Assembly Bill 1749 (Statutes 2006, Chapter 501) Cigarette & Tobacco Products

    New License Required for Manufacturers and Importers of Tobacco Products

  1. What is AB 1749?
  2. Who is affected by AB 1749?
  3. When does AB 1749 go into effect?
  4. Licensing Information

  5. What impact will it have on the tobacco manufacturers and importers?
  6. Is there a fee for a manufacturer or importer license?
  7. What are the filing requirements?
  8. How do I apply for a manufacturers and Importers license?
  9. New Deferral Payment Options for Cigarette Distributors

  10. What are the new deferred payments options for cigarette distributors?
  11. How will Payment Option I benefit distributors?
  12. How would Payment Option II benefit distributors?
  13. What type(s) of security are acceptable for the deferred payment of cigarette tax stamps?
  14. How do I apply for a deferred payment option?
  15. How will I know if I qualify for a deferral payment option?
  16. What happens if a distributor fails to promptly pay for purchases of cigarette tax stamps on the deferred basis?
  17. For more information.

New License Required for Manufacturers and Importers of Tobacco Products

  1. What is AB 1749?
  2. AB 1749 was signed into law September 27, 2006 and is comprised of several provisions affecting both the Business and Professions Code and the Revenue and Taxation Code. In general, it requires manufacturers and importers of tobacco products to comply with the invoicing and recordkeeping requirements currently applicable to manufacturers and importers of cigarettes under the Cigarette and Tobacco Products Licensing Act of 2003 (AB 71).

    AB 1749 is effective January 1, 2007, but some of its provisions are not operative until May 1, 2007.

    Among other things, AB 1749

    • Requires manufacturers or importers of tobacco products who wish to sell in California to obtain and maintain a license under the Cigarette and Tobacco Products Licensing Act of 2003.
    • Defines an importer as someone who buys cigarettes or tobacco products outside of the United States with the intent to distribute or resell for the first time in United States.
    • Requires licensed manufacturers and importers to file monthly report with the Board. At a minimum, the report is required to include (1) a list of all licensed distributors that received the manufacturer's or importer's tobacco products, and (2) the products total wholesale cost.
    • Prohibits a retailer or wholesaler from purchasing cigarettes or tobacco products from any manufacturer or importer; makes tobacco products manufacturer and importer prohibitions consistent with cigarette manufacturers and importers.
    • Allows additional stamp payment deferral options for cigarette distributors.
    • Increases the penalties for counterfeiting stamps, possessing for sale any package of cigarettes without a stamp, and transporting cigarettes or tobacco products into California without a permit.
  3. Who is affected by AB 1749?
  4. Manufacturers or importers of tobacco products, such as all forms of cigars, chewing tobacco and snuff, as well as other products containing at least 50 percent tobacco and licensed distributors, wholesalers and retailers in California. Also, any cigarette distributor who desires to defer payments for stamps or meter register settings.

    Back to Top of Page

  5. When does AB 1749 go into effect?
  6. AB 1749 is effective January 1, 2007. However, the licensing provision for manufacturers and importers of tobacco products is not operative until May 1, 2007.

Licensing Information

  1. What impact will it have on the tobacco manufacturers and importers?
  2. The law requires manufacturers or importers of tobacco products to obtain and maintain a license under the Licensing Act of 2003 (AB 71) to engage in the sale of tobacco products. In order to be eligible for obtaining and maintaining a license, a manufacturer or importer is required to do all of the following in the manner specified by the Board of Equalization (Board):

    • Submit to the Board a list of all tobacco products they manufacture or import.
    • Update the list of all tobacco products they manufacture or import whenever a new or additional product is manufactured or imported or a listed product is no longer manufactured or imported.
    • Consent to jurisdiction of the California courts for the purpose of enforcement of this division and appoint a registered agent for service of process in this state and identify the registered agent to the Board.
    • Require manufacturers or importers of tobacco products holding a license to file a monthly report with the Board, in a manner specified by the Board, which may be, but not limited to, electronic media.

    Back to Top of Page

  1. Is there a fee for a manufacturer or importer license?
  2. Yes, a manufacturer or importer of chewing tobacco or snuff is required to submit an application with a one-time license fee of ten thousand dollars ($10,000). A manufacturer or importer of tobacco products, excluding chewing tobacco or snuff, is required to submit an application with a one-time license fee of two thousand dollars ($2,000). However, the one-time license fee for a manufacturer or importer of tobacco products is limited to ten thousand dollars ($10,000).

  3. What are the filing requirements?
  4. Manufacturers and importers of tobacco products will need to submit form BOE-400-LT, Application for a Manufacturer/Importer Tobacco Products License, along with the applicable fee in order to obtain a license. In addition, as a manufacturer and/or importer you are required to file monthly reports with us. The reports are required to include:

    • A list of all licensed distributors that received the manufacturer's or importer's tobacco products.
    • The total wholesale cost of the products.
    • Other information as requested by the Board.
    • Manufacturers and importers of tobacco products will be subject to the same invoicing and record-keeping requirements, and penalty provisions for violations of the licensing Act as manufacturers and importers of cigarettes, as provided in existing law.

