HomeMy Public PortalAbout1991_12_10_O055The Town of
Leesburg,
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ORDINANCE NO.
AN ORDINANCE:
PRESENTED December 10, 1991
91-0-55 ADOPTED December 10, 1991
AMENDING THE CODE OF THE TOWN OF LEESBURG, VIRGINIA, AS
AMENDED, BY THE ADDITION OF ARTICLE VII "CIGARETTE TAX" TO
CHAPTER 17, "TAXATION AND LICENSES" IN ORDER TO IMPOSE A TAX ON
CIGARETTES SOLD IN THE TOWN OF LEESBURG
WHEREAS, the Town of Leesburg under Section 3-1 of its Charter and Section 15.1-841, Code of
Virginia (1950), as amended, is authorized to enact taxes on property and other lawful subjects as in the
judgment of the Town Council are necessary to pay the debts, defray the expenses, accomplish the
purposes and perform the functions of the town; and
WHEREAS, under Sections 58.1-3840, 58.1-3830, 58.1-3831 and 58.1-3832, Code of Virginia (1950)
as amended, and the aforesaid authority, the town is authorized to levy a tax upon cigarettes sold within
the town; and
WHEREAS, this Council deems the levy of such a tax on cigarettes necessary to pay the debts,
defray the expenses, accomplish the purposes and perform the functions of the town; and
WHEREAS, a public hearing was held on November 26, 1991, as required by the Town Code:
THEREFORE, ORDAINED by the Council of the Town of Leesburg in Virginia as follows:
SECTION I. The Town Code is amended by adding an article to be numbered Article VII, which
said article reads as follows:
Section 17-146. Definitions.
ARTICLE VII - CIGARETTE TAX
(a) Board shall mean the Town of Leesburg; any agency or authority of the Town of Leesburg;
for the administration and enforcement of the cigarette tax ordinance; or any agency or authority for the
administration and enforcement of the cigarette tax ordinance to which the Town of Leesburg, pursuant
to the authorities contained in Section 15.1-21 of the Code of Virginia of 1950, as amended, delegates such
administrative and enforcement pursuant to the provisions of Section 58.1-3832 of the Code of Virginia
of 1950, as amended.
(b) Carton shall mean any container, regardless of material used in its construction, in which
ten (10) packages of twenty (20) cigarettes are placed.
For the purpose of this Article the following words and phrases shall have the meanings respectively
ascribed to them by this Section:
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(c) Cigarette shall mean and include any roll of any size or shape for smoking, whether f'fltered
or ~mt~ltered~ with or without a mouthpiece, made wholly or partly of cut, shredded or crimped tobacco
or other plant or substitute for tobacco~ whether the same is flavored~ adulterated or mixed with another
ingredient~ if the wrapper or cover is made of any material other than leaf tobacco or homogenized leaf
tobacco, regardless of whether the roll is labeled or sold as a cigarette or by any other ~ame.
(d) Town shall mean Town of Leesburg, Virginia.
(e) Dealer shall mean and include every manufacturer's representative, self wholesaler, retailer,
vending m~chine operator, public warehouseman or other person who shall sell~ receive~ store, possess,
distribute or transport cigarettes within or into the town.
(f) Package shall mean and include any container, regardless of the material used in its
construction in which separate cigarettes are placed without such cigarettes being placed into any container
within the package. Packages are those containers of cigarettes from which they are consumed by their
ultimate user. Ordinarily a paclrage contains twenty (20) cigarettes; however~ "package" includes those
containers in which fewer or more than twenty (20) cigarettes are placecL
Person shall mean and include any individual, fh-~n~ unincorporated association~ company,
corporation~ ioint stock company, group, agency..syndicate, trust or trustee, receiver, fiduciary., partnership
and conservator. The word "person" as applied to a partnership, unincorporated association or other joint
venture means the partners or members thereof, and as applied to a corporation shall include all the
officers and directors thereof.
(h) Place of business shall mean and include any place where cigarettes are sol~ placed~ stored~
offered for sale or displayed for sale or where cigarettes are brou~t or kept for the purpose of sale~
consumption or distribution~ including vending mochines~ by a dealer within the town.
i~_ Registered agent shall mean and include ever? dealer and other person who shall be required
to report and collect the tax on cigarettes under the provisions of this Article.
