Home Tax Professionals Legislative Updates Alcohol, Tobacco, and Motor Fuel Legislative Updates Alcohol, Tobacco, and Motor Fuel Legislative Updates 2016 Alcohol Tax Legislation 2015 Alcohol Tax Legislation 2014 Alcohol Tax Legislation 2013 Alcohol Tax Legislation 2012 Alcohol Tax Legislation 2011 Alcohol Tax Legislation Tobacco Tax Legislative Updates 2007 Tobacco Tax Legislation The 2007 session of the General Assembly saw several pieces of legislation passed having statewide effect on the alcohol and tobacco tax laws of Maryland. Those bills are indicated below along with a brief synopsis and their effective dates. Where it is known, the chapter number is indicated in parenthesis. The session also saw the passage of approximately fifty-six alcohol bills affecting laws at the county level. For a summary of those pieces of legislation, visit the Maryland General Assembly's Web site. Senate Bill 7 (Chapter 8) Cross References and Corrections In part, correcting cross-references and other corrections in Article 2B, Alcoholic Beverages, 6-301 and 12-107; and other state articles. Effective October 1, 2007. Senate Bill 150 (Chapter 5) Annual Corrective Bill In part, for the purpose of correcting certain errors and omission in Article 2B, Section 6-301, 12-107 and 12-108. Effective March 22, 2007. Senate Bill 9 (Chapter 306) Education - Student Surveys - Youth Risk Behavior Surveillance System Survey Requires the Department of Education and the Department of Health and Mental Hygiene to establish a workgroup to include representatives knowledgeable of and experience with the Maryland Youth Tobacco Survey among other health surveys as mandated by Federal and State laws to collect data regarding the use of tobacco, alcohol, and other drugs by the youth of the State. Effective July 1, 2007. Senate Bill 91 (Chapter 501) and House Bill 359 (Chapter 502) Clean Indoor Air Act of 2007 Requiring the Department of Health and Mental Hygiene and the Department of Labor, Licensing, and Regulation to adopt regulations to implement the provisions of prohibiting a person from smoking tobacco products in indoor areas open to the public and places of employment with civil penalties and fines for the violation of a newly created Clean Indoor Air Act of 2007. An indoor area open to the public includes any establishment licensed or permitted under Article 2B of the Code for the sale or possession of alcoholic beverages. Waivers shall be determined through and granted by the health officer of a county from applications received prior to January 31, 2011. Effective October 1, 2007. House Bill 68 (Chapter 589) Alcoholic Beverages - Places of Public Entertainment and Unlicensed Establishments Prohibiting a person in Caroline County, Dorchester County, Kent County, Queen Anne's County, Somerset County, Talbot County, Wicomico County or Worcester County from serving or dispensing certain items or serving, dispensing, keeping, or allowing to be consumed alcoholic beverages or other component parts of mixed alcoholic drinks in certain places of public entertainment; prohibiting a person who operates a certain business establishment for profit in certain counties from knowingly allowing customers to bring alcoholic beverages for consumption into the establishment; etc. Effective July 1, 2007. Senate Bill 1017 (Chapter 218) Crimes - Tobacco Paraphernalia - Distribution to and possession by minors Prohibiting the distribution of tobacco paraphernalia to a minor, unless the minor is acting as an agent of the minor's employer within the scope of employment. Tobacco paraphernalia defined to include cigarette rolling paper and various pipes. Emergency Bill, effective April 24, 2007. HB670 (Chapter 249) Alcohol Without Liquid Machines (AWOL) Prohibiting the possession, purchase, transfer, or offering of sale or use, an AWOL device which is designed for the user to inhale a mix of an alcoholic product with pure oxygen or other gas; producing a vaporized product that can be inhaled. Effective October 1, 2007. HB785 (Chapter 497) Cigarette Fire Safety Performance Standard & Firefighter Protection Act Prohibiting the manufacture of cigarettes or sale of cigarettes to any person within this State unless the manufacturer has filed a specified written certification with the Comptroller, copied to the wholesaler, attesting that each marked cigarette has been tested and is fire standard compliant for the purpose of creating a self-extinguishing cigarette. The manufacturer will provide an illustrated copy of the packaging to the wholesaler, in turn, provide same to each retailer, subwholesaler, and vending machine operator to which the wholesaler sells cigarettes. A fee of $250.00 will be charged for each certificate which may list no more than 50 cigarettes, with recertification required every three years. Violators will be subject to penalties and cigarettes may be seized and destroyed. Effective July 1, 2008. 2008 Tobacco Tax Legislation 2008 Tobacco Tax Legislation The Maryland General Assembly passed the following statewide legislative bills related to alcohol and tobacco laws. A brief synopsis of the bills is provided, along with the effective date and chapter number, if signed by the Governor. Bills do not become law until signed by the Governor, scheduled for April 24, May 13 and May 22, 2008. Also, approximately thirty-four legislative bills related to county alcohol licensure and regulation have passed this session. For a summary of those pieces of legislation, visit the Maryland General Assembly's Web site. Senate Bill 9 (Chapter 343) Alcoholic Beverages - Beer Keg Sales - Registration Form Requiring a person who sells beer in kegs at retail in Prince George's County to complete a specified registration form and to record on the copy of the registration form the purchaser's identification number and the date the identification was issued. EFFECTIVE JULY 1, 2008. Senate Bill 118 (Chapter 369) (House Bill 205) Alcoholic Beverages - Beer Manufacturer & Distributor Agreements - Obligation of Successor Manufacturer Requiring a successor beer manufacturer who terminates an agreement with a beer distributor to remunerate the beer distributor a sum equal to the fair market value calculated from the date of the termination for the sale of