§ 205.426. Records and statements; markings required on shipping case, box, or container; examination of records; invoices or bills of lading in possession of transporter; permit for transportation of tobacco product.

Sec. 6.  (1) A manufacturer, wholesaler, secondary wholesaler, vending machine operator, transportation company, unclassified acquirer, or retailer shall keep a complete and accurate record of each tobacco product manufactured, purchased, or otherwise acquired.  Except for a manufacturer, the records shall include a written statement containing the name and address of both the seller and the purchaser, the date of delivery, the quantity, the trade name or brand, and the price paid for each tobacco product purchased.  A licensee shall keep as part of the records a true copy of all purchase orders, invoices, bills of lading, and other written matter substantiating the purchase or acquisition of each tobacco product at the location where the tobacco product is stored or offered for sale.  A retailer shall keep as part of the records a true copy of all purchase orders, invoices, bills of lading, and other written matter substantiating the purchase or acquisition of each tobacco product at the location where the tobacco product is offered for sale for a period of 4 months from the date of purchase or acquisition.  The department may, by giving prior written approval, authorize a person licensed under this act or a retailer to maintain records in a manner other than that required by this subsection.  Other records shall be kept by these persons as the department reasonably prescribes.
(2) A manufacturer, wholesaler, unclassified acquirer, and secondary wholesaler shall deliver with each sale or consignment of a tobacco product a written statement containing the name or trade name and address of both the seller and the purchaser, the date of delivery, the quantity, and the trade name or brand of the tobacco product, correctly itemizing the prices paid for each brand purchased, and shall retain a duplicate of each statement.
(3) A vending machine operator shall keep a detailed record of each vending machine owned for the sale of tobacco products showing the location of the machine, the date of placing the machine on the location, the quantity of each tobacco product placed in the machine, the date when placed there, and the amount of the commission paid or earned on sales through the vending machine.  When filling or refilling the vending machine, the operator shall deliver to the owner or tenant occupying the premises where the machine is located a written statement containing his or her own name and address, the name and address of the owner or the tenant, the date when the machine was filled, and the quantity of each brand of tobacco product sold from the machine since the date when tobacco products were last placed in the machine.  A person in possession of premises where a vending machine is located shall keep a record of each tobacco product sold through the vending machine located on the premises and the amount of commission paid by the person operating the vending machine.  The records shall consist of written statements required to be given by each person operating a vending machine for the sale of tobacco products as provided in this section.
(4) A licensee under this act shall not issue or accept a written statement or invoice that is known to the licensee to contain a statement or omission that falsely indicates the name of the customer, the type, trade name, or brand of merchandise, the quantity of each type, trade name, or brand of merchandise, the prices, the discounts, the date of the transaction, or the terms of sale.  A person shall not use a device or game of chance to aid, promote, or induce sales or purchases of a tobacco product, or give a tobacco product in connection with a device or game of chance.
(5) All statements and other records required by this section shall be in a form prescribed by the department and shall be preserved for a period of 4 years and offered for inspection at any time upon oral or written demand by the department or its authorized agent by every wholesaler, secondary wholesaler, vending machine operator, unclassified acquirer, and retailer.
(6) If a tobacco product other than cigarettes is received or acquired within this state by a wholesaler, secondary wholesaler, vending machine operator, unclassified acquirer, or retailer, each original manufacturer's shipping case shall bear the name and address of the person making the first purchase or any other markings the department prescribes.  If a tobacco product other than cigarettes is found in a place of business or otherwise in the possession of a wholesaler, secondary wholesaler, vending machine operator, unclassified acquirer, transporter, or retailer without proper markings on the shipping case, box, or container of the tobacco product or if an individual package of cigarettes is found without a stamp affixed as provided under this act or if a tobacco product is found without proper substantiation by invoices or other records as required by this section, the presumption shall be that the tobacco product is kept in violation of this act.  If a tobacco product is shipped outside the state, the licensee shipping the tobacco product shall cause to be placed on every shipping case or other container in which the tobacco product is shipped the name and address of the consignee or purchaser to whom the shipment is made outside of the state.  The department may require reports from a common carrier who transports a tobacco product to a point within this state from another person who, under contract, transports a tobacco product, or from a bonded warehouseperson or bailee who has in his or her possession a tobacco product.  A carrier, bailee, warehouseperson, or other person shall permit the inspection of the tobacco products and examination by the department or its duly authorized agent of any records relating to the shipment of a tobacco product into, from, or within the state.
