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Publication 65 Revised 6/21 Tax Information for , Products, Products and Electronic Products

Utah State Tax Commission 210 North 1950 Salt Lake City, Utah 84134 If you need an accommodation under the Americans 801-297-2200 with Disabilities Act, email [email protected], or 1-800-662-4335 call 801-297-3811 or TDD 801-297-2020. Please tax.utah.gov allow three working days for a response.

General Information or FDA-approved nicotine replacement therapy. A nicotine The Utah State Tax Commission administers the cigarette, product is either a non-therapeutic nicotine product or an tobacco, nicotine product and e-cigarette product tax laws in alternative nicotine product. Utah and ensures all products are sold by licensed sellers. • Nontherapeutic nicotine products include nicotine inhalers The Tax Commission also works with the State Fire Marshal and nasal sprays. to ensure that cigarettes and tobacco products sold in Utah • Alternative nicotine products include pure nicotine, snort- are fi re-safe. Fire Safe Cigarettes (FSC) are designed to stop able nicotine, dissolvable nicotine products, and nicotine- burning when left unattended. laced food/beverages. Nicotine products do not include fruits, vegetables or teas Definitions containing naturally-occurring nicotine. Cigarette: Any roll of tobacco made to be smoked, no matter NPM cigarettes: Cigarettes made by a manufacturer that the size or shape, whether the tobacco is fl avored, adulter- is not a party to the Master Settlement Agreement (MSA) ated or mixed with any other ingredient, and that is wrapped between the State of Utah and the leading U.S. tobacco in a cover made of anything except tobacco (such as paper). product manufacturers. (E-cigarette): A device containing a To identify NPM products, see the Utah Cigarette Directory heating element, battery or electronic circuit that simulates at tax.utah.gov/cigarette/cig-directory.pdf. by inhalation of an or of nicotine or Other tobacco products: Products containing tobacco that another substance. Also an e-pipe, e- or a component do not meet the defi nitions of “cigarette,” “moist ” or of such a device, or an accessory sold in the same package. “little .” Examples: cigars, roll your own (RYO) tobacco, E-cigarette substance: Any substance, including liquid pipe tobacco and cigarettes produced from a rolling machine containing nicotine, made for use in an e-cigarette. (this list is not all-inclusive). E-cigarette product: An e-cigarette, a prefi lled e-cigarette Prefi lled e-cigarette: An e-cigarette prefi lled with an elec- or an e-cigarette substance. tronic cigarette substance. Little cigar: A roll for smoking made wholly or in part of to- Tobacco product: Any product made of or containing to- bacco with a or similar fi lter and wrapped in bacco, not including cigarettes. a substance containing tobacco, but not exclusively natural leaf tobacco. License to Sell Products Manufacturer’s sales price: The amount a manufacturer You must be licensed by the Tax Commission to legally sell charges after subtracting a discount, including the original cigarettes, tobacco products, nicotine products and e-ciga- Utah destination freight charge. rette products in Utah. We will only issue a license to the per- Moist snuff: Tobacco that: son owning or operating a place that sells those products. A • is fi nely cut, ground or powdered, person who does not operate a business cannot be licensed. See Utah Code §59-14-202(1). • has at least 45 percent moisture content, and Licenses are valid for three years. You cannot renew an • is not meant to be smoked or placed in the nasal cavity. expired license – you must apply for a new one. Nicotine product: A non-prescription product containing The Tax Commission audits for cigarette tax compliance. To nicotine that is not a cigarette, e-cigarette, tobacco product keep your license to sell in good standing: tronic cigarettes must pay tax on those products upon fi rst receipt in Utah. The tax rate is 56 percent of the manufactur- Figure 1: er’s sales price and must be paid electronically (see E-fi ling, Markings on legal below). packs of cigarettes See Utah Code §59-14-805(1).

Moist Snuff The tax rate for moist snuff is $1.83 per ounce.

