SB1812 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 42-3001, Arizona Revised Statutes, is amended to read:

START_STATUTE42-3001. Definitions

In this chapter, unless the context otherwise requires:

1. "Affix" and "affixed" include imprinting tax meter stamps on packages and individual containers as authorized by the department.

2. "Brand family" has the same meaning prescribed in section 44-7111.

3. "Cavendish" means a tobacco product that is smoked from a pipe and that meets one of the following criteria:

(a) Is described as cavendish, as containing cavendish or as a cavendish blend on its packaging, labeling or promotional materials.

(b) Appears to have been processed or manufactured with an amount of flavorings and humectants that exceeds twenty percent of the weight of the tobacco contained in the product.

4. "Cider" means vinous liquor that is made from the normal alcoholic fermentation of the juice of sound, ripe apples, pears or other pome fruit, including flavored, sparkling and carbonated cider and cider made from condensed apple, pear or other pome fruit must, and that contains more than one-half of one percent of alcohol by volume but not more than seven percent of alcohol by volume.

5. "Cigar" means any roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco other than any roll of tobacco that is a cigarette, as defined in paragraph 6 , subdivision (b) of this section.

6. "Cigarette" means either of the following:

(a) Any roll of tobacco wrapped in paper or any substance not containing tobacco.

(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 and labeling, is likely to be offered to or purchased by a consumer as a cigarette described in subdivision (a) of this paragraph. This subdivision shall be interpreted consistently with the classification guidelines established by the federal alcohol and tobacco tax and trade bureau.

7. "Consumer" means a person in this state that comes into possession of any luxury subject to the tax imposed by this chapter and that, on coming into possession of the luxury, is not a distributor intending to sell or distribute the luxury, a retailer or a wholesaler.

8. "Craft distiller" means a distiller in the United States or in a territory or possession of the United States that holds a license pursuant to section 4-205.10.

9. "Distributor" means any person that manufactures, produces, ships, transports or imports into this state or in any manner acquires or possesses for the purpose of making the first sale of the following:

(a) Cigarettes without Arizona tax stamps affixed as required by this article.

(b) Roll-your-own tobacco or other tobacco products on which the taxes have not been paid as required by this chapter.

10. "Farm winery" has the same meaning prescribed in section 4-101.

11. "First sale" means the initial sale or distribution in intrastate commerce or the initial use or consumption of cigarettes, roll-your-own tobacco or other tobacco products.

12. "Luxury" means any article, object or device on which a tax is imposed under this chapter.

13. "Malt liquor" means any liquid that contains more than one-half of one percent alcohol by volume and that is made by the process of fermentation and not distillation of hops or grains, but not including:

(a) Liquids made by the process of distillation of such substances.

(b) Medicines that are unsuitable for beverage purposes.

14. "Master settlement agreement" has the same meaning prescribed in section 44-7101.

15. "Microbrewery" has the same meaning prescribed in section 4-101.

16. "Nonparticipating manufacturer" has the same meaning prescribed in section 44-7111.

17. "Other tobacco products" means tobacco products other than cigarettes and roll-your-own tobacco.

18. "Participating manufacturer" has the same meaning prescribed in section 44-7111.

19. "Person" means any individual, firm, partnership, joint venture, association, corporation, municipal corporation, estate, trust, club, society or other group or combination acting as a unit, and the plural as well as the singular number.

20. "Place of business":

(a) Means a building, facility site or location where an order is received or where tobacco products are sold, distributed or transferred. Place of business

(b) Does not include a vehicle.

21. "Ready-to-drink spirits product" means distilled spirits as defined in seCTION 4-101 that are mixed with another beverage that may contain flavoring or coloring materials and other ingredients, that do not exceed ten percent alcohol by volume, that are sealed in an original container of not more than sixteen ounces and that are sold in the manufacturer's original packaging.

21. 22. "Retailer" means any person that comes into possession of any luxury subject to the taxes imposed by this chapter for the purpose of selling it for consumption and not for resale.

22. 23. "Roll-your-own tobacco" means any tobacco that, because of its appearance, type, packaging or labeling, is suitable for use and likely to be offered to or purchased by consumers as tobacco for making cigarettes. This paragraph shall be interpreted consistently with the term as used in section 44-7101. This paragraph shall be interpreted consistently with the classification guidelines established by the federal alcohol and tobacco tax and trade bureau.

23. 24 "Smoking tobacco":

(a) Means any tobacco that, because of its appearance, type, packaging, labeling or promotion, is suitable for use and likely to be offered to or purchased by consumers as tobacco for making cigarettes or otherwise consumed by burning. Smoking tobacco

(b) Includes pipe tobacco and roll-your-own tobacco.

