Cigarette Distributors

Along with the renewal form and payment, documents required for license renewal include:

• Proof of a valid sales tax license
• Any unfiled MSA documents such as the Non-Participating Manufacturer Brands Reporting Form, DR 1285, and/or the Annual Exemption from Monthly Non-Participating Manufacturer Brand Reporting, DR 1286
• Any unfiled tax returns
• Payment of outstanding tax debt(s) due to the department
• Bond verification, if a bond is required
• Cigarette Distributors: A letter of evidence from a manufacturer, on the manufacturer's letterhead, stating they will supply you with cigarettes. The product must be from a manufacturer and brand on the Colorado Certified Brands Directory. This is required yearly for renewal.
• Cigarette Wholesale Subcontractors: A letter of evidence from a Colorado licensed distributor stating they will supply you with stamped cigarettes either from a participating manufacturer or a manufacturer who remits escrow to an applicable Colorado tobacco escrow account. This is required yearly for renewal.
• PACT Act reporting, if required, must be current.

Cigarette distributors who have a surety bond are allowed to reduce the bond amount by 20% annually if they have not had a cigarette tax delinquency in the previous year. The Department notifies distributors by letter when they qualify for a bond reduction. 

Colorado Cigarette Distributors must file a Cigarette Tax Return electronically each month. For instructions to file a Cigarette Tax Return, (see Forms & Instructions | Cigarette, Nicotine Products, & Tobacco Products Tax). The return must be filed and the payment, which is required to be made electronically, must be submitted by the 10th day of the month following the month in which stamps were ordered (example: for stamps ordered between July 1 and July 31, the payment is due on August 10).

Distributors must file a return even if no tax is due for that month. Effective July 1, 2024, the amount paid to the Department may be reduced by 0.28571% for cigarettes that are not modified risk tobacco products and 0.22222% for cigarettes that are modified risk tobacco products. This discount of the tax due is allowed when the return and payment are made by the due date and is to cover the distributor's expense in the collection and remittance of the tax.

In addition to the monthly Cigarette Excise Tax Return, cigarette distributors must file and pay an inventory floor tax when the tax rate increases.  The inventory tax is the difference between the old per pack tax and the new per pack tax. Cigarette packs stamped with the old tax stamp prior to July 1, 2024, are subject to the inventory tax and may be sold with the old stamp on or after July 1, 2024.  It is unlawful to stamp cigarette packs with the old tax stamp after 11:59 p.m. June 30, 2024. Unused stamps purchased within one year of the refund claim may be returned for credit, and new stamps reflecting the new tax rate will be available for purchase on July 1, 2024.  For the rate increase effective July 1, 2024, all licensed cigarette distributors are required to file the Cigarette Inventory Tax Return, Form DR 0224, by August 12, 2024 through Revenue Online or as a paper form available at tax.colorado.gov/forms-in-number-order.

The return and payment is due on the 10th day of the month following the reporting period. If the 10th falls on a Saturday, Sunday, or legal holiday, the distributor's return and tax remittance is due the next business day. 

Cigarette Distributors are also required to file Master Settlement Agreement (MSA) reports monthly or annually. For more information on MSA reporting, see the Master Settlement Agreement Reporting web page.

Federal law under the PACT Act states that distributors selling cigarettes, electronic nicotine delivery systems (ENDS) or tobacco products in interstate commerce, into Colorado are subject to a number of registration, labeling, delivery, tax, reporting and record-keeping requirements including registering and reporting under the PACT Act. For more information, visit the PACT Act Requirements web page. 

For Cigarette Tax Returns, distributors are required to keep true and accurate records of their activities for at least three years after filing their returns.
For Master Settlement Agreement (MSA) reporting, cigarette licensees must keep their records for at least five years.
 

See the Cigarette Stamps page for information on refunds for returned stamps. 

Credit will be given by the Department for cigarette taxes on unsalable merchandise when the cigarettes have been returned to the manufacturer. A manufacturers' credit invoice must be attached to the return to substantiate the credits claimed. If credits exceed the amount of cigarette tax due, or a zero return is filed, a Claim for Refund must be submitted to request the refund. An Excise, Fee and Fuel Claim for Refund (DR 0137E) can be submitted through "Additional Actions" on your Revenue Online account, or see the Forms in Number Order page if return stamps are included with your claim. A Claim for Refund for bad debt may be claimed through December 31, 2024. After January 1, 2025, a Claim for Refund for bad debt is not allowed per House Bill 24-1036 Section 39-28-104(4)(a).

Credit is given by the department to a wholesaler for taxes paid on cigarettes that are bad debts. The credit is prohibited unless the bad debt has been charged off as uncollectible on the books of the distributor. The distributor will be required to repay the credit if payment is received for the bad debt subsequent to receiving the credit. The credit will be processed as a refund on form DR 0137E.

If the credit exceeds the amount of tax for the period, the excess credit can be claimed and refunded from the period in which the tax was incurred. An Excise, Fee and Fuel Claim for Refund, DR 0137E, must be submitted, along with supporting documentation, to request a refund.

For information on how to claim a refund, visit the File the Sellers Claim for Refund web page. 

For more information regarding cigarette taxes, see the Colorado Cigarette Tax Guide Publication. 

Send form DR 0137, along with supporting documentation through your Revenue Online account via web message, or mail to:

A modified risk tobacco product (MRTP) is a cigarette, tobacco product or nicotine product that has been approved by the U.S. Department of Health and Human Services Food and Drug Administration (FDA) as a MRTP. A complete list of modified risk granted orders can be found on the FDA's website. MRTPs are taxed at a lower rate than other cigarettes and tobacco products. For more information on current tax rates, including Modified Risk tax rates, see the Colorado Cigarette Tax Guide Publication.