[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1755 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 1755

 To amend the Internal Revenue Code of 1986 to disallow tax deductions 
   for advertising, promotional, and marketing expenses relating to 
  tobacco product use unless certain advertising requirements are met.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 13, 1998

   Mr. Reed (for himself, Mrs. Boxer, and Mr. Chafee) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to disallow tax deductions 
   for advertising, promotional, and marketing expenses relating to 
  tobacco product use unless certain advertising requirements are met.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Children's Health Preservation and 
Tobacco Advertising Compliance Act''.

SEC. 2. DISALLOWANCE OF TAX DEDUCTIONS FOR CERTAIN ADVERTISING, 
              PROMOTION, AND MARKETING EXPENSES RELATING TO TOBACCO 
              PRODUCT USE.

    (a) In General.--Part IX of subchapter B of chapter 1 of subtitle A 
of the Internal Revenue Code of 1986 (relating to items not deductible) 
is amended by adding at the end the following:

``SEC. 280I. DISALLOWANCE OF DEDUCTION FOR CERTAIN TOBACCO ADVERTISING, 
              PROMOTION, AND MARKETING EXPENSES.

    ``(a) In General.--No deduction shall be allowed under this chapter 
for any taxable year for any expenditure relating to advertising, 
promoting, or marketing tobacco products if such advertising, 
promoting, or marketing, or such expenditure is prohibited under the 
following subsections.
    ``(b) Prohibition of Certain Advertising.--
            ``(1) Prohibition on outdoor advertising.--
                    ``(A) In general.--No manufacturer, distributor, or 
                retailer may use any form of outdoor tobacco product 
                advertising, including billboards, posters, or 
                placards.
                    ``(B) Stadia and arenas.--Except as otherwise 
                provided in this section, a manufacturer, distributor, 
                or retailer shall not advertise tobacco products in any 
                arena or stadium where athletic, musical, artistic, or 
                other social or cultural events or activities occur.
            ``(2) Prohibition on use of human images and cartoons.--No 
        manufacturer, distributor, or retailer may use a human image or 
        a cartoon character or cartoon-type character in its 
        advertising, labeling, or promotional material with respect to 
        a tobacco product.
            ``(3) Prohibition on advertising on the internet.--No 
        manufacturer, distributor, or retailer may use the Internet to 
        advertise tobacco products unless such an advertisement is 
        inaccessible in or from the United States.
            ``(4) Prohibition on point of sale advertising.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, no manufacturer, distributor, or 
                retailer may use point of sale advertising of tobacco 
                products.
                    ``(B) Adult only stores and tobacco outlets.--
                Subparagraph (A) shall not apply to point of sale 
                advertising at adult only stores and tobacco outlets.
                    ``(C) Permissible advertising.--
                            ``(i) In general.--Each manufacturer of 
                        tobacco products may display not more than 2 
                        separate point of sale advertisements in or at 
                        each location at which tobacco products are 
                        offered for sale.
                            ``(ii) Retailers.--No manufacturer, 
                        distributor, or retailer may enter into any 
                        arrangement with a retailer to limit the 
                        ability of the retailer to display any form of 
                        permissible point of sale advertisement or 
                        promotional material originating with another 
                        manufacturer, distributor, or retailer.
                    ``(D) Limitations.--
                            ``(i) In general.--A point of sale 
                        advertisement permitted under this paragraph 
                        shall be comprised of a display area that is 
                        not larger than 576 square inches (either 
                        individually or in the aggregate) and shall 
                        consist only of black letters on a white 
                        background or other recognized typographical 
                        marks. Such advertisement shall not be attached 
                        to nor located within 2 feet of any fixture on 
which candy is displayed for sale.
                            ``(ii) Audio and video formats.--Audio and 
                        video advertisements otherwise permitted under 
                        this section may be distributed to individuals 
                        who are 18 years of age or older at point of 
                        sale but may not be played or viewed at such 
                        point of sale.
                            ``(iii) Display fixtures.--Display fixtures 
                        in the form of signs consisting of brand name 
                        and price and not larger than 2 inches in 
                        height are permitted.
    ``(c) Additional Restrictions.--
            ``(1) Restriction on product names.--A manufacturer shall 
        not use a trade or brand name of a nontobacco product as the 
        trade or brand name for a cigarette or smokeless tobacco 
        product, except for a tobacco product whose trade or brand name 