the beer; requiring a successor beer manufacturer to give notice to a surviving beer distributor before termination of specified agreements, and providing for other obligations of a successor beer manufacturer. EFFECTIVE OCTOBER 1, 2008. Senate Bill 188 (Chapter 568) Comptroller - Cigarette Business Licenses - Grounds for Disciplinary Action Clarifying that applicants for cigarette business licenses and licensees must buy cigarettes for resale from a licensed cigarette manufacturer in order to be in compliance with specified provisions of law and not subject to disciplinary action by the Comptroller. EFFECTIVE OCTOBER 1, 2008. Senate Bill 745 (Chapter 702) Alcoholic Beverages - Definitions - Beer Altering the definition of beer as used in Article 2B of the Code and Title 5 of the Tax - General Article, Annotated Code of Maryland to include “flavored malt beverages” in conformity with the United States Alcohol and Tobacco Tax and Trade Bureau's regulations. EFFECTIVE OCTOBER 1, 2008. House Bill 76 (Chapter 566) Furnishing an Alcoholic Beverage to Underage Individual - Penalty Increasing the penalty for furnishing an alcoholic beverage for consumption to an individual under the age of 21 years under certain circumstances by imposing a fine not to exceeding $2,500 for a first offense and a fine not exceeding $5,000 for a subsequent violation. EFFECTIVE OCTOBER 1, 2008. House Bill 703 (Chapter 86) Alcoholic Beverages - Special Brewery Promotional Event Permit Establishing a special brewery promotional event permit to be issued by the Office of the Comptroller to a holder of a Class 5 manufacturer's license, authorizing a permit holder to provide beer samples and sell beer at a promotional event under specified circumstances. EFFECTIVE JUNE 1, 2008. 2009 Tobacco Tax Legislation 2009 Tobacco Tax Legislation In 2009, the Maryland General Assembly passed and the Governor signed the following statewide and local bills related to tobacco tax regulation and enforcement. TOBACCO Statewide Fire Safety Performance Standard for Cigarettes – Sale or Distribution for Consumer Testing Under Controlled Settings House Bill 653 (Chapter 688, Acts of 2009) defines “sell” and “consumer testing” for determining applicability of the Fire Safety Performance Standard law. The definition of “sell” includes sample cigarettes, and cigarettes used for consumer testing. By changing the definition of “sell” to include cigarettes used for consumer testing, a manufacturer certification can be required for those cigarettes used in a non-controlled setting, such as random sampling of cigarettes sent to the public. This type of certification may be filed “confidential under seal” with respect to the cigarettes descriptors of brand, style, length, circumference, flavor, and package in order to protect proprietary information. EFFECTIVE OCTOBER 1, 2009. Cigarette Business Licenses – Cigarette Manufacturers – Definitions and Scope of License Senate Bill 1059 (Chapter 347, Acts of 2009) changes the definition of a manufacturer to include cigarette makers that have plants located outside of the United States, and those that sell cigarettes only to Maryland licensed wholesalers located outside of State boundaries. It allows all manufacturers to obtain a license to sell cigarettes in Maryland, and incorporates into the definition of manufacturer those “participating manufacturers” who are parties to the Master Settlement Agreement and defined as manufacturers under the MSA because of their status as the exclusive U.S. importer for foreign cigarette manufacturers. EFFECTIVE OCTOBER 1, 2009. Tobacco Product Manufacturers – Settlement of State Claims – Nonparticipating Manufacturers – Deposit of Funds in Escrow – Codification of Model Statute Senate Bill 12 (Chapter 12, Acts of 2009) codifies the Tobacco Product Manufacturers Escrow Act passed by the Maryland General Assembly in 1999. It makes no substantive change to Maryland law. The Escrow Act requires cigarette manufacturers that have not signed the Master Settlement Agreement (MSA) to deposit certain monies in an escrow account to ensure that funds would be available if the State of Maryland were to sue them in the future. By requiring these payments, the Escrow Act levels the playing field between tobacco manufacturers that have signed the MSA and those that have not, and thereby promotes the public health provisions of the MSA. EFFECTIVE OCTOBER 1, 2009. Local Cecil County – Tobacco Products – Distribution to Minors House Bill 941 (Chapter 430, Acts of 2009) prohibits a person from distributing certain tobacco-containing and tobacco-related products to a minor in Cecil County. It establishes certain civil penalties, and authorizes only law enforcement officers to issue civil citations for violations. EFFECTIVE OCTOBER 1, 2009. 2010 Tobacco Tax Legislation 2010 Tobacco Tax Legislation In 2010, the Maryland General Assembly passed and the Governor signed the following statewide and local bills related to tobacco tax regulation and enforcement. For more information, visit the Maryland General Assembly's Web site. TOBACCO STATEWIDE: Chapter 388 - House Bill 88 – Other Tobacco Products Licenses This bill creates a new Title 16.5 in the Business Regulations Article establishing other tobacco products licenses for manufacturers, wholesalers and retailers. Modeled in general after the cigarette licensure statute in Title 16 of the Business Regulations Article, “other tobacco products” “OTP”) licenses are created for in-state manufacturers, in-state or out-of-state wholesalers, and in-state retailers. The Comptroller will administer the OTP manufacturer and wholesaler licenses, and the Clerks of the Court will administer the OTP retailer licenses and tobacconist licenses. OTP manufacturers located in Maryland must obtain an OTP manufacturer license, but there is no license requirement for out-of-state manufacturers. All OTP wholesalers must obtain a Maryland OTP wholesaler license. OTP wholesalers must sell OTP directly tax-paid to licensed OTP retailers. OTP licensed wholesalers must file monthly tobacco tax returns and pay the 15% OTP tax based on the wholesale price. OTP manufacturers, both unlicensed out-of-state and licensed in-state, may sell OTP not tax-paid directly to a licensed