• Check packs before stocking to ensure all cigarettes on Nicotine Products your shelves have the proper tax stamp visible. Anyone importing nicotine products must pay tax on those • Keep invoices for three years from date of purchase. products upon fi rst receipt in Utah. • Renew your license prior to expiration. • The tax on prefi lled non-therapeutic nicotine devices and non-therapeutic nicotine device substances is 56 percent of the manufacturer’s sales price. What is Legal to Sell in Utah • The tax on alternative nicotine products is $1.83 per Cigarettes and RYO tobacco sold in Utah ounce, based on the net weight listed by the manufacturer. must be listed in the Utah Cigarette Directory (tax.utah.gov/cigarette/cig-directory.pdf). Little cigars Cigarettes must also be fi re-safe (see Figure 1). The The tax rate for little cigars is 8.5 cents per little cigar. Fire Marshal maintains a list of fi re-safe brands online at fi remarshal.utah.gov/cigarette-fi re-safety-program/. Rolling Machine Cigarettes Cigarettes, tobacco products, nicotine products and Cigarettes produced by a rolling machine are taxed at the e-cigarette products must meet state and federal labeling same rate as cigarettes. requirements. All Other Tobacco Products All other tobacco products are taxed at 86 percent of manu- Mail, Phone and Internet Purchases facturer’s sales price. Only licensed persons may buy cigarettes, tobacco products, nicotine products and e-cigarette products via the internet, phone or mail-order. Modified Risk Products Any person who makes such sales to an unlicensed person Modifi ed risk products approved by the FDA and the Tax in Utah is subject to a fi ne of up to $5,000 for each sale. Commission may be sold in Utah at a reduced tax rate. See tax.utah.gov/tobacco for a list of currently-approved modi- See Utah Code §§59-14-509, 59-14-808 and 76-10-105.1. fi ed risk products. See Utah Code §59-14-104. Utah Taxes See Utah Code §§59-14-204, 59-14-302 and 59-14-804. Registration and Cigarettes Account Requirements Each pack of cigarettes must be stamped before sale in Register for tax accounts and apply for licenses on Utah (see Figure 1). Stamps must be affi xed within 72 hours TC-69, Utah State Business and Tax Registration, with of receipt by wholesalers, distributors or retailers in Utah. Schedule TC-69TOB. Stampers buy stamps from the Tax Commission at the cur- You must have an active Sales and Use Tax License in good rent tax rate. standing to register as a retailer, stamper or distributor. See Utah Code §59-14-205(3). You must post any required bonds when you register. We Rate per cigarette Rate per 20 pack Rate per 25 pack may increase bond amounts if you are not in compliance 8.5 cents $1.70 $2.125 with tax requirements. Consumers do not pay cigarette tax at the time of purchase. Consumers can only buy stamped cigarettes from licensed Retailers retailers. Retailers buy products tax-paid and sell those products di- rectly to consumers. All cigarettes a retailer buys must have NPM Cigarettes the Utah stamp affi xed. NPM cigarettes are subject to an additional equity assess- Retailers who purchase untaxed e-cigarette products, to- ment of 35 cents per pack of 20 ($2.05 total tax per pack), bacco products or nicotine products, or who products and 43.75 cents per pack of 25 ($2.5625 total tax per pack). from Utah, must also register as a distributor. E-cigarettes License Anyone importing e-cigarette substances or prefi lled elec- Retailers must be licensed. A license to sell cigarettes, tobacco products, nicotine products and/or e-cigarette prod- ucts is owner and location specifi c. A business must get a new license if its location or ownership changes. If you have multiple sales locations you must have a sepa-

65 page 2 rate license for each one. We will set the same renewal date Bond for all of your locations. Distributors of tobacco products, e-cigarette substances, Vending machines: Each cigarette is a pre-fi lled e-cigarettes and nicotine products must post a separate place of business and must be separately licensed. bond of at least $500, or an amount equal to the tax obliga- tion of one three-month fi ling period. This bond is in addition Exception: When than one machine operates at a sin- to the cigarette stamper bond (if applicable). gle location, only one of those machines must be licensed. See Rule R865-20T-3(A). You may need to post a higher bond if you have not faithfully met all obligations to the state or if you have an account that A sales location may have either a Cigarette/Tobacco is not in good standing. See Utah Code §59-14-201(3). License or an Electronic Cigarette or Nicotine Products License: Filing 1. Cigarette/Tobacco License File form TC-553 and pay taxes due on a quarterly basis. • The location may sell cigarettes, tobacco products, nicotine products and e-cigarette products. Manufacturers 2. Electronic Cigarette or Nicotine Products License A manufacturer is anyone, except rolling machine opera- tors, who makes or is involved in the making of cigarettes, • The location may only sell e-cigarette products and/or tobacco products, nicotine products or e-cigarette products. nicotine products. Manufacturers that import or distribute tobacco products, • The location may not sell cigarettes and tobacco prod- nicotine products, e-cigarette substances or prefi lled ucts without a Cigarette/Tobacco License. e-cigarettes must register as a distributor.