Retail dealer shall mean and include every person who~ in the usual course of business,
purchases or receives cigarettes from any source whatsoever for the purpose of sale within the town to
the ultimate consumer; or any person who, in the usual course of business, owns, leases~ or otherwise
operates within his own place of business, one or more cigarette vending machines for the purpose of sale
within the town of cigarettes to the ultimate consumer; or any person who~ in any manner, buys~ sells,
stores, transfers, or deals in cigarettes for the purpose of sale within the town to the ultimate consumer,
who is not licensed as a wholesaler, or vending machine operator.
(k) Sale or sell shall mean and include every act or transaction~ regardless of the method or
means employed~ including barter, exchange, or the use of vending machines or other mechanical devices
or a criminal or tortious act whereby either ownership or possession~ or both~ of any cigarettes shall be
transferred within the town from a dealer as herein det'med to any other person for a consideration.
(1) Stamp shall mean a srrmll gummed piece of paper or decal used to evidence provision for
payment of the tax as authorized by the Board required to be affixed to eve .ry p~IraE, e of e-i.o~rettes sold
or used within the town.
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(m) Store or storage shall mean and include the keeping or retention of cigarettes in this town
for any purpose except sale in the regular course of business.
(n) Use shall mean and include the exercise of any right or power over any cigarettes or
packages or cigarettes incident to the ownership or possession of those cigarettes or packages of cigarettes
including any transaction where possession is given or received or otherwise transferred, other than a sale.
(o) User shall mean any person who exercises any right or power over any cigarettes or packages
of cigarettes subject to the provisions of this Article incident to the ownership or possession of those
cigarettes or packages of cigarettes or any transaction where possession is given or received or otherwise
transferred, other than a sale.
Section 17-147. Levy and rate.
In addition to all other taxes of every kind now or hereinafter imposed by law, there is hereby levied
and imposed by the town upon eve .ry person who sells or uses cigarettes within the town from and after
the effective date of this Article an excise tax equivalent to five cents for each package containing twenty
(20) cigarettes and 2.5 mills for each cigarette contained in packages of fewer or more than twenty (20)
cigarettes sold or used within the town. The tax shall be paid and collected in the manner and at the
time hereinafter prescribed; provided, that the tax payable for each cigarette or cigarette package sold or
used within the town shall be paid but once. The tax hereby levied shall not apply to free distribution
of sample cigarettes in packages containing five (5) or fewer cigarettes.
Section 17-148. Delegation of Administration.
(a) The town manager is authorized to enter into a written contract on behalf of the Town of
Leesburg delegating the administrative and enforcement authority under this Article to the Northern
Virginia Cigarette Tax Board or its successors or any other agency or authority which qualifies pursuant
to the provisions of Section 15.1-21 of the Code of Virginia of 1950, as amended.
(b) The agen .cy or authority so delegated is authorized to promulgate such rules and regulations,
as it deems appropriate, governing:.
(1) The display of cigarette stamps in vending machines~
(2) The placement of tax liens against property of taxpayers hereunder;
(3) The extending of varying discount rates;
The establishing of different classes of taxpayers or those required to collect and remit
the tax;
(5) The requirements concerning keeping and production of records;
(6) The administrative and jeopardy assessment of tax where reasonably justified;
(7) The required notice to authorities of sale of taxpayer's business;
(8) The audit requirements and authority;
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(lO)
(e) Any
The criteria for authority of distributors and others to possess untaxed cigarettes; and
Any and all powers granted by the provisions of Section 58.1-382(9) of the Code of
Virginia of 1950~ as amended, or necessarily implied therefrom.
agency or authority so delegated by the town marmger on behalf of the Town of
Leesburg pursuant to the provisions of paragraph (a) of this section immediately hereinabove~ is authorized
to_~:
(1) Issue a eommon revenue stamp;
(2) Employ legal counsel~
(3) Bring appropriate court action in its own name where necessary to enforce payment
of the cigarette taxes or penalties~
(4) Provide cigarette tax agents and the necessary enforcement supplies and equipment
needed to effectively enforce the cigarette tax ordinance.
Section 17-149. Methods of collection.
