GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1991

H	1 

HOUSE BILL 1288

Short Title:  Income Tax/Tobacco Tax Fairness.	(Public)
─────────────────────────────────────── 
Sponsors: Representatives Withrow; and Easterling.
─────────────────────────────────────── 
Referred to:  Finance.
─────────────────────────────────────── 

May 10, 1991

A BILL TO BE ENTITLED
AN ACT TO PROVIDE TAX FAIRNESS BY INCREASING INCOME TAXES ON HIGH-INCOME PERSONS, ELIMINATING THE INDIVIDUAL INCOME TAX CREDIT FOR NORTH CAROLINA DIVIDENDS, INCREASING THE CIGARETTE TAX, AND EXTENDING THE CIGARETTE TAX TO CIGARS AND SMOKELESS TOBACCO.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-134.2(a) reads as rewritten:
"(a)	A tax is imposed upon the North Carolina taxable income of every individual.  The tax shall be levied, collected, and paid annually and shall be computed at the following percentages of the taxpayer's North Carolina taxable income.
(1)	For married individuals who file a joint return under G.S. 105-152.1 and for surviving spouses, as defined in section 2(a) of the Code:
		On the North Carolina taxable income up to twenty-one thousand two hundred fifty dollars ($21,250), six percent (6%).
		On the amount over twenty-one thousand two hundred fifty dollars ($21,250) and up to one hundred thousand dollars ($100,000), seven percent (7%).
		On the amount over one hundred thousand dollars ($100,000) and up to one hundred fifty thousand dollars ($150,000), eight percent (8%).
		On the amount over one hundred fifty thousand dollars ($150,000), nine percent (9%).
(2)	For heads of households, as defined in section 2(b) of the Code:
		On the North Carolina taxable income up to seventeen thousand dollars ($17,000), six percent (6%).
		On the amount over seventeen thousand dollars ($17,000) and up to eighty thousand dollars ($80,000), seven percent (7%).
		On the amount over eighty thousand dollars ($80,000) and up to one hundred twenty thousand dollars ($120,000), eight percent (8%).
		On the amount over one hundred twenty thousand dollars ($120,000), nine percent (9%).
(3)	For unmarried individuals other than surviving spouses and heads of households:
		On the North Carolina taxable income up to twelve thousand seven hundred fifty dollars ($12,750), six percent (6%).
		On the amount over twelve thousand seven hundred fifty dollars ($12,750) and up to sixty thousand dollars ($60,000), seven percent (7%).
		On the amount over sixty thousand dollars ($60,000) and up to ninety thousand dollars ($90,000), eight percent (8%).
		On the amount over ninety thousand dollars ($90,000), nine percent (9%).
(4)	For married individuals who do not file a joint return under G.S. 105-152.1:
		On the North Carolina taxable income up to ten thousand six hundred twenty-five dollars ($10,625), six percent (6%).
		On the amount over ten thousand six hundred twenty-five dollars ($10,625) and up to fifty thousand dollars ($50,000), seven percent (7%). 
		On the amount over fifty thousand dollars ($50,000) and up to seventy-five thousand dollars ($75,000), eight percent (8%).
		On the amount over seventy-five thousand dollars ($75,000), nine percent (9%)."
Sec. 2.  G.S. 105-151.19 is repealed.
Sec. 3.  Notwithstanding G.S. 105-163.15, no addition to tax may be made under that statute for a taxable year beginning on or after January 1, 1991, and before January 1, 1992, with respect to an underpayment of individual income tax to the extent the underpayment was created or increased by this act.
Sec. 4.  Article 2A of Chapter 105 of the General Statutes reads as rewritten:
"ARTICLE 2A. 
"Schedule B-A. Tobacco Products Tax. 
"§ 105-113.2. Short title.
This Article may be cited as the 'Tobacco Products Tax Act' or 'Tobacco Products Tax Article.'"
