To revise and reform the Act commonly called the Jenkins Act, and for other purposes.

January 28, 2004

Mr. WEINER introduced the following bill; which was referred to the Committee on the Judiciary

To revise and reform the Act commonly called the Jenkins Act, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Local Government Internet Tobacco Sales Enforcement Act of 2004'.

SEC. 2. REVISION OF ACT OF OCTOBER 19, 1949.

The Act of October 19, 1949, entitled `An Act to assist States in collecting sales and use taxes on cigarettes' (15 U.S.C. 375 et seq.) is amended by striking `That for the purposes of this Act' and all that follows through the end of the Act and inserting the following:

`SECTION 1. SHORT TITLE.

`This Act may be cited as the `Jenkins Act'.

`SEC. 2. INTERSTATE SALES OF CIGARETTES AND SMOKELESS TOBACCO.

`(a) Compliance With Laws-

`(1) Each person who engages in an interstate sale of cigarettes or smokeless tobacco or in an interstate distribution of cigarettes or smokeless tobacco shall comply with all the excise, sales, and use tax laws applicable to the sale or other transfer of cigarettes or smokeless tobacco in the State and place in which the cigarettes or smokeless tobacco are delivered as though the person were physically located in that State or place.

`(2) Unless State law requires otherwise, no cigarettes or smokeless tobacco may be delivered pursuant to an interstate sale unless in advance of delivery--

`(A) any cigarette or smokeless tobacco excise tax that is imposed by the State in which the cigarettes or smokeless tobacco are to be delivered has been paid to the State;

`(B) any cigarette or smokeless tobacco excise tax imposed by the local government of the place in which the cigarettes or smokeless tobacco are to be delivered has been paid to the local or tribal government; and

`(C) any required stamps or other indicia that the excise tax has been paid are properly affixed or applied to the cigarettes or smokeless tobacco.

`(3) The provisions of paragraph (2) do not apply to an interstate sale or distribution of smokeless tobacco when the law of the State or place where the smokeless tobacco is to be delivered requires or otherwise provides that interstate sellers of smokeless tobacco collect the excise tax from the consumer and remit the excise tax to the State or place, and the interstate seller complies with such requirement.

`(4)(A) Each State may compile a list of interstate sellers of cigarettes or smokeless tobacco who are in compliance with this Act with respect to that State. If a State posts a list pursuant to this subsection that specifically refers to this subsection, no person may knowingly make an interstate distribution of cigarettes or smokeless tobacco into that State other than to a person licensed or otherwise authorized by the State to engage in the business of manufacturing, distributing or selling cigarettes or smokeless tobacco unless the person initiating or ordering the delivery is on the list at the time of delivery.

`(B) Each State may also compile a list of interstate sellers of cigarettes or smokeless tobacco who are not in compliance with this Act with respect to that State. A State may provide such a list to a common carrier, the United States Postal Service, or to any other person, and make public the availability of the list to any person engaged in the delivery business in or into the State or who delivers cigarettes or smokeless tobacco in or into the State. Such list shall be confidential, and any person receiving such a list from a State shall maintain the confidentiality of the list. If a State, pursuant to this subsection, provides such a list to any person and makes public its availability to persons who deliver cigarettes or smokeless tobacco in or into the State, no person who receives the list and no person who delivers cigarettes or smokeless tobacco in or into the State may knowingly make an interstate distribution of any item in or into that State for a person on the list unless--

`(i) the person in good faith determines that the item does not include cigarettes or smokeless tobacco; or

`(ii) the delivery is made to a person licensed or otherwise authorized by the State to engage in the business of manufacturing, distributing or selling cigarettes or smokeless tobacco.

`(b) Recordkeeping and Reporting- Each person who engages in an interstate sale of cigarettes or smokeless tobacco, or who advertises, or offers to engage in, such a sale, shall--

`(1) first file with the tobacco tax administrator of the State and place in which the cigarettes or smokeless tobacco are to be offered, advertised, or delivered, a statement setting forth the person's name and trade name (if any), and the address of that person's principal place of business and any other place of business, as well as telephone numbers for each place of business, a principal electronic mail address, any website addresses, and the name, address and telephone number of an agent authorized to accept service in the State on behalf of that person;

`(2) not later than the 10th day of each calendar month, file with that tobacco tax administrator a memorandum or copy of the invoice covering each and every interstate sale of cigarettes or smokeless tobacco by the filer into that State or place, and each interstate distribution of cigarettes or smokeless tobacco pursuant to that sale, during the previous calendar month, and such memorandum or invoice shall include the name and address of the person to whom the cigarettes or smokeless tobacco are delivered, the brand, and the type, the quantity delivered, and the name, address, and phone number of the person delivering; and

`(3) maintain records, including the information specified in paragraph (2), for not less than 5 years after the date of an interstate sale of cigarettes or smokeless tobacco and of each interstate distribution of cigarettes or smokeless tobacco pursuant to that sale, and make those records available for inspection upon the lawful demand of the Attorney General of the United States, an attorney general of a State, the Commissioner of Internal Revenue, or the chief tax collection official of a State or place that levies an excise tax on cigarettes or smokeless tobacco.

