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Fillable Printable Pub-65, Tax Information For Cigarettes, Tobacco Products

Fillable Printable Pub-65, Tax Information For Cigarettes, Tobacco Products

Pub-65, Tax Information For Cigarettes, Tobacco Products

Pub-65, Tax Information For Cigarettes, Tobacco Products

tax.utah.gov
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Utah State Tax Commission
210 North 1950 West
Salt Lake City, Utah 84134
801-297-2200
1-800-662-4335
tax.utah.gov
Tax Information for Cigarettes,
Tobacco Products and
Electronic Cigarette Products
Publication 65
Revised 8/17
General Information
The Utah State Tax Commission administers the cigarette
and tobacco tax laws in Utah and ensures all cigarettes,
tobacco products and electronic cigarette products are sold
by licensed sellers.
The Tax Commission works with state and local health depart-
ments to prevent cigarette, tobacco and electronic cigarette
product sales to minors.
The Tax Commission also works with the State Fire Marshal
to ensure that cigarettes and tobacco products sold in Utah
are fi re-safe. Fire Safe Cigarettes (FSC) are designed to stop
burning when left unattended.
Definitions
Cigarette: Any roll for smoking made wholly or in part of to-
bacco, irrespective of size or shape, and whether or not such
tobacco is fl avored, adulterated, or mixed with any other
ingredient, the wrapper or cover of which is made of paper or
any other substance or material except tobacco.
Electronic Cigarette (E-Cigarette): A device that simulates
smoking a cigarette, pipe or cigar, which contains a heating
element, battery or electronic circuit that produces a vapor of
nicotine or another substance.
E-Cigarette Substance: Any substance, including liquid
containing nicotine, intended for use in an e-cigarette.
E-Cigarette Product: An e-cigarette or an e-cigarette
substance.
Little cigar: A roll for smoking made wholly or in part of
tobacco, that uses an integrated celluslose acetate or similar
lter, and that is wrapped in a substance containing tobacco,
but is not exclusively natural leaf tobacco.
Moist snuff: Tobacco that:
is fi nely cut, ground or powdered,
has at least 45 percent moisture content, and
is not meant to be smoked or placed in the nasal cavity.
Nonparticipating manufacturer (NPM): A tobacco product
manufacturer that is not a participant in the MSA between
the State of Utah and the leading U.S. tobacco product
manufacturers.
To identify NPM products, see the Utah Cigarette Directory
at tax.utah.gov/cigarette/cig-directory.pdf. NPM products
are highlighted and identifi ed by brand name. Examples of
NPM brands are Complete, Kingsboro, Premis, Roger, Tradi-
tions and Zig Zag (this list is not all-inclusive).
Other tobacco products: Products containing tobacco that
do not meet the defi nitions of “cigarette, “moist snuff or “little
cigars. Examples: cigars, roll your own (RYO) tobacco and
pipe tobacco and cigarettes produced from a rolling machine
(this list is not all-inclusive).
Participating manufacturer (PM): A tobacco product
manufacturer that is a participant in the Master Settlement
Agreement (MSA) between the State of Utah and the leading
U.S. tobacco product manufacturers. Examples of PM brands
are: Marlboro, Camel, Lucky Strike, Kent and Liggett Select
(this list is not all inclusive).
Who Can Sell Cigarettes,
Tobacco Products and
E-Cigarette Products
You must be licensed by the Tax Commission to legally sell
cigarettes, tobacco products and e-cigarette products in
Utah. We will only issue a license to the person owning or
operating a place which sells the products. A person who
does not operate a business cannot be licensed. See Utah
Code §59-14-202(1).
We will not issue a cigarette/tobacco license until a seller has paid
the license fee and posted a bond, if applicable. See Utah Code
§59-14-201.
See Licenses, Fees and Bonds on page 2.
Vending Machines
page 2
65
Each cigarette vending machine is considered a separate
place of business. Exception: When more than one machine
operates at a single location, only one of those machines
needs to be licensed.
See Rule R865-20T-3(A).
What is Legal to Sell
Only cigarettes and RYO tobacco listed in the Utah Cigarette
Directory (tax.utah.gov/cigarette/cig-directory.pdf) may be
legally sold in Utah.
Cigarettes sold in Utah must also be fi re-safe (see gure 1).
The Fire Marshal maintains a list of fi re-safe brands online at
remarshal.utah.gov/cigarette-fi re-safety-program/.
