Gov. Tom Corbett signed Act 131 into law on Sept. 24, which authorized a $2-per-pack tax on all cigarettes and little cigars sold in Philadelphia. The tax became effective on Oct. 1, 2014 and the money is earmarked for public school funding. PFMA fought hard against the passage of the tax increase, but the bill had strong bipartisan support as well as the support of Governor Corbett.
"PFMA is disappointed in the passage of this major tax increase which only provides temporary relief of a long term problem and will have a negative impact on retailers and lower income residents of Philadelphia," said Alex Baloga, PFMA director of government and public relations.
A new tax stamp has been created for Philadelphia that includes both the state and city cigarette taxes. These new stamps reflect the 8-cent-per-stick state tax and the new 10-cent-per-stick Philadelphia city tax, for a total of $3.60 per pack of 20 cigarettes/little cigars and $4.50 per pack of 25 cigarettes/little cigars sold in Philadelphia.
"PFMA is disappointed in the passage of this major tax increase which only provides temporary relief of a long term problem and will have a negative impact on retailers and lower income residents of Philadelphia," said Alex Baloga, PFMA director of government and public relations.
A new tax stamp has been created for Philadelphia that includes both the state and city cigarette taxes. These new stamps reflect the 8-cent-per-stick state tax and the new 10-cent-per-stick Philadelphia city tax, for a total of $3.60 per pack of 20 cigarettes/little cigars and $4.50 per pack of 25 cigarettes/little cigars sold in Philadelphia.
Cigarette Retailer Requirements
Each retailer had to calculate, report and remit cigarette floor tax on all cigarettes and little cigars in inventory and vending machines in Philadelphia as of 12:01 a.m. on October 1. For up to 30 days following the effective date of the Philadelphia cigarette tax, wholesalers may sell Pennsylvania-stamped cigarettes to Philadelphia retailers, so long as the wholesaler charges the Philadelphia cigarette tax ($20 per carton) to each retailer in Philadelphia and issues the retailer an invoice showing the Philadelphia tax was paid.
According to the state Department of Revenue, enforcement visits will be conducted to Philadelphia retailers to ensure they are selling correctly stamped and documented packs. Each retailer must maintain for inspection a copy of its floor tax return/inventory and all wholesaler invoices showing Philadelphia tax was paid on additional Pennsylvania stamped product acquired between Oct.1 - Oct. 31, 2014.
Retail evasion of the Philadelphia cigarette tax will violate state law and be punishable by suspension or revocation of the retailer’s cigarette license, criminal fines and/or imprisonment.
All cigarettes in Pennsylvania must be sold in compliance with minimum price statutes. The minimum price of cigarettes sold in Philadelphia will include the state and city tax rates in the calculation.
Cigarette Wholesaler Requirements
To facilitate monitoring of Philadelphia-stamped and Pennsylvania-stamped product across the state, the Pennsylvania Department of Revenue will require wholesalers to report their sales to retail and vending customers monthly. The return and accompanying schedules for this monthly report will be available on the department’s website, www.revenue.state.pa.us.
For up to 30 days following the effective date of the Philadelphia cigarette tax, until Oct. 31, wholesalers may sell Pennsylvania-stamped cigarettes to Philadelphia retailers, so long as the wholesaler charges the Philadelphia cigarette tax to each retailer in Philadelphia and issues the retailer an invoice showing the Philadelphia tax was paid. The Philadelphia cigarette tax collected must be remitted to the Department of Revenue by the 20th day of the month following the sale, along with invoice copies to verify the additional tax collected.
Alternatively, wholesalers can exhaust Pennsylvania stamped product by selling to retailers and wholesalers located outside of Philadelphia or returning the state-stamped inventory to a CSA for a refund or a credit toward Philadelphia stamped cigarettes. Additionally, a new return, REV-1142P, is in development for documentation of tax due on unstampable little cigars sold in Philadelphia.
If a wholesaler is unable to exhaust Pennsylvania stamped product, it should inventory and segregate state-stamped product on November 1 and contact the PA Department of Revenue at (717) 783-9374.
Cigarette Stamping Agents Requirements
Cigarette stamping agents must purchase and affix Philadelphia tax stamps to product that will end up in retail and vending locations in Philadelphia. Additionally, cigarette stamping agents will have to file a separate return (REV-1030P/REV-1036P) to account for cigarettes sold into Philadelphia and the stamps purchased and used on a monthly basis.
Administrative matters related to the Philadelphia cigarette tax:
• Philadelphia tax stamps will be sold in rolls of 7,200 stamps for both 20- and 25-packs of cigarettes.
