As of October 1, 2016, the excise tax on OTP, previously calculated on a per ounce basis, has been changed to a calculated rate on wholesale sales. The calculated tax rate is equal to the rate tax on a package of 20 cigarettes, expressed as a percentage of its average wholesale price as of the previous March. The Office of Revenue Analysis has determined the average wholesale price of a package of 20 cigarettes as of the previous March to be $4.52. The combined cigarette excise tax was set at $2.92 per package of 20 cigarettes beginning October 1, 2016.
Accordingly, the rate of tax applicable to wholesale sales of tobacco products other than cigarettes and premium cigars is 65%.
Premium cigars are not subject to the OTP tax, but they remain subject to 5.75% DC general sales tax when sold at retail.
The 2015 version of Form FR-1000Q is not on the Office of Tax and Revenue Excise Tax Forms website yet, but staff reported that it will be posted shortly. Until then, tobacco products wholesalers may call (202) 442-6316 or email email@example.com to request an updated form.
Definitions in Washington D.C.
“Smoking” means the burning of a lighted cigar, cigarette, pipe, or any other matter or substance that contains tobacco.
The act of puffing, having in one’s possession, holding, or carrying a lighted or smoldering tobacco product, including through the use of smoking equipment of any kind including a pipe, cigarette papers, or tubes; or
The lighting of a tobacco product, including through the use of smoking equipment of any kind including a pipe, cigarette papers, or tubes.
A “tobacco specialty store” is a retail store that is used primarily for the sale of cigarettes, other tobacco products, and accessories in which the total annual revenue generated by the sale of non-tobacco products or accessories is no greater than 25% of the total revenue of the establishment.