Administrative Procedure

Administrative Procedure AP 114: Cigarette Excise

Date: 01/31/2018
Referenced Sources: Massachusetts General Laws

Miscellaneous

114.1: Cigarette Excise: G.L. c. 64C

      1. Filing Requirements for Licensees

 

      All sellers of cigarettes and smokeless tobacco must be licensed. Retailers should apply on line for a cigarette license through MASSTAX CONNECT at mass.gov/dor. File Form CTL for all cigarette licenses except a retailer's license. To apply for a retailer's license, use Form CT-RL. Wholesalers must file three affidavits from licensed manufacturers with Form CTL stating that they will sell cigarettes to the applicant.

 

      Vending machine operators must also affix decal licenses valid for two fiscal years to all cigarette vending machines. To apply for decals, file Form CTL and Form CTL-1. Vending machine operators must file Form CTL to apply for a license initially as well as every year no later than July 1 and apply for decal renewal on Form CTL-1 in even years only. Decals expire on September 30 of even years.

 

Note: Smokeless tobacco and “little cigars” are defined as “cigarettes” for purposes of the cigarette excise.  See TIR 08-9. Rolls of tobacco wrapped in leaf tobacco or in any substance containing tobacco and as to which 1,000 units weigh not more than three pounds are “little cigars.”

 

See TIR 08-16 and TIR 08-17 for information relating to cigar and smoking tobacco retailers and cigar and smoking tobacco distributors.

     

      The following classes of licensees must file returns with the Department: 

 

Cigarette wholesalers, vending machine operators, unclassified acquirers and manufacturers who purchase directly from a cigarette manufacturer: (See “Stamps/Payment” below)

CT-1 or CTS-1NR/monthly

Cigarette Wholesalers who do not purchase directly from the manufacturer

Form CT-10/monthly

Vending Machine Operators who do not purchase directly from the manufacturer

Form CT-10/monthly

Other persons authorized by the Commissioner to sell unstamped cigarettes

Form CTS-8C/monthly

Transportation Companies None
Wholesalers who sell only smokeless tobacco

Form CTS -8C/monthly
Form CTS -8C/monthly


      Stamps/Payment: Stamps must be ordered on line directly from the stamp manufacturer. Payments must be made to the Commonwealth of Massachusetts via electronic fund transfer. Smokeless tobacco is not stamped.

 

      Billing: Cigarette stampers have thirty (30) days to pay for the stamps if the stamper has posted either a bond or other such surety or a bond of the Commonwealth or of the U.S. that is equal to the amount of the credit desired. If the stamper fails to pay, DOR will bill the stamper. The bill will be for the gross amount due, i.e., compensation to the stamper will be disallowed. The bill will be sent to the stamper before any attempt is made to collect on the bond. No stamper can buy stamps until all outstanding bills are paid.

 

      Filing Requirements: Resident cigarette stampers file Form CT-1; non‑resident stampers file Form CTS-1NR. Forms CT-1 and CTS-1NR must be filed on or before the twentieth (20th) day of each month for the previous month. If unstamped cigarettes were sold during the previous month by unclassified acquirers, transportation companies or manufacturers, Form CTS-8C must be filed in the same manner. For filing requirements for smokeless tobacco, see the table above.

 

      Compensation: Massachusetts cigarette stamps are required to be encrypted. Effective for stamps purchased on or after January 1, 2012, the stamper compensation is as follows:

 

    1. $12.00 per roll of 1,200 stamps; and
    2. in each fiscal year, $600.00 per roll of 30,000 stamps for the first fifty (50) rolls purchased and $200.00 per roll for each additional roll of 30,000 stamps purchased.

       

      Rate of Tax: As of July 31, 2013, the rate of tax is $3.51 per pack of twenty and $4.3875 per pack of twenty five. See TIR 13-15. The rate of tax on smokeless tobacco is 210% of the purchase price paid by the licensee.

 

      Exemptions: Sales of cigarettes to the Federal government and cigarettes shipped out of Massachusetts are exempt from tax and need not be stamped.

 

      Interest and Penalties: See Administrative Procedure 612 and TIR 99-18.

     

      Extensions of Time to File: See Administrative Procedure 604.

 

      Amended Returns: No special form is required to amend a return. Write "amended" on the regular return.

