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HB145 ENGROSSED
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HB145
YMEYFN6-2
By Representative Lee
RFD: Ways and Means General Fund
First Read: 13-Jan-26
PFD: 09-Jan-26
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HB145 Engrossed
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PFD: 09-Jan-26
A BILL
TO BE ENTITLED
AN ACT
Relating to interstate warehouser tobacco tax; to amend
Sections 40-25-1, 40-25-4.1, 40-25-8, as last amended by Act
2025-448, 2025 Regular Session, 40-25-8.1, as last amended by
Act 2025-448, 2025 Regular Session, 40-25-16.1, 40-25-18, as
last amended by Act 2025-448, 2025 Regular Session, and
40-25-25, as last amended by Act 2025-448, 2025 Regular
Session, Code of Alabama 1975; to define an interstate
warehouser, to require an interstate warehouser permit issued
by the Department of Revenue; to add Section 40-25-15.1 to the
Code of Alabama 1975; to provide application and enforcement
provisions; to provide for penalties for noncompliance; and to
make nonsubstantive, technical revisions to update the
existing code language to current style.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 40-25-1, 40-25-4.1, 40-25-8, as
last amended by Act 2025-448, 2025 Regular Session, 40-25-8.1,
as last amended by Act 2025-448, 2025 Regular Session,
40-25-16.1, 40-25-18, as last amended by Act 2025-448, 2025
Regular Session, and 40-25-25, as last amended by Act
2025-448, 2025 Regular Session, Code of Alabama 1975, are
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2025-448, 2025 Regular Session, Code of Alabama 1975, are
amended to read as follows:
"§40-25-1
For the purposes of this article, the following terms
shall have the respective following meanings ascribed by this
section :
(1)(10) WHOLESALE DEALER AND JOBBER. Persons , firms, or
corporations who that buy tobacco products direct from the
manufacturer or an affiliate of the manufacturer and sell at
wholesale only, any one or more of the articles taxed herein
under this article to licensed wholesale dealers, jobbers,
semijobbers, and retail dealers for the purpose of resale
only.
(2)(7) RETAIL DEALER. Every person , firm, or
corporation, other than a wholesale dealer or jobber, who that
sells or offers for sale any one or more of the articles taxed
herein under this article , irrespective regardless of quantity
or amount , or the number of sales; and all persons operating
under a retail dealer's license.
(3)(8) SEMIJOBBER. Persons, firms, or corporations A
person who buy buys tobacco products from permitted
wholesalers or obtain obtains tobacco from any other source
and sell sells at wholesale any one or more of the articles
taxed herein under this article to licensed retail dealers for
the purpose of resale only.
(4)(9) STAMPS. The stamp or stamps by the use of
through which the tax levied under this article is are paid
and shall be designated Alabama Revenue Stamps.
(5)(3) CIGARS, CHEROOTS, or STOGIES , ETC. A roll for
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(5)(3) CIGARS, CHEROOTS, or STOGIES , ETC. A roll for
smoking that is of any size or shape , and that is made wholly
or in part of tobacco or any tobacco substitute therefor ,
irrespective regardless of whether the tobacco is pure , or
flavored, adulterated , or mixed with any other ingredient, if
the roll has with a wrapper made wholly or in part of
tobacco.
(6)(5) HEATED TOBACCO PRODUCT. A product other than a
cigarette intended to be heated, containing tobacco that
produces an inhalable aerosol by heating the tobacco by means
of a device without combustion of the tobacco or by heat
generated from a combustion source that only or primarily
heats rather than burns the tobacco.
(7)(1) CIGARETTE or CIGARETTES . The same meaning as
defined in Section 6-12-2 and includes including a cigarette
or cigarettes intended to be heated.
(8)(2) CIGARETTE OR CIGARETTES INTENDED TO BE HEATED. A
cigarette containing tobacco that produces an inhalable
aerosol: (i) by heating the tobacco by means of an electronic
device without combustion of the tobacco; or (ii) by heat
generated from a combustion source that only or primarily
heats rather than burns the tobacco.
(4) DEPARTMENT. The Alabama Department of Revenue.
