HB 820-FN-A- – AS INTRODUCED

2007 SESSION

07-1006

09/03

HOUSE BILL 820-FN-A

AN ACT establishing a tax on candy.

SPONSORS: Rep. Mulholland, Graf 10

COMMITTEE: Ways and Means

ANALYSIS

This bill establishes a tax on candy.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

07-1006

09/03

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Seven

AN ACT establishing a tax on candy.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Chapter; Tax on Candy. Amend RSA by inserting after chapter 78-C the following new chapter:

CHAPTER 78-D

TAX ON CANDY

78-D:1 Definitions. In this chapter:

I. “Candy” means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. “Candy” shall not include any preparation containing flour or any preparation requiring refrigeration.

II. “Commissioner” means the commissioner of revenue administration.

III. “Licensed manufacturer” means a manufacturer licensed under this chapter.

IV. “Licensed retailer” means a retailer licensed under this chapter.

V. “Licensed vending machine operator” means a vending machine operator licensed under this chapter.

VI. “Licensed wholesaler” means a wholesaler licensed under this chapter.

VII. “Licensee” means the person in whose name the license is issued.

VIII. “Manufacturer means any person engaged in the business of importing, exporting, producing, or manufacturing candy who sells his or her product only to licensed wholesalers.

IX. “Retailer” means any person who sells candy to consumers and any vending machine in which candy is sold.

X. “Vending machine” means any self-service device which, upon insertion of money, tokens, or any other form of payment, dispenses candy.

XI. “Vending machine operator” means any person operating one or more vending machines on property or premises other than his or her own.

XII. “Wholesaler” means any person doing business in this state who shall purchase all of his or her candy directly from a licensed manufacturer, and who shall sell all of the candy to licensed wholesalers, retailers, and vending machine operators.

XIII. “Wholesale sales price” means the price for which a manufacturer sells candy to a wholesaler, exclusive of any discount or other reduction.

78-D:2 Licenses.

I. Each manufacturer, wholesaler, retailer, and vending machine operator shall secure a license from the commissioner before engaging in the business of selling or distributing candy in this state or continuing to engage in such business. Each wholesale and retail outlet shall have a separate license regardless of the fact that one or more outlets may be owned or controlled by a single person. Each vending machine to be operated in this state shall be licensed by the commissioner and shall be appropriately identified as being licensed. The commissioner shall adopt rules pursuant to RSA 541-A relative to the licensing and identification of each vending machine, and the information required in an application for a license. The commissioner shall issue a license upon application stating such information necessary to identify the outlet and the character of business transacted. The fees for licenses shall be: $100 for a manufacturer's license; $250 for a wholesaler's license; $70 for a vending machine operator's license; $10 for a retailer's license; and $10 for each vending machine location, for the purpose of helping to pay the cost of administering this chapter. Each license shall be prominently displayed on the premises described in it. Any person who shall sell, offer for sale, or possess with intent to sell any candy without such license as provided in this section shall be subject to the penalty provisions of RSA 21-J:39.

II. Unlicensed vending machines retailing candy are those machines without a current sticker or license affixed to them. The commissioner or his or her agent shall seal each unlicensed machine, until such time as said machine is licensed as evidenced by the presence of a visible current sticker or license on said machine. Said sealing shall be so as to prevent the purchase of candy and the use of the machine.

III. No person shall sell candy through a vending machine unless access to said machine is readily available or it is constructed so as to permit the commissioner, or his or her agent, to readily determine whether the packages of candy being sold have proper stamps affixed to them which show payment of the candy tax imposed under this chapter.

78-D:3 Tampering With Seal. It shall be unlawful for any person, licensed or unlicensed, to tamper with any seal affixed by the commissioner or his or her agents to any candy vending machine, as required under RSA 78-D:2. Any person who violates this section shall be guilty of a violation for the first offense. For each subsequent offense he or she shall be guilty of a misdemeanor.

78-D:4 Term of License; Renewals. Licenses issued under RSA 78-D:2 shall expire on June 30 in each even-numbered year, unless sooner revoked or unless the business in respect to which the license was issued should change ownership. Licenses may be renewed upon signed application as provided in RSA 78-D:2 and upon paying the prescribed fee, provided that a license shall not be renewed if there are unpaid fees, fines, or penalties resulting from violations of this chapter attributable to the license or the licensee.

