an unlicensed wholesale dealer, or to a wholesale
56 dealer whose license has been suspended or revoked, or to a retail deal-
S. 8177 3
1 er who [has been forbidden to continue selling cigarettes or tobacco
2 products, as the case may be] is not registered under section four
3 hundred eighty-a of this article, or whose registration has been
4 suspended or revoked, and no wholesale dealer shall sell cigarettes or
5 tobacco products to a retail dealer [so forbidden after notice of the
6 prohibition] who is not registered under section four hundred eighty-a
7 of this article, or whose registration has been suspended or revoked,
8 and no retail dealer [so forbidden] shall [continue selling] sell ciga-
9 rettes or tobacco products unless such dealer is registered under
10 section four hundred eighty-a of this article.
11 § 4. Subdivision 1 of section 480-a of the tax law is amended by
12 adding a new paragraph (e) to read as follows:
13 (e) The commissioner may refuse to register as a retail dealer or may
14 revoke the registration of a retail dealer where the applicant's or
15 retail dealer's place of business is at the same premises as that of a
16 retail dealer whose retail dealer registration has been revoked and
17 where such revocation is still in effect, unless the applicant or retail
18 dealer provides the commissioner with adequate documentation demonstrat-
19 ing that such applicant or retail dealer acquired the premises or busi-
20 ness through an arm's length transaction as defined in this paragraph
21 and that the sale or lease was not conducted, in whole or in part, for
22 the purpose of permitting the original registrant to avoid the effect of
23 the previous revocation for the same premises. For purposes of this
24 paragraph, "arm's length transaction" means a sale of a fee or all undi-
25 vided interests in real property, or lease of any part thereof, or a
26 sale of a business, in good faith and for valuable consideration, that
27 reflects the fair market value of such real property or lease, or busi-
28 ness, in the open market, between two informed and willing parties,
29 where neither is under any compulsion to participate in the transaction,
30 unaffected by any unusual conditions indicating a reasonable possibility
31 that the sale or lease was made for the purpose of permitting the
32 original registrant to avoid the effect of the previous revocation for
33 the same premises. The following sales or leases shall be presumed not
34 to be arm's length transactions unless adequate documentation is
35 provided demonstrating that the sale or lease was not conducted, in
36 whole or in part, for the purpose of permitting the original registrant
37 to avoid the effect of the previous revocation for the same premises:
38 (i) a sale between relatives; or
39 (ii) a sale between related companies or partners in a business; or
40 (iii) a sale or lease affected by other facts or circumstances that
41 would indicate that the sale or lease is entered into for the primary
42 purpose of permitting the original registrant to avoid the effect of the
43 previous revocation for the same premises.
44 § 5. Subdivision 3 of section 480-a of the tax law, as added by chap-
45 ter 190 of the laws of 1990, paragraph (a) as amended by chapter 629 of
46 the laws of 1996, is amended to read as follows:
47 3. In addition to any other penalty imposed by this chapter: (a) Any
48 retail dealer who violates the provisions of this section shall, after
49 due notice and an opportunity for a hearing, for a first violation be
50 liable for a civil fine not less than five hundred dollars but not to
51 exceed [one] two thousand dollars and for a second or subsequent
52 violation within three years following a prior finding of violation be
53 liable for a civil fine not less than one thousand dollars but not to
54 exceed [two] three thousand five hundred dollars; or
55 (b) Any person who owns or, if the owner is not the operator, then any
56 person who operates one or more vending machines through which ciga-
S. 8177 4
1 rettes or tobacco products are sold in this state and who violates the
2 provisions of this section shall, after due notice and an opportunity
3 for a hearing, for a first violation be liable for a civil fine not less
4 than seventy-five dollars but not to exceed [one] two hundred dollars
5 and for a second or subsequent violation within three years following a
6 prior finding of violation be liable for a civil fine not less than two
7 hundred dollars but not to exceed [three] six hundred dollars.