        was on both a tobacco product and a nontobacco product that 
        were sold in the United States on January 1, 1998.
            ``(2) Advertising limit actions.--
                    ``(A) In general.--A manufacturer, distributor, or 
                retailer may in accordance with this section, 
                disseminate or cause to be disseminated advertising or 
                labeling which bears a tobacco product brand name 
                (alone or on conjunction with any other word) or any 
                other indicia of tobacco product identification only in 
                newspapers, in magazines, in periodicals or other 
                publications (whether periodic or limited 
                distribution), on billboards, posters and placards in 
                accordance with subsection (b)(1), in nonpoint of sale 
                promotional material (including direct mail), in point-
                of-sale promotional material, and in audio or video 
                formats delivered at a point-of-sale.
                    ``(B) Limitation.--A manufacturer, distributor, or 
                retailer that intends to disseminate, or to cause to be 
                disseminated, advertising or labeling for a tobacco 
                product in a medium that is not described in 
                subparagraph (A) shall notify the Secretary of Health 
                and Human Services not less than 30 days prior to the 
                date on which such medium is to be used. Such notice 
                shall describe the medium and discuss the extent to 
                which the advertising or labeling may be seen by 
                individuals who are under 18 years of age.
                    ``(C) Action by secretary.--Not later than 30 days 
                after the date on which the Secretary receives a notice 
                under subparagraph (B), the Secretary shall make a 
                determination with respect to the action to be taken 
                concerning such notice.
            ``(3) Restriction on placement in entertainment media.--No 
        payment shall be made by any manufacturer, distributor, or 
        retailer for the placement of any tobacco product or tobacco 
        product package or advertisement--
                    ``(A) as a prop in any television program or motion 
                picture produced for viewing by the general public; or
                    ``(B) in a video or on a video game machine.
            ``(4) Restrictions on glamorization of tobacco products.--
        No direct or indirect payment shall be made, or consideration 
        given, by any manufacturer, distributor, or retailer to any 
        entity for the purpose of promoting the image or use of a 
        tobacco product through print, film or broadcast media that 
        appeals to individuals under 18 years of age or through a live 
        performance by an entertainment artist that appeals to such 
        individuals.
    ``(d) Format and Content Requirements for Labeling and 
Advertising.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), each manufacturer, distributor, or retailer advertising or 
        causing to be advertised, disseminating or causing to be 
        disseminated, any labeling or advertising for a tobacco product 
        shall use only black text on a white background.
            ``(2) Certain advertising excepted.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                advertising--
                            ``(i) in any facility where vending 
                        machines and self-service displays are located 
                        if the advertising involved--
                                    ``(I) is not visible from outside 
                                of the facility; and
                                    ``(II) is affixed to a wall or 
                                fixture in the facility;
                            ``(ii) that appears in any publication 
                        (whether periodic or limited distribution) that 
                        is an adult publication.
                    ``(B) Adult publication.--For purposes of 
                subparagraph (A)(ii), the term `adult publication' 
                means a newspaper, magazine, periodical, or other 
                publication--
                            ``(i) whose readers under 18 years of age 
                        constitute 15 percent or less of the total 
readership as measured by competent and reliable survey evidence; and
                            ``(ii) that is read by fewer than 2,000,000 
                        individuals who are under 18 years of age as 
                        measured by competent and reliable survey 
                        evidence.
            ``(3) Audio or video formats.--Each manufacturer, 
        distributor or retailer advertising or causing to be advertised 
        any advertising for a tobacco product in an audio or video 
        format shall comply with the following:
                    ``(A) With respect to an audio format, the 
                advertising shall be limited to words only with no 
                music or sound effects.
                    ``(B) With respect to a video format, the 
                advertising shall be limited to static black text only 
                on a white background. Any audio with the video 
                advertising shall be limited to words only with no 
                music or sound effects.
    ``(e) Ban on Nontobacco Items and Services, Contests and Games of 
Chance, and Sponsorship of Events.--
            ``(1) Ban on all non-tobacco merchandise.--No manufacturer, 
        importer, distributor, or retailer shall market, license, 
