Cigarette Tax

What definitions apply for purposes of the Wisconsin cigarette tax law?
What requirements must a distributor meet to sell cigarettes to retailers or other permitted wholesalers for sale in the state of Wisconsin?
What requirements must a retailer meet to sell cigarettes to consumers in the state of Wisconsin?
What is the tax rate on cigarettes?
Who must obtain a cigarette permit?
Who pays the cigarette tax?
How is the cigarette tax paid?
Where are the cigarette returns filed?
When are the cigarette returns due?
Are any cigarettes exempt from the cigarette tax?
Who may receive a refund of cigarette tax paid?
How do I correct a cigarette return that I previously filed?
Am I subject to interest or penalties if I file an incorrect cigarette return?
Should I notify the Department of Revenue if the business has a change to its name, address, or ownership or if the business ceases operating in Wisconsin?
How can I obtain additional information or forms relating to the cigarette tax?
What records should I keep for Wisconsin purposes, and how long should I keep them?

What definitions apply for purposes of the Wisconsin cigarette tax law?
- Cigarettes - Wisconsin law defines cigarettes as any roll of tobacco which is wrapped in paper or any substance other than tobacco [sec. 139.30(1), Wis. Stats.].
- Person - The term includes a natural person, sole proprietorship, partnership, limited liability company, corporation, or association.
- Permittee - A person who holds a cigarette permit issued by the Wisconsin Department of Revenue.
What requirements must a distributor meet to sell cigarettes to retailers or other permitted wholesalers for sale in the state of Wisconsin?
The requirements for the legal sale of cigarettes in Wisconsin are found in subch. II of ch. 139 and sec. 995.12, Wis. Stats., (2005-06).

Appearance of a manufacturer's brand(s) in the Attorney General's Directory of Certifying Manufacturers, does not, on its own, constitute legal sale of that product to Wisconsin consumers. Any distributor permittee who violates any of the following requirements is subject to revocation of its cigarette permit, fines/forfeitures, and/or confiscation of illegal cigarettes.
- Direct buy of cigarettes by distributors
  
  Wisconsin distributors (both in-state and out-of-state) may affix Wisconsin tax stamps only to cigarettes purchased directly from the manufacturer of those cigarettes. For cigarettes imported into the U.S., unstamped cigarettes must be purchased directly from the manufacturer's authorized first importer of record of those cigarettes. Wisconsin distributors may also purchase cigarettes with the Wisconsin tax stamp affixed from other distributors who have Department approval for those brand(s) and supplier(s).
  
  Any cigarettes purchased from another source are illegal and are subject to confiscation in Wisconsin.
- Department approval prior to receipt or sale of cigarettes in Wisconsin
  
  Wisconsin distributors must have the approval of the Wisconsin Department of Revenue for the direct purchase of all cigarettes they will receive in Wisconsin or to which they will affix Wisconsin tax stamps for sale in Wisconsin prior to receipt or sale in Wisconsin.
  
  Distributors shall file a Letter of Direct Buy (LDB) from the manufacturer or authorized importer. The Department will notify the distributor of approval to purchase those cigarettes unstamped from the manufacturer or authorized importer. No cigarettes may be brought or shipped into Wisconsin without the Department's approval. To be approved, the cigarettes must meet all state and federal requirements for legal sale, including appearance of good standing in the Attorney General's Directory of Certifying Manufacturers.
- Continued legal sale after Department approval
  
  For continued legal sale after receiving Department approval, the manufacturer's products must:
  - Continue to appear in good standing in the Attorney General's Directory.
  - Continue to maintain federal requirements for legal sale (such as FTC and HHS).
  - Continue direct buy from approved legal source. Invoices must validate this requirement.
- Legal Tax Stamp Application
  A distributor may affix Wisconsin tax stamps only to Department-approved cigarettes that appear in good standing in the Attorney General's Directory of Certifying Manufacturers. Distributors may not affix stamps to any product or sell any stamped product on or after the date a product is delisted from the Attorney General's Directory and is not available to Wisconsin consumers.
- Reporting requirement for all distributor permittees (F)CD/(F)TPD
  
  All distributors must properly report all transactions of cigarette products, including Roll-Your-Own (RYO) and Little Cigars, by manufacturer, brand, and single sticks/ounces to the Wisconsin Department of Revenue on their monthly reporting forms and maintain all records for at least five years.
  
