It’s no secret that states generate high amounts of tax revenue from excise tax. For public policy and political reason, alcohol and tobacco seem ripe for state governments to extort money from citizens. As a result of high tax rates, businesses that buy and sell large quantities of alcohol and tobacco products find it worthwhile to fight rogue state agencies, such as the various departments that regulate alcohol and tobacco tax. Because this is such a profitable revenue stream, there are many intricacies to tobacco tax today.


Due to the rising cost and high taxes of cigarettes throughout the country, individuals and businesses are coming up with creative ways to avoid the tax on cigarettes and tobacco. From clubs to specialty stores and even peoples’ homes, establishments that allow smokers to make their own cigarettes are on the rise. Companies such as RYO have installed thousands of machines throughout the nation in an effort to combat the rising cost of cigarettes. What is often overlooked by many of these DIY stores is whether allowing customers to partake in cigarette making morphs them into a cigarette manufacturer. In most states, becoming a cigarette manufacturer can impose strict and expensive license requirements as well as burdensome state taxes.

In addition, the rising popularity of products such as e-cigarettes is causing some confusion as to what is subject to a tobacco or cigarette tax. Many states that believe a particular practice is against public policy or are unsure about a product tax it heavily in order to influence certain behavior. This is the case for e-cigarettes, which have yet to have established long-term health effects or FDA approval. If you have paid tax on an item, such as e-cigarettes, that may not actually fall under tobacco and cigarette tax, it may be worth going after a refund. 

Contact our offices to see if we can help you with any of your tobacco tax related issues