(6) INTERSTATE WAREHOUSER. A person who purchases
tobacco products directly from the manufacturer or an
affiliate of the manufacturer and, solely for resale, sells
any one or more of the articles taxed under this article to a
permitted wholesale dealer who is qualified under Section
40-25-16. "
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40-25-16. "
"§40-25-4.1
(a) Notwithstanding any other laws, the only persons or
businesses who may be licensed to buy and affix the tax stamps
of the Alabama Department of Revenue required by law to
packages of tobacco products are : (i) wholesalers and
distributors who buy the tobacco products direct from the
manufacturer, or an affiliate of the manufacturer ,; or (ii)
wholesalers who purchase tobacco products directly from an
interstate warehouser permitted by the State of Alabama.
except that the The manufacturer of the product may be allowed
to affix the stamps to a tobacco product for the following
purposes:
(1) Trademark registration.
(2) Promotions of the product.
(3) Test-marketing the product.
(b) In order for For a manufacturer to affix tax stamps
to a tobacco product for a purpose described in subsection
(a), the manufacturer shall give at least four weeks ' prior
written notice to the Commissioner of the Department of
Revenue department of such the manufacturer's intention , along
with full details of the exceptional event purpose , including,
but not limited to:
(1) The nature of the promotion.
(2) The location and length of the promotion.
(3) The estimated number of tobacco products to be
offered for sale during the promotion.
(c) The Department of Revenue department shall notify
all self-administered counties and municipalities of the
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all self-administered counties and municipalities of the
manufacturer's request within seven days of receiving notice
from the manufacturer by forwarding to each self-administered
county and municipality a copy of the written notice,
including the full details of the exceptional event purpose as
set out above.
(d) Any person who violates this section shall be
guilty of a Class A misdemeanor and, upon conviction thereof,
shall be punished as prescribed by law ."
"§40-25-8
(a) Any cigarettes, smoking tobacco, heated tobacco
products, cigars, stogies, cheroots, chewing tobacco, snuff,
or other products taxable under this article found at any
point within the State of Alabama, which the cigarettes,
smoking tobacco, heated tobacco products, cigars, stogies,
cheroots, chewing tobacco, snuff, or other products taxable
under this article shall have been within the State of Alabama
for a period of two hours, or longer, in possession of any
retailer or semijobber not having without the stamps required
by this article affixed to the package the stamps as provided
in this article , or, in the case of products not requiring a
stamp to be affixed , where purchase invoices do not itemize
the applicable tobacco taxes, are declared to be contraband
goods and may be seized by the Department of Revenue
department , its agents of the department, or by any peace
officer of the State of Alabama , without a warrant . and the
goods Goods confiscated pursuant to this subsection shall be
delivered to the Department of Revenue department for
destruction.
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destruction.
(b) Any of the goods, wares, or merchandise when
offered for sale, either at wholesale or retail without the
stamps having been first affixed, or , in the case of products
not requiring a stamp to be affixed , where purchase invoices
do not itemize the applicable tobacco taxes, shall be subject
to confiscation as hereinabove provided.
(c) Any untaxed cigarettes, smoking tobacco, heated
tobacco products, cigars, stogies, cheroots, chewing tobacco,
snuff, or other products taxable under this article found at
any location within the State of Alabama , other than the
primary location of the permitted wholesaler or jobber,
registered semijobber, registered retailer , or tobacco
products manufacturer who stores tobacco products at a bonded
warehouse in this state for resale , are declared to be
contraband goods, and those goods may be seized by the
Department of Revenue department , or its agents of the
department, or by any peace officer of the State of Alabama ,
without a warrant . and the goods Goods confiscated pursuant to
this subsection shall be delivered to the Department of
Revenue department for destruction.
