Relates to cigarette and tobacco product retail dealers and vending machine registrations

BILL NUMBER:A8948

Title of bill

An act to amend the tax law, in relation to retail dealer and vending machine registration

Purpose or general idea of bill

To adjust the annul application fee that cigarette and tobacco retailers must pay, in order to better reflect the profits of such places of business.

Summary of specific provisions

Section one of the bill amends subparagraph (ii) of paragraph (a) of subdivision 2 of the section 480-a of the tax law, as amended by the 2009-2010 State Budget. It provides that the application fee for filling stations, as defined by the tax law, shall be $1,000, regardless of whether or not the gross sales of the business exceed $1 million. Section two of the bill provides for an immediate effective date.

Justification

The 2009-2010 State Budget exponentially increased the annual fee that cigarette and tobacco dealers are required to pay the state. In previous years, this fee was $100. The new fee schedule is now tied to gross sales of the business. Those with gross receipts are less than $1 million are now required to pay a $1,000 fee; those with gross receipts between $1 million and $5 million will now pay $2,500 annually; and those businesses with receipts of over $5 million are now required to pay $5,000 annually. Thus, some retailers will now have to pay 49 times more than they did last year to the state. In many cases, this registration fee will exceed a business' state taxes.

Independent of the merits of these fee increases, this new fee structure misrepresents the gross revenue of many of New York's motor fuel and diesel stations. While motor fuel accounts for a significant proportion of such retailer's revenue, it does not drive the net profits at such businesses. Therefore, while a gas station may fall between the $1 million - $5 million gross receipts threshold, its actual revenue would likely be similar to non-motor fuel retailer with significantly less gross receipts.

In order to address this misrepresentation of such stations' ability to pay such a substantial fee increase, this legislation puts the annual registration fee at $1,000 for all motor fuel and diesel stations. This legislation will prevent hundreds of small businesses from going out of business; thus preserving millions of dollars for the state, through sales tax and lottery revenue.

Prior legislative history

new bill FISCAL IMPLICATIONS: To be determined.

Effective date

This act shall take effect immediately.