S. 5701--A 2
cigarette market, and importers, exporters and manufacturers of ciga-
rettes, and other persons within or without the state as agents to buy
or affix stamps to be used in paying the tax herein imposed, but an
agent shall at all times have the right to appoint the person in his
employ who is to affix the stamps to any cigarettes under the agent's
control. The fee for filing such application for an agent's license
shall be one thousand five hundred dollars, unless such fee has been
paid during the preceding twelve months, in which case, the fee for a
new license shall be one thousand dollars. All of the provisions of
section four hundred eighty OF THIS ARTICLE relating to wholesale deal-
ers' licenses, including the procedure for suspension, revocation,
refusal to license and for hearings, except for paragraphs (c) and (g)
of subdivision one of such section, shall be applicable to agents'
licenses applied for or granted pursuant to this section, as if such
provisions had been set forth in full in this subdivision and had
expressly referred to the applicant for, or the holder of, an agent's
license. Whenever the commissioner shall sell and deliver to any such
agent any such stamps, such agent shall be entitled to receive as
compensation for his services and expenses as such agent in selling or
affixing such stamps, and to retain out of the moneys to be paid by him
for such stamps, a commission on the par value thereof. The commissioner
is hereby authorized to prescribe a schedule of commissions, not exceed-
ing five per centum, allowable to such agent for buying and affixing
such stamps. Such schedule shall be uniform with respect to the differ-
ent types of stamps used, and may be on a graduated scale with respect
to the number of stamps purchased. The commissioner may, in his
discretion, permit an agent to pay for such stamps within thirty days
after the date of purchase and may require any such agent to file with
the department [of taxation and finance] a bond issued by a surety
company approved by the superintendent of financial services as to
solvency and responsibility and authorized to transact business in the
state or other security acceptable to the commissioner, in such amount
as the commissioner may fix, to secure the payment of any sums due from
such agent pursuant to this article. If securities are deposited as
security under this subdivision, such securities shall be kept in the
custody of the commissioner and may be sold by the commissioner if it
becomes necessary so to do in order to recover any sums due from such
agent pursuant to this article, but no such sale shall be had until
after such agent shall have had opportunity to litigate the validity of
any tax if it elects so to do. Upon any such sale, the surplus, if any,
above the sums due under this article shall be returned to such agent.
S 2. Section 482 of the tax law is amended by adding a new subdivision
(c) to read as follows:
(C) FROM THE AMOUNTS RECEIVED PURSUANT TO SUBDIVISION ONE OF SECTION
FOUR HUNDRED SEVENTY-TWO OF THIS ARTICLE, THE COMMISSIONER SHALL DEPOSIT
IN THE CIGARETTE TAX ENFORCEMENT FUND ESTABLISHED PURSUANT TO SECTION
NINETY-SEVEN-QQQQ OF THE STATE FINANCE LAW THE CONCURRENT EXPENSE ALLOW-
ANCE FOR THE CIGARETTE TAX ENFORCEMENT FUND OF FOUR CENTS PER STAMP.
S 3. The state finance law is amended by adding a new section 97-qqqq
to read as follows:
S 97-QQQQ. CIGARETTE TAX ENFORCEMENT FUND. 1. THERE IS HEREBY CREATED
IN THE JOINT CUSTODY OF THE STATE COMPTROLLER AND THE COMMISSIONER OF
TAXATION AND FINANCE AN ACCOUNT OF THE MISCELLANEOUS SPECIAL REVENUE
FUND TO BE KNOWN AS THE "CIGARETTE TAX ENFORCEMENT FUND".
2. NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATION TO THE CONTRARY,
THE STATE COMPTROLLER IS HEREBY AUTHORIZED AND DIRECTED TO RECEIVE FOR
S. 5701--A 3
DEPOSIT TO THE CREDIT OF THE CIGARETTE TAX ENFORCEMENT FUND MONIES
RECEIVED FROM THE COMMISSIONER OF TAXATION AND FINANCE FROM THE CONCUR-
RENT EXPENSE ALLOWANCE PAID PURSUANT TO SUBDIVISION ONE OF SECTION FOUR
HUNDRED SEVENTY-TWO OF THE TAX LAW, MONIES RECEIVED FROM THE COMMISSION-
ER OF TAXATION AND FINANCE FROM THE SALE OF FORFEITED CIGARETTES AUTHOR-
IZED PURSUANT TO SECTION EIGHTEEN HUNDRED FORTY-SIX OF THE TAX LAW, AND
OTHER MONIES APPROPRIATED, CREDITED OR TRANSFERRED THERETO FROM ANY
OTHER FUND OR SOURCE.
3. THE PROCEEDS OF THE CIGARETTE TAX ENFORCEMENT FUND SHALL BE USED
SOLELY TO ENFORCE (I) THE COLLECTION OF THE CIGARETTE TAX IMPOSED BY
ARTICLE TWENTY OF THE TAX LAW OR (II) THE CIGARETTE MARKETING STANDARDS
ACT, AS ESTABLISHED BY ARTICLE TWENTY-A OF THE TAX LAW.
4. MONIES IN THE CIGARETTE TAX ENFORCEMENT FUND SHALL BE KEPT SEPARATE
AND APART AND SHALL NOT BE COMMINGLED WITH ANY OTHER MONEYS IN THE
CUSTODY OF THE COMPTROLLER AND SHALL ONLY BE EXPENDED AS PROVIDED HERE-
IN.
5. MONIES OF THE FUND SHALL BE AVAILABLE TO THE COMMISSIONER OF TAXA-
TION AND FINANCE FOR PURPOSES OF CARRYING OUT THE PROVISIONS OF SUBDIVI-
SION (J) OF SECTION EIGHTEEN HUNDRED FOURTEEN OF THE TAX LAW AND SHALL
BE PAID OUT OF THE FUND ON THE AUDIT AND WARRANT OF THE COMPTROLLER ON
VOUCHERS CERTIFIED OR APPROVED BY THE COMMISSIONER OF TAXATION AND
FINANCE.
6. IN THE MONTH IMMEDIATELY FOLLOWING THE MONTH IN WHICH THE BALANCE
OF THE FUND EXCEEDS SIX MILLION FIVE HUNDRED THOUSAND DOLLARS, THE COMP-
TROLLER SHALL, UPON RECEIPT OF A CERTIFICATE OF ALLOCATION ISSUED BY THE
DIRECTOR OF THE DIVISION OF THE BUDGET, TRANSFER SIX MILLION DOLLARS TO
THE DIVISION OF STATE POLICE TO SUPPORT THE DIVISION'S CIGARETTE TAX, AS
IMPOSED BY ARTICLE TWENTY OF THE TAX LAW, AND THE CIGARETTE MARKETING
STANDARDS ACT, AS ESTABLISHED BY ARTICLE TWENTY-A OF THE TAX LAW,
ENFORCEMENT ACTIVITIES. THESE FUNDS MAY BE APPORTIONED TO EITHER THE
PATROL ACTIVITIES OR CRIMINAL INVESTIGATION ACTIVITIES PROGRAMS OF THE
DIVISION OF STATE POLICE, MAY BE TRANSFERRED OR SUBALLOCATED TO ANY
OTHER STATE AGENCY OR PUBLIC AUTHORITY FOR THEIR COSTS ASSOCIATED WITH
THE ENFORCEMENT OF THE CIGARETTE TAX OR THE CIGARETTE MARKETING STAND-
ARDS ACT, AND MAY BE USED TO CONTRACT WITH LOCAL ENFORCEMENT AGENCIES
FOR CIGARETTE TAX AND/OR CIGARETTE MARKETING STANDARDS ACT ENFORCEMENT
ACTIVITIES.
