Chicago Passes Nicotene Products Tax

Effective January 1, 2016, the City of Chicago enacted a local tax on “nicotine products.” Chicago has always been notorious for its aggressive tactics in cigarette and tobacco tax collection and positions. Chicago joins the list of many states and other local governments in their efforts to tax the growing e-cigarette industry.

The tax was enacted in Chapter 3-47 of the Chicago ordinances. The tax is imposed at a rate of $.80 per “product unit” and an additional $.55 per fluid milliliter of consumable liquid of nicotine product. A “product unit” is simple each individual nicotine product, irrespective of whether its sold as a single unit or within the same package as other units. A ‘nicotene product” is broadly defined as any e-cig that contains nicotine, any container that contains nicotine.

It is also unsurprising as to the high rate of Chicago’s tax compared to other states. As the nicotine products taxes continue to evolve, they are often ripe for challenge. It is questionable whether many products are encompassed under the nicotine products definition. It is also questionable whether a company, with no property, employees, or inventory within Chicago can be required to pay the high taxes. If you or you business receives an inquiry or assessment that you believe is unfair in Chicago, please do not hesitate to contact us for a free consultation.

In his law practice Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini obtained his LL.M. in Taxation at NYU. Mr. Donnini is licensed to practice law in Florida. If you have any questions please do not hesitate to contact him via email [email protected] or phone at 954-639-4496.