Tobacco Products Distributor Tax Return

The California Department of Tax and Fee Administration (CDTFA) administers the California Cigarette and Tobacco Products Tax Law. This law imposes a tax upon the distribution of tobacco products in California, based on the wholesale cost of these products (Regulation 4076). We determine the rate each year, which is equivalent to the combined rate of tax imposed on cigarettes.

Filing Requirements

Every licensed tobacco distributor is required to file a Tobacco Products Distributor Tax Return and supplemental schedules (if applicable) of all distributions of tobacco products and the wholesale cost during the reporting period. A return must be filed, via electronic media, for each reporting period, on or before the 25th day of the month following the reporting period, even if there are no transactions to report. Remittance for the amount due must be submitted by the due date of the return. A copy of the return and supplemental schedules (if applicable), should be retained on the licensed premises for verification by CDTFA auditors. (Revenue and Taxation Code section 30181(b)).

Penalty and Interest

The penalty for filing a late return and/or late payment is ten percent of the amount due for the period. Interest also applies to late payments for each month or fraction of a month that the payment is late. (Revenue and Taxation Code section 30281)

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Definitions

Tobacco Products include, but are not limited to, a product containing, made, or derived from tobacco or nicotine that is intended for human consumption, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including, but not limited to, cigars, little cigars, chewing tobacco, pipe tobacco, shisha, or snuff, but does not include cigarettes. Electronic cigarettes are considered a tobacco product (Revenue and Taxation Code (R&TC) section 30121 (b)).

Electronic Cigarettes include any device or delivery system sold in combination with nicotine which can be used to deliver to a person, nicotine in aerosolized or vaporized form, including, but not limited to, e-cigarettes, e-cigars, e-pipes, vape pens, or e-hookahs. Electronic cigarettes include any component, part, or accessory of such a device that is used during the operation of the device when sold in combination with any liquid or substance containing nicotine. Electronic cigarettes also include any liquid or substance containing nicotine, whether sold separately or sold in combination with any device that could be used to deliver to a person nicotine in aerosolized or vaporized form (R&TC section 30121 (c)).

Distribution includes the sale of untaxed tobacco products in California; the use or consumption, including the giving away as samples, of untaxed tobacco products in California; or the placing in California of untaxed tobacco products in a vending machine or in retail stock for the purpose of selling the tobacco products to consumers (R&TC section 30008).

Distributor includes every person who makes a “distribution” of tobacco products, or who sells or accepts orders for tobacco products that are to be transported from outside California to a consumer within California (R&TC section 30011).

Imposition of Tax is upon every distributor that must pay a tax upon the distribution of tobacco products based on the wholesale cost of these tobacco products (R&TC sections 30123 (b and 30131.2).

Untaxed Tobacco Product is either: 1) any tobacco product that has not yet been distributed in a manner that results in a tax liability, or 2) any tobacco product that was distributed in a manner that resulted in a tax liability, but was returned to the distributor after the tax was paid and for which distributor has either claimed a deduction (R&TC sections 30123(c) or 30131.2(c)), or a refund or credit pursuant to R&TC sections 30176.2 or 30178.2.

Retail Stock includes, but is not limited to, tobacco products that are displayed for sale to consumers or stored in an area where retail sales are made. Retail stock is considered to be distributed in California with excise tax due. If you purchase untaxed tobacco products and only make sales to consumers, your entire inventory is considered retail stock, distributed in California, and the excise tax is immediately due. Untaxed tobacco products that are securely stored away from the area where retail sales are made are not considered retail stock if you make sales to other licensees. The untaxed tobacco products must be in the original manufacturer's packaging with an unbroken seal and securely separated from the retail area. (Regulation 4001).

Wholesale Cost means the cost of tobacco products to the distributor prior to any discounts or trade allowances (R&TC sections 30017, 30123 (b), and 30131.2).

For more clarification on wholesale cost, please see our Tax Guide for Cigarettes and Tobacco Products under the Industry Topics section, under the heading Distributors (Cigarette and Tobacco Products Tax Regulation 4076, Wholesale Cost of Tobacco Products).

Roll-Your-Own Tobacco Sold in California

As part of the Master Settlement Agreement between certain participating cigarette and tobacco manufacturers and the State of California we must compile information about cigarettes and roll-your-own tobacco sold in California made by manufacturers who did not sign the Master Settlement Agreement (nonparticipating manufacturers). (Revenue and Taxation Code 30165.1(g)(1))

If you sold any roll-your-own tobacco from a nonparticipating manufacturer listed on the California Tobacco Directory, either directly or through a distributor, you must complete Schedule T, Roll-Your-Own Tobacco Sold in California.

