Tobacco Tax and Licensing Rules for Pennsylvania Businesses
Pennsylvania requires businesses that sell tobacco products in the state to comply with licensing standards and remittance of applicable taxes. These rules apply regardless of your business location or if you operate entirely online. If you sell tobacco products in Pennsylvania, these rules apply to your business. Knowing your tax and licensing obligations is crucial for protecting your business investment and mitigating the risk of penalties for noncompliance.
Which Pennsylvania Tobacco Products License Do You Need?
If your tobacco business is in Pennsylvania or makes sales to customers located in the state, then you will need the license that corresponds with your type of sales. Pennsylvania has three types of licenses with distinct applications you can complete using PA-100 along with payment of the application fee, which are:
- Retailer license ($25 per location)
- Vending machine license ($25 per location)
- Wholesaler & Manufacturer license ($1,500 per location)
- Philadelphia retailer permit (if applicable)
You must renew your license electronically using the Department of Revenue’s Pennsylvania Tax Hub (PATH) as of November 2022. Licenses expire on the last day of February following the date of issuance. For example, a license issued on July 1, 2022, would need renewal prior to February 28, 2023.
Pennsylvania’s Other Tobacco Products Tax
Starting in 2016, Pennsylvania now imposes an excise tax on the sale of other tobacco products (OTP), which covers a broad range of items, including e-cigarettes, pipe tobacco, chewing tobacco, and many others. The wholesale dealer or manufacturer is generally responsible for collecting the tax when making a first sale in Pennsylvania based on the weight of the product sold. However, retailers can be liable for the tax when the seller does not collect it from them, in which case the tax applies to the retailer’s purchase price of the OTP. The tax rate is 55 cents per ounce or 40% of the purchase price for sales of e-cigarettes. If your sale or transfer of OTP is exempt from tax, then you must complete and keep a record using an exemption certificate (REV-1042).
Retailers Are Still Responsible for Pennsylvania Sales Tax
In addition to the other tobacco products tax, the sale of OTP at retail also triggers the collection of Pennsylvania’s state and local sales tax. The state sales tax rate is 6%. However, local rates may apply if your sales take place in Allegheny County (1%) or Philadelphia (2%), for example.
Filing Your Other Tobacco Products Tax Return and Remitting Payment
Wholesalers and manufacturers must submit monthly tax returns via the Department’s online system. Along with your tax return and remittance of OTP tax, you must also submit monthly information reports using REV-679 and REV-1808. You can review REV-703 for information on specific due dates for submitting your OTP tax reporting and payments.
What’s the Penalty for Noncompliance with Pennsylvania’s Other Tobacco Products Tax Laws?
Noncompliance with any of Pennsylvania’s rules surrounding its other tobacco products tax is a serious offense that can lead to a variety of penalties that range from fines up to $5,000 for a first offense to criminal conviction and imprisonment. This applies to all aspects of the Department of Revenue’s administration of its OTP tax, such as recordkeeping, timely filing and payment of tax, and other obligations your tobacco business may have. Compliance shortfalls can also mean suspension or revocation of your license to sell tobacco products in Pennsylvania.
Get Professional Help with Pennsylvania Tobacco Tax or Compliance Matters
Tobacco Tax Refund, Inc. is a consulting firm committed to helping tobacco businesses like yours when it comes to regulatory compliance matters such as taxation or licensing. We help tobacco distributors and retailers resolve their issues with Pennsylvania’s Department of Revenue. Our services extend to preparing refund claims, managing audits, appealing wrongful determinations, and other related issues. If a Pennsylvania tax authority contacts you, or if you have questions about your compliance, our consultants are here to provide cost-effective help.
Schedule a consultation with Tobacco Tax Refund, Inc. about Pennsylvania’s other tobacco product tax.