SALT Report 2684 – The Connecticut Department of Revenue Services issued guidance regarding the new law that requires cigarette stampers and non-stamping distributors to collect sales tax on all sales of cigarettes to licensed dealers effective July 1, 2013.
Stamper’s Obligation to Collect Sales Tax
If the stamper sells stamped packages of cigarettes to a licensed dealer, the stamper is required to collect sales tax from the licensed dealer. The amount of sales tax to be collected by the stamper must be separately stated on the invoice provided to the licensed dealer. Stampers cannot accept resale certificates from licensed dealers.
If the stamper sells stamped packages of cigarettes to a non-stamping distributor, the stamper is required to collect tax from the non-stamping distributor, unless the non-stamping distributor provides a resale certificate.
Sales to Chain Operators
Non-stamping distributors, or chain operators, who buy cigarettes for retail stores or franchise locations, and do not resell the cigarettes to these stores, are required to pay sales tax on those purchases. However, chain operators who do resell cigarettes to these retail stores or franchise locations can issue a resale certificate and collect sales tax on these sales to those dealers.
A licensed dealer is required to report the gross receipts from sales of cigarettes and can take a deduction on their Sales and Use Tax Return – Form OS-114. The amount that can be deducted is the total purchase amount of cigarettes that were taxed by the stamper or non-stamping distributor.
New Filing Requirements
Stampers and non-stamping distributors are now required to report and remit sales tax on their sales of cigarettes on a monthly basis. Stampers and non-stamping distributors who currently file an annual sales and use tax return must file a sales tax return on or before July 31, 2013, for the period of January 1, 2013 through June 30, 2013. After that, stampers and non-stamping distributors will begin filing their sales tax returns and remitting the tax on a monthly basis, beginning with the July 2013 tax period.
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