AN
ACT Relating to cooperative agreements concerning the taxation of cigarettes
sold on Indian lands; amending RCW 82.24.510; adding new sections to chapter
43.06 RCW; adding a new section to chapter 82.08 RCW; adding a new section to
chapter 82.12 RCW; adding a new section to chapter 82.24 RCW; creating a new
section; repealing RCW 82.24.070; and providing an effective date.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. The
legislature intends to further the government-to-government relationship
between the state of Washington and Indians in the state of Washington by
authorizing the governor to enter into contracts concerning the sale of
cigarettes. The legislature finds that these cigarette tax contracts will
provide a means to promote economic development, provide needed revenues for
tribal governments and Indian persons, and enhance enforcement of the state's
cigarette tax law, ultimately saving the state money and reducing conflict. In
addition, it is the intent of the legislature that the negotiations and the
ensuing contracts shall have no impact on the state's share of the proceeds under
the master settlement agreement entered into on November 23, 1998, by the
state. This act does not constitute a grant of taxing authority to any Indian
tribe nor does it provide precedent for the taxation of non-Indians on fee
land.
NEW
SECTION. Sec. 2. A
new section is added to chapter 43.06 RCW to read as follows:
(1)
The governor may enter into cigarette tax contracts concerning the sale of
cigarettes. All cigarette tax contracts shall meet the requirements for cigarette
tax contracts under this section. Except for cigarette tax contracts under
section 3 of this act, the rates, revenue sharing, and exemption terms of a
cigarette tax contract are not effective unless authorized in a bill enacted by
the legislature.
(2)
Cigarette tax contracts shall be in regard to retail sales in which Indian
retailers make delivery and physical transfer of possession of the cigarettes
from the seller to the buyer within Indian Country, and are not in regard to
transactions by non-Indian retailers. In addition, contracts shall provide
that retailers shall not sell or give, or permit to be sold or given,
cigarettes to any person under the age of eighteen years.
(3)
A cigarette tax contract with a tribe shall provide for a tribal cigarette tax
in lieu of all state cigarette taxes and state and local sales and use taxes on
sales of cigarettes in Indian Country by Indian retailers. The tribe may allow
an exemption for sales to tribal members.
(4)
Cigarette tax contracts shall provide that all cigarettes possessed or sold by
a retailer shall bear a cigarette stamp obtained by wholesalers from a bank or
other suitable stamp vendor and applied to the cigarettes. The procedures to
be used by the tribe in obtaining tax stamps must include a means to assure
that the tribal tax will be paid by the wholesaler obtaining such cigarettes.
Tribal stamps must have serial numbers or some other discrete identification so
that each stamp can be traced to its source.
(5)
Cigarette tax contracts shall provide that retailers shall purchase cigarettes
only from:
(a)
Wholesalers or manufacturers licensed to do business in the state of
Washington;
(b)
Out-of-state wholesalers or manufacturers who, although not licensed to do
business in the state of Washington, agree to comply with the terms of the
cigarette tax contract, are certified to the state as having so agreed, and who
do in fact so comply. However, the state may in its sole discretion exercise
its administrative and enforcement powers over such wholesalers or
manufacturers to the extent permitted by law;
(c)
A tribal wholesaler that purchases only from a wholesaler or manufacturer
described in (a), (b), or (d) of this subsection; and
(d)
A tribal manufacturer.
(6)
Cigarette tax contracts shall be for renewable periods of no more than eight
years. A renewal may not include a renewal of the phase-in period.
(7)
Cigarette tax contracts shall include provisions for compliance, such as
transport and notice requirements, inspection procedures, stamping
requirements, recordkeeping, and audit requirements.
(8)
Tax revenue retained by a tribe must be used for essential government
services. Use of tax revenue for subsidization of cigarette and food retailers
is prohibited.
(9)
The cigarette tax contract may include provisions to resolve disputes using a
nonjudicial process, such as mediation.
(10)
The governor may delegate the power to negotiate cigarette tax contracts to the
department of revenue. The department of revenue shall consult with the liquor
control board during the negotiations.
(11)
Information received by the state or open to state review under the terms of a
contract is subject to the provisions of RCW 82.32.330.
(12)
It is the intent of the legislature that the liquor control board and the
department of revenue continue the division of duties and shared authority
under chapter 82.24 RCW and therefore the liquor control board is responsible
for enforcement activities that come under the terms of chapter 82.24 RCW.
(13)
Each cigarette tax contract shall include a procedure for notifying the other
party that a violation has occurred, a procedure for establishing whether a
violation has in fact occurred, an opportunity to correct such violation, and a
provision providing for termination of the contract should the violation fail
to be resolved through this process, such termination subject to mediation
should the terms of the contract so allow. A contract shall provide for
termination of the contract if resolution of a dispute does not occur within
twenty-four months from the time notification of a violation has occurred.
Intervening violations do not extend this time period. In addition, the
contract shall include provisions delineating the respective roles and
responsibilities of the tribe, the department of revenue, and the liquor
control board.
(14)
For purposes of this section and sections 3 through 6 of this act:
(a)
"Essential government services" means services such as tribal
administration, public facilities, fire, police, public health, education, job
services, sewer, water, environmental and land use, transportation, utility
services, and economic development;
(b)
"Indian retailer" or "retailer" means (i) a retailer wholly
owned and operated by an Indian tribe, (ii) a business wholly owned and
operated by a tribal member and licensed by the tribe, or (iii) a business
owned and operated by the Indian person or persons in whose name the land is
held in trust; and
(c)
"Indian tribe" or "tribe" means a federally recognized
Indian tribe located within the geographical boundaries of the state of
Washington.
NEW
SECTION. Sec. 3. A
new section is added to chapter 43.06 RCW to read as follows:
(1)
The governor is authorized to enter into cigarette tax contracts with the
Squaxin Island Tribe, the Nisqually Tribe, Tulalip Tribes, the Muckleshoot
Indian Tribe, the Quinault Nation, the Jamestown S'Klallam Indian Tribe, the
Port Gamble S'Klallam Tribe, the Stillaguamish Tribe, the Sauk-Suiattle Tribe,
the Skokomish Indian Tribe, the Nooksack Indian Tribe, the Lummi Nation, the
Chehalis Confederated Tribes, and the Upper Skagit Tribe. Each contract
adopted under this section shall provide that the tribal cigarette tax rate be
one hundred percent of the state cigarette and state and local sales and use
taxes within three years of enacting the tribal tax and shall be set no lower
than eighty percent of the state cigarette and state and local sales and use
taxes during the three-year phase-in period. The three-year phase-in period
shall be shortened by three months each quarter the number of cartons of
nontribal manufactured cigarettes is at least ten percent or more than the
quarterly average number of cartons of nontribal manufactured cigarettes from
the six-month period preceding the imposition of the tribal tax under the
contract. Sales at a retailer operation not in existence as of the date a
tribal tax under this section is imposed are subject to the full rate of the
tribal tax under the contract. The tribal cigarette tax is in lieu of the
state cigarette and state and local sales and use taxes, as provided in section
2(3) of this act.
(2)
A cigarette tax contract under this section is subject to section 2 of this
act.
NEW
SECTION. Sec. 4. A
new section is added to chapter 82.08 RCW to read as follows:
The
tax levied by RCW 82.08.020 does not apply to sales of cigarettes by an Indian
retailer during the effective period of a cigarette tax contract subject to
section 2 of this act.
NEW
SECTION. Sec. 5. A
new section is added to chapter 82.12 RCW to read as follows:
The
provisions of this chapter shall not apply in respect to the use of cigarettes
sold by an Indian retailer during the effective period of a cigarette tax
contract subject to section 2 of this act.
NEW
SECTION. Sec. 6. A
new section is added to chapter 82.24 RCW to read as follows:
(1)
The taxes imposed by this chapter do not apply to the sale, use, consumption,
handling, possession, or distribution of cigarettes by an Indian retailer
during the effective period of a cigarette tax contract subject to section 2 of
this act.
(2)
Effective July 1, 2002, wholesalers and retailers subject to the provisions of
this chapter shall be allowed compensation for their services in affixing the
stamps required under this chapter a sum computed at the rate of six dollars
per one thousand stamps purchased or affixed by them.
NEW
SECTION. Sec. 7. RCW
82.24.070 (Compensation of dealers), as now or hereafter amended,
and 1987 c 496 s 5, 1987 c 80 s 2, 1971 ex.s. c 299 s 14, 1965 ex.s. c 173 s
24, 1961 ex.s. c 24 s 4, & 1961 c 15 s 82.24.070 are each repealed.
Sec.
8. RCW
82.24.510 and 1986 c 321 s 5 are each amended to read as follows:
(1)
The licenses issuable under this chapter are as follows:
(a)
A wholesaler's license.
(b)
A retailer's license.
(2)
Application for the licenses shall be made through the master license system
under chapter 19.02 RCW. The department of revenue shall adopt rules regarding
the regulation of the licenses. The department of revenue may refrain from the
issuance of any license under this chapter if the department has reasonable
cause to believe that the applicant has wilfully withheld information requested
for the purpose of determining the eligibility of the applicant to receive a
license, or if the department has reasonable cause to believe that information
submitted in the application is false or misleading or is not made in good
faith. In addition, for the purpose of reviewing an application for a
wholesaler's license and for considering the denial, suspension, or revocation
of any such license, the department may consider criminal convictions of the
applicant related to the selling of cigarettes within the previous five years
in any state, tribal, or federal jurisdiction in the United States, its
territories, or possessions, and the provisions of RCW 9.95.240 and chapter
9.96A RCW shall not apply to such cases. The department may, in its
discretion, grant or refuse the wholesaler's license, subject to the provisions
of RCW 82.24.550.
(3)
No person may qualify for a wholesaler's license under this section without
first undergoing a criminal background check. The background check shall be
performed by the liquor control board and must disclose any criminal
convictions related to the selling of cigarettes within the previous five years
in any state, tribal, or federal jurisdiction in the United States, its
territories, or possessions. A person who possesses a valid license on the
effective date of this section is subject to this subsection and subsection (2)
of this section beginning on the date of the person's master license
expiration, and thereafter. If the applicant or licensee also has a license
issued under chapter 66.24 RCW, the background check done under the authority
of chapter 66.24 RCW satisfies the requirements of this section.
(4)
Each such license shall expire on the master license expiration date, and each
such license shall be continued annually if the licensee has paid the required
fee and complied with all the provisions of this chapter and the rules of the
department of revenue made pursuant thereto.
NEW
SECTION. Sec. 9.
Section 7 of this act takes effect July 1, 2002.