(7) A transporter or other licensee transporting, possessing, or acquiring for the purpose of transporting a tobacco product upon a public highway, road, or street of this state shall have in his or her actual possession invoices or bills of lading containing the name and address of both the seller and the purchaser, the date of delivery, the name and address of the transporter, the quantity and trade name or brand of each tobacco product, the price paid for each trade name or brand in the transporter's possession or custody, and the license as prescribed under this act.
(8) A transporter desiring to possess or acquire for transportation or transport a tobacco product upon a highway, road, or street of this state shall obtain a permit from the department authorizing the transporter to possess or acquire for transportation or transport tobacco products and shall have the permit in his or her possession while the tobacco product is in his or her possession.  This permit shall be obtained for each load being transported and shall contain a statement setting forth the name and address of the purchaser, seller, and transporter, the license number of the purchaser, the date of the delivery of the tobacco product or date of importation into this state, the route to be followed if a tobacco product is being transported from an out-of-state source, and any other information the department requires.  The department shall provide a permit on a form prescribed by it upon the application of a transporter with the remittance of a fee of $1.00.  If a transporter transports a tobacco product into this state, the transporter shall stop at the nearest state police post within this state on the route authorized by the permit and disclose the tobacco products in his or her possession and the papers required by this section to be in his or her possession.

§ 205.426a. Disbursement of stamps to wholesaler or unclassified acquirer; affixing stamp; resale of package or cigarette; inspection or inventory; exchanging or discontinuing unaffixed stamps; accepting, purchasing, or borrowing unaffixed stamps; appointment of stamping agent to affix stamps to individual packages; limitation; inquiries from department of state police.

Sec. 6a.  (1) A wholesaler or unclassified acquirer other than a manufacturer may apply to the department for stamps to affix as provided in this act.  The department may prescribe the method of shipment of the stamps.  The department shall keep a record of all stamps disbursed, name of wholesaler or unclassified acquirer, and date of disbursement.  The department may release the identity of the wholesaler or unclassified acquirer to whom specific stamps were disbursed to state or local police agencies.
(2) Before delivery, sale, or transfer to any person in this state, a wholesaler or an unclassified acquirer shall place or cause to be placed on the bottom of each individual package of cigarettes to be sold within this state a stamp provided by the department.  Stamps shall be firmly affixed in such a manner that the stamps cannot be removed without being mutilated or destroyed.  A stamp shall be affixed to each individual package in an aggregate denomination equal to the amount of the tax upon the contents of the individual package of cigarettes.  Except as otherwise provided in this subsection, a stamp is considered affixed if more than 50% of the stamp is affixed to the individual package, as determined by the department.  Upon implementation of the digital stamps as provided in section 5a(2),  1 a stamp is considered affixed if 90% or more of the stamp is affixed to the individual package.
(3) A retailer or person licensed under this act, other than a wholesaler or unclassified acquirer or a person acting as a transporter for a wholesaler or unclassified acquirer, shall not acquire for resale an individual package of cigarettes or a cigarette from an individual package unless that individual package of cigarettes has affixed to it a stamp as provided in this act.
(4) A retailer or vending machine operator shall not sell or offer for sale an individual package of cigarettes to the general public that does not have affixed the stamp required by this act.  Cigarettes without stamps may not be placed or stored in a vending machine.
(5) The department or its authorized agents may inspect or conduct an inventory of a wholesaler's or unclassified acquirer's stock of cigarettes, tobacco products other than cigarettes, and stamps during regular business hours and inspect the related statements and other records required in section 6.  2
(6) The department or its authorized agents may inspect the operations of a secondary wholesaler, vending machine operator, or retailer, or the contents of a specific vending machine, during regular business hours.  This inspection shall include inspection of all statements and other records required by section 6 of this act, of packages of cigarettes and tobacco products other than cigarettes, and of the contents of cartons and shipping or storage containers to ascertain that all individual packages of cigarettes have an affixed stamp of proper denomination as required by this act.  This inspection may also verify that all the stamps were produced under the authority of the department.
(7) A person shall not prevent or hinder the department or its authorized agents from making a full inspection of any place or vending machine where cigarettes or tobacco products other than cigarettes subject to the tax under this act are sold or stored, or prevent or hinder the full inspection of invoices, books, records, or other papers required to be kept by this act.
(8) The department may require wholesalers and unclassified acquirers to exchange unaffixed stamps with the department as the department considers necessary.  The department may require wholesalers, unclassified acquirers, secondary wholesalers, vending machine operators and retailers to discontinue offering for sale any unsold individual packages of cigarettes bearing a prior version of the stamp that the department has withdrawn from circulation.  The department may set a reasonable timeline after which the prior version of the stamp may no longer be offered for sale and the new version of the stamp is required.  A secondary wholesaler, retailer, or vending machine operator may return cigarette packages bearing discontinued stamps to a wholesaler for credit.  A wholesaler or unclassified acquirer may take credit on its tax returns for individual packages of cigarettes bearing discontinued stamps that are returned to the manufacturer for credit less the appropriate discount paid.
