XT 2006-01 - Excise and Motor Fuel Tax Division Information
Release – Tobacco Requirements - Issued July, 2006
The purpose of this information release is to address the
numerous changes to the tax code affecting the licensing,
sale, transportation and reporting of both cigarette and
other tobacco products, made in Am. Sub. H.B. 66 and Am. Sub.
H.B. 530. This information release summarizes these changes
in the following categories: 1) Licensing and reporting
requirements for cigarette manufacturers and importers; 2)
Licensing requirements for cigarette wholesalers; 3)
Restrictions on the sale and shipment of cigarettes; 4)
Registration and reporting requirements for Other Tobacco
Product (OTP) manufacturers, importers, and brokers; 5)
Licensing requirements for OTP distributors; 6) Restrictions
on the sale and shipment of OTP; 7) Record keeping and
reporting requirements; and 8) Miscellaneous issues.
Licensing
& Reporting Requirements for Cigarette Manufacturers and
Importers
All manufacturers and importers that sell cigarettes into
Ohio must apply for and obtain a license from the Ohio
Department of Taxation. These licenses are to be renewed
annually on or before the fourth Monday of May. A list of all
cigarette manufacturers and importers is public information
and will be posted on the department’s Web site at
tax.ohio.gov. It is illegal for any cigarette wholesaler to
buy from a manufacturer or importer that is not licensed and
listed on this site.
Ohio licensed cigarette wholesalers located outside Ohio must
purchase from Ohio licensed cigarette manufacturers or
importers, but only if those cigarettes are being sold into
Ohio.
As part of the Ohio licensing requirement, all manufacturers
and importers will be required to prove that their product(s)
are legal for sale in Ohio. Cigarette brands that are listed
on the Attorney General’s Web site will suffice as such
proof. Any cigarette brands not listed on this site may only
be sold to cigarette wholesalers for sale into another state
and such cigarettes must be legal for sale in such other
state.
The issuing of an Ohio license to a manufacturer does not
excuse a manufacturer from the certification process required
under
section 1346.05 of the Ohio Revised Code.
All Ohio licensed cigarette manufacturers and importers must
file monthly reports detailing the brand and quantities of
all cigarettes shipped into Ohio as well as the name and
address of the recipient along with all invoice numbers and
invoice dates. Any manufacturer or importer that fails to
file the required reports may have its Ohio license suspended
or revoked and may no longer sell its products into
Ohio.
Licensing
Requirements of Cigarette Wholesalers
No changes were made to the requirement that all cigarette
wholesalers obtain Ohio licenses. These Ohio wholesale
licenses are issued by the county auditor’s office and are
still renewed on or before the fourth Monday in May. A list
of all cigarette wholesalers is now public information and
will be posted on the Department of Taxation’s Web site at
tax.ohio.gov. Cigarette wholesalers will be classified as
either: 1) Ohio stamping cigarette wholesalers; 2) Ohio
non-stamping cigarette wholesalers; 3) multi-state stamping
cigarette wholesalers; or 4) out-of-state licensed cigarette
wholesalers.
In addition to obtaining an Ohio wholesale cigarette license
from the county auditor’s office, all cigarette wholesalers
must also establish an account with the Department of
Taxation. The information obtained by the department will be
used to properly classify the wholesaler into one of the four
categories below:
(1) Ohio stamping cigarette wholesaler – located in Ohio and stamps cigarettes only for sale in the state of Ohio. Must receive authority from the department in order to purchase cigarette tax stamps.
(2) Ohio non-stamping cigarette wholesaler – purchases and distributes cigarettes on which the
tax has already been paid. Essentially, a sub-jobber with no authority to purchase and/or apply tax stamps.
(3) Multi-state-stamping cigarette wholesaler – located in Ohio but stamps cigarettes for sale in Ohio as well as other states.
(4) Out-of-state licensed wholesaler – located outside Ohio but stamps and sells cigarettes into Ohio. Must receive authority from the department in order to purchase cigarette tax stamps.
Restrictions on the Sale and
Shipment of Cigarettes
Licensed cigarette retailers may only purchase stamped
cigarettes from Ohio licensed cigarette wholesalers. Licensed
cigarette wholesalers may sell cigarettes between each other
under certain circumstances. Ohio licensed cigarette
wholesalers may purchase cigarettes from cigarette
manufacturers or importers that have obtained a license from
the Department of Taxation, or as stated above, from other
Ohio licensed cigarette wholesalers under certain
circumstances.
The following
transactions are not permitted:
No cigarettes may be sold into Ohio unless the cigarette
manufacturer or importer has obtained an Ohio license. These
Ohio-licensed cigarette manufacturers and importers will be
posted on the department’s Web site. Additionally, licensed
cigarette manufacturers or importers may only sell to
stamping cigarette wholesalers. Cigarette manufacturers and
importers may not sell to non-stamping cigarette wholesalers
or cigarette retailers.