S 4. Subdivisions (a), (b) and (c) of section 1846 of the tax law, as
amended by chapter 556 of the laws of 2011, are amended to read as
follows:
(a) Whenever a police officer designated in section 1.20 of the crimi-
nal procedure law or a peace officer designated in subdivision four of
section 2.10 of such law, acting pursuant to his or her special duties,
shall discover any cigarettes subject to tax provided by article twenty
of this chapter or by chapter thirteen of title eleven of the adminis-
trative code of the city of New York, and upon which the tax has not
been paid or the stamps not affixed as required by such article or such
chapter thirteen, they are hereby authorized and empowered forthwith to
seize and take possession of such cigarettes, together with any vending
machine or receptacle in which they are held for sale. Such cigarettes,
vending machine or receptacle seized by a police officer or such peace
officer shall be turned over to the commissioner. Such seized ciga-
rettes, vending machine or receptacle, not including money contained in
such vending machine or receptacle, shall be forfeited to the state. The
commissioner may, within a reasonable time thereafter, upon publication
of a notice to such effect for at least five successive days, before the
S. 5701--A 4
day of sale, in a newspaper published or circulated in the county where
the seizure was made, sell such forfeited vending machines or recepta-
cles at public sale and pay the proceeds into the state treasury to the
credit of the general fund. Notwithstanding any other provision of this
section, the commissioner may enter into an agreement with any city of
this state which is authorized to impose a tax similar to that imposed
by article twenty of this chapter to provide for the disposition between
the state and any such city of the proceeds from any such sale. All
cigarettes forfeited to the state [shall be destroyed or used for law
enforcement purposes], except [that] cigarettes that violate, or are
suspected of violating, federal trademark laws or import laws shall [not
be used for law enforcement purposes. If the commissioner determines the
cigarettes may not be used for law enforcement purposes], UPON PUBLICA-
TION IN THE STATE REGISTRY, BE AVAILABLE FOR INSPECTION BY THE MANUFAC-
TURER WHO SHALL DETERMINE WHETHER SUCH CIGARETTES ARE OF SALEABLE QUALI-
TY AND SUCH CIGARETTES SHALL BE OFFERED FOR SALE TO SUCH MANUFACTURERS.
ANY CIGARETTES THAT ARE EITHER NOT INSPECTED BY THE MANUFACTURER WITHIN
FIVE DAYS OF THE PUBLICATION IN THE STATE REGISTRY OR ARE NOT PURCHASED
BY THE MANUFACTURER AFTER BEING DETERMINED TO BE OF SALEABLE QUALITY
SHALL, UPON PUBLICATION IN THE STATE REGISTRY, BE OFFERED FOR SALE TO
AGENTS, AS SUCH TERM IS DEFINED IN SUBDIVISION ELEVEN OF SECTION FOUR
HUNDRED SEVENTY OF THIS CHAPTER, TO A PRICE EQUALING TWO DOLLARS AND
TWENTY CENTS PER PACK OF TWENTY CIGARETTES. ANY SUCH CIGARETTES THAT ARE
EITHER NOT SOLD WITHIN A REASONABLE PERIOD OF TIME AFTER BEING OFFERED
FOR SALE TO AGENTS OR DEEMED UNSALEABLE BY THE MANUFACTURER SHALL, UPON
PUBLICATION IN THE STATE REGISTRY, BE DESTROYED OR USED FOR LAW ENFORCE-
MENT PURPOSES. IF THE COMMISSIONER DETERMINES THE CIGARETTES MAY NOT BE
OFFERED FOR SALE TO THE MANUFACTURERS OR AGENTS, OR USED FOR LAW
ENFORCEMENT PURPOSES BECAUSE SUCH CIGARETTES VIOLATE, OR ARE SUSPECTED
OF VIOLATING, FEDERAL TRADEMARK LAWS OR IMPORT LAWS, the commissioner
must, within a reasonable time after the forfeiture of such cigarettes,
upon publication in the state registry, destroy such forfeited ciga-
rettes. The commissioner may, prior to any destruction of cigarettes,
permit the true holder of the trademark rights in the cigarettes to
inspect such forfeited cigarettes in order to assist in any investi-
gation regarding such cigarettes. THE REVENUE FROM ALL SALES OF CIGA-
RETTES MADE PURSUANT TO THIS SUBDIVISION SHALL BE DEPOSITED IN THE CIGA-
RETTE TAX ENFORCEMENT FUND, AS ESTABLISHED IN SECTION NINETY-SEVEN-QQQQ
OF THE STATE FINANCE LAW.