OTP wholesaler. Also, an OTP manufacturer, unlicensed or licensed, may sell OTP not tax-paid directly to a licensed tobacconist, and may sell premium cigars or pipe tobacco not tax-paid directly to an OTP licensed retailer. A tobacconist license is an additional license created under this bill, which allows tobacconists to purchase OTP directly from an OTP manufacturer. The licensed tobacconists must file quarterly tobacco tax returns and pay the 15% OTP tax based on the wholesale price. OTP licensed retailers may purchase “premium cigars” and “pipe tobacco” directly from an OTP manufacturer. The OTP retailer must file quarterly tobacco tax returns and pay the 15% OTP tax based on the wholesaler price; otherwise, the OTP retailer must purchase all other OTP tax-paid from a licensed OTP wholesaler. The bill also creates an OTP storage warehouse license for facilities in Maryland to store OTP not tax-paid on behalf of an OTP manufacturer. License fees, administrative hearing procedures, recordkeeping requirements, and criminal sanctions are provided for in the bill. OTP wholesalers, OTP retailers, and tobacconists who have a cigarette license are not required to pay the OTP license fees. An OTP wholesaler must post a surety bond in order to obtain a license. Sale of OTP through the internet is prohibited. EFFECTIVE MAY 1, 2011 Chapter 169 - House Bill 1205 – Montgomery County – Alcoholic Beverages License Fees – Repeal of Sunset This bill repeals the termination date of June 30, 2010 for the issuance of a Class B beer, wine and liquor license for hotels and restaurants, and a Class B beer, wine and liquor license for a performing arts facility in Montgomery County as provided for in Article 2B, § 6-201(q). EFFECTIVE JUNE 1, 2010 Chapter 440 – House Bill 823 – Montgomery County – Winery Special Event Permits – Farmers' Markets In addition to the 12 winery special event permits that may be issued to a Class 4 limited winery, this bill authorizes the Comptroller to issue up to 12 winery special event permits to a Class 4 limited winery for use at a Farmer's Market in Montgomery County. The permittee may not sell wine by the glass, and alcohol awareness certification is required for the permittee and the Farmer's Market administrator. EFFECTIVE JUNE 1, 2010 Chapter 42 – Senate Bill 151 – Prince George's County – Alcoholic Beverages – Class B-AE (Arts and Entertainment) License This bill authorizes the Board of License Commissioners in Prince George's County to issue a Class B-AE (Arts and Entertainment) beer, wine and liquor license to an establishment in the Prince George's County Arts and Entertainment District. The licensee may sell beer, wine, and liquor for on-premise consumption. No more than 2 Class B-AE licenses may be issued to a person. EFFECTIVE OCTOBER 1, 2010 Chapter 156 - House Bill 567 – Prince George's County – Alcoholic Beverages – License Fees and Salaries of Inspectors This bill increases the annual license fees in Prince George's County for many and various retail licenses; repeals the Class B beer, wine and liquor license (“arena license”); increases the alcoholic content from 14% to 15.5% for wine provided under the wine tasting (WT) license; and establishes an annual salary of $10,900 for inspectors removing the amount of salary from the discretion of the County Council. EFFECTIVE JULY 1, 2010 Chapter 157 - House Bill 573 – Prince George's County – Alcoholic Beverages – Class A/Class 4 Light Wine Licenses This bill adds Prince George's County to the list of counties authorized to issue a Class A light wine license to a Class 4 limited winery. The Class A/Class 4 license is exempt from quotas established by the Board of License Commissioners for Prince George's County for the election district where the winery is located. EFFECTIVE JULY 1, 2010 Chapter 158 - House Bill 574 – Prince George's County – National Harbor – Alcoholic Beverages – Restriction on License Holder This bill prohibits the Board of License Commissioners for Prince George's County from issuing a special 3-day Class C beer, wine and liquor license to a nonprofit organization for use at the National Harbor for more than 2 consecutive years. EFFECTIVE JULY 1, 2010 Chapter 420 – House Bill 559 – Prince George's County – Winery Special Event Permits – Farmers' Markets In addition to the 12 winery special event permits that may be issued to a Class 4 limited winery, this bill authorizes the Comptroller to issue up to 12 winery special event permits to a Class 4 limited winery for use at a Farmer's Market in Prince George's County. The permittee may not sell wine by the glass, and alcohol awareness certification is required for the permittee and the Farmer's Market administrator. EFFECTIVE JUNE 1, 2010 Chapter 422 – House Bill 570 – Prince George's County – Alcoholic Beverages – Extinguishment of Licenses This bill authorizes the Board of License Commissioners in Prince George's County to issue a Class A license for purposes of having the license extinguished when the licensee has possession. Within 10 days of possession, the licensee must surrender the license to the Board, and provide evidence that all taxes or obligations to wholesalers or other persons have been paid. This Class A license will count towards the maximum number of Class A licenses that may be issued. EFFECTIVE JULY 1, 2010 Chapter 423 – House Bill 571 – Prince George's County – Alcoholic Beverages Licenses – Waterfront Entertainment Retail Complex This bill authorizes the Board of License Commissioners for Prince George's County to issue a special Class D beer and wine license to an establishment in a waterfront entertainment retail complex defined in the county zoning ordinance, or an individual or entity that holds an event in the property of a conceptual site plan at least part of which includes a waterfront entertainment retail complex. The licensee may sell beer and wine on-premises and off-premises 7 days a week. EFFECTIVE JUNE 1, 2010 Chapter 425 - House Bill 582 – Prince George's County – Issuance of Alcoholic Beverages Licenses and Park Permits– Notification This bill requires the Board of License Commissioners of Prince George's County when issuing a special Class C beer, wine and liquor license to notify the Chief of Police, the Fire