Bond License and Fee Retailers who purchase only stamped cigarettes for sale Manufacturers that distribute or import tobacco products, do not need to post a bond IF they fi le form TC-722, Retail nicotine products or e-cigarette products into Utah must be Sales of Stamped Cigarettes Affi davit. licensed. Retailers who purchase untaxed e-cigarette substances, Tobacco product manufacturers must pay a $30 license fee. untaxed prefi lled e-cigarettes or untaxed nicotine products Manufacturers that only make nicotine products and e-ciga- for sale must post a bond of at least $500, which is in ad- rette products do not pay the fee. dition to the cigarette stamper bond and distributor bond (if applicable). Product Certifi cation The products of cigarette and RYO manufacturers must be Cigarette Stampers certifi ed and listed in the Utah Cigarette Directory before Cigarette stampers buy unstamped cigarettes and affi x the they may be sold in Utah. You must renew certifi cations each Utah stamp before selling to a licensed distributor, wholesal- year and whenever you intend to sell new brands in Utah. er or retailer. Order Utah stamps from the Tax Commission See form TC-752, Certifi cate of Compliance of a Tobacco using form TC-79, Cigarette Revenue Stamp Order Form. Manufacturer. Manufacturers of tobacco products with an FDA modifi ed License and Fee risk order must submit a copy of the order to the Taxpayer Stampers must be licensed. The license fee is $30. Services Division at TOBmodifi [email protected] to qualify the products for a reduced tax rate. Bond Stampers must post a bond of at least $500, which is in ad- The reduced tax rate for the product begins on the fi rst day dition to the distributor bond (if applicable). See Utah Code of the calendar quarter following 90 days from the date the §59-14-201(3). manufacturer submits the copy of the order to the Tax Com- mission (see Utah Code §59-14-104). Cigarette stampers with accounts in good standing may buy stamps on credit, up to 90 percent of their bond value. These Products the Tax Commission approves for the reduced tax accounts must be paid in full within 60 days after the delivery rate are listed at tax.utah.gov/tobacco. date of cigarette stamps. Stampers may voluntarily increase their bond to buy additional stamps on credit. Report Cigarette and RYO manufacturers who are not party to the Report Master Settlement Agreement must report on form TC-553 Report sales of cigarettes and RYO on form TC-553 on a on a quarterly basis. quarterly basis. Rolling Machine Operators Distributors License Distributors, including wholesalers and jobbers, buy products Rolling machine operators must be licensed. before the tax has been paid. Certifi cation License and Fee You must certify with the Tax Commission before bringing Distributors of tobacco products, nicotine products and e- rolling machines into Utah and renew the certifi cation each cigarette products must be licensed. year by December 31. See form TC-550, Cigarette Rolling Tobacco product distributors must pay a $30 license fee. Dis- Machine Operation Certifi cation. tributors that only handle nicotine products and e-cigarette products do not pay the fee. Filing File form TC-553 and pay taxes due on a quarterly basis.

65 page 3 E-filing You will need the following information to set up online ac- Use our online service, Taxpayer Access Point (TAP), to fi le cess to your accounts: taxes and reports, renew licenses and make payments. TAP: • Federal Employer Identifi cation Number (FEIN) or Social • Is fast Security Number (SSN), • Is accurate • Utah 14-digit account number • Calculates for you • Your PIN • Is available 24/7

Table 1: Cigarette, Tobacco, Nicotine and E-Cigarette Products Violation Penalties Violation Statute Penalty Notes

Failure to properly affi x and §59-14-205 • $25 for each offense (article, package or Each article, package or con- cancel stamps §59-14-213 container). tainer is a separate offense. • Cigarettes seized without a warrant by the Tax Commission, its employees or any offi cer. • Confi scated products destroyed.

Counterfeit cigarettes or §59-14-209 • Seizure of counterfeit cigarettes and any • For each affi xed stamp. stamps §59-14-211 personal property used in direct connec- • Reuse or cause stamps to tion with sale or possession for sale of §59-14-213 be reused; buy, sell, offer counterfeit cigarettes. Forfeiture of the washed or restored stamps; seized assets. use or possess washed or • Counterfeit goods seized without a war- restored stamps; buy, sell, rant by the Tax Commission, its employ- offer for sale or use counter- ees or any peace offi cer. feit stamp. • Seizure without a warrant of all cigarettes stamped with counterfeit, reused, washed or restored stamps. • Confi scated products destroyed. • Various penalties imposed by a court for counterfeit cigarettes. • 3rd degree felony.

