XT 2002-03 - Cigarette Tax Increase For All Ohio
Stamping Cigarette Wholesalers
The 124th Ohio General Assembly recently passed Amended
Substitute Senate Bill 261 which included a tax increase on
cigarettes effective July 1, 2002. The current tax rate is
1.2 cents per cigarette, and the new rate will be 2.75 cents
per cigarette or 55 cents per package of 20 and 68.75 cents
per package of 25. The new tax on packages sold in Cuyahoga
County will be 59.5 cents per package of 20 and 74.375 cents
per package of 25.
As a result of the tax increase, you are required to pay a
floor stock tax on all affixed and unaffixed state and
combined cigarette tax stamps on hand as of the close of
business on June 30, 2002. There is no additional tax on
county only stamps. The tax is to be paid in three
installments. One-third of the tax is due by July 31, 2002,
one-third is due by August 31, 2002, and the final one-third
is due by September 30, 2002. Enclosed is your first Ohio
floor stock tax return which must be filed and paid by July
31, 2002, and is based on your June 30 inventory. Tax stamps
in transit that were paid for at the old rate must be counted
in your June 30 inventory even though you may not have
possession. The second and third tax returns will be mailed
in August. If you pay the entire amount on your first tax
return, you are not required to file the returns that are due
in August and September.
The bill also changed the purchasing requirements for stamps.
From July 1, 2002, through April 30, 2003, the surety bond
for licensed dealers in good standing only has to cover the
old tax value of the stamps, including the county tax. The
entire amount of your purchase must then be paid within
thirty days. The same applies to cash purchases. Licensed
dealers in good standing only have to pay for the old tax
value of the stamps, including the county tax, and you have
thirty days to pay the remainder. These payment options are
available only from July 1, 2002, through April 30, 2003.
Cash purchases from May 1, 2003, through June 30, 2003, will
be at the entire tax rate.
Effective July 1, 2003, the bond or cash payment must be for
the entire
tax rate. More details on the new credit options will be
provided before July 1, 2002.
The enclosed informational release and floor stock tax return
has been mailed to all retailers. We would appreciate it if
you would notify your retail customers and provide them with
a copy of the retailer release and return if they did not
receive them.
The General Assembly also passed Amended Substitute Senate
Bill 242 that increased the wholesale cigarette minimum
markup from 2.5 percent to 3.5 percent and the retail
cigarette minimum markup from 6 percent to 8 percent
effective July 1, 2002. Ohio law prohibits the sale of
cigarettes below state minimum. For your convenience a list
of the new minimum prices is
available on our Web site. If you have any questions or
problems, please contact the Fuel Use and Excise Tax Unit at
(614) 466-3410.