Chief, the Director of the Department of Environmental Resources, and if applicable, the municipal corporation where the event will occur, regarding the time, place, and expected size of event. Also, when a use and occupancy permit is issued allowing public entertainment to be held for an association, club, society, or other organization, the following must be notified: Board of License Commissioners for Prince George's County, Chief of Police, the Fire Chief, Director of the Department of Environmental Resources, and if applicable, the municipal corporation where the entertainment will occur. EFFECTIVE JUNE 1, 2010 Chapter 475 - House Bill 1478 – Prince George's County – Beer, Wine, and Liquor Tastings This bill authorizes the Board of License Commissioners in Prince George's County to issue a beer tasting license, and a beer/wine tasting to holders of a beer, wine and liquor (BWL) or a beer and wine (BW) license. A Class B beer licensee may obtain a beer tasting license. The beer tasting or beer/wine tasting licensee may not serve more than 3 ounces from each brand of beer, and no more than 1 ounce from each brand of wine, to any one person. The Board is also authorized to issue a beer, wine, and liquor tasting (BWLT) license to a holder of a beer, wine and liquor license. The BWLT licensee may provide one-half of an ounce of liquor from a brand and 1.5 ounces from all brands to any one person in a single day for tasting and sampling. Quantity limitations applicable to the consumption of beer and wine apply to the BWLT tasting license. EFFECTIVE JULY 1, 2010 Chapter 684 - House Bill 558 – Prince George's County – Alcoholic Beverages – Entertainment Permit This bill authorizes the Board of Liquor License Commissioners for Prince George's County issue a special entertainment permit to a holder of a Class B (on-sale) license. Before issuing the permit, the Board is required to hold a public hearing to determine whether the permit should be issued. The permittee may from 9:00 p.m. to 2:00 a.m. impose a cover charge, offer facilities for patron dancing, and provide entertainment. An applicant must submit a security plan to the Board and the Chief of the Prince George's County Police Department. If necessary, the Circuit Court may issue a temporary restraining order to immediately close the premises if there is a threat to public health, safety, or welfare. A permittee is give due process rights if action is taken by the Board or Circuit Court. EFFECTIVE JULY 1, 2010 Chapter 170 - House Bill 1309 – Somerset and Worcester Counties – Liquor Control Boards – Ethics This bill includes the Liquor Control Board for Somerset County and the Liquor Control Board for Worcester County in the definition of “executive unit” for purposes of the Maryland Public Ethics Law to make clear that this law applies to the liquor control boards. EFFECTIVE OCTOBER 1, 2010 Chapter 675 - House Bill 451 - Somerset County – Alcoholic Beverages – Sales to Underage Drinkers – Local Caterer's License Created This bill authorized the Board of License Commissioner for Somerset County to issue a local caterer's license to a holder of a Class B restaurant or hotel (on-sale) beer and light wine license, or a Class B restaurant or hotel (on-sale) beer, wine and liquor license. The caterer's licensee may provide alcoholic beverages allowed under the Class B license for off-premise consumption at a catered event where food is served. In addition, this bill adds Somerset County to the list of counties where the granting of probation before judgment to a licensee or employee of a licensee for violating the prohibition of alcoholic beverage sales to minors or intoxicated persons does not bar the Board of Licensee Commissioners from taking administrative action against the licensee. EFFECTIVE JULY 1, 2010 Chapter 360 – Senate Bill 904 – St. Mary's County – Alcoholic Beverages – Class A Off-Sale License Quota This bill prohibits the Board of License Commissioners for St. Mary's County from issuing more than one Class A retail off-sale license for each unit of 1,350 people in each election district using the most recent St. Mary's County Planning Commission Annual Report for population figures. This quota limit applies to transfers of licenses among election districts. EFFECTIVE JULY 1, 2010 Chapter 411 (House Bill 399) – Washington County – Alcoholic Beverages – Beer Tasting License This bill authorizes the Board of License Commissioners for Washington County to issue a beer tasting (BT) license to a holder of a Class A or Class B beer and wine (BW) license, or a Class A or Class B beer, wine and liquor (BWL) license. The BT license allows consumption of beer for tasting only at no charge. The Board shall regulate the quantity of beer served, and the number and size of bottles. EFFECTIVE JULY 1, 2010 Chapter 245 – Senate Bill 195 – Wicomico County - Alcoholic Beverages – Micro-Brewery Licenses This bill adds Wicomico County to the list of jurisdictions where a Class 7 micro-brewery license may be issued by the Comptroller. This Class 7 micro-brewery license provides the holder with on-sale and off-sale privileges. The Class 7 licensee must have a Class B beer, wine and liquor (on-sale) license for use on the premises of a restaurant, and under the Class 7, may sell at retail up to 4,000 barrels of beer annually for on-premise consumption. The Class 7 licensee may sell at retail for consumption off-premises beer in refillable containers sealed by the micro-brewery licensee at the time of each refill. EFFECTIVE JULY 1, 2010 Chapter 419 - House Bill 551 – Wicomico County Alcoholic Beverages Act of 2010 This bill authorizes the Board of License Commissioners for Wicomico County to issue a beer tasting (BT) license and a beer and wine tasting (BWT) tasting license to a Class A beer and wine (off-sale) licensee, or a Class A beer, wine and liquor (off-sale) licensee. An individual may be served for on-premises consumption a tasting or sampling of not more than 1 ounce of wine from each brand, and 3 ounces of beer from each brand. No more than 6 bottles of wine may be open at any one time at a wine or beer and wine sampling or tasting event, and no more than 6 containers of beer may be open at any one time at a beer or beer and wine sampling or