Arkansas Tobacco Products Tax Act
of 1977 - ACA § 26-57-201 et Seq.
Copyright
© 1987-2007 by
The State of
All rights reserved.
***
CURRENT THROUGH THE 2007 REGULAR SESSION ***
Title 26 Taxation
Subtitle 5. State Taxes
Chapter 57 State Privilege Taxes
Subchapter 13 - Enforcement Enhancements
§ 26-57-1301. Findings and purpose.
The General Assembly finds that:
(1) Violations of §§ 26-57-260 and 26-57-261
threaten the integrity of the tobacco Master Settlement
Agreement, the fiscal soundness of the state, and the public
health; and
(2) Enacting procedural enhancements will help
prevent violations and aid the enforcement of §§ 26-57-260 and
26-57-261 and thereby safeguard the Master Settlement
Agreement, the fiscal soundness of the state, and the public
health.
HISTORY: Acts
2003, No. 1073, § 1.
§ 26-57-1302. Definitions.
(a) "Brand family" means all styles of cigarettes
sold under the same trademark and differentiated from one
another by means of additional modifiers or descriptors,
including, but not limited to, "menthol", "lights", "kings",
and "100s", and includes any brand name alone or in
conjunction with any other word, trademark, logo, symbol,
motto, selling message, recognizable pattern of colors, or any
other indicia of product identification identical or similar
to or identifiable with a previously known brand of
cigarettes.
(b) "Cigarette" has the same meaning as in §
26-57-260(a)(4).
(c) "Director" means the Director of the Arkansas
Tobacco Control Board.
(d) "Licensee" means any person or entity who has been
granted and holds a permit or license under § 26-57-215,
including a wholesale cigarette license or permit, a wholesale
tobacco license or permit, a salesman's license or permit, a
retail cigarette license or permit, a retail tobacco license
or permit, or a dealer's license or permit.
(e) "Master Settlement Agreement" has the same meaning
as in § 26-57-260(a)(5).
(f) "Nonparticipating manufacturer" means any tobacco
product manufacturer that is not a participating manufacturer.
(g) "Participating manufacturer" has the meaning given
that term in Section II(jj) of the Master Settlement Agreement
and all amendments to the agreement.
(h) "Qualified escrow fund" has the same meaning as
that term is defined in § 26-57-260(a)(6).
(i) "Tobacco product manufacturer" has the same meaning
as that term is defined in § 26-57-260(a)(9).
(j) "Units sold" has the same meaning as that term is
defined in § 26-57-260(a)(10)(A).
(k) "Wholesaler" means:
(1) Any person or entity who has been granted and
holds a wholesale cigarette license or permit or a wholesale
tobacco license or permit pursuant to § 26-57-215; and
(2) Any person or entity who as a retailer purchases
tobacco products directly from a manufacturer or an unlicensed
wholesaler or distributor and is therefore liable for
reporting and paying taxes under § 26-57-211(a)(1)(B).
HISTORY: Acts
2003, No. 1073, § 2.
§ 26-57-1303. Certifications - Directory - Tax stamps.
(a) Certification. (1) No later than
April 30 each year, every tobacco product manufacturer whose
cigarettes are sold in Arkansas, whether directly or through a
wholesaler, retailer, or similar intermediary or
intermediaries, shall execute and deliver on a form prescribed
by the Attorney General a certification to the Attorney
General certifying under penalty of perjury that as of the
date of the certification the tobacco product manufacturer
either:
(A) Is a participating manufacturer; or
(B) Is in full compliance with §§ 26-57-260 and
26-57-261, including all quarterly installment payments that
may be required under § 26-57-1305(e).
(2) A participating manufacturer shall include in
its certification a list of its brand families. The
participating manufacturer shall update the list thirty (30)
calendar days before any addition to or modification of its
brand families by executing and delivering a supplemental
certification to the Attorney General.
(3) A nonparticipating manufacturer shall include in
its certification:
(A) An electronic mail address and facsimile
number to which notices from the Attorney General may be sent
and a list of all of its brand families and the number of
units sold for each brand family that were sold in the state
during the preceding calendar year;
(B) A list of all of its brand families that have
been sold in the state at any time during the current calendar
year:
(i) Indicating by an asterisk any brand family
sold in the state during the preceding calendar year but that
is no longer being sold in the state as of the date of the
certification; and
(ii) Identifying by name and address any other
manufacturer of the brand families in the preceding or current
calendar year.
(4) The nonparticipating manufacturer shall update
the list thirty (30) calendar days before any addition to or
modification of its brand families by executing and delivering
a supplemental certification to the Attorney General.
