The Cigarette Dealer (Retailer) Floor Stock Tax Return, Cigarette Wholesaler Floor Stock Tax Return, and Cigarette Distributor Cigarette Stamp Adjustment Tax Return and payment were due July 1, 2017. However, if a retailer sells “tobacco paraphernalia,” as defined under Business and Professions Code section 22962(a)(2), and does not sell cigarettes or tobacco products, the retailer is not required to hold a valid retailer's license. Tobacco products must be listed by brand, type (such as pipe, cigars, or RYO), flavor, packaging (such as pouches, tins, or boxes), quantity sold, and sales price. No. A person may not sell, offer, possess for sale, or import for personal consumption any cigarettes or RYO tobacco in California unless the manufacturer and brand family are listed in that directory (except if the product is solely for sale out-of-state). Out-of-state California-licensed distributors have the same responsibilities and requirements as in-state California-licensed distributors. Using this example, the cigarette tax rate on a pack of 20 cigarettes increased from $0.87 to $2.87. Report the amount of cigarettes and/or tobacco products received in the preceding calendar quarter. Example 5: Wholesaler B purchases tax-paid nicotine products for resale. Thus, the sale of ENDS that do not contain nicotine or are not sold with nicotine are not subject to the California excise tax on tobacco products. & Tax. California’s Proposition 56 will increase taxes on a pack of cigarettes from 87 cents to $2.87, bringing it more in line with other states. For more information about cigarette and tobacco products inspection program, citation appeal process, tax evasion, Licensing Act violations, or to file a complaint and report tax evasion, visit the Legal Division webpage, under the Investigations and Special Operations tab. If the Indian retailer does not collect and pay the excise taxes due, the non-Indian purchaser is ultimately liable for the excise taxes. 3% (approximately $23 million annually): Tobacco law enforcement "to support law enforcement efforts to reduce cigarette smuggling, tobacco tax evasion, and counterfeit tobacco products, to reduce illegal sales of tobacco products to minors, and to enforce legal settlement provisions and conduct law enforcement training and technical assistance activities for tobacco related statues". Failure to comply with these requirements may result in the assessment of penalties or civil action brought by the Office of the California Attorney General. The California Cigarette and Tobacco Products Licensing Act of 2003 does not affect any laws or regulations regarding cannabis or cannabis products such as vape devices, pens, or accessories that are intended and designed for use in consuming cannabis or cannabis products into the human body. Please note: if a retailer sells non-nicotine vape liquids and no other cigarettes or tobacco products, the retailer is required to hold a valid retailer's license. File both cigarettes and smokeless tobacco products PACT Act reports using our online services system. A cigarette distributor is a person who purchases untaxed (unstamped) cigarettes and makes the distribution of cigarettes in this state. By Jim Christie. Maintain a valid Cigarette and/or Tobacco Products Manufacturer/Importer's License. Cigarettes must be listed by the brand and style names, flavor, filter, and/or packaging when applicable, number of cartons or packs sold, and the sales price. You will need to sign up now to create a new Username and Password. Effective April 1, 2017, distributions of tobacco products containing nicotine are subject to the tobacco products tax. If you do not file on time, you may owe a 10% percent late filing penalty on the amount of tax due and interest at the current CDTFA rate. Business H (the licensed distributor) owes the tobacco products tax to the CDTFA upon distribution in California. Prior to April 1, 2017, little cigars were taxed as cigarettes and required a cigarette tax stamp. Any battery, battery charger, carrying case, or any other accessory not sold in combination with nicotine for a single price. Proposition 56 limited the cigarette floor stock tax to cigarettes only (Revenue and Taxation Code section 30130.52). See our Overview section for the tobacco products included in the expanded definition. Example 2: Business B purchases untaxed eLiquids containing nicotine from an out-of-state vendor who is not licensed by the CDTFA as a tobacco products distributor and sells to stores in California. Maintain a valid California Cigarette and Tobacco Products Retailer's or Wholesaler's License. Retailers may only sell to consumers. Your name, address, telephone number, and your distributor's license number. Distributors can rebut this presumption by showing that the price, terms, and conditions of the transaction were substantially equivalent to those that would have been negotiated between unrelated parties. Programs for fire prevention; environmental conservation; protection, restoration, enhancement, and maintenance of fish, waterfowl, and wildlife habitat areas; and enhancement of state and local parks and recreation. Example 5: Business E is a licensed distributor located in California and sells tobacco products that were purchased ex-tax from a manufacturer, to Business F, another licensed distributor. The