AB471 - Revises provisions governing remote sales of certain tobacco products. (BDR 32-846)

- 83rd Session (2025) Assembly Bill No. 471–Assemblymembers Hibbetts; and Nguyen CHAPTER.......... AN ACT relating to taxation; revising provisions governing the taxation of remote sales of cigars and pipe tobacco; revising provisions governing the licensing of remote retail sellers of cigars and pipe tobacco; revising provisions governing age verification for remote retail sales of certain tobacco products; providing penalties; making an appropriation; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law imposes a tax on the receipt, purchase or sale in this State of cigarettes and other tobacco products, including, without limitation, cigars and pipe tobacco. (NRS 370.0318, 370.165, 370.350, 370.440, 370.450) Under existing law, the tax on tobacco products, other than cigarettes, is required to be paid by the wholesale dealer who purchased the products from the manufacturer and who distributes the products to a retail dealer in this State. If any tobacco products, other than cigarettes, are authorized by law to be sold directly to a consumer in this State by a person located outside this State, the tax is imposed on the person making the sale and the tax is based on the established price for which the products are sold to the consumer. (NRS 370.440, 370.450) This bill enacts provisions to provide for the taxation of the remote sale of cigars and pipe tobacco by persons who make sales of cigars and pipe tobacco through any means by which the cigars or pipe tobacco are delivered to the consumer through remote sales. Sections 2 and 3 of this bill, respectively, define the sales that constitute a remote retail sale and the sellers who are remote retail sellers for the purposes of taxing such remote retail sales of cigars and pipe tobacco. Section 3.3 of this bill requires the tax for a remote sale of cigars or pipe tobacco to be based on the actual cost of the cigars or pipe tobacco to the remote retail seller, as defined in section 1.3 of this bill. Under section 3.3, a remote retail seller is subject to this tax only if the remote retail seller meets certain thresholds for the retail sale of cigars or pipe tobacco to consumers in this State. Section 3.4 of this bill provides for the filing of a monthly report of the sales of cigars and pipe tobacco by a remote retail seller in a manner similar to the monthly report for a wholesale dealer of such products, and section 3.5 of this bill imposes recordkeeping requirements on a remote retail seller of cigars and pipe tobacco that are similar to the recordkeeping requirements for a wholesale dealer of such products. Sections 3.6-3.9 of this bill provide for the licensing of remote retail sellers of cigars and pipe tobacco in the same manner as wholesale dealers of such products. Specifically: (1) section 3.65 prohibits the issuance, maintenance or renewal of a license if the applicant or licensee is not registered to collect and remit sales and use tax, is delinquent in the payment of sales and use tax or the tax imposed by section 3.3, or does not comply with certain age-verification requirements; (2) section 3.8 imposes the same fees for a license that are imposed on similar tobacco licensees; and (3) section 3.9 imposes the same bonding requirements that are imposed on similar tobacco licensees. Section 7 of this bill clarifies requirements for wholesale dealers of tobacco products, other than cigarettes, to maintain an inventory of such products by providing that such inventory must be maintained at each location in this State at which the wholesaler maintains a place of business. Section 12.5 of this bill makes a remote retail seller – 2 – - 83rd Session (2025) subject to the penalties that apply under existing law to delinquency in the payment of taxes on tobacco products. (NRS 370.523) Section 20 of this bill makes a conforming change to align with existing requirements for the use of an independent, third-party age verification service by remote retail sellers of certain tobacco products. Section 20.5 of this bill makes a conforming change to ensure premium cigars sold to a remote retail seller are taxed in the same manner as premium cigars sold by other retail sellers in this State. Section 20.7 of this bill makes an appropriation to the Department of Taxation for certain costs to implement the provisions of this bill. EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. Chapter 370 of NRS is hereby amended by adding thereto the provisions set forth as sections 1.1 to 3.9, inclusive, of this act. Sec. 1.1. As used in sections 1.1 to 3.9, inclusive, of this act, unless the context otherwise requires, the words and terms defined in sections 1.3 to 3.2, inclusive, of this act