(a) The tax imposed by this Article shall be evidenced by the use of a stamp and shall be paid
by each dealer or other person liable for the tax under a reporting method deemed by the Board to carry,
out the provisions of this Article. The stamps shall be affLxed in such a manner that their removal will
require continued application of water or stream. Each dealer or other person liable for the tax is hereby
required, and it shall be his duty~ to collect and pay the tax and report separately for packages of twenty
(20) cigarettes o forms prescribed for this purpose by the Board:
(1) The quantity of Board-st~mped cigarettes sold or delivered to:
(a) Each registered agent appointed by the Board for which no tax was collected;
(b) Each manufacturer's representative~ and
(c) Each separate person and place of business within the town during the
preceding calendar or lineal month; and
(2) The quantity of Board stamps on hand, both affLxed and unatTLxed on the first day
and the last day of the preceding calendar or fmcal month and the quantity of Board stamps or Board
st~moed ciam'ettes received during the preceding calendar or fmcal month; and
(3) The quantity of cigarettes on hand to which the Board stamp had not been affixed
on the first and last day of the preceding calendar or fmml month and the quantity of cigarettes received
during the preceding calendar or fmcal month to which the Board stamp had not been affixed; and
(4) Such further information as the administrator for the board may require for the
proper administration and enforcement of this Article for the determination of the exact number of
cigarettes in the possession of each dealer or user.
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(b~ Each dealer or other person liable for the tax shall ~e such reports with the Board and pay
the ~x due to the Board between the first and twentieth day after the close of each calendar or fmcal
montl~ and shall furnish a copy of any cigarette tax reports submitted to the Virginia Department of
Taxation for the previous month.
(c) When~ upon e~Arnination and audit of any invoices, records, books, cancelled checks or other
memoranda touching on the purchase, sale, receipt, storage or possession of tobacco products taxed herein~
any dealer or other person liable for the tax is unable to furnish evidence to the Board of sufficient tax
p~yments and stamp purchases to cover cigarettes which were sold~ used~ stored~ received~ purchased or
possessed by ~ the prima facie presumption shall arise that such cigarettes were received~ sold~ used~
stored~ purchased or possessed by him without the proper tax having been paid. The Board shal]~ from
the results of such e~smlnation and audit based upon such direct or indirect information avAilAble, assess
the tax due and unpaid and impose a penalty of ten (10) percent and interest of ten percent per annum
of the gross tax due.
(d) When any dealer or other person liable for the tax flies a false or fraudulent report or fails
to £de a report or fails to perform any act or performs any act to evade payment of the tax~ the Board
shall administratively assess the tax due and unpaid and impose a penalty of fifty (50) percent and interest
of ten percent per anm~m of the gross tax due.
(e) The dealer or other person liable for the tax shall be notified by. certified mail of such
deficiency and such tax~ penalty and interest assessed shall be due and payable within ten (10) da~ys after
notice of such deficiency has been issued. Every dealer or other person liable for the tax shall e~smine
each package of cigarettes to ensure that the Board stamp has been affhxed thereto prior to offering them
for sale.
(f) Any dealer or other person liable for the tax who shall receive cigarettes not bearing the
Board stamp sb~ll~ within one hour of receipt of such cigarettes, commence and with all reasonable
diliEence continue to affLX the Board stamp to each and every package of cigarettes until all unstamped
oacka~es of cigarettes have been stamped and before offering such cigarettes for sale. Any dealer or other
person liable for the tax who has notified the Board that he is engaged in interstate or intrastate business
shall be permitted to set aside such part of his stock as may be legally kept for the conduct of such
interstate or intrastate business (that is, cigarettes held for sale outside the iurisdiction of the Board)
without affixing the stamps required by this Article. Any such interstate or intrastate stock shall be kept
entirely separate and apart from the Board-stamped stock~ in such a msnner as to prevent the
commingling of the interstate or intrastate stock with the Board stock. Any dealer or other person liable
for the tax found to have had untaxed cigarettes which have been lost, whether by negligence, theft, or
any other unaccountable loss, shall be liable for and shall pay the tax due thereon.