tasting event. The Board must receive 5 days notice before an event. Also, the bill repeals the requirement that a Class B beer, wine and liquor licensee, who obtains a Class 7 micro-brewery license under Article 2B, § 12-104(e)(5)(ii), may only sell beer for off-premises consumption to a licensed wholesaler. Under Article 2B, § 12-104(e)(5)(iii), a Class 6 pub-brewery license or Class 7 micro-brewery license may be issued to a Class B beer, wine and liquor licensee for a location in any enterprise zone in Wicomico County, not only the City of Salisbury. Finally, a provision is added to Article 2B, § 12-302 allowing an individual who is at least 16 years of age and has a work permit to be employed at a licensed premise to stock alcoholic beverages or clear tables and bar areas. EFFECTIVE JULY 1, 2010. Chapter 470 - House Bill 1431 – Worcester County – Alcoholic Beverages – Pub-Breweries and Micro-Breweries This bill adds Worcester County to the list of counties where a Class 6 pub-brewery license and a Class 7 micro-brewery license may be issued by the Comptroller. It also adds Worcester County to the list of counties that allow a Class 7 micro-brewery licensee to sell at retail beer brewed on the licensed premise for off-premise consumption in refillable containers sealed at the time of refill. EFFECTIVE JULY 1, 2010 Chapter 388 - House Bill 88 – Other Tobacco Products Licenses This bill creates a new Title 16.5 in the Business Regulations Article establishing other tobacco products licenses for manufacturers, wholesalers and retailers. Modeled in general after the cigarette licensure statute in Title 16 of the Business Regulations Article, “other tobacco products” (“OTP”) licenses are created for in-state manufacturers, in-state or out-of-state wholesalers, and in-state retailers. The Comptroller will administer the OTP manufacturer and wholesaler licenses, and the Clerks of the Court will administer the OTP retailer licenses and tobacconist licenses. OTP manufacturers located in Maryland must obtain an OTP manufacturer license, but there is no license requirement for out-of-state manufacturers. All OTP wholesalers must obtain a Maryland OTP wholesaler license. OTP wholesalers must sell OTP directly tax-paid to licensed OTP retailers. OTP licensed wholesalers must file monthly tobacco tax returns and pay the 15% OTP tax based on the wholesale price. OTP manufacturers, both unlicensed out-of-state and licensed in-state, may sell OTP not tax-paid directly to a licensed OTP wholesaler. Also, an OTP manufacturer, unlicensed or licensed, may sell OTP not tax-paid directly to a licensed tobacconist, and may sell premium cigars or pipe tobacco not tax-paid directly to an OTP licensed retailer. A tobacconist license is an additional license created under this bill, which allows tobacconists to purchase OTP directly from an OTP manufacturer. The licensed tobacconists must file quarterly tobacco tax returns and pay the 15% OTP tax based on the wholesale price. OTP licensed retailers may purchase “premium cigars” and “pipe tobacco” directly from an OTP manufacturer. The OTP retailer must file quarterly tobacco tax returns and pay the 15% OTP tax based on the wholesaler price; otherwise, the OTP retailer must purchase all other OTP tax-paid from a licensed OTP wholesaler. The bill also creates an OTP storage warehouse license for facilities in Maryland to store OTP not tax-paid on behalf of an OTP manufacturer. License fees, administrative hearing procedures, recordkeeping requirements, and criminal sanctions are provided for in the bill. OTP wholesalers, OTP retailers, and tobacconists who have a cigarette license are not required to pay the OTP license fees. An OTP wholesaler must post a surety bond in order to obtain a license. Sale of OTP through the internet is prohibited. EFFECTIVE MAY 1, 2011 2012 Tobacco Tax Legislation Other Tobacco Products (OTP) Floor Tax The 2012 Special Session of the Maryland General Assembly enacted legislation changing the excise tax on the wholesale price of OTP to the following: Cigars – 70% All Other OTP – 30% Premium Cigars – Tax rate remains unchanged at 15% The new tax rate applies to all OTP floor stock in Maryland on July 1, 2012. For more information, see Bulletin TT-73. Use Form ATT-610F to submit your OTP Floor Tax return. Questions related to the OTP floor tax can be directed to Taxpayer Service at 410-260-7980, 1-800-638-2937, or taxhelp@marylandtaxes.gov. Motor Fuel Tax Legislative Updates 2002 Motor Fuel Tax Legislative Updates Budget Reconciliation and Financing Act of 2002 Senate Bill 323 is a multi-faceted financing bill, which will impact certain licensed dealers and licensed special fuel sellers. With respect to motor fuel taxes, this bill reduces the amount of the discount that a licensed dealer or licensed special fuel seller may deduct for keeping records, collecting and paying the tax, and preparing reports. The amount of discount will change from 1% to 0.5% of the first 10 cents of the motor fuel tax on each gallon of motor fuel. Effective July 1, 2002 (Chapter 440, Acts of 2002) Motor Carriers - Tax Returns - Identifying Number Senate Bill 101 repeals a statutory reference to an obsolete Interstate Commerce Commission (ICC) identifying number and authorizes the Comptroller to require in its place a U.S. Department of Transportation (USDOT) number. This identifying number is required for motor carriers that are licensed under the International Fuel Tax Agreement (IFTA) for interstate travel and payment of road use taxes. As a means of enhancing motor carrier safety by providing a more consistent vehicle identification method for enforcement officials and the public, the USDOT's Federal Motor Carrier Safety Administration revised requirements for marking commercial motor vehicles using USDOT identifying numbers. This law change will make Maryland's identification requirements consistent with federal requirements. Effective October 1, 2002. (Chapter 123, Acts of 2002) Distribution of Contraband Motor Fuel - Pricing Service Senate Bill 102 eliminates the Comptroller's requirement to use Platt's Oil Gram as the sole source of determining the price of motor fuel relative to a seizure of contraband motor fuel. For certain violations of the motor