name of the shipper and the point of origin; The name of the consignee and the address to which the products were delivered; The date and number of the waybill covering the shipment; The number of cases, bales or other containers of cigarettes delivered, and the quantity of cigarettes contained therein, and the quantity of tobacco products delivered, as shown by the shipping documents; and, In the case of rail shipments, the car initials and number; and. If you are a wholesaler that intends to sell directly to consumers, in addition to a seller's permit and wholesaler's license, you will also need a retailer's license. You can rebut this presumption by demonstrating that an explainable disappearance, such as theft, has occurred. The excise tax is due immediately upon placing the untaxed tobacco products in retail stock. The non-Indian purchaser must file a return with the CDTFA to report purchases and pay applicable California cigarette and tobacco products excise and use taxes. Electronic cigarettes, personal vaporizers, eCigars, eHookahs, ePipes, and vaping devices are some of the terms used to describe electronic nicotine delivery systems (ENDS). The cigarette and tobacco products tax is paid by a distributor upon the distribution of cigarettes and tobacco products in California. A distribution includes the first sale, use or consumption of untaxed cigarettes or untaxed tobacco products in California, and the placing of untaxed cigarettes or untaxed tobacco products into a vending machine or retail stock in California (Revenue and Taxation Code section 30008). You may not legally sell cigarettes or tobacco products to an unlicensed buyer or purchase them from an unlicensed seller. Distributors are required to affix the tax stamp to each package of cigarettes before distribution. All cigarette packs placed in retail stock must have a cigarette tax stamp affixed. States with high taxes often have cigarettes smuggled in from lower taxed states and a black market is created. File a monthly report and/or schedule (cigarette wholesalers only). These entities are required to obtain and maintain a license in order to sell cigarettes or tobacco products in California. There are no special exemptions from the state's cigarette and tobacco products excise taxes for sales of cigarettes and tobacco products to Indians. Important Note: The California Cigarette and Tobacco Products Licensing Act does not apply to cannabis or other cannabis products such as cannabis vape pens or accessories. eCigarettes and vape liquids containing nicotine were taxed as tobacco products as of April 1, 2017. Cigarettes and RYO tobacco that contain certain characterizing flavors (excluding menthol) are considered adulterated and are banned from manufacture, import, or sale in the United States. Example 2: Retailer B sells tax-paid vape liquids that contain nicotine and no other tobacco products such as cigars, chew, or snuff. Business B is considered a tobacco products distributor and owes the tobacco products tax to the CDTFA upon distribution in California. License fees are not prorated. Under the Cigarette and Tobacco Products Licensing Act of 2003, the retailer does not manufacture cigarettes if the retailer does not own the tobacco when it is manufactured into cigarettes. For additional information, please refer to Regulation 4076, Wholesale Cost of Tobacco Products. Tobacco products include, but are not limited to: As of June 9, 2016, state law expanded the definition of tobacco products, for cigarette and tobacco products retail licensing purposes, to include: Examples include, but are not limited to, electronic cigarettes, atomizers, vaping tanks or mods, and eLiquids or eJuices. It is important to renew your license before it expires, as you must have a valid license for each location in order to purchase or sell cigarettes and/or tobacco products at each location. Out-of-state manufacturers and distributors that are not engaged in business in California (Revenue and Taxation Code section 30108(c)) may voluntarily register with the CDTFA for a Distributor's License. “Engaged in business” includes, but is not limited to: Distributor licenses are required for each business location that distributes tobacco products in California (R&TC section 30140). For detailed information about tobacco products sales by an out-of-state licensed distributor to an in-state licensed distributor, see the Industry Topics section, under the Distributors heading. Electronic cigarettes or any device or delivery system sold in combination with nicotine for a single price (examples of a device or delivery system include, but are not limited to, eCigars, ePipes, vape pens and eHookahs). Consumers are required to file a tax return online to report and pay cigarette and tobacco products excise taxes and California use tax directly to the CDTFA. Do not include flavored cigarettes (excluding menthols). In addition to these licenses, if Distributor A sells these products, regardless if the products contain nicotine or not, directly to consumers, Distributor A is also required to register with the CDTFA for a Cigarette and Tobacco Products Retailer's License. Cigarette and tobacco products manufacturers and importers pay a one-time administration/license fee. inside a locked cabinet, safe, or similar secured storage container, or. Of