(9) Except as provided in subsection (10), a wholesaler or unclassified acquirer shall not give, sell, or lend any unaffixed stamps to another person and except as otherwise provided in this act, a person shall not accept, purchase, or borrow any unaffixed stamps from another person.
(10) Upon written authorization of the department, a wholesaler or unclassified acquirer licensed under this act may appoint a stamping agent to affix stamps to individual packages of cigarettes.
(11) Stamps may only be affixed to an individual package of cigarettes if the manufacturer of the cigarettes is identified on the lists of participating manufacturers or nonparticipating manufacturers maintained by the department pursuant to section 6c(8). 3
(12) The department of state police shall initiate inquiries to or otherwise access data from the department to support or in furtherance of its enforcement activities under this act.

§ 205.426b. Issuance of stamps to wholesaler or unclassified acquirer.

Sec. 6b.  (1) Beginning April 15, 1998, a wholesaler or unclassified acquirer may obtain stamps from the department and shall remit the unpaid balance of the tax at the time of filing the return provided in section 7   1 at a discount from the face amount of the stamps as provided in section 7(3).  If the department determines that a wholesaler or unclassified acquirer is not financially sound, the department shall issue stamps only if 1 of the following is met:
(a) On the filing with the department of a bond or other security as determined by the department in an amount to be determined by the department.
(b) The department requires returns and payments to be made more frequently than provided in section 7.
(c) The department requires the wholesaler or unclassified acquirer to pay for the stamps at the time of obtaining them, less a discount from the face amount of the stamps equal to the discount provided in section 7(3).
(2) The department shall not issue any stamps to a wholesaler or unclassified acquirer who is delinquent in paying the tax under this act.

§ 205.426c. Acquisition of cigarettes from nonparticipating manufacturer.

Sec. 6c.  (1) A nonparticipating manufacturer shall by April 30 of each year certify to the department that it is not a participant in the master settlement agreement and that it has performed its obligation to establish a qualified escrow account and deposited funds into that account under 1999 PA 244, MCL 445.2051 to 445.2052 .
(2) The certification of compliance shall be on a form prescribed by the department, shall contain all of the information requested on the form, and shall include a list of all brand names of cigarettes sold by the nonparticipating manufacturer for consumption in this state during the calendar year immediately preceding the certification date.
(3) A nonparticipating manufacturer shall provide a copy of the certification of compliance to the attorney general and any wholesaler, unclassified acquirer, or other person to whom the nonparticipating manufacturer makes a sale of its cigarettes for subsequent sale in this state.
(4) A wholesaler, unclassified acquirer, or other person who is provided with a certification of compliance under this section shall retain the certification of compliance for not less than 4 years from the date the certification of compliance was received.
(5) A wholesaler or unclassified acquirer shall report to the department all cigarettes that it acquires that were manufactured by a nonparticipating manufacturer.  A wholesaler or unclassified acquirer that has not voluntarily submitted annual reports described in this subsection for periods beginning December 28, 1999 shall file those reports with the department within 60 days of the effective date of the amendatory act that added this section.  The report shall be on a form prescribed by the department and attached to the return required under section 7.  1  A wholesaler or unclassified acquirer that has not acquired any cigarettes from a nonparticipating manufacturer shall file the report with the return required under section 7 stating that it has not purchased, acquired, exported, or returned cigarettes related to a nonparticipating manufacturer.  The information contained in this report is for the purposes of enforcing 1999 PA 244, MCL 445.2051 to 445.2052 , and does not constitute information obtained in connection with the administration of a tax under section 28(1)(f) of 1941 PA 122, MCL 205.28 .  A wholesaler or unclassified acquirer shall retain a copy of the report for not less than 4 years from the date the report was filed with the department.  If a wholesaler or unclassified acquirer does not file a report or knowingly files an incomplete or inaccurate report under this subsection, the department may do 1 or more of the following:
(a) Assess a penalty under this section.
(b) Prohibit the wholesaler or unclassified acquirer from obtaining cigarette stamps from the department until a complete and accurate report is filed.
(c) Revoke the wholesaler's or unclassified acquirer's license under section 5,  2 only after conducting a hearing.
(6) A nonparticipating manufacturer that has not provided the certification of compliance required by this section shall not make a sale of cigarettes in this state or a sale within or outside this state to any person for sale, distribution, or consumption in this state.