Collecting Utah Cigarette
and Tobacco Taxes
E-Cigarettes
E-cigarette products are not subject to Utah tobacco taxes
unless they contain tobacco, in which case they are taxed as
tobacco products.
Cigarettes
Each pack of cigarettes must be stamped before it is legal
for sale in Utah (see gure 1). Stamps must be affi xed within
72 hours of receipt by wholesalers, distributors or retailers in
Utah. Stampers buy stamps from the Tax Commission at the
current tax rate.
There is no consumer cigarette tax paid at the time of
purchase. Consumers can only buy cigarettes from licensed
retailers who have paid tax when buying cigarette stamps. All
cigarette packs sold to consumers must be stamped.
See Utah Code §59-14-205(3).
Tobacco Products
Tobacco product distributors report and pay tobacco tax quar-
terly on form TC-553, Tobacco Product Tax Return. The return
is due on or before the last day of the month following each
quarterly period (e.g., the April - June return is due July 31).
See Utah Code §59-14-303(1).
Utah Tax Rates
Utah imposes taxes on the sale, use, storage and distribu-
tion of all cigarettes and tobacco products in Utah.
See Utah Code §59-14-204 and §59-14-302.
Cigarettes
Rate per cigarette Rate per 20 pack Rate per 25 pack
8.5 cents $1.70 $2.125
NPM Cigarettes
NPM cigarettes are subject to an additional equity assess-
ment of 35 cents per pack of 20 ($2.05 total tax per pack),
and 43.75 cents per pack of 25 ($2.5625 total tax per pack).
Moist Snuff
The tax rate for moist snuff is $1.83 cents per ounce.
Little cigars
Effective July 1, 2011, the tax rate for little cigars is 8.5 cents
per little cigar.
Rolling Machine Cigarettes
Cigarettes produced by a rolling machine are taxed at the
same rate as cigarettes.
All Other Tobacco Products
All other tobacco products are taxed at 86 percent of manu-
facturer’s sales price.
Mail, Phone and
Internet Purchases
The sale and purchase of cigarettes, tobacco products and
e-cigarette products via the Internet, phone or mail-order is
prohibited, except to licensed persons.
Any person who makes such sales to an unlicensed person
in Utah is subject to a fi ne of up to $5,000 for each sale.
See Utah Code §59-14-509 and §76-10-105.1.
Licenses, Fees and Bonds
You must have an active Sales and Use Tax License in good
standing to qualify for a Cigarette/Tobacco License or an
Electronic Cigarette Products License.
Apply for these licenses on form TC-69, Utah State Business
and Tax Registration.
Retailers
Retailers sell products directly to consumers, who buy all
products tax-paid. All cigarettes a retailer buys must have the
Utah stamp affi xed.
A license to sell cigarettes, tobacco products and/or e-
cigarette products is owner and location specifi c. A business
must get a new license if its location or ownership changes.
If you have multiple locations you must have a separate
license for each location where you sell cigarettes, tobacco
products and/or e-cigarette products. We will set the same
renewal date for all of your locations.
A location may have either a Cigarette/Tobacco License or
an Electronic Cigarette Products License:
1. Cigarette/Tobacco License
a. The location may sell cigarettes, tobacco products
and e-cigarette products.
2. Electronic Cigarette Products License
a. The location may only sell e-cigarette products.
b. The location may not sell cigarettes and tobacco
products without a Cigarette/Tobacco License.
The license fee is $30. No bond is needed. The license is
valid for three years unless revoked. A three-year renewal
license is $20. In case of revocation, the reinstatement fee is
$30.
Figure 1:
Markings on legal
packs of cigarettes
page 3
65
Cigarette Stampers
Cigarette stampers buy unstamped product and affi x the
Utah stamp before selling to a licensed distributor, whole-
saler or retailer. Stampers order Utah stamps from the Tax
Commission on form TC-79, Cigarette Revenue Stamp
Order Form.
The license fee is $30. Cigarette stampers must be bonded.
The minimum bond is $500 and must be paid at the time of
application. See Utah Code §59-14-201(3).
Cigarette stampers with accounts in good standing may buy
stamps on credit, up to 90 percent of their bond value. These
accounts must be paid in full within 60 days after the date
the stamps were delivered.
Cigarette stampers report Utah sales of cigarettes and RYO
on form TC-553 (with Schedules E and F).
