Alabama imposes a “license or privilege tax,” measured according to volume of sales, on every person or entity within the State who sells, stores, or receives tobacco products for the purpose of distribution. However, every wholesaler, distributor, jobber, semijobber, or retail dealer is required to add the amount of the tax to the price of the tobacco or tobacco products sold. If a retail dealer or consumer receives untaxed products, it is their responsibility to remit the tax to the Department of Revenue.
Taxes on tobacco products other than cigarettes and smokeless tobacco (“OTP”) are paid by all distributors and consumers by filing a monthly state tax return.
Many counties in Alabama also levy additional, state-administered other tobacco product taxes that are paid by filing monthly county tax returns. Local taxes imposed on or before May 18, 2004, remain operative, but no additional local tax and/or license fee can be levied on the sale of other tobacco products (“OTP”).
Alabama’s tax rates on tobacco products other than cigarettes vary based on weight (for little cigars, snuff, chewing tobacco and smoking tobacco) and retail selling price (cheroots, stogies, and cigars) of the products.
Wholesalers distributing untaxed tobacco products in Alabama should submit an Application for Tobacco Stamping Permit [Form TOB: APP-R (In-state) or Form TOB-APP-NR (Out-of-state)]. Distributors who want to distribute tobacco products into another state, Alabama tax free, must also apply and qualify for a Tobacco Stamping Permit to become a qualified wholesaler, as only a qualified wholesaler may sell tobacco products exempt from Alabama’s tobacco tax.
Retail distributors receiving or selling tobacco products for which the state and/or state-administered county taxes have not been paid must submit the Tobacco Products Registration Form (Form TOB: REG) to the Department of Revenue.
Tobacco product retailers and wholesalers are also required to obtain a privilege license for each county in which the entity does business. Retailers must pay to the state the following privilege license tax: in cities of 25,000 inhabitants and over, $15; in cities or towns of 10,000 inhabitants and less than 25,000 inhabitants, $10; in cities or towns of 5,000 inhabitants and less than 10,000 inhabitants, $5; in cities or towns of 2,000 inhabitants and less than 5,000 inhabitants, $3; in all other places, whether incorporated or not, $2. Wholesalers are required to pay one $100 privilege license tax to the state and $5 to each county in which the wholesale dealer does business.
Each distributor of other tobacco products in Alabama is required to file a Monthly State Tobacco Tax Return (Form TOB: OTP) and a Report of All Tobacco Sales for Resale (Form TOB: SALES FOR RESALE) with the Department of Revenue by the 20th of each month, along with payment for taxes due. These forms must be filed even if there is no activity during the month.
In addition, distributors who sell or receive tobacco products in a state-administered county for which the county tax has not been paid must file a Monthly County Tobacco Tax Return (Form TTCO-A) by the 20th of each month, along with payment for taxes due.
“Cigars, Cheroots, Stogies, etc.” are rolls for smoking that are of any size or shape and that are made wholly or in part of tobacco or any substitute therefor, irrespective of whether the tobacco is pure or flavored, adulterated or mixed with any other ingredient, if the roll has a wrapper made wholly or in part of tobacco.
A “wholesale dealer” or “jobber” is a person, firm, or corporation who buys tobacco products direct from the manufacturer or an affiliate of the manufacturer and sells at wholesale only, any one or more of the articles taxed herein to licensed wholesale dealers, jobbers, semijobbers, and retail dealers for the purpose of resale only.
A “retail dealer” is every person, firm, or corporation, other than a wholesale dealer or jobber, who sells or offers for sale any one or more of the articles taxed herein, irrespective of quantity or amount, or the number of sales; and all persons operating under a retail dealer’s license.
A “semijobber” is a person, firm, or corporation who buys tobacco products from permitted wholesalers or obtains tobacco from any other source and sells at wholesale any one or more of the articles taxed herein to licensed retail dealers for the purpose of resale only.