PART 1. COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3. TAX ADMINISTRATION
SUBCHAPTER JJ. CIGARETTE, E-CIGARETTE, AND TOBACCO PRODUCTS REGULATION
34 TAC §3.1201
The Comptroller of Public Accounts proposes amendments to §3.1201, concerning fee for outdoor advertising of cigarettes or tobacco products. The comptroller proposes amendments to replace statutory references with definitions, to incorporate statutory changes made by House Bill 3475, 86th Legislature, 2019, and to remove outdated requirements and expired effective date language. The comptroller also proposes amendments to include a title for penalties and address when a penalty is applicable for failure to remit tax when a report is due.
The comptroller amends subsection (a)(1) and (5) to replace statutory citations with the actual definition of cigarettes and the revised definition of tobacco products from House Bill 3475. See Tax Code, §154.001 and §155.001.
The comptroller amends subsection (c) to rename the title to reflect "Due date and reporting period". The comptroller removes paragraph (2) regarding outdated reporting requirements for cigarettes and tobacco products. Additionally, the comptroller restructures subsection (c) to remove the graphic and incorporate the graphic's language relating to reporting requirements and the due dates in paragraphs (1) through (4).
The comptroller amends subsection (g)(1) to add the title "Penalty" to address a penalty is applicable when a purchaser fails to timely remit tax when due. Paragraph (2) removes existing language referencing the Tax Code and amends the language to include interest provisions related to delinquent reports.
The comptroller amends subsection (h) to remove the word "the" before all statutory references throughout this subsection.
The comptroller deletes subsection (j) to remove outdated language regarding the effective date of the fee imposed on cigarette and tobacco product outdoor advertising, which is no longer necessary to administer current law.
Tom Currah, Chief Revenue Estimator, has determined that during the first five years that the proposed amendment is in effect, the amendment: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy. This proposal amends a current rule.
Mr. Currah also has determined that for each year of the first five years the rule is in effect, proposed amendment would benefit the public by conforming the rule to current statutory language. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. The proposed amendment would have no significant fiscal impact on the state government, units of local government, or individuals. There would be no anticipated significant economic costs to the public.
Comments on the proposal may be submitted to Teresa G. Bostick, Director, Tax Policy Division, P.O. Box 13528, Austin, Texas 78711-3528. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register.
The section is proposed under Tax Code, §111.002 (Comptroller's Rules; Compliance; Forfeiture) and §111.0022 (Application to Other Laws Administered by Comptroller) which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement provisions of Tax Code, Title 2 (State Taxation), and taxes, fees, or other charges which the comptroller administers under other law.
The section implements Health and Safety Code, §161.123 (Advertising Fee).
§3.1201.Fee for Outdoor Advertising of Cigarettes or Tobacco Products.
(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Cigarettes--A roll for smoking that is: [
This term has the meaning assigned by Tax Code, §154.001.]
(A) not a cigar; and
(B) that is made of tobacco or tobacco mixed with another ingredient and wrapped or covered with a material other than tobacco.
(2) Gross sales price--The sum of:
(A) production costs, including the cost of layout, paper, materials, printing, distribution, and sign installation, but not the cost of design and artwork;
(B) media costs, including the cost for leasing billboards, or any other outdoor space where a message or sign is displayed; and
(C) cost of sales or commissions paid to an agency or broker.
(3) Outdoor advertising--A medium, including a structure, display, light device, figure, painting, drawing, message, plaque, poster, sign, or billboard, that:
(A) is used to advertise or to inform;
(B) is visible from the main-traveled way of a street or highway; and
(C) does not include:
(i) a medium displayed inside a building, even if the medium is visible from outside the building; or
(ii) a medium that displays the name of the business, unless that medium also contains a cigarette or tobacco product trademark, brand or trade name, or logo type.
(4) Purchase--A transaction, including:
(A) an installment and credit purchase;
(B) an exchange of service for service or money;
(C) a signed contract between a purchaser and a seller; and
(D) any other transaction that is the functional equivalent of a purchase.
(5) Tobacco product--[
This term has the meaning
assigned by the Tax Code, §155.001]
(A) A cigar;
(B) smoking tobacco, including granulated, plug-cut, crimp-cut, ready-rubbed, and any form of tobacco suitable for smoking in a pipe or as a cigarette;
(C) chewing tobacco, including Cavendish, Twist, plug, scrap, and any kind of tobacco suitable for chewing;
(D) snuff or other preparations of pulverized tobacco; or
(E) an article or product that is made of tobacco or a tobacco substitute and that is not a cigarette or an e-cigarette as defined by Health and Safety Code, §161.081 (Definitions).
(b) Fee imposed. A fee is imposed on each purchaser of outdoor advertising in an amount that is equal to 10% of the gross sales price of any outdoor advertising of cigarettes or tobacco products in this state.
(c) Due date and reporting [
period. A purchaser of outdoor advertising for cigarettes or tobacco
products shall file a report on or before the 20th day of the month
following the end of the calendar quarter in which the advertising
was purchased. The due dates and corresponding reporting periods are:
(1) April 20 for the period covering January
1 through March 31; [
Except as provided in paragraph (2)
of this subsection, the calendar quarter report due dates and the
corresponding reporting periods are:]
34 TAC §3.1201(c)(1)]
(2) July 20 for the period covering April 1 through June 30;
[(2) The first report due will cover
the period of September 1, 1997, through December 31, 1997. The due
date for the report due October 20, 1997, is extended to January 20, 1998.]