(5) In the case of a nonparticipating manufacturer,
the certification shall further certify:
(A) That the nonparticipating manufacturer is
registered to do business in the state or has appointed a
resident agent for service of process and provided notice
thereof as required by § 26-57-1304;
(B) That the nonparticipating manufacturer:
(i) Has established and continues to maintain
a qualified escrow fund; and
(ii) Has executed a qualified escrow agreement
that has been reviewed and approved by the Attorney General
and that governs the qualified escrow fund;
(C) That the nonparticipating manufacturer is in
full compliance with §§ 26-57-260 and 26-57-261 and this
subchapter and with any regulations promulgated pursuant
thereto;
(D) The name, address, and telephone number of
the financial institution where the nonparticipating
manufacturer has established the qualified escrow fund
required under §§ 26-57-260 and 26-57-261 and with all
regulations promulgated thereto;
(E) The account number of the qualified escrow
fund and any subaccount number for the state;
(F) The amount the nonparticipating manufacturer
placed in the fund for cigarettes sold in the state during the
preceding calendar year, the date and amount of each deposit,
and such evidence or verification as may be deemed necessary
by the Attorney General to confirm the requirements of the
foregoing; and
(G) The amount and date of any withdrawal or
transfer of funds the nonparticipating manufacturer made at
any time from the fund or from any other qualified escrow fund
into which it ever made escrow payments under §§ 26-57-260 and
26-57-261 and all regulations promulgated thereto.
(6) A tobacco product manufacturer may not include a
brand family in its certification unless:
(A) In the case of a participating manufacturer,
the participating manufacturer affirms that the brand family
is to be deemed to be its cigarettes for purposes of
calculating its payments under the Master Settlement Agreement
for the relevant year in the volume and shares determined
under the Master Settlement Agreement; and
(B) In the case of a nonparticipating
manufacturer, the nonparticipating manufacturer affirms that
the brand family is to be deemed to be its cigarettes for
purposes of §§ 26-57-260 and 26-57-261.
(7) Nothing in § 26-57-1303(a)(6) shall be construed
as limiting or otherwise affecting the state's right to
maintain that a brand family constitutes cigarettes of a
different tobacco product manufacturer for purposes of
calculating payments under the Master Settlement Agreement or
for purposes of §§ 26-57-260 and 26-57-261.
(8) Tobacco product manufacturers shall maintain all
invoices and documentation of sales and other information
relied upon for the certification for a period of five (5)
years unless otherwise required by law to maintain them for a
greater period of time.
(b) Directory of Cigarettes Approved for Stamping
and Sale. (1) (A) Not later than the last
business day of May of each year, the Attorney General shall
develop and make available for public inspection and shall
publish on the Attorney General's website a directory listing
all tobacco product manufacturers that have provided current
and accurate certifications conforming to the requirements of
subsection (a) of this section and all brand families that are
listed in the certifications except as provided in this
section.
(B) The Attorney General shall not include or
retain in the directory the name or brand families of any
nonparticipating manufacturer that has failed to provide the
required certification or whose certification the Attorney
General determines is not in compliance with subsection (a) of
this section unless the Attorney General has determined that
the violation has been cured to the satisfaction of the
Attorney General.
(C) Neither a tobacco product manufacturer nor
brand family shall be included or retained in the directory if
the Attorney General concludes in the case of a
nonparticipating manufacturer that:
(i) Any escrow payment required under §§
26-57-260 and 26-57-261 for any period for any brand family,
whether or not listed by the nonparticipating manufacturer,
has not been fully paid into a qualified escrow fund governed
by a qualified escrow agreement that has been approved by the
Attorney General; or
(ii) Any outstanding final judgment, including
interest on the judgment, for a violation of §§ 26-57-260 and
26-57-261 has not been fully satisfied for the brand family or
the manufacturer.
(D) The Attorney General shall update the
directory as necessary in order to correct mistakes and to add
or remove a tobacco product manufacturer or brand family to
keep the directory in conformity with the requirements of this
subchapter.
(E) Every wholesaler shall provide and update as
necessary an electronic mail address to the Attorney General
for the purpose of receiving any notifications as may be
required by this subchapter.
(F) (i) Notwithstanding the provisions of
this section, in the case of any nonparticipating manufacturer
who has established a qualified escrow account pursuant to §§
26-57-260 and 26-57-261 that has been approved by the Attorney
General, the Attorney General may not remove the
nonparticipating manufacturer or its brand families from the
directory until at least fifteen (15) days after the
nonparticipating manufacturer has been given notice of such an
intended action.