 

      Refunds/Abatements: The tax paid for unsold stamped cigarettes or unapplied or misapplied stamps may be refunded. Submit an Application for Abatement/Amended Return, Form CA-6, to the Customer Service Bureau (617-887-6367) at 200 Arlington Street, Chelsea, MA 02150. The unapplied or misapplied stamps must be returned to the Department. The unsold stamped cigarettes must be returned to the cigarette manufacturer, who must execute an affidavit stating that they have been returned to the manufacturer. Attach the affidavit to Form CA-6. Business taxpayers can dispute an audit finding or a penalty online through MASSTAX CONNECT.

 

      Cigarette stampers may also use Form CA-6 to apply for an abatement of tax paid with a cigarette and smokeless excise return. Abatements are also handled by the Customer Service Bureau (617-887-6367).

 

      Changing Information or Status: Changes must be submitted in writing to the address given below.

      2. Filing Requirement of Persons Purchasing Cigarettes in Interstate Commerce for Which the Massachusetts Cigarette Excise Has Not Been Paid

 

      Massachusetts residents and entities are required to pay the cigarette excise upon all cigarettes that they acquire from any source that do not already bear a Massachusetts excise stamp. Massachusetts residents are required to file with the Commissioner Form CT-11B, “Non-stamper Cigarette Excise Return”, on a quarterly basis if they have purchased packs of cigarettes that are either unstamped or stamped by another state or jurisdiction. The return is required to be filed for quarterly periods ending on March 31, June 30, September 30, and December 31. Each completed, signed and dated quarterly return, along with payment in full of the excise owed, must be received not later than the twentieth day of the month following the end of each calendar quarter in which purchases of cigarettes, bearing no Massachusetts excise stamp from any source, were made. Residents claiming credits for cigarette taxes paid to another state must furnish proof of payment of such excise with the return. See Department Directive 02-14 which is published on the DOR website or contact the Cigarette and Tobacco Excise Unit at 617-887-5090.

 

As of the date of the publication of this Administrative Procedure, the mailing address of the Cigarette and Tobacco Excise Unit is

 

Massachusetts Department of Revenue

Cigarette and Tobacco Excise Unit

P.O. Box 7004

Boston, MA 02204

114.2: Procedures for the Issuance, Renewal, and Revocation of Cigarette Licenses, for the Appointment of Cigarette Stampers, and for Smoking Bar Permits

See below

114.2 I. Introduction

Massachusetts law requires that cigarette manufacturers, wholesalers, vending machine operators, unclassified acquirers, transportation companies and retailers be licensed.   Pursuant to G.L. c. 62C, § 67, the Department of Revenue must conduct an investigation of the prior activities of any person or entity that applies for the issuance of a license from the Commissioner of Revenue to act as a cigarette manufacturer, wholesaler, vending machine operator, unclassified acquirer, transportation company, or retailer, as those terms are defined in G.L. c. 64C, § 1.  The Commissioner has ninety (90) days from the date of an application to either grant or deny the issuance of a license.  If the Commissioner fails to act within that ninety (90) day period, the application is deemed denied.  See Section VI for appeal rights.

 

Note:  Smokeless tobacco and “little cigars” are defined as “cigarettes” for purposes of the cigarette excise, including licensing.  However, smokeless tobacco is required to be stamped.  Rolls of tobacco wrapped in leaf tobacco or in any substance containing tobacco and as to which 1,000 units weigh not more than 3 pounds are “little cigars.”  See TIR 08-9. 

 

See TIR 08-16 and TIR 08-17 for information relating to cigar and smoking tobacco retailers and cigar and smoking tobacco distributors.

114.2 II. Application for a License or an Appointment

License application forms are available from the Cigarette and Tobacco Excise Unit of the Department or from the Department’s website. Retailers should apply online for a tobacco license through MASSTAXCONNECT on the website mentioned above. Other cigarette license applicants should use Form CTL.

 

Persons seeking appointment as cigarette stampers should also use Form CTL. Chapter 64C does not categorize cigarette stampers as licensees. Instead, the statute gives the Commissioner of Revenue the authority to appoint stampers.

