E-Cigarette Tax Parity Act

II 116TH CONGRESS 1ST SESSION S. 2463 To amend the Internal Revenue Code of 1986 to provide for regulation and taxation of electronic cigarettes and alternative nicotine products. IN THE SENATE OF THE UNITED STATES SEPTEMBER 11, 2019 Mr. WYDEN (for himself, Mrs. FEINSTEIN, Mr. REED, Mr. CARPER, Ms. STA- BENOW, Mr. CARDIN, Mr. WHITEHOUSE, Mr. UDALL, Mrs. SHAHEEN, Mr. MERKLEY, Mr. BENNET, Mr. COONS, Mr. HEINRICH, Mr. KING, Mr. MARKEY, Mr. VAN HOLLEN, Ms. HASSAN, Ms. SMITH, and Mrs. MUR- RAY) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide for regulation and taxation of electronic cigarettes and alternative nicotine products. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘E-Cigarette Tax Parity 4 Act’’. 5 VerDate Sep 11 2014 23:17 Sep 11, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2463.IS S2463 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2463 IS SEC. 2. REGULATION AND TAXATION OF ELECTRONIC CIGA- 1 RETTES AND ALTERNATIVE NICOTINE PROD- 2 UCTS. 3 (a) IMPOSITION, RATE, AND ATTACHMENT OF 4 TAX.—Section 5701 of the Internal Revenue Code of 1986 5 is amended— 6 (1) by redesignating subsection (h) as sub- 7 section (i), and 8 (2) by inserting after subsection (g) the fol- 9 lowing new subsection: 10 ‘‘(h) ALTERNATIVE NICOTINE PRODUCTS.— 11 ‘‘(1) IN GENERAL.—On alternative nicotine 12 products, manufactured in or imported into the 13 United States, there shall be imposed a tax equal to 14 the applicable dollar amount per gram of nicotine 15 (and a proportionate tax at the like rate on all frac- 16 tional parts of a gram) contained in such product. 17 ‘‘(2) APPLICABLE DOLLAR AMOUNT.—For pur- 18 poses of this subsection, the applicable dollar 19 amount shall be equal to— 20 ‘‘(A) $50.33, or 21 ‘‘(B) for any specified class of alternative 22 nicotine products which is identified pursuant 23 to regulations prescribed by the Secretary, such 24 amount as may be determined by the Secretary 25 (in consultation with the Secretary of Health 26 VerDate Sep 11 2014 02:39 Sep 12, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2463.IS S2463 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2463 IS and Human Services) to be equivalent to the 1 rate of tax imposed on cigarettes under sub- 2 section (b)(1) on an estimated per use basis for 3 such class of alternative nicotine products.’’. 4 (b) DEFINITIONS.—Section 5702 of the Internal Rev- 5 enue Code of 1986 is amended— 6 (1) in subsection (c), by striking ‘‘and roll-your- 7 own tobacco’’ and inserting ‘‘roll-your-own tobacco, 8 and alternative nicotine products’’, 9 (2) in subsection (d), by striking ‘‘or roll-your- 10 own tobacco’’ each place it appears and inserting 11 ‘‘roll-your-own tobacco, or alternative nicotine prod- 12 ucts’’, and 13 (3) by adding at the end the following new sub- 14 section: 15 ‘‘(q) ALTERNATIVE NICOTINE PRODUCT.— 16 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 17 the term ‘alternative nicotine product’ means any 18 product containing nicotine which is— 19 ‘‘(A) suitable for and likely to be offered 20 to, or purchased by— 21 ‘‘(i) a consumer for the inhalation, in- 22 gestion, absorption, or consumption of nic- 23 otine, or 24 VerDate Sep 11 2014 02:39 Sep 12, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2463.IS S2463 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2463 IS ‘‘(ii) a person for the production of a 1 product described in clause (i), and 2 ‘‘(B) sold, transferred, or delivered to any 3 person not possessing a permit provided for in 4 section 5713(a) as a manufacturer, importer, or 5 export warehouse proprietor. 6 ‘‘(2) EXCEPTIONS.—Pursuant to regulations 7 prescribed by the Secretary, the term ‘alternative 8 nicotine product’ shall not include— 9 ‘‘(A) tobacco, processed tobacco, cigars, 10 cigarettes, smokeless tobacco, pipe tobacco, or 11 roll-your-own tobacco, or 12 ‘‘(B) any product which— 13 ‘‘(i) has been approved by the Food 14 and Drug Administration for sale as a to- 15 bacco cessation product or for other thera- 16 peutic purposes, and 17 ‘‘(ii) is marketed and sold solely for a 18 purpose approved as described in clause 19 (i).’’. 20 (c) EFFECTIVE DATE.—The amendments made by 21 this section shall take effect on the date that is 180 days 22 after the date of the enactment of this Act. 23 Æ VerDate Sep 11 2014 23:17 Sep 11, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\S2463.IS S2463 pamtmann on DSKBC07HB2PROD with BILLS