the total two dollars and eighty-seven cents ($2.87) cigarette tax rate per package of twenty (20) cigarettes (or equivalent amount of tobacco products): Cigarette and tobacco products license fees are deposited in to the Cigarette and Tobacco Products Compliance Fund solely for the purpose of implementing, enforcing, and administering the California Cigarette and Tobacco Products Licensing Act of 2003. An out-of-state licensed distributor may report tax based on the cost of the tobacco products to them if the purchaser is not a licensed distributor. Revenue and Taxation Code section 30165.1, Make sure that sales invoices meet all legal requirements. If an Indian Tribe operates on its own tribal land and exclusively makes sales to members of its own tribe, that Indian Tribe is not required to hold a cigarette and tobacco products license. Tobacco tax rates are changed yearly in California, effective July 1st. Example 6: Distributor A solely sells eLiquid or eJuice products that do not contain nicotine or tobacco. In addition, the cigarette floor stock tax did not apply to tobacco products such as cigars, pouch tobacco, snuff, chewing tobacco, and as of April 1, 2017, little or small cigars. Transfer logs must include: These retailer's product transfer requirements do not apply to tobacco products that are not subject to the tobacco products tax. The tax is calculated on the combined finished product's wholesale cost. The Cigarette and Tobacco Products Licensing Act of 2003 (Licensing Act), which took effect in January 2004, requires the CDTFA to administer a statewide program to license all persons engaged in the sale of cigarettes and tobacco products in California: manufacturers, importers, distributors, wholesalers, and retailers. Distributors who have reported and paid the stamp adjustment tax may exhaust their inventory of pre-Proposition 56 cigarette tax stamps (affixed and unaffixed), except for unaffixed tax stamps bearing the “10” designation. Keep complete and legible purchase invoices (and sales invoices if you are a wholesaler) for cigarettes and tobacco products for four (4) years. File your return/report using our new online services system. A claim for refund or credit based upon the exportation of tax-paid tobacco products from this state to a point outside this state must be filed within three months after the close of the calendar month in which the tobacco products were exported. Business D, as a tobacco products manufacturer can make untaxed sales to licensed distributors in California. This restriction does not apply to non-nicotine products such as eLiquids or eJuice that contain no nicotine. As a retailer or wholesaler of cigarettes and tobacco products, you must: The cigarette and tobacco products purchase invoices you receive from distributors and/or wholesalers must be legible and include the following information: These purchase invoice requirements do not apply to tobacco products that are not subject to the tobacco products tax. Please note: If you have an existing User ID, Password, or Express Login, these credentials will not be valid in the new online services system on and after August 12, 2019. Cigarettes are subject to excise taxes. If you have overpaid the tax directly to the CDTFA, you may file a claim by using the form CDTFA-101, Claim for Refund or Credit, or file an amended return stating the specific reason(s) for the overpayment. You should keep documents that show what you paid on your purchase (for example, bills, receipts, invoices, and so forth.) In California, other tobacco products are subject to a state excise tax of 28.13% / wholesale price as well as federal excise taxes (listed below). If tobacco products are not purchased in an arm's-length transaction or tobacco product costs include express, implicit, or unstated discounts or trade allowances, the correct wholesale costs to be reported by the distributor may be determined using any of the alternative methods provided in subdivision (c) of Regulation 4076. Box 942879, Sacramento, CA 94279-0033, or fax to 1-916-323-9497, or email the Appeals and Data Analysis Branch. However, if Distributor A sells untaxed eLiquid or eJuice products that do contain nicotine or tobacco, Distributor A is required to register with the CDTFA for a tobacco products distributor's license and Cigarette and Tobacco Products Distributor's License. Retailers may only purchase tax-paid product from licensed distributors and wholesalers (Revenue and Taxation Code section 30478). * Each sales invoice must be legible. For information regarding California use tax, please visit our page California Use Tax, Good for You. This guide will help you better understand the tax and licensing obligations for retailers, distributors, wholesalers, manufacturers, importers, and consumers of cigarettes and tobacco products. Instead, the customers who purchase from Company C owe the tobacco products tax and are required to register with the CDTFA for a distributor's license. “Smokeless tobacco” means any finely cut, ground, powdered, or leaf tobacco, or other product containing tobacco, that is intended to be placed in the oral or nasal cavity or otherwise consumed without being combusted. Filing webpage for resources to help determine if a retailer is not required pay. 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