fuel tax law, the Comptroller is authorized by statute to seize a conveyance and motor fuel. If the seized motor fuel is determined not to be subject to forfeiture, the Comptroller may elect to return the fuel to the owner or pay to the owner an amount equal to the value of the motor fuel. This law allows the Comptroller to use any nationally recognized oil price reporting service to determine the value of the motor fuel, rather than being locked in to using Platt's Oil Gram only. For example, Oil Price Information Service (OPIS) is a nationally recognized pricing service that is widely used in the petroleum industry. Effective October 1, 2002. (Chapter 124, Acts of 2002) Motor Fuel and Lubricants - Dyed Diesel Fuel Senate Bill 287 prohibits the use of dyed diesel fuel in vehicles that travel on public highways. This law mirrors federal law that prohibits the use of dyed fuel in highway vehicles. Approximately 34 other states have adopted similar laws, recognizing the dyeing requirement for untaxed fuel and adopting penalties for improper use of dyed fuel. This law will help law enforcement officers identify people who are evading fuel taxes by using the untaxed fuel for on-road use; and it will reduce unfair competition by anyone taking advantage of our current tax structure. Home heating fuel is dyed red to indicate it is not taxed. Generally home heating fuel also contains a higher concentration of sulfur that is not permitted in clear, highway diesel fuel. Therefore, it is a federal violation to use dyed fuel in highway vehicles for environmental as well as tax reasons. Effective October 1, 2002. (Chapter145, Acts of 2002) 2003 Motor Fuel Tax Legislative Updates The following legislation relative to the motor fuel industry was introduced into the 2003 Maryland General Assembly: SB 97 Motor Fuel Tax - Special Fuels - Tax Payment PASSED: This bill updates the motor fuel tax law by specifying that the motor fuel tax does not apply to special fuel containing dye and used for purposes other than operating a licensed highway vehicle. Effective October 1, 2003 (Acts of 2003, Chapter 61) SB 107 Refueling Service - Drivers with Disabilities FAILED: This bill proposes to update the motor fuel and lubricants law by clarifying requirements for providing refueling service for disabled drivers, bringing the law into compliance with the Americans with Disabilities Act (ADA). The ADA requires retail service stations and stores that sell motor fuel to provide equal access for their customers with disabilities. This bill also requires retail service station dealers to provide signage to advise a driver with disabilities on how to obtain assistance for fueling service. SB 653 Motor Fuel Tax - Clean Burning Fuel - Tax Rate FAILED: This bill alters the definition of gasoline to exclude clean-burning fuel, no more than 15% of which is gasoline and alters the motor fuel tax rate for E-85 and propane. SB 758 Motor Fuel Tax - Rates FAILED: This bill increases the motor fuel tax rate for specified motor fuels by 10 cents per gallon. HB 753 Tax Administration and Compliance GOVERNOR VETO: Among other things, this bill repeals the cost of collection allowance for licensed dealers and licensed special fuel sellers. HB 910 Balancing Budget Act of 2003 FAILED: This bill, among other things, increases the motor fuel tax rate by 5 cents for specified motor fuels. HB 928 Motor Fuel Tax - Clean-Burning Fuel - Tax rate (Same as SB 653) FAILED HB 1020 Transportation - Tax Revenues FAILED: Among other provisions, this bill imposes a sales and use tax on motor fuel; and it adds a sales tax to the motor carrier tax. HB 1163 Motor Fuel Tax - Rate (Same as SB 758) FAILED See 2002 Legislative Session 2004 Motor Fuel Tax Legislative Updates NEW LAWS PASSED HB 228 - Motor Fuel Tax - Refunds - Concrete Pump Trucks Allowing a refund of 35 percent of the motor fuel tax paid on fuel that is used by a concrete pump truck. TG, Section 13-901(f)(1)(ii)4. and (2)-amended Effective July 1, 2004 Chapter 161 HB 829 - Business Regulation - Registration of Service Station Dealers and Sale of Gasoline Products Extending to October 1, 2009, the expiration date of the conditional prohibition against the Comptroller of Maryland on the issuance of a certificate of registration to a retail service station dealer who markets motor fuel through a retail service station that has been altered, enlarged, or structurally modified. BR, Sections 10-304 and 10-312-amended Effective October 1, 2004 Chapter 380 FAILED LEGISLATION SB 21 Motor Fuel Tax - Exemption for Biodiesel Fuel - Queen Anne's County Exempting biodiesel fuel purchased for use in Queen Anne's County government vehicles and school buses from the state motor fuel tax; and providing for the termination of the Act in three years. Unfavorable Report, B&T HB 128 Motor Fuel Taxes - Display at Retail Service Stations Requiring all dispensing equipment at retail service stations to be marked to show the combined amount of federal and state motor fuel taxes imposed per gallon of motor fuel. Unfavorable Report, W&M HB 395 Motor Fuel Tax - Exemption for Biodiesel Fuel - Queen Anne's County (Companion to SB 21) Exempting biodiesel fuel purchased for use in Queen Anne's County government vehicles and school buses from the state motor fuel tax; and providing for the termination of the Act in three years. Unfavorable Report, W&M HB 700 Motor Fuel Tax - Rates Increasing the motor fuel tax rates for gasoline, special fuel, and clean-burning fuel by 10 cents per gallon; increasing the motor fuel tax rates for aviation gasoline and turbine fuel by 3 cents per gallon. Hearing 3/5 - No action 2005 Motor Fuel Tax Legislative Updates NEW LAWS PASSED HB 147 Budget Reconciliation and Financing Act of 2005 This multi-faceted budget bill includes a provision that exempts motor fuel purchased by the Department of General Services (DGS) for use by state agencies from the state motor fuel tax. In other words, this part of the new law will allow DGS to claim a refund of the tax on motor fuel that it purchases for use by state agencies. The state tax on gasoline is 23.5 cents per gallon, and diesel fuel is taxed at 24.25 cents per gallon. This particular part of the new law becomes effective July 1, 2005. Chapter 444 HB 373 