(ii) Notice shall be sufficient and be deemed
immediately received by a nonparticipating manufacturer if the
notice is sent either electronically or by facsimile to an
electronic mail address or facsimile number, as the case may
be, provided by the nonparticipating manufacturer in its most
recent certification filed pursuant to subsection (a) of this
section.
(c) Prohibition Against Stamping, Sale, or Import of
Cigarettes Not in Directory. (1) It is unlawful
for any person or entity to:
(A) Affix a tax stamp to a package or other
container of cigarettes of a tobacco product manufacturer or
brand family that the person or entity knows is not included
in the directory maintained by the Attorney General pursuant
to subsection (b) of this section; or
(B) Sell, offer, or possess for sale in this
state, or import for personal consumption in this state,
cigarettes of a tobacco product manufacturer or brand family
that the person or entity knows is not included in the
directory maintained by the Attorney General pursuant to
subsection (b) of this section.
(2) Persons and entities are deemed to have received
notice that cigarettes of a tobacco product manufacturer or a
brand family are not included in the directory maintained by
the Attorney General pursuant to subsection (b) of this
section at the time the Attorney General's website fails to
list any such cigarettes in the directory or at the time the
Attorney General removes the cigarettes from the directory.
(3) A person or entity purchasing cigarettes for
resale shall not be in violation of this subchapter if:
(A) At the time of purchase the manufacturer and
brand families of the cigarettes are included in the directory
maintained by the Attorney General pursuant to subsection (b)
of this section and the cigarettes are lawfully stamped and
sold within twenty-one (21) days of the date the manufacturer
and brand families were removed from the directory; or
(B) In the case of a retailer, the cigarettes are
sold or delivered to retail customers within twenty-one (21)
days after receipt of delivery of such cigarettes from a
wholesaler so long as the cigarettes in question were lawfully
purchased from the same wholesaler.
(4) No brand families may be purchased by or
delivered to a wholesaler once the manufacturer and brand
families are removed from the directory.
(5) Any manufacturer, wholesaler, or retailer
selling cigarettes for resale of a manufacturer or brand
family that has been removed from the directory maintained by
the Attorney General pursuant to subsection (b) of this
section shall notify the purchaser of such cigarettes of that
fact at the time of delivery of the cigarettes.
(6) (A) Unless otherwise provided by
contract or purchase agreement, a purchaser shall be entitled
to a refund of the purchase price from the manufacturer,
wholesaler, or retailer from whom the cigarettes were
purchased of any cigarettes that are the product of a
manufacturer or a brand family that has been removed from the
directory maintained by the Attorney General pursuant to
subsection (b) of this section.
(B) The Department of Finance and Administration
may by regulation provide for a refund of the price of tax
stamps that have been lawfully affixed to cigarettes that may
not be sold under this subsection.
HISTORY: Acts
2003, No. 1073, § 3; 2005, No. 384, § 2.
§ 26-57-1304. Requirement for agent for service of
process.
(a) (1) As a condition precedent to having
its brand families included or retained in the directory
maintained by the Attorney General pursuant to §
26-57-1303(b), any nonresident or foreign nonparticipating
manufacturer that has not registered to do business in the
state as a foreign corporation or business entity shall
appoint and continually engage without interruption the
services of an agent in this state to act as agent for the
service of process on whom all process and any action or
proceeding against it concerning or arising out of the
enforcement of this subchapter and §§ 26-57-260 and 26-57-261
may be served in any manner authorized by law.
(2) The service shall constitute legal and valid
service of process on the nonparticipating manufacturer.
(3) The nonparticipating manufacturer shall provide
the name, address, phone number, and proof of the appointment
and availability of the agent to and to the satisfaction of
the Attorney General.
(b) (1) The nonparticipating manufacturer shall
provide notice to the Attorney General thirty (30) calendar
days before the termination of the authority of an agent and
shall provide proof to the satisfaction of the Attorney
General of the appointment of a new agent no less than five
(5) calendar days before the termination of an existing agent
appointment.
(2) If an agent terminates an agency appointment,
the nonparticipating manufacturer shall notify the Attorney
General of the termination within five (5) calendar days and
shall include proof to the satisfaction of the Attorney
General of the appointment of a new agent.
(c) (1) Any nonparticipating manufacturer whose
cigarettes are sold in this state and who has not appointed
and engaged an agent as required by this subchapter shall be
deemed to have appointed the Secretary of State as the agent
and may be proceeded against in courts of this state by
service of process upon the Secretary of State.
