Town Council
Meeting Agenda

AN ORDINANCE TO AMEND THE TOWN CODE OF THE TOWN OF DRAKES BRANCH, VIRGINIA, BY ADDING ARTICLE II, CIGARETTE TAX, TO CHAPTER 12, TAXATION

WHEREAS, Virginia Code § 58.1-3830 authorizes any locality, including the Town of Drakes Branch, to levy a tax upon the sale or use of cigarettes; and

WHEREAS, Virginia Code § 58.1-3832 further authorizes the Town to adopt ordinance provisions for the administration and enforcement of its cigarette tax, including the use of tax stamps, seizure of untaxed cigarettes, and penalties for violations; and

WHEREAS, the Town of Drakes Branch currently has no local cigarette tax in effect; and

WHEREAS, the Town Council finds that the imposition of a local cigarette tax will generate revenue to support town operations and capital needs; and

WHEREAS, notice of a public hearing on this ordinance was published in the Charlotte Gazette, the legal organ of the Town, and a public hearing was held on [HEARING DATE]; and

WHEREAS, adoption of this ordinance imposes a new tax and therefore requires an affirmative vote of two-thirds of the members of the Town Council pursuant to Virginia Code § 15.2-1427(G);

NOW, THEREFORE, BE IT ORDAINED by the Town Council of the Town of Drakes Branch, Virginia, that Chapter 12 of the Town Code is amended by adding Article II, Cigarette Tax, as follows:

Article II. Cigarette Tax

Sec. 12-11. Definitions.

The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Agent means every local dealer and every other person who shall be authorized by the town treasurer to purchase and affix stamps to packages of cigarettes under the provisions of this article.

Dealer means every manufacturer, jobber, wholesale dealer or other person who supplies a seller with cigarettes.

Package means every package, box, can or other container of any cigarettes to which the Internal Revenue Stamp of the United States Government is required to be affixed by and under federal statutes and regulations and in which retail sales of such cigarettes are normally made or intended to be made.

Sale means every act or transaction, irrespective of the method or means employed, including the use of vending machines and other mechanical devices, whereby title to any cigarettes shall be transferred from the seller, as defined in this section, to any other person within the town.

Seller means every person engaged in the business of selling cigarettes who transfers title or in whose place of business title to any such cigarettes is transferred within the town for any purpose other than resale.

Stamp means the small gummed piece of paper or decalcomania to be sold by the town treasurer and to be affixed by the agent to every package of cigarettes; it shall also denote any insignia or symbol printed by a meter machine upon any such package under authorization of the town treasurer.

Treasurer means the town treasurer and every person duly authorized by him or her to serve as his or her representative.

Sec. 12-12. Levied; amount.

There is hereby levied and imposed by the town, in addition to any other taxes which may be or have been imposed, a tax to be paid and collected as provided in this article on each and every sale of cigarettes made in the town. The tax is to be paid by the seller, local dealer or other agent by affixing a stamp, or causing a stamp to be affixed to every package of cigarettes, in the kind and manner required in this article and at the applicable rates as follows:

The rate of tax levied or imposed on cigarettes shall be an initial rate of fifteen cents ($0.15) for each twenty (20) cigarettes or fractional part thereof. This rate shall become effective [EFFECTIVE DATE] and shall remain effective through December 31 of that year. Beginning January 1 of the following year, the rate shall increase by two and one-half cents ($0.025) per pack of twenty (20) cigarettes on each January 1 thereafter, until reaching a final rate of twenty-seven and one-half cents ($0.275) per pack of twenty (20) cigarettes, four years after the initial effective date.

Sec. 12-13. Preparation, sale, etc., of stamps; duties of treasurer generally.

(a) The town treasurer shall acquire, keep and sell necessary stamps to local dealers and other agents, the stamps to be of such denominations and quantities as may be necessary for the payment of the tax imposed in this article. Any stamp or meter impression issued under this article shall be of the same stamp technology as is used or required by the Commonwealth for the state cigarette tax stamp pursuant to Va. Code § 58.1-1000 et seq., as required by Va. Code § 58.1-3832(2).

(b) In the sale of such stamps to a local dealer or other agent, the treasurer shall allow a discount of two and one-half cents ($0.025) per stamp of the face value thereof to cover the cost which will be incurred by such dealer or agent in affixing the stamps to packages of cigarettes.

(c) The town treasurer may, from time to time and as often as he or she deems advisable, provide for the issuance and exclusive use of stamps of a new design and forbid the use of stamps of any other design. The treasurer is empowered to make and carry into effect such reasonable rules and regulations relating to the preparation, furnishing and sale of stamps as he or she may deem necessary. He or she is further authorized and empowered to prescribe the method to be employed, the conditions to be observed, and any other necessary requirements not contrary to this article in the use of meter machines for printing upon packages of cigarettes an insignia to represent the payment of the tax and in lieu of stamps.

(d) Refunds and redemption of stamps shall be made as follows:

(1) Unused stamps that are returned to the treasurer and verified as intact and undamaged shall be refunded at their full face value, without penalty or additional fee, as required by Va. Code § 58.1-3832(2).