Tobacco Products Distributors
Tobacco products distributors buy tobacco products before
the tax has been paid and pay tax on a quarterly basis on
form TC-553, Tobacco Tax Product Return.
The license fee is $30. Tobacco product distributors must be
bonded. The minimum bond is $500 (cash or surety), or an
amount equal to one quarter of the fi ling obligation, and must
be paid at the time of application. A higher bond amount may
be required if the distributor has not faithfully met all obliga-
tions to the state or if the account is not in good standing.
See Utah Code §59-14-201(3).
Each quarter, distributors must report cigarettes and RYO
sold in Utah on form TC-553.
Manufacturers
Cigarette manufacturers that want to certify cigarettes for
sale in Utah must have a valid cigarette license.
Tobacco product manufacturers that will distribute tobacco
products directly into Utah must have a valid Utah tobacco
distributor license.
E-cigarette product manufacturers do not need a Utah
license unless they also sell e-cigarette products in Utah.
Rolling Machine Operators
Rolling machine operators must:
1. have a Utah tobacco license,
2. certify with the Tax Commission (form TC-550) prior to
bringing rolling machines into the state,
3. renew certifi cation each year by December 31, and
4. le form TC-553 quarterly to report and pay taxes on
cigarettes produced by rolling machines.
Keeping a License in
Good Standing
State and local health departments monitor all retail loca-
tions and perform quarterly compliance checks to prevent
illegal sales to underage persons. You can learn about
the Utah Department of Health Tobacco Prevention and
Control Program by calling 1-877-220-3466 or visiting
www.tobaccofreeutah.org.
Your license will be suspended for up to 30 days if you are
cited for selling to an underage person three times in a
12-month period.
Your license will be revoked for one year if you are cited
for selling to an underage person four times in a 12-month
period.
The Tax Commission audits for cigarette tax compliance.
Check packs before stocking to ensure all cigarettes on
your shelves have the proper tax stamp visible. Keep
invoices for all tobacco products for three years from date
of purchase.
Renew your license prior to expiration. Failure to renew will
cause your license to expire. Expired licenses cannot be
renewed. You will have to apply for a new license.
Electronic Reporting, Filing,
License Renewals and Payments
You are encouraged to fi le all cigarette and tobacco tax
returns, reports and payments online using Tax Express,
Taxpayer Access Point (TAP), our online account manage-
ment system. TAP:
• Is fast
• Is accurate
Calculates for you
Is available 24/7
You will need the following information to set up online ac-
cess to your accounts:
Federal Employer Identifi cation Number (FEIN) or Social
Security Number (SSN),
Utah 14-digit account number
• Your PIN
page 4
65
Violation Statute Penalty Notes
Internet or mail order sales
of tobacco or cigarettes to an
unlicensed person
§59-14-509 Fine of up to $5,000 per violation.
Injunction to restrain.
Recovery of additional costs and fees.
Profi ts, gain, gross receipts, or other
benefi t may be disgorged and paid to the
state treasurer.
Failure to report imported
cigarettes or provides false or
misleading information
§59-14-212 License suspended or revoked.
Fine of the greater of 500% of retail value
of cigarettes or $5,000.
Class B misdemeanor.
MAY be subject to civil penalty.
Selling contraband goods: no
license, no stamp, counterfeit,
prohibited, non-reported im-
ported cigarettes, non-report-
ed NPM cigarettes, cigarettes
not listed in the Utah Cigarette
Directory.
§59-14-213 Contraband seized without a warrant by
the Tax Commission, its employees or
any peace offi cer.
Confi scated products destroyed.
Prohibited sales of cigarettes §59-14-210
§59-14-211
License suspended or revoked.
Fine of the greater of 500 percent of retail
value of cigarettes or $5,000.
Class B misdemeanor.
• Possible imprisonment.
Each affi xed stamp is a
separate violation.
Prohibited sales include
products not intended for
sale or use in the US, prod-
ucts that do not comply with
labeling laws, and products
imported unlawfully.
Does not include duty-free
cigarettes.
Counterfeit cigarettes or
stamps
§59-14-209
§59-14-211
§59-14-213
Seizure of counterfeit cigarettes and any
personal property used in direct connec-
tion with sale or possession for sale of
counterfeit cigarettes. Forfeiture of the
seized assets.
Counterfeit goods seized without a war-
rant by the Tax Commission, its employ-
ees or any peace offi cer.