        distribute, sell or cause to be marketed, licensed, distributed 
        or sold any item (other than tobacco products) or service, 
        which bears the brand name (alone or in conjunction with any 
        other word), logo, symbol, motto, selling message, recognizable 
        color or pattern of colors, or any other indicia of product 
        identification similar or identifiable to those used for any 
        brand of tobacco products.
            ``(2) Gifts, contests, and lotteries.--No manufacturer, 
        distributor, or retailer shall offer or cause to be offered to 
        any person purchasing tobacco products any gift or item (other 
        than a tobacco product) in consideration of the purchase of 
        such products, or to any person in consideration of furnishing 
        evidence, such as credits, proofs-of-purchase, or coupons, of 
        such a purchase.
            ``(3) Sponsorship.--
                    ``(A) In general.--No manufacturer, distributor, or 
                retailer shall sponsor or cause to be sponsored any 
                athletic, musical, artistic or other social or cultural 
                event, or any entry or team in any event, in which the 
                brand name (alone or in conjunction with any other 
                word), logo, motto, selling message, recognizable color 
                or pattern of colors, or any other indicia of product 
                identification similar or identical to those used for 
                tobacco products is used.
                    ``(B) Use of corporate name.--A manufacturer, 
                distributor, or retailer may sponsor or cause to be 
                sponsored any athletic, musical, artistic, or other 
                social or cultural event in the name of the corporation 
                which manufactures the tobacco product if--
                            ``(i) both the corporate name and the 
                        corporation were registered and in use in the 
                        United States prior to January 1, 1995; and
                            ``(ii) the corporate name does not include 
                        any brand name (alone or in conjunction with 
                        any other word), logo, symbol, motto, selling 
                        message, recognizable color or pattern of 
                        colors, or any other indicia or product 
                        identification identical or similar to, or 
                        identifiable with, those used for any brand of 
                        tobacco products.
    ``(f) Definitions.--For purposes of this section--
            ``(1) In general.--Any term used in this section which is 
        also used in section 5702 shall have the same meaning given 
        such term by section 5702.
            ``(2) Brand.--The term `brand' means a variety of a tobacco 
        product distinguished by the tobacco used, tar content, 
        nicotine content, flavoring used, size, filtration, or 
        packaging.
            ``(3) Distributor.--The term `distributor' means any person 
        who furthers the distribution of tobacco products, whether 
        domestic or imported, at any point from the original place of 
        manufacture to the person who sells or distributes the product 
        to individuals for personal consumption. Such term shall not 
        include common carriers.
            ``(4) Package.--The term `package' means a pack, box, 
        carton, or container of any kind in which tobacco products are 
        offered for sale, sold, or otherwise distributed to consumers.
            ``(5) Point of sale.--The term `point of sale' means any 
        location at which an individual can purchase or otherwise 
        obtain tobacco products for personal consumption.
            ``(6) Point of sale advertising.--The term `point of sale 
        advertising' means all printed or graphical materials bearing 
        the brand name (alone or in conjunction with any other word), 
        logo, motto, selling message, recognizable color or pattern of 
        colors, or any other indicia of product identification similar 
        or identical to those used for tobacco products, which, when 
        used for its intended purpose, can reasonably be anticipated to 
        be seen by customers at a location at which tobacco products 
        are offered for sale.
            ``(7) Retailer.--The term `retailer' means any person who 
        sells tobacco products to individuals for personal consumption, 
        or who operates a facility where vending machines or self-
        service displays are located.
            ``(8) Video.--The term `video' means an audiovisual work 
        produced for viewing by the general public, such as a 
        television program, a motion picture, a music video, and the 
        audiovisual display of a video game.
            ``(9) Video game.--The term `video game' means any 
        electronic amusement device that utilizes a computer, 
        microprocessor, or similar electronic circuitry and its own 
        cathode ray tube, or is designed to be used with a television 
        set or a monitor, that interacts with the user of the 
        device.''.
    (b) Conforming Amendment.--The table of sections for such part IX 
is amended by adding after the item relating to section 280H the 
following:

                                  ``Sec. 280I. Disallowance of 
                                        deduction for certain tobacco 
                                        advertising, promotion, and 
                                        marketing expenses.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.
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