`(c) Personally identifiable information--

`(1) relating to an individual to whom cirgarettes or smokeless tobacco are delivered; and

`(2) filed, or maintained in records, under paragraph (2) or (3) of subsection (b);

shall not be made available to the public and shall be used solely for the purposes of tax collection or law enforcement.

`(d) Deeming Rule- For the purposes of this section--

`(1) an interstate sale or delivery of cigarettes or smokeless tobacco shall be deemed to have occurred in the State and place where the buyer obtains personal possession of the cigarettes or smokeless tobacco; and

`(2) a delivery pursuant to an interstate sale is deemed to have been initiated or ordered by the seller.

`SEC. 3. CIVIL ACTION.

`(a) In General- In addition to any other remedies available under other Federal or State or local law, the attorney general of a State or the chief law enforcement officer of a local government that imposes an excise tax on cigarettes or smokeless tobacco may in a civil action obtain any appropriate relief, including money damages, civil penalties, and injunctive or other equitable relief where appropriate, against--

`(1) any person who violates, or is about to engage in a violation of, section 2; or

`(2) any person who knowingly assists or participates, or knowingly is about to engage, in such a violation.

`(b) Notice- No attorney general of a State or chief law enforcement officer of a local government may commence an action pursuant to subsection (a) prior to 60 days after the State attorney general has given notice of his intent to commence the action to the Attorney General of the United States. If the Attorney General of the United States has commenced and is diligently prosecuting a civil action against the persons named in the notice for the violation described in the notice, then the State attorney general may not commence an action against that defendant for that violation but may join the United States Attorney General's action solely for the purpose of establishing and collecting State damages.

`(c) Limitations on Civil Actions by Local Governments- The chief law enforcement officer of a local government may not bring any unconsented suit pursuant to this Act against any Federal, State, local, or tribal governmental entity.

`(d) Referrals of Local Violations for Enforcement- The chief law enforcement officer of a local government may provide evidence of a violation of its excise tax on cigarettes or smokeless tobacco under section 2(a) of this Act to the Attorney General of the United States, the United States Attorney with jurisdiction over the locality, or the attorney general of the State in which the local government is located. Upon referral, the Attorney General of the United States or the United States Attorney shall take appropriate actions to enforce this Act.

`(e) Availability of Information- The Attorney General of the United States shall make information about Federal, State, and other efforts to enforce this Act publicly available, through posting the information on the Internet and through other means.

`SEC. 4. CIVIL PENALTY.

`Whoever violates section 2 is subject to a civil penalty not to exceed $5,000 in the case of a first violation, and, in any other case, not to exceed $10,000 or, if it is higher, 5 percent of the gross revenue from interstate sales or distributions of cigarettes or smokeless tobacco by such person during the 1-year period ending on the date of the violation.

`SEC. 5. CRIMINAL PENALTIES.

`(a) Section 2(a) Violations- Whoever violates section 2(a) shall be fined under title 18, United States Code, or imprisoned not more than 3 years, or both.

`(b) Section 2(b) Violations- Whoever violates section 2(b) shall be guilty, fined under title 18, United States Code, or imprisoned not more than 6 months, or both.

`SEC. 6. NONPREEMPTION.

`This Act does not limit the remedies provided by State, tribal, Federal, or other law with respect to alleged violations of State, tribal, Federal, or other law relating to a sale or distribution of cigarettes or smokeless tobacco in connection with an interstate sale or distribution of cigarettes or smokeless tobacco. Nothing in this Act shall be construed to prohibit an authorized State or local government official from proceeding in State court or taking other enforcement actions on the basis of alleged violations of State or other law, or an authorized tribal government official from proceeding in tribal court or taking other enforcement action, on the basis of alleged violations of tribal or other law.

`SEC. 7. EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL MATTERS.

`(a) Indian Country- The provisions of this Act relating to State tax collection do not apply to a sale of cigarettes or smokeless tobacco that occurs exclusively in Indian country (as defined in section 1151 of title 18, United States Code) owned or occupied by an Indian tribe to a consumer located in that Indian Country who is an individual member of the same Indian tribe.

