Understanding Tax Responsibilities for Little Cigars
If you are in the business of selling little cigars at your convenience store, then you should be charging the full excise tax as if they are any other tobacco product.
In a recent audit, our client was selling little cigars without charging excise tax because he thought they did not fall into the category of a tobacco product.
It is irrelevant as to how the little cigar resembles a cigarette or not, or even that of a cigar.
Tobacco Reporting Requirements
Monthly Reporting
The cigarette report and wholesalers’ ‘Other Tobacco report’ are now combined. Returns are due on the 10th of each month.
Tobacco Wholesalers/Distributors and Manufacturers/Importers must submit a return even if it is a zero return.
Electronic Filing Requirement
As of September 2012, paper returns are no longer being accepted. The Department will mail you back the return, which may result in a late filing penalty for your business.
About the Audit & Excise Tax Unit
The Audit & Excise Tax Unit is charged with receiving, processing, collecting, and maintaining Excise Tax Reports for:
- Malt beverages
- Wines
- Distilled spirits
- Cigarettes
- Cigars
- Little cigars
- Loose or smokeless tobacco
This unit also performs all in-state audit functions.
Frequently Asked Questions
What are little cigars classified as for tax purposes?
Little cigars are considered tobacco products for excise tax purposes. Regardless of how they look or how similar they are to cigarettes or cigars, they are subject to the same tax rules as other tobacco items.
When are tobacco tax returns due?
Tobacco tax returns must be submitted by the 10th of each month. This includes the combined cigarette and “Other Tobacco” reports required from wholesalers and distributors.
Is electronic filing mandatory for tobacco tax returns?
Yes, since September 2012, all tobacco tax returns must be filed electronically. Paper returns will not be accepted and may be returned unprocessed, potentially resulting in late penalties.
What happens if I have no sales or purchases to report for the month?
Even if you have no tobacco transactions for the month, you are still required to submit a zero return. Failure to do so may lead to compliance issues with the Audit & Excise Tax Unit.
What does the Audit & Excise Tax Unit oversee?
The unit is responsible for processing and maintaining excise tax reports for all types of tobacco products, including cigarettes, cigars, little cigars, and smokeless tobacco, as well as malt beverages, wines, and distilled spirits. They also conduct in-state audits.