Methyl Tertiary Butyl Ether - Clean Gasoline Alternatives - Report Methyl Tertiary Butyl Ether (MTBE) is a gasoline additive that makes gasoline burn cleaner to reduce vehicle tailpipe emissions. Due to concerns about potential ground water contamination, the Maryland General Assembly passed HB 373 which requires the Department of the Environment, on or before December 1, 2005, to develop and submit to the Senate Education, Health, and Environmental Affairs Committee and the House Environmental Matters Committee a report on the viability of alternatives to the use of MTBE in gasoline sold in the state. Effective July 1, 2005 through December 31, 2005. Chapter 538 SB 740 Renewable Fuels Promotion Act of 2005 This bill provides incentives for the production and use of clean burning, domestically produced renewable fuels in the state, such as ethanol and biodiesel. Ethanol is an alcohol-based fuel, which can be made from small grains and is usually blended into gasoline. Biodiesel is an alternative motor fuel produced from a renewable source such as vegetable oil or animal fat. The most common blend used in motor vehicles is a mixture of 20 percent biodiesel and 80 percent regular diesel fuel. The new law establishes a renewable fuels incentive board that would review credit certification applications and pay credits of up to 20 cents a gallon. Effective October 1, 2005. Chapter 332 FAILED LEGISLATION SB 448 Motor Fuel Tax - Exemption for Biodiesel Fuel - Queen Anne's County This bill exempts biodiesel fuel purchased for use in Queen Anne's County Government vehicles and school buses from the state motor fuel tax; and and providing for the termination of the Act in three years. Unfavorable report - Senate Budget and Taxation Committee. 2006 Motor Fuel Tax Legislative Updates NEW LAWS PASSED SB 54 – State-Owned Vehicles – State Fleet Biodiesel Fuel Usage Act of 2006 (Sponsor: Senator Giannetti) This bill requires the state to ensure that, in fiscal year 2008 and in each subsequent year, at least 50 percent of vehicles using diesel fuel in the state vehicle fleet use a blend of fuel that is at least 5 percent biodiesel fuel. Effective October 1, 2006; Chapter 425. SB 113 – Motor Fuel Violations – Issuance of Citation by Police Officer (Sponsors: Chairman, Judicial Proceedings Committee (Departmental - Comptroller) This bill will authorize a police officer to charge a person with a violation of specified laws relating to motor fuels by issuing a written traffic citation containing specified information, etc. Effective July 1, 2006; Chapter 114. SB 120 – Motor Fuel – Gasoline Commingling by Brand or Grade – Prohibition (Sponsors: Chairman, Finance Committee (Departmental – Comptroller) This legislation will prohibit a marina from commingling gasoline under specified circumstances. It will also prohibit specified motor fuel sellers and transporters from commingling gasoline by brand or grade, etc. Effective September 1, 2006; Chapter 236. SB 285 – Maryland Transportation Authority – Gasoline Service Stations on Kennedy Highway– Establishment in Service Areas (Sponsored by: Chairman, Finance Committee (Departmental – Transportation) This bill alters a provision of law governing the establishment of gasoline stations at service areas on the John F. Kennedy Memorial Highway, etc. Effective October 1, 2006; Chapter 128. FAILED LEGISLATION HB 38 – Procurement – Diesel-Powered Non-road Vehicles – Fuel and Technology Requirements (Sponsor: Delegate Hubbard) This bill will require on or after April 1, 2007, that specified diesel-powered non-road vehicles be powered by ultra low sulfur diesel fuel. It also requires that on or after October 1, 2007, specified diesel-powered non-road vehicles utilize the best available technology for reducing the emission of pollutants; providing for specified exceptions to the requirements to use ultra low sulfur diesel fuel and best available technology for reducing the emission of pollutants; etc. Hearing Cancelled, No Action; House, Health & Government Operations HB 127 – Business Regulation – Motor Fuel – Below Cost Sales (Sponsors: Delegates Miller, Bates, Boteler, Cluster, Costa, Dwyer, Impallaria, Sossi, and Weldon) This legislation repeals specified provisions of law that prohibit a retail service station dealer from selling motor fuel below cost. It will repeal specified provisions of law that require the Comptroller, on receipt of a specified complaint, to conduct a specified investigation with a specified amount of time; repealing specified penalties. It also repeals the exemption for motor fuel sold by a retail service station dealer from the provisions of the Sales Below Cost Act. Unfavorable Report - House, Economic Matters SB 50 - Motor Fuel Tax - Exemption for Biodiesel Fuel - Queen Anne's County (Sponsor: Senator Pipkin) This legislation will exempt biodiesel fuel purchased for use in Queen Anne's County government vehicles and school buses from the state motor fuel tax. This bill calls for the termination of this Act in three years. Unfavorable Report - Senate, Budget and Taxation 2007 Motor Fuel Tax Legislative Updates NEW LAWS PASSED SB 54 – State-Owned Vehicles – State Fleet Biodiesel Fuel Usage Act of 2006 (Sponsor: Senator Giannetti) This bill requires the state to ensure that, in fiscal year 2008 and in each subsequent year, at least 50 percent of vehicles using diesel fuel in the state vehicle fleet use a blend of fuel that is at least 5 percent biodiesel fuel. Effective October 1, 2006; Chapter 425. SB 113 – Motor Fuel Violations – Issuance of Citation by Police Officer (Sponsors: Chairman, Judicial Proceedings Committee (Departmental - Comptroller) This bill will authorize a police officer to charge a person with a violation of specified laws relating to motor fuels by issuing a written traffic citation containing specified information, etc. Effective July 1, 2006; Chapter 114. SB 120 – Motor Fuel – Gasoline Commingling by Brand or Grade – Prohibition (Sponsors: Chairman, Finance Committee (Departmental – Comptroller) This legislation will prohibit a marina from commingling gasoline under specified circumstances. It will also prohibit specified motor fuel sellers and transporters from commingling gasoline by brand or grade, etc. Effective September 