have the meanings ascribed to them in those sections. Sec. 1.3. “Actual cost” means the actual price paid by a remote retail seller for an individual stock keeping unit of cigars or pipe tobacco. Sec. 1.5. “Actual cost list price” means the average of the price paid by a remote retail seller for a stock keeping unit over the 12 calendar months immediately preceding January 1 of the year in which a remote retail sale is made by a remote retail seller. Sec. 1.7. “Cigar” means any roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco, other than a cigarette, as defined in NRS 370.010. Sec. 1.8. “License” means a license issued pursuant to section 3.6 of this act that authorizes the holder of the license to engage in business as a remote retail seller. Sec. 1.85. “Licensee” means the holder of a license. Sec. 1.9. “Pipe tobacco” means any tobacco which, because of its appearance, type, packaging or labeling, is suitable for use and likely to be offered to, or purchased by, ultimate consumers as tobacco to be smoked in a pipe. Sec. 2. “Remote retail sale” means a sale of a cigar or pipe tobacco to an ultimate consumer in this State for which: 1. The ultimate consumer submits the order for the sale by means of a telephonic or other method of voice transmission, the mail or the Internet or any other on-line service, or the seller is – 3 – - 83rd Session (2025) otherwise not in the physical presence of the buyer when the request for purchase or order is made; or 2. The cigar or pipe tobacco is delivered by common carrier, private delivery service or other method of remote delivery, or the seller is not in the physical presence of the buyer when the buyer obtains possession of the cigars or pipe tobacco. Sec. 3. “Remote retail seller” means a person located within or outside the borders of this State who makes a remote retail sale of a cigar or pipe tobacco to ultimate consumers in this State. Sec. 3.1. “Sale” means any transfer, exchange, barter, gift, offer for sale or distribution for consideration of other tobacco products. Sec. 3.15. “Stock keeping unit” means the unique identifier assigned by the distributor or remote retail seller to an item for the purpose of tracking inventory. Sec. 3.2. “Ultimate consumer” has the meaning ascribed to it in NRS 370.440. Sec. 3.25. (Deleted by amendment.) Sec. 3.3. 1. Except as otherwise provided in this section, there is hereby imposed upon the receipt, purchase or sale of cigars and pipe tobacco sold by a remote retail seller to an ultimate consumer in this State: (a) For cigars and pipe tobacco that are not premium cigars, a tax of 30 percent of the actual cost of those products; and (b) For cigars and pipe tobacco that are premium cigars, a tax of 30 percent of the actual cost of those products except that, if 30 percent of the actual cost of those products is: (1) Greater than 50 cents for each premium cigar, the tax imposed shall be 50 cents for each premium cigar. (2) Less than 30 cents for each premium cigar, the tax imposed shall be 30 cents for each premium cigar. 2. The tax is imposed at the time the remote retail seller makes a remote retail sale to an ultimate consumer in this State. The tax must be paid by the remote retail seller to the Department in accordance with the provisions of section 3.4 of this act. It is the intent and purpose of this section to impose the tax once and only once on cigars and pipe tobacco sold in this State. 3. The tax is imposed on a remote retail seller only if, during the current calendar year or the immediately preceding calendar year: (a) The cumulative gross receipts of the remote retail seller from remote retail sales of cigars or pipe tobacco, or both, by the – 4 – - 83rd Session (2025) remote retail seller to ultimate consumers in this State exceed $100,000; or (b) The remote retail seller makes 200 or more separate remote retail sales of cigars or pipe tobacco, or both, to ultimate consumers in this State. 4. Any remote retail seller who makes a remote retail sale of cigars or pipe tobacco to an ultimate consumer in this State without paying the tax provided for by this section is guilty of a misdemeanor. 5. As used in this section, “premium cigar” means a cigar that is rolled by hand, has a wrapper made of whole tobacco leaves and does not have a filter or mouthpiece. Sec. 3.4. 1. A remote retail seller shall, not later than 20 days after the end of each month, submit to the Department a report setting forth such information as the Department may prescribe concerning cigars and pipe tobacco on which the tax provided by section 3.3 of this act was imposed during the preceding calendar month. The report must include, without limitation, information concerning: (a) All cigars and pipe tobacco brought into this State from outside this State, or caused to be brought into this State from outside this State, by the remote retail seller, or shipped or transported from within or outside this State to ultimate consumers in this State by the remote retail seller, during the preceding calendar month; and (b) The actual cost and actual cost list price for each stock keeping unit for the preceding calendar month. 