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91_HB0941
LRB9103486LDmb
1 AN ACT to create the Cigarette Sales Act.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Cigarette Sales Act.
6 Section 5. Legislative findings. The General Assembly
7 hereby finds and declares as follows:
8 (a) Cigarettes, because of their standardized character,
9 their great popularity, their widespread and varied types of
10 markets and methods of distribution, and the sensitivity of
11 their distribution to price fluctuations, possess a distinct
12 marketing character and the economic facts and circumstances
13 peculiar to their distribution require special and
14 individualized treatment of the problems created by the sale
15 of cigarettes below cost.
16 (b) The legislature hereby finds that it is necessary to
17 regulate and control the sales price of cigarettes within the
18 State at the wholesale and retail levels for the purpose of
19 stabilizing the cigarette industry in Illinois.
20 The legislature finds that predatory pricing by cigarette
21 dealers from states surrounding Illinois has contributed to
22 the destruction of the price structure in Illinois. Those
23 dealers who are protected in their home states by cigarette
24 sales price laws similar to this Act have had an unfair
25 advantage over Illinois cigarette dealers. This Act is
26 enacted by the legislature to prevent the movement of the
27 cigarette distribution industry outside of Illinois, with the
28 loss of jobs attendant to such a move and to particularly
29 prevent not only the sale of untaxed cigarettes and the
30 evasion of State and local cigarette and sales taxes, but to
31 make sure the State of Illinois retains its level of tax
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1 revenue from the sales taxes.
2 Section 10. Definitions. As used in this Act unless the
3 context otherwise requires:
4 (1) "Person" means and includes any individual, firm,
5 association, company, partnership, corporation, joint stock
6 company, club, agency, syndicate, the State of Illinois, and
7 any municipal corporation or other political subdivision of
8 this State, trust, receiver, trustee, fiduciary, or
9 conservator.
10 (2) "Director" means the Director of the Illinois
11 Department of Revenue.
12 (3) "Department of Revenue" means the Illinois
13 Department of Revenue.
14 (4) "Cigarette" means and includes any roll for smoking
15 made wholly or in part of tobacco, irrespective of size or
16 shape and whether or not the tobacco is flavored,
17 adulterated, or mixed with any other ingredient, the wrapper
18 or cover of which is made of paper or any other substance or
19 material, excepting tobacco.
20 (5) "Wholesaler" means any person who is licensed by the
21 State of Illinois to affix tax stamps to cigarettes and who
22 sells cigarettes at wholesale or distributes cigarettes to be
23 subsequently sold at retail, and includes any manufacturer,
24 distributor, jobber, sub-jobber as broker, agent, or other
25 person, whether or not enumerated in this item (5), who is so
26 licensed and sells or distributes cigarettes. If a wholesaler
27 also sells or otherwise distributes cigarettes directly to
28 consumers, the wholesaler shall be considered a "retailer"
29 under this Act regarding any such sales or distributions.
30 (6) "Jobber" or "sub-jobber" means any person who sells
31 cigarettes at wholesale or who distributes cigarettes to be
32 subsequently sold at retail, but is not licensed by the State
33 of Illinois to affix tax stamps to cigarettes. If a jobber or
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1 sub-jobber also sells or otherwise distributes cigarettes
2 directly to consumers, that jobber or sub-jobber shall be
3 considered a "retailer" under this Act regarding any such
4 sales or distributions.
5 (7) "Retailer" means and includes any person who sells
6 cigarettes in this State to a consumer or to any person for
7 any purpose other than resale, and the term includes a
8 wholesaler or jobber or sub-jobber who sells or distributes
9 cigarettes directly to a consumer.
10 (8) "Sale" or "sell" means any transfer for
11 consideration or gift.
12 (9) "Sell at wholesale", "sale at wholesale", or
13 "wholesale sale" means and includes any sale made in the
14 ordinary course of trade or usual conduct of the business of
15 a wholesaler, jobber, or sub-jobber to a retailer for the
16 purpose of resale.
17 (10) "Sell at retail", "sale at retail", or "retail
18 sale" means and includes any sale for consumption or use made
19 in the ordinary course of trade or usual conduct of the
20 seller's business.
21 (11) "Basic cost of cigarettes" means the lowest cost of
22 cigarettes available to the wholesaler, jobber, sub-jobber,
23 or retailer, as the case may be, within 7 days prior to the
24 date of sale, less (i) all discounts, except discounts
25 pertaining to Electronic Funds Transfer (EFT) and (ii) any
26 taxes other than federal taxes.
