Other Tobacco Products Tax
Effective October 1, 2016, tax is imposed on smokeless tobacco, pipe tobacco, e-cigarettes, including the products and substances that go into the e-cigarettes, and any other tobacco products for chewing, ingesting or smoking, except cigars. The tax on roll-your-own tobacco takes effect December 14, 2016.
The tax rate is 40 percent of the purchase price from the wholesaler on the following:
- Electronic cigarettes — defined as an electronic oral device, such as one composed of a heating element and battery, electronic circuit or both. An electronic cigarette provides a vapor of nicotine or any other substance, and the use or inhalation of an electronic cigarette simulates smoking. Electronic cigarettes are subject to the tax no matter whether the devices are manufactured, distributed, marketed or sold as an e-cigarette, e-cigar, e-pipe or under any other product, name or description. These devices are taxable when sold with or without the liquid or substance.
- Any liquid or substance placed in or sold for use in the electronic cigarette, regardless of whether the liquid or substance contains nicotine.
- Any component sold in the same packaging as the electronic cigarettes.
Example: If the retailer purchased an e-cigarette for $10, the retailer would pay tax of $4. The tax on e-cigarettes is effective beginning October 1, 2016.
Roll-your-own, chewing tobacco, snuff and pipe tobacco
The tax is 55 cents ($0.55) per ounce, with a minimum tax per package of 66 cents ($0.66). For example, if the retailer purchases 100 ounces of tobacco in two-ounce packages the tax due would be $55. If the same quantity is purchased in one-ounce packages, the tax due would be $66.
List of what is taxable under the Tobacco Products Tax
- Liquids or any other substance that goes into e-cigarettes,
- Roll-your-own tobacco,
- Pipe tobacco,
- Granulated tobacco,
- Plug cut tobacco,
- Crimp cut tobacco,
- Ready rubbed tobacco,
- Chewing tobacco,
- Dry snuff,
- Snuff flour,
- Plug and twist tobacco,
- Fine cut tobacco, and
- Any other type or variation of smoking and or chewing tobacco.
Both wholesalers and dealers need an Other Tobacco Products (OTP) license. Every location of a wholesaler or dealer, including vending machines, must be individually licensed. Existing cigarette tax license are not valid for other tobacco products. Additional information relating to licensing, including the applications, will be available September 1, 2016. The cost of an OTP license is as follows:
- Wholesaler & Manufacturer license are $1,500 per location.
- Retailer license are $25 per location.
- Vending machine license are $25 per location.
Tobacco Products Licenses are applied for with a Pennsylvania Enterprise Registration Form (PA-100), found online at www.pa100.state.pa.us.
Reporting and Payment
The tax is collected by the wholesaler at time of the sale to the retailer. The wholesaler is responsible for the reporting and payment of the tax unless the retailer is the first point of entry into Pennsylvania commerce. The tax and return are due to the department monthly, on or before the 20th day of the month.
The inventory in the retailer’s business on the effective date of the tax is subject to a floor tax. The retailer is to take an inventory and remit the floor tax return and payment within 90 days to the department. The floor tax return and payment for Other Tobacco Products (OTP), excluding roll-your-own tobacco (RYO), is due by December 29, 2016. The floor tax return and payment for roll-your-own tobacco (RYO), is due by March 14, 2017.
Floor tax returns and payment should be mailed to:
PA DEPARTMENT OF REVENUE
BUREAU OF IMAGING AND DOCUMENT MANAGEMENT (CIG)
HARRISBURG PA 17128-0408
All checks should be made payable to: PA DEPARTMENT OF REVENUE