2. Each report submitted pursuant to this section must be accompanied by the tax owed pursuant to section 3.3 of this act for cigars and pipe tobacco on which that tax was imposed during the previous month. Sec. 3.5. 1. Every remote retail seller shall keep at the principal place of business identified on the license issued to the remote retail seller complete and accurate records relating to remote retail sales to ultimate consumers in this State, including invoices indicating the actual cost or actual cost list price paid by the remote retail seller for each stock keeping unit. The invoices required by this subsection must contain: (a) The name and address of the remote retail seller who sold the cigars or pipe tobacco; (b) The name and address of the ultimate consumer in this State who purchased the cigars or pipe tobacco; (c) The date of the sale; – 5 – - 83rd Session (2025) (d) The invoice number; (e) The method of delivery; and (f) The itemized quantity of each brand, type, quantity and price of cigar and pipe tobacco sold. 2. Every remote retail seller shall preserve for at least 5 years after the date of the sale to the ultimate consumer in this State or the date of the last entry made on the record, whichever is later. Sec. 3.6. 1. A person shall not engage in business as a remote retail seller unless the person first secures a license to engage in that activity from the Department. 2. An application for a license must: (a) Be made to the Department on forms prescribed by the Department. (b) Include the name and address of the applicant. If the applicant is a firm, association or partnership, the application must include the name and address of each of its members. If the applicant is a corporation, the application must include the names and addresses of the president, vice president, secretary and managing officer or officers. (c) Specify the location, by street and number, of the principal place of business of the applicant. (d) Specify the location, by street and number, of any place used by the applicant to distribute, ship, warehouse or store cigars and pipe tobacco and for which the license is sought. (e) Specify any other information the Department may require to carry out the provisions of this chapter. (f) Be accompanied by the required license fee. (g) Be accompanied by a certified copy of the certificate required by NRS 602.010 or any renewal certificate required by NRS 602.035. 3. A license as a remote retail seller authorizes the holder thereof to make remote retail sales of cigars and pipe tobacco from the premises for which the license was issued to any ultimate consumer in this State. Sec. 3.65. No license as a remote retail seller may be issued, maintained or renewed if: 1. The provisions of chapter 372 or 374 of NRS, or any regulations adopted pursuant thereto, require the applicant or licensee to impose, collect and remit sales tax, or collect and remit use tax, and the applicant or licensee: (a) Is not registered with the Department pursuant to NRS 360B.200 or does not hold a valid permit for each place of business of the applicant pursuant to NRS 360.5971; or – 6 – - 83rd Session (2025) (b) Is delinquent in the payment of any such tax, or any penalty or imposed by the Department for delinquent payment of such tax. 2. The applicant or licensee is: (a) Required by section 3.3 of this act to pay tax on the receipt, purchase or sale of cigars or pipe tobacco to an ultimate consumer in this State; and (b) Delinquent in the payment of any such tax, or any penalty or interest imposed by the Department for delinquent payment of such tax. 3. The applicant or licensee does not provide for age verification through an independent, third-party age verification service that compares information available from a commercially available database, or aggregate of such databases, that are regularly used by governmental agencies and businesses for the purposes of age and identity verification to the personal information entered by the person during the ordering process to establish that the person is over the age of 21 years. Sec. 3.7. 1. Each holder of a license shall include the license information on the Internet website of the licensee. 2. Licenses are nontransferable, except that upon prior written notice to the Department the location of the premises for which the license was issued m [Text truncated for display. Full text available on LegiScan.]