HomeMy Public PortalAbout1992_05_12_O013 Cigarette TaxThe Town of
Leesburg,
¥irginia
ORDINANCE NO.
AN ORDINANCE:
PRESENTED May 12, 1992
92-0-13 ADOPTED May 12, 1992
AMENDING ARTICLE VI/OF CHAPTER 17, "TAXATION AND LICENSES" IN
ORDER TO REVISE THE 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
Vir~Ja (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 Vir~-Ja (1950)
as amended, and the aforesaid authority, the town is authorized to levy a tax upon cigarettes sold within the
town; and
WHEREAS, the proposed budget for the £mcal year ending June 30, 1993, contemplates an increase
in the cigarette tax of from $.05 per pack to $.15 per pack; and
WHEREAS, this Council deems the levy of such a tax on cigarettes necessary to pay the debts, defray
the expenses, accomplish the purposes and perform the functions of the town; and
WHEREAS, a public hearing was held on April 14, 1992, as required by the Town Code:
THEREFORE, ORDAIN-ED by the Council of the Town of Leesburg in Virginia as follows:
SECTION I. The Town Code is amended by revising Section 17-147 of Article VII, of Chapter 17
which read as follows:
ARTICLE VII - CIGARE~i'E TAX
Section 17-146. Definitions.
For the purpose of this Article the following words and phrases shall have the meanings respectively
ascribed to them by this Section:
(a) Board shall mean the Town of Leesburg;, any agency or authority of the Town of Leesburg;
for the administration and enforcement of the cigarette tax ordinance; or any agency or authority for the
administration and enforcement of the cigarette tax ordinance to which the Town of Leesburg, pursuant to
the authorities contained in Section 15.1-21 of the Code of Virginia of 1950, as amended, delegates such
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administrative and enforcement pursuant to the provisions of Section 58.1-3832 of the Code of Virginia of
1950, as amended.
(b) Carton shall mean any container, regardless of material used in its construc$ion, in which ten
(10) packages of twenty (20) cigarettes are placed.
(c) Cigarette shall mean and include any roll of any size or shape for smoking~ whether filtered
or unfdtered, 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 name.
(d) Town shall mean Town of Leesburg, Virginis~
(e) Dealer shah mean and include every manufacturer's representative, self wholesaler, retailer,
vending machine 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 msterial used in its
construction in which separate cigarettes are placed without such cigarettes being placed into any container
within the paei~%~e. Packages are those containers of cigarettes from which they are consumed by their
ultimate user. Ordinarily a package contains twenty (20) cigarettes; however, "package" includes those
containers in which fewer or more than twenty (20) cigarettes are placed.
(g) Person shall mean and include any individual, £mn, unincorporated association, company,
corporation, joint stock company, group, agency, syndicate, trust or trustee, receiver, fiduciary, partnership
and conservator. The word "person" as applied to a partnership, unincorporated assochtion 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 sold, placed, stored,
offered for sale or displayed for sale or where cigarettes are brought or kept for the purpose of sale,
consumption or distribution, including vending machines, by a dealer within the town.
(i) Registered agent shah mean and include every dealer and other person who shall be required
to report and collect the tax on cigarettes under the provisions of this Article.
(j) 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 meclmnical devices or
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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 de£med to any other person for a consideration.
(1) Stamp shall mean a small g~,mmed piece of paper or decal used to evidence provision for
payment of the tax as authorized by the Board required to be affixed to every packsge of cigarettes sold or
used within the town.
(m) Store or storage shall mean and include the keeping or retention of cigarettes in this town
for any purpose except sale in the reg~dsr 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 tram,~__ction 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 packsges
of cigarettes subject to the provisions of this Article incident to the ownership or possession of those
cigarettes or packsges 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 every person who sells or uses cigarettes within the town from and after the
effective date of this Article an excise tax equivalent to fi;-c fifteen cents for each package containing twenty
(20) cigarettes and 3,5 7.._.~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 msnager is authorized to enter into a written contract on behalf of the Town of
Leesburg delegating the admlrdstrative and enforcement authority under this Article to the Northern ~r~rginla
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 agency 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 m~w~ines;
(2)
(3)
The placement of tax liens against property of taxpayers hereunder;
The extending of varying discount rates;
(4)
'I"ne establishing of different classes of taxpayers or those required to collect and
remit the tax;
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and
(5)
(6)
(7)
(8)
(9)
The requirements concerning keeping and production of records;
The administrative and jeopardy assessment of tax where reasonably justified;
The required notice to authorities of sale of taxpayer's business;
The audit requirements and authority;
The criteria for authority of distributors and others to possess tmtaxed cigarettes;
(10) 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.
(c) Any agency or authority so delegated by the town manager 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 common 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-stamped cigarettes sold or delivered to:
(a) Each registered agent appointed by the Board for which no tax was collected;
(b) Each m~uufacturer's representative; and
(c) Each separate person and place of business within the town during the
preceding calendar or fmcal month; and
(2) 'I"ne quantity of Board stamps on hand, both affLxed and unaffLxed on the first day
and the last day of the preceding calendar or fmcal month and the quantity of Board stamps or Board
stamped cigarettes received during the preceding calendar or fmcal month; and
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(3) The quantity of cigarettes on hand to which the Board stamp had not been affhxed
on the first and last day of the preceding calendar or fmcal month and the quantity of cigarettes received
during the preceding calendar or fiscal month to which the Board stamp had not been aff'.Lxed; and
(4) Such further information as the administrator for the board nmy 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.