1, 2006; Chapter 236. SB 285 – Maryland Transportation Authority – Gasoline Service Stations on Kennedy Highway– Establishment in Service Areas (Sponsored by: Chairman, Finance Committee (Departmental – Transportation) This bill alters a provision of law governing the establishment of gasoline stations at service areas on the John F. Kennedy Memorial Highway, etc. Effective October 1, 2006; Chapter 128. FAILED LEGISLATION HB 38 – Procurement – Diesel-Powered Non-road Vehicles – Fuel and Technology Requirements (Sponsor: Delegate Hubbard) This bill will require on or after April 1, 2007, that specified diesel-powered non-road vehicles be powered by ultra low sulfur diesel fuel. It also requires that on or after October 1, 2007, specified diesel-powered non-road vehicles utilize the best available technology for reducing the emission of pollutants; providing for specified exceptions to the requirements to use ultra low sulfur diesel fuel and best available technology for reducing the emission of pollutants; etc. Hearing Cancelled, No Action; House, Health & Government Operations HB 127 – Business Regulation – Motor Fuel – Below Cost Sales (Sponsors: Delegates Miller, Bates, Boteler, Cluster, Costa, Dwyer, Impallaria, Sossi, and Weldon) This legislation repeals specified provisions of law that prohibit a retail service station dealer from selling motor fuel below cost. It will repeal specified provisions of law that require the Comptroller, on receipt of a specified complaint, to conduct a specified investigation with a specified amount of time; repealing specified penalties. It also repeals the exemption for motor fuel sold by a retail service station dealer from the provisions of the Sales Below Cost Act. Unfavorable Report - House, Economic Matters SB 50 - Motor Fuel Tax - Exemption for Biodiesel Fuel - Queen Anne's County (Sponsor: Senator Pipkin) This legislation will exempt biodiesel fuel purchased for use in Queen Anne's County government vehicles and school buses from the state motor fuel tax. This bill calls for the termination of this Act in three years. Unfavorable Report - Senate, Budget and Taxation 2008 Motor Fuel Tax Legislative Updates There were no regulatory motor fuel bills passed in the General Assembly during the 2008 legislative session. 2009 Motor Fuel Tax Legislative Updates The following regulatory motor fuel bills were passed in the General Assembly during the 2009 legislative session: Chapter 364 - Senate Bill 92 – Motor Carriers – Identification Markers – Forged Documents – Criminal Penalties This bill makes the possession, use, sale, or manufacture of a falsified IFTA license or decal a misdemeanor subject to one year imprisonment or a $1,000 fine or both. EFFECTIVE OCTOBER 1, 2009. Chapter 377 – House Bill 163 – Motor Fuel – Dyed Diesel Fuel – Violations This bill identifies and clarifies who may be charged with a violation of the dyed diesel fuel law. In some instances, the owner, with or without the knowledge of the operator, knows the vehicle is being driven with dyed diesel fuel. Currently, only the operator may be charged, but not the owner, who is the guilty party. This bill permits the owner or wrongdoer to be charged with a violation. EFFECTIVE OCTOBER 1, 2009. Chapter 61 - Senate Bill 392 (Chapter 62 -House Bill 377) – Business Regulation – Registration of Retail Service Station Dealers and Sale of Gasoline Products This bill eliminates the expiration date of the conditional prohibition against the Comptroller on the issuance of a certificate of registration to a retail service station dealer who markets motor fuel through a retail service station that has been altered, enlarged, or structurally modified. Also, the bill repeals the provision of law that requires a producer, refiner, or wholesaler of motor fuel after a certain date to extend voluntary allowances uniformly to all retail service station dealers that they supply. EFFECTIVE OCTOBER 1, 2009. 2010 Motor Fuel Tax Legislative Updates In 2010, the Maryland General Assembly passed and the Governor signed the following statewide and local bills related to motor-fuel and motor carrier regulation and enforcement, and state business licenses: For more information, visit the Maryland General Assembly's Web site. MOTOR FUEL STATEWIDE: Chapter 720 - House Bill 1032 – Motor Fuel Suppliers - Game of Chance The general rule is that a supplier may not engage in game of chance at a retail service station, and that under the exception a supplier may participate in a game of chance only if it is sponsored by an entity other than the supplier. This bill amends the exception in Business Regulation Article, § 10-502 by allowing a supplier of motor fuel to sponsor, promote, advertise, or otherwise perform or participate in a game of chance if the retail service station dealer agrees to participate, but a supplier may not require a retail service station to participate in a game of chance. This Act is in effect for 3 years until September 30, 2013, and if no action is taken by the Maryland General Assembly, it will become null and void. EFFECTIVE OCTOBER 1, 2010 LOCAL: Chapter 114 – Senate Bill 1006 – Chapter 115 – House Bill 1025 – Baltimore City – Sale of Motor Fuel for Dirt Bikes – Prohibition This bill requires a retail service station dealer in Baltimore City to post a sign stating the provisions of: (1) the Baltimore City Code that prohibit a service station or any other person from selling, transferring, or dispensing motor fuel for delivery into a dirt bike; and (2) the newly added § 21-1128 of the Transportation Article that prohibits a person from dispensing motor fuel into a dirt bike. The Comptroller is required in consultation with the Washington, Maryland, Delaware Service Station and Automotive Repair Association to adopt guidelines for the design of the sign. A civil penalty of $100 may be charged against the retail service station dealer for a second or subsequent offense. A child's motor vehicle license may be suspended for violation of this law. In addition, a criminal penalty of up to $1,000 may be imposed or imprisonment of up to 90 days or both. EFFECTIVE OCTOBER 1, 2010 MOTOR CARRIERS – “IFTA” No legislation passed related to the motor carrier tax, or IFTA (International Fuel Use Tax Agreement).