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ADOR - Tobacco Tax FAQs

 

Tobacco Tax
Frequently Asked Questions

WHAT IS THE STATE TAX RATE ON TOBACCO PRODUCTS? Alabama's tax rate on cigarettes is 33.75 mills for each cigarette. This converts to $0.03375 for one stick, $0.675 for a package of 20 cigarettes and $0.84375 for a package of 25 cigarettes. Alabama's tax rates on tobacco products other than cigarettes (snuff, smoking tobacco, chewing tobacco, and cigars) vary based on weight and the number of cigars received. Click the below link for state rates: revenue.alabama.gov/tobaccotax/ttstaterates.html

HOW IS STATE TAX ON TOBACCO PRODUCTS PAID? State tax on cigarettes is paid by purchasing revenue stamps and affixing the stamp to the package of cigarettes. Distributors can only purchase stamps from the Alabama Department of Revenue. Consumers are required to remit the tax on cigarettes by return. State taxes on tobacco products other than cigarettes are paid by tax return. Tobacco wholesalers normally pay the taxes. However, if a retailer or consumer receives untaxed products, it is their responsibility to remit the tax to the Department.

HOW MUCH ARE THE STAMPS FOR CIGARS, SNUFF, CHEWING TOBACCO AND SMOKING TOBACCO? There is not a stamp for these products, which are referred to as "other tobacco products". The state tax rates vary, and taxes are paid by filing a monthly state tobacco tax return that is due by the twentieth of the month for the previous calendar month's activity. The tax for regular cigars is based on the number of cigars received, whereas the tax for little cigars, snuff, chewing tobacco and smoking tobacco is based on weight.

I AM LOCATED IN ALABAMA AND WANT TO DISTRIBUTE CIGARS AT WHOLESALE IN ALABAMA AND TO OTHER STATES. I WILL RECEIVE THESE CIGARS FROM SUPPLIERS IN THE DOMINICAN REPUBLIC, PUERTO RICO AND OTHER STATES. WHAT ARE MY FILING REQUIREMENTS? Alabama Code Section 40-25-2 states that in addition to all other taxes of every kind imposed by law, every person, firm, corporation, club or association, within the State of Alabama who sells or stores or receives for the purpose of distribution to any person, firm, corporation, club or association, within the State of Alabama, cigars, cheroots, stogies . . . or any substitute therefor, shall pay to the State of Alabama a license or privilege tax. The distributor is responsible for filing a monthly state tobacco tax return and remitting the state tax on all untaxed cigars received for distribution. If the distributor wants to distribute tobacco products into another state, Alabama tax free, they must apply and qualify for a tobacco stamping permit (40-25-16) to become a qualified wholesaler. According to the provisions of Section 40-25-15, only a qualified wholesaler may sell tobacco products exempt from Alabama's tobacco tax. Also, if the distributor distributes the cigars into a state-administered county, they must file a monthly county tobacco tax return, and pay the county tax for each county in which there was activity. Both returns and tax payments are collected by the Department of Revenue and, are due by the twentieth of the month. (Section 40-25-15 provides for a nontaxable sale by a qualified wholesaler or jobber if the sale is to another state, the United States or any instrumentality of the United States, or ships engaged in foreign commerce or coastwise shipping between points in this state and points outside this state.  However, the product may be taxable in the state into which it is distributed.)

I AM GOING OUT-OF-BUSINESS AND WISH TO CANCEL MY STAMPING PERMIT. HOW CAN I RECEIVE A REFUND FOR THE CIGARETTE REVENUE STAMPS THAT I DID NOT USE? Once a taxpayer contacts the Tobacco Tax Section desiring to cancel their stamping permit, the Section notifies them in writing to provide written documentation concerning their effective out-of-business date. To receive a refund for unused stamps, the taxpayer must return the stamps to the Department along with a copy of the purchase invoice to substantiate the stamp sale. If the taxpayer purchased the stamps, and they returned them within the statute of limitations, a refund is issued to the taxpayer for the tax originally paid.

IS THERE A TAX ON ROLLING PAPERS? There is not a state tax on rolling papers. However, some counties do levy a tax on rolling papers. The tax rates range from $0.05 to $0.25 per package.

CAN WE SELL SINGLE CIGARETTES? No. Since the revenue stamp is not affixed to individual sticks of cigarettes, there would be no evidence of tax payment. Section 40-25-2(f), Code of Alabama 1975, states that stamps in the amount of the tax shall be affixed to the box or container from which the tobacco product is sold at retail. In the case of cigarettes, the stamp shall be affixed to the individual package of cigarettes. Taxable tobacco products offered for sale at wholesale or retail without the appropriate revenue stamp affixed in the above manner is subject to confiscation by the Alabama Department of Revenue.

HOW DO I PAY STATE-ADMINISTERED COUNTY TOBACCO TAXES? State-administered county tobacco taxes are paid on cigarettes by purchasing the county revenue stamp from the Alabama Department of Revenue and affixing the stamp to the cigarette package prior to distribution.  All cigarette products placed in retail facilities must have the appropriate county stamp affixed; otherwise, the product is subject to confiscation.  Consumers receiving untaxed cigarettes and manufacturers distributing promotional cigarettes are to remit the county tax to the Department by filing a monthly tax return.  Taxes on tobacco products other than cigarettes (OTP) are paid by all distributors and consumers by filing a monthly tax return.  Click the below link to obtain the tax return:  revenue.alabama.gov/tobaccotax/ttforms.html Questions relating to county tobacco taxes not administered by the Alabama Department of Revenue must be directed to the appropriate county commission.

WHAT ARE THE COUNTY TAX RATES ON CIGARETTES? The county tax rates on cigarettes are based on a per package basis. County cigarette tax rates vary from county to county according to the language of each Act. County cigarette tax rates range from a low of $0.01 to a high of $0.25 per package.  Click the below link for county rates: revenue.alabama.gov/tobaccotax/tobacco/tobaccoindex.html

ARE THERE COUNTY TAXES ON CHEWING TOBACCO, SNUFF, SMOKING TOBACCO, CIGARS, OR ROLLING PAPERS? These items are commonly referred to as other tobacco products (OTP). Most of the counties impose a tax on these items. The tax rates vary according to each county Act.  Click the below link for county rates: revenue.alabama.gov/tobaccotax/tobacco/tobaccoindex.html

HOW ARE CIGARS TAXED FOR COUNTY PURPOSES? The tax on cigars differs between counties. Standard cigars for state-administered counties are all taxed per cigar, or each, and the rates range from $0.02 to $0.12. Little cigars are taxed by the pack or per each little cigar.  The rate per pack of little cigars ranges from $0.04 to $0.12.  The rate per each cigar ranges from $0.02 to $0.05.  Click the below link for county rates: revenue.alabama.gov/tobaccotax/tobacco/tobaccoindex.html

ARE THERE COUNTY REVENUE STAMPS THAT I MUST APPLY TO MY PRODUCT? Yes, state-administered county cigarette tax is collected by purchasing the stamp from the Alabama Department of Revenue.  Some self-administered counties also collect and administer their taxes by using revenue stamps.