"§ 105-113.3. Purpose.
It is the intent of this Article that the incidence of the tobacco products tax shall rest upon the ultimate consumer and not upon the grower or processor of leaf tobacco or upon the manufacturer of tobacco products.  This tax shall be paid to the State only once, regardless of the number of times the tobacco products may be sold in this State, but it is the intent of this Article that the tax shall be added to the sales price and passed on from successive sellers to successive purchasers so that it may be included in the ultimate purchase price of the final or last purchaser. The amount of the tax may be stated separately from the price of tobacco products on all price display signs, sales or delivery slips, bills, and statements which advertise or indicate the price. 
"§ 105-113.4. Definitions.
The following definitions apply in this Article, except where the context clearly indicates a different meaning:
(1)	'Cigar' means a roll of tobacco wrapped in a substance that contains tobacco, other than a cigarette as defined in subdivision (1a)b.
 (1a)'Cigarette' means –
a.	Any roll of tobacco wrapped in paper or in any substance not containing tobacco, and
b.	Any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in subparagraph (1) a above.
	(2)	'Secretary' means the Secretary of Revenue.
	(3)	'Distributor' means any person, wherever resident or located, who manufactures or produces tobacco products or who purchases unstamped tobacco products directly from the manufacturer and stores, sells, or otherwise disposes of them.  
	(4)	'In this State' or 'within this State' means within the exterior limits of the State of North Carolina, and includes  all territory within those limits owned by, leased by, or  ceded to the United States of America.
	(5) 	'Licensed distributor' means a distributor licensed under the provisions of this Article.
	(6)	'Manufacturer' means any person who manufactures or produces tobacco products.
(7)	'Package' means the individual packet, can, box, or other container used to contain and to convey tobacco products to the consumer.
	(8) 	'Person' means any individual, firm, copartnership, joint venture, association, corporation, estate, trust, business trust, receiver, syndicate, or other group or combination acting as a unit, or the State or any of its political subdivisions.  
	(9)	'Retail dealer' means any person other than a distributor engaged in this State in the business of selling tobacco products at retail.
	(10)	'Selling' or 'sale' means any sale, transfer, exchange, barter, gift, or offer for sale and distribution. 
(10a)	'Smokeless tobacco product' means any tobacco product other than a cigar or cigarette.
	(11)	'Stamp' means any impression, device, stamp, label, or print manufactured, printed, or made as prescribed by the Secretary under this Article.
(11a)	'Tobacco product' means a product containing tobacco and intended for inhalation or oral use.
	(12)	'Unstamped' means not bearing a North Carolina tobacco products tax stamp prescribed by the Secretary under this Article.
(13)	'Use' means the exercise of any right or power over tobacco products incident to ownership or possession other than the making of a sale in the course of engaging in a business of selling tobacco products. 
"§ 105-113.5. Privilege tax levied.
(a)	In addition to all other taxes and fees, a tax is hereby levied upon the sale or possession for sale within this State, by distributors, of all cigarettes at the rate of six mills per individual cigarette.
(b)	In addition to all other taxes and fees, a tax is hereby levied upon the sale or possession for sale within this State by distributors of all cigars at the rate of six mills per individual cigar.
(c)	In addition to all other taxes and fees, a tax is hereby levied upon the sale or possession for sale within this State by distributors of all smokeless tobacco products at the rate of six mills per ounce.
(d)	The tax levied by this Article does not apply to free distribution of sample cigarettes in packages containing five or fewer cigarettes nor to any package of cigarettes customarily donated free of charge by manufacturers to employees in factories where cigarettes are manufactured in this State where such packages of cigarettes are not taxed by the federal government.  The tax levied by this Article does not apply to free distribution of sample cigars or smokeless tobacco products.
"§ 105-113.6. Use tax levied.