(7) A person shall not purchase, acquire, possess, or sell cigarettes acquired from or manufactured by a nonparticipating manufacturer that has not provided the certification of compliance to the department as required under this section and that has not provided the person with a copy of the certification of compliance if required to do so under subsection (3).
(8) The department shall maintain and regularly update a list of participating manufacturers and nonparticipating manufacturers that have provided the certification of compliance required under this section.  The department shall publish the list on its website and provide a copy of the list to a person upon request.
(9) If a wholesaler or unclassified acquirer receives a certification of compliance from a nonparticipating manufacturer that is not included in the list maintained by the department, the wholesaler or unclassified acquirer shall within 10 business days after receiving the certification of compliance provide a copy of the certification of compliance and the name and address of the nonparticipating manufacturer to the department.
(10) Thirty days after the department posts on its website and provides wholesalers and unclassified acquirers a notice of a second or subsequent knowing violation of a provision of 1999 PA 244, MCL 445.2051 to 445.2052 , or a notice of a judgment the department has against a nonparticipating manufacturer, the department may seize or confiscate from any person any cigarettes in that person's possession that were acquired from or manufactured by that nonparticipating manufacturer.  Beginning May 1, 2003, the department may seize or confiscate from any person any cigarettes in that person's possession that were acquired from or manufactured by a nonparticipating manufacturer if that nonparticipating manufacturer has not provided the certification required by this section.  Seizure, confiscation, forfeiture, and sale of cigarettes under this section shall be accomplished under section 9.  3
(11) The department may impose on any person a civil fine not to exceed $1,000.00 for each violation of this section.  The civil fine is in addition to all other fines or penalties imposed by this act or 1941 PA 122, MCL 205.1 to 205.31 .
(12) As used in this section:
(a) “Cigarette” means that term as defined in 1999 PA 244, MCL 445.2051 to 445.2052 .
(b) “Nonparticipating manufacturer” means a manufacturer of cigarettes that is not a participating manufacturer as that term is defined in 1999 PA 244, MCL 445.2051 to 445.2052 .  Nonparticipating manufacturer also includes the first purchaser of cigarettes manufactured outside the United States for resale in the United States.

§ 205.426d. Sale of cigarettes by nonparticipating manufacturer; information to be provided to department; payment of equity assessment; prepayment; stamp; prohibited conduct; publication of list of compliant nonparticipating manufacturers; seizure or confiscation; violation; service of process; brand previously sold; audit or review; definitions.

Sec. 6d.  (1) Before commencing sales of cigarettes in this state, a nonparticipating manufacturer shall provide to the department the information described in subsection (3) and shall pay the equity assessment as provided in subsections (4) and (5).
(2) A nonparticipating manufacturer selling cigarettes in this state on the effective date of the amendatory act that added this subsection   1 shall provide to the department the information described in subsection (3) and pay the equity assessment as provided in subsections (4) and (5) within 30 days after the effective date of the amendatory act that added this subsection.  If a nonparticipating manufacturer is not selling cigarettes in this state on the effective date of the amendatory act that added this subsection, before selling cigarettes in this state, the nonparticipating manufacturer shall pay the equity assessment imposed under subsections (4) and (5) for all cigarettes that are anticipated to be sold in the current calendar year as described in subsection (5).
(3) A nonparticipating manufacturer shall provide to the department on a form prescribed by the department the following information:
(a) The complete name, address, and telephone number of the nonparticipating manufacturer.
(b) The date that the nonparticipating manufacturer intends to begin or began selling cigarettes in this state.
(c) The brand names of the cigarettes the nonparticipating manufacturer will sell or is selling in this state.
(d) A statement of the nonparticipating manufacturer's intention to comply with its escrow obligation under 1999 PA 244, MCL 445.2051 to 445.2052 , obligations under section 6c,  2 and the obligations in this section.
(e) The name, address, and telephone number of the resident agent of the nonparticipating manufacturer.
(f) The name, address, telephone number, and signature of an officer of the nonparticipating manufacturer attesting to all of the information described in this subsection.
(4) An equity assessment in the amount of 17.5 mills per cigarette is imposed upon all cigarettes sold by a nonparticipating manufacturer in this state.  The purpose of the equity assessment is to fund enforcement and administration of 1999 PA 244, MCL 445.2051 to 445.2052 , and this act.  The equity assessment is in addition to all other fees, assessments, and taxes levied by law.  The equity assessment shall be collected by the department from each nonparticipating manufacturer selling cigarettes in this state.  The equity assessment shall be collected and reconciled by April 15 of each year for cigarettes sold in the previous calendar year.  The department shall credit a nonparticipating manufacturer with any prepayment made by the nonparticipating manufacturer pursuant to subsection (5) for that calendar year.