(b) Each dealer or other person liable for the tax shall file such reports with the Board and pay
the tax due to the Board between the £n-st and twentieth day after the close of each calendar or fmcal month,
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~mlnation 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
payments and stamp purchases to cover cigarettes which were sold, used, stored, received, purchased or
possessed by him; 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 shsll; from the
results of such examination 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 mmum of the gross
tax due.
(d) When any dealer or other person liable for the tax £des a false or fraudulent report or fails
to fde a report or fails to perform any act or performs any act to evade payment of the tax, the Board shall
admini.~tratively assess the tax due and unpaid and impose a penalty of f~ty (50) percent and interest of ten
percent per annum of the gross tax due.
(e) The dealer or other person liable for the tax shall be notified by certified msi! of such
deficiency and such tax, penalty and interest assessed shall be due and payable within ten (10) days after
notice of such deficiency has been issuecL Every dealer or other person liable for the tax shah examine each
package of cigarettes to ensure that the Board stamp bas been affhxed thereto prior to offering them for sale.
(f) Any dealer or other person liable for the tax who shall receive cigarette,,~ not bearing the
Board s~mp shall; within one hour of receipt of such cigarettes, commence and with all reasonable dilio~ence
continue to affix the Board stamp to each and every packnge of cigarettes until all unstamped packno~es of
cigarettes have been stemped 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 jurisdiction 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 unacco~mtable loss, shall
be liable for and shall pay the tax due thereon.
(g) It shall also be the duty of each dealer or other person liable for the tax and he is hereby
required to maintain and keep for a period of three (3) years, not including the current calendar year, records
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of cigarettes received, sold, stored, possessed, transferred or handled by him in any mmmer, whatsoever,
whether the same were stamped or unst~mped, to make all such records available for audit,
inspection and e~smlnation and to make available at all reasonable times the means, facilities and opportunity
for making such audit, inspection or e~mlnation upon demand of the Board.
Section 17-150. Registered Agents.
(a) Any 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 qualify as a
registered agent. Such application blank, 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 surety bond to the Board of one hundred £ffty (150) percent of his average monthly
tax liability or £ffty thousand dollars ($50,000.00), whichever is less, with a surety company authorized to do
business in the State of Virgini~ 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 filing his application, submit blm.~elf to the Board's legal jurisdiction 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,sllry him as a registered agent to purchase, sell, use,
store, possess, distribute or transport within or into the town, Board-stamped cigarettes.
(b) Registered agents shall agree to the reporting and payment 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 m~ximum 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 has complied with all applicable State laws to legally conduct such business and to file
£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 qn~lit%d 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 writing, of the supplier of such cigarettes
and the ~ame 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.
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(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 q~mlWy as a registered agent.
Section 17-152. Sale of Cigarette in Vending Machines; Contraband.
(a) Any cigarettes placed in any coin-operated vending mschine shall be presumed for sale within
the town. Any vending machine 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 m~chines, 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 ma~-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 ~ame, address and telephone
number of the owner of said machine.
Section 17-153. Illegal Acts.
(a)
It shall be unlawful and a violation of the Article for any dealer or other person liable for the
(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, publish, 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 afl'ged; 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 affixed;
or
(5) To transport, authorize or approve the transportation of any cigarettes in quantities
of more than sixty (60) packages into or within the town upon which the Board stamp has not been afrLxed,
if they are:
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(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 quantity of
cigarettes transported; or
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 indicat, ing:.
(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 to~mcco 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
(ii) 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 destination; or
(6) To reuse or refdl with cigarettes any package from which cigarettes have been
removed, for which the tax imposed has been theretofore paid; or
(7) to remove from any packzge 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 a~y 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 msire an assessment of the tax or
amount of tax required to be collected and shall m~il or issue a notice of such assessment to the taxpayer
together with a demand for immediate payment of the tax or of the deficiency in tax declared to be in
jeopardy including penalties and interest. In the case of a current period, for which the tax is in jeopardy,
the Board m~y declare the taxable period of the taxpayer immediately terminated and shah cause notice of
such finding and declaration to be mailed or issued to the taxpayer together with a demand for immediate
payment of the tax based on the period declared terminated and such tax shall be immediately due and
payable, whether or not the terms otherwise allowed by this Article for filing a return and paying the tax has
expired.
Section 17-155. Erroneous Assessment
Notices and Hearings in the Event of Sealing of Vending 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 machines and other property have been sealed or seized under processes of this
Article who has been aggrieved by such assessment, seizure, or sealing may £de a request for a hearing before
the Board for a correction of such assessment and the return of such property seized or sealed.
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(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
or sealing shall include procedures for an administrative hearing for return of such prope~y 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 notify 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 mailecL 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
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 m~taxed 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 may be disposed of by sale or other method deemed appropriate by the Board
after any petitioner has exhausted all admlrfistrative appeal procedures. No credit from any sale of cigarettes,
vending m~hines, or other property seized shall be allowed toward any tax and penaltie.~ assessed.
Section 17-157. Extensions.
The Board, upon a finding of good cause may grant an extension of time to file a tax report upon
written application therefore, until the end of the calendar or fmcal 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 file 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 ,ff the granting of
such an extension. Where such extension is granted beyond the end of the calendar or fiscal month in which
any tax report is due, hereunder, interest on the tax at a rate of ten percent per annum shah be chargecL
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)
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or imprisonment of not more than twelve (12) months or by both such £me and imprisomnent. Such £me
and/or imprisonment shall not relieve any such person from the payment of any tax, penalty or interest
imposed by this Article.
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)
pacirAges 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 remsinder of the Article, and every 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 12th day of
,1992.
Robert E Sevila, l~Ia~or
Town of Leesburg
ATTEST:
Clerk of Council
O:Cigarett-Tax