 

Applicants should submit a completed application form together with the application fee to the Cigarette and Tobacco Excise Unit. If an applicant for a retailer license is not already registered to collect sales tax, it must register online through MASSTAXCONNECT to collect sales tax. Only upon the issuance of a license or appointment as a stamper may the licensee or stamper begin to engage in the business permitted by its license or appointment.

114.2 III. License Application Requirements

A.         Wholesaler’s Application

 

Those applying to the Department for a wholesaler’s license must furnish duly executed affidavits from three (3) separate licensed cigarette manufacturers stating that, if the Commissioner grants the license, the manufacturer will sell cigarettes to the wholesaler. If one or more of the three manufacturers ceases to do business as a cigarette manufacturer, ceases to be licensed as a manufacturer, or for any reason ceases to supply cigarettes to the wholesaler, the licensee must, within 60 days, provide substitute affidavit(s) from other manufacturer(s). Failure to do so will result in the suspension or revocation of the wholesaler license.

 

B.         Stamper’s Application for Appointment

 

A stamper applicant is required to hold one of the following licenses issued pursuant to G.L. c. 62C, § 67 to be considered for appointment as a stamper: a manufacturer license, a wholesaler license, a vending machine operator license or an unclassified acquirer license. However, neither a retailer license nor a transportation company license will satisfy this prerequisite for appointment as a stamper.

                       

C.        The Department’s Investigation

 

The Department will review the license or appointment application and such additional information as will allow it to make a judgment about the applicant’s prior business experience, its record of tax compliance and its ability to accurately and faithfully carry out the record-keeping, tax collection, reporting and payment duties that cigarette licensees and appointees assume under G.L. c. 62C, c. 64C, c. 94E and c. 94F.

 

Upon completion of its investigation, the Department will notify the applicant of its decision whether to grant or deny the application. Upon approval of an application, the license or appointment letter will be mailed to the applicant at the business address shown on the application.

 

The grounds upon which the Commissioner may deny the grant of a license are listed in G.L. c. 62C, § 67 and include failure to pay taxes and conviction of a tax crime.

 

The Commissioner may apply the provisions of G.L. c. 62C, § 67 in reviewing an application for appointment as a stamper.

114.2 IV. License or Appointment Renewal

Each license must be renewed annually, except for the licenses of retailers, which must be renewed every other year. Cigarette retailer licenses expire on September 30 of each year ending in an even digit (e.g., 2010 and 2012). All other licenses expire annually on June 30. Appointments of stampers expire annually on June 30. Any of the grounds upon which the Commissioner may rely to deny the initial application for a license or appointment may also be relied upon to deny an application for renewal.

114.2 V. Suspension or Revocation of a License or Appointment

The Department’s administrative authority to suspend or to revoke a license, as well as the grounds upon which such a suspension or revocation may be based, are found in G.L. c. 62C, § 47A and G.L. c. 62C, § 68. The Department’s administrative authority to suspend or to revoke the authority of a cigarette stamper is found in G.L. c. 62C and c. 64C.

114.2 VI. Appeal Rights

An applicant whose initial or renewal application for a license has been denied by action of the Department or whose application has been deemed to have been denied where the Department has not acted on the application within 90 days, has the right to appeal the denial to the Appellate Tax Board within sixty (60) days of the date of notice of denial or sixty (60) days from the deemed denial.

 

A licensee whose license has been suspended or revoked has the right to appeal to the Appellate Tax Board within ten (10) days after written notice of the suspension or revocation has been mailed or delivered to the licensee.

 

The Commissioner has the sole discretionary authority to appoint cigarette stampers. The request for appointment as a cigarette stamper will not be unreasonably withheld and, once granted, will not be revoked, suspended or denied renewal unreasonably as long as the appointed stamper fully and timely complies with all requirements under G.L. c. 62C, c. 64C, c. 94E and c. 94F.

114.2 VII. Responsibilities of Licensees and Stampers

            It is the responsibility of each cigarette licensee and cigarette stamper to know and follow all the requirements imposed upon licensees and stampers under all applicable statutes and regulations, including G.L. c. 62C, c. 64C, c. 94E and c. 94F and 830 CMR 94E.1.1. These duties include, but are not limited to, the keeping of complete and accurate records, the timely filing of all required returns and informational schedules, the payment of the full measure of the cigarette excise and the sales tax, and the sale or stamping of products listed on the Tobacco Product Manufacturer Directory.