(5) Except as provided in subsection (2), a nonparticipating manufacturer selling cigarettes in this state shall prepay the equity assessment imposed in subsection (4) not later than March 1 for all cigarettes that are anticipated to be sold in the current calendar year.  The prepayment amount shall be determined by multiplying 17.5 mills times the number of cigarettes that the department reasonably determines that the nonparticipating manufacturer will sell in this state in the current calendar year or $10,000.00, whichever is more.  The department may require a nonparticipating manufacturer to provide any information reasonably necessary to determine the equity assessment prepayment amount.  Not later than February 15 of each year, the department shall notify the nonparticipating manufacturer of the amount of the prepayment due for the current year.  The department shall increase the equity assessment prepayment amount during the year if the increase is justified by the nonparticipating manufacturer's actual sales of cigarettes.
(6) A stamping agent shall not affix to any package of cigarettes or shipping container of roll-your-own tobacco of a nonparticipating manufacturer the stamp required under this act unless the nonparticipating manufacturer is listed on the department website as provided in subsection (9) or after receiving notice that the nonparticipating manufacturer has not prepaid or paid in full the equity assessment imposed under this section.  A stamping agent that violates this subsection is subject to the penalties described in section 5.  3  If a stamping agent intentionally and knowingly violates this subsection, the department may seize or confiscate any cigarettes in the stamping agent's possession that were stamped in violation of this subsection.  Seizure, confiscation, forfeiture, and sale of cigarettes shall be accomplished under section 9.  4
(7) A nonparticipating manufacturer that does not provide the information required under subsection (3) or pay the equity assessment required by this section shall not make a sale of cigarettes in this state to any person for sale, distribution, or consumption in this state.
(8) A person shall not purchase, acquire, possess, or sell cigarettes acquired from or manufactured by a nonparticipating manufacturer that has not provided the information required under subsection (3) or made the payment of the equity assessment required by this section.
(9) The department shall maintain and regularly update a list of nonparticipating manufacturers that have complied with the requirements of this section.  The department shall publish the list on its website and provide a copy of the list to a person upon request.
(10) Ninety days after the department posts on its website and provides wholesalers and unclassified acquirers notice that a nonparticipating manufacturer is in violation of subsection (1) or (2), the department may seize or confiscate from any person any cigarettes in that person's possession that were acquired from or manufactured by that nonparticipating manufacturer.  Seizure, confiscation, forfeiture, and sale of cigarettes under this section shall be accomplished under section 9.
(11) The department may impose on any person a civil fine not to exceed $1,000.00 for each violation of this section.  The civil fine is in addition to all other fines or penalties imposed by this act or 1941 PA 122, MCL 205.1 to 205.31 .
(12) A nonparticipating manufacturer shall appoint and continually engage a resident agent for service of process.  That service shall constitute legal and valid service of process on the nonparticipating manufacturer.
(13) For purposes of this section, a nonparticipating manufacturer that intends to sell or is selling a brand of cigarettes in or into this state is presumed to be the same manufacturer that previously sold that same brand in or into the state, unless the nonparticipating manufacturer can prove that the 2 manufacturers are not affiliated.  A nonparticipating manufacturer shall not be authorized to sell in or into this state a cigarette brand that was previously sold in or into this state by another nonparticipating manufacturer if that other nonparticipating manufacturer did not escrow the entire amount due under 1999 PA 244, MCL 445.2051 to 445.2052 , or pay the equity assessment due under this section.
(14) The department shall conduct an audit or review of nonparticipating manufacturers to ensure compliance with this section.
(15) As used in this section:
(a) “Cigarette” means that term as defined in 1999 PA 244, MCL 445.2051 to 445.2052 .
(b) “Nonparticipating manufacturer” means a manufacturer of cigarettes that is not a participating manufacturer as that term is defined in 1999 PA 244, MCL 445.2051 to 445.2052 .  Nonparticipating manufacturer also includes the first purchaser of cigarettes manufactured outside the United States for resale in the United States.

§ 205.426e. Enforcement of tobacco product manufacturer's escrow accounts act; disclosure of information to attorney general; consolidation of information received pursuant to agreements with Indian tribes; disclosure of confidential information; information received as result of NPM adjustment settlement agreement.

Sec. 6e.  (1) Notwithstanding any law to the contrary, the department shall, upon request of the attorney general, disclose to the attorney general, or his or her designee, information obtained by the department that is relevant to the enforcement of the tobacco product manufacturers' escrow accounts act, 1999 PA 244, MCL 445.2051 to 445.2052 .  However, with regard to information received pursuant to any tax agreement entered into between this state and any Indian tribe, that includes limitations on disclosure of such information in addition to, or in lieu of, those contained in statute, the information provided under this section shall be consolidated to include all information received pursuant to such agreements with Indian tribes so as not to enable a person to ascertain any 1 Indian tribe's information.  The department and the attorney general or his or her designee, except as provided in this subsection, may disclose information provided under this section that may otherwise be confidential if 1 or more of the following apply:
(a) In discharge of the duty to enforce or defend the provisions of this act or the tobacco product manufacturers' escrow accounts act, 1999 PA 244, MCL 445.2051 to 445.2052 .