It shall also be the duty of each dealer or other person liable for the tax and he is hereby
required to mslutain and keep for a period of three (3) years, not including the current calendar year,
records of cigarettes received~ sold~ stored~ possessed~ transferred or handled by him in any manner,
whatsoever, whether the same were stamped or ~mst~'nped~ to make all such records available for audit..
inspection and examination and to mAire available at all reasonable times the means, facilities and
opportunity for ruskinE s~eh audit, inspection or ex~minA~.ion upon demsnd of the Board
Section 17-150. Registered Agents.
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(a) A~.¥ dealer or other person liable for the tax who shall sell, use, store, possess, distribute
or transport cigarettes within or into the town shall first make application to the Board to q,,Ali .fy as a
registered agent. Such application blar~ which shall be supplied upon request, shall require such
information relative to the nature of the business engaged in by said applicant as the Board deems
necessary.. Such applicant shall provide a sure .ty bond to the Board of one hundred fifty (150) percent of
his average monthly tax liability or fifty thousand dollars ($50,000.00), whichever is less, with a surety
company authorized to do business in the State of Virgin~ Such bond shall be so written that, on timely
payment of the premium thereon~ it shall continue in force from year-to-year. Any applicant whose place
of business is outside the town shall automatically, by fding his application~ submit himself to the Board's
legal {urisdiction and appoint the Administrator for the Board as his agent for any service of lawful
process.
Upon receipt of the properly completed application~ and the required surety bond executed,
the Board shall issue to said applicant a permit to q,ali~ him as a registered agent to purchase, sell~ use,
store, possess, distribute or transport within or into the towrh Board-stamped cigarettes.
(b) Registered agents shall agree to the reporting and p~yment requirements placed upon him
by this Article and the rules and regulations as from time-to-time may be promulgated by the Board. In
his reporting and payment of the tax~ the registered agent shall be allowed a discount, as the Board may
determine not to exceed .0175 cents per carton sold or delivered by him. When any registered agent's
monthly report and payment of the tax is not received within the dates prescribed, the Board shall
disallow any discount taken up to a maximum Amount of five hundred dollars ($500.00), and shall impose
a late reporting penalty of ten (10) percent of the gross tax due or ten dollars ($10.00), whichever is
greater, but in no event more than five hundred dollars ($500.00). The Board may also require such
registered agent to provide proof that he bas complied with all applicable State laws to legally conduct
such business and to £de £mancial statements showing all assets and liabilities. The Board may revoke
any registered agent's permit if such bond, as required, is impaired for any reason.
(c) After adoption of this Article, dealers or other persons liable for that tax who shall sell~ use,
store, possess, distribute or transport tobacco products within or into the town shall be allowed thirty. (30)
days to become q,mH~ed as a registered agent.
Section 17-151. Notice of Intention by Retail Dealers.
(a) Retail dealers who shall sell~ offer for sale, store, possess, distribute, purchase, receive or
transport cigarettes in or into the town shall notify the Board, in VvTiting, of the supplier of such cigarettes
and the name and address and the Virginia Retail Sales and Use Certificate of Registration number for
each separate place of business. Possession of a Virginia State Retail Sales and Use Tax Certificate and
a Virginia State Retail Tobacco License and, where applicable, a retail business license issued by the town
for each separate place of business by a retail dealer shall be considered sufficient written notification to
the Board.
(b) No retail dealer, as defined herein~ who shall have complied with the provisions of the Article
and who purchases only tax-paid Board-stamped cigarettes for each separate place of business shall be
required to quali~, as a registered agent.
Section 17-152. Sale of Cigarette in Vending Machines; Contraband.
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(a) Any cigarettes placed in any coin-operated vending machine shah be presumed for sale within
the town. Any vending m~chine located within the town containing cigarettes placed so as to not allow
visual inspection of the Board stamp through the viewing area as provided for the vending machine
manufacturer shall be in violation of this Article.
(b) Any cigarettes, coin-operated vending machines, counterfeit stamps, or other property found
in violation of this Article shall be declared contraband goods and may be seized by the Board. In addition
to any tax due, the dealer or other person liable for the tax possessing such untaxed cigarettes shall be
subject to civil and criminal penalties herein provided.