Schedule T

Did you sell any roll-your-own tobacco from a nonparticipating manufacturer (directly or through a distributor) this reporting period?

If you sold any roll-your-own tobacco from a nonparticipating manufacturer listed on the California Tobacco Directory, either directly or through a distributor, this reporting period, select Yes and then select Next. (Refer to the Schedule T Information section below for more information.)

If you did not sell any roll-your-own tobacco from a nonparticipating manufacturer listed on the California Tobacco Directory this reporting period, select No and then Next.

Schedule T Information

You must report all roll-your-own tobacco you sold in California from a nonparticipating manufacturer listed on the California Tobacco Directory, either directly or through a distributor, during this reporting period on Schedule T. To complete Schedule T, select  Add a Record and enter all requested information.

Roll-Your-Own Tobacco Sold in California

Brand Name. Enter the brand name of the roll-your-own tobacco product sold only if the product is not manufactured by a participating manufacturer listed on the California Tobacco Directory.

Note: Do not list cigarettes, cigars, little cigars, pipe tobacco, or smokeless tobacco products on Schedule T. Cigarettes should be reported on the Cigarette Distributor/Importer Tax Report.

Ounces of Roll-Your-Own Tobacco. Enter the ounces of roll-your-own tobacco you sold in California.

Nonparticipating Manufacturer’s Name. Enter the name of the nonparticipating manufacturer of the brand name you sold.

• For roll-your-own tobacco manufactured inside the United States, list the nonparticipating manufacturer of the tobacco.
• For roll-your-own tobacco manufactured outside the United States, including foreign manufacturers of domestic brand name roll-your-own tobacco, list both the nonparticipating manufacturer and the importer of the tobacco.

Nonparticipating Manufacturer’s Address. Enter the address of the nonparticipating manufacturer of the brand name you sold.

Purchased From

Seller’s Name. Enter the name of the person or business from whom you bought each brand.

Seller’s Address. Enter the address of the person or business from whom you bought each brand.

Complete ONLY for Foreign Manufactured Brand

First Importer’s Name. Enter the name of the first importer of the foreign manufactured brand.

First Importer’s Address. Enter the address of the first importer of the foreign manufactured brand.

Once you have completed the information for the entry, select Add  to save the entry and return to the Schedule T screen. To add additional entries, select Add a Record. Select Next to continue.

Transactions

Wholesale cost of tobacco products distributed. Enter the wholesale cost, as defined, of electronic cigarettes and vaping products that contain nicotine, and all other tobacco products (OTP) distributed, in its corresponding field.

Important Notes:

Include:

1. (1) Sales to licensed California wholesalers or retailers;
2. (2) Distributions of all tobacco products purchased from out-of-state distributors; and
3. (3) Distributions of all tobacco products that were manufactured outside of the U.S. and were purchased from an original importer.

Do not include:

1. (1) The wholesale cost of tobacco products that were returned to you by a customer during the same month covered by this return when you refund the entire amount the customer paid for the tobacco products either in cash or credit. The refund or credit of the entire amount shall be deemed to be given when the purchase price, less rehandling charges and restocking cost, is refunded or credited to a customer (Revenue & Taxation Code (R&TC) sections 30123(c), 30131.2(c)), and 30176.2);
2. (2) Tax-paid products purchased from another in-state licensed distributor that you subsequently sold; or
3. (3) Sales of tobacco products by an out-of-state distributor to an in-state licensed distributor.

Note: If you are also a manufacturer (R&TC section 30103) or original importer of tobacco products manufactured outside of the U.S. (R&TC section 30105), you must report your nontaxable sales (for example, sales to interstate or foreign commerce, sales to U.S. armed forces, etc.) on your Schedule – Manufacturer/Importer Report of Nontaxable Sales of Tobacco Products, which is filed with the Tobacco Products Manufacturer/Importer Return of Taxable Distributions of Samples in California.

Total wholesale cost of all tobacco products distributed. The system will automatically calculate this field.

Exemptions

Note:

1. (1) Exemptions taken for interstate or foreign commerce, interstate or foreign passenger common carriers, or other exemptions must be included in the Wholesale cost of tobacco products distributed line above, under the Transactions section.
2. (2) If you are also a manufacturer or original importer of tobacco products manufactured outside of the U.S., you must report your nontaxable sales on your Schedule – Manufacturer/Importer Report of Nontaxable Sales of Tobacco Products, which is filed with the Tobacco Products Manufacturer/ Importer Return of Taxable Distributions of Samples in California. These nontaxable sales should not be reported on this Tobacco Products Distributor return.