(2) However, the appointment of the Secretary of
State as the agent shall not satisfy the condition precedent
for having the brand families of the nonparticipating
manufacturer included or retained in the directory maintained
by the Attorney General pursuant to § 26-57-1303(b).
HISTORY: Acts
2003, No. 1073, § 4.
§ 26-57-1305. Reporting of information - Escrow
installments.
(a) Reporting by Wholesalers. (1) Not
later than twenty (20) calendar days after the end of each
calendar quarter, each wholesaler shall submit such
information as the Attorney General requires to facilitate
compliance with this subchapter, including, but not limited
to, a list by brand family of the total number of cigarettes
or in the case of "roll-your-own", the equivalent stick count
for which the wholesaler affixed tax stamps during the
previous calendar quarter or otherwise paid the tax due for
the cigarettes.
(2) The wholesaler shall maintain and make available
to the Attorney General all invoices and documentation of
sales of all nonparticipating manufacturer cigarettes and any
other information relied upon in reporting to the Attorney
General for a period of five (5) years.
(b) Disclosure of Information. (1) The
Arkansas Tobacco Control Board and the Department of Finance
and Administration may disclose to the Attorney General any
information in their possession as requested by the Attorney
General for purposes of determining compliance with and
enforcing the provisions of this subchapter.
(2) The board, the department, and the Attorney
General may share with each other any information received
under this subchapter and may share the information with other
federal, state, or local agencies only for purposes of
enforcement of this subchapter, §§ 26-57-260 and 26-57-261, or
corresponding laws of other states.
(c) Verification of Qualified Escrow Fund. The
Attorney General may require at any time from the
nonparticipating manufacturer proof from the financial
institution in which the manufacturer has established a
qualified escrow fund for the purpose of compliance with §§
26-57-260 and 26-57-261 of:
(1) The amount of money in the fund, exclusive of
interest;
(2) The amount and date of each deposit into the
fund; and
(3) The amount and date of each withdrawal from the
fund.
(d) Requests for Additional Information. In
addition to the information required to be submitted under
this subchapter, the Attorney General may require a licensee
or tobacco product manufacturer to submit any additional
information, including, but not limited to, samples of the
packaging or labeling of each brand family as is necessary to
enable the Attorney General to determine whether a tobacco
product manufacturer is in compliance with this subchapter.
(e) Quarterly Escrow Installments for Tobacco
Product Manufacturers. (1) (A) To promote
compliance with this subchapter, the Attorney General may
require any manufacturer to make escrow deposits required by
§§ 26-57-260 and 26-57-261 in quarterly installments.
(B) Quarterly installments of escrow deposits
required under subdivision (e)(1)(A) of this section shall be
deposited into a qualified escrow account established to
receive escrow deposits required by §§ 26-57-260 and 26-57-261
not later than twenty (20) calendar days after the end of the
quarter in which the sales were made.
(2) The Attorney General may require production of
information sufficient to enable the Attorney General to
determine the adequacy of the amount of each installment
deposit.
(3) The failure of any tobacco product manufacturer
to make a quarterly installment of an escrow deposit required
by the Attorney General under subdivision (e)(1) of this
section shall subject the tobacco product manufacturer to any
penalty and other remedy provided under §§ 26-57-261 and
26-57-1303 for failure to place funds in escrow.
HISTORY: Acts
2003, No. 1073, § 5; 2007, No. 285, § 1.
NOTES:
Amendments.
The 2007 amendment, in (e), deleted "New" preceding "Tobacco"
in the introductory paragraph, added the (1)(A) designation
and added (1)(B), in (1)(A) substituted "any manufacturer" for
"any manufacturer added to the directory after the first
publication of the directory on the Attorney General's
website" and deleted "through the first two (2) years in which
the sales covered by the deposits are made" at the end, and
added (3).
§ 26-57-1306. Penalties and other remedies.
(a) License Revocation and Civil Penalty. (1) In
addition to or in lieu of any other civil or criminal remedy
provided by law, upon a determination that a licensee has
violated § 26-57-1303(c) or any regulation adopted under this
subchapter, the Director of the Arkansas Tobacco Control Board
may revoke or suspend the licensee's licenses or permits
pursuant to law and the Arkansas Tobacco Control Board's rules
and regulations governing the procedure for revocation or
suspension of the licenses or permits.
(2) Each tax stamp affixed to and each sale or offer
to sell cigarettes in violation of § 26-57-1303(c) shall
constitute a separate violation.
