35 ILCS 135/7: Distributor's permits.

(a) Cigarettes in original packages contained inside a sealed transparent wrapper.

(1) The Department may, in its discretion, upon application, issue permits authorizing the collection of the tax herein imposed by those out-of-State cigarette manufacturers who are not required to be licensed as distributors of cigarettes in this State, but who elect to qualify under this subsection as distributors of cigarettes in this State, and who, to the satisfaction of the Department, furnish adequate security to insure collection and payment of the tax, provided that any such permit shall extend only to cigarettes which such permittee manufacturer places in original packages that are contained inside a sealed transparent wrapper, and provided that no such permit shall be issued under this subsection to such a manufacturer who has obtained the permit provided for in Section 4b(a) of the Cigarette Tax Act. Application for a permit shall be made to the Department, by electronic means, in a form prescribed by the Department. Each applicant for a permit under this subsection shall furnish to the Department in a form signed and verified by the applicant under penalty of perjury, in an electronic format established by the Department, the following:

(A) a statement that the applicant will fully comply with the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003; and

(B) the following information:

(i) the name and address of the applicant;

(ii) the address of the location at which the applicant proposes to engage in business; and

(iii) such other additional information as the Department may reasonably require by its rules.

When so authorized, it shall be the duty of such distributor to collect the tax upon all cigarettes which the distributor delivers or causes to be delivered within this State to licensed distributors, in the same manner and subject to the same requirements as a distributor maintaining a place of business within this State.

(2) The following are ineligible to receive a distributor's permit under this subsection:

(A) a person who is not of good character and reputation in the community in which the person resides; the Department may consider prior conviction of a felony, but, except as provided in paragraph (B), the conviction shall not operate as an absolute bar to licensure;

(B) a person who has been convicted of a felony under any federal or State law, if the Department, after investigation and consideration of any mitigating factors and evidence of rehabilitation contained in the applicant's record, including those provided in Section 4i of the Cigarette Tax Act, and a hearing, if requested by the applicant, determines that such person has not been sufficiently rehabilitated to warrant the public trust and the conviction will impair the ability of the person to engage in the position for which a license is sought;

(C) a corporation, if any officer, manager or director thereof, or any stockholder or stockholders owning in the aggregate more than 5% of the stock of such corporation, would not be eligible to receive a permit under this Act for any reason;

(D) a person who has delinquent reports under Section 25 of the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003; or

(E) a person, or any person who owns more than 15% of the ownership interests in a person or a related party who:

(i) owes, at the time of application, any delinquent taxes that have been determined by law to be due and unpaid under this Act or any other tax Act administered by the Department, unless the applicant has entered into an agreement approved by the Department to pay the amount due;

(ii) had a license under this Act, the Cigarette Use Tax Act, the Tobacco Products Tax Act of 1995, or the Cigarette Machine Operator's Occupation Tax Act revoked within the past 2 years by the Department for misconduct relating to stolen or contraband cigarettes or has been convicted of a State or federal crime, punishable by imprisonment of one year or more, relating to stolen or contraband cigarettes;

(iii) manufactures cigarettes, whether in this State or out of this State, and who is neither (a) a participating manufacturer as defined in subsection II(jj) of the "Master Settlement Agreement" as defined in Sections 10 of the Tobacco Product Manufacturers' Escrow Act and the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003; nor (b) in full compliance with Tobacco Product Manufacturers' Escrow Act and the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003;

(iv) has been found by the Department, after notice and a hearing, to have imported or caused to be imported into the United States for sale or distribution any cigarette in violation of 19 U.S.C. 1681a;

(v) has been found by the Department, after notice and a hearing, to have imported or caused to be imported into the United States for sale or distribution or manufactured for sale or distribution in the United States any cigarette that does not fully comply with the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1331, et seq.); or

(vi) has been found by the Department, after notice and a hearing, to have made a materially false statement in the application or has failed to produce records required to be maintained by this Act.

(3) There is no application fee for the initial and renewal permits. A permittee shall notify the Department of any change in the information contained on the application form, including any change in ownership, and shall do so within 30 days after any such change. Such permit shall not be transferable or assignable. A permittee does not acquire any vested interest or compensable property right in a permit issued under this subsection.