• A revised REV-1043, Cigarette Stamping Agent Purchase Order, is available at www.revenue.state.pa.us.
• The 0.87 percent CSA commission does not apply to the Philadelphia cigarette tax, but the commission on state cigarette tax will apply to Philadelphia stamps.
• CSAs purchasing cigarette tax stamps on a consignment basis may need to increase their bond liability amounts by executing and submitting a bond rider to the department.
• Additionally, a new return, REV-1142P, is in development for documentation of tax due on unstampable little cigars sold in Philadelphia.
For questions on the proposed implementation plan for the Philadelphia cigarette tax or any stamping agent that wants to request a refund for Pennsylvania-stamped cigarettes may call the Miscellaneous Tax Section at (717) 783-9374.
Each retailer had to calculate, report and remit cigarette floor tax on all cigarettes and little cigars in inventory and vending machines in Philadelphia as of 12:01 a.m. on October 1. For up to 30 days following the effective date of the Philadelphia cigarette tax, wholesalers may sell Pennsylvania-stamped cigarettes to Philadelphia retailers, so long as the wholesaler charges the Philadelphia cigarette tax ($20 per carton) to each retailer in Philadelphia and issues the retailer an invoice showing the Philadelphia tax was paid.
According to the state Department of Revenue, enforcement visits will be conducted to Philadelphia retailers to ensure they are selling correctly stamped and documented packs. Each retailer must maintain for inspection a copy of its floor tax return/inventory and all wholesaler invoices showing Philadelphia tax was paid on additional Pennsylvania stamped product acquired between Oct.1 - Oct. 31, 2014.
Retail evasion of the Philadelphia cigarette tax will violate state law and be punishable by suspension or revocation of the retailer’s cigarette license, criminal fines and/or imprisonment.
All cigarettes in Pennsylvania must be sold in compliance with minimum price statutes. The minimum price of cigarettes sold in Philadelphia will include the state and city tax rates in the calculation.
Cigarette Wholesaler Requirements
To facilitate monitoring of Philadelphia-stamped and Pennsylvania-stamped product across the state, the Pennsylvania Department of Revenue will require wholesalers to report their sales to retail and vending customers monthly. The return and accompanying schedules for this monthly report will be available on the department’s website, www.revenue.state.pa.us.
For up to 30 days following the effective date of the Philadelphia cigarette tax, until Oct. 31, wholesalers may sell Pennsylvania-stamped cigarettes to Philadelphia retailers, so long as the wholesaler charges the Philadelphia cigarette tax to each retailer in Philadelphia and issues the retailer an invoice showing the Philadelphia tax was paid. The Philadelphia cigarette tax collected must be remitted to the Department of Revenue by the 20th day of the month following the sale, along with invoice copies to verify the additional tax collected.
Alternatively, wholesalers can exhaust Pennsylvania stamped product by selling to retailers and wholesalers located outside of Philadelphia or returning the state-stamped inventory to a CSA for a refund or a credit toward Philadelphia stamped cigarettes. Additionally, a new return, REV-1142P, is in development for documentation of tax due on unstampable little cigars sold in Philadelphia.
If a wholesaler is unable to exhaust Pennsylvania stamped product, it should inventory and segregate state-stamped product on November 1 and contact the PA Department of Revenue at (717) 783-9374.
Cigarette Stamping Agents Requirements
Cigarette stamping agents must purchase and affix Philadelphia tax stamps to product that will end up in retail and vending locations in Philadelphia. Additionally, cigarette stamping agents will have to file a separate return (REV-1030P/REV-1036P) to account for cigarettes sold into Philadelphia and the stamps purchased and used on a monthly basis.
Administrative matters related to the Philadelphia cigarette tax:
• Philadelphia tax stamps will be sold in rolls of 7,200 stamps for both 20- and 25-packs of cigarettes.
• A revised REV-1043, Cigarette Stamping Agent Purchase Order, is available at www.revenue.state.pa.us.
• The 0.87 percent CSA commission does not apply to the Philadelphia cigarette tax, but the commission on state cigarette tax will apply to Philadelphia stamps.
• CSAs purchasing cigarette tax stamps on a consignment basis may need to increase their bond liability amounts by executing and submitting a bond rider to the department.
• Additionally, a new return, REV-1142P, is in development for documentation of tax due on unstampable little cigars sold in Philadelphia.
For questions on the proposed implementation plan for the Philadelphia cigarette tax or any stamping agent that wants to request a refund for Pennsylvania-stamped cigarettes may call the Miscellaneous Tax Section at (717) 783-9374.
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