(b) In the course of any litigation, arbitration, or proceeding related to the tobacco product manufacturers' escrow accounts act, 1999 PA 244, MCL 445.2051 to 445.2052 , the master settlement agreement, or the NPM adjustment settlement agreement.
(c) In complying with provisions in the NPM adjustment settlement agreement related to a data clearinghouse.
(2) Tobacco product sales data provided by another state, a manufacturer, or other person or entity to a data clearinghouse pursuant to the NPM adjustment settlement agreement that is also provided to the department pursuant to that agreement shall be treated as confidential tax information subject to section 28 of 1941 PA 122, MCL 205.28 .  This subsection only applies to information received by the department as a result of the NPM adjustment settlement agreement.

§ 205.427. Levy of tax on sale of tobacco products; filing return; payment of tax; inventory; importation or acquisition of tobacco product; tax abatement or refund; reimbursement by adding to price of tobacco product; sale or transfer of unaffixed stamps by wholesaler or unclassified acquirer; prohibition; exchange of unaffixed stamps; inspection; reports; definitions.

Sec. 7.  (1) Beginning May 1, 1994, a tax is levied on the sale of tobacco products sold in this state as follows:
(a) Through July 31, 2002, for cigars, noncigarette smoking tobacco, and smokeless tobacco, 16% of the wholesale price.
(b) For cigarettes, 37.5 mills per cigarette.
(c) Beginning August 1, 2002, for cigarettes, in addition to the tax levied in subdivision (b), an additional 15 mills per cigarette.
(d) Beginning August 1, 2002, for cigarettes, in addition to the tax levied in subdivisions (b) and (c), an additional 10 mills per cigarette.
(e) Beginning July 1, 2004, for cigarettes, in addition to the tax levied in subdivisions (b), (c), and (d), an additional 37.5 mills per cigarette.
(f) Beginning August 1, 2002 and through June 30, 2004, for cigars, noncigarette smoking tobacco, and smokeless tobacco, 20% of the wholesale price.
(g) Beginning July 1, 2004, for cigars, noncigarette smoking tobacco, and smokeless tobacco, 32% of the wholesale price.  However, beginning November 1, 2012 and through October 31, 2021, the amount of tax levied under this subdivision on cigars shall not exceed 50 cents per individual cigar.
(2) On or before the twentieth day of each calendar month, every licensee under section 3   1 other than a retailer, unclassified acquirer licensed as a manufacturer, or vending machine operator shall file a return with the department stating the wholesale price of each tobacco product other than cigarettes purchased, the quantity of cigarettes purchased, the wholesale price charged for all tobacco products other than cigarettes sold, the number of individual packages of cigarettes and the number of cigarettes in those individual packages, and the number and denominations of stamps affixed to individual packages of cigarettes sold by the licensee for each place of business in the preceding calendar month.  The return shall also include the number and denomination of unaffixed stamps in the possession of the licensee at the end of the preceding calendar month.  Wholesalers shall also report accurate inventories of cigarettes, both stamped and unstamped at the end of the preceding calendar month.  Wholesalers and unclassified acquirers shall also report accurate inventories of affixed and unaffixed stamps by denomination at the beginning and end of each calendar month and all stamps acquired during the preceding calendar month.  The return shall be signed under penalty of perjury.  The return shall be on a form prescribed by the department and shall contain or be accompanied by any further information the department requires.  The department may also require licensees to report cigarette acquisition, purchase, and sales information in other formats and frequency.
(3) To cover the cost of expenses incurred in the administration of this act, at the time of the filing of the return, the licensee shall pay to the department the tax levied in subsection (1) for tobacco products sold during the calendar month covered by the return, less compensation equal to the following:
(a) One percent of the total amount of the tax due on tobacco products sold other than cigarettes.
(b) Through July 31, 2002, 1.25% of the total amount of the tax due on cigarettes sold.
(c) Beginning August 1, 2002, 1.5% of the total amount of the tax due on cigarettes sold and, beginning on June 20, 2012, for sales of untaxed cigarettes to Indian tribes in this state, an amount equal to 1.5% of the total amount of the tax due on those cigarettes sold as if those cigarette sales were taxable sales under this act.