(2) For stamps that have been damaged or destroyed such that the treasurer cannot verify their return in original, intact condition, the treasurer shall not in any case refund more than ninety (90) percent of the face value of such stamps.

(e) In addition to powers granted in subsections (a) through (d) of this section, the town treasurer is further authorized and empowered to:

(1) Prescribe, adopt, promulgate and enforce rules and regulations relating to the method and means to be used in the cancellation of stamps;

(2) Delegate his or her powers to agents or others, including the Mayor of the Town of Drakes Branch;

(3) Act in any other matters pertaining to the administration and enforcement of the provisions of this article.

Sec. 12-14. Inspection of records, premises, etc.

The town treasurer, or his or her duly authorized agent, is empowered to examine books, records, invoices and papers related to purchases, sales, etc., of cigarettes, and to examine all cigarettes in and upon any premises where cigarettes are placed, sold, stored, offered for sale or displayed for sale by a seller.

Sec. 12-15. Seizure and disposition of untaxed cigarettes, etc.

(a) If the town treasurer or his or her agent discovers any cigarettes subject to the tax imposed under this article, but upon which such tax has not been paid and upon which stamps have not been affixed or evidence of payment is not shown thereon by printed markings of a meter machine in compliance with the provisions of this article, then the treasurer or duly authorized agents or officers, any of them, may seize and take possession forthwith of such cigarettes, which shall thereupon be deemed to be forfeited to the town. Such cigarettes may, within a reasonable time thereafter, and after written notice is posted at the front door of the town office at least five (5) days before the date given therein for sale, be sold in the place designated in such notice.

(b) Any property, other than motor vehicles, used in the furtherance of any illegal evasion of the tax may be seized, confiscated and disposed of as provided in subsection (a) of this section. No credit from any sale or other disposition shall be allowed toward any tax or penalties owed.

(c) The seizure and sale of any property shall not be deemed to relieve any of the persons of any other penalties provided in this article.

Sec. 12-16. Obligation of dealers and agents regarding stamps.

(a) Every local dealer in cigarettes and every agent appointed under this section shall purchase necessary stamps from the town treasurer to pay the tax imposed under this article and shall affix or cause to be affixed a stamp of the monetary value provided by this article to each package of cigarettes prior to delivering or furnishing such cigarettes to any seller who is not also an agent.

(b) Nothing contained in this section shall be deemed to preclude any dealer from authorizing and employing any agent to purchase and affix such stamps on the dealer's behalf, or to have a stamp meter machine used in lieu of stamps to effectuate the provisions of this article.

(c) Stamps or printed markings of a meter machine shall be placed upon each package of cigarettes in such a manner as to be readily visible to the purchaser.

(d) It shall be the responsibility of every seller to determine that each package of cigarettes offered for sale has a proper stamp affixed thereto in compliance with the provisions of this article.

(e) If inspection by the agents of the town discloses unstamped or improperly stamped packages of cigarettes, the seller, when such cigarettes were obtained from a local dealer, shall immediately notify such dealer, and upon such notification such dealer shall forthwith either affix to the unstamped or improperly stamped package, container or item the proper amount of stamps or replace such package, container or item with others to which stamps have been properly affixed. If a seller, who is not also an agent, acquires or has in his or her possession unstamped or improperly stamped cigarettes, the seller shall forthwith notify the treasurer of such fact. The treasurer shall thereupon affix or cause to be affixed the proper stamps to such cigarettes. The cost of such stamps at face value shall be advanced by such seller.

(f) The treasurer, by proper rules and regulations, may require every local dealer, agent or seller to cancel stamps upon all packages of cigarettes in his or her possession.

(g) Every local dealer and seller shall maintain and keep for a period of at least two (2) years such records of cigarettes received and sold by him or her as may be required by the treasurer; such records shall be made available for examination in the town by the treasurer upon demand, and the means, facilities and opportunities for making any such examination shall be made available at all reasonable times.

Sec. 12-17. Presumptions based on quantity.

Cigarettes found in quantities of more than six (6) cartons within the town shall be conclusively presumed to be for sale therein and may be seized and confiscated if:

(1) They are in transit, and are not accompanied by a bill of lading or other document indicating the true name and address of the consignor or seller and of the consignee or purchaser, and the brands and quantity of cigarettes so transported, or they are in transit and accompanied by a bill of lading or other document which is false or fraudulent, in whole or in part;

(2) They are in transit and are accompanied by a bill of lading or other document indicating:

a. A consignee or purchaser in another state or the District of Columbia who is not authorized by the law of such other jurisdiction to receive or possess such cigarettes on which the taxes imposed by such other jurisdiction have not been paid, unless the tax of the state or district of destination has been paid and the products bear the tax stamps of that state or district; or

b. A consignee or purchaser in the Commonwealth but outside the town who does not possess a state sales and use tax certificate, a state retail cigarettes license and, where applicable, both a business license and retail cigarettes license issued by the local jurisdiction of destination; or

(3) They are not in transit and the tax has not been paid, nor have approved arrangements for payment been made, provided that this subsection shall not apply to cigarettes in the possession of distributors or public warehouses which have filed notice and appropriate proof with the town that those cigarettes are temporarily within the town and will be sent to consignees or purchasers outside the jurisdiction in the normal course of business.