(b) [In the alternative] PRIOR TO MAKING FORFEITED CIGARETTES AVAIL-
ABLE FOR INSPECTION OR PURCHASE BY THE MANUFACTURER, OFFERING SUCH CIGA-
RETTES FOR SALE TO AGENTS, OR USING SUCH CIGARETTES FOR LAW ENFORCEMENT
PURPOSES IN ACCORDANCE WITH SUBDIVISION (A) OF THIS SECTION, the tax
commission, on reasonable notice by mail or otherwise, may permit the
person from whom said cigarettes were seized to redeem the said ciga-
rettes, and any vending machine or receptacle seized therewith, by the
payment of the tax due, plus a penalty of fifty per centum thereof, plus
interest on the amount of tax due for each month or fraction thereof
after such tax became due (determined without regard to any extension of
time for filing or paying) at the rate applicable under subparagraph
(ii) of paragraph (a) of subdivision one of section four hundred eight-
y-one of this chapter and the costs incurred in such proceeding, which
total payment shall not be less than five dollars; provided, however,
that such seizure and sale or redemption shall not be deemed to relieve
any person from fine or imprisonment provided for in this article for
violation of any provision of article twenty of this chapter.
S. 5701--A 5
(c) [In the alternative] AFTER MAKING FORFEITED CIGARETTES AVAILABLE
FOR INSPECTION OR PURCHASE BY THE MANUFACTURER AND OFFERING SUCH CIGA-
RETTES FOR SALE TO AGENTS IN ACCORDANCE WITH SUBDIVISION (A) OF THIS
SECTION, the tax commission may dispose of any cigarettes seized pursu-
ant to this section, except those that violate, or are suspected of
violating, federal trademark laws or import laws, by transferring them
to the department of corrections and community supervision for sale to
or use by inmates in such institutions.
S 5. Subdivision (b) of section 483 of the tax law, as amended by
chapter 860 of the laws of 1987, subparagraph (A) of paragraph 1 and
subparagraph (B) of paragraph 3 as amended by chapter 744 of the laws of
1990, subparagraph (B) of paragraph 1 as amended by chapter 1 of the
laws of 1999 and subparagraph (B) of paragraph 2 as amended by chapter 4
of the laws of 1988, is amended to read as follows:
(b) 1. (A) The term "cost of the agent" shall mean the basic cost of
cigarettes plus the cost of doing business by the agent as evidenced by
the accounting standards and methods regularly employed by said agent in
his determination of costs for the purpose of federal income tax report-
ing for the total operation of his establishment, and must include,
without limitation, labor, including salaries of executives and offi-
cers, rent, depreciation, selling costs, maintenance of equipment,
delivery costs, interest payable, all types of licenses, taxes, insur-
ance and advertising expressed as a percentage and applied to the basic
cost of cigarettes. Any fractional part of a cent in the cost to the
agent per carton of cigarettes shall be rounded off to the next higher
cent. In the case of sales at retail by an agent, the "cost of the
agent" shall be the same as the "cost of the retail dealer". In the case
of sales of cigarettes to a chain store having fifteen or more retail
outlets, excluding vending machine operators, which are delivered to a
central warehouse owned and operated by such chain store and which are
delivered to its retail outlets by the chain store, the "cost of the
agent" shall be presumed to be the basic cost of cigarettes. There shall
be determined a separate cost of the agent for sales to wholesale deal-
ers and for sales to retail dealers.
