Vapor Products Tax
Pursuant to Am. Sub. H.B. 166, Ohio will impose an excise tax on vapor products beginning October 1, 2019.
What is Vapor Product?
A vapor product is any liquid or other substance that contains nicotine and is depleted as it is used in an electronic smoking product. It does not include any solution or substance that is regulated as a drug, device, or combination product under Chapter V of the Federal Food, Drug, and Cosmetics Act 21 U.S.C 301, et seq.
What is Subject to the Excise Tax on Vapor Products?
The tax is levied on the sale of vapor products the first time an Ohio distributor receives untaxed vapor products or whenever an out-of-state distributor sells vapor products to an Ohio purchaser at a rate of one cent per one-tenth of a milliliter or one-tenth of a gram (equiv. of 10 cents/mL or gram) depending on whether sold in liquid or non-liquid form. The excise tax on vapor products does not apply to electronic smoking products, but only the liquid or non-liquid vapor product as defined above. Only one sale of the same article is used to compute the tax due. Additionally, if a tax-paid vapor product is repackaged, reconstituted, diluted or reprocessed, the tax does not apply to a subsequent sale of the vapor product.
Licensing and Registration
Tobacco Products and Vapor Products Distributors
A distributor is required to obtain a license issued by the Department to engage in the business of distributing tobacco products and vapor products. The application fee for a license to engage in the business of distributing both tobacco products and vapor products is $1,000 for each location where tobacco products and vapor products are received or distributed. Taxpayers who already hold an active other tobacco products (OTP) distributor’s license do not need to obtain a separate vapor products distributor’s license.
Vapor Products Distributor
A vapor distributor is required to obtain a license from the Department by September 30, 2019 to engage in the business of distributing vapor products. The application fee for a license to engage solely in the business of distributing vapor products (vapor products distributor’s license) is $125 for each location where vapor products are received or distributed.
A secondary manufacturer must obtain a vapor products distributor's license by September 30, 2019. Only secondary manufacturers that are licensed vapor distributors are permitted to reconstitute, dilute or reprocess vapor products to consumers under Ohio law.
Manufacturers and importers of vapor products are required registered with the Department by July 1, 2020.
Retailers who receive untaxed vapor products or are secondary manufacturers are required to obtain a vapor products distributor's license by September 30, 2019.
Return Filing and Payments
Monthly returns and payments are due on or before the 23rd day of the month reflecting the activity of the previous month.
All returns must be filed electronically. Taxpayers may file returns through the Ohio Business Gateway.
In accordance with R.C. 5743.54, all distributors must retain all invoices, bills of lading, and receipts for three years. In addition, when selling vapor products to retailers, all distributors are required to mark each invoice with the following:
- Account number
- A statement indicating that the Ohio excise tax has been paid
- The total vapor volume in grams or milliliters