Sec. 12-18. Presumption based upon stamps or markings.

If any package of cigarettes is found in the possession of a seller without proper stamps or authorized printed markings thereon, and the seller is unable to submit evidence establishing that he or she received such packages, containers or items within the immediately preceding forty-eight (48) hours, and that he or she has not offered the same for sale, then it shall be presumed that such packages, containers or items are being kept in violation of the provisions of this article, and the seller shall be subject to the pre-discount tax and a penalty in the amount of fifty (50) percent thereof, even though such seller is also an agent.

Sec. 12-19. Disposition of revenue.

Revenue derived from the tax imposed in this article shall be deposited by the town treasurer to the credit of the general fund of the town. The revenue generated from the tax shall be utilized for the specific purposes listed below:

(1) Costs related to implementation and administration of the cigarette tax, including the purchase of tax stamps;

(2) [ADDITIONAL PURPOSE — e.g., capital improvement projects];

(3) [ADDITIONAL PURPOSE, if any].

Other than the listed purposes above, the Town Council may not utilize cigarette tax revenue for any other purpose without a unanimous vote of the Council members. Such vote must be conducted for every instance where cigarette tax revenue is utilized.

Sec. 12-20. Illegal acts.

It shall be unlawful and a violation of this article for any dealer or other person liable for the tax to:

(1) Perform any act or fail to perform any act for the purpose of evading the payment of any tax imposed by this article or any part thereof, or fail or refuse to perform any of the duties imposed on him or her under the provisions of this article, or fail or refuse to obey any lawful order which may be issued under this article;

(2) Falsely or fraudulently make, or cause to be made, any invoices or reports, or falsely or fraudulently forge, alter or counterfeit any stamp, or procure or cause to be made, forged, altered or counterfeited any such stamp, or knowingly and willfully alter, publish, pass or tender as true any false, altered, forged or counterfeited stamp or stamps;

(3) Sell, offer for sale, or authorize or approve the sale of, any cigarettes upon which the town stamp has not been affixed;

(4) Possess, store, use, authorize or approve the possession, storage or use of any cigarettes in quantities of more than sixty (60) cigarettes upon which the town stamp has not been affixed;

(5) Transport, or authorize or approve the transportation of, any cigarettes in quantities of more than sixty (60) packages into or within the town upon which the town stamp has not been affixed, if they are:

a. Not accompanied by a bill of lading or other document indicating the true name and address of the consignor or seller and the consignee or purchaser and the brands and quantity of cigarettes transported;

b. Accompanied by a bill of lading or other document which is false or fraudulent in whole or part; or

c. Accompanied by a bill of lading or other document indicating:

1. A consignee or purchaser in another state or the District of Columbia who is not authorized by the law of such other jurisdiction to receive or possess such tobacco products on which the taxes imposed by such other jurisdiction have not been paid, unless the tax of the jurisdiction of destination has been paid and such cigarettes bear the tax stamps of that jurisdiction; or

2. A consignee or purchaser in the Commonwealth but outside the taxing jurisdiction who does not possess a state sales and use tax certificate, a state retail tobacco license, and, where applicable, both a business license and a retail tobacco license issued by the local jurisdiction of destination;

(6) Reuse or refill with cigarettes any package from which cigarettes have been removed, for which the tax imposed has theretofore been paid; or

(7) Remove from any package any stamp with intent to use, or cause the package to be used, after such package has already been used, or buy, sell, offer for sale or give away any used, removed, altered or restored stamps to any person, or reuse any stamp which had theretofore been used as evidence of the payment of any tax prescribed by this article, or sell or offer to sell any stamp provided for in this article.

Sec. 12-21. Penalty.

Any person violating any of the provisions of this article shall be guilty of a Class 1 misdemeanor. Any fine and/or imprisonment pursuant to conviction of a Class 1 misdemeanor shall not relieve any such person from the payment of any tax, penalty or interest imposed by this article.

Sec. 12-22. Each violation a separate offense.

The sale of any quantity, or the use, possession, storage or transportation of more than sixty (60) packages of cigarettes upon which the town stamp has not been affixed, shall constitute a separate violation. Each continuing day of violation shall be deemed to constitute a separate offense.

Sec. 12-23. Adoption and enactment date.

The foregoing ordinance was adopted by the Drakes Branch Town Council at a [regular/special] meeting held on [ADOPTION DATE], following a public hearing held on [HEARING DATE], by a recorded vote of [X–X] (a two-thirds majority, as required by Va. Code § 15.2-1427(G)). The ordinance enactment date is [EFFECTIVE DATE].

ATTEST:

[Town Clerk Name], Town Clerk

[Mayor Name], Mayor