Prohibited sales of cigarettes §59-14-210 • License suspended or revoked. • Each affi xed stamp is a §59-14-211 • Fine of the greater of 500% of retail separate violation. value of cigarettes or $5,000. • Prohibited sales include • Class B misdemeanor. products not intended for sale or use in the US, prod- • Possible imprisonment. ucts that do not comply with labeling laws, and products imported unlawfully. • Does not include duty- cigarettes.

Failure to report imported §59-14-212 • License suspended or revoked. MAY be subject to civil penalty. cigarettes or provides false or • Fine of the greater of 500% of retail value misleading information of cigarettes or $5,000. • Class B misdemeanor.

Selling contraband goods: no §59-14-213 • Contraband seized without a warrant by license, no stamp, counterfeit, the Tax Commission, its employees or prohibited, non-reported im- any peace offi cer. ported cigarettes, non-report- • Confi scated products destroyed. ed NPM cigarettes, cigarettes not listed in the Utah Cigarette Directory.

65 page 4 Violation Statute Penalty Notes

Internet or mail order sales of §59-14-509 • Fine of up to $5,000 per violation. cigarettes, tobacco products, §59-14-808 • Injunction to restrain. nicotine products or e-ciga- rette products to an unlicensed • Recovery of additional costs and fees. person • Profi ts, gain, gross receipts, or other benefi t may be disgorged and paid to the state treasurer.

Failure to affi x NPM Equity As- §59-14-205 • Cigarettes seized without a warrant by Each article, package or con- sessment stamp §59-14-214 the Tax Commission, its employees or tainer is a separate offense. any peace offi cer. • Confi scated products destroyed.

Selling §59-14-501 • Products seized without a warrant by the without a warning label §59-14-505 Tax Commission, its employees or any peace offi cer. §59-14-506 • Confi scated products destroyed.

Bringing goods not listed in the §59-14-213 • Stamping agent’s license suspended or • Civil penalties and Tax Utah Cigarette Directory into §59-14-604 revoked. Commission action (see Utah for use, possession for §59-14-608). §59-14-608 • Fine of the greater of 500% of retail value sale, stamping or selling or $5,000. • These are contraband • Each affi xed stamp is a separate violation. cigarettes. • Class B misdemeanor.

Failure to place funds in §59-22-203 If a court fi nds violation of annual deposit, Each failure to make an annual escrow it may impose a penalty of 5 percent of deposit is a separate violation. amount not put into escrow per day of viola- tion, up to 100 percent of amount improp- erly withheld. If it is a knowing violation, the court may impose 15 to 300 percent. A two-year injunction is added for a second knowing violation.

Selling or offering for sale §53-7-406 • Penalty of $10,000-$100,000 against Each violation is a separate cigarettes that are not marked manufacturer. offense. Fire Safe (FSC) • Penalty of $500-$25,000 against retailer. • Penalty of $75,000-$250,000 for false certifi cation. • Forfeiture and destruction of cigarettes.

Failure to supply a report of §375 of US Code $1,000 or imprisonment of up to six months. internet sales as required by Title 15 Jenkins Act Chapter 10A

Selling cigarettes without a §59-14-203 • Seizure, forfeiture and destruction of license §59-14-213 products. • Class B misdemeanor.

Failure to fi le quarterly return §59-14-407 • Class B misdemeanor. and supporting schedules §59-14-606 • Subject to revocation or suspension of §59-14-214 license. • Penalty, not to exceed the greater of 500% of retail value of cigarettes or $5,000.

Selling e-cigarette products §59-14-803 • Class B misdemeanor. or nicotine products without a license

65 page 5 Return Filing Requirements

Return Retailer Stamper Distributor Manufacturer Rolling Machine (cigarette only) (cigarette or RYO) Operator TC-69 (and TC-69TOB) X X X X X Utah State Business and Tax Registration

TC-79 X Cigarette Revenue Stamp Order Form

TC-553 X X X Tobacco Product Tax Return (quarterly)

TC-752 X Utah Certifi cate of Compli- ance by Tobacco Products Manufacturers (annual)

TC-38B X X X X X License Renewal for Ciga- rettes/Tobacco Products and Electronic Cigarette Products (every three years)

TC-550 X Cigarette Rolling Machine Operation Certifi cate

65 page 6