Seizure without a warrant of all cigarettes
stamped with counterfeit, reused, washed
or restored stamps.
Confi scated products destroyed.
Various penalties imposed by a court for
counterfeit cigarettes.
3rd degree felony.
For each affi xed stamp.
Reuse or cause stamps to
be reused; buy, sell, offer
washed or restored stamps;
use or possess washed or
restored stamps; buy, sell,
offer for sale or use counter-
feit stamp.
Failure to properly affi x and
cancel stamps
§59-14-205
§59-14-213
$25 for each offense (article, package or
container).
Cigarettes seized without a warrant by
the Tax Commission, its employees or
any peace offi cer.
Confi scated products destroyed.
Each article, package or con-
tainer is a separate offense.
Table 1: Cigarette, Tobacco and E-Cigarette Products Violation
Penalties
page 5
65
Selling cigarettes without a
license
§59-14-203
§59-14-213
Seizure, forfeiture and destruction of
products.
Class B misdemeanor.
Selling to underage person
(under 19 years)
Dept. of Health enforces and
assesses penalties.
Tax Commission suspends/
revokes accounts.
§26-42-103
§59-14-203.5
1st – penalty of up to $300.
Within 12 months of 1st violation:
2nd – penalty of up to $750.
3rd – penalty of up to $1,000 and sus-
pend license up to 30 days.
4th – penalty of up to $1,000 and revoke
license for one year.
Bringing goods not listed in the
Utah Cigarette Directory into
Utah for use, possession for
sale, stamping or selling
§59-14-213
§59-14-604
§59-14-608
Stamping agent’s license suspended or
revoked.
Fine of the greater of 500 percent of retail
value or $5,000.
• Each affi xed stamp is a separate violation.
Class B misdemeanor.
Civil penalties and Tax
Commission action (see
§59-14-608).
These are contraband
cigarettes.
Failure to place funds in
escrow
§59-22-203 If a court fi nds violation of annual deposit,
it may impose a penalty of 5 percent of
amount not put into escrow per day of viola-
tion, up to 100 percent of amount improp-
erly withheld. If it is a knowing violation,
the court may impose 15 to 300 percent. A
two-year injunction is added for a second
knowing violation.
Each failure to make an annual
deposit is a separate violation.
Selling or offering for sale
cigarettes that are not marked
Fire Safe (FSC)
§53-7-406 Penalty of $10,000-$100,000 penalty
against manufacturer.
Penalty of $500-$25,000 against retailer.
Penalty of $75,000-$250,000 for false
certifi cation.
Forfeiture and destruction of cigarettes.
Each violation is a separate
offense.
Failure to supply a report of
Internet sales as required by
Jenkins Act
§375 of US Code
Title 15
Chapter 10A
$1,000 or imprisonment of up to six months.
Selling smokeless tobacco
without a warning label
§59-14-501
§59-14-505
§59-14-506
Products seized without a warrant by the
Tax Commission, its employees or any
peace offi cer.
Confi scated products destroyed.
Violation Statute Penalty Notes
Failure to fi le quarterly return
and supporting schedules
§59-14-407
§59-14-606
§59-14-214
Class B misdemeanor.
Subject to revocation or suspension of
license.
Penalty, not to exceed the greater of 500%
of retail value of cigarettes or $5,000.
Selling e-cigarette products
without a license
§59-14-803 Class B misdemeanor.
Failure to affi x NPM Equity As-
sessment stamp
§59-14-205
§59-14-214
Cigarettes seized without a warrant by
the Tax Commission, its employees or
any peace offi cer.
Confi scated products destroyed.
Each article, package or con-
tainer is a separate offense.
page 6
65
Return Filing Requirements
XTC-752
Utah Certifi cate of Compli-
ance by Tobacco Products
Manufacturers (annual)
XXXTC-553
Tobacco Product Tax Return
(quarterly)
X
XXXXTC-69
Utah State Business and
Tax Registration
XTC-79
Cigarette Revenue Stamp
Order Form
Rolling Machine
Operator
Manufacturer
(cigarette or
RYO)
Distributor
(tobacco only)
Stamper
(cigarette only)
RetailerReturn
XTC-550
Cigarette Rolling Machine
Operation Certifi cate
XXXXXTC-38B
License Renewal for Ciga-
rettes/Tobacco Products and
Electronic Cigarette Products
(every three years)
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