In addition to all other taxes and fees, a tax is hereby levied upon the sale or possession for sale by all persons other than distributors, and upon the use, consumption, and possession for use or consumption of cigarettes within this State at the rate set forth in G.S. 105-113.5(a)	provided, that the tax levied by this section shall not be applicable to the sale or possession for sale by persons other than distributors, or to the use, consumption, or possession for use or consumption of cigarettes with respect to which the tax levied by the  provisions of G.S. 105-113.5 has been computed and paid. 
In addition to all other taxes and fees, a tax is hereby levied upon the sale or possession for sale by all other persons other than distributors, and upon the use, consumption, and possession for use or consumption of cigars within this State at the rate set out in G.S. 105-113.5(b); provided, that the tax levied by this section does not apply to the sale or possession for sale by persons other than distributors, or to the use, consumption, or possession for use or consumption of cigars with respect to which the tax levied by the provisions of G.S. 105-113.5 has been computed and paid.
In addition to all other taxes and fees, a tax is hereby levied upon the sale or possession for sale by all persons other than distributors, and upon the use, consumption, and possession for use or consumption of smokeless tobacco products within this State at the rate set forth in G.S. 105-113.5(c); provided, that the tax levied by this section does not apply to the sale or possession for sale by persons other than distributors, or to the use, consumption, or possession for use or consumption of smokeless tobacco products with respect to which the tax levied by the provisions of G.S. 105-113.5 has been computed and paid.
"§ 105oArticle
"§ 105-113.8. Federal Constitution and statutes.
Any activities which this Article may purport to tax in violation of the Constitution of the United States or any federal statute are hereby expressly exempted from taxation under this Article.
"§ 105-113.9. Out-of-State shipments.
Any distributor engaged in interstate business may set aside stock necessary for the conduct of interstate business without paying the tax or affixing the stamps otherwise required by this Article, but only if the distributor complies with the rules concerning keeping of records, making of reports, posting of bond, and other matters as may be promulgated by the Secretary for the administration of this Article.
As used in this section, the term 'interstate business' means:
(1)	The sale of tobacco projects to a nonresident when the tobacco products are delivered by the distributor to the business location of  the nonresident purchaser in another state; and
	(2) 	The sale of tobacco products to a nonresident wholesaler or retailer registered through the Secretary who has no place of business in North Carolina and who purchases the tobacco products for the purposes of resale not within this State and where the tobacco products are delivered to the purchaser at the business location in North Carolina of the distributor who is also licensed as a distributor under the laws of the state of the  nonresident purchaser.
"§ 105-113.10. Manufacturers shipping to distributors exempt.
Any manufacturer shipping tobacco products to other distributors who are licensed to affix stamps as provided in this Article may, upon application to the Secretary and upon compliance with rules promulgated by the Secretary, be relieved of the requirement of paying the taxes and affixing the stamps required by this Article, but no manufacturer may be relieved of the requirement to be licensed as a distributor in order to make shipments, including drop shipments, to a retail dealer or ultimate user. However, the Secretary may permit monthly reports from the manufacturer instead of requiring stamps to be affixed to free tobacco products given as complimentary samples by the manufacturer, but only if the package has been imprinted with the words 'State tax paid.'
"§ 105-113.11. Licenses required.
It is unlawful for a person to engage in business as a distributor in this State without first obtaining from the Secretary the appropriate license as provided in this Article.  Any license required by this Article shall be in addition to any other licenses which may be required by law.
"§ 105-113.12. Distributors' license.
(a)	Distributors shall obtain, for each place of business, a continuing license, for which a fee of twenty-five dollars ($25.00)  shall be paid.
(b)	For the purposes of this section, 'place of business'  means any place where unstamped packages of tobacco products are received or stored by a distributor for the purposes of affixing stamps thereto, and any place where a distributor actually affixes stamps to unstamped packages of tobacco products.
(c)	Out-of-State distributors may obtain appropriate distributors' licenses upon compliance with the provisions of G.S. 105-113.24, for which a fee of twenty-five dollars ($25.00) shall be " paid.