With respect to cigarettes which come within the scope of such a permit and which any such permittee delivers or causes to be delivered in Illinois to licensed distributors, such permittee shall collect the tax imposed by this Act and shall remit such tax to the Department by the 5th day of each month for the preceding calendar month. Each such remittance shall be accompanied by a return filed with the Department in a form prescribed by the Department and shall disclose such information as the Department may lawfully require. Information that the Department may lawfully require includes information related to the uniform regulation and taxation of cigarettes. All returns and supporting schedules required to be filed under this subsection and all payments required to be made under this subsection shall be by electronic means in the form prescribed by the Department. Each such return shall be accompanied by a copy of each invoice rendered by the permittee to any licensed distributor to whom the permittee delivered cigarettes of the type covered by the permit or caused cigarettes of the type covered by the permit to be delivered in Illinois during the period covered by such return.

Such authority and permit may be suspended, canceled, or revoked when, at any time, the Department considers that the security given is inadequate, or that such tax can more effectively be collected from the person using such cigarettes in this State or through distributors located in this State, or whenever the permittee violates any provision of this Act or any lawful rule issued by the Department pursuant to this Act or is determined to be ineligible for a distributor's permit under this Act as provided in this Section, or whenever the permittee shall notify the Department in writing to have the permit canceled. The Department shall have the power, in its discretion, to issue a new permit after such suspension, cancellation, or revocation, except when the person who would receive the permit is ineligible to receive a distributor's permit under this Act.

All permits issued by the Department under this subsection shall be valid for not to exceed one year after issuance unless sooner revoked, canceled or suspended as in this Act provided.

Any person aggrieved by any decision of the Department under this subsection may, within 30 days after notice of the decision, protest and request a hearing. Upon receiving a request for a hearing, the Department shall give notice to the person requesting the hearing of the time and place fixed for the hearing and shall hold a hearing in conformity with the provisions of this Act and then issue its final administrative decision in the matter to that person. In the absence of a protest and request for a hearing within 30 days, the Department's decision shall become final without any further determination being made or notice given.

(b) Unstamped original packages of cigarettes for distribution to the public for promotional purposes without consideration.

(1) Out-of-state cigarette manufacturers who are not required to be licensed as distributors of cigarettes in this State and who do not elect to obtain approval under subsection (a) to pay the tax imposed by this Act, but who elect to qualify under this subsection as distributors of cigarettes in this State for purposes of shipping and delivering unstamped original packages of cigarettes into this State to licensed distributors, shall obtain a permit from the Department, provided that no such permit shall be issued under this subsection to a manufacturer who has obtained the permit provided for in Section 4b(b) of the Cigarette Tax Act.

Application for permit shall be made to the Department, by electronic means, in a form prescribed by the Department. Each applicant for a permit under this subsection shall furnish to the Department in a form signed and verified by the applicant under penalty of perjury, in an electronic format established by the Department, the following:

(A) a statement that the applicant will fully comply with the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003; and

(B) the following information:

(i) the name and address of the applicant;

(ii) the address of the location at which the applicant proposes to engage in business; and

(iii) such other additional information as the Department may reasonably require by its rules.

(2) The following are ineligible to receive a distributor's permit under this subsection:

(A) a person who is not of good character and reputation in the community in which the person resides; the Department may consider prior conviction of a felony, but, except as provided in paragraph (B), the conviction shall not operate as an absolute bar to licensure;

(B) a person who has been convicted of a felony under any federal or State law, if the Department, after investigation and consideration of any mitigating factors and evidence of rehabilitation contained in the applicant's record, including those provided in Section 4i of the Cigarette Tax Act, and a hearing, if requested by the applicant, determines that the person has not been sufficiently rehabilitated to warrant the public trust and the conviction will impair the ability of the person to engage in the position for which a permit is sought;

(C) a corporation, if any officer, manager or director thereof, or any stockholder or stockholders owning in the aggregate more than 5% of the stock of the corporation, would not be eligible to receive a permit under this Act for any reason;

(D) a person who has delinquent reports under Section 25 of the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003 (30 ILCS 167/25); or

(E) a person, or any person who owns more than 15% of the ownership interests in a person or a related party who:

(i) owes, at the time of application, any delinquent taxes that have been determined by law to be due and unpaid under this Act or any other tax Act administered by the Department, unless the applicant has entered into an agreement approved by the Department to pay the amount due;