(d) Any vehicle , that is not a common carrier , or owned
by an interstate warehouser permittee and that is used for the
transportation for the purpose of sale of selling unstamped
tobacco articles as hereinabove enumerated described in this
section shall likewise be subject to confiscation and sale at
public auction to the highest bidder after due advertisement
and notice to the title owner of the vehicle. The proceeds of
sale for any vehicle sold hereunder pursuant to this
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sale for any vehicle sold hereunder pursuant to this
subsection shall be deposited into the State Treasury by the
Department of Revenue department to be credited in the same
manner as the tax otherwise due on the tobacco products being
transported. The cost of confiscation and sale shall be paid
out of the sales proceeds derived from the sale before making
remittance to the State Treasurer. Should any unstamped
tobaccos tobacco products be found in any vehicle that is
engaged in the sale, distribution, or delivery of taxable
tobaccos tobacco products , the same shall be prima facie
evidence that it was there the tobacco products were for
sale."
"§40-25-8.1
(a) Each person, firm, corporation, club, or
association that transports products upon the public highways,
roads, or streets of this state which are required to be
stamped as provided in Section 40-25-8 , and which are not
stamped , or on which the tax has not been paid in accordance
with this chapter and Chapter 25A, upon the public highways,
roads, or streets of this state is required to have an active
interstate warehouser permit, tobacco permit , or transporters
permit under this chapter. Failure to obtain a permit prior to
before transporting the products is a violation of this
section. A violation of this section may result in the
products being declared contraband goods that may be seized
without warrant by any law enforcement officer in this state.
The contraband goods may be disposed of or destroyed by the
law enforcement officer in accordance with this chapter. In
addition, a vehicle used in the transportation of confiscated
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addition, a vehicle used in the transportation of confiscated
products may be subject to confiscation by the law enforcement
officer and sold at public auction to the highest bidder after
due advertisement pursuant to Chapter 13 of Title 32.
(b) The owner or, driver, or both , of a vehicle used in
a violation of this section is guilty of a Class A misdemeanor
unless the tobacco products being transported exceeds exceed
any of the following quantities: (i) 25,000 cigars , : (ii)
50,000 filtered cigars , ; (iii) 50,000 little cigars , ; (iv)
50,000 cigarettes , ; (v) 50,000 heated tobacco products , ;
(vi) 25,000 cigar wraps , ; or (vii) 2,500 individual
containers of loose or smokeless tobacco, in which case the
owner or driver is guilty of a Class C felony. Any person
convicted of a second or subsequent offense for a violation of
this section is guilty of a Class C felony, regardless of the
amount of tobacco products involved in the violation.
(c) This section shall not apply to individuals
transporting tobacco for personal consumption as provided in
Section 40-25-25."
"§40-25-11
All interstate warehousers, common carriers, contract
carriers, buses , and trucks transporting tobacco products may
be required , under regulations to be prescribed rules adopted
by the Department of Revenue department, to transmit to the
Department of Revenue a periodic statement of such
consignments or deliveries of tobacco products showing date,
point of origin, point of delivery and to whom delivered ,
recipient , and time of delivery ., and all All interstate
warehousers, common carriers, buses , or and trucks shall
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warehousers, common carriers, buses , or and trucks shall
permit examination by the Department of Revenue department or
its the department's agents of their records relating to
shipment or receipt of tobacco products. The interstate
warehouser, common carriers, buses , and trucks shall permit
the examination and investigation of their records of shipment
or receipts relating to tobacco products, when and wherever
where it is deemed advisable and necessary by the Department
of Revenue department or its the department's agents in the
enforcement of this article. Inspectors, stamp deputies , and
other duly authorized agents of the Department of Revenue,
department shall conduct these examinations on upon proper
identification from and authorization by from the Department
of Revenue, shall make such examination department . Any
person, firm, corporation, partnership , or association of
persons who refuses to transmit to the Department of Revenue
the statements hereinabove provided for, or who refuses to
permit the examination of his records by submit the statements
required by this section to the department, or who refuses to
permit the Department of Revenue department or its duly an
authorized agent of the department to examine its records ,
shall be guilty of a misdemeanor and upon conviction shall be
punished by a fine of not less than one hundred dollars ( $100)
nor more than five hundred dollars ( $500) for each such
offense."
"§40-25-16.1
(a)(1) Each interstate warehouser, wholesaler, jobber,
semijobber, registered retailer, importer, or any other person
selling, receiving, or distributing tobacco products in this
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selling, receiving, or distributing tobacco products in this
state for resale shall file a report of its activity with the
Department of Revenue department between the first and the
twentieth of each month. The information report shall include,
but not be limited to, the customer's name, address, invoice
number, invoice date, a description of the tobacco products,
the itemized tax, and any other information required by the
department.