24. 25. "Spirituous liquor":

(a) Means any liquid that contains more than one-half of one percent alcohol by volume, that is produced by distillation of any fermented substance and that is used or prepared for use as a beverage. Spirituous liquor

(b) Does not include medicines that are unsuitable for beverage purposes.

25. 26. "Tobacco product manufacturer" has the same meaning prescribed in section 44-7101.

26. 27. "Tobacco products" means all luxuries included in section 42-3052, paragraphs 5 through 9.

27. 28. "Vehicle" means a device in, on or by which a person or property is or may be transported or drawn on the roads of this state regardless of the means by which it is propelled or whether it runs on a track.

28. 29. "Vinous liquor":

(a) Means any liquid that contains more than one-half of one percent alcohol by volume and that is made by the process of fermentation of grapes, berries, fruits, vegetables or other substances. But

(b) Does not include:

(a) (i) Liquids in which hops or grains are used in the process of fermentation.

(b) (ii) Liquids made by the process of distillation of hops or grains.

29. 30. "Wholesaler" means a person that sells any spirituous, vinous or malt liquor taxed under this chapter to retail dealers or for the purposes of resale only. END_STATUTE

Sec. 2. Section 42-3052, Arizona Revised Statutes, is amended to read:

START_STATUTE42-3052. Classifications of luxuries; rates of tax

The taxes under this chapter are imposed at the following rates:

1. On each sealed container of spirituous liquor, at the rate of three dollars $3 per gallon and at a proportionate rate for any lesser or greater quantity than one gallon.

2. On each container of vinous liquor, except cider, of which the alcoholic content is not greater than twenty-four per cent percent by volume, at the rate of eighty-four cents $.84 per gallon and at a proportionate rate for any lesser or greater quantity than one gallon.

3. On each container of vinous liquor of which the alcoholic content is greater than twenty-four per cent percent by volume, containing eight ounces or less, twenty-five cents $.25, and for each eight ounces for containers containing more than eight ounces, twenty-five cents $.25.

4. On each gallon of malt liquor or cider, sixteen cents $.16, and at a proportionate rate for any lesser or greater quantity than one gallon.

5. On each cigarette, nine-tenths cent $.009.

6. On smoking tobacco, snuff, fine cut chewing tobacco, cut and granulated tobacco, shorts and refuse of fine cut chewing tobacco, and refuse, scraps, clippings, cuttings and sweepings of tobacco, excluding tobacco powder or tobacco products used exclusively for agricultural or horticultural purposes and unfit for human consumption, two cents $.02 per ounce or major fraction of an ounce.

7. On all cavendish, plug or twist tobacco, one-half cent $.005 per ounce or fractional part of an ounce.

8. On each twenty small cigars or fractional part weighing not more than three pounds per thousand, four cents $.04.

9. On cigars of all descriptions except those included in paragraph 8 of this section, made of tobacco or any tobacco substitute:

(a) If manufactured to retail at not more than five cents $.05 each, two cents $.02 on each three cigars.

(b) If manufactured to retail at more than five cents $.05 each, two cents $.02 on each cigar.

10. On each sealed container of a ready-to-drink spirits product, $1.50 per gallon and a proportionate rate for any lesser or greater quantity than one gallon. END_STATUTE

Sec. 3. Section 42-3351, Arizona Revised Statutes, is amended to read:

START_STATUTE42-3351. Bonds required of liquor and ready-to-drink spirits products wholesalers; exemption

A. Every wholesaler of spirituous liquors, vinous and liquors, malt liquors or ready-to-drink spirits products shall file with the department, in such form as the department prescribes, a bond or bonds, duly executed by the wholesaler as principal, and with a corporation duly authorized to execute and write bonds within the state as surety, payable to the state, and conditioned upon on the payment of all taxes, penalties and other obligations of the wholesaler arising under this chapter.

B. The department shall fix the total amount of the bond or bonds required of the wholesaler and may increase or reduce the amount at any time. In fixing the total amount, the department shall require a bond or bonds equivalent in total amount to twice the wholesaler's estimated monthly tax, ascertained in such manner as the department deems proper. The total amount of the bond or bonds required of any wholesaler shall not be less than two thousand dollars $2,000.

C. A wholesaler is exempt from the requirements of this section if the wholesaler has made timely payment of the taxes imposed by this chapter for the twenty-four consecutive months immediately preceding the current month. END_STATUTE

Sec. 4. Section 42-3354, Arizona Revised Statutes, is amended to read:

START_STATUTE42-3354. Return and payment by spirituous or vinous liquor and ready-to-drink spirits products wholesalers

A. Every wholesaler of spirituous liquors selling spirituous liquors within the this state shall pay the tax under this chapter on all such liquor sold within the this state and add the amount of the tax to the sales price.