`(b) Intergovernmental Arrangements- Nothing in this Act is intended nor shall be construed to affect, amend, or modify--

`(1) any agreement, compact, or other intergovernmental arrangement between any State or local government and any Indian tribe relating to the collection of taxes on cigarettes or smokeless tobacco sold on tribal lands; or

`(2) any State law that pertains to any such intergovernmental arrangement or creates special rules or procedures for the collection of State, local, or tribal taxes on cigarettes or smokeless tobacco sold on tribal lands.

`(c) Coordinated Law Enforcement Efforts- Nothing in this Act shall be construed to inhibit or otherwise affect any coordinated law enforcement effort by one or more States or other jurisdictions, including Indian tribes, through interstate compact or otherwise, that--

`(1) provides for the administration of tobacco product laws or laws pertaining to interstate sales or other sales of tobacco products;

`(2) provides for the seizure of tobacco products or other property related to a violation of such laws; or

`(3) establishes cooperative programs for the administration of such laws.

`SEC. 8. DEFINITIONS.

`As used in this Act--

`(1) the term `attorney general', with respect to a State, means the chief law enforcement officer of that State, or the designee of that officer;

`(2) the term `cigarette' means--

`(A) any roll of tobacco wrapped in paper or in any substance not containing tobacco which is to be heated or burned;

`(B) any roll of tobacco wrapped in any substance containing tobacco that, because of its appearance, the type of tobacco used in the filler, or its packaging or labeling is likely to be offered to, or purchased by consumers as a cigarette described in subparagraph (A);

`(C) any roll of tobacco wrapped in any substance that because of its appearance, the type of tobacco used in the filler, or its packaging or labeling is likely to be offered to, or purchased by consumers as a cigarette; or

`(D) loose rolling tobacco that, because of its appearance, type, packaging, or labeling, is likely to be offered to, or purchased by, consumers as tobacco for making cigarettes;

`(3) the term `smokeless tobacco' means any product intended or marketed for human consumption containing finely cut, ground, powdered, leaf, or other tobacco that is intended to be placed in the oral or nasal cavity or otherwise consumed without being combusted;

`(4) the term `interstate sale of cigarettes or smokeless tobacco' means any sale of cigarettes or smokeless tobacco in interstate or foreign commerce to a person, other than a person licensed or otherwise authorized as a distributor, wholesaler, or retailer in the State where the cigarettes or smokeless tobacco is delivered, in which--

`(A) the buyer submits the order for such sale by means of a telephone or other method of voice transmission, the mails, or the Internet or other online service, or the seller is not in the physical presence of the buyer when the request for purchase or order is made; or

`(B) the cigarettes or smokeless tobacco are delivered by use of a common carrier, private delivery service, or the mails, or the seller is not in the physical presence of the buyer when the buyer obtains physical possession of the delivered cigarettes or smokeless tobacco;

`(5) the term `interstate or foreign commerce' means commerce between a State and any place outside that State, commerce between a State and any Indian lands in that State, or commerce between points in the same State but through any place outside that State;

`(6) the term `interstate distribution of cigarettes or smokeless tobacco' means a delivery or other distribution of cigarettes or smokeless tobacco pursuant to an interstate sale of cigarettes or smokeless tobacco;

`(7) the term `State' means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States;

`(8) the term `person' means an individual, a corporation, company, association, firm, partnership, society, joint stock company, an Indian tribal organization, or an Indian tribal government;

`(9) the term `tribal organization' has the meaning given that term in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b); and

`(10) the term `Indian lands' has the meaning given that term in section 3 of the Archaeological Resources Protection Act of 1979 (16 U.S.C. 470bb).'.

SEC. 3. SENSE OF CONGRESS CONCERNING THE PRECEDENTIAL EFFECT OF THIS ACT.

It is the sense of Congress that unique harms are associated with the remote interstate sales of cigarette and smokeless tobacco, including problems associated with verifying the legal age of consumers and long-term negative health effects associated with the continued use of these products. This Act further affirms Congress' longstanding interest in encouraging compliance and enforcement of State laws that relate to the remote sales, including internet sales, of these specific harmful products. Enacted more than 50 years ago, the Jenkins Act established reporting requirements for remote interstate sellers of cigarettes in order to reduce incentives for smuggling and to help states enforce tobacco taxes. In light of the unique federal policy and historic distinctions between cigarettes and smokeless tobacco and other products, the requirements of this Act are in no way meant to create, and ought not be considered, precedent regarding the collection of State sales or use taxes by out-of-state entities that lack a physical presence within the taxing State.

SEC. 4. EFFECTIVE DATE.

The amendment made by this Act shall take effect on the first day of the first month beginning on or after 60 days after the date of the enactment of this Act.

END