A nicotine products distributor is every person who first receives nicotine products in Colorado, every person who sells nicotine products in Colorado who is primarily liable for the nicotine products tax, every person who first sells or offers for sale nicotine products imported into Colorado, and every person who makes a delivery sale of nicotine products into Colorado.
A nicotine products distributor license is required when a distributor:
- Operates the place from which wholesale nicotine products are purchased. If sales or shipments are made from two or more separate locations by a wholesaler, a license for each location is required.
- Brings or causes nicotine products to be brought into Colorado for sale.
- Makes, manufactures, or fabricates nicotine products in Colorado for sale in Colorado.
- Ships or transports nicotine products to retailers in Colorado, or
- Makes a delivery sale of nicotine products into Colorado.
Renewing a License
Nicotine Products licenses can be renewed through your Revenue Online account. Along with the renewal form and payment, documents required for license renewal include:
- Any unfiled tax returns.
- Payment of outstanding debt(s) due to the department.
- A valid sales tax license.
- PACT Act reporting, if required, must be current.
Out-of-state distributors must also register as delivery sellers if they qualify. A delivery seller is any out-of-state distributor that sells nicotine products subject to the PACT Act directly to consumers located in Colorado.
Filing a Return & Reporting Requirements
Colorado nicotine products distributors must file a Nicotine Products Tax Return electronically each quarter. The return must be filed and the payment, which is required to be made electronically, must be submitted by the 20th day of the month following the reporting quarter. If the 20th falls on a Saturday, Sunday, or legal holiday, the distributor's return and tax remittance is due the next business day. EFT payments are required to be made prior to 4:00 PM Mountain Time on the return's due date.
The amount paid to the department may be reduced by 1.1% of the tax due to cover the distributor's expense in the collection and remittance of the tax, if the payment is submitted by the due date.
For questions on filing requirements, contact the Excise Tax Unit.
No Excise Tax to Report
Distributors must file a return even if no tax is due for that quarter. Nicotine products tax returns must be submitted by the due date of the return. A nicotine products tax return not submitted to the Department is subject to a penalty of $25.00. A zero filing or payment by EFT does not change the requirement that a return must be submitted for each period. Missing nicotine products tax returns will delay the renewal of a nicotine products license.
Exemption and Credits
Exempt sales (line 2), credits for nicotine products exported to out-of-state retailers (line 6), credits for nicotine products exported to out-of-state consumers (line 7), credits for nicotine products returned to the manufacturer (line 8) and credits for nicotine products destroyed (line 9) must be claimed based on the manufacturer's list price, not the sales price.
If you are eligible for a credit but did not claim it on your returns, you can file amended returns to correct your filings. After amending your return, submit a Claim for Refund, DR 0137, through your Revenue Online account or see the Forms in Number Order page for the paper form, to request a refund.
Recordkeeping
Distributors are required to keep true and accurate records of their activities for at least three years after filing their Nicotine Products Tax Returns.
PACT Act Requirements
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.
Refund
Credits are allowed for tax paid on nicotine products (claim on the Nicotine Products Tax Return) when:
- Shipped to retailers outside of Colorado for sale by those retailers
- Shipped to consumers outside Colorado
- Returned to the manufacturer
- Destroyed by the distributor
Overpayment on tax from prior periods requires an amended Nicotine Products Tax Return and form DR 0137 (submit through your Revenue Online account or see Forms in Number Order for the paper form) to be submitted with supporting documentation.
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 Nicotine Products Tax Guide Publication.
Modified Risk Tobacco Products
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 Nicotine Products Tax Guide Publication.