27 (12) (a) "Cost to wholesaler, jobber, or sub-jobber for
28 wholesale sales" means the basic cost of the cigarettes
29 involved plus the cost of doing cigarette business by the
30 wholesaler, jobber, or sub-jobber. In determining the cost of
31 doing cigarette business by the wholesaler, jobber, or
32 sub-jobber, the cost of doing business shall first be
33 determined by applying the generally accepted accounting
34 practices employed by the wholesaler, jobber, or sub-jobber,
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1 as the case may be, and includes labor costs, including
2 salaries of executives and officers, rent, depreciation,
3 selling costs, maintenance of equipment, delivery costs, all
4 types of licenses, taxes, insurance, and advertising.
5 (b) In the absence of proof of a lesser or higher cost
6 of doing cigarette business by the wholesaler making the
7 sale, the cost of doing cigarette business by the wholesaler
8 as to sales to jobbers and sub-jobbers shall be presumed to
9 be 1% of the basic cost of cigarettes and as to sales made to
10 retailers shall be presumed to be 3 1/2% of the basic cost of
11 cigarettes if cartage is provided by the wholesaler and 3% if
12 no cartage is so provided. In the absence of proof of a
13 lesser or higher cost of doing cigarette business by the
14 jobber or sub-jobber making the sales, the cost of doing
15 cigarette business by the jobber or sub-jobber shall be
16 presumed to be 2 1/2% of the basic cost of the cigarettes if
17 cartage is provided by the jobber or sub-jobber and 2% if no
18 cartage is provided.
19 (13) (a) "Cost to the retailer" means the basic cost of
20 cigarettes involved to the retailer plus the cost of doing
21 cigarette business by the retailer. In determining the cost
22 of doing cigarette business by the retailer, the cost of
23 doing business by the retailer shall first be determined by
24 applying the generally accepted accounting practices employed
25 by the retailer, including labor, including salaries of
26 executives and officers, rent, depreciation, selling costs,
27 maintenance of equipment, delivery costs, all types of
28 licenses, taxes, insurance, and advertising.
29 (b) In the absence of proof of a lesser or higher cost
30 of doing cigarette business by the retailer making the sale,
31 the cost of doing cigarette business by the retailer shall be
32 presumed to be 8% of the basic cost of the cigarettes to the
33 retailer.
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1 Section 15. Sale at less than cost prohibited.
2 (a) It shall be unlawful for any wholesaler, jobber,
3 sub-jobber, or retailer to sell, at wholesale or retail,
4 cigarettes at less than cost to the wholesaler, jobber,
5 sub-jobber, or retailer, as the case may be, as defined in
6 Section 10 for the purpose of destroying competition or
7 substantially lessening competition.
8 (b) It shall be unlawful for any retailer:
9 (1) to induce or attempt to induce or to procure or
10 attempt to procure the purchase of cigarettes at a price
11 less than the cost to the wholesaler, jobber, or
12 sub-jobber; or
13 (2) to induce or attempt to induce or procure or
14 attempt to procure any rebate or commission of any kind
15 or nature whatsoever in connection with the purchase of
16 cigarettes.
17 (c) Sale of cigarettes by any wholesaler, jobber,
18 sub-jobber, or retailer at less than cost to him or her shall
19 be prima facie evidence of intent to destroy or substantially
20 lessen competition.
21 Section 20. Combination of sales. In all sales involving
22 2 or more items, at least one of which items is cigarettes,
23 at a combined price, and in all sales involving the giving of
24 any gift or concession of any kind, whether it be coupons or
25 otherwise, the wholesaler's, jobber's, sub-jobber's, or
26 retailer's combined selling price shall not be below the cost
27 to the wholesaler, the cost to the jobber or sub-jobber, or
28 the cost to the retailer, respectively, of the total of all
29 articles, products, commodities, gifts, and concessions
30 included in the transactions, except that if any articles,
31 products, commodities, gifts, or concessions, are not
32 cigarettes, the basic cost thereof shall be determined in
33 like manner as provided in Section 10.
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1 Section 25. Sales by wholesaler to any other wholesaler.
2 When one wholesaler sells cigarettes to any other wholesaler,
3 the seller shall not be required to include in his selling
4 price to the buyer, the "cost to the wholesaler", as provided
5 in Section 10, but the buyer wholesaler, upon resale to a
6 jobber, sub-jobber, or a retailer or upon resale to a
7 consumer, shall be subject to the provisions of Section 10.
8 Section 30. Sales excluded from provisions of Section
9 10. The provisions of items (12) and (13) of Section 10
10 shall not apply to a sale at wholesale or a sale at retail
11 made:
12 (1) if cigarettes are sold in a bona fide clearance sale
13 for the purpose of discontinuing trade in the cigarettes;
14 (2) if cigarettes are sold as imperfect or damaged;
15 (3) if cigarettes are sold upon the final liquidation of
16 a business; or
17 (4) if cigarettes are sold by any fiduciary or other
18 officer acting under the order or direction of any court.
19 Section 35. Transactions permitted to meet lawful
20 competition.
