Moist Snuff

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The tax rates for moist snuff products were established with the passage of Proposition EE, and went into effect on January 1, 2021.

Moist snuff is any finely cut, ground, or powdered tobacco that is not intended to be smoked but does not include any finely cut, ground, or powdered tobacco that is intended to be placed in the nasal cavity. Moist snuff is taxed differently than other tobacco products and is subject to a minimum tax of $1.48 per 1.2 ounce can. 

  • For container sizes smaller than 1.2 ounces the minimum tax is $1.48 per can. 
  • For container sizes larger than 1.2 ounces the minimum tax is proportionally increased.

When filing a Tobacco Products Tax Return, moist snuff must be reported per transaction on the Moist Snuff Schedule. The tobacco products distributor must report the container size, the purchase price, and the number of containers purchased at that price, if the transaction is exempt, if the transaction is a credit, and if the transaction is a modified risk tobacco product.1 This spreadsheet may be downloaded to an excel spreadsheet and used to calculate the moist snuff tax owed when filing the Tobacco Products Tax Return (DR 0229). 

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Service Fee

The service fee for moist snuff must be calculated on a per transaction basis. 

  • When the tobacco products tax is greater than the minimum moist snuff tax, the service fee rate is 0.96% for non-modified risk tobacco products and 0.6857% for modified risk tobacco products. 
  • When the minimum tax is greater than the tobacco products tax, the purchase of moist snuff is subject to the minimum tax, the service fee must be calculated for each purchase as follows:
    • Determine the total minimum tax by multiplying the number of containers by the minimum tax rate (adjusted, if necessary, for container sizes in excess of 1.2 ounces).
    • Multiply the taxable purchase price by 20%, and subtract the product from the total minimum tax, this is the net minimum tax.
    • Multiply the net minimum tax by 1.6%. The result is the service fee amount. 
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Tax Calculation Example

A distributor makes the following moist snuff purchases: 100 1.2 oz. cans at $3.25/can and 100 2 oz. cans at $4.75/can for a total purchase price of $800. The tax due for each product is calculated as follows: 
 

100 x 1.2 oz. cans @ $3.25/can

100 x 2 oz. cans @ $4.75/can

Step 1: Calculate the regular tax due at 50% of the purchase price.

Purchase Price = 100 x $3.25 or $325

Regular Tax = $325 x 50% or $162.50

Purchase Price = 100 x $4.75 or $475

Regular Tax = $475 x 50% or $237.50

Step 2: Calculate the total minimum tax rate by proportionally increasing the $1.48 minimum tax to the extent the container size exceeds 1.2 oz.

Size is 1.2 oz.

Minimum Tax is $1.48 per can.

Size is 2.0 oz.

Minimum Tax is (2.0 / 1.2) x $1.48 or $2.47 per can

Step 3: Calculate the total minimum tax and determine whether minimum tax or regular tax is due.

Minimum Tax = 100 cans x $1.48 or $148, which is less than the regular tax of $162.50

Regular Tax is Due

Minimum Tax = 100 x $2.47 or $247, which is greater than the regular tax of $237.50.

Minimum Tax is Due

Step 4: Deduct the service fee, which is 0.96% if the regular tax is due.  

If the minimum tax is due, multiply the purchase price by the 20% tax rate imposed under C.R.S. § 39-28.5-102.5.  Subtract this amount from the total minimum tax to calculate the net minimum tax. Multiply the result by the 1.6% service fee rate.

Service Fee = $162.50 x 0.96% or $1.56

Tax Levied per 39-28.5-102.5 = $475 x 20% or $95.

Net minimum tax = $247 - $95 or $152

Service fee = $152 x 1.6% or $2.43

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1 A modified risk tobacco product (MRTP) is a legal designation of a specific product granted by the FDA. The list of Modified Risk Tobacco Products be found on the FDA website.