Tobacco products mean any smokeless tobacco products, smoking tobacco, chewing tobacco, and any kind or form of tobacco prepared in a manner suitable for chewing or smoking, or both, or any kind or form of tobacco that is suitable to be placed in an individual‘s oral cavity, except: cigarettes, reference tobacco, snuff, and chewing tobacco.

Definition of Distributor: Any person in the State of Kentucky who has tobacco products for resale within the state on which the tax has not been paid.

Definition of retail distributor: Any retailer who is licensed by the department of revenues in the State of Kentucky for purchase of tobacco products.

Who can apply for tobacco license?

Every distributor who brings untaxed tobacco products in the state for sale to retailers or to any person who is not licensed by the department is required to obtain a distributor license first.

Every wholesaler who purchases at least 75% of the cigarettes directly from the manufacturer need to obtain a license from the department.

There is no requirement for retail sale license but if a retailer is purchasing tobacco products on which tax has not been paid from a distributor who is not licensed with the DOR, then he or she will have to apply for a retail distributor‘s license from the department of revenue.

How can I apply for license?

License can be obtained by applying electronically on Kentucky one stop business portal on DOR website. You can log in using your username and password and follow the steps mentioned on the portal.

Tobacco licenses are issued for one year from July to June and is renewed annually.

What is the license fee?

Wholesalers, Distributor‘s	$500
Retail Distributor	$100

Responsibilities of retailers and retail distributors?

• Distributor and retail distributor should keep in each licensed place of business complete and accurate records sales, purchases, general ledgers and other tax records for at least four years.
• They are required to mention the license number and the amount of tax on each invoice which are sent to the retailer.

What are the tax rates on the cigarette and other tobacco products in Kentucky?

• Tax rate on the cigarette is $0.6 per pack of 20 cigarettes.
• Snuff $0.19 per 1.5 ounce.
• Chewing Tobacco: $0.19 per each single unit.
• OTP: 15% of distributor‘s sales price.

In case of cigarettes, tax is due at the time when any wholesalers in the State acquires unstamped cigarettes whereas in case of OTP, tax is imposed at the time of sale of OTP.

When are the tax returns due?

Cigarettes and OTP returns are required to be filed monthly on the 20th of each month following the reporting month. Monthly return is filed on Form 73A420 for cigarettes and 73A422 for tobacco products and are submitted by the licensed distributors who complete information on tobacco returns.

Who is responsible for tax collection and payment?

It is the responsibility of the distributors to pay and submit taxes to the department. However, if a retail distributor purchases directly from the distributors who are not licensed with DOR, then he or she will directly pay the applicable taxes on the purchase price of tobacco products to the DOR.

Is there any penalty for non-filing of returns?

Yes, there is a penalty for non-filing of return on time and non-payment of tax, which is 2% of tax due for a month up to a maximum of 20% of the amount of unpaid tax but should not be less than $10.

What are the PACT act requirements for cigarettes and tobacco products?

• As per the Prevent All Cigarette Trafficking (PACT) act, every tax filer is required to submit due tobacco products report on the 10th of every month.
• As per the act, all federal and state taxes are required to be paid before any tobacco products are delivered to the customers.
• This law required every tobacco dealer to check the age and identity of the customers before delivering tobacco products to them.
• You are required to file a statement in the Kentucky, if you advertise your business of selling cigarettes and tobacco products. This statement must contain details of your name, business name, phone number, email address agent name and address.