(ii) had a license under this Act, the Cigarette Tax Act, the Tobacco Products Tax Act of 1995, or the Cigarette Machine Operator's Occupation Tax Act revoked within the past 2 years by the Department for misconduct relating to stolen or contraband cigarettes or has been convicted of a State or federal crime, punishable by imprisonment of one year or more, relating to stolen or contraband cigarettes;

(iii) manufactures cigarettes, whether in this State or out of this State, and who is neither (a) a participating manufacturer as defined in subsection II(jj) of the "Master Settlement Agreement" as defined in Sections 10 of the Tobacco Product Manufacturers' Escrow Act and the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003; nor (b) in full compliance with Tobacco Product Manufacturers' Escrow Act and the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003;

(iv) has been found by the Department, after notice and a hearing, to have imported or caused to be imported into the United States for sale or distribution any cigarette in violation of 19 U.S.C. 1681a;

(v) has been found by the Department, after notice and a hearing, to have imported or caused to be imported into the United States for sale or distribution or manufactured for sale or distribution in the United States any cigarette that does not fully comply with the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1331, et seq.); or

(vi) has been found by the Department, after notice and a hearing, to have made a materially false statement in the application or has failed to produce records required to be maintained by this Act.

(3) There is no application fee for the initial and renewal permits. A permittee shall notify the Department of any change in the information contained on the application form, including any change in ownership, and shall do so within 30 days after any such change. Such permit shall not be transferable or assignable. A permittee does not acquire any vested interest or compensable property right in a permit issued under this subsection.

With respect to original packages of cigarettes such permittee delivers or causes to be delivered in Illinois and distributed to the public for promotional purposes without consideration, the permittee shall pay the tax imposed by this Act by remitting the amount thereof to the Department by the 5th day of each month covering cigarettes shipped or otherwise delivered in Illinois for those purposes during the preceding calendar month. The permittee, before delivering those cigarettes or causing those cigarettes to be delivered in this State, shall evidence the obligation to remit the taxes due with respect to those cigarettes by imprinting language to be prescribed by the Department on each original package of cigarettes, in such place thereon and in such manner also to be prescribed by the Department. The imprinted language shall acknowledge the permittee's payment of or liability for the tax imposed by this Act with respect to the distribution of those cigarettes.

With respect to cigarettes such permittee delivers or causes to be delivered in Illinois to Illinois licensed distributors or distributed to the public for promotional purposes, the permittee shall, by the 5th day of each month, file with the Department, a report covering cigarettes shipped or otherwise delivered in Illinois to licensed distributors or distributed to the public for promotional purposes during the preceding calendar month on a form to be prescribed and furnished by the Department and shall disclose such other information as the Department may lawfully require. Information that the Department may lawfully require includes information related to the uniform regulation and taxation of cigarettes. All reports required to be filed under this subsection and all payments required to be made under this subsection shall be by electronic means in the form prescribed by the Department. Each such report shall be accompanied by a copy of each invoice rendered by the permittee to any purchaser to whom the permittee delivered cigarettes of the type covered by the permit or caused cigarettes of the type covered by the permit to be delivered in Illinois during the period covered by such report.

Such permit may be suspended, canceled, or revoked whenever the permittee violates any provision of this Act or any lawful rule issued by the Department pursuant to this Act, is determined to be ineligible for a distributor's permit under this Act as provided in this subsection, or notifies the Department in writing to have the permit canceled. The Department shall have the power, in its discretion, to issue a new permit after such suspension, cancellation, or revocation, except when the person who would receive the permit is ineligible to receive a distributor's permit under this Act.

All permits issued by the Department under this subsection shall be valid for a period not to exceed one year after issuance unless sooner revoked, canceled, or suspended as in this Act provided.

Any person aggrieved by any decision of the Department under this subsection may, within 30 days after notice of the decision, protest and request a hearing. Upon receiving a request for a hearing, the Department shall give notice to the person requesting the hearing of the time and place fixed for the hearing and shall hold a hearing in conformity with the provisions of this Act and then issue its final administrative decision in the matter to that person. In the absence of a protest and request for a hearing within 30 days, the Department's decision shall become final without any further determination being made or notice given.