"§ 105-113.13. Issuance of licenses.
(a)	All licenses shall be issued by the Secretary.
(b)	No license shall be issued to a distributor except upon payment of the full fee.
(c)	Prior to the issuance of any license under this Article, the Secretary may make any investigation he deems necessary respecting the eligibility of the applicant to receive the license and the accuracy of the information contained in the application for the license.  The Secretary may refuse to issue a license where he has reasonable cause to believe that the applicant has willfully withheld information requested by him for the purpose of determining the eligibility of the applicant to receive a license or where he has reasonable cause to believe that the information submitted in the application is false or misleading and is not made in good faith.
(d)	When the Secretary deems it necessary to the proper administration of this Article, he may require any distributor upon application for a license to file with him a bond payable to the State of North Carolina in such amount and upon such conditions as in the opinion of the Secretary will guarantee the performance of the duties and the discharge of the liabilities of the distributor under this Article.  The bond shall be executed by the distributor as principal and by an indemnity company licensed to do business under the insurance laws of this State as surety.
(e)	No license shall be assignable or transferable.
"§ 105-113.14. Refund of license fee.
No refund of a license fee shall be paid to any person upon the surrender, suspension, or revocation of any license except a license fee paid or collected in error.
"§ 105-113.15. Duplicate or amended license.
Upon application to the Secretary, a distributor may obtain without charge:
	(1)	A duplicate license, upon a satisfactory showing that the original has been lost, destroyed or defaced;
(2)	An amended license, upon a satisfactory showing that the location of the place of business represented by the license  has been changed.
Each duplicate or amended license shall bear the words 'duplicate license' or 'amended license' on its face, as appropriate.
"§ 105-113.16. Revocation of license.
(a)	The Secretary shall, without notice or hearing, revoke the license of every distributor who voluntarily surrenders the license.
	(b)	Whenever any distributor violates any provision of this Article or any rule of the Secretary made pursuant to the provisions of this Article, or has ceased to act in the capacity for which the license was issued, the Secretary, upon hearing, after giving the licensed distributor 10 days' notice in writing specifying the time and place of hearing and requiring him to show cause why his license should not be revoked, may revoke or suspend the license held by the distributor. The notice may be served personally or by registered mail directed to the last known address of the person. All provisions with respect to review and appeals of the Secretary's decisions as provided by G.S. 105-241.2, 105-241.3, and 105-241.4 apply to this subsection.
(c)	No distributor whose license has been suspended or revoked may sell or permit the sale of tobacco products. 
(d)	No disciplinary, penal, or regulatory proceeding or action shall be barred or abated by the expiration, transfer, surrender, continuance, renewal, or extension of any license issued under this Article.
(e)	If any person licensed under the provisions of G.S. 105-65.1, 105-164.4, 105-164.5, 105-164.6, or 105-164.29 is convicted by any court of competent jurisdiction in this State of any  offense under this Article, the Secretary may revoke any of these licenses issued to that person. The provisions of subsection (b) relative to notice, hearing, review, and appeal shall apply to this subsection.
"§ 105-113.17. Exhibit of license; identification of dispensers.
	Every person licensed under this Article shall exhibit the license in the place of business for which it is issued and in such manner as may be prescribed by the Secretary.
(b)	Every vending machine that dispenses tobacco products shall be identified as to ownership in such manner as the Secretary may prescribe.
"§ 105-113.18. Reports.
The following reports are required to be filed with the Secretary:
(1)	Every distributor required to affix stamps shall file a report on or before the twentieth day of each month, in such form as the Secretary shall prescribe, disclosing the quantity of tobacco products on hand on the first and last days of the calendar month immediately preceding the month in which the report is required, the amount of stamps purchased, used, and on hand during the report period, and any other information that the Secretary shall prescribe.