B. Every wholesaler of vinous liquors selling vinous liquors other than ciders as defined in section 42-3001 within this state shall pay the tax under this chapter on all such liquors sold within this state and add the amount of tax to the sales price.

c. Every wholesaler of ready-to-drink spirits products selling ready-to-drink spirits products within this state shall pay the tax under this chapter on all ready-to-drink spirits products sold within this state and add the amount of the tax to the sales price.

C. d. The wholesaler shall pay the tax to the department monthly on or before the twentieth day of the month next succeeding the month in which the tax accrues.

D. e. On or before the date prescribed by subsection C D of this section, the wholesaler shall prepare a sworn return for the month in which the tax accrues in the form prescribed by the department, showing:

1. The amount of spirituous liquors sold in this state during the month in which the tax accrues.

2. The amount of vinous liquors other than ciders as defined in section 42-3001 sold in the this state during the month in which the tax accrues.

3. The amount of tax for the period covered by the return.

4. Any other information that the department deems necessary for the proper administration of this chapter.

E. F. The wholesaler shall deliver the return, together with a remittance of the amount of the tax due, to the department.

F. G. Any taxpayer that fails to pay the tax within ten days from after the date on which the payment becomes due is subject to and shall pay a penalty determined under section 42-1125, plus interest at the rate determined pursuant to section 42-1123 from the time the tax was due and payable until paid.

G. H. For reporting periods beginning from and after December 31, 2019, or when the department has established an electronic filing program, whichever is later, each taxpayer shall file electronically any report or return required under this chapter. The report or return is considered to be filed and received by the department on the date of the electronic postmark pursuant to section 42-1105.02. END_STATUTE

Sec. 5. Section 42-3355, Arizona Revised Statutes, is amended to read:

START_STATUTE42-3355. Return and payment by farm wineries, manufacturers, direct shipment licensees, microbreweries and craft distillers

A. A farm winery selling vinous liquor at retail or to a retail licensee pursuant to title 4, chapter 2 that is manufactured or produced on the premises, a producer of vinous liquor that sells at retail pursuant to section 4-243.02 or a direct shipment licensee that sells pursuant to section 4-203.04 shall pay the tax under this chapter on all such liquor sold at retail or to a retail licensee within this state and add the amount of the tax to the sales price.

B. A microbrewery selling malt liquor at retail or to a retail licensee pursuant to title 4, chapter 2 that is manufactured or produced on the premises or a manufacturer of beer that sells at retail pursuant to section 4-243.02 shall pay the tax under this chapter on all malt liquor sold at retail or to a retail licensee within this state and add the amount of the tax to the sales price.

C. A craft distiller selling spirituous liquor or ready-to-drink spirits products at retail or to a retail licensee pursuant to title 4, chapter 2 that is manufactured or produced on the premises or a distiller of spirituous liquor or ready-to-drink spirits products that sells at retail pursuant to section 4-243.02 shall pay the tax under this chapter on all spirituous liquor or ready-to-drink spirits products sold at retail or to a retail licensee within this state and add the amount of the tax to the sales price.

D. The farm winery, manufacturer, microbrewery, craft distiller or direct shipment licensee shall pay the tax to the department annually on or before the twentieth day of the first month of the year succeeding the year in which the tax accrues.

E. On or before that date, the farm winery, manufacturer, microbrewery, craft distiller or direct shipment licensee shall prepare a sworn return for the year in which the tax accrues in the form prescribed by the department, showing:

1. The amount of liquors, or beer or ready-to-drink spirits products sold in this state during the year in which the tax accrues.

2. The amount of tax for the period covered by the return.

3. Any other information that the department deems necessary for the proper administration of this chapter.

F. The farm winery, manufacturer, microbrewery, craft distiller or direct shipment licensee shall deliver the return, together with a remittance of the amount of the tax due, to the department.

G. Any taxpayer that fails to pay the tax within ten days after the date on which the payment becomes due is subject to and shall pay a penalty determined under section 42-1125, plus interest at the rate determined pursuant to section 42-1123 from the time the tax was due and payable until paid.

H. For reporting periods beginning from and after December 31, 2019, or when the department has established an electronic filing program, whichever is later, each taxpayer shall file electronically any report or return required under this chapter. The report or return is considered to be filed and received by the department on the date of the electronic postmark pursuant to section 42-1105.02. END_STATUTE

Sec. 6. Applicability

This act applies to taxable periods beginning on or after the first day of the month following the general effective date.