  All Subsequent Participating Manufacturers' (SPM) and Non-Participating Manufacturers' (NPM) brands must currently be reported, with no exceptions.
What requirements must a retailer meet to sell cigarettes to consumers in the state of Wisconsin?
A retailer must meet the following requirements for all cigarettes sold to Wisconsin consumers:
- Wisconsin excise tax must have been paid on the cigarettes.
- The retailer must hold a valid license to sell cigarettes to consumers in Wisconsin.
Licensed retailers are required to purchase their cigarettes for sale to Wisconsin consumers from permitted wholesalers (distributors or jobbers) who sell cigarettes on which the Wisconsin excise taxes have been paid, evidenced by the Wisconsin Cigarette Tax Stamp affixed to each pack of cigarettes. Cigarettes possessed and/or offered for sale to consumers in this state without the proper Wisconsin tax stamp affixed are untaxed and illegal contraband cigarettes subject to seizure. Such sales of cigarettes via the Internet or mail order to consumers in the state of Wisconsin are not legal. [See sec. 134.65, subch. II of ch. 139, and sec. 995.12, Wis. Stats., (2005-06)]

Appearance of a manufacturer's brand(s) in the Attorney General's Directory of Certifying Manufacturers, does not, on its own, constitute legal sale of that product to Wisconsin consumers. Any retailer who violates the requirements for the legal sale of cigarettes in this state is subject to confiscation of those cigarettes and/or criminal charges.
What is the tax rate on cigarettes?
From October 1, 2001, through December 31, 2007, the tax rate on cigarettes is 3.85¢ excise tax per single cigarette, which is 77¢ on a 20-pack. For periods after January 1, 2008, the tax rate on cigarettes is 8.85¢ excise tax per single cigarette, which is $1.77 on a 20-pack. [sec. 139.31, Wis. Stats., effective January 1, 2008].

Inventory tax: When the cigarette tax rate increases, an inventory tax is imposed on all permittees and retailers who possess stamped cigarettes held for resale on which the cigarette tax was paid at the prior rate and upon unaffixed stamps in the possession of distributors. The inventory tax is the amount by which the cigarette tax rate increases. The inventory tax return is due 30 days after the effective date of the tax increase. Late-filed returns are subject to a $10 late-filing fee and delinquent interest of 1.5% per month. A penalty for a false or fraudulent return may be assessed and is an amount equal to the tax that the person evaded or attempted to evade [sec. 139.315, Wis. Stats.].

Who must obtain a cigarette permit?

Any person who wants to handle cigarettes at the wholesale level in Wisconsin must obtain a cigarette permit from the Department of Revenue.

Persons who want a cigarette permit must hold a Business Tax Registration (BTR) Certificate [sec. 73.03(50), Wis. Stats.]. The BTR certificate and cigarette permits are issued by the Excise Section in Madison, (608) 261-6435. There is a one-time $20 charge for the BTR certificate. This certificate is renewable every two years for $10. The BTR certificate and cigarette permits are valid until canceled by the permittee or revoked by the Department. A person need only obtain one BTR certificate regardless of the number of permits or licenses held with the Department.

Types of Wholesale Permits/Prefix	Statute	Fee	Term of Permit
Wisconsin distributor (CD)	sec. 139.34	none	2 years
Wisconsin jobber (CJ)	sec. 139.34	none	2 years
Wisconsin multiple retailer (CMR)	sec. 139.34	none	2 years
Wisconsin vendor (CV)	sec. 139.34	none	2 years
Wisconsin cigarette warehouse (CW)	sec. 139.34	none	2 years
Out-of-state distributor (FCD)	sec. 139.34	none	2 years
Out-of-state jobber (FCJ)	sec. 139.34	none	2 years
Out-of-state vendor (FCV)	sec. 139.34	none	2 years
Out-of-state distributor and manufacturer (FCDM)	sec. 139.34	none	2 years
Out-of-state multiple retailer (FCMR)	sec. 139.34	none	2 years
Wisconsin and out-of-state cigarette salespersons	sec. 139.37	none	2 years

Permittees and retailers who purchase cigarettes from sources that do not hold a permit with the Department may have their cigarettes confiscated by the Department's Alcohol & Tobacco Enforcement Section [secs. 139.321(2) and 139.40, Wis. Stats.].

Security required - Security will be required (e.g., cash, bond) from cigarette distributors who do not timely file monthly returns and/or do not timely pay any cigarette tax due. The Secretary of Revenue will determine the amount of security required [sec. 139.322, Wis. Stats.].

Who pays the cigarette tax?
The tax is paid by cigarette distributors who are required to purchase tax stamps from the Department which they apply to each pack of cigarettes. Stamps are purchased on credit and payment must be submitted by distributors along with their monthly cigarette tax returns on or before the 15th day after the month in which the stamps are received.
- Cigarette tax stamps [sec. 139.32, Wis. Stats.]
  Cigarette tax stamps are purchased by distributors from the Department's Processing Bureau using the Wisconsin Cigarette Stamp Purchase Order Form CT-108. Stamps may be either heat applied (fusion) or water transfer (decal). Effective July 1, 1994, cigarette stamp meter machines were no longer authorized as a method to apply impressions of cigarette tax stamps to packs sold in Wisconsin. Stamps come in different size rolls and sheet configurations. Special distinctive stamps must be applied to packs of cigarettes sold to Indian tribes [sec. 139.32(2m), Wis. Stats.].
  