The following
transactions are permitted with prior approval of the
Department of Taxation:
The sale of unstamped cigarettes between cigarette
wholesalers is permitted only with prior approval of the
department. Such approval will only be granted if the selling
wholesaler was the original purchaser of the cigarettes from
an Ohio licensed cigarette manufacturer or importer. This
requirement also applies to shipments between locations of
affiliated wholesalers. Shipments through Ohio (no origin,
destination, or stops in Ohio) do not require this consent;
however, these shipments do fall under the federal Cigarette
Contraband Trafficking Act and all the requirements of this
act must be adhered to.
Prior approval is to be requested on a form prescribed for
that purpose. This form must be submitted by the wholesaler
that is to receive the cigarettes and shall contain the
quantity and brands of the cigarettes being shipped. The
approval must be carried in the vehicle transporting the
cigarettes. Both the supplying wholesaler and receiving
wholesaler will be faxed the approval. If the quantity
received by the receiving wholesaler differs from the
quantity approved to be shipped, the receiving wholesaler
must notify the Department of Taxation within 48 hours of
receipt. Failure of the receiving wholesaler to notify the
department will be presumed to have received the quantity
approved for shipment along with the resulting tax liability.
If the shipment involves the transportation into, from, or
through another state, it is the responsibility of the
wholesalers to obtain whatever other approvals are needed in
such other state to transport the cigarettes.
The following
transactions do not require the department’s approval:
Ohio-licensed cigarette manufacturers or importers may sell
unstamped cigarettes to stamping cigarette wholesalers
without the approval of the Department of Taxation. Licensed
cigarette retailers may only purchase stamped cigarettes from
Ohio licensed cigarette wholesalers and Ohio-licensed
cigarette wholesalers may sell to licensed cigarette
retailers without prior approval from the department.
Registration and Reporting
Requirements for OTP
Manufacturers, Importers, and
Brokers
All manufacturers, importers and brokers of other tobacco
products that sell other tobacco products into Ohio must
register with the Department of Taxation. This registration
must be renewed annually on or before the first day of
February. It is illegal for any manufacturer, importer or
broker of OTP to sell into Ohio without registering with the
department.
As part of the registration requirement, all manufacturers,
importers and brokers will be required to prove that any
roll-your-own tobacco being sold into or within Ohio is legal
for sale in Ohio. Roll-your-own brands that are listed on the
Attorney General’s Web site will suffice as such proof. Any
brands of roll-your-own tobacco not listed on this site may
be sold only to licensed OTP distributors for sale into
another state and such roll-your-own must be legal for sale
in such other state.
The registration of an OTP manufacturer does not excuse such
manufacturer from the certification process required under
section 1346.05 of the Ohio Revised Code.
All Ohio registered OTP manufacturers, importers and brokers
must file monthly reports detailing the brand, wholesale
cost, type and quantities of all other tobacco products
shipped into Ohio, as well as the name and address of the
recipient along with all invoice numbers and invoice dates.
Any manufacturer, importer or broker that fails to file the
required reports may have its Ohio registration suspended or
revoked and may no longer sell its products into Ohio.
Licensing
Requirements of OTP Distributors
All distributors of other tobacco products must obtain an
Other Tobacco Products license. All OTP licenses are
still issued by the Department of Taxation and are renewed
annually on or before the first day of February. In
the past, persons dealing solely in tax-paid other tobacco
products were not required to obtain an Ohio OTP
distributor’s license. The new licensing requirements now
require these sub-jobbers, or secondary distributors, to
obtain an Ohio OTP license. Licenses are not
required by retailers who purchase tax-paid other tobacco
products and who only sell to ultimate consumers.
A list of all OTP distributors is now public information and
will be posted on the Department of Taxation’s Web site at
tax.ohio.gov.
Restrictions on the Sale and
Shipment of OTP
Retailers may only purchase tax-paid other tobacco products
from Ohio licensed OTP distributors. Ohio licensed OTP
distributors may purchase other tobacco products from
registered OTP manufacturers, importers or brokers. Ohio
licensed OTP distributors may sell other tobacco products
between each other under certain circumstances. Licensed OTP
distributors may purchase other tobacco products only from
OTP manufacturers, importers or brokers that have registered
with the Ohio Department of Taxation, or as stated above,
from other Ohio licensed OTP distributors under certain
circumstances.
The following
transactions are not permitted:
All manufacturers, importers or brokers of other tobacco
products must be registered with the Department of Taxation.
No manufacturer, importer or broker of other tobacco products
that has not registered with the department may sell or ship
other tobacco products into Ohio.
The following
transactions do not require the department’s approval:
Registered manufacturers, importers or brokers of other
tobacco products may sell tobacco products into Ohio only to
Ohio licensed OTP distributors. The identities of Ohio
licensed distributors are subject to public disclosure and
will be posted on the department’s Web site at
tax.ohio.gov. Registered OTP manufacturers, importers
or brokers are not public information and will not be posted
on this site. Therefore, in order for the OTP distributor to
know they are purchasing from an Ohio registered OTP
manufacturer, importer or broker, the OTP manufacturer,
importer or broker must include, on their invoice, the
following statement: “Registered by the State of Ohio;
Registration number xxxxxxxx. The recipient named on the
invoice responsible for paying the Ohio Other Tobacco
Products Tax.”
