H.R. 1676 (111th): PACT Act

Introduced:
Mar 23, 2009 (111th Congress, 2009–2010)
Sponsor:
Rep. Anthony Weiner [D-NY9]
Status:
Died (Passed House)
See Instead:

S. 1147 (same title)
Signed by the President — Mar 31, 2010

The bill’s title was written by the bill’s sponsor. H.R. stands for House of Representatives bill.

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Status

This bill was introduced in a previous session of Congress and was passed by the House on May 21, 2009 but was never passed by the Senate.

Progress
Introduced Mar 23, 2009
Referred to Committee Mar 23, 2009
Reported by Committee Apr 28, 2009
Passed House May 21, 2009
Votes

House Vote on Passage
May 21, 2009 1:53 p.m.
Passed 397/11

Cosponsors
3 cosponsors (2R, 1D) (show)
Committees

House Judiciary

Senate Judiciary

The committee chair determines whether a bill will move past the committee stage.

Full Title

To prevent tobacco smuggling, to ensure the collection of all tobacco taxes, and for other purposes.

Summary

No summaries available.

Text

Read Bill Text »

Last updated Jun 01, 2009.
68 pages

Primary Source

View on THOMAS (The Library of Congress)

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Citation

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GovTrack’s Bill Summary

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Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

5/21/2009--Passed House amended. Prevent All Cigarette Trafficking Act of 2009 or PACT Act - Amends the Jenkins Act to revise provisions governing the collection of taxes on, and trafficking in, cigarettes and smokeless tobacco.
Section 2 -
Revises the definition of "cigarette" to include roll-your-own tobacco and to exclude cigars.
Defines "delivery sale" to mean any sale of cigarettes or smokeless tobacco to a consumer ordered by telephone, the mails, or the Internet or other online service . Redefines "person" to include state, local, and Indian tribal governments.
Redefines "use" to include the consumption, storage, handling, or disposal of smokeless tobacco, in addition to cigarettes.
Applies state tobacco tax reporting requirements to:
(1) the sale or advertising for sale of smokeless tobacco products;
(2) persons who ship or transfer cigarettes and smokeless tobacco products; and
(3) the shipment of cigarettes or smokeless tobacco into a locality or Indian country that taxes the sale or use of such products.
Requires sellers of tobacco products to file with the Attorney General reports filed with state tobacco tax administrators.
Imposes additional information reporting requirements on such sellers, including the disclosure of electronic mail addresses, website addresses, and authorized agents for service of process.
Limits the use of information received from sellers of tobacco products solely for tax enforcement purposes.
Expands requirements for delivery sales by requiring each delivery seller, with respect to delivery sales into a specific state and place, to:
(1) comply with specified shipping and record-keeping requirements, all state, local, tribal, and other laws generally applicable to sales of cigarettes or smokeless tobacco as if such delivery sales occurred entirely within the specific state and place (including laws imposing excise taxes and licensing and tax-stamping requirements), and specified tax collection requirements;
(2) include on the bill of lading for the shipping package containing cigarettes or smokeless tobacco a clear and conspicuous statement that federal law requires the payment of all applicable excise and sales taxes and compliance with applicable licensing and tax-stamping obligations;
(3) comply with specified weight and age verification requirements; and
(4) keep records of all delivery sales, organized by state, for four years and make such records accessible to state, local, and Indian tribe tax authorities and the Attorney General. Prohibits the delivery of cigarettes or smokeless tobacco unless the excise tax on such products has been paid and any required stamps or other indicia of payment are properly affixed to the products.
Allows an exception for states that require delivery sellers to collect the tax from consumers and remit such tax to state or local tax authorities.
Requires the Attorney General to compile a list of noncompliant delivery sellers of cigarettes and smokeless tobacco and to distribute such list to state attorneys general and tax administrators and common carriers and other couriers, including the United States Postal Service. Prohibits the delivery of any package to, or on behalf of, a noncompliant delivery seller without determining that such package does not include cigarettes or smokeless tobacco.
Makes knowingly violating the Jenkins Act a felony (currently, a misdemeanor).
Increases civil penalties for violations to the greater of $5,000 for a first violation or $10,000 for any other violation, or two percent of the gross sales of cigarettes or smokeless tobacco for the year before the violation.