8 § 6. Paragraph (d) of subdivision 4 of section 480-a of the tax law,
9 as added by chapter 629 of the laws of 1996, is amended to read as
10 follows:
11 (d) After review of the suspension or revocation of registration by
12 the commissioner or his designee is complete, or the time within which a
13 retail dealer may request such review has expired without such a request
14 having been made, notice of the suspension or revocation of a retail
15 dealer registration pursuant to this subdivision shall be given by the
16 commissioner to the head of the division of the lottery for the purpose
17 of enforcement of section sixteen hundred seven of this chapter and such
18 division may suspend or revoke any license issued with respect to a
19 lottery agent's specific location pursuant to article thirty-four of
20 this chapter if such lottery agent is a retail dealer of cigarettes
21 whose registration for such location is suspended or revoked pursuant to
22 this section. In addition, notice of such suspension or revocation
23 shall also be given to the division of alcoholic beverage control and
24 such suspension or revocation shall constitute cause, for purposes of
25 section one hundred eighteen of the alcoholic beverage control law, for
26 revocation, cancellation or suspension of any license or permit issued
27 pursuant to such law.
28 § 7. Paragraph (b) of subdivision 1 of section 481 of the tax law, as
29 amended by chapter 61 of the laws of 1989, is amended to read as
30 follows:
31 (b) (i) In addition to any other penalty imposed by this article, the
32 commissioner [of taxation and finance] may impose a penalty of not more
33 than one hundred fifty dollars for each two hundred cigarettes, or frac-
34 tion thereof, in excess of [two] one thousand cigarettes in unstamped or
35 unlawfully stamped packages in the possession or under the control of
36 any person. In addition, the commissioner may impose a penalty of not
37 more than [fifty] seventy-five dollars for each fifty cigars or one
38 pound of tobacco, or fraction thereof, in excess of two hundred fifty
39 cigars or five pounds of tobacco in the possession or under the control
40 of any person and a penalty of not more than one hundred fifty dollars
41 for each fifty cigars or pound of tobacco, or fraction thereof, in
42 excess of five hundred cigars or ten pounds of tobacco in the possession
43 or under the control of any person, with respect to which the tobacco
44 products tax has not been paid or assumed by a distributor or tobacco
45 products dealer; provided, however, that any such penalty imposed shall
46 not exceed [five] seven thousand five hundred dollars in the aggregate.
47 The commissioner may impose a penalty of not more than [fifty] seventy-
48 five dollars for each fifty cigars or one pound of tobacco, or fraction
49 thereof, in excess of fifty cigars or one pound of tobacco in the
50 possession or under the control of any tobacco products dealer or
51 distributor appointed by the commissioner, and a penalty of not more
52 than one hundred fifty dollars for each fifty cigars or pound of tobac-
53 co, or fraction thereof, in excess of two hundred fifty cigars or five
54 pounds of tobacco in the possession or under the control of any such
55 dealer or distributor, with respect to which the tobacco products tax
56 has not been paid or assumed by a distributor or a tobacco products
S. 8177 5
1 dealer; provided, however, that any such penalty imposed shall not
2 exceed [ten] fifteen thousand dollars in the aggregate.
3 (ii) The penalties imposed by this subparagraph may be imposed by the
4 commissioner in addition to any other penalty imposed by this article,
5 but in lieu of the penalties imposed by subparagraph (i) of this para-
6 graph:
7 (A) (I) not less than thirty dollars but not more than two hundred
8 dollars for each two hundred cigarettes, or fraction thereof, in excess
9 of one thousand cigarettes but less than or equal to five thousand ciga-
10 rettes in unstamped or unlawfully stamped packages knowingly in the
11 possession or knowingly under the control of any person;
12 (II) not less than seventy-five dollars but not more than two hundred
13 dollars for each two hundred cigarettes, or fraction thereof, in excess
14 of five thousand cigarettes but less than or equal to twenty thousand
15 cigarettes in unstamped on unlawfully stamped packages knowingly in the
16 possession or knowingly under the control of any person; and
17 (III) not less than one hundred dollars but not more than two hundred
18 dollars for each two hundred cigarettes, or fraction thereof, in excess
19 of twenty thousand cigarettes in unstamped or unlawfully stamped pack-
20 ages, knowingly in the possession or knowingly under the control of any
21 person.