78-D:5 Suspension and Revocation of License by Commissioner. The commissioner may adopt rules pursuant to RSA 541-A relative to accomplishing the purpose of the chapter. The commissioner may suspend or revoke any license issued under RSA 78-D:2 for failure to comply with the provisions of this chapter and with any rules which the commissioner may adopt.

78-D:6 Tax Imposed. A tax upon the retail consumer is hereby imposed at the rate of $.50 for each package containing one pound of candy or at a rate proportional to such rate for packages containing more or less than one pound of candy, on all candy sold at retail in this state. The payment of the tax shall be evidenced by affixing stamps to the smallest packages containing the candy in which such candy usually is sold at retail. No tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States.

78-D:7 Nature of Tax. All taxes upon candy under this chapter are declared to be a direct tax upon the consumer at retail and shall conclusively be presumed to be pre-collected for the purpose of convenience and facility only.

78-D:8 Stamps.

I. The commissioner shall adopt rules pursuant to RSA 541-A relative to the design and denomination of stamps to be secured by the commissioner for affixing to packages of candy as evidence of the payment of the tax imposed by this chapter. The commissioner shall sell such stamps to each licensed wholesaler. The commissioner may permit a licensed wholesaler to pay for such stamps within 30 days after the date of purchase, provided a bond satisfactory to the commissioner in an amount not less than the sale price of such stamps shall have been filed with the commissioner, conditioned upon the payment of such stamps. The commissioner shall keep accurate records of all stamps sold to each wholesaler and shall pay over all receipts from the sale of such stamps to the state treasurer daily.

II. Any wholesaler who fails to pay any amount owing to the purchase of stamps or meter-registered settings within the time required shall pay, in addition to the amount, interest as prescribed in RSA 21-J:28.

78-D:9 Resale of Stamps; Redemption. No wholesaler shall sell or transfer any stamps issued under RSA 78-D:8. The commissioner shall redeem any unused, uncancelled stamps presented by any licensed wholesaler at a price equal to the amount paid by such licensee. In case such stamps are destroyed before they are affixed, the commissioner shall refund the purchase price upon presentation of evidence of such destruction satisfactory to the commissioner. The commissioner shall refund the purchase price for stamps and metered impressions which are destroyed after affixing to outdated, damaged, or unsaleable candy. The commissioner also shall refund or provide a credit for future tax payments on outdated, damaged, or unsaleable candy exempted from bearing stamps by the commissioner under rules adopted under RSA 541-A. The state treasurer shall provide, out of money collected under this chapter, the funds necessary for redemption or refund.

78-D:10 Metering Machines. The commissioner shall adopt rules pursuant to RSA 541-A relative to the authorization of any licensee to use a metering machine in lieu of stamps and the insuring of the payment of all taxes properly due under this chapter. The commissioner shall not permit the use of any such machine until prepayment covering the cost of the tax less discount, for which the meter is set, shall have been made or unless a bond satisfactory to the commissioner shall have been filed, conditioned upon the payment of said amount. Cash may be used as security in place of surety bond.

78-D:11 Affixing Stamps.

I. The commissioner shall adopt rules pursuant to RSA 541-A relative to the affixing of stamps to each package of candy sold or distributed by a licensed wholesaler. At any time before candy is transferred out of the possession of a licensed wholesaler, stamps shall be affixed, at the location for which the license is issued, to each package of candy sold or distributed.

II. The commissioner is authorized to exempt candy from the requirement of affixing stamps to its packages under paragraph I, if the commissioner finds that the affixing of stamps is physically impractical due to the size or nature of the package or that the cost of affixing the stamps is unreasonably disproportionate to the tax revenue to be collected. In lieu of stamps, the commissioner may, by rules adopted under RSA 541-A, require the submission of periodic reports to the commissioner by wholesalers exempted under this paragraph, setting forth the total amount of such unstamped candy distributed and transmitting payment of the tax due under this chapter.

III. Any person who violates the provisions of this section by failing to make the reports and to pay the taxes due shall be guilty of a felony.

