Audience: Businesses

Table of Contents

1. Who pays the cigarette excise tax?
2. What is meant by the "Master Settlement Agreement"?
3. What does OTP stand for?
4. When was the OTP tax created?
5. Who reports and pays the OTP tax? And how often are reports filed?
6. On what amount does a tobacco manufacturer pay the OTP tax?
7. Does an out-of-state manufacturer have to register as a wholesaler to pay the OTP tax?
8. Can a wholesaler remit OTP tax for their subwholesaler and the subwholesaler file a return for the same period showing no tax due?
9. Is documentation needed with the submission of the OTP tax report?
10. Can a wholesaler remit OTP tax by calculating 15 percent of their selling price rather than 15 percent of their cost?
11. I am a Tobacco Vending Machine Operator. How do I get a tobacco vending machine sticker?
12. I need a tobacco form. Where do I look?
13. What is the minimum age to buy or possess cigarettes?
14. Is there an age limit for selling cigarettes?
15. Why can't I smoke in my workplace, a public building, or at a restaurant?
16. How many cigarettes can be imported into Maryland?
17. Who enforces Maryland's cigarette and tobacco tax laws?
18. How can I report a store that's selling cigarettes to minors?
19. What is the current Maryland excise tax on cigarettes?
20. Can I order cigarettes over the Internet?
21. What are fire safe cigarettes?

Frequently Asked Questions

1. Who pays the cigarette excise tax?

It is paid by wholesalers when they purchase tax stamps.

2. What is meant by the "Master Settlement Agreement"?

The Master Settlement Agreement (MSA) is an agreement that signed in November, 1998, by attorneys general in 46 states and five U.S. territories and the tobacco industry. The agreement resolved lawsuits filed by the attorney general against the tobacco industry and provided the states funding intended for tobacco prevention and control. Under the MSA, Maryland was awarded $1 billion over 10 years, beginning July 1, 2000. The Maryland legislature enacted Senate Bill 896/House Bill 1425 in April, 2000, which created the Cigarette Restitution Fund Program (CRFP). The CRFP oversees the use of MSA funds which are currently being used to fund activities and projects.

3. What does OTP stand for?

Other Tobacco Products (other than cigarettes).

4. When was the OTP tax created?

July 1, 2000

5. Who reports and pays the OTP tax? And how often are reports filed?

Whoever reports the tax, should remit the tax, be it the wholesaler, retailer or consumer. If the wholesaler remits the tax, they should provide the retailer with a letter saying the tax was paid on their behalf. A wholesaler must report monthly. A retailer or consumer must report quarterly the date the product was purchased. Ultimately, the wholesaler has the primary responsibility to pay the tax.

6. On what amount does a tobacco manufacturer pay the OTP tax?

The tobacco manufacturer pays the tax on the amount it costs to make the OTP product, not the invoice amount.

7. Does an out-of-state manufacturer have to register as a wholesaler to pay the OTP tax?

Yes, if the OTP is sold to Maryland by the manufacturer. Anyone who holds a cigarette license is obligated to submit the OTP tax.

8. Can a wholesaler remit OTP tax for their subwholesaler and the subwholesaler file a return for the same period showing no tax due?

No, the "wholesaler" for the purpose of this tax, means a person located in or out of the state who sells to a retailer in Maryland. The tax shall be paid by the wholesaler who sells the OTP to a retailer in Maryland. Subwholesalers are responsible for remitting the OTP tax on sales to Maryland retailers for the report month.

9. Is documentation needed with the submission of the OTP tax report?

No. However, keep supporting documentation for audits, should they occur.

10. Can a wholesaler remit OTP tax by calculating 15 percent of their selling price rather than 15 percent of their cost?

No. The tax rate is 15 percent of the "wholesale price". The wholesale price is defined as "the price for which a wholesaler buys other tobacco products". The tax must be calculated on the cost of the OTP sold during the report month.

11. I am a Tobacco Vending Machine Operator. How do I get a tobacco vending machine sticker?

Contact the Field Enforcement Bureau at 410-260-7490. Agents do not apply the stickers.

The stickers will be mailed to the Vending Machine Operator, providing the following information: name, company name (if applicable), and address.

12. I need a tobacco form. Where do I look?

See Tobacco Tax Forms

13. What is the minimum age to buy or possess cigarettes?

21 years of age. See Criminal Law, 10-107.

14. Is there an age limit for selling cigarettes?

No, provided that proper work permits are in place.

15. Why can't I smoke in my workplace, a public building, or at a restaurant?

Contact the Maryland Department of Occupational Safety and Health at 410-767-2215.

16. How many cigarettes can be imported into Maryland?

Five cartons per person. Importing more than five cartons is a felony if transported. See Tax General TG 12-104 and TG 13-1015.

17. Who enforces Maryland's cigarette and tobacco tax laws?

The Maryland Comptroller's Field Enforcement Bureau handles the enforcement of state laws governing cigarettes and tobacco.

18. How can I report a store that's selling cigarettes to minors?

Contact your local jurisdiction's law enforcement agency.

19. What is the current Maryland excise tax on cigarettes?

The current tax rate is $2.00 per pack of 20.
July 1, 1999 – Tax rate increased from $.36 to $.66 per pack of 20.
June 1, 2002 - Tax rate increased from $.66 to $1.00 per pack of 20.
Effective January 1, 2008, the rate increased from $1.00 to $2.00 per pack of 20.

20. Can I order cigarettes over the Internet?

No. It is illegal to purchase cigarettes over the Internet.

21. What are fire safe cigarettes?

All cigarettes manufactured or sold in Maryland must be tested and marked as Fire Safe Cigarettes.