22 (B)(I) not less than twenty-five dollars but not more than one hundred
23 dollars for each fifty cigars or one pound of tobacco, or fraction ther-
24 eof, in excess of two hundred fifty cigars or five pounds of tobacco
25 knowingly in the possession or knowingly under the control of any
26 person, with respect to which the tobacco products tax has not been paid
27 or assumed by a distributor or tobacco products dealer; and
28 (II) not less than fifty dollars but not more than two hundred dollars
29 for each fifty cigars or pound of tobacco, or fraction thereof, in
30 excess of five hundred cigars or ten pounds of tobacco knowingly in the
31 possession or knowingly under the control of any person, with respect to
32 which the tobacco products tax has not been paid or assumed by a
33 distributor or tobacco products dealer; provided, however, that any such
34 penalty imposed under this clause shall not exceed ten thousand dollars
35 in the aggregate.
36 (C) (I) not less than twenty-five dollars but not more than one
37 hundred dollars for each fifty cigars or one pound of tobacco, or frac-
38 tion thereof, in excess of fifty cigars or one pound of tobacco knowing-
39 ly in the possession or knowingly under the control of any person, with
40 respect to which the tobacco products tax has not been paid or assumed
41 by a distributor or tobacco products dealer; and
42 (II) not less than fifty dollars but not more than two hundred dollars
43 for each fifty cigars or pound of tobacco, or fraction thereof, in
44 excess of two hundred fifty cigars or five pounds of tobacco knowingly
45 in the possession or knowingly under the control of any person, with
46 respect to which the tobacco products tax has not been paid or assumed
47 by a distributor or a tobacco products dealer; provided, however, that
48 any such penalty imposed under this clause shall not exceed twenty thou-
49 sand dollars in the aggregate.
50 (iii) Any penalty provided for in this paragraph shall be determined
51 as provided in section four hundred seventy-eight of this chapter, and
52 may be reviewed only pursuant to such section. Such penalty shall be
53 collected in the same manner as the taxes imposed by this article. The
54 commissioner [of taxation and finance,] in [his] the commissioner's
55 discretion, may remit all or part of such penalty. Such penalty shall be
S. 8177 6
1 paid to the department [of taxation and finance] and disposed of as
2 hereinafter provided with respect to moneys derived from the tax.
3 § 8. Subdivision (d) of section 1814 of the tax law, as added by chap-
4 ter 65 of the laws of 1985, is amended to read as follows:
5 (d) Any person, other than an agent [so authorized] licensed by the
6 [tax commission] commissioner, who possesses or transports for the
7 purpose of sale any unstamped or unlawfully stamped packages of ciga-
8 rettes subject to tax imposed by section four hundred seventy-one of
9 this chapter, or who sells or offers for sale unstamped or unlawfully
10 stamped packages of cigarettes in violation of the provisions of article
11 twenty of this chapter shall be guilty of a misdemeanor. Any person who
12 violates the provisions of this subdivision after having previously been
13 convicted of a violation of this subdivision within the preceding five
14 years shall be guilty of a class E felony.
15 § 9. Subdivision (e) of section 1814 of the tax law, as added by chap-
16 ter 65 of the laws of 1985, is amended to read as follows:
17 (e) (1) Any person, other than an agent [so authorized] licensed by
18 the [tax commission] commissioner, who willfully possesses or transports
19 for the purpose of sale twenty thousand or more cigarettes subject to
20 the tax imposed by section four hundred seventy-one of this chapter in
21 any unstamped or unlawfully stamped packages or who willfully sells or
22 offers for sale twenty thousand or more cigarettes in any unstamped or
23 unlawfully stamped packages in violation of article twenty of this chap-
24 ter shall be guilty of a class E felony.
25 (2) Any person, other than an agent licensed by the commissioner, who
26 willfully possesses or transports for the purpose of sale thirty thou-
27 sand or more cigarettes subject to the tax imposed by section four
28 hundred seventy-one of this chapter in any unstamped or unlawfully
29 stamped packages or who willfully sells or offers for sale thirty thou-
30 sand or more cigarettes in any unstamped or unlawfully stamped packages
31 in violation of article twenty of this chapter shall be guilty of a
32 class D felony.
33 § 10. Subdivision b of section 11-1317 of the administrative code of
34 the city of New York is amended to read as follows:
35 b. (1) In addition to any other penalty imposed by this section, the
36 commissioner of finance may impose a penalty of not more than one
37 hundred dollars for each two hundred cigarettes or fraction thereof in
38 excess of [two] one thousand cigarettes in unstamped or unlawfully
39 stamped packages in the possession or under the control of any person.