(2)	Every other person who has acquired unstamped tobacco products for sale, use, or consumption subject to the tax imposed by this Article shall, within 96 hours after receipt of the tobacco products, complete and file, in such form as the Secretary shall prescribe, a report showing the amount of tobacco products received and any other information that the Secretary shall prescribe. The report shall be accompanied by a remittance of the full amount of the tax.
(3)	Any person, except a licensed distributor, who transports tobacco products upon the public highways, roads, streets, or waterways of this State, upon notice from the Secretary, shall file a report in a form, on any dates, and containing any information that the Secretary shall prescribe.
(4)	Repealed by Session Laws 1981 (Regular Session, 1982), c. 1209, s. 1.
"§ 105-113.19. Secretary to provide stamps.
(a)	The taxes levied by this Article shall be paid or payment shall be evidenced by the use of stamps, except as provided in G.S. 105-113.6. The Secretary shall provide for the manufacture of the taxpaid tobacco products tax stamps provided for in this Article. The Secretary shall prescribe the form, design, denominations, and other matters as may be necessary with respect to the stamps. The Secretary may sell the stamps directly to taxpayers and arrange for release of taxpaid stamps to taxpayers by the manufacturer of the stamps. The manufacturer of the stamps shall furnish such bond as the Secretary may deem advisable, in such amount, and upon such conditions as in the opinion of the Secretary will adequately protect the State in the collection of the taxes levied by this Article.
(b)	Payment in full shall accompany application for purchase of stamps; provided, however, a licensed distributor may purchase stamps on credit if the distributor has filed with the Secretary a bond satisfactory to the Secretary in an amount not less than the amount to be paid for the stamps before the date the credit purchases are made. The licensed distributor shall pay for the credit purchases of stamps on or before the tenth day of the month next following the date of purchase, and the bond shall be conditioned upon such payment. The bond shall be executed by the distributor as principal and by an indemnity company licensed to do business under the insurance laws of this State, as surety.
(c)	A licensed distributor using a stamp metering machine as provided for in G.S. 105-113.23 may make payment upon the same terms and conditions as in the case of the purchase of stamps as set forth in subsection (b) of this section.
"§ 105-113.20. Distributors to affix stamps.
Only licensed distributors may affix stamps. A licensed  distributor may not sell, borrow, loan, buy, or exchange stamps to, from, or with any other person, except as provided in G.S. 105-113.19.
Unless stamps have been previously affixed, the stamps required by this Article shall be affixed to packages by the licensed distributor within 48 hours of the receipt of all unstamped tobacco products, exclusive of Saturdays, Sundays, and legal holidays of this State, and before any deliveries to other persons except deliveries to points outside the State, deliveries by manufacturers to licensed distributors, and deliveries which this State is prohibited from  taxing under the Constitution or the statutes of the United States.
"§ 105-113.21. Discount on sales of stamps.
On sales of stamps, the Secretary shall allow a discount of seven twenty-fourths cent (7/24¢) per stamp as compensation for the services and expenses of the licensed distributor in handling and affixing the stamps to packages. No discount shall be allowed on any sales of stamps in amounts less than one hundred dollars ($100.00).
"§ 105-113.22. Manner of affixing and cancelling stamps.
The Secretary shall regulate and prescribe the manner of affixing and cancelling stamps, but no more than one stamp shall be affixed to any package and that stamp shall represent the proper tax paid.
"§ 105-113.23. Stamp metering machines.
If the Secretary determines that it is practicable in any case to permit licensed distributors to impress on or attach to each package of tobacco products evidence of tax payment by means of a metering machine, in lieu of stamps, the Secretary may authorize any licensed distributor to use any metering machine approved by the Secretary, if the machine is sealed by the Secretary before being used and used in accordance with rules and regulations prescribed by the Secretary. All costs and expenses of procuring and using any metering machine shall be borne by the user.
"§ 105-113.24. Sale of stamps to odistributors.
