How much did the Kansas cigarette tax increase in 2002, and what inventory (floor-stocks) tax applied?

Plain-English summary

2002 Senate Bill 39 raised the Kansas cigarette tax and required a floor-stocks (inventory) tax on packs on hand.

• New rate (July 1, 2002): $.70 on each pack of 20 cigarettes (or $.875 per pack of 25).
• Further increase (January 2003): $.79 per pack of 20 (or $.99 per pack of 25). The Department would send another Form CG-117 and vouchers before then.
• Inventory (floor-stocks) tax: wholesalers, retailers, and vending machine operators had to inventory unaffixed stamps (wholesalers only) and stamped packs on hand at 12:01 a.m. July 1, 2002, and pay $.46 per pack of 20 ($.575 per pack of 25). Payment could be made in full or in three equal installments on July 30, September 30, and December 30, 2002; penalty and interest apply for late payment.
• Forms: complete Form CG-117 (Tax Rate Change Inventory Report) and return it with the first payment voucher (CGV); keep copies.
• Bond: wholesalers may need to raise their Tax Credit Bond to at least $25,000 (they may order against 85%, or $21,250).

What this means for you

If you held cigarette inventory in Kansas in mid-2002, you paid tax twice: the higher stamp tax going forward and a one-time floor-stocks tax on packs already in stock. File Form CG-117, pay the $.46-per-pack (of 20) inventory tax by the installment dates, and — if you're a wholesaler — confirm your Tax Credit Bond is at least $25,000.

Common questions

Q: What was the new cigarette tax rate?
A: $.70 per pack of 20 (or $.875 per pack of 25) from July 1, 2002, rising to $.79 per pack of 20 in January 2003.

Q: What is the inventory (floor-stocks) tax?
A: $.46 per pack of 20 ($.575 per pack of 25) on stamped packs and stamps on hand at 12:01 a.m. July 1, 2002, payable in full or in three installments (July 30, September 30, December 30, 2002).

Q: Do I need to update my bond?
A: Wholesalers may need a Tax Credit Bond of at least $25,000 (orderable against 85%, $21,250).

Citations and references

• 2002 Senate Bill 39 -- cigarette tax rate increase and inventory (floor-stocks) tax. Form CG-117 (Tax Rate Change Inventory Report).

Subject

Notice of Cigarette Tax Increase and Inventory Requirements (Senate Bill 39)

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 02-04

Original ruling text

Notice
Notice Number: 02-04
Tax Type: Cigarette and Tobacco Products
Brief Description: Legislated (2002 Session) tax increase notification (inventory requirements)
under Senate Bill 39.
Keywords:
Approval Date: 06/24/2002

Body:
NOTICE 02-04

             Notice of Cigarette Tax Increase and Inventory Requirements

To comply with recent legislative changes, your company is required to take inventory of the cigarette stamps not
attached to cigarette packs (Wholesalers Only) and stamped cigarette packs (Wholesalers, Retailers, and Vending
Machine Operators) on hand at 12:01 a.m., July 1, 2002. On and after July 1, 2002, the tax rate will be $.70 on each
pack of 20 cigarettes or fractional part thereof or $.875 on each pack of 25 cigarettes. Senate Bill 39.

Your company is required to pay a tax of $.46 on each 20-cigarette pack or $.575 on each 25-cigarette pack in stock as
of 12:01 a.m., July 1, 2002. Payment of the additional tax on your inventory can be submitted in full or in three
equal installments on July 30, September 30 and December 30, 2002. Penalty and interest will be assessed if the
payment is not received in a timely manner.

Enclosed are the Tax Rate Change Inventory Report (Form CG-117) and three cigarette tax payment vouchers
(CGVs). Complete Form CG-117 and return it and the corresponding voucher with your initial payment. Please keep a
copy of each voucher you submit as well as a copy of the Tax Rate Change Inventory Report for your records. You do
not need to send a copy of the inventory report with each equal installment payment.

In January, 2003, the tax rate increases to $.79 on each pack of 20 cigarettes or fractional part thereof or $.99 on each
pack of 25 cigarettes. Prior to that time, you will receive another Form CG-117 and payment vouchers that will need
to be completed and returned.

Wholesalers: You may need to update your Tax Credit Bond. With the tax increase, the amount of the bond should be
at least $25,000.00. You may order against 85% of the bond, ($21,250.00).

Please be advised that violations of these statutory provisions may result in license suspension or revocation and/or
fines. Thank you for your cooperation in this matter.

Enclosures

Date Composed: 06/24/2002 Date Modified: 06/24/2002

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