What is the new Kansas cigarette tax rate on July 1, 2015 and what inventory tax is owed?

Plain-English summary

Revised Kansas Notice 15-01 explains a cigarette tax rate increase and the one-time inventory (floor-stock) tax that came with it.

The new rate. Effective July 1, 2015, the cigarette tax rose to $1.29 on each pack of 20 cigarettes (or fractional part) and $1.61 on each pack of 25.

The inventory tax. Wholesalers, retailers, and vending machine operators had to take inventory of cigarette stamps (wholesalers only) and stamped packs on hand at 12:01 a.m., July 1, 2015, and pay an additional tax of $0.50 on each 20-cigarette pack ($0.62 on each 25-cigarette pack) then in stock. That additional tax was due in full no later than October 31, 2015; penalty and interest are assessed on late payment.

Forms. File the Tax Rate Change Inventory Report (form CG-117) by July 31, 2015, with a Cigarette Inventory Tax Voucher (CG-3); keep a copy for your records.

Wholesaler changes. The wholesale discount rate dropped from 0.80% to 0.55% on July 1, 2015. Wholesalers may need to update their tax credit bond and may order only against 85% of the bond. Violations may result in license suspension or revocation and/or fines.

Date note. The notice carries no printed issue date; the date shown reflects the July 1, 2015 effective date of the increase.

What this means for you

Cigarette wholesalers

• Pay the $0.50-per-20-pack (or $0.62-per-25-pack) floor tax on stamps and stamped packs on hand at 12:01 a.m. July 1, 2015, by October 31, 2015; file form CG-117 by July 31.
• The wholesale discount fell to 0.55%, and you may order stamps only against 85% of your tax credit bond.

Retailers and vending machine operators

• Take inventory of stamped packs on hand at 12:01 a.m. July 1, 2015 and pay the additional per-pack tax by October 31, 2015.

Common questions

What is the new cigarette tax rate? $1.29 per pack of 20 (or $1.61 per pack of 25), effective July 1, 2015.

How much is the inventory tax? $0.50 on each 20-cigarette pack and $0.62 on each 25-cigarette pack on hand at 12:01 a.m. July 1, 2015.

When is the inventory tax due? In full by October 31, 2015; the CG-117 report is due July 31, 2015.

Did the wholesale discount change? Yes -- from 0.80% to 0.55%, and wholesalers may order only against 85% of their bond.

Citations and references

• Effective July 1, 2015: cigarette tax $1.29 per 20-pack / $1.61 per 25-pack; floor-stock tax $0.50 / $0.62 per pack due October 31, 2015.
• Form CG-117 (Tax Rate Change Inventory Report) due July 31, 2015 with CG-3 voucher.
• Wholesale discount 0.80% to 0.55%; wholesalers may order against 85% of the tax credit bond.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 15-01

Original ruling text

Miscellaneous Tax
Division of Taxation Phone: (785) 368-8222
915 SW Harrison St FAX: (785) 291-3968
Topeka KS 66612-1588 www.ksrevenue.org
Nick Jordan, Secretary Department of Revenue Sam Brownback, Governor
Steve Stotts, Director of Taxation

                                        REVISED NOTICE 15-01

              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 packs
(Wholesalers, Retailers, and Vending Machine Operators) on hand at 12:01 a.m., July 1,
2015. On and after July 1, 2015 the tax rate will be $1.29 on each pack of 20 cigarettes or
fractional part thereof or $1.61 on each pack of 25 cigarettes.

Your Company is required to pay an additional tax of $0.50 on each 20-cigarette pack or $0.62
on each 25-cigarette pack in stock as of 12:01 a.m. Payment of the additional tax on your
inventory must be submitted in full no later than October 31, 2015. Penalty and Interest will
be assessed if the payment is not received in a timely manner.

Enclosed are the Tax Rate Change Inventory Report (CG-117) and a Cigarette Inventory Tax
Voucher (CG3). Complete Form CG-117 and return it by July 31, 2015. Please keep a copy of
the Tax Rate Change Inventory Report for your records.

Effective July 1, 2015, the wholesale discount percentage rate will change from 0.80% to 0.55%.

Wholesalers: You may need to update your Tax Credit Bond. You may only order against 85%
of the bond.

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.

                                        Taxpayer Assistance

Additional copies of this notice, forms or publications are available from our web site,
www.ksrevenue.org. If you have questions, please contact:

                                 Customer Relations/Miscellaneous Tax
                                    Kansas Department of Revenue
                                         915 SW Harrison St.
                                       Topeka, KS 66612-1588
                                          Phone: 785-368-8222
                                          Fax: 785-291-3968