(a)	The Secretary may authorize any distributor outside this State engaged in the business of selling and shipping tobacco products into the State, upon complying with the rules of the Secretary, to purchase and affix or cause to be affixed on behalf of any purchaser of tobacco products the stamps required by this Article, or may authorize the use of a machine by the distributor in the same manner and under the same conditions as set forth in G.S. 105-113.23.
(b)	The nonresident distributor shall submit his books, accounts, and records to reasonable examination by the Secretary or his duly authorized agents and shall file with the Secretary a performance bond fulfilling the terms and conditions set forth with respect to bonds in G.S. 105-113.13(d).
	(c) Each nonresident distributor other than a foreign corporation which has qualified with the Secretary of State as doing business in this State shall, by a duly executed instrument filed in the office of the Secretary of State, appoint the Secretary of State his lawful attorney in fact upon whom any original process in any action or legal proceeding against the nonresident distributor arising out of any matter relating to this Article may be served, and shall agree that any original process against him so served shall be of the same force and effect as if served on him within this State, and that the authority of the instrument shall continue in force irrevocably as long as the nonresident distributor remains liable for any taxes, interest, or penalties under this Article.
(d)	Any nonresident distributor who complies with the provisions of this section may be licensed as a distributor.
"§ 105-113.25. Redemption and refund.
The Secretary shall redeem any unused or mutilated, but identifiable, stamps that any distributor may present for redemption, and refund the face value of the stamps, less the discount allowed at the time of the purchase of the stamps by the distributor. In the event any stamped tobacco products are shipped out of this State or are sold to those agencies or instrumentalities which this State is prohibited from taxing under the Constitution or statutes of the United States by any distributor, a refund of the face value of the the stamps less the discount allowed by the Secretary at the time of the purchase of the stamps by the distributor shall be made upon the application of the distributor on forms prescribed by the Secretary together with such evidence and proof of sale as the Secretary may require.
"§ 105-113.26. Records to be kept.
Every person required to be licensed under this Article and every person required to make reports under this Article shall keep complete and accurate records of all sales and such other information as is required under this Article. The kind and form of the records may be prescribed by the Secretary and all records shall be so kept as to be adequate to enable the Secretary to determine any tax liability.
All records shall be safely preserved for a period of three years in such a manner to ensure their security and accessibility for  inspection by the Secretary or his duly authorized agents. The Secretary may consent to the destruction of any records at any time. f" § 105-113.27. Unstamped tobacco products.
(a)	Except as otherwise provided in this Article, licensed distributors may not sell, borrow, loan, or exchange unstamped tobacco products to, from, or with other licensed distributors.
(b)	No person may sell or offer for sale unstamped tobacco products.
(c)	The possession of more than six hundred unstamped cigarettes or cigars or more than thirty unstamped packages of smokeless tobacco products by any person other than a licensed distributor shall be prima facie evidence that the tobacco products are possessed in violation of this Article. 
"§ 105-113.28. Displaying unstamped tobacco products for sale.
It is unlawful for any person to display for sale or offer for sale unstamped tobacco products within this State.
"§ 105-113.29. Unlicensed place of business.
It is unlawful for any person to maintain a place of business within this State required by this Article to be licensed to engaged in the business of selling or offering for sale tobacco products without first obtaining the required licenses."
"§ 105-113.30. Records and reports.
It is unlawful for any person who is required under this Article to keep records or make reports, to fail to keep the records, refuse to make the reports, make false entries in the records, fail to produce the records for inspection by the Secretary or his duly authorized agents, fail to file a report, or make a false or fraudulent report or statement. 
"§ 105-113.31. Possession and transportation of unstamped tobacco products; seizure and confiscation of vehicle or vessel.
(a)	It is unlawful for any person to transport unstamped tobacco products in violation of the provisions of this Article, or to fail or refuse to comply with rules promulgated by the Secretary.  The Secretary may make reasonable rules governing quantities of untaxed cigarettes and cigars, not exceeding six hundred, and of untaxed packages of smokeless tobacco products, not exceeding thirty, which may be brought into this State by any transient, tourist, or person returning to this State after traveling outside this State, for the use of that transient, tourist, or person; and the possession or transportation of these quantities are not subject to the penalties imposed by this section.