 

     See TIR 08-13 regarding the wholesaler’s requirement to collect and to prepay the sales tax on all tobacco products.  

 

            Any questions concerning the duties of a cigarette licensee or of a cigarette stamper may be directed to the Cigarette and Tobacco Excise Unit at 617-887-5090. As of the date of the publication of this Administrative Procedure, the mailing address of the Cigarette and Tobacco Excise Unit is:

 

 

 

 

Massachusetts Department of Revenue

Cigarette and Tobacco Excise Unit

P.O. Box 7004

Boston, MA 02204

114.2 VIII. Smoking Bar Permit

A smoking bar is an establishment that holds a valid state license and any required city or town permit and/or license to sell tobacco products and that is primarily engaged in the retail sale of tobacco products for consumption by consumers on the premises. The phrase “primarily engaged in the retail sale of tobacco products” means that at least 51% of the smoking bar’s combined revenues from the sale of tobacco products, food and beverages are from the retail sale of tobacco products. Pursuant to G.L. c. 270, § 22 and 830 CMR 270.1.1, applicants for a smoking bar permit must do the following:

 

  • Complete Form SBP. This form can be found at here.         
  • Obtain a Certificate of Good Standing. This application can be found at here.

or apply online at MASSTAX Connect.

  • For a first time applicant for a permit, submit a business plan that demonstrates that at least 51% of the applicant’s revenues will be generated from the retail sale of tobacco products for consumption on the premises;
  • Provide a copy of any city or town permit and/or license to sell tobacco products; and
  • Mail the above documents to: Massachusetts Department of Revenue, P.O. Box 7004, Boston, MA 02204.

 

There is no fee for a smoking bar permit. A permit holder must submit a Smoking Bar Quarterly Declaration (Form SBQD) to the Department every quarter no later than twenty days following the end of the preceding quarter. Form SBQD can be found at here.

 

If a smoking bar does not file a Form SBQD, the Commissioner will send a written notice to the business requiring that a Form SBQD be submitted within twenty-one days of the notice or the permit will be suspended. If a smoking bar does not meet the 51% requirement at the end of a quarter and at the end of the year, the Commissioner may suspend or revoke the permit.

 

A permit is valid for two years from the date of issuance, unless suspended or revoked. A permit that is not suspended at the time of its expiration may be renewed for consecutive two-year periods.

 

Please note that some cities and towns may require that revenues in a percentage greater than 51% be generated from the retail sale of tobacco products for on-premises consumption in order for an establishment to qualify as a smoking bar.

Reference for 114.1: Cigarette Excise: G.L. c. 64C

G.L. c. 64C

TIR 99-18

TIR 08-7

TIR 08-9

TIR 08-16

TIR 08-17

TIR 13-15

DD 02-14

AP 604, Extension of Time to File Tax Return

AP 612, Interest and Penalties

Form CA-6, Application for Abatement – Amended Return

Form CT-1, Resident Stamper’s Monthly Return

Form CT-10, Cigarette Excise Return

Form CT-11B, Non-Stamper Cigarette Excise Return (for transactions occurring on or after July 1, 2008)

Form CTL, Application and Instruction for Cigarette Licenses

Form CTL-1, Cigarette Vending Machine Locations  

Form CT-RL, Application for Tobacco Retailer License

Form CTS-1NR, Nonresident Stamper’s Monthly Return

Reference for 114.2: Procedures for the Issuance, Renewal, and Revocation of Cigarette Licenses, for the Appointment of Cigarette Stampers, and for Smoking Bar Permits

G.L. c. 62C, §§ 47A, 67, 68

G.L. c. 64C, § 1

G.L. c. 94E

G.L. c. 94F

G.L. c. 270 § 22

830 CMR 94E.1.1

830 CMR 270.1.1

TIR 08-9

TIR 08-13

TIR 08-16

TIR 08-17

Certificate of Good Standing

Form CTL, Application for All Cigarette Licenses

Form CT-RL, Application for Tobacco Retailer License

Form SBP, Application for Smoking Bar Permit

FORM SBQD, Smoking Bar Quarterly Declaration

Referenced Sources:

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