Connecticut State Department of Revenue Services

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IP 2009(29)

Q & A on the Cigarette Tax Increase Effective October 1, 2009 for Licensed Cigarette Distributors

Purpose: This Informational Publication describes recently enacted legislation increasing the cigarette tax rate effective October 1, 2009. The legislation also imposes a tax, as of the close of business on September 30, 2009, on each licensed cigarette distributor’s inventory of packages of cigarettes, including those in cartons, that have an old cigarette tax stamp attached.
 
Effective Date: October 1, 2009.

Statutory Authority: 2009 Conn. Pub. Acts 3, §106, (June 2009 Spec. Sess.); Conn. Gen. Stat. §12-296, as amended by 2009 Conn. Pub. Acts 3, §104, (June 2009 Spec. Sess.); Conn. Gen. Stat. §12-316, as amended by 2009 Conn. Pub. Acts 3, §105, (June 2009 Spec. Sess.); and Conn. Gen. Stat. §12-330c, as amended by 2009 Conn. Pub. Acts 3, §107, (June 2009 Spec. Sess.).

Cigarette Tax Rate Increase: The cigarette tax rate will increase from 100 mills (.10¢) to 150 mills (.15¢) per cigarette on October 1, 2009.

Tax before 10-01-2009   Tax on or after 10-01-2009
Packages
20 cigarettes per package
$2.00
$3.00
 25 cigarettes per package 
$2.50
$3.75
Cartons
5 packs per carton (20s)
10 packs per carton (20s)
8 packs per carton (25s)
10 packs per carton (25s)
$10.00
$20.00
$20.00
$25.00
$15.00
$30.00
$30.00
$37.50

 

   

Tax on Cigarette Inventory as of Close of Business on September 30, 2009: As of the close of business on September 30, 2009, if you have any packages of cigarettes, including those in cartons, that have an old cigarette tax stamp attached to them, you are liable for a tax (known as a floor tax) on those packages. The floor tax is the difference between the old cigarette tax rate and the new cigarette tax rate.

Close of Business on September 30, 2009: If your business closes after 11:59 p.m. on September 30, 2009, you must take the cigarette inventory as of 11:59 p.m. on September 30, 2009.

1.  When do I take the inventory of packages of cigarettes that have old cigarette tax stamps attached?

You must take an inventory as of the close of business on September 30, 2009. The inventory must include a physical count of all packages of cigarettes, including those in cartons, that have an old cigarette tax stamp attached. This inventory must also include promotional packages of cigarettes that have an old cigarette tax stamp attached. You must immediately enter this information on to Schedule A, which is located on the back of Form FT-TFT, Floor Tax Form for Cigarette Tax, follow the instructions and sign the report. See Question 4 for information on filing the report.

Old cigarette tax stamp means either a yellow $2.00 Connecticut cigarette tax stamp (for packages of 20 cigarettes) or a blue $2.50 Connecticut cigarette tax stamp (for packages of 25 cigarettes).

2.  Am I required to purchase and affix floor tax stamps to packages of cigarettes in inventory as of the close of business on September 30, 2009?

You are not required to purchase and affix floor tax stamps to packages of cigarettes in your inventory as of the close of business on September 30, 2009.

3.  What if I have packages of cigarettes in inventory at the close of business on September 30, 2009, that have new cigarette tax stamps already attached?

Do not include in your inventory any packages of cigarettes that have a new cigarette tax stamp attached. New cigarette tax stamp means either an orange $3.00 Connecticut cigarette tax stamp for packages of 20 cigarettes or a green $3.75 Connecticut cigarette tax stamp for packages of 25 cigarettes.

4.   When do I file Form FT-TFT?

You must complete and sign Form FT-TFT as of the close of business on September 30, 2009, and keep a copy of the signed Form FT-TFT on your premises for inspection by Department of Revenue Services (DRS) agents.

You must file the original Form FT-TFT and pay the tax to DRS no later than November 16, 2009. You must file Form FT-TFT whether or not you have packages of cigarettes in your inventory that have old cigarette tax stamps attached. If you fail to file Form FT-TFT with DRS on or before November 16, 2009, your distributor’s license may be revoked.

5.   When do I pay the floor tax?

You must pay the floor tax on or before November 16, 2009. The tax is due on each package of cigarettes, including those in cartons, that you have in inventory as of the close of business on September 30, 2009, which have an old cigarette tax stamp attached. If you fail to pay the floor tax, your distributor’s license may be revoked.