(c) In lieu of seizure, the Board may seal such vending m~hines to prevent continued illegal
sale or removal of such cigarettes. The removal of such seal from a vending machine by any unauthorized
person shall be a violation of this Article. Nothing in this Article shall prevent the seizure of any vending
machine at any time after it is sealed.
(d) All cigarette vending machines shall be plainly marked with the nome, address and telephone
number of the owner of said machine.
Section 17-153. Illegal Acts.
the tax:
It shall be unlawful and a violation of the Article for any dealer or other person liable for
(1) To perform any act or fail to perform any act for the purpose of evading the payment
of any tax imposed by this Article or of any part thereof, or to fail or refuse to perform any of the duties
imposed under him under the provisions of the Article or to fail or refuse to obey any lawful order which
may be issued under this Article; or
(2) To falsely or fraudulently make, or cause to be made, any invoices or reports, or to
falsely or fraudulently forge, alter or counterfeit any stamp, or to procure or cause to be made, forged,
altered or counterfeited any such stamp, or knowingly and willfully to alter, publislh pass or tender as true
any false, altered, forged or counterfeited stamp or stamps; or
(3) To sell, offer for sale, or authorize or approve the sale of any cigarettes upon which
the Board stamp has not been affixed; or
(4) To possess, store, use authorize or approve the possession~ storage or use of any
cigarettes in quantities of more than sixty (60) packages upon which the Board stamp has not been
affLxed; or
(5) To transport, authorize or approve the transportation of any cigarettes in quantities
of more than sixty (60) ~aclrAEes into or within the town upon which the Board stamp has not been
aff'Lxed, ~f they are:
(a) Not accompanied by a bill of lading or other document indicating the true
name and address of the consignor or seller and the consignee or purchaser and the brands and q~mntity
of cigarettes transported; or
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(b) Accompanied by a bill of lading or other document which is false or
fraudulent in whole or part; or
(c) Accompanied by a bill of lading or other document indicatin~
(i) A consignee or purchaser in another state or the District of Columbia
who is not authorized by the law of such other jurisdiction to receive or possess such tobacco products
on which the taxes imposed by such other jurisdiction have not been paid unless the tax on the
jurisdiction of destination has been paid and said cigarettes bear the tax stamps of the jurisdiction; or
(~) A consignee or purchaser in the Commonwealth of Virginia but
outside the taxing jurisdiction who does not possess a Virginia Sales and Use Tax Certificate, a Virginia
retail tobacco license and, where applicable, or a business license and a retail tobacco license issued by
the local jurisdiction of destinationl or
(6) To reuse or reffil with cigarettes ar~y packaE, e from which cigarettes have been
removed, for which the tax imposed has been theretofore pald~ or
(7) to remove from any packsEe any stamp with intent to use or cause the same to be
used after same has already been used or to buy, sell, or offer for sale or give away any used, removed,
altered or restored stamps to any person, or to reuse any stamp which had therefore been used for
evidence of the payment of any tax prescribed by this Article or to sell~ or offer to sell, any stamp provided
for herein.
Section 17-154. Jeopardy Assessment.
If the Board determines that the collection of any tax or any amount of tax required to be collected
and paid under this Article will be jeopardized by delay, the Board shall make an assessment of the tax
or amount of tax required to be collected and shall mgil or issue a notice of such assessment to the
taxpayer together with a demand for immediate payment of the tax or of the deficien .ey in tax declared
to be in jeopardy includin~ oenalties and interest. In the case of a current period, for which the tax is
in ieopardy, the Board may declare the taxable period of the taxpayer immediately terminated and shall
cause notice of such fmding and declaration to be msiled or issued to the taxpayer together with a demsud
for immediate payment of the tax based on the period declared terminated and such tax shall be
immediately due and oavable, whether or not the terms otherwise allowed by this Article for fding a
return and pavin~ the tax has expired.
Section 17-155. Erroneous Assessment: Notices and Hearings in the Event of Sealing of Vendin~
Machines or Seizure of Contraband Property.
(a) Any person assessed by the Board with a cigarette tax, penalties and interest or any person
whose cigarettes, vending mschines and other property have been sealed or seized under processes of this
Article who has been aggrieved by such assessment, seizure, or sealing m~y fde a request for a hearin~
before the Board for a correction of such assessment and the return of such property seized or sealed.