Interstate or foreign commerce (products distributed to purchasers in other states, territories, or foreign countries). Enter the wholesale cost, as defined, of electronic cigarettes and vaping products that contain nicotine, and all other tobacco products (OTP), in its corresponding field, that were distributed to purchasers in other states, territories, or foreign countries by delivery outside California and not returned to this state before use (Revenue & Taxation Code (R&TC) section 30008).

Interstate or foreign passenger common carriers (products distributed to a common carrier engaged in interstate or foreign passenger service). Enter the wholesale cost, as defined, of electronic cigarettes and vaping products that contain nicotine, and all other tobacco products (OTP), in its corresponding field, that were distributed to a common carrier engaged in interstate or foreign passenger service or to a person authorized to sell tobacco products on the facilities of such carriers (R&TC section 30104).

Other exemptions. Enter the wholesale cost, as defined, of electronic cigarettes and vaping products that contain nicotine, and all other tobacco products (OTP), in its corresponding field, that are exempt from excise tax, such as:

1. (1) Tobacco products sold to the United States Army, Air Force, Navy, Marine Corps, or Coast Guard exchanges and commissaries, and Navy or Coast Guard ships' stores (R&TC section 30102(1));
2. (2) Tobacco products under internal revenue bond or customs control (R&TC section 30102.5);
3. (3) Tobacco products sold or transferred to a law enforcement agency for use in a criminal investigation (R&TC section 30103.5); or
4. (4) Sales to the United States Veterans' Administration (R&TC sections 30102(2) and 30105.5).

Subtotal exempt distributions. The system will automatically calculate this field.

Total exempt distributions. The system will automatically calculate this field.

Summary

Taxable distributions. The system will automatically calculate this field.

Electronic Cigarettes and Vaping Products that Contain Nicotine Tax Disbursement Schedule

You must report all sales of electronic cigarettes or vaping products that contain nicotine in California during this reporting period by completing the CDTFA-810-CTN, Electronic Cigarettes and Vaping Products that Contain Nicotine Tax Disbursement Schedule.

How would you like to add CDTFA-810-CTN, Electronic Cigarettes and Vaping Products that Contain Nicotine Tax Disbursement Schedule?

To manually add each transaction to the schedule, select Manually and click Next. (Refer to the Tax Disbursement Schedule Information section below for more information.)

To upload CDTFA-810-CTN, select Upload an Excel Workbook. Under the Upload your Schedule section, select Upload Schedule to upload the Excel file.

Tax Disbursement Schedule Information

To manually complete your Electronic Cigarettes and Vaping Products that Contain Nicotine Tax Disbursement Schedule, enter the requested information for each column.

If you uploaded your schedule, please review the transactions, and correct any errors.

Requested Information

Buyer's Name. Enter the buyer's complete name.

Street Address. Enter the street number and street name where the product was delivered.

City. Enter the name of the city where the product was delivered.

Zip Code. Enter the five-digit ZIP code where the product was delivered.

California Cigarette and Tobacco Products License Number. Enter the buyer’s nine-digit California cigarette and tobacco products license number.

Note:

• If you are an in-state distributor and a licensed retailer and sold to your retail location, enter your own cigarette and tobacco products retailer license number for each location; or
• If you are an out-of-state distributor and sold directly to a consumer, leave this field blank.

Total Sales of Electronic Cigarette and Vaping Products. Enter the total sales amount (excluding sales tax) of all electronic cigarettes and vaping products that contain nicotine.

Note: The total sales amount should not be the same as the wholesale cost of electronic cigarettes and vaping products that contain nicotine that you distributed.

Do you need to report credit on returned electronic cigarettes and vaping products that contain nicotine and/or other tobacco products (OTP) where you reported and paid the tax for a prior reporting period(s)?

If you need to report credit on returned tobacco products where you reported and paid the tax for a prior reporting period(s), select Yes and click the Next button to complete the required Tax Credit Adjustment Worksheet (refer to the below section for more information).

If you do not have return credits to report, select No.

Tax Credit Adjustment Worksheet

Complete the Tax Credit Adjustment Worksheet to claim a credit for returned electronic cigarettes and vaping products that contain nicotine and/or other tobacco products (OTP) where you reported and paid the tax in a prior reporting period(s). The amounts claimed on the worksheet may only consist of tax recovery items if:

• the original taxable distribution of the returned tobacco products was reported in a prior period; and
• you refunded your customer in the current reporting period, either in cash or credit, the entire amount paid, including the excise tax, for the tobacco products, less rehandling and restocking fees.

