Information Release

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 (855) 466-3921.