    Back to Top of Page

  1. How do I apply for a manufacturers and Importers license?

    If you need to register for a Manufacturer/Importer Tobacco Product License, please click here

  2. Back to Top of Page

New Deferral Payment Options for Cigarette Distributors

  1. What are the new deferred payments options for cigarette distributors?
  2. AB 1749 allows for two new additional deferral alternatives for a cigarette distributor that desires to defer payments for stamps or meter register settings purchases.

    Payment Option I: Allows that no security be required for a distributor that desires to defer payments for stamps or meter register settings purchases, if the distributor's average monthly purchase of stamps for the previous 12 months does not exceed seventy-two thousand (72,000) stamps or meter register settings, and the distributor meets all of the following:

    1. The distributor has been licensed under this part for a minimum of five years;
    2. The distributor has not been delinquent in the filing of any reports or returns required under this part for the preceding three consecutive years;
    3. The distributor has not been delinquent in the payment of any tax under the Cigarette and Tobacco Products Tax Law, or for any other tax or fee administered or collected by the Board, for the preceding three consecutive years;
    4. The distributor provides to the Board and updates, as necessary, an electronic mail address for the purpose of receiving payment information, including, but not limited to, amounts owing for stamps and meter register settings purchased;
    5. Amounts owing for stamps purchased on the deferred-payment basis without a security are due and payable on or before Wednesday following the week in which the stamps were purchased.
    6. Any other criteria the Board may require.

    Payment Option II: This bill reduces the security provided by a distributor desiring to defer payments for tax stamps to equal to not less than 25 percent of the amount and no more than twice the amount, as fixed by the Board, if that distributor elects to make payments on a weekly basis.

    If that distributor elects to make payments on a weekly basis, the distributor will be:

    1. Required to remit the payment on or before Wednesday following the week in which the stamps and meter register settings were purchased.
    2. Every distributor electing to make payment on a weekly basis will be required to provide to the Board and update, as necessary, an electronic mail address for the purpose of receiving payment information, including, but not limited to, amounts owing for stamps and meter register settings purchased.

    Back to Top of Page

  1. How will Payment Option I benefit distributors?
  2. No security will be required for the purchases of tax stamps on deferred credit under payment option I. Distributors will not have expenditures in bond premiums or tie up additional cash in security deposits.

    Back to Top of Page

  3. How would Payment Option II benefit distributors?
  4. Distributors electing to make payments on a weekly basis are only required to post security on 25 percent of the deferred monthly stamp purchases.

    Back to Top of Page

  5. What type(s) of security are acceptable for the deferred payment of cigarette tax stamps?
    1. Cash Deposits
    2. Deposit accounts in banks, savings banks, and savings and loans including Insured Accounts, Fully Paid Investment, Bonus Investment Certificates and accumulative Investment Certificates
    3. State and Federal Credit Union Shares
    4. Surety Bonds

    Back to Top of Page

  1. How do I apply for a deferred payment option?
  2. To apply for the deferral payment alternatives, you must complete and submit form BOE-356, Cigarette Distributor's Election to Defer Payment. You may click on this link to download this form from our website, or contact the Excise Taxes and Fees Division to have it mailed. Please note, you can only apply for one option and upon approval by the Board, you will be required to remain in the authorized option for at least one year from the date the election is made.

    Back to Top of Page

  3. How will I know if I qualify for a deferral payment option?
  4. Upon receipt and review of your application and required security, the Board will notify you in writing if you are qualified to participate in the deferral payment program.

    Back to Top of Page

  5. What happens if a distributor fails to promptly pay for purchases of cigarette tax stamps on the deferred basis?
  6. If a distributor fails to pay when payment is due, the Board is authorized to suspend a distributor's privilege to purchase tax stamps on credit. The Board may also pursue the distributor's security deposit.

    Back to Top of Page

  7. For more information.
  8. If you have additional questions regarding the new licensing and recordkeeping requirements, or the Cigarette and Tobacco Products Tax Law, please contact:

    Excise Taxes Division MIC 56
    State Board of Equalization
    450 N Street
    PO Box 942879
    Sacramento, CA 94279-7077

    Telephone: 800-400-7115
    Fax: 916-323-9297

    Staff is available to help you weekdays from 8:00 a.m. to 5:00 p.m., except State holidays, or you may write to the Board of Equalization, Excise Taxes Division, P.O. Box 948279, Sacramento, California, 94279-0056.

    You may also e-mail your non-confidential tax questions to the Board at http://www.boe.ca.gov/info/email.html.

    Back to Top of Page