(B) In the absence of the filing with the commissioner of satisfactory
proof of a lesser cost of doing business of the agent making the sale,
the cost of doing business by the agent shall be presumed to be [seven-
eighths of one] TWO AND ONE-QUARTER percent of the basic cost of ciga-
rettes for sales to wholesale dealers plus one cent per package of ten
cigarettes, two cents per package of twenty cigarettes and in the case
of a package containing more than twenty cigarettes, two cents and one-
half of a cent for each five cigarettes in excess of twenty cigarettes,
[one and one-half] FIVE AND THREE-QUARTER percent of the basic cost of
cigarettes for sales to chain stores plus one cent per package of ten
cigarettes, two cents per package of twenty cigarettes and in the case
of a package containing more than twenty cigarettes, two cents and one-
half of a cent for each five cigarettes in excess of twenty cigarettes
and [three and seven-eighths] FIVE AND THREE-QUARTER percent of the
basic cost of cigarettes with respect to sales to retail dealers plus
one cent per package of ten cigarettes, two cents per package of twenty
cigarettes and in the case of a package containing more than twenty
cigarettes, two cents and one-half of a cent for each five cigarettes in
excess of twenty cigarettes and the foregoing cents per pack shall be
included in the "cost of doing business by the agent" referred to in
paragraphs two and three of this subdivision.
S. 5701--A 6
2. (A) The term "cost of the wholesale dealer" shall mean the basic
cost of cigarettes plus the cost of doing business by the wholesale
dealer as evidenced by the accounting standards and methods regularly
employed by said wholesale dealer in his determination of costs for the
purpose of federal income tax reporting for the total operation of his
establishment, and must include, without limitation, labor, including
salaries of executives and officers, rent, depreciation, selling costs,
maintenance of equipment, delivery costs, interest payable, all types of
licenses, taxes, insurance and advertising expressed as a percentage and
applied to the basic cost of cigarettes, plus the cost of doing business
by the agent with respect to sales of cigarettes to wholesale dealers.
Any fractional part of a cent in the cost to the wholesale dealer per
carton of cigarettes shall be rounded off to the next higher cent. In
the case of sales at retail by a wholesale dealer, the "cost of the
wholesale dealer" shall be the same as the "cost of the retail dealer".
There shall be determined a separate cost of the wholesale dealer for
sales to chain stores and for sales to retail dealers.
(B) In the absence of the filing with the tax commission of satisfac-
tory proof of a lesser cost of doing business of the wholesale dealer
making the sale, the cost of doing business by the wholesale dealer with
respect to sales to retail dealers shall be presumed to be three AND
ONE-HALF per centum of the basic cost of cigarettes, and with respect to
sales to chain stores, [five-eighths of one] THREE AND ONE-HALF percent
of the basic cost of cigarettes.
3. (A) The term "cost of the retail dealer" shall mean the basic cost
of cigarettes plus the cost of doing business by the retail dealer as
evidenced by the accounting standards and methods regularly employed by
said retail dealer in his determination of costs for the purpose of
federal income tax reporting for the total operation of his establish-
ment, and shall include, without limitation, labor, including salaries
of executives and officers, rent, depreciation, selling costs, mainte-
nance of equipment, delivery costs, interest payable, all types of
licenses, taxes, insurance and advertising expressed as a percentage and
applied to the basic cost of cigarettes, plus the cost of doing business
by the agent with respect to sales of cigarettes to retail dealers. Any
fractional part of a cent in the cost to the retail dealer per package
or per carton shall be rounded off to the next higher cent.
(B) In the absence of the filing with the commissioner of taxation and
finance of satisfactory proof of a lesser cost of doing business by the
retail dealer making the sale, the cost of doing business by the retail
dealer shall be presumed to be [seven] TEN per centum of the sum of the
basic cost of cigarettes plus the cost of doing business by the agent
with respect to cigarettes sold to retail dealers.