Grants federal district courts jurisdiction to prevent and restrain violations of this Act and to provide injunctive or equitable relief, including money damages.
Empowers the Attorney General to administer and enforce this Act. Authorizes a state attorney general, a local government, an Indian tribe that levies a tax subject to this Act, or a holder of a permit as a manufacturer or importer of tobacco products or as an export warehouse proprietor (permit holder) to bring an action in U.S. district court to prevent and restrain violations of this Act. Authorizes a state attorney general or such a local government or Indian tribe to provide to the Attorney General or a U.S. Attorney evidence of a violation of this Act by any person not subject to state, local, or tribal government enforcement actions for violations of this Act. Establishes a PACT Anti-Trafficking Fund into which 50% of criminal and civil penalties collected in enforcing this Act shall be deposited and available to the Attorney General to enforce this Act and other laws relating to contraband tobacco products.
Requires the Attorney General to make information on enforcement actions publicly available (including on the Internet) and to report to Congress on such actions.
Section 3 -
Amends the federal criminal code to treat cigarettes and smokeless tobacco as nonmailable matter and prohibit their deposit into the U.S. mails.
Authorizes the U.S. Postal Service to refuse to accept nonmailable tobacco products and to issue cease and desist orders to anyone mailing such products.
Imposes civil penalties for failure to comply with such orders.
Exempts from such prohibition:
(1) cigars; and
(2) mailings within Alaska or Hawaii;
(3) mailings for business purposes between legally operating tobacco businesses, and by individuals for noncommercial purposes; or
(4) mailings for consumer testing by manufacturers or the federal government.
Requires the seizure and forfeiture of any cigarettes or smokeless tobacco illegally deposited into the U.S. mails.
Imposes a criminal penalty for intentionally placing nonmailable tobacco products in the U.S. mails.
Establishes the PACT Postal Service Fund to which 50% of criminal and civil fines for mailing violations shall be transferred and made available to the Postmaster General to enforce mailing restrictions on cigarettes and smokeless tobacco products.
Allows a state, local government, or Indian tribe to obtain appropriate injunctive or equitable relief for mailing violations in a civil action in a U.S. district court.
Section 4 -
Prohibits a tobacco product manufacturer or importer from selling in, delivering to, or placing for delivery sale in a state that is a party to the Master Settlement Agreement (executed November 23, 1998, by state attorneys general and certain tobacco manufacturers) any cigarette of such a manufacturer that is not in full compliance with the terms of the Model Statute or Qualifying Statute enacted by such state.
Grants:
(1) U.S. district courts jurisdiction to prevent and restrain prohibited sales; and
(2) the Attorney General authority to administer and enforce compliance with restrictions on such sales.
Section 5 -
Authorizes the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to enter the business premises of delivery sellers and inspect their records and information and any cigarettes or smokeless tobacco stored at such premises. Authorizes federal district courts to compel such inspections. Imposes a civil penalty for failure to comply with inspections.
Section 6 -
Declares that nothing in this Act shall be construed to affect, amend, or modify specified agreements or limitations relating to the collection of taxes on, and related matters regarding, cigarettes or smokeless tobacco sold in Indian country or to inhibit the coordination of law enforcement by states or other jurisdictions, including Indian tribes, with respect to interstate sales or seizures of tobacco products.
Section 7 -
Directs the ATF Director to:
(1) create six regional contraband trafficking teams over a three-year period in New York City, Washington, D.C., Detroit, Los Angeles, Seattle, and Miami;
(2) create a new Tobacco Intelligence Center to oversee and monitor smuggling investigations;
(3) establish a covert national warehouse for undercover operations; and
(4) create a computer database to track and analyze information from retail sellers of tobacco products who sell through the Internet or mail order or who make other non face-to-face sales.
Authorizes appropriations.
Section 10 -
Expresses the sense of Congress that this Act responds to the unique harms posed by online cigarette sales and does not create a precedent for the collection of state sales or use taxes by, or the validity of efforts to impose other types of taxes on, out-of-state entities that do not have a physical presence in the taxing state.

