Pennsylvania State Taxes
On July 13, 2016, Governor Tom Wolf signed into law Act 84 of 2016, amending the Tax Reform Code and imposing a Tobacco Products Tax. Act 84 establishes a tax on smokeless tobacco, roll-your-own tobacco, pipe tobacco, and e-cigarettes including the devices and substances that go into the e-cigarettes. The tax on e-cigarettes does not apply to prescription drugs or medical devices used to inhale or ingest prescription drugs, including medical marijuana.
The rate of tax on roll-your-own, pipe tobacco and smokeless tobacco is $0.55 per ounce. For tobacco products other than e-cigarettes that weigh less than 1.2 ounces per container the tax shall not be less than $0.66 per package of these tobacco products. The rate of tax on e-cigarettes is 40 percent of the retailer’s purchase price from the wholesaler/manufacturer. Wholesalers and manufacturers are required to collect tax from retailers or first point of entry into commerce. A floor tax is imposed on the existing inventory of the retailer as of the effective date of the tax and the return and payment are due within ninety (90) days.
Tobacco Products Tax (OTP and E-cigarettes): RECENT UPDATE
A new article is added establishing a Tobacco Products Tax (Article XII-A) which imposes a tax on smokeless tobacco, roll-your-own (RYO) tobacco and electronic cigarettes (e-cigarettes). The tax will be collected by the wholesaler (dealer or manufacturer) at the time it is sold to a retailer in PA. If the tax is not collected by the seller from the retailer, the tax is imposed on the retailer at the time of purchase and the retailer shall remit the tax to the department
The tax rate on smokeless tobacco and RYO tobacco is 55 cents per ounce and includes a minimum weight provision for product weighing less than 1.2 ounces. The tax on smokeless tobacco takes effect October 1, 2016. The tax on RYO takes effect 60 days after the publication in the PA Bulletin that the Attorney General has obtained consent of the participating manufacturers under the Master Settlement Agreement to the amendment of the definition of “units sold” contained in the Tobacco Settlement Agreement Act (it is assumed that the RYO would become effective December 1, 2016).
The tax rate on e-cigarettes is 40% of the wholesale price and will take effect October 1, 2016.
A “floor tax” is imposed on the existing inventory as of the effective date of each tax and shall be reported and paid within 90 days of the effective date of the tax.
Definition of Tobacco Products
The definition of tobacco products includes the following: periques, granulated, plug cut, crimp cut, ready rubbed and other smoking tobacco, roll-your-own tobacco, snuff, dry snuff, snuff flour, cavendish, plug and twist tobacco, fine-cut and other chewing tobaccos, shorts, refuse scraps, clippings, cuttings and sweepings of tobacco and other kinds of forms of tobacco, prepared in such a manner as to be suitable for chewing or ingesting or for smoking in a pipe or otherwise, or both for chewing and smoking, including e-cigarettes.
Registration and Licensing
All manufacturers, wholesalers, retailers and vending machine operators engaged in commerce in the commonwealth are required to be licensed for the sale of tobacco products. The licensing fees are $1,500 per location for manufacturers and wholesalers and $25 per location for retailers and vending machines
EcigsDirect currently has a temporary Tobacco Products License that is valid until February 28, 2017. The department will be mailing our REV-821 license renewal forms beginning November 1, 2016. Beginning with licensing term 2017-2018, the REV-821 license renewal form will encompass both cigarette tax and other tobacco products.
Tobacco Products Floor Tax
Enclosed is a tobacco products floor tax return, REV-1141. All retailers and vending machine operators will be required to pay a floor tax on all tobacco products, excluding RYO, on-hand as of 12:01 a.m. October 1, 2016. Every retailer and vending machine operator must file a floor tax return, REV-1141 even if no tobacco products are in inventory. The floor tax return and payment may be filed any time after October 1, 2016, but no later than December 29, 2016.
Other tobacco products documented as “in transit” as of October 1, 2016, will be deemed the property of the receiver. The receiver shall file a return and pay the floor tax by December 29, 2016.
The due date for the floor tax on roll-your-own tobacco at $0.55 per ounce with a minimum tax per package of $0.66, will be determined and communicated by the department after the Attorney General publishes a notice in the Pennsylvania Bulletin that the tax is permitted under the Master Settlement Agreement with the tobacco companies.
Monthly Reporting Requirements
Beginning October 1, 2016, wholesalers and manufacturers are required to remit every person they sell to, to the state tax department. The first tax and return are to be remitted to the department, for the quarter ending December 31, 2016, on or before January 20, 2017. Beginning January 2017 (due February 20, 2017), the tax and return will be due monthly, on or before the 20th day of the following month. Remittance will be done electronically using e-TIDES, a free business tax filing system available to all registered account holders. Visit www.etides.state.pa.us to register for e-TIDES. Manufacturers and wholesalers also will be required to file tobacco products monthly reports REV-679 and applicable schedules, REV-679 A, B, C, D and E. The first monthly report is to be remitted to the department, for the quarter ending December 31, 2016, on or before January 20, 2017. Beginning January 2017 (due February 20, 2017), the report will be due monthly, on or before the 20th day of the following month. These reports, schedules and due dates can be found on our website at www.revenue.pa.gov.
Additional information on tobacco products and forms can be found on the department’s website at www.revenue.pa.govor by calling the Miscellaneous Tax Section at 717-783-9374.