  Distributors receive a 0.7% tax discount when purchasing stamps to help offset the costs they incur when applying the stamps to packs of cigarettes [sec. 139.32(5), Wis. Stats.]. However, distributors must pay the costs of printing stamps and shipping them [sec. 139.32(5m), Wis. Stats.].
  
  Mail or fax stamp orders to:
  
  Wisconsin Department of Revenue
  P.O. Box 8900
  Madison, WI 53708-8900
  FAX: (608) 266-9659
  
  or Express Mail to:
  
  Wisconsin Department of Revenue
  2135 Rimrock Road, Mail Stop 3-14
  Madison, WI 53713
  
  If you have questions about stamps, call (608) 266-3282.
- Cigarette use tax [secs. 139.321 and 139.33, Wis. Stats.]
  No person other than a cigarette distributor licensed by the Department may bring into Wisconsin cigarettes on which the Wisconsin cigarette tax has not been paid. Payment of the tax is demonstrated by the cigarette tax stamp which a distributor must apply to all packs of cigarettes to be sold in Wisconsin.
  
  Cigarettes brought into Wisconsin that are not stamped with a Wisconsin cigarette tax stamp or stamped with another state's tax stamp are untaxed cigarettes. Persons other than cigarette distributors who bring untaxed cigarettes into Wisconsin must pay a use tax on the cigarettes. These persons must contact the Department in writing within 15 days of bringing in untaxed cigarettes declaring the number of cigarettes brought in and remitting the use tax due (see Form CT-121s). The use tax rate is the same rate as the Wisconsin cigarette tax (see question #4). If the use tax is not paid when due, delinquent interest of 1.5% per month is imposed and a penalty of $25 per each 200 cigarettes (1 carton) may also be imposed. Call (608) 266-8970 for assistance or forms. A Cigarette Use Tax Return, Form CT-121s may be printed from the Department's website.
  
  Members of the Armed Forces of the United States Government are not required to report and pay the use tax on cigarettes issued to them by the federal government or purchased in any Armed Forces post exchange or service store. Cigarettes sold to state or federally operated veterans' hospitals are not subject to the use tax either.
How is the cigarette tax paid?
The cigarette tax is paid with a monthly return by distributors [sec. 139.38, Wis. Stats.]. The three different cigarette returns are as follows:
- Wisconsin Distributor's Cigarette Tax Return, Form CT-100.
- Wisconsin Distributor's Cigarette Tax Return - Out-of-State Permittees, Form CT-105.
- Quarterly Report of Wisconsin Tax-Paid Cigarettes Purchased, Form CT-114a (informational report, no tax owing).
EFT tax payments - Taxes may be required to be paid to the Department by electronic funds transfer (EFT). Distributors with $40,000 or more annual tax liability must make their cigarette tax payments by EFT. Information about paying by EFT can be obtained from the Electronic Funds Transfer page or by calling (608) 264-9918.
Where are the cigarette returns filed?
Send the monthly returns (Forms CT-100 and CT-105) and remittances to:

Wisconsin Department of Revenue
Box 93640
Milwaukee, WI 53293-0640

Send the quarterly informational reports (Form CT-114a) to:

Wisconsin Department of Revenue
Excise Tax Section
P.O. Box 8900
Madison, WI 53708-8900

Note: The Master Settlement Agreement (MSA) between the 46 signatory states and the cigarette manufacturers required the passage of a model statute by the State of Wisconsin. The model statute was passed and became effective on May 23, 2000, placing Wisconsin in compliance with the MSA. The passage of the model statute imposes additional reporting requirements by distributors.
When are the cigarette returns due?
All returns are due by the 15th day of the month following the month or quarter covered by the return [sec. 139.38(2), Wis. Stats.]. For example, a return for October is due November 15.

Late filed returns are subject to the following charges:
- Late-filing fee - $10 [sec. 139.38(5), Wis. Stats.].
- Delinquent interest - 1.5% per month [sec. 139.44(11), Wis. Stats.].
There are no extensions of time granted if you are unable to file a cigarette return and pay any amount owing by the due date.
Are any cigarettes exempt from the cigarette tax?
The Wisconsin cigarette tax is not imposed upon the following [sec. 139.31(3), Wis. Stats.]:
- Cigarettes shipped via interstate commerce to customers in other states for sale outside Wisconsin.
- Cigarettes sold to the Armed Forces (e.g., Camp McCoy) or state or federally operated veterans' hospitals.
- Cigarettes sold to interstate carriers of passengers for hire to be resold to bona fide passengers being transported.
Who may receive a refund of cigarette tax paid?
- Distributor Refunds [sec. 139.36, Wis. Stats.]
  