S 6. Section 1814 of the tax law is amended by adding a new subdivi-
sion (j) to read as follows:
(J) REWARDS. (1) NOTWITHSTANDING ANY PROVISION OF LAW, RULE OR REGU-
LATION TO THE CONTRARY, THE COMMISSIONER SHALL ESTABLISH A PROGRAM TO
ALLOW INDIVIDUALS TO SUBMIT A SWORN STATEMENT AFFIRMING THE OBSERVATION
OF A VIOLATION OF ARTICLE TWENTY OF THIS CHAPTER AND, WHERE THE COMMIS-
SIONER DEEMS IT APPROPRIATE, ALLOW FOR A REWARD FOR ANY SUCH SWORN
STATEMENT. WHERE ENFORCEMENT ACTION IS TAKEN PURSUANT TO THIS ARTICLE OR
ARTICLE TWENTY OF THIS CHAPTER BASED UPON A SWORN STATEMENT BY ONE OR
MORE INDIVIDUALS AND WHERE THE COMMISSIONER DETERMINES, IN THE EXERCISE
OF HIS OR HER DISCRETION, THAT SUCH SWORN STATEMENT, EITHER ALONE OR IN
CONJUNCTION WITH THE TESTIMONY OF THE PERSON SUBMITTING SUCH SWORN
STATEMENT CONTRIBUTES TO THE IMPOSITION OF A CIVIL OR CRIMINAL PENALTY
S. 5701--A 7
UPON ANY PERSON FOR A VIOLATION OF THIS ARTICLE, OR ARTICLE TWENTY OF
THIS CHAPTER, THE COMMISSIONER SHALL OFFER AS A REWARD TO SUCH INDIVID-
UAL OR INDIVIDUALS AN AMOUNT THAT, IN THE AGGREGATE, IS FIVE DOLLARS. NO
PEACE OFFICER, POLICE OFFICER OR EMPLOYEE OF THE DEPARTMENT, EMPLOYEE OF
ANY COMPANY UNDER CONTRACT WITH THE DEPARTMENT, OR EMPLOYEE OF ANY
GOVERNMENTAL ENTITY THAT, IN CONJUNCTION WITH THE DEPARTMENT, CONDUCTS
ENFORCEMENT ACTIVITY RELATING TO A VIOLATION OF THIS ARTICLE OR ARTICLE
TWENTY OF THIS CHAPTER, SHALL BE ENTITLED TO OBTAIN THE BENEFIT OF ANY
SUCH REWARD WHEN ACTING IN THE DISCHARGE OF HIS OR HER OFFICIAL DUTIES.
(2) ALL REWARDS PAID PURSUANT TO THIS SECTION SHALL BE PAID FROM THE
CIGARETTE TAX ENFORCEMENT FUND, AS ESTABLISHED IN SECTION NINETY-SEVEN-
QQQQ OF THE STATE FINANCE LAW.
S 7. Beginning the month immediately following the month in which the
cigarette tax enforcement fund, as established in section 97-qqqq of the
state finance law, is established, there is hereby appropriated to the
division of state police the amount of six million dollars ($6,000,000)
from the cigarette tax enforcement fund to support cigarette tax, as
imposed by article 20 of the tax law, and cigarette marketing standards
act, as established by article 20-A of the tax law, enforcement activ-
ities. This appropriation may be apportioned to either the patrol activ-
ities or criminal investigation activities programs of the division of
state police, may be transferred or suballocated to any other state
agency or public authority for their costs associated with the enforce-
ment of the cigarette tax or the cigarette marketing standards act, and
may be used to contract with local enforcement agencies for cigarette
tax and/or cigarette marketing standards act enforcement activities. No
monies shall be available from this appropriation absent a certificate
of allocation from the director of the budget.
S 8. This act shall take effect on the first day of the sales tax
quarterly period, as described in subdivision (b) of section 1136 of the
tax law, next succeeding the thirtieth day after it shall have become a
law and shall apply in accordance with the applicable transitional
provisions of sections 1106 and 1217 of the tax law.
