This summer included some important changes from the Louisiana legislature concerning its vapor product excise tax. Specifically, an increased tax rate on consumable nicotine solutions and new compliance requirements for permit holders. If you manufacture or sell vapor products in Louisiana, these rule changes will likely impact your operations and understanding them will be key to avoiding underpayment of the Louisiana vapor product tax and any associated penalties.
How Does Louisiana Excise Tax Apply to E-Cigarettes and Vapor Products?
Louisiana was one of the first states to start taxing the sale of e-cigarettes and vapor products when it passed legislation to tax these items at a rate of $0.05 per milliliter of e-liquid. The tax broadly applies to any noncombustible product that contains nicotine and produces a vapor under RS 47:841(F). This includes many common electronic smoking devices under the definition of “vapor product” in RS 47:842(20), such as the following:
- Electronic cigarettes
- Electronic cigars
- Electronic cigarillo
- Electronic pipes
- Vapor cartridges
Unlike some states’ vapor product tax, Louisiana taxes the amount of consumable product being as opposed to the wholesale price of the item. The excise tax is generally the responsibility of the wholesale dealer or manufacturer that brings the product into Louisiana for a first sale. However, Louisiana vapor product retailers could also be responsible if they are the first to handle the product. For example, when purchasing from an online or out-of-state distributor.
New Louisiana Vapor Product Tax Rate Effective July 1, 2023
For tax periods starting on or after July 1, 2023, the vapor product excise tax rate will triple to $0.15 per milliliter of e-liquid sold. Maintaining clear records of inventory and acquired vapor products leading up to and after this date will be important for minimizing the risk of additional tax owed at the higher rate.
When Are Your Louisiana Vapor Product Excise Tax Returns Due?
Louisiana tobacco tax returns, which includes vapor product sales, are due monthly. Those with taxable sales or transactions of vapor products into Louisiana must complete either Form R-5608 or Form R-5604 depending on if you are a retailer or a wholesale dealer/manufacturer. The return and owed excise tax are due 20 days after the end of the reporting month and must be done electronically as of the January 1, 2023.
Other New Requirements for Louisiana Vapor Product Dealers
Along with the vapor product excise tax rate increase, Louisiana also imposed new requirements for the legal sale of these products in the state. Starting July 1, 2023, you can only purchase products from licensed wholesale dealers and those with a valid stamping agent designation permit. Additionally, vapor product manufacturers that have their products sold in Louisiana (either directly or indirectly through another dealer) must register their products with the Louisiana Office of Alcohol and Tobacco Control (ATC) V.A.P.E. directory beginning October 1, 2023. You can review Revenue Information Bulletin No. 23-016 for additional details.
Get Help with Vapor Product Excise Taxes and Other Tobacco Tax Compliance
As electronic smoking devices continue to grow in the overall tobacco market, state revenue departments will continue to expand and refine their excise taxes on vapor products. Staying ahead of these changes is important for managing tax compliance and minimizing liability where possible. If you or your clients are facing an audit or assessment for your vapor product taxes, our tobacco tax professionals are here for support. We regularly help clients navigate their tax and licensing obligations, including defense of wrongful actions by state agents that are detrimental to your business.