21 (a) Any wholesaler, jobber, or sub-jobber may sell
22 cigarettes to a regular customer at a price made in good
23 faith to meet the price of a competitor whether a wholesaler,
24 jobber, or sub-jobber selling to the same customer. Any
25 retailer may sell cigarettes at a price made in good faith to
26 meet the price of a competitor. The price of cigarettes sold
27 under the exceptions specified in Section 30 shall not be
28 considered the price of a competitor and shall not be used as
29 a basis for establishing prices below cost, nor shall the
30 price established at a bankruptcy sale be considered the
31 price of a competitor within the purview of this Section.
32 (b) In the absence of proof of the actual cost to the
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1 competing wholesaler, jobber, sub-jobber, or competing
2 retailer, as the case may be, the cost may be presumed to be
3 the lowest cost to the wholesaler, jobber, or sub-jobber, or
4 the lowest cost to the retailer, as the case may be, as
5 provided in subsections (12)(b) and (13)(b) of Section 10.
6 Section 40. Sales contract made in violation of this Act
7 void. Any contract, express or implied, made by any person
8 in violation of any the provisions of this Act shall be void
9 and no recovery shall be had thereon.
10 Section 45. Actions for violations or threatened
11 violations; remedies; costs.
12 (a) The Department of Revenue shall have the prime
13 responsibility of enforcing the provisions of this Act and
14 shall adopt rules pertaining to this Act.
15 (b) Upon a first violation of any of the provisions of
16 this Act by a wholesaler, jobber, sub-jobber, or retailer,
17 after due notice and opportunity for a hearing, the
18 Department of Revenue may impose a civil fine not to exceed
19 $15,000.
20 (c) Upon a second or subsequent violation of this Act
21 committed by a wholesaler, jobber, sub-jobber, or retailer
22 within 3 years following a prior finding of violation, after
23 due notice and opportunity for a hearing, the Department of
24 Revenue may impose a civil fine not to exceed $25,000.
25 (d) Any fines collected by the Department of Revenue for
26 violations of this Act shall be disbursed to the Prevention
27 of Tobacco Use by Minors Fund, which is created as a special
28 Fund in the State Treasury. Moneys in the Fund shall be
29 used, subject to appropriation, for the purpose of education
30 to prevent underage use of tobacco products.
31 (e) The Department of Revenue, or any person injured by
32 any violation of this Act, or who may suffer injury from any
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1 threatened violation of this Act, may maintain an action in
2 any court of competent jurisdiction to prevent, restrain, or
3 enjoin the violation or threatened violation. If a violation
4 or threatened violation of this Act is established, the court
5 shall enjoin and restrain or otherwise prohibit the violation
6 or threatened violation. In addition, the court shall assess
7 in favor of the plaintiff and against the defendant the cost
8 of the suit, including reasonable attorney's fees. It shall
9 not be necessary that actual damages to the plaintiff be
10 alleged or proved, but if alleged and proved, the plaintiff
11 in the action, in addition to injunctive relief, the costs of
12 the suit, and reasonable attorney's fees, shall be entitled
13 to recover from the defendant the actual damages sustained by
14 him or her.
15 (f) Any person injured by a violation of this Act may
16 maintain an action for damages and the costs of suit in any
17 court of general jurisdiction, and if successful, shall be
18 entitled to 3 times the amount of actual damages, plus costs
19 and reasonable attorney fees.
20 Section 50. Evidence admissible in determining cost to
21 wholesaler and retailer. In determining cost to the
22 wholesaler, jobber, or sub-jobber and in determining the cost
23 to the retailer, the court shall receive and consider as
24 bearing on the proof of the cost, evidence tending to show
25 that any person complained against under any of the
26 provisions of this Act purchased the cigarettes involved in
27 the complaint at a fictitious price, or upon terms, or in a
28 manner, or under such invoices, as to conceal the true cost,
29 discounts, or terms of the purchase, and shall also receive
30 and consider as bearing on proof of the cost, evidence of the
31 normal, customary, and prevailing terms and discounts in
32 connection with other sales of a similar nature in the trade
33 area or state.
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1 Section 55. Powers and duties of Department of Revenue.
2 (a) The Department of Revenue shall promulgate
3 administrative rules for the enforcement of this Act.
4 (b) All of the powers vested in the Director of the
5 Department of Revenue and Department of Revenue by the
6 provisions of the Cigarette Tax Act shall be available for
7 the enforcement of this Act.
8 Section 60. Application of Illinois Administrative
9 Procedure Act. The Illinois Administrative Procedure Act is
10 hereby expressly adopted and shall apply to all
11 administrative rules and procedures of the Illinois
12 Department of Revenue under this Act.
13 Section 95. The State Finance Act is amended by adding
14 Section 5.490 as follows:
15 (30 ILCS 105/5.490 new)
16 Sec. 5.490. The Prevention of Tobacco Use by Minors
17 Fund.