Make your check payable to Commissioner of Revenue Services and remit the tax with Form FT-TFT on or before November 16, 2009. Mail your payment and Form FT-TFT to:

Department of Revenue Services
PO Box 2987
Hartford CT 06102-2987

6.  What if I do not comply with the requirements described in this informational publication?

DRS audit and enforcement personnel will be out in force to verify that you correctly accounted for the inventory of packages of cigarettes, including those in cartons, that have old cigarette tax stamps attached as of the close of business on September 30, 2009. If you fail to report and pay the correct amount of floor tax, you will be subject to penalty and interest. The penalty for willfully delivering a false return to DRS is a fine of not more than $5,000, or imprisonment for not more than five years, or both.

7.   How do I report those who are in violation of the law?

Contact the DRS Special Investigations Section at 860-297-5877 during business hours, Monday through Friday, 8:30 a.m. to 4:30 p.m.

Additional Information for Stampers

8.   When will the new cigarette tax stamps be available for purchase?

Sales of new cigarette tax stamps will begin on September 28, 2009. DRS will contact each distributor to set up appointments for the return of unused old cigarette tax stamps and to purchase new cigarette tax stamps at the new rate. These appointments, along with the return of the old cigarette tax stamps, will be conducted only at DRS headquarters in Hartford. If you have any questions about your appointment, contact DRS at 860-297-4895.

A separate invoice must be completed for return of old cigarette tax stamps and the purchase of new cigarette tax stamps.

Return of old cigarette tax stamps: Stampers must use Form O-252, Order form for Connecticut Cigarette Tax Stamps (Rev. 03/09), to return unused cigarette tax stamps at the old rate by checking the appropriate credit or refund box on the invoice and entering the negative quantity in the appropriate field.

Purchase of new cigarette tax stamps: Before October 1, 2009, stampers must use Form O-252, to purchase the new cigarette tax stamps by entering the quantity for 20 pack cigarettes on Line 5 or by entering the quantity for 25 pack cigarettes on Line 6.

On or after October 1, 2009, stampers must use Form O-252 (Rev.09/09) to purchase new cigarette tax stamps.

9.  How long will the old cigarette tax stamps be available for purchase?

DRS will continue to sell old cigarette tax stamps at all DRS offices through September 28, 2009. However, mail orders for old cigarette tax stamps must be received no later than September 25, 2009.

10.  How does a distributor return unaffixed old cigarette tax stamps?

Old cigarette tax stamps must be returned to DRS headquarters in Hartford during your appointment on September 29 or September 30, 2009. They cannot be returned to any other DRS office. Stamps must be counted and the information must be entered on an invoice. Check the appropriate box for credit or refund.

11.  Will the monthly reports for distributors be revised?

The following monthly reports that stampers are required to file with DRS are being revised by DRS:

Resident Distributors

  • Form CT-15, Monthly Tax Stamp and Cigarette Report/Resident Distributor
  • Form CT-31, Cigarette and Unaffixed Stamp Inventory Report for Resident Distributors
  • Form CT-39, Record of Cigarette Stamps Purchased/Resident Distributor

Nonresident Distributors

  • Form CT-15A, Monthly Tax Stamp and Cigarette Report/Nonresident Distributor
  • Form CT-31A, Cigarette and Unaffixed Stamp Inventory Report for Nonresident Distributors
  • Form CT-38, Record of Cigarette Stamps Purchased Nonresident Distributor

12.  Should distributors who stamp cigarettes increase their surety bond?

Due to the cigarette tax increase, each stamper should consider increasing the amount of its surety bond. In general, a stamper’s purchases of cigarette tax stamps on credit may not exceed the amount of the stamper’s surety bond.

Additional information for licensed cigarette distributors who are licensed tobacco products distributors:

The tobacco products will increase from 20% of the wholesale sales price to 27.5%. The tax rate on snuff tobacco products will increase from 40¢ per ounce to 55¢ per ounce. There is no floor tax on the tobacco products held in inventory by the tobacco products distributors and cigarette dealers.

Effect on Other Documents: None affected.

Effect of This Document: An Informational Publication issued by DRS addresses frequently-asked questions about a current position, policy, or practice, usually in a less technical question and answer format.

For Further Information: Call DRS during business hours, Monday through Friday:

  • 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only); or
  • 860-297-5962 (from anywhere).

TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911. 

Paperless Filing/Payment Methods (fast, easy, free, and confidential):

Business and individual taxpayers can use the Taxpayer Service Center (TSC) at www.ct.gov/TSC to file a variety of tax returns, update account information, and make payments online.

File Electronically: You can choose first-time filer information and filing assistance or log directly into the TSC to file returns and pay taxes.

Pay Electronically: You can pay taxes for tax returns that cannot be filed through the TSC. Log in and select the Make Payment Only option. Designate a payment date up to the due date of the tax and mail a paper return to complete the filing process.

IP 2009(29)
Cigarette Distributor
Issued: 09-14-09