(1)(2) This subsection is enacted to aid the Department
of Revenue department in the enforcement of Section 40-23-260,
which requires a seller of tobacco products selling or
distributing to retailers in this state to report the sale of
tobacco products if an exemption from the sales or use tax is
claimed at the time of sale.
(2)(3) Any sale of tobacco products to a purchaser
using a sales tax number to purchase the products is declared
to be a purchase for resale, and the seller is required to
obtain a tobacco account and report the sale on the monthly
tobacco sales for resale report.
(3)(4) If a non-registered seller or a non-permitted
interstate warehouser fails to obtain a tobacco account as
required, the department may assess the following penalties:
a. On the first violation, the non-registered seller
shall be issued a written warning notice from the department.
The notice shall advise the non-registered seller of state the
penalty due if the seller continues to fail to comply for
continued noncompliance with this section.
b. On a second violation of this section, the
non-registered seller shall be assessed a civil penalty of one
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non-registered seller shall be assessed a civil penalty of one
hundred dollars ($100).
c. On a third or subsequent violation, the
non-registered seller shall be assessed a civil penalty of one
hundred dollars ($100) multiplied by the total number of
violations that have been imposed under this section.
(b) The commissioner of the department shall establish
a web site website for listing each interstate warehouser,
wholesaler, jobber, semijobber, retailer, importer, or
distributor of tobacco products that has qualified or
registered with the Department of Revenue department .
Purchases of tobacco products made from an entity entities
other than the above those listed as permitted or registered
entities appearing on the department department's website
listing shall be subject to confiscation, as provided for
specified in this chapter."
"§40-25-18
(a) Persons failing to properly affix the required
stamps to any cigars, cheroots, stogies, cigarettes, smoking
tobacco, heated tobacco products, chewing tobacco, and snuff
shall be required to pay, as part of the tax imposed hereunder
under this article , a penalty of not less than twenty-five
dollars ($25) nor more than per article on the first
violation, two hundred fifty dollars ($250) per article on the
second violation, and five hundred dollars ($500) per article
on the third and subsequent violations . Each article or
commodity not having without the proper stamps affixed thereto
as herein as required shall be deemed considered a separate
offense. Any cigars, cheroots, stogies, cigarettes, smoking
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offense. Any cigars, cheroots, stogies, cigarettes, smoking
tobacco, heated tobacco products, chewing tobacco, and snuff
in the at a place of business of any person required by this
article to stamp the same the products shall be prima facie
evidence that they are intended for sale. The Department of
Revenue, upon good cause shown, may waive or remit reduce any
penalty or any part thereof of a penalty provided for in this
section. Any person , firm, corporation, club, or association
of persons who has been found guilty of violating this article
and who, after being punished by fine, penalty, assessment, or
imprisonment, is found guilty of a second or subsequent
violation of this article shall have his or her license, as
provided in Sections 40-12-72 and 40-12-73, revoked by the
department, and no further license or permit shall be issued
or granted to that person , firm, corporation, club, or
association of persons for a period of one year from the date
their the license or permit has been revoked. Notice of the
revocation shall be mailed to the probate judge of probate and
license inspector of the county in which the revocation was
made.
(b) In addition to the penalty levied by the department
pursuant to subsection (a), the county license inspector,
license commissioner, revenue commissioner, tax assessor, or
tax collector of the county in which the untaxed tobacco
product is located may assess a penalty against any person
failing to affix the required stamps to any cigars, cheroots,
stogies, cigarettes, smoking tobacco, heated tobacco products ,
and or snuff. The amount of the additional penalty shall be
not be less than one hundred dollars ($100) nor more than five
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not be less than one hundred dollars ($100) nor more than five
hundred dollars ($500).
(c) The department and the local taxing official may
assess the tax levied by this chapter pursuant to the
assessment procedures set out in Chapter 2A of this title."
