- What is the Cigarette and Tobacco Product Internet Program?
The Board of Equalization has implemented the Cigarette and Tobacco Product Internet Program to collect the California state excise taxes and use taxes from California consumers purchasing untaxed cigarettes and/or tobacco products from out-of-state Internet retailers, and/or by way of mail or telephone, for self-consumption in California.
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- What is excise tax?
The California Cigarette and Tobacco Products Tax Law imposes an excise tax on the first distribution of cigarettes and tobacco products in this state.
- Distribution is defined to mean the sale, use, or consumption of untaxed cigarettes or tobacco products.
- Use or consumption is defined to include ownership of the cigarettes or tobacco products.
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- What is the excise tax rate?
Cigarettes: 87 cents ($0.87) per package of 20 cigarettes or $8.70 per carton.
Tobacco Products: 45.13 percent of the tobacco product's cost (effective July 1, 2006 through June 30, 2007). For example, the excise tax due on tobacco products that cost $100.00 is $45.13
(100.00 x 45.13% = $45.13)
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- What is use tax?
Use tax, a complement to the state's sales tax, generally applies to the use or consumption of tangible personal property in California that has been purchased from an out-of-state retailer who does not collect California sales tax.
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- What is the use tax rate?
For out-of-state purchases of cigarettes and tobacco products, the use tax rate is 7.25% (statewide rate) of the product's purchase price.
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- What are tobacco products and cigarettes?
Tobacco products include, but are not limited to, all forms of cigars, smoking tobacco, chewing tobacco, snuff, and other products containing at least 50 percent tobacco, except cigarettes. This does not include cigarettes labeled as little or small cigars that are considered cigarettes for tax purposes.
A cigarette is defined as a rolled product of any size or shape, intended for smoking that includes any tobacco, flavored or not, and is wrapped in paper or another material. Exception: Products wrapped in tobacco or with a wrapper made mostly of tobacco are not considered cigarettes when they weigh over 3 pounds per thousand. For more information, see www.boe.ca.gov.
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- Which purchases are subject to taxes?
Taxes apply to any quantity of untaxed cigarettes, tobacco products, or other untaxed merchandise shipped to a user or consumer in California from a seller outside of California. If the out-of-state seller or vendor does not collect the taxes from the consumer at the time of sale, the consumer is responsible for paying the taxes due.
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- Why did I receive these returns?
Under a federal law (the Jenkins Act), we receive information from out-of-state sellers who ship cigarettes to California customers. The seller must give us the buyer’s name and address, and the brand and quantity of cigarettes sold or transferred.
Records from out-of-state retailers show that you
- Received a shipment of cigarettes and/or tobacco products you bought by the Internet, phone, or mail, and
- Have not paid the state excise and use tax due.
The Excise Taxes Division has registered you as a cigarette and/or tobacco consumer and sent you returns so that you can pay the state tax you owe. You were sent two tax returns: one for excise tax and one for use tax.
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- Why did I receive two returns?
Every registered consumer will receive a quarterly excise tax return and a use tax return to report their out-of-state purchases and pay the excise tax and use tax due on their purchase(s).
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- How can I register to pay the taxes due?
If you have received tax returns from us, you're already registered.
If you have not received tax returns from us, you may obtain a registration
form by contacting the Excise Taxes Division at 800-400-7115.
We will mail or fax a registration form to you.
A registration form is also available by downloading and printing the document by using the link below.
Cigarette and Tobacco Products Internet Registration: Form BOE-400-CIP
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- What forms do I use? When are they due?
You must complete two tax returns:
- Cigarette and Tobacco Products Excise Tax Return, BOE-501-CI.
Due date: The 25th day of the month following the end of the calendar quarter.
Example: The third quarter of 2006 ends on September 30th. The excise tax return is due on October 25.
- Cigarette and Tobacco Products Use Tax Return, BOE-501-UI.
Due date: The last day of the month following the end of the calendar quarter.
Example: The third quarter of 2006 ends on September 30th. The use tax return is due on October 31.
Each return includes instructions to assist you in completing the forms.
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- What if I file the return and/or payment after the due date?
If you do not file on time, you may owe a 10% percent late filing penalty on the amount of tax due and interest at the current Board rate.
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- Can I pay the tax with my Sales & Use Tax return?
No. You must use the returns listed above.
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- What kind of records should I keep?
You should keep:
- Documents that show what you paid on your purchase (for example, bills, receipts, invoices, and so forth.)
- All working papers used to prepare your returns.
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- What happens if I do not mail a return back to the Board?
If you received a return and do not mail it back by the due date, you will receive a delinquency notice. You must file your returns even if you have no tax to report.
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- What if I do not respond to your return and delinquency notice?
The Excise Taxes Division may issue a compliance assessment for tax, penalty and interest based on the invoices received from the out-of-state companies complying with the Jenkins Act or other documentation available to the Board. You will then have 30 days to pay or dispute the liability.
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- What if I send you my return and payment but do not include all of my purchases?
The Excise Taxes Division will reconcile your return with invoices received from any out-of-state companies complying with the Jenkins Act and issue a billing for the additional tax due, penalty and interest. You will then have 30 days to pay or dispute the liability.
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