(d) Beginning on the first calendar month following the implementation of the use of digital stamps as provided in section 5a(2),  2 for licensees who are stamping agents, 0.5% of the total amount of the tax due on cigarettes sold and, for sales of untaxed cigarettes to Indian tribes in this state, 0.5% of the total amount of the tax due on those cigarettes sold as if those cigarette sales were taxable sales under this act, until the stamping agent is compensated in an amount equal to the direct cost actually incurred by the stamping agent for the purchase of upgrades to technology and equipment, excluding the equipment reimbursed under subdivision (e), that are necessary to affix the digital stamp as determined by the department.  Compensation under this subdivision may also be claimed by a stamping agent for the direct costs actually incurred by the stamping agent, as determined by the department and reflected in the net purchase price, for the initial and 1-time purchase of case packers or similar machines or conveyors as follows:
(i) Case packers or similar machines to be used exclusively to repack cigarette cartons into case boxes after digital stamps have been applied by eligible equipment to the individual packages of cigarettes contained within those cigarette cartons.  Compensation under this subparagraph may only be claimed by a stamping agent if the case packers or similar machines are in addition to, and not a replacement for, 1 or more case packers or similar machines used in connection with cigarette stamping machines which do not use the digital stamp authorized under this act.
(ii) Conveyors to be used exclusively for that portion of a cigarette stamping line that is necessary for and dedicated to cigarette stamping operations using eligible equipment to affix digital stamps to individual packages of cigarettes to be sold in this state.  Compensation under this subparagraph may only be claimed by a stamping agent if the cigarette stamping line served by the conveyors is in addition to 1 or more distinct and existing cigarette stamping lines using stamping machines which do not use the digital stamp authorized under this act and that compensation shall not exceed a total of 50% of the amount reimbursed under subdivision (e) for any particular stamping agent.
(iii) Compensation under subparagraphs (i) and (ii) shall also include any applicable sales or use taxes paid, and shipping and crating charges actually incurred, by the stamping agent in connection with the purchase, but shall exclude any other costs incurred by the stamping agent not otherwise expressly provided for in this subdivision, including, but not limited to, charges for installation and ongoing maintenance.
(e) Beginning in the first calendar month following the implementation of the use of digital stamps as provided in section 5a(2) and continuing for the immediately succeeding 17 months, for licensees who are stamping agents, reimbursement of direct costs actually incurred by the stamping agent, as determined by the department, for the initial purchase of eligible equipment in an amount equal to 5.55% of the total net purchase price of the eligible equipment necessary to affix the digital stamp.  The reimbursement provided under this subdivision shall also include reimbursement for any applicable sales or use taxes paid and shipping and crating charges actually incurred by the stamping agent for the initial purchase of eligible equipment, but shall exclude reimbursement for any other costs incurred by the stamping agent not otherwise expressly provided for in this subdivision, including, but not limited to, charges for installation and ongoing maintenance related to eligible equipment.  A stamping agent may only receive reimbursement under this subdivision to the extent that the eligible equipment purchased by the stamping agent does not exceed the total number of the stamping agent's existing equipment as certified by the stamping agent on a form prescribed by the department.
(f) Beginning in the first calendar month following the implementation of the use of digital stamps as provided in section 5a(2), for licensees who are stamping agents, reimbursement of qualified equipment costs actually incurred by the stamping agent, not otherwise compensated or reimbursed under subdivision (d) or (e), as determined by the department.  The reimbursement provided under this subdivision shall not exceed $60,000.00 for all stamping agents combined.
(4) Every licensee and retailer who, on August 1, 2002, has on hand for sale any cigarettes upon which a tax has been paid pursuant to subsection (1)(b) shall file a complete inventory of those cigarettes before September 1, 2002 and shall pay to the department at the time of filing this inventory a tax equal to the difference between the tax imposed in subsection (1)(b), (c), and (d) and the tax that has been paid under subsection (1)(b).  Every licensee and retailer who, on August 1, 2002, has on hand for sale any cigars, noncigarette smoking tobacco, or smokeless tobacco upon which a tax has been paid pursuant to subsection (1)(a) shall file a complete inventory of those cigars, noncigarette smoking tobacco, and smokeless tobacco before September 1, 2002 and shall pay to the department at the time of filing this inventory a tax equal to the difference between the tax imposed in subsection (1)(f) and the tax that has been paid under subsection (1)(a).