(3) October 20 for the period covering July 1 through September 30; and
(4) January 20 for the period covering the previous October 1 through December 31.
(d) Report forms. Each purchaser must report the outdoor advertising fee on the Texas cigarettes or tobacco products outdoor advertising fee report as prescribed by the comptroller. The fact that a purchaser does not receive the form or does not receive the correct form from the comptroller for the filing of the report does not relieve the purchaser of the responsibility of filing a report and paying the required fee.
(e) Payment of the fee. On or before the 20th day of the month following each reporting period, every purchaser shall remit the total fee amount due.
(f) Records required.
(1) Invoices, purchase contracts, installment or credit agreements, or any other records relating to the outdoor advertising purchase must be kept by the purchaser for at least four years after the date each report is filed with the comptroller.
(2) Any records or equipment of any person liable for the fee must be made available to the comptroller or the comptroller's representative for examination to verify the accuracy of any report made or to determine the fee liability in the event no report is filed.
(3) Each purchaser must maintain records showing:
(A) the location at which outdoor advertising is displayed in this state;
(B) the date on which the advertising was purchased;
(C) the gross sales price paid for outdoor advertising displayed in this state; and
(D) if outdoor advertising is purchased for display in more than one state, information to support an allocation to Texas of the appropriate portion of the total amount paid.
(g) Penalty and interest.
(1) Penalty. A purchaser who does not timely
remit the fee due [
file a report] as provided by
subsection (e) [ (c)] of this section, shall
pay a penalty of 5.0% of the amount of the fee due and payable. If
the purchaser does not [ file the report and] pay the fee
before the 30th day after the date on which the fee [ or report]
is due, the person shall pay a penalty of an additional 5.0% of the
amount of the fee due and payable.
(2) Interest. Interest accrues on the unpaid tax
due beginning 60 days after the due date and ends the day on which
the tax is paid [
The provisions of the Tax Code, Chapter
101 and Chapters 111 through 113, apply to the administration, payment,
collection, and enforcement of fees imposed under this section, in
the same manner as those chapters and sections apply to the administration,
payment, collection, and enforcement of taxes imposed under the Tax
Code, Title 2].
(h) Administrative remedies.
(1) A purchaser of outdoor advertising who violates
any part of [
the ] Health and Safety Code, §161.123,
or a rule adopted under that section, will be subject to an administrative
penalty and will be notified by certified mail of the reasons for
the penalty. The recourse for a purchaser who does not agree with
the imposed administrative penalty will be governed by the provisions
of [ the ] Tax Code, Chapter 111, [ the ] Government
Code, Chapter 2001, and §§1.1-1.42 of this title (relating
to Practice and Procedure).
(2) The administrative penalty for a violation may be in an amount not to exceed $5,000. Each day a violation continues or occurs is a separate violation for the purpose of imposing a penalty.
(3) The following factors shall be taken into consideration when an administrative penalty is imposed:
(A) the amount of fees due and owing;
(B) the attempted concealment of misconduct by the person who committed the violation;
(C) premeditated misconduct by the person who committed the violation;
(D) intentional misconduct by the person who committed the violation;
(E) the motive of the person who committed the violation;
(F) prior misconduct of a similar or related nature by the person who committed the violation;
(G) prior written warnings from any government agency or official regarding statutes or regulations pertaining to the misconduct;
(H) violation by the person who committed the violation of an order of the comptroller;
(I) lack of rehabilitative potential or likelihood for future misconduct of a similar nature;
(J) relevant circumstances increasing the seriousness of the misconduct; and
(K) any other matter justice may require.
(4) If the comptroller finds that a violation has occurred and imposes an administrative penalty, the comptroller shall give notice of the violation by certified mail to the permit holder within 15 days of the finding of a violation. The notice must include a statement of the rights of the permit holder to judicial review.
(5) If the permit holder does not respond to the written notice of violation within 15 calendar days, an order finding that a violation has occurred may be entered and the maximum penalty may be imposed. If the permit holder requests an administrative hearing, a hearing will be set. The notice of the setting of the hearing shall be governed by §§1.1-1.42 of this title. The permit holder will have 15 days in which to respond to the setting of the hearing.
(6) If the comptroller finds that a purchaser of outdoor
advertising violates this section or Health and Safety Code, Subchapter
K, §161.123, or a rule made pursuant to these sections, the comptroller
may impose an administrative fine and/or suspend or revoke a permit
pursuant to [
the] Tax Code, §154.1142.
(7) An administrative hearing will be held at the office
of the Comptroller of Public Accounts in Austin, Texas. The recourse
for a permit holder who does not agree with the administrative decision
will be governed by the provisions of [
the] Tax Code, Chapter
111; Government Code, Chapter 2001; and §§1.1-1.42 of this title.
(8) The burden of proof in an administrative hearing pursuant to this rule is by a preponderance of the evidence unless otherwise provided by statute.
(9) A penalty collected under this section shall be deposited in the general revenue fund.
(i) If the purchaser of outdoor advertising does not pay the amount of the administrative penalty, the comptroller may refer the matter to the attorney general for collection of the amount of the penalty.
[(j) Effective date. The fee is imposed
on all outdoor advertising of cigarettes or tobacco products purchased
after August 31, 1997.]
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on November 21, 2019.
Special Counsel for Tax Administration
Comptroller of Public Accounts
Earliest possible date of adoption: January 5, 2020
For further information, please call: (512) 475-0387