Re: Act 270, Session Laws of Hawaii (SLH) 2001
August 1, 2001
1. Who is this new act applicable to and what is the impact?
Currently, cigarette tax stamps are sold at $1.017 per stamp. Act 270, Session Laws of Hawaii 2001 (Act 270), provides that cigarette tax stamps may be sold at $1.013 per stamp beginning on September 1, 2001 if the licensee (Tobacco licensee approved to purchase cigarette tax stamps) is in compliance with the State of Hawaii’s tax laws. This discount is not a reduction in tax.
2. As a cigarette and tobacco wholesaler/dealer approved to purchase cigarette tax stamps, am I automatically eligible to purchase stamps at $1.013?
Act 270 only allows cigarette tax stamps to be sold at $1.013 to purchasers who are in compliance with the tax laws administered by the State of Hawaii. To provide proof of compliance, you must submit a Tax Clearance Certificate approved by the Department of Taxation (the Department). If the licensee has a tax clearance certificate (Form A-6) with the Department’s approval dated after February 2001, the licensee may submit a copy of that certificate. Otherwise, this can be done by completing and submitting the Form A-6, Tax Clearance Application which is enclosed for your convenience.
Complete and submit the form A-6 to the following address by August 31, 2001:
Oahu District Office
P O Box 259
Honolulu HI 96809-0259
Attn: Licensing Supervisor
After the implementation of Act 270, tax clearances will be part of the fiscal year Cigarette and Tobacco tax license renewal process. The notification packet to renew your license will contain a tax clearance application form for those cigarette and tobacco wholesalers and dealers who are approved to purchase cigarette tax stamps.
For purposes of certifying compliance under Act 270, all tax clearance processing is being centralized on Oahu.
3. What happens if I can’t get a tax clearance?
Effective September 1, 2001, all purchases of cigarette tax stamps will be offered at $1.013 per stamp. If you have not obtained a tax clearance, for September and subsequent months, you will receive an assessment from the Department of Taxation for the $.004 multiplied by the number of cigarette tax stamps purchased during that month.
If you subsequently obtain a tax clearance certificate, assessments will cease from the month in which the clearance was approved.
4. Will Act 270 change the monthly cigarette and tobacco tax return (M-19) and the way I fill it out?
Act 270 does not impact the manner in which the form M-19 is completed since the discount is not a reduction in tax.
5. How much will I be paying for stamps when I purchase a roll? Will I be paying $1.017 per stamp if I order the stamps on the automated system prior to September 1, 2001?
Currently, cigarette tax stamps are sold at $1.017 per stamp and a roll of stamps (15,000 stamps per roll) costs $15,255. Effective September 1, 2001, cigarette tax stamps will be sold at $1.013 per stamp and a roll of stamps will then cost $15,195.
The cigarette tax stamp is considered “sold” when the purchase is consummated, that is, when the stamps are paid for. Thus, when orders are received prior to the September 1, 2001 effective date, either through the automated system at First Hawaiian Bank or by fax order from an out-of-state purchaser, and the stamps are subsequently paid for on the first working day of September (September 4), the purchaser will pay $1.013 per stamp. For out-of-state purchasers who submit checks or wire payments, the post-mark date on the envelope in which the check is enclosed or the transmission date of the wire payment will constitute the consummation date of the transaction.
Cigarette tax stamps may also be purchased in smaller quantities through the Department of Taxation’s district offices, on-site. In-person purchases are paid for that same day, so the $1.013 price will be in effect for on-site purchases through the district offices beginning the first working day in September (September 4, 2001). The most common purchase on-site has been a purchase of 500 stamps. Currently, a purchase of 500 stamps at $1.017 costs $508.50. Beginning on September 4, a purchase of 500 stamps on-site at the Department of Taxation’s district offices will cost $506.50.
For licensees approved to participate in the deferred payment program, the cigarette tax stamp is considered “sold” when the purchaser takes possession of the stamps. Following the example above, if the stamps are ordered prior to the September 1, 2001 effective date and the deferred payment purchaser subsequently takes possession of the stamps on September 4, 2001, the cost of the stamps for that transaction will be $1.013 per stamp.
For additional information or other questions, please call 808-587-4242 or 808-587-1455 or e-mail Taxpayer.Services@hawaii.gov