AGENDA ITEM #83
May
5, 2015
Public Hearing
MEMORANDUM
April 29, 2015
TO:
FROM:
SUBJECT:
County Council
Amanda Mihill, Legislative
AttorneYtJn~tiLf
Public Hearing:
Bill 15-1S, Taxes
Excise Tax - Electronic Cigarettes
Bill IS-15, Taxes - Excise Tax - Electronic Cigarettes, sponsored by Lead Sponsor
Councilmember Hucker and Co-Sponsors Councilmembers Leventhal, Berliner, Riemer, Floreen,
Katz, EIrich and Navarro, was introduced on April 14,20IS. A Government Operations and Fiscal
Policy Committee worksession is tentatively scheduled for May 7 at 10:00 a.m..
Bill IS-IS would:
(1)
establish an excise tax on the distribution of electronic cigarette products;
(2)
set the rate ofthe tax and authorize the County Council to change the rate each year
by resolution;
(3) define certain terms, and authorize the County Executive to issue certain
regulations;
(4)
provide for collection of the tax and payment of interest and penalties, set the
effective date of the tax, and apply certain provisions of law to this tax; and
(S)
generally amend the County laws governing excise taxation.
This packet contains:
Bill IS-IS·
Legislative Request Report
Circle
#
1
6
F:\LAW\BILLS\15 I 5 E Cig Excise Tax\Public Hearing.Docx
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Bill No.
15-15
Concerning:
Taxes - Excise Tax ­
Electronic Cigarettes
Revised:
4/1012015
Draft No. 3
Introduced:
April 14, 2015
Expires:
October 14, 2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ __
Sunset Date:
_N~o.:!.n:.!<:e
_ _ _ _ __
Ch. _ _, Laws of Mont Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Councilmember Hucker
Co-Sponsors: Councilmembers Leventhal, Berliner, Riemer, Floreen, Katz, EIrich, and Navarro
AN
ACT to:
(l)
(2)
(3)
(4)
(5)
establish an excise tax on the distribution of electronic cigarette products;
set the rate of the tax and authorize the County Council to change the rate each year
by resolution;
define certain termsf and authorize the County Executive to issue certain regulations;
provide for collection of the tax and payment of interest and penalties, set the
effective date ofthe tax, and apply certain provisions oflaw to this tax; and
generally amend the County laws governing excise taxation.
By adding
Montgomery County Code
Chapter 52, Taxation
Article XIII. Excise Tax on Electronic Cigarettes
Sections 52-95 through 52-100
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
*
* *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Councilfor Montgomery County, Maryland approves thefollowing Act.'
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BILL
No. 15-15
1
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Sec. 1. Chapter 52 is amended
by
adding Article
xm
(Sections 52-96
through 52-100) as follows:
Article XIll. [Reserved] Excise Tax on Electronic Cigarettes.
52-95. Definitions.
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In
this Article, the following tenus have the meanings indicated:
Dealer
means any person who engages in
~
retail business.
Director
means the Director ofFinance or the Director's designee.
Distributor
means:
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ill
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person who supplies an electronic cigarette product to
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dealer in the
County; or
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person who supplies and servIces
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vending machine with an
electronic cigarette product.
Electronic cigarette product
means any product containing or delivering
nicotine or any other substance intended for human consumption that can be
used
.Qy
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person to simulate smoking through inhalation of vapor or aerosol
from the product. The tenu includes any such device, whether manufactured,
distributed, marketed, or sold as an e-cigarette, e-cigar, e-pipe, e-hookah, or
vape pen, or under any other product name or descriptor.
Electronic cigarette
product
includes any refill, cartridge, or any other component of an electronic
cigarette.
Supplying
or
supplies
means the act of providing, furnishing, delivering,
distributing, or transmitting an electronic cigarette product
Qy
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distributor to
~
dealer in the County. Liability for the tax accrues when the electronic cigarette
product is provided, distributed, or delivered to the dealer in the County.
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G)
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BILL No.
15-15
25
52-96. Tax levied; rate.
(ill
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A tax is levied and imposed on every distributor who supplies to
f!
dealer
in
the County an electronic cigarette product.
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(hl
The tax rate for an electronic cigarette product is 30% of the wholesale
price ofthe electronic cigarette product.