"§40-25-25
If any person , firm, or corporation who is not a
regularly licensed dealer in tobacco products shall have or a
permitted interstate warehouser has in his or her possession
within the state more than 30 packages of unstamped cigarettes
or heated tobacco products or more than one box of unstamped
untaxed cigars within the state , such possession it shall be
presumed that the possession is to be for the purpose of
evading the payment of the taxes due thereon ."
Section 2. Section 40-25-15.1, is added to the Code of
Alabama 1975, to read as follows:
§40-25-15.1
(a) Before an interstate warehouser may ship tobacco
products into this state, the interstate warehouser must
possess a current interstate warehouser permit.
(b)(1) The annual application for an interstate
warehouser permit must include the following items and any
other information required by the department:
a. A copy of the current wholesale license or permit,
or its equivalent, issued by at least four states other than
Alabama.
b. A current Certificate of Authority issued by the
Alabama Secretary of State if the applicant is not registered
in Alabama as a domestic entity.
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in Alabama as a domestic entity.
c. The name and address of each permitted wholesaler
within this state to whom the applicant will be delivering
tobacco products.
d. A copy of any contracts between the applicant and
the permitted wholesalers in Alabama regarding the potential
sale of tobacco products within this state.
e. A copy of the most recent audited financial
statements from a certified public accountant or a firm
regularly engaged in the auditing of financial records.
f. A permit fee of two thousand dollars ($2,000) for
the initial application.
(2) An annual permit renewal fee of five hundred
dollars ($500) shall be due on October 1 of each following
year with the annual renewal application. Failure to submit
the required renewal application and fee by October 1 shall
constitute a voluntary dismissal of the interstate warehouser
permit.
(3) Permit fees may be retained and used by the
Department of Revenue for the enforcement of this chapter.
(c) An interstate warehouser permit is
non-transferable, and the annual fees paid are non-refundable.
(d) The department may refuse to issue a permit to an
applicant under this section if any of the following
conditions exist:
(1) The application is incomplete or contains
inaccurate information.
(2) The applicant has been convicted of any criminal
offense involving fraud or misrepresentation.
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offense involving fraud or misrepresentation.
(3) The applicant's wholesale license, permit, or
equivalent, has been revoked by any other state.
(4) The applicant or its predecessor in business
previously held an interstate warehouser permit that was
revoked by Alabama and was not pending reinstatement by the
Alabama Tax Tribunal within the past 12 months.
(5) The applicant has failed to file or pay any tax
administered by the department.
(6) The application is denied for other good cause
which shall be detailed in a written response to the applicant
by the Department of Revenue.
(e) The department may revoke the permit if the
interstate warehouser has violated any provisions of this
chapter or any rules of the department adopted under authority
of this article.
(f) An interstate warehouser with the required permit
may sell cigarettes and tobacco products without applying the
taxes imposed by this article or attaching the state or county
revenue stamps, provided that the products are sold to a
wholesale dealer who is licensed by the State of Alabama.
Additionally, the interstate warehouser must keep in its
possession a record of the sale, the original purchase order,
a copy of the invoice, a receipt from a common carrier or
contract carrier showing shipment for delivery, or, if the
interstate warehouser delivers directly to the qualified
wholesale dealer, a receipt showing delivery along with the
record, original purchase order, and invoice copy related to
the sale.
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the sale.
(g) Any person who violates this section shall be
subject to a penalty of one thousand dollars ($1,000)
multiplied by the total number of violations. This penalty is
in addition to any other penalties that may be imposed under
this chapter.
(h) Any unstamped tobacco product brought into the
state other than by an interstate warehouser, a manufacturer,
or an affiliate of a manufacturer for wholesale or retail sale
shall be deemed contraband and subject to confiscation and
applicable penalties.
(i) The department may adopt rules to implement and
administer this section.
Section 3. This act shall become effective on October
1, 2026.
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1, 2026.
House of Representatives
Read for the first time and referred
to the House of Representatives
committee on Ways and Means General
Fund
................13-Jan-26
Read for the second time and placed
on the calendar:
1 amendment
................14-Jan-26
Read for the third time and passed
as amended
Yeas 102
Nays 0
Abstains 0
................15-Jan-26
John Treadwell
Clerk
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