(b) Where holders of property interest in cigarettes, vending machines or other property are
know at time of seizure or sealing, notice of seizure or sealing shall be sent to them by certified mail
within twenty-four (24) hours. Where such holders of property interests are unknown at time of seizure
or sealing, it shall be sufficient notice to such unknown interest holders to post such notice to a door or
wall of the room or building which contained such seized or sealed property. Any such notice of seizure
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or sealing shall include procedures for an administrative hearing for return of such property seized or
sealed as well as affirmative defenses set forth in this section which may be asserted.
(c) Such hearing shall be requested within ten (10) days of the notice of such assessment,
seizure, or sealing and shall set forth the reasons why said tax, penalties and interest and cigarettes,
vending machines or other property should be returned or released. Within five (5) days after receipt of
such hearing request the Board shall noti~, the petitioner by certified mail of a date and time for the
informal presentation of evidence at a hearing to be held within fifteen (15) days of the date notification
is mailed. Any such request for hearing shall be denied if the assessed tax, penalties and interest has not
been paid as required or if the request is received more than ten (10) days from first notice to the
petitioner of such seizure or sealing. Within five (5) days after the hearing, the Board shall notify the
petitioner, by registered mail~ whether his request for a correction has been granted or refused.
(d) Appropriate relief shall be given by the Board if it is proven by the preponderance of the
evidence that the illegal sale or use of such seized cigarettes or vending machine or other property was
not intentional on the part of the petitioner, and that said seized cigarettes were in the possession of a
person other than the petitioner without the petitioner's consent at the time said cigarettes, vending
machines or other property were seized or sealed or that petitioner was authorized to possess such
untaxed cigarettes. If the Board is satisfied that the tax was erroneously assessed, it shall refund the
amount erroneously assessed together with any interest and penalties paid thereon and shall return any
cigarettes, vending machines or other property seized or sealed to the petitioner, any petitioner who is
unsatisfied with the written decision of the Board may within thirty (30) days of the date of said decision~
appeal such decision to the appropriate Court in the jurisdiction where the seizure or sealing occurred.
Section 17-156. Disposal of Seized Property.
Any seized and confmcated cigarettes, vending machines or other property used in the furtherance
of any illegal evasion of the tax n~.y be disposed of by sale or other method deemed appropriate by the
Board after any petitioner has exhausted all administrative appeal procedures. No credit from any sale
of cigarettes, vending machines, or other property seized shall be allowed toward any tax and penalties
assessed.
Section 1%157. Extensions.
The Board, upon a finding of good cause may grant an extension of time to f'de a tax report upon
written application therefore, until the end of the calendar or £mcal month in which any tax report is due
hereunder, or for a period not exceeding thirty (30) days. In no case shall a request for an extension of
time to £de a tax report be granted by the Board when such request is not received within the due date
for ~ing such tax report. No interest or penalty shall be charged, assessed or collected by reason of the
granting of such an extension. Where such extension is granted beyond the end of the calendar or fmcal
month in which any tax report is due, hereunder, interest on the tax at a rate of ten percent per annum
shall be charged.
Section 17-158. Penalty for Violation of Article.
Any persons violating any of the provisions of this Article shall be guilty of a Class I misdemeanor
and, upon conviction thereof, shall be punished by a frae of not more than one thousand dollars
($1,000.00) or imprisonment of not more than twelve (12) months or by both such frae and imprisonment.
Such £me and/or imprisonment shall not relieve any such person from the payment of any tax, penalty
or interest imposed by this Article.
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Section 17-159. Each Violation a Separate Offense.
The sale of any quantity or the use, possession, storage or transportation of more than sixty (60)
packages of cigarettes upon which the Board stamp has not been affixed shall be and constitute a separate
violation. Each continuing day of violation shall be deemed to constitute a separate offense.
Section 17-160. Severability.
If any section, phrase, or part of this Article should for any reason be held invalid by a Court of
competent jurisdiction, such decision shall not affect the remainder of the Article~ and eve .ry remaining
section~ clause, phrase or part thereof shall continue in full force and effect.
This ordinance shall be in effect upon its passage.
PASSED this 10th day of December, 1991.
Town of Leesburg
ATTEST:
Clerk of Council
O:Cigarett-Tax