Tuesday, February 10 2009
By Chris McCalla, Legislative Director,
IPCPR
NO FLOOR TAX ON LARGE CIGARS! Floor Tax Covers All Other Tobacco Products
Following the signing of the SCHIP bill, I have received phone calls inquiring about the floor tax included in the legislation. Keeping in mind that the floor tax does not cover "large cigar," (this accounts for most premium cigars), a floor tax applies to all other tobacco products.
The federal Alcohol and Tobacco Tax and Trade Bureau (TTB), a division of the U.S. Department of Treasury, that will be handling the excise tax collection, is currently working on the procedure that will dictate how to collect the floor stock tax. This is the first time the TTB will be collecting floor taxes on tobacco products other than cigarettes, so they are entering "unchartered waters."
While the legislation states the floor stocks obligation falls on "anyone" holding tobacco products for sale as of a certain date (to be determined-most likely March 31, 2009, the day before the new excise tax rates take effect, it is unknown at this time how the TTB will notify every company "holding tobacco."
It is important to keep in mind that in the "floor tax" provision of the SCHIP statute, a $500 (five-hundred) dollar credit is provided for the first $500 of floor taxes that may be due on August 1, 2009. If a company who pays the floor tax owes only $400 in floor taxes, that company would simply do nothing. Others would pay anything over that first $500.
Your trade association continues working with the Cigar Association of America (CAA) and other agencies to determine the exact parameters of how the floor tax will be collected. As we learn more, we will update you accordingly.
Thank you for your patience as details of this statute are worked out at the federal level. £
For more information and updates, please visit IPCPR.org.
