Technical Information Release

Technical Information Release  TIR 08-7: Excise Increase on Cigarettes under G.L. c. 64C

Date: 07/02/2008
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws

Miscellaneous/Sales and Use

TIR 08-7 modifies and supersedes in part TIR 02-15.

I. Introduction

The Massachusetts Legislature has amended G.L. c. 64C, § 6 of the General Laws to increase the excise on cigarettes effective July 1, 2008. The purpose of this Technical Information Release ("TIR") is to explain the excise rate increase. This TIR modifies and supersedes in part TIR 02-15.

II. Law Change

A. Excise rate increase.

Effective July 1, 2008, G.L. c. 64C, § 6 was amended to increase the amount of the excise imposed on cigarettes. See St. 2008, c. 168, effective July 1, 2008. The excise imposed on cigarettes was increased by 50 mills per cigarette ($1.00 per pack of 20 cigarettes and $1.25 per pack of 25 cigarettes). The excise rates have consequently increased from $1.51 per pack of 20 cigarettes to $2.51 per pack and from $1.8875 per pack of 25 cigarettes to $3.1375 per pack.

The new stamps for packs of 20 cigarettes will be tan. The color of stamps for packs of 25 cigarettes will not change, but will continue to be either green or purple, depending on the product sold. Stampers are required to use up their existing inventory of pink stamps for packages of 20 cigarettes and thereafter to apply tan stamps to these packs. They must continue to apply green or purple stamps, as appropriate, to packs of 25 cigarettes.

B. Inventory tax imposed.

In order to ensure payment of the rate increase on cigarettes and unapplied stamps currently in vendors' inventories, the Legislature also enacted an "inventory" or "floor" tax. See St. 2008, c. 168, effective July 1, 2008. Therefore, every stamper, wholesaler, unclassified acquirer, retailer, or vending machine operator must remit payment equal to the increase in the excise represented by the number of unapplied cigarette stamps and/or the number of stamped packs of cigarettes in its inventory as of the opening of business on July 1, 2008 to the Department of Revenue. Returns and remittances are due by July 21, 2008. Stampers must file Form CIS, non-stampers (including retailers) Form CIN, and vending machine operators Form CIV.

Any vendor who did not take an actual inventory as of the opening of business on July 1, 2008 should take one as of the opening of business on July 2, 2008, or as soon as possible thereafter, making adjustments for sales between the opening of business on July 1, 2008 and the time at which the actual inventory was taken. Every vendor must maintain records substantiating its inventory.

/s/Navjeet K. Bal
Navjeet K. Bal
Commissioner of Revenue


July 2, 2008

TIR 08-7

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