(b)
(1)	Every person who transports tobacco products not stamped as required by this Article upon the public highways, roads, streets, or waterways of this State shall have in his actual possession invoices or delivery tickets for the tobacco products which show the true name and complete and exact address of the consignee or purchaser, the quantity and brands of the products transported, and the true name and complete and exact address of the person who has paid or who shall assume the payment of the tax imposed by this Article or the tax, if any, of the state or foreign country at the point of ultimate destination.
(2)	Any common carrier which has issued a bill of lading for a shipment of tobacco products and is without notice to itself or to  any of its agents or employees that the tobacco products are not stamped as required by this Article shall be deemed to have complied with this Article and the vehicle or vessel in which the tobacco products are being transported is not subject to confiscation under this section.  In the absence of such invoices, delivery tickets, or bills of lading, as the case may be, the tobacco products so transported, the vehicle or vessel in which the tobacco products are being transported, and any paraphernalia or devices used in connection with the unstamped tobacco products are contraband goods and may be seized by any officer of the law, who shall take possession of the contraband goods and shall arrest any person in charge of them.
	(3)	The officer shall at once proceed against the person arrested, under the provisions of this Article, in any court  having competent jurisdiction; but the vehicle or vessel shall be returned to the owner upon execution by him of a good and valid bond, with sufficient sureties, in a sum double the value of the property, which bond shall be approved by the officer and shall be conditioned to return the property to the custody of the officer on the day of trial to abide the judgment of the court.  All unstamped tobacco products seized under this section shall be held and shall, upon the acquittal of the person so charged, be returned to the established owner.
	(4) 	Unless the claimant can show that the unstamped tobacco products seized were not transported in violation of this Article and  that the property seized is his property, or that in the case of property other than tobacco products, the property was used in  transporting unstamped tobacco products in violation of this Article without his knowledge or consent, with the right on the part of the claimant to have a jury pass upon his claim, the court shall order a sale by public auction of the property seized, and the officer making the sale, after deducting the cost of stamps which he shall affix to the tobacco products upon sale, expenses of keeping the property, the fee for the seizure, and the costs of the sale, shall pay all liens according to their priorities which are established, by intervention or otherwise, at the hearing or in other proceedings brought for that purpose as being bona fide and as having been created without the lienor having any notice that the vehicle or vessel was being used for the unlawful transportation of unstamped tobacco products and shall pay the balance of the proceeds to the State Treasurer for the General Fund.
	(5) 	All liens against property sold under the provisions of this section shall be transferred from the property to the proceeds of the sale of the property. If, however, no one claims the tobacco products or the vehicle or vessel, the taking of the property, including a description, shall be advertised in some newspaper published in the city or county where taken, or, if there is no newspaper published in that city or county, in a newspaper having circulation in  the county, once a week for two weeks and by notices posted in three public places near the place of seizure, and if no claimant appears within ten days after the last publication of the advertisement, the property shall be sold, and the proceeds, after deducting the expenses and costs, shall be paid to the State Treasurer for the General Fund.
	(6)	Nothing in this section shall be construed to authorize any  officer to search any vehicle or vessel or baggage of any person without a search warrant duly issued, except where the officer sees or has knowledge that there are unstamped tobacco products in the vehicle or vessel.
"§ 105-113.32. Unstamped tobacco products subject to confiscation.
All tobacco products subject to the tax imposed by this Article, to which stamps have not been affixed as required by this Article, together with any container in which they are stored, or displayed for sale (including but not limited to vending machines) are contraband goods and may be seized by any officer of the law, who shall arrest any person in charge of the contraband goods.  The officer shall at once proceed against the person arrested, under the provisions of this Article, in any court having competent jurisdiction and the disposition of the unstamped tobacco products and container shall be governed by G.S. 105-113.31.