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(Q)
The County Council
.by
resolution, after
f!
public hearing advertised
under Section 52-17(c), may increase or decrease the rate set in
subsection
hl
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@
The County Executive may further specify the administration of this tax
.by
Method
ill
regulation.
52-97. Remittance.
(ill
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The tax levied under Section 52-96 is due and payable for each month
on the last day ofthe next month.
(hl
The Director may establish an alternative payment system.
If an
alternative payment system is established, the Director must require
f!
pro-rated payment for any taxable period that ends before the system
takes effect.
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(Q)
If any dealer transports or causes to be transported into the County an
electronic cigarette product, that dealer is liable for the payment of the
tax imposed under Section 52-96 unless that dealer obtains from the
supplier of the electronic cigarette product
f!
written certification, in
f!
form approved
.by
the Director, that the supplier is liable for and is
paying the tax.
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52-98. Cessation of business.
When
f!
person who is required to
~ ~
tax under this Article ceases to do
business or otherwise disposes of the business, any tax owed becomes immediately
due and payable. That person must immediately remit the total amount of the tax due.
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51
o
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BILL
No. 15-15
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52-99. Collection; interest and penalties; violation.
{ill
If any person does not 00 the Director the tax due under Section 52-96,
that person is liable for:
ill
ill
interest on the unpaid tax at the rate of 1
%
per month for each
month or part of
~
month after the tax is due; and
~
penalty of 5% of the amount of the tax per month or part of
~
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month after the tax is due, not to exceed 25% ofthe tax.
The Director must collect any interest and penalty as part of the tax.
(hl
If any person does not 00 the tax when due, the Director must obtain
information on which to calculate the tax due. As soon as the Director
obtains sufficient information on which to calculate any tax due, the
Director must assess the tax and penalties against the person.
The
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Director must notify the person of the total amount of the tax, interest,
and penalties
Qy
mail sent to the person's last known address. This
notice is prima facie evidence of the tax due; entitles the County to
judgment for the amount of the tax, penalty, and interest listed in the
notice; and gives the taxpayer the burden of proving that the tax has
been paid or any other sufficient defense to the action. The total amount
due must be paid within 10 days after the date ofthe notice.
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.cru
If any person does not timely file any report and 00 the tax required
under this Section, the Director may use any available information to
estimate the tax due. As soon as the Director obtains available
information on which to base the calculation of any tax payable
Qy
any
person who has not timely filed any report and paid the tax, the Director
may assess against that person any tax, interest, and penalties due and
must notify that person of the total amount due
Qy
regular mail sent to
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BILL
No. 15-15
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the person's last known address. The total amount assessed is due and
payable
within
10 days after the notice is sent.
Every person liable for any tax under Section 52-96 must preserve for
J
years suitable records necessary to detennine the amount of the tax.
The Director may inspect and audit the records at any reasonable time.
@
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ill
Any failure to
~
the tax when due under Section 52-97, and any
~
violation of this Section 52-97 or this Section, is
Class A violation.
Each violation is
~
separate offense. A conviction under this subsection
does not relieve any person from paying the tax.
ill
Approved:
Section 52-18D applies to this tax.
52-100. Reserved.
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George Leventhal, President, County Council
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94
Date
Approved:
Isiah Leggett, County Executive
95
96
Date
This is a correct copy o/Council action.
Linda M. Lauer, Clerk ofthe Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 15-15
Taxes - Excise Tax - Electronic Cigarettes
DESCRIPTION:
Bill 11-15 would establish an excise tax on the distribution ofelectronic
cigarette products; set the rate of the tax and authorize the County
Council to change the rate each year by resolution; define certain tenns,
and authorize the County Executive to issue certain regulations; provide
for collection of the tax and payment of interest and penalties, set the
effective date of the tax, and apply certain provisions of law to this tax;
and generally amend the County laws governing excise taxation.
The County continues to face many budget pressures. An additional
stream of revenue may ease those pressures.
To establish an excise tax on electronic cigarette products.
Finance
To be requested.
To be requested.
To be requested.
Minnesota and North Carolina have established a tax for certain
electronic cigarette products.
Amanda Mihill, Legislative Attorney, 240-777-7815
Revenue measures apply in all municipalities in the County.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITmN
MUNICIPALITIES:
PENALTIES:
Class A
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