If you have tax recovery items that should have been claimed in a prior reporting period, you will need to amend the prior period return or file a claim for refund for those transactions rather than claiming them in the current period. For example, if you made a taxable distribution in January 2022 and the customer returned the tobacco products to you in March 2022 and you refunded the entire amount your customer paid you for the tobacco products either in cash or credit in March 2022, the returned tobacco products tax recovery item may only be claimed on the tax return for the March 2022 period. If the March 2022 tax return has already been filed, an amended return or claim for refund will need to be filed for the March 2022 period.

You may claim this credit only if you refunded the entire amount your customer paid you for the tobacco products either in cash or credit. A refund or credit of the entire amount is deemed to be given when you refunded or credited to your customer their purchase price less rehandling and restocking costs. (Revenue and Taxation Code (R&TC) section 30176.2)

You may not claim a credit for tobacco products that were returned to you by your customer during the same reporting period in which the tobacco products were distributed, when you refund or credit your customer the entire amount your customer paid you for the tobacco products (R&TC sections 30123(c) and 30131.2(c)).

For example, you sold OTP to your customer on January 5, 2022. On January 25, 2022, your customer returned the OTP to you and you refunded your customer the entire amount your customer paid for the OTP. You may not report the wholesale cost of the returned OTP distributed on your tax return for the January 2022 reporting period. In addition, you may not claim a credit for the returned OTP on your tax return for the January 2022 reporting period or in any subsequent reporting period since you are not required to report the wholesale cost of the OTP that was returned during the same reporting period in which the OTP was distributed.

Section A. Returned Electronic Cigarettes and Vaping Products that Contain Nicotine Credit Worksheet

Complete this section to calculate the tax recovery for returned electronic cigarettes and vaping products that contain nicotine.

1A. Original Distribution Period. Enter the reporting period of the original distribution when you reported and paid the tax to us for the returned product. You may not enter a current reporting period. You may only enter a prior reporting period. For example, you sold product to your customer on January 5, 2022, and you reported the distribution and paid the tax to us during your January 2022 monthly reporting period. On March 25, 2022, your customer returned the product to you, and you refunded your customer the entire amount your customer paid for the product. When you file your tax return for the March 2022 reporting period, your original distribution period would be January 2022, which would be entered as “01-Jan-2022.”

2A. Wholesale Cost. Enter the wholesale cost, as defined, of the returned electronic cigarettes and vaping products that contain nicotine.

3A. Tax Rate. The system will automatically determine this field.

4A. Tax Credit Amount. The system will automatically calculate this field.

Subtotal Section A. The system will automatically calculate this field.

Section B. Returned Other Tobacco Products (OTP) Credit Worksheet

Complete this section to calculate the tax recovery for returned OTP (excluding electronic cigarettes and vaping products that contain nicotine).

1B. Original Distribution Period. Enter the reporting period for the original distribution when you reported and paid the tax on the returned OTP. You may not enter a current reporting period. You may only enter a prior reporting period. For example, you sold OTP to your customer on January 5, 2022, and you reported the distribution and paid the tax to us during your January 2022 monthly reporting period. On March 25, 2022, your customer returned the OTP to you, and you refunded your customer the entire amount your customer paid for the OTP. When you file your tax return for your March 2022 reporting period, your original distribution period would be January 2022, which would be entered as “01-Jan-2022”.

2B. Wholesale Cost. Enter the wholesale cost, as defined, of the returned OTP.

3B. Tax Rate. The system will automatically determine this field.

4B. Tax Credit Amount. The system will automatically calculate this field.

Subtotal Section B. The system will automatically calculate this field.

Total Returned Electronic Cigarettes and Vaping Products That Contain Nicotine and Other Tobacco Products Credit. The system will automatically calculate this field.

If you have collected more tax from your customers than the amount due calculated on your return, enter the difference in the Enter Excess Tax collected field below (Revenue and Taxation Code section 30361.5).

Excess tax collected can occur in the following situations:

• When tax is computed on a transaction which is not subject to tax;
• When tax is computed on an amount in excess of the amount subject to tax;
• When tax is computed using a tax rate higher than the rate imposed by law; and
• When mathematical or clerical errors result in an overstatement of the tax on a billing.

Total amount of tax due for tobacco products. The system will automatically calculate this field.

Enter Excess Tax collected. Enter the amount of excess tax collected.

• Tax Guide for Cigarettes and Tobacco Products
• Online Return Filing Tutorial
• Publication 93, Cigarette and Tobacco Products Taxes