FET FLOOR STOCKS TAX
DEFINITIONS AND CRITERIA

IMPORTANT INFORMATION

REGARDING A FLOOR STOCK TAX ON ALL CIGARETTE AND TOBACCO PRODUCTS

The Children’s Health Insurance Program Reauthorization Act of 2009 was signed into law on February 4, 2009. The Act increases the Federal excise tax on cigarette and tobacco products effective April 1, 2009. In addition, the Act imposes a floor stocks tax on all tobacco products, cigarette papers and cigarette tubes held for sale on April 1, 2009. Large cigars are exempt from this floor stocks tax. The amount of the floor stocks tax is equal to the difference between the new tax rate and the one just previous to it. The amount of the floor stocks tax for each retailer will be established by an inventory of all cigarette and tobacco products in the possession of the retailer on April 1, 2009. The tax must be paid on or before August 1, 2009.

This notice is to alert our retail partners of this new legislation and the impact on our industry. For more information and details regarding the Act and the process for complying with the floor stocks tax, please visit the Alcohol and Tobacco Tax and Trade Bureau web site at: http://www.ttb.gov

Small Cigarettes
(noted on pack as Class A) Retailer must count the number of cigarettes/sticks and record on return sheet. The number of sticks must be multiplied

Large Cigarettes
(noted on pack as Class B) We do not carry any of these items. by 0.03083 and the total tax computed.

Small Cigars
Will be noted on pack, box or carton as “little” or “small” cigars. Retailer must count the number of little or small cigars and record on the return sheet. The number of cigars must be multiplied by 0.048502 and the total tax computed.

Large Cigars
All other cigars that are not little or small cigars. Large cigars are exempt from Floor Stocks Tax.

Chewing Tobacco
Any leaf tobacco that is not intended to be smoked. Calculate the number of pounds of Chewing Tobacco in the store and multiply by 0.3083 per pound to compute total tax due.

Snuff
Any finely cut, ground, or powdered tobacco not intended to be smoked. Calculate the number of pounds of Snuff in the store and multiply by 0.925 per pound to compute total tax due.

Pipe Tobacco
Any tobacco which, because of its appearance, type, packaging or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco to be smoked in a pipe. Calculate the number of pounds of pipe tobacco in the store and multiply by $1.7342 per pound to compute total tax due.

Roll Your Own Tobacco
Any tobacco, which, because of its appearance, type, packaging or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes. Calculate the number of pounds of Roll Your Own Tobacco in the store and multiply by $23.6831 per pound to compute total tax due.

Cigarette Papers
Cigarette Papers must be reported in units of 50. Inventory the total number of individual papers in the store, divide by 50, round up any remaining count and multiply by 0.0193 per 50 papers to compute the total tax due.

EXAMPLE: 350 papers on hand divided by 50 equals 7 units of 50 times 0.0193 equals 0.1351 total tax due. Rounded up, your tax due on 350 individual cigarette papers is 0.14.

NOTE: Cigarette papers are packed differently by brand: Zig Zag papers are 32 papers per pouch, Job papers are 24 papers per pouch, and Joker papers are 24 papers per pouch.

Cigarette Tubes
Cigarette Tubes are cigarette papers made into hollow cylinders for use in making cigarettes. This product must be reported in units of 50. Count the total number of tubes in the store, divide the total by 50 and round up, multiplying by 0.0386 per 50 tubes to compute the total tax due.

EXAMPLE: 600 tubes on hand divided by 50 equals 12 units of 50 times 0.0386 equals 0.4632 total tax due. Rounded up, your tax due on 600 individual cigarette tubes is 0.46.

This FET Floor Stocks Tax Definitions and Criteria synopsis is provided as a guidance tool only for TTB F 5000.28T09. It is not controlling, should not be relied upon, nor in any way is it meant to be a binding document or have any legal effect. It is merely a synopsis of the instructions for compliance with DEPARTMENT OF THE TREASURY ALCOHOL AND TOBACCO TAX AND TRADE BUREAU – TTB F 5000.28T09 going into effect April 1, 2009. If more detail or information is needed, you should directly consult the specific DEPARTMENT OF THE TREASURY ALCOHOL AND TOBACCO TAX TRADE BUREAU instructions for TTB F 5000.28T09. http://www.ttb.gov