(5) Every licensee and retailer who, on July 1, 2004, has on hand for sale any cigarettes upon which a tax has been paid pursuant to subsection (1)(b), (c), and (d) shall file a complete inventory of those cigarettes before August 1, 2004 and shall pay to the department at the time of filing this inventory a tax equal to the difference between the tax imposed in subsection (1)(b), (c), (d), and (e) and the tax that has been paid under subsection (1)(b), (c), and (d).  Every licensee and retailer who, on July 1, 2004, has on hand for sale any cigars, noncigarette smoking tobacco, or smokeless tobacco upon which a tax has been paid pursuant to subsection (1)(f) shall file a complete inventory of those cigars, noncigarette smoking tobacco, and smokeless tobacco before August 1, 2004 and shall pay to the department at the time of filing this inventory a tax equal to the difference between the tax imposed in subsection (1)(g) and the tax that has been paid under subsection (1)(f).  The proceeds derived under this subsection shall be credited to the Michigan Medicaid benefits trust fund created under section 5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255 .
(6) The department may require the payment of the tax imposed by this act upon the importation or acquisition of a tobacco product.  A tobacco product for which the tax under this act has once been imposed and that has not been refunded if paid is not subject upon a subsequent sale to the tax imposed by this act.
(7) An abatement or refund of the tax provided by this act may be made by the department for causes the department considers expedient.  The department shall certify the amount and the state treasurer shall pay that amount out of the proceeds of the tax.
(8) A person liable for the tax may reimburse itself by adding to the price of the tobacco products an amount equal to the tax levied under this act.
(9) A wholesaler, unclassified acquirer, or other person shall not sell or transfer any unaffixed stamps acquired by the wholesaler or unclassified acquirer from the department.  A wholesaler or unclassified acquirer who has any unaffixed stamps on hand at the time its license is revoked or expires, or at the time it discontinues the business of selling cigarettes, shall return those stamps to the department.  The department shall refund the value of the stamps, less the appropriate discount paid.
(10) If the wholesaler or unclassified acquirer has unsalable packs returned from a retailer, secondary wholesaler, vending machine operator, wholesaler, or unclassified acquirer with stamps affixed, the department shall refund the amount of the tax less the appropriate discount paid.  If the wholesaler or unclassified acquirer has unaffixed unsalable stamps, the department shall exchange with the wholesaler or unclassified acquirer new stamps in the same quantity as the unaffixed unsalable stamps.  An application for refund of the tax shall be filed on a form prescribed by the department for that purpose, within 4 years from the date the stamps were originally acquired from the department.  A wholesaler or unclassified acquirer shall make available for inspection by the department the unused or spoiled stamps and the stamps affixed to unsalable individual packages of cigarettes.  The department may, at its own discretion, witness and certify the destruction of the unused or spoiled stamps and unsalable individual packages of cigarettes that are not returnable to the manufacturer.  The wholesaler or unclassified acquirer shall provide certification from the manufacturer for any unsalable individual packages of cigarettes that are returned to the manufacturer.
(11) On or before the twentieth of each month, each manufacturer shall file a report with the department listing all sales of tobacco products to wholesalers and unclassified acquirers during the preceding calendar month and any other information the department finds necessary for the administration of this act.  This report shall be in the form and manner specified by the department.
(12) Each wholesaler or unclassified acquirer shall submit to the department an unstamped cigarette sales report on or before the twentieth day of each month covering the sale, delivery, or distribution of unstamped cigarettes during the preceding calendar month to points outside of this state.  A separate schedule shall be filed for each state, country, or province into which shipments are made.  For purposes of the report described in this subsection, “unstamped cigarettes” means individual packages of cigarettes that do not bear a Michigan stamp.  The department may provide the information contained in this report to a proper officer of another state, country, or province reciprocating in this privilege.
(13) As used in subsection (3):
(a) “Eligible equipment” means a cigarette tax stamping machine that meets all of the following conditions:
(i) Was purchased by a stamping agent who was licensed as a stamping agent as of December 31, 2011.
(ii) Enables the stamping agent to affix digital stamps to individual packages of cigarettes in accordance with the requirements under section 6a(2). 3
(iii) Was purchased to be used for the primary purpose of permitting the stamping agent to affix digital stamps to individual packages of cigarettes to be sold in this state following the implementation of the use of digital stamps as provided in section 5a(2).
(b) “Existing equipment” means a cigarette tax stamping machine that meets all of the following conditions:
(i) Was owned by a person who was licensed as a stamping agent as of December 31, 2011.
(ii) Was a cigarette tax stamping machine used prior to January 1, 2012 by the stamping agent to apply stamps using stamp rolls of 30,000 stamps.
(c) “Qualified equipment” means equipment that was placed in service by a stamping agent that included conveyors and additional associated electrical line and compressed air line before August 15, 2014 in connection with the implementation of a digital stamping line under a pilot program with the department as determined by the department.  Qualified equipment does not include the cost of installation of a conveyor.