  Licensed cigarette distributors may file Form CT-624 to obtain the following refunds:
  - Unsalable cigarettes - A cigarette distributor can receive a refund of the tax paid for Wisconsin stamps affixed to packs of unsalable cigarettes they return to the manufacturer. Verification from the manufacturer of the returned cigarettes must accompany the Form CT-624.
  - Unaffixed stamps - Distributors going out of business or selling their business can receive a refund of the tax paid for Wisconsin stamps not affixed to packs of cigarettes. Refunds for unaffixed distinctive stamps are also available to distributors who no longer sell cigarettes to Indian tribes. However, no refunds are issued to distributors who in error order too many stamps for current use.
- Native American Refund
  
  Indian tribal councils who have entered into agreements with the State are eligible for two refunds:
  - 30% of the cigarette tax paid on cigarettes sold on reservations to enrolled members of the tribe residing on the reservation. The refund claim is sent by the Department to tribes at the end of each quarter [sec. 139.325, Wis. Stats., and sec. Tax 9.08, Wis. Administrative Code].
  - 70% of the cigarette tax paid on cigarettes sold by authorized Indian retailers on reservation trust land over which a tribe has jurisdiction. The land must have been designated a reservation or trust land on or before January 1, 1983. No more than two refund claims (Form CT-001) can be filed within a calendar month [sec. 139.323, Wis. Stats., and sec. Tax 9.08, Wis. Administrative Code]
How do I correct a cigarette return that I previously filed?
If you need to change a return previously filed, send your corrected return and/or schedules labeled "corrected" or "amended" to the following address:
- Tax due on corrected return (Forms CT-100 and CT-105)
  
  Send return plus your remittance to:
  
  Wisconsin Department of Revenue
  Box 93640
  Milwaukee, WI 53293-0640
- No tax owing or refund due on corrected return (Form CT-100, CT-105, or CT-114a)
  Send return to:
  
  Wisconsin Department of Revenue
  Excise Tax Section
  P.O. Box 8900
  Madison, WI 53708-8900
Am I subject to interest or penalties if I file an incorrect cigarette return?
The following interest and discretionary penalty may be applied when you file incorrect cigarette returns:
- Unpaid taxes bear interest at the rate of 12% per year [sec. 139.44(9), Wis. Stats.].
- Refunded taxes bear interest at the rate of 9% per year [sec. 139.44(9), Wis. Stats.].
- Negligence penalty of 25% of the tax is imposed if there is negligence in filing a return [sec. 139.44(12), Wis. Stats.].
Should I notify the Department of Revenue if the business has a change to its name, address, or ownership or if the business ceases operating in Wisconsin?
You must notify the Department of Revenue when your business has any change to its name, address, or ownership or when you cease operating in Wisconsin. You can notify the Department by letter or by attaching a note to your return. If your name or ownership changes and you receive a different Federal Employer Identification Number (FEIN), you must file a new application with the Department and update your security. When you cease operations, you must be sure to file a cigarette return for the last month (or quarter) of operations even if you were in business only a few days during that period. A report must be filed until you have no inventories of cigarettes and/or stamps. Call (608) 261-6435 if you have any questions about your cigarette tax permit.
How can I obtain additional information or forms relating to the cigarette tax?
Contact the following Department offices to receive more information or forms regarding Wisconsin's cigarette tax:
- Registration and Security
  
  Wisconsin Department of Revenue
  Mail Stop 5-107
  P.O. Box 8900
  Madison, WI 53708-8900
  (608) 261-6435
  FAX: (608) 261-7049
  E-Mail Additional Questions
- Filing Returns, Paying Tax, Forms, and Other Information
  
  Wisconsin Department of Revenue
  Excise Tax Section
  P.O. Box 8900
  Madison, WI 53708-8900
  (608) 266-8970 or 261-8985
  FAX: (608) 261-7049
  E-Mail Additional Questions
What records should I keep for Wisconsin purposes, and how long should I keep them?
You must keep a complete copy of your cigarette returns and all records pertaining to your business for at least five years so the Department can determine how you computed your tax liabilities and MSA requirements [secs. 139.38(1), 139.39(6), and 995.12, Wis. Stats. (2005-06)]. The required records include, but are not limited to, your purchases, receipts, inventories, sales (whether taxable or exempt), distribution, and consumption of products. The records must be stored on the premises described in the permit in a manner easily accessible for review by Department representatives. When records are not maintained, the Department presumes that all products you purchase or receive are subject to tax without benefit of any deductions.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Excise Tax Section
Mail Stop 5-107
P.O. Box 8900
Madison, WI 53708-8900
Phone: (608) 266-8970
Fax: (608) 261-7049
E-Mail Additional Questions

Last updated December 20, 2007

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