The following
transactions are permitted with prior approval of the
Department of Taxation:
Unless authorized by the Tax Commissioner, Ohio licensed OTP
distributors may only purchase other tobacco products from
Ohio registered OTP manufacturers, importers and brokers.
All other shipments between OTP distributors must
have the prior approval of the Department of
Taxation. Such approval will only be granted if the
selling distributor was the original purchaser of the other
tobacco products from a registered OTP manufacturer, importer
or broker. This requirement also applies to shipments between
locations of affiliated distributors. Prior approval is to be
requested on a form prescribed for that purpose. This form
must be submitted by the OTP distributor that is to receive
the product and shall contain the quantity and brands of the
products being shipped. This approval must be carried in the
vehicle transporting the product. Both the supplying
wholesaler and receiving wholesaler will be faxed the
approval. If the quantity received by the receiving
wholesaler differs from the quantity approved to be shipped,
the receiving wholesaler must notify the Department of
Taxation within 48 hours of receipt. If the receiving
wholesaler fails to notify the department, such wholesaler
will be presumed to have received the quantity approved for
shipment along with the resulting tax liability. If the
shipment involves the transportation into, from or through
another state, it is the responsibility of the distributors
to obtain whatever other approvals are needed in such other
state to transport the other tobacco products.
Record
Keeping and Reporting Requirements
New reports have been prescribed for the monthly reporting of
both cigarette and tobacco products purchased and sold in
Ohio. The reports will be distributed by the Department of
Taxation and may also be downloaded from the department’s Web
site at tax.ohio.gov. The additional reports now
require the reporting of both tax-paid and tax unpaid
product.
Every person shall maintain complete and accurate records of
all purchases and sales of both cigarettes and other tobacco
products and shall retain all invoices, bills of lading, and
other documents relating to these purchases and sales. The
invoices or documents shall be maintained for each place of
business and shall show the name and address of the other
party along with the quantity of cigarettes or other tobacco
products sold or purchased. The records and documents shall
be made available, upon request, to the Tax Commissioner and
shall be preserved for a period of three years.
Miscellaneous
Issues
Retailers
Responsibility to Prove OTP Tax Paid – Retailers of
other tobacco products must have proof of tax payment made on
all other tobacco products in inventory. Although retailers
of other tobacco products need not have an Ohio OTP license
to sell these products, invoices from their supplier must
state that the OTP tax has been paid along with the account
number assigned to the supplier by the department. Any
tobacco product in a retailer’s possession, for which
evidence of payment of the other tobacco products tax is not
available, is subject to seizure.
Retailers Duty to
Inspect Cigarettes – No changes have been made to the
licensing requirements of cigarette retailers. Each retail
dealer, within 24 hours after the receipt of any cigarettes
at the retail’s place of business, and before the cigarettes
are made available for sale, shall inspect the cigarettes to
ensure that tax stamps are affixed. Please notify the
Department of Taxation if any cigarettes are received without
the proper Ohio tax stamp affixed. Whenever any cigarettes
are found at a retail place of business without proper tax
stamps affixed, it is presumed that such cigarettes are being
kept in violation of Ohio tax laws and such product may be
confiscated.
Face-to-Face
Requirement – In general, all cigarettes sold in Ohio
must be sold in a face-to-face transaction. The face-to-face
requirement is not applicable to cigarettes sold between Ohio
licensed cigarette manufacturers, importers, wholesalers and
retailers. Sales to consumers in Ohio must be sold in
face-to-face transactions. Sales of cigarettes over the
Internet, catalogue, mail order, phone order, or any other
means that does not involve a face-to-face transaction are
prohibited by section 2927.023 of the Ohio Revised
Code.
Attorney General’s Web
Site – As part of Ohio's participation in the
Master Settlement Agreement, only brands of cigarettes and
roll-your-own tobacco that have been certified by the
Attorney General’s office as legal for sale in Ohio may be
sold in Ohio. A list of legal brands is
published on the AG’s Web site at www.ag.state.oh.us. Any
brand of cigarette or roll-your-own tobacco not listed on
this site may not be sold in Ohio and is subject to
confiscation. Please note, the Master Settlement
Agreement covers only cigarettes and roll-you-own tobacco.
Other than roll-your-own tobacco, it does not include other
tobacco products such as cigars, snuff, chewing tobacco and
the like. These products are not listed on the Attorney
General’s Web site and continue to be legal for sale in Ohio
once the OTP tax has been paid.
Any questions regarding this information release may be
directed to:
Ohio Department of Taxation
Excise Tax and Motor Fuel Division
P O Box 530
Columbus, Oh. 43216-0530
(614) 466-7026