"§ 105-113.33. Criminal penalties.
Any person who violates any of the provisions of this Article for which no other punishment is specifically prescribed shall be guilty of a misdemeanor punishable by a fine or imprisonment or both in the discretion of the court.
"§ 105-113.34. Forging or counterfeiting revenue stamps.
Any person who falsely or fraudulently makes, forges, alters, or counterfeits, or causes or procures to be falsely or fraudulently made, forged, altered, or counterfeited, any stamps prepared or prescribed by the Secretary under this Article, or who knowingly and willfully utters, publishes, passes, or tenders as true any false, altered, forged, or counterfeited stamps for the purpose of evading the tax levied by this Article, shall be guilty of a felony punishable by a fine not to exceed two thousand dollars ($2,000), imprisonment not to exceed five years, or both, in the discretion of the court.
If any person secures, manufactures, causes to be secured or manufactured, or has in his possession any stamp or any counterfeit impression device not prescribed or authorized by the Secretary, that person shall be guilty of a felony punishable by a fine not to exceed two thousand dollars ($2,000), imprisonment not to exceed five years, or both, in the discretion of the court.
"§ 105-113.35. Interest and penalty.
If any person neglects, fails, or refuses to pay any tax due under this Article, interest shall be added to the tax at the rate established pursuant to G.S. 105-241.1(i)	from the date due until paid and there shall also be added to the tax an amount equal to fifty percent (50%) of the tax."
"§ 105-113.36. General administrative provisions of Revenue Act applicable.
All provisions not inconsistent with this Article contained in Article 9 entitled 'General Administration; Penalties and Remedies' of this Chapter are made a part of and shall apply to this Article. 
"§ 105-113.37. Secretary to make rules.
Subject to the provisions of G.S. 105-262, the Secretary shall make all reasonable rules necessary for the efficient administration and enforcement of this Article not inconsistent with the provisions of this Article. Upon request, the Secretary shall furnish any taxpayer with a copy of these rules.  All provisions with respect to reviews and appeals from the Secretary's decisions as provided by G.S. 105-241.2, 105-241.3, and 105-241.4 shall apply to this Article.
"§ 105-113.38. Tax to be paid only once.
Whenever the tax levied by this Article has been computed and paid to the State with respect to any tobacco products as provided by this Article, and appropriate stamps affixed, the tax need not be paid again to the State regardless of how many times the tobacco products are sold or resold, but the seller may add to the sales price the amount of the tax paid.
"§ 105-113.39. Local units prohibited to tax.
No city, town, or county may levy any privilege license tax with respect to the sale of tobacco products other than as permitted by Article 2 of " this Chapter."
"§."
Sec. 5.  Every person subject to the taxes levied in G.S. 105-113.5 and G.S. 105-113.6 who, on October 1, 1991, has on hand any tobacco products shall file a complete inventory of the tobacco products by October 21, 1991, and shall pay to the Secretary at the time of filing the inventory the tax or additional tax due on the tobacco products under G.S. 105-113.5 and G.S. 105-113.6.  The provisions of Article 2A of the General Statutes as amended by this act relative to the collection, verification, and administration of the tax shall, insofar as pertinent, apply to the tax imposed by this section, but the affixing of stamps as evidence of the payment of the tax by persons subject to the taxes levied in G.S. 105-113.6 is not necessary except as the Secretary by regulation or administrative rule may require.
Sec. 6.  This act does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this act before its amendment or repeal; nor does it affect the right to any refund or credit of a tax that would otherwise have been available under the amended or repealed statute before its amendment or repeal.
Sec. 7.  Sections 1 and 2 of this act are effective for taxable years beginning on or after January 1, 1991.  Section 4 of this act becomes effective October 1, 1991.  The remainder of this act is effective upon ratification.