House Republican Conference Summary

The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.

This summary can be found at http://www.gop.gov/bill/111/1/hr1676.

Background

According to the U.S. Department of the Treasury, the Jenkins Act of 1946 (P.L. 81-363) regulates the shipment of tobacco products to consumers through mail carriers such as the United States Postal Service and private carriers. The Jenkins Act requires that tobacco delivery companies file monthly reports on all taxes collected with the tax collection agencies in each State that it delivers tobacco products.

Consumers who order tobacco products on the internet from outside the United States are not exempt from paying Federal excise taxes or customs duties. Also, consumers who purchase tobacco products over the internet from another State may have to pay their State's tobacco sales and excise taxes. All tobacco products made in the U.S. and shipped outside the U.S. cannot be brought back in to the U.S. through purchase by an individual consumer over the internet.

Several major private shipping companies, such as UPS, DSL, and FedEx, do not ship tobacco products. Currently, most orders for tobacco made over the internet in the U.S. are shipped using the USPS.

According to the Republican Staff of the House Committee on Homeland Security, illegal tobacco trade is one of the most lucrative smuggling operations in the world. Estimates show that five percent of the cigarette market in North America, or 414 billion cigarettes, are illicit. The report indicates that money made through this type of trafficking is linked to funding terrorist organizations such as Hezbollah, Hamas, and al Qaeda.

Summary

H.R. 1676 would create new requirements and regulations on companies that sell and ship tobacco products (specifically, cigarettes and smokeless tobacco) through the mail to consumers.

Shipping and Labeling:  Under the bill, companies that ship tobacco products must not sell or ship for single delivery any tobacco product weighing more than ten pounds.  Also, the bill would require that every package containing tobacco products be clearly labeled with the statement:

"CIGRAETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS."  

Tobacco products that do not have this labeling would be considered non-deliverable.

Age Verification and Records of Sale:  Additionally, the bill would require that all companies who mail tobacco products obtain the name, birthday, and address of anyone placing a mail order for tobacco.  This information would be kept in a database by the seller for four years and is to be available to all Federal, State, and Tribal authorities for compliance verification.

The bill would also require companies to use delivery methods that verify all persons accepting the delivery of tobacco products are of the minimum age required for the legal purchase of tobacco by providing government identification and signature.

List of Unregistered or Non-compliant Delivery Tobacco Sellers:  H.R. 1676 would require all tobacco delivery companies to register with the U.S. Attorney General within ninety days of this bill's enactment and requires the Attorney General to compile a list of those companies that have not registered or are not in compliance with the provisions of this bill.  These companies are to be notified of their inclusion on the non-compliance list. 

Taxes:  H.R. 1676 would require tobacco delivery companies to charge applicable Federal, State, or local taxes on tobacco products prior to shipping.

Penalties:  Tobacco delivery companies found to be in violation of any of the provision of H.R. 1676 will not be subject to civil penalties.  Penalties are to be the greater of: 1) two percent of the gross cigarette or smokeless tobacco receipts for the year prior to the date of violation; or 2) $5,000 for a first violation or $10,000 for any other.  Common carriers or independent delivery services that are found to enforce effective policies in compliance with this bill will be subject to penalties.

Cost

A CBO score for H.R. 1676 was not available at press time. However, a CBO score for a similar bill in the 110th Congress (H.R. 4081) estimated that implementing the legislation would cost about $120 million over five years.

House Democratic Caucus Summary

The House Democratic Caucus does not provide summaries of bills.

So, yes, we display the House Republican Conference’s summaries when available even if we do not have a Democratic summary available. That’s because we feel it is better to give you as much information as possible, even if we cannot provide every viewpoint.

We’ll be looking for a source of summaries from the other side in the meanwhile.

The bill contains the following citations to other parts of U.S. law:

United States Code

The United States Code is the compilation of permanent laws enacted by Congress. Temporary and other non-permanent laws do not appear in the United States Code. (About half of the United States Code is the law itself, called positive law. The other half is merely a compilation of the laws but has no legal significance.)

Other Citations

  • 18 U.S.C. Chapter 83