My New York retail business sells only vaping products (e-cigarettes, vape pens, and e-liquid) -- no cigarettes or tobacco. Do I need a cigarette/tobacco dealer registration, and do I owe any special New York excise tax on vaping products?

Plain-English summary

A New York retailer that sells only vaping products -- electronic cigarettes, vape pens, and e-liquid, but no cigarettes or tobacco -- asked whether it needs to register as a retail dealer of tobacco products for excise tax purposes.

The Department's answer: no, because Tax Law § 470's definitions of "cigarettes" and "tobacco products" don't include vapor products, so a vaping-only retailer isn't required to hold a certificate of registration as a cigarette or tobacco products dealer under Article 20.

But that's not the end of the analysis. Since December 1, 2019, Article 28-C of the Tax Law imposes a 20% supplemental sales tax on retail sales of vapor products, and any retailer intending to sell vapor products at retail must first obtain a vapor products dealer certificate of registration under Tax Law § 1183 -- and to get that certificate, the retailer must already hold a general sales tax certificate of authority (since vapor products are tangible personal property subject to the ordinary vendor-registration rules of §§ 1105 and 1134).

What this means for you

Vape shop and e-cigarette retailer owners

You don't need a cigarette/tobacco dealer certificate if you sell only vaping products. But you do need two things before making any retail sales: (1) a standard sales tax certificate of authority, and (2) a vapor products dealer certificate of registration under § 1183. And every retail sale of vapor products since December 1, 2019 carries a 20% supplemental sales tax on top of ordinary sales tax.

Retailers who sell both tobacco and vaping products

If you also sell cigarettes or tobacco products alongside vaping products, you likely still need the separate cigarette/tobacco dealer registration for that side of the business -- this ruling addresses only a business that sells vaping products exclusively.

Accountants and tax professionals

Note the layered registration requirement: sales tax certificate of authority first, then the vapor products dealer certificate under § 1183(d) -- and the 20% Article 28-C supplemental tax stacks on top of standard state and local sales tax on the same transaction.

Common questions

Q: Do I need a tobacco dealer registration if I only sell vaping products in New York?
A: No. Vapor products aren't "cigarettes" or "tobacco products" under Tax Law § 470, so the Article 20 dealer registration doesn't apply to a vaping-only retailer.

Q: What registration do I need instead?
A: A vapor products dealer certificate of registration under Tax Law § 1183, which requires first holding a sales tax certificate of authority under §§ 1105 and 1134.

Q: Is there a special tax on vaping products beyond regular sales tax?
A: Yes. Since December 1, 2019, Article 28-C imposes a 20% supplemental sales tax on retail sales of vapor products.

Q: Can I rely on this ruling for my own vape shop?
A: No. This advisory opinion binds the Department only as to the petitioner and the specific facts described.

Citations and references

Statutes:

• Tax Law § 470 (definitions of "cigarettes" and "tobacco products")
• Tax Law Article 20 (cigarette and tobacco products tax; dealer registration)
• Tax Law Article 28-C (20% supplemental sales tax on vapor products, effective 12/1/2019)
• Tax Law § 1183; § 1183(d) (vapor products dealer certificate of registration)
• Tax Law §§ 1105, 1134 (sales and use tax vendor registration)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/cigarette_ao.htm
• Opinion: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales/20-3m.htm
• Printer-friendly PDF: https://www.tax.ny.gov/pdf/advisory_opinions/misc/a20-3m.pdf

Original ruling text

Miscellaneous Tax
November 24, 2020
Office of Counsel

The Department of Taxation and Finance received a Petition for Advisory Opinion from Redacted (“Petitioner”). Petitioner asks whether a retailer of vaping products in New York State is required to obtain a certificate of registration as a retail dealer of tobacco products for New York State excise tax purposes.

We conclude that Petitioner is not required to obtain a certificate of registration as a retail dealer of tobacco products. However, as of December 1, 2019, Petitioner is required under Article 28- C of the Tax Law to obtain a vapor products dealer certificate of registration.

Facts

Petitioner states that it sells personal vaping products and no tobacco products. Petitioner does not specify what personal vaping products it sells. However, the business’s website indicates that Petitioner sells an assortment of vaping products such as electronic cigarettes or vape pens and liquid for use in electronic cigarettes. Petitioner does not sell cigarettes or tobacco products.

Analysis

Petitioner asserts that it sells vapor products only and does not sell cigarettes or tobacco products within this State.

Tax Law § 470 does not include vapor products in the definition of cigarettes or tobacco products. Therefore, Petitioner’s sale of vapor products does not constitute the sale of tobacco products subject to tax under Tax Law Article 20, and Petitioner is not required to obtain a certificate of registration as a dealer of cigarettes and/or tobacco products. However, beginning on December 1, 2019, Article 28-C of the Tax Law imposes a supplemental sales tax of 20% on the receipts of retail sales of vapor products. Petitioner’s product is a vapor product and thus, retail sales of Petitioner’s product made on or after December 1, 2019 are subject to the Article 28-C supplemental sales tax imposed on vapor products. Tax Law § 1183 requires that every person who intends to sell vapor products at retail in this state must obtain a vapor products dealer certificate of registration prior to engaging in sales of vapor products. Therefore, Petitioner must obtain a vapor products dealer certificate of registration if it intends to sell any vapor products at retail in this State.

In addition, the Tax Law requires that vendors selling tangible personal property or services within this State register with the Department for State and local sales and use tax purposes. See Tax Law §§ 1105 and 1134. Vapor products are tangible personal property and Petitioner must obtain a certificate of authority from the Department prior to making any sales of tangible personal property. In addition, persons who intend to sell vapor products must first obtain a sales tax certificate of authority before applying for vapor products dealer certificate of registration. See Tax Law § 1183(d).

Deborah R. Liebman
Deputy Counsel

Note: An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts set forth therein and is binding on the Department only with respect to the person or entity to whom it is issued and only if the person or entity fully and accurately describes all relevant facts. An Advisory Opinion is based on the law, regulations, and Department policies in effect as of the date the Opinion is issued or for the specific time period at issue in the Opinion. The information provided in this document does not cover every situation and is not intended to replace the law or change its meaning.