Nevada’s Tobacco Tax and Licensing Rules for Retailers and Distributors
The sale of tobacco products, including e-cigarettes and vapor products, is subject to Nevada’s tax on other tobacco products (OTP) and other licensing requirements. Managing your compliance with Nevada’s rules on tobacco sales is important for avoiding penalties and minimizing your interactions with Nevada’s Department of Revenue. Here, we discuss the major compliance issues that OTP businesses need to know and explain how Tobacco Tax Refund, Inc.’s team of consultants can serve as a cost-effective resource on such matters.
The Different Tobacco Licenses for Selling OTP in Nevada
Your tobacco licensing needs in Nevada depend on who your OTP customers are. In most cases, you are either a non-retailer that distributes to retailers and other wholesalers, or you are a retailer that sells directly to end-users. If your business does both, then you will need to apply for each type of license. Nevada also has a separate license for companies that store or distribute OTP for wholesalers and retailers. Details on the license types are as follows:
- Application for Tobacco Retail License (Rev 6.21) - $50
- Application for Tobacco Licenses (Rev 6.21) - $650 for wholesalers and $1,000 for manufacturers
- Application for Warehouse/Distribution Center or Logistics Company (Rev 1.20) – No fee
Licenses are valid for one calendar year before you must renew them with repayment of the applicable licensing fee. If you apply for a license in the middle of a calendar year, then you will owe a prorated amount of the fee (listed on the application). Additionally, wholesalers must also provide a minimum $1,000 security bond along with their application.
Nevada’s Other Tobacco Products Tax on the Wholesale Price of OTP
Two taxes apply to the sale of other tobacco products in Nevada. The first is an excise tax on the wholesale price of the OTP at a rate of 30%. The wholesale price is the price before making any reductions related to the following:
- Discounts or rebates
- Manufacturing costs (e.g., materials, labor, and other services)
- Transportation and other service costs related to the sale (e.g., shipping, freight, storage, customer service, advertising, etc.)
Filing Your Other Tobacco Products Tax Return and Remitting Payment
Nevada’s OTP tax applies when the wholesale dealer makes the first sale in the state or when the OTP comes into the possession of a business in the state of Nevada. Wholesale dealers are responsible for collecting and remitting payment and their OTP excise tax return to the Department of Revenue by the 20th of the month for the prior month’s period (e.g., January’s tax return is due by February 20th).
Aside from filing OTP excise tax returns, wholesalers and retailers of tobacco must also retain various sales records necessary to support the information on their tax returns for at least 5 years in the event of an audit. This includes receipts, invoices, inventory records, financial statements, etc. Specifically, you must retain a separate invoice for each purchase that contains the following information:
- Seller’s name and address
- Buyer’s name and address
- Purchase date
- Invoice number
- Delivery method
- An itemization of the product sold, including its quantity, type, size, and price
The Tobacco Retailer Collects and Remits Nevada Sales Tax
Like other goods and services in Nevada, the sale of OTP is also subject to state and local sales tax. Tobacco retailers are responsible for collecting the tax from customers who are end-users and remitting the tax to the Department of Revenue along with their sales tax returns.
What Are the Penalties for Noncompliance with Nevada’s OTP Rules?
A tobacco wholesaler or retailer that fails to follow Nevada’s various tax and licensing rules may risk exposure to a variety of civil and criminal penalties. Depending on the nature and severity of your noncompliance (e.g., repeated offenses), you may be looking at one or more of the following penalties:
- Suspension or termination of your license to sell OTP
- Fines ranging from $1,000 to $5,000 per offense
- Tax penalties of 10 to 25%
- Misdemeanor and felony convictions
Contact Tobacco Tax Refund, Inc. For More Help with Nevada’s OTP Regulations
Tobacco Tax Refund, Inc. is a consulting firm committed to helping tobacco businesses like yours when it comes to their compliance with Nevada’s tax or licensure obligations. We act as an experienced and affordable resource when interacting with Nevada’s Department of Revenue. Our office handles all matters pertaining to your license applications, tax audits, appealing tax assessments, and claiming your available tax credits or refunds. If you have concerns about your compliance in Nevada or need help with an upcoming audit, our consultants are ready to lend their support.
Schedule a consultation with Tobacco Tax Refund, Inc. today.