40 Such penalty shall be determined as provided in section 11-1310 of this
41 chapter, and may be reviewed only pursuant to such section. Such penalty
42 may be enforced in the same manner as the tax imposed by this chapter.
43 The commissioner of finance, in his or her discretion, may remit all or
44 part of such penalty. Such penalty shall be paid and disposed of in the
45 same manner as other revenues under this chapter.
46 (2) The penalties imposed by this paragraph may be imposed by the
47 commissioner of finance in addition to any other penalty imposed by this
48 section, but in lieu of the penalties imposed by paragraph one of this
49 subdivision: (a) not less than thirty dollars but not more than two
50 hundred dollars for each two hundred cigarettes, or fraction thereof, in
51 excess of one thousand cigarettes but less than or equal to five thou-
52 sand cigarettes in unstamped or unlawfully stamped packages knowingly in
53 the possession or knowingly under the control of any person; (b) not
54 less than seventy-five dollars but not more than two hundred dollars for
55 each two hundred cigarettes, or fraction thereof, in excess of five
56 thousand cigarettes but less than or equal to twenty thousand cigarettes
S. 8177 7
1 in unstamped or unlawfully stamped packages knowingly in the possession
2 or knowingly under the control of any person; and (c) not less than one
3 hundred dollars but not more than two hundred dollars for each two
4 hundred cigarettes, or fraction thereof, in excess of twenty thousand
5 cigarettes in unstamped or unlawfully stamped packages, knowingly in the
6 possession or knowingly under the control of any person. Such penalty
7 shall be determined as provided in section 11-1310 of this chapter, and
8 may be reviewed only pursuant to such section. Such penalty may be
9 enforced in the same manner as the tax imposed by this chapter. The
10 commissioner of finance, in his or her discretion, may remit all or part
11 of such penalty. Such penalty shall be paid and disposed of in the same
12 manner as other revenues under this chapter.
13 § 11. Subdivisions (b) and (c) of section 11-4012 of the administra-
14 tive code of the city of New York, as added by chapter 765 of the laws
15 of 1985, are amended to read as follows:
16 (b) Any person, other than an agent so authorized by the commissioner
17 of finance, who possesses or transports for the purpose of sale any
18 unstamped or unlawfully stamped packages of cigarettes subject to tax
19 under chapter thirteen of this title, or who sells or offers for sale
20 unstamped or unlawfully stamped packages of cigarettes in violation of
21 the provisions of such chapter shall be guilty of a misdemeanor. Any
22 person who violates the provisions of this subdivision after having
23 previously been convicted of a violation of this subdivision within the
24 preceding five years shall be guilty of a class E felony.
25 (c) (1) Any person, other than an agent so authorized by the commis-
26 sioner of finance, who willfully possesses or transports for the purpose
27 of sale twenty thousand or more cigarettes subject to the tax imposed by
28 chapter thirteen of this title in any unstamped or unlawfully stamped
29 packages or who willfully sells or offers for sale twenty thousand or
30 more cigarettes in any unstamped or unlawfully stamped packages in
31 violation of such chapter shall be guilty of a class E felony.
32 (2) Any person, other than an agent appointed by the commissioner of
33 finance, who willfully possesses or transports for the purpose of sale
34 thirty thousand or more cigarettes subject to the tax imposed by chapter
35 thirteen of this title in any unstamped or unlawfully stamped packages
36 or who willfully sells or offers for sale thirty thousand or more ciga-
37 rettes in any unstamped or unlawfully stamped packages in violation of
38 such chapter shall be guilty of a class D felony.
39 § 12. Severability clause. If any clause, sentence, paragraph, subdi-
40 vision, section or part of this act shall be adjudged by any court of
41 competent jurisdiction to be invalid, such judgment shall not affect,
42 impair, or invalidate the remainder thereof, but shall be confined in
43 its operation to the clause, sentence, paragraph, subdivision, section
44 or part thereof directly involved in the controversy in which such judg-
45 ment shall have been rendered. It is hereby declared to be the intent of
46 the legislature that this act would have been enacted even if such
47 invalid provisions had not been included herein.
48 § 13. This act shall take effect on the ninetieth day after it shall
49 have become a law; provided, however, that subdivision two of section
50 1399-ll of the public health law as added by section two of this act
51 shall take effect January 1, 2001.