78-D:12 Unauthorized Sales. Manufacturers and wholesalers shall not sell candy to any licensee who does not possess a valid or current license issued by the commissioner. Any person who violates the provisions of this section shall be subject to the penalty provisions of RSA 21-J:39.

78-D:13 Authorization to Affix Stamps or Use Metering Machine. The commissioner may adopt rules, pursuant to RSA 541-A, relative to authorizing any person resident or located outside this state and engaged in a business which would make such person if he or she carried it on in this state a wholesaler as defined in this chapter, to affix the stamps required by this chapter on behalf of the purchasers of such candy. The commissioner may sell stamps to such person or the commissioner may authorize the use of a metering machine as provided in this chapter. No stamps shall be sold or no such authorization shall issue, however, until such nonresident person shall have appointed the secretary of state his or her attorney for the service of process in this state in the same manner as provided in RSA 293-A. Service shall be made on the secretary of state as agent of such person in the same manner as is provided in RSA 293-A. The commissioner may adopt rules, pursuant to RSA 541-A, relative to the conditions which must be met upon a grant of authorization to a nonresident to affix stamps. Such conditions shall include the right to inspect the books of the nonresident and the posting of a bond by the nonresident conditioned upon the payment of all taxes imposed under this chapter.

78-D:14 Unstamped Candy. No retailer or vending machine operator or other person who is not licensed under the provisions of this chapter, shall sell, offer for sale, display for sale, ship, store, import, transport, carry, or possess with or without intent to sell, any candy not properly stamped under RSA 78-D:11 or RSA 78-D:13, except as provided in RSA 78-D:11, II. This section shall not prevent any unlicensed person able to purchase unstamped candy by statute from possessing such products for his or her own use or consumption. The provisions of this section shall not apply to common carriers transporting unstamped candy. Any person who violates the provisions of this section shall be guilty of a felony.

78-D:15 Possession of Candy of Foreign States. Licensed wholesalers and vending machine operators may possess candy bearing a foreign state's tax stamp or indicia with an intent to sell such products only if the licensee is currently and legitimately doing business in that state.

78-D:16 Forfeiture. Unless the candy is subject to the exemption under RSA 78-D:11, II, candy found at any place in this state without the necessary stamps affixed to it, unless it is in the possession of a licensed manufacturer or wholesaler, or unless it is in the course of transit by common carrier from a bonded warehouse and consigned to a licensed manufacturer, wholesaler, or anyone exempted by statute, shall be declared to be contraband goods and subject to forfeiture to the state. The commissioner, his or her authorized agents, sheriffs, deputy sheriffs, and policemen shall have the power to seize such candy in the manner provided under RSA 617.

78-D:17 Required Taxpayer Records. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the form for records of all candy manufactured, produced, purchased, and sold. Each manufacturer, wholesaler, retailer, and vending machine operator shall keep complete and accurate records of all such candy. Such records shall be safely preserved for 3 years in such manner as to insure permanency and accessibility for inspection by the commissioner and the commissioner's authorized agents. The commissioner and the authorized agents may examine the books, papers, and records of any manufacturer, wholesaler, retailer, or vending machine operator doing business in this state, for the purpose of determining whether the tax imposed by this chapter has been fully paid, and they may investigate and examine the stock of candy in or upon any premises where such candy is possessed, stored, or sold, for the purpose of determining whether the provisions of this chapter are being obeyed.

78-D:18 Additions to Tax. If after any examination as provided in RSA 78-D:17, the commissioner or his or her agent determines that there is a deficiency with respect to the purchase of tax indicia, the commissioner shall assess the tax and all applicable additions due the state. At the time such additional assessment is made, the commissioner shall give notice of the assessment to the person liable and make demand upon him or her for immediate payment.

78-D:19 Inspection Authorized. The commissioner or any agent or employee of the department of revenue administration, and any policeman, constable, sheriff, or deputy sheriff, may enter in and upon any place or premises where candy is held, kept, located, or stored for the purpose of inspecting such products and ascertaining that the candy at such premises, or any portion thereof, shall not be sold, used, or consumed in this state without the candy tax first having been paid.

2 Effective Date. This act shall take effect July 1, 2007.

LBAO

07-1006

Revised 03/05/07

HB 820 FISCAL NOTE

AN ACT establishing a tax on candy.

FISCAL IMPACT:

METHODOLOGY: