FY2018-04 Amending Title 3 Revenue And Finance To Add Chapter 3.80 Excise Tax On Cigarettes And Other Tobacco Products.1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
Introduced by: Borough Manager
Drafted by: Assessing Director
Introduced on: 07/20/2017
Public Hearing Date: 08/03/2017
Amended: 08/03/2017
Adopted on: 08/03/2017
KODIAK ISLAND BOROUGH
ORDINANCE NO. FY2018-04
AN ORDINANCE OF THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH AMENDING
TITLE 3 REVENUE AND FINANCE TO ADD CHAPTER 3.80 EXCISE TAX ON CIGARETTES
AND OTHER TOBACCO PRODUCTS.
WHEREAS, recent cuts in Federal and State funding has necessitated the need for the
Kodiak Island Borough to expand its tax base; and
WHEREAS, the Kodiak Island Borough wishes to exercise the authority granted to it by AS
29.35.010 to levy a tax; and
WHEREAS, of all possible options researched, a tax on cigarettes and other tobacco products
is the most palpable.
NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KODIAK ISLAND
BOROUGH THAT:
Section 1: Classification. This ordinance is of a general and permanent nature and shall
become a part of the Kodiak Island Borough Code of Ordinances.
Section 2: Enactment. Title 3 of the Kodiak Island Borough Code of Ordinances is amended to
read as follows:
Chapter 3.80
EXCISE TAX ON CIGARETTES AND OTHER TOBACCO PRODUCTS
Sections:
3.80.010 Applicability, purpose and authority
3.80.020 Definitions
3.80.030 Excise tax on cigarettes and other tobacco products.
3.80.040 Exemptions.
3.80.050 License required for dealers in cigarettes or tobacco products: issuance.
3.80.060 Display of license: suspension or revocation by borough; surrender.
3.80.070 Refund of tax or license fee.
3.80.080 Tax returns.
3.80.090 Involuntary returns.
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 1 of 12
Version 1
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
3.80.100 Amended returns.
3.80.110 Application of payments.
3.80.120 Prohibited acts and penalties.
3.80.130 Civil fraud.
3.80.140 Tax lien.
3.80.150 Interest on unpaid tax.
3.80.160 Taxpayer, licensee, or other person remedies.
3.80.170 Inspection and maintenance of documents and other records.
3.80.180 Administrative regulations.
3.80.190 Confidentiality of tax records.
3.80.010 Applicability, purpose and intent.
A. Applicability. Unless otherwise expressly provided, this chapter shall apply areawide
to all cigarettes and tobacco products brought into or acquired in the borough, including
smokeless tobacco products and electronic cigarettes.
B. Purpose and intent. It is the purpose and intent of this chapter to provide for the levy,
collection and enforcement of the excise tax from the distributor who brings cigarettes or
other tobacco products into the Borough. The excise tax is levied when a distributor
brings, or causes to be brought, cigarettes or other tobacco products into the Borough
from outside the Borough for sale.
3.80.020 Definitions.
different meaning:
A. "Borough" means the Kodiak Island Borough, Alaska.
C. "Buyer" means a person who brings into or acquires in the borough cigarettes or
D. "Cigarette" means a roll for smoking of any size or shape, made wholly or partly of
tobacco, whether the tobacco is flavored. adulterated. or mixed with another inaredient.
E. "Department' means the borough finance department.
F. "Direct -buying retailer" means a person who is engaged in the sale of the cigarettes
or other tobacco products at retail in the borough, and who brings or causes them to be
brought into the borough.
G. "Distributor" means a person who brings cigarettes or other tobacco products or
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 2 of 12
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
H. "Inventory count' means the effective date and details of a count by description,
including the trade name and brand, purchase price and total quantity on hand of all
ciqarettes and other tobacco products. Detail must be subtotaled and distinguished
this chapter.
I. "Licensee" means a person licensed under this chapter.
K. "Other tobacco products" means:
1. A cigar;
2. A cheroot;
3. A stogie;
4. A perique;
5. Snuff and snuff flour:
7. Chewing tobacco, including cavendish, twist, plug, or scrap tobacco and tobacco
suitable for chewing;
Physician; or
under a duty to perform an act concerning which a violation of this chapter could occur.
It is the intent of this chapter that such persons be personally liable for unremitted taxes.
M. "Place of business" means a place where cigarettes or other tobacco products are
sold, or where they are brought or kept for the purpose of sale or consumption, including
a vessel, vehicle, airplane or train.
N. "Purchase" means the acquisition of ownership or possession of cigarettes or other
tobacco products from any source.
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 3 of 12
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
P. "Retail" means a sale to a consumer or to any person for any purpose other than for
resale.
Q. "Retailer" means a person in the borough who is engaged in the business of selling
curettes or other tobacco products at retail.
R. "Sale" includes a sale, barter, exchange and every other manner of transferring the
ownership of personal property.
S. "Tax" means the cigarette and other tobacco products excise tax assessed pursuant
to this chapter.
T. "Tax return" means the quarterly report to be submitted to the department as required
by this chapter.
U. `Vending machine operator" means a person who brings or causes cigarettes or
tobacco products to be brought into the borough and who owns or operates a vending
machine that dispenses cigarettes, whether the vending machine is installed on the
person's own premises or installed elsewhere.
V. "Wholesale price" means the established price for which a manufacturer sells a
tobacco product to a distributor or other person, after deduction of a discount or other
reduction received by the distributor for quantity or cash.
3.80.030 Excise tax on cigarettes and tobacco products.
A. Excise tax on cigarettes. The borough hereby levies an excise tax of $0.05 on each
cigarette brought into the borough for distribution or sale in the borough beginning on
October 1, 2017. Cigarettes upon which the tax is imposed are not again subject to the
tax when acquired by another person.
B. Excise tax on other tobacco products. The borough hereby levies an excise tax on
other tobacco products at the rate of 25 percent of the wholesale price of tobacco
products brought into the Borough for distribution or sale in the borough after October 1,
2017.
3.80.040 Exemptions.
The tax imposed under this chapter does not apply to:
B. Cigarettes and other tobacco products brought into the borough by an exchange,
commissary, or ship's stores operated by one of the uniformed services of the United
States as defined in 5 USC S 2101.
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 4 of 12
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
3.80.050 License required for dealers in cigarettes or tobacco products; issuance.
B. Issuance of license. The department, upon application and payment of the fee, shall
required and must accompany the application. The application must include the
following information:
1. The applicant's name and address;
2. The name under which the cigarette or tobacco products business will be conducted;
3. The applicant's cigarette or tobacco products business categories as a manufacturer,
distributor, direct -buying retailer, vending machine operator or buyer;
4. In the case of a vending machine operator, the number of vending machines which
will be operated; and
5. Other information required by the department's application form.
has requested to determine the applicant's eligibility to receive a license, or if there is
reasonable cause to believe that information submitted in the aDDlication is false or
D. Other licensing requirements. A license required by this chapter is in addition to any
other license required by law.
E. Contents of license. A license issued under this chapter shall include:
1. The name and address of the licensee;
2. The type of business to be conducted;
3. The address at which the business is conducted: and
4. The years for which the license is issued.
G. Expiration and renewal of license. A license issued under this chapter expires on
December 31st of each respective year. A licensee, on application to the department
the department, be reissued a license for the new location for the balance of the
unexpired term. A person whose license is lost, stolen or defaced shall immediately file
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 5 of 12
255 an application with the department for reissuance of the license for the balance of the
256 unexpired term.
257
258 H. Transfer of license. A license issued under this chapter is not assignable or
259 transferable. However, in the case of death, bankruptcy, receivership on incompetency of
260 the licensee, or if the business of the licensee is transferred to another person by
261 operation of law, the department may in its discretion extend the license for a limited
262 time to the executor, administrator, trustee or receiver, or the transferee of the licensee
263
264 3.80.060 Display of license; suspension or revocation by borough; surrender.
265 A. A license issued under this chapter must be prominently displayed at the licensee's
266 place of business.
267
268 B. The department may suspend or revoke a license issued under this chapter:
269
270 1. For violation of this chapter or a regulation of the borough adopted pursuant to this
271 chapter; or
272
273 2. If a licensee ceases to act in the capacity for which the license was issued.
274
275 C. A licensee shall surrender a license to the borough within ten days after:
276
277 1. A revocation of a license;
278
279 2. A cessation of business:
280
281 3. A change of ownership of; or
282
283 4. A change of a place of business.
284
285 D. No person whose license is suspended or revoked shall sell cigarettes or tobacco
286 products or permit cigarettes or tobacco products to be sold during the period of the
287 suspension or revocation on the premises occupied or controlled by that person. No
288 disciplinary proceeding or action is barred or abated by the expiration, transfer.
289 surrender, renewal or extension of a license issued under this chapter.
290
291 3.80.070 Refund of tax or license fee.
292 A. The department shall not refund the license fee paid pursuant to this chapter upon
293 the surrender or revocation of a license after the beginning of the license year. Upon
294 application, the department will refund a license fee that is paid or collected in error.
295
296 B. If a remittance by a licensee exceeds the amount due, and the department, on audit of
297 the account in question, is satisfied that this is the case, the department shall, upon
298 written request of the licensee, refund the excess to the licensee without interest.
299
300 C. Any claim for refund filed more than one year after the due date of the tax is forever
301 barred.
302
303 3.80.080 Tax returns.
304 A. Each year, on or before the last day of the calendar month immediately following
305 March 31, June 30, September 30 and December 31, all licensees shall submit to the
306 department a tax return, upon forms provided by the department, and submit payment
307 for the taxes due.
Kodiak Island Borough, Alaska Ordinance No. FY2018-04
Deletion — Red, Strikeout Page 6 of 12
Insertion — Bold, Blue, Underlined
308
309
310
311
312
313
314
315
316
317
318
319
320
321
322
323
324
325
326
327
328
329
330
331
332
333
334
335
336
337
338
339
340
341
342
343
344
345
346
347
348
349
350
351
352
353
354
355
356
357
358
359
360
1. The return shall be signed under penaltV of perjury by the licensee or his agent and
must include:
a. The name and address of the licensee:
b. The name and address of the person filing the return, if different from the licensee:
c. The number of the license issued under this chapter;
d. The name under which the cigarette or tobacco business is being conducted;
e. The number of cigarettes manufactured, brought into or acquired in the borough
during the preceding month from any source whatsoever;
f. The wholesale price of all tobacco products brought into or acquired in the borough
during the preceding month from any source whatsoever;
v,11csta
whatsoever;
h. The number of cigarettes brought into or acquired in the borough from each person
named in subsection (A)(1)(g) of this section;
j. Deductions claimed for the number of cigarettes and the wholesale price of other
k. The amount of tax due on the nonexempt cigarettes manufactured, brought into or
acquired in the borough during the preceding month, and the amount of tax due based
I. Such other information and supporting documentation as may be required by the
department to be included with the return.
B. Each licensee shall report the cigarette and other tobacco product sales for which an
shall provide a copy of an invoice
supporting each sale to a cardholder.
month.
03.80.090 Involuntary returns.
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 7 of 12
361
362
363
364
365
366
367
368
369
370
371
372
373
374
375
376
377
378
379
380
381
382
383
384
385
386
387
388
389
390
391
392
393
394
395
396
397
398
399
400
401
402
403
404
405
406
407
408
409
410
411
412
413
to the department, including, among other things, comparative data for similar
good and sufficient for all legal purposes. However, nothing prevents the licensee from
presenting evidence in an appeal to rebut the presumed sufficiency of a return prepared
03.80.100 Amended returns.
A Any tax return filed hereunder may be amended by the licensee within one year after
the due date of the tax return being amended. No amendment by the licensee shall be
allowed after this one-year period.
B Any tax return prepared and filed by the department on behalf of the licensee may be
amended by the licensee within one year of the date filed by the department. No
amendment by the licensee shall be allowed after this one-year period.
03.80.110 Application of payments.
Any payment submitted to the finance director for any taxes, penalties, interest, or cost
due under any provision of this chapter or any return or any finding or determination by
taxes due, in that order.
03.80.120 Prohibited acts and penalties.
A. Unless done in compliance with the provisions of this chapter, no person may:
1. Import cigarettes or other tobacco products into the borough;
2. Sell transfer or acquire cigarettes or other tobacco products in the borough; or
B. A penalty of ten percent (10%) of the taxes due shall be incurred automatically when a
within seven calendar days following its due date under this chapter. If a person fails to
pay the full amount of the tax due and/or file a tax return or report required under this
1. Notice of the penalties incurred and to be incurred shall be given to the person
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 8 of 12
414
415
416
417
418
419
420
421
422
423
424
425
426
427
428
429
430
431
432
433
434
435
436
437
438
439
440
441
442
443
444
445
446
447
448
449
450
451
452
453
454
455
456
457
458
459
460
461
462
463
464
465
466
C. If a properly filed amended return reduces the total tax liability or the tax required to
be paid, or the department reduces the tax liability, the related penalty will be reduced
accordingly.
D. All penalties and remedies enumerated in this chapter are cumulative.
ise
penalties and taxes due under this chapter plus a penalty equal to thirty percent (30%) of
3.80.130 Civil fraud.
due to fraud, then a penalty will be added to the tax. The penalty is fifty percent (50%) of
the deficiency due or $500, whichever is greater. The penalty is computed on the total
amount of the deficiency due.
is
of its falsity and intended that it be acted upon or accepted as the truth.
D. To establish civil fraud, the department must prove by clear and convincing evidence
that:
1. the tax liability was understated; and
2. the understatement was the result of an intent to evade tax.
E. An intent to evade tax may be demonstrated by any relevant evidence, including but
not limited to the following:
1. the person has provided false explanations regarding understated or omitted
acquisitions of cigarettes or tobacco products;
2. the person has provided falsified or incomplete source documents;
3. the person has not justified an omission or understatement of a significant amount of
acquisitions of cigarettes or tobacco products; or
4._ the person has substantially overstated a deduction and has failed to justify the
overstatement.
3.80.140 Tax lien.
additional amounts, or assessable penalty together with costs, is a lien in favor of the
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 9 of 12
467
468
469
470
471
472
473
474
475
476
477
478
479
480
481
482
483
484
485
486
487
488
489
490
491
492
493
494
495
496
497
498
499
500
501
502
503
504
505
506
507
508
509
510
511
512
513
514
515
516
517
518
519
borough upon all property and rights to property, real or personal, belonging to that
person.
C. A lien arising out of a tax due under this chapter, including the penalties and interest
on the tax, is. subiect to A.S. 29.45.300. a lien prior, paramount. and superior to all other
to the tax.
D. The lien on personal and real property may be enforced as provided in A.S. 29.45.300
— 29.45.480 for enforcement of real and person property tax liens.
3.80.150 Interest on unpaid tax.
3.80.160 Taxpayer, licensee, or other person remedies.
A. Any person aggrieved by any action of the finance director in issuing, suspending,
revoking, or refusing to issue any license under this chapter or in fixing the amount of
assembly shall hold a hearing to determine whether a correction is warranted. Hearinqs
before the assembly under this subsection may, at the option of the assembly, be
modification and issuance of a final order or decision by the assembly. An application for
shall be given access to the department's file in the matter for preparation of the appeal.
Saturday, Sunday, or a borough observed holiday, the due date is the next working daV.
A current mailing address must be provided to the borough clerk with the request for
appeal, and any change in mailing address after the request for appeal is filed must be
reported to the borough clerk.
C. If the notice to the person pursuant to subsection A of this section shows an amount
due, the uncontested portion of the amount due must be paid within 30 days after the
reason to believe that collection of the total amount due might ieopardize by delay,
immediate payment of the total amount will be demanded and the finance director may
Kodiak Island Borough, Alaska Ordinance No. FY2018-04
Deletion — Red, Strikeout Page 10 of 12
Insertion — Bold, Blue, Underlined
520
521
522
523
524
525
526
527
528
529
530
531
532
533
534
535
536
537
538
539
540
541
542
543
544
545
546
547
548
549
550
551
552
553
554
555
556
557
558
559
560
561
562
563
564
565
pursue any collection remedies provided by law. Payment in full does not affect the
person's right to a hearing.
D. If a person requests a hearing and fails to appear at the hearing, the assembly or
E. Taxes, license fees, penalties and interest declared to be due in the final
administrative decision must be paid within 30 days after the date of the decision. or a
Procedures.
3.80.170 Inspection and maintenance of documents and other records.
A. Every person subject to this chapter shall keep a complete and accurate record of all
cigarettes and other tobacco products manufactured, purchased, sold, brought into,
transported outside of, or acquired in the borough by such person.
1. Except in the case of a manufacturer, the records shall include a statement containing
the name and address of the person from whom cigarettes or other tobacco products
were purchased or acquired, the date of delivery, the quantity of cigarettes and other
tobacco products, the trade name and brand, and the price paid for other tobacco
products purchased.
2. Each invoice or other documentation of the sale of cigarettes or other tobacco
products within the borough shall state whether the tax imposed under this chapter has
been paid.
3. Persons subiect to this chapter shall keep such other documents and records as the
department prescribes.
4. All documents and records required by this section shall be preserved by persons
subject to this chapter for three years. All records and documents required by this
chapter to be kept or retained are subject to inspection within the borough upon demand
iV the department.
B. A licensee transferring or selling cigarettes or other tobacco products to a cardholder
must keep a record of cigarettes and other tobacco products transferred or sold to such
person, including the serial number of the exemption card.
C. The borough finance director or other authorized designee may, during business
hours, enter the business premises of a licensee or cardholder where cigarettes or other
tobacco products are kept or stored, so far as it may be necessary for the purpose of
examining such products and the related business records.
3.80.180 Administrative regulations.
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 11 of 12
566
567
568
569
570
571
572
573
574
575
576
577
578
579
580
581
582
583
584
585
586
587
588
589
590
591
592
593
594
595
596
597
598
599
600
601
602
603
604
605
606
The finance director may adopt policies and procedures providing for the application and
interpretation of this chapter and provide forms for reporting and collecting the tax
imposed herein.
3.80.190 Confidentiality of records.
A. All tax returns, documents, records, and/or reports filed with the borough pursuant to
this chapter and all data obtained from tax returns, documents, records, and/or reports
are confidential as provided by KIBC 2.40.100 and may not be released for inspection by
any person except the licensee, mayor, treasurer, borough attorney, or the assembly;
provided, however, that such data may be released upon court order.
B. It is the duty of the borough clerk to safely keep tax returns, documents, records,
and/or reports and all data thereof secure from public and private inspection except as
Provided by this chapter.
C. This section does not prohibit the borough from compiling and publishing statistical
analysis concerning the data submitted; provided, that no identification of particular tax
returns, documents, records, and/or reports is made. Nothing in this section shall be
deemed to prohibit the internal auditor from examining the tax returns, documents,
records, and/or reports: provided, that no information obtained from specific or identified
tax returns shall be made available to persons other than those authorized to review
them under subsection A of this section.
Section 3: Severability. Should any portion of this ordinance or any application thereof to any
person or circumstances is held invalid, the remainder of this ordinance and application as to
any person or circumstances shall not be affected thereby.
Section 4: Effective Date. This ordinance shall take effect October 1, 2017.
ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH
THIS THIRD DAY OF AUGUST, 2017.
KODIAK ISLAND BH ATTEST:
Daniel A. Rohrer, Mayor Nova M. Javier, MMC, Clerk
VOTES:
Ayes: Crow, LeDoux, Smiley, Townsend, Van Daele
Noes: Skinner, Symmons
Kodiak Island Borough, Alaska
Deletion — Red, Strikeout
Insertion — Bold, Blue, Underlined
Ordinance No. FY2018-04
Page 12 of 12