(3) For each violation the board may also impose a
civil penalty in an amount not to exceed the greater of five
hundred percent (500%) of the retail value of the cigarettes
or five thousand dollars ($5,000) upon a determination of a
violation of § 26-57-1303(b) or of any regulations adopted
under this subchapter.
(b) Contraband and Seizure. Any cigarettes that
have been sold, offered for sale, or possessed for sale in
this state or imported for personal consumption in this state
in violation of § 26-57-1303(c) shall be deemed contraband,
and the cigarettes shall be subject to seizure and forfeiture
as provided in § 5-64-505, and all of the cigarettes so seized
and forfeited shall be destroyed and not resold.
(c) Injunction. (1) The Attorney General
may seek an injunction to restrain a threatened or actual
violation of § 26-57-1303(c), § 26-57-1305(a), or §
26-57-1305(d) by a licensee and to compel the licensee to
comply with those provisions.
(2) In any action brought under this section, the
state shall be entitled to recover the costs of investigation,
costs of the action, and reasonable attorney's fees.
(d) Unlawful Sale and Distribution. (1) It
is unlawful for a person to sell or distribute cigarettes or
to acquire, hold, own, possess, transport, import, or cause to
be imported, cigarettes that the person knows or should know
are intended for distribution or sale in the state in
violation of § 26-57-1303(c).
(2) A violation of this subsection is a Class A
misdemeanor.
(e) Deceptive and Unconscionable Trade Practice. A violation of § 26-57-1303(c) is a deceptive or
unconscionable trade practice under § 4-88-101 et seq.
HISTORY: Acts
2003, No. 1073, § 6.
§ 26-57-1307. Miscellaneous provisions.
(a) Notice and Review of Determination. (1) A
determination by the Attorney General to not include or to
remove from the directory a brand family or tobacco product
manufacturer shall be subject to review by the filing of a
civil action for prospective declaratory or injunctive relief.
(2) The Pulaski County Circuit Court shall have
exclusive jurisdiction over the civil action.
(3) In authorizing the civil action, the state does
not waive its sovereign immunity from claims for monetary
relief, costs, or attorney's fees, and no such relief shall be
recoverable in any such civil action.
(b) Applicants for Licenses. No person or entity
shall be issued a license or permit or granted a renewal of a
license or permit by the Director of the Arkansas Tobacco
Control Board unless the person or entity has certified in
writing under penalty of perjury that the person or entity
will comply fully with this subchapter.
(c) Dates. For the year 2003:
(1) The first report of wholesalers required by §
26-57-1305(a) shall be due thirty (30) calendar days after
April 3, 2003;
(2) The certifications by a tobacco product
manufacturer described in § 26-57-1303(a) shall be due
forty-five (45) calendar days after April 3, 2003; and
(3) The directory described in § 26-57-1303(b) shall
be published or made available within ninety (90) calendar
days after April 3, 2003.
(d) Promulgation of Regulations. The Attorney
General, the Arkansas Tobacco Control Board, and the
Department of Finance and Administration may promulgate
regulations necessary to effect the purposes of this
subchapter.
(e) Recovery of Costs and Fees by Attorney General. In an action brought by the Attorney General to enforce this
subchapter, the Attorney General shall be entitled to recover
the costs of the investigation, expert witness fees, costs of
the action, and reasonable attorney's fees.
(f) Disgorgement of Profits for Violations of
Subchapter. (1) If a court determines that a
person or entity has violated this subchapter, the court shall
order any profits, gain, gross receipts, or other benefit from
the violation to be disgorged and paid to the Treasurer of
State for deposit into the State Central Services Fund.
(2) Unless otherwise expressly provided, the
remedies or penalties provided by this subchapter are
cumulative to each other and to the remedies or penalties
available under all other laws of this state.
(g) Construction and Severability. (1) If
a court of competent jurisdiction finds that the provisions of
this subchapter and of §§ 26-57-260 and 26-57-261 conflict and
cannot be harmonized, the provisions of §§ 26-57-260 and
26-57-261 shall control.
(2) If any section, subsection, subdivision,
paragraph, sentence, clause, or phrase of this subchapter
causes §§ 26-57-260 and 26-57-261 to no longer constitute a
qualifying or model statute as those terms are defined in the
Master Settlement Agreement, that portion of this subchapter
shall not be valid.
(3) If any section, subsection, subdivision,
paragraph, sentence, clause, or phrase of this subchapter is
for any reason held to be invalid, unlawful, or
unconstitutional, the decision shall not affect the validity
of the remaining portions of this subchapter or any part of
this subchapter.
HISTORY: Acts
2003, No. 1073, § 7.