New York State just implemented a tax that might put Vape Shops out of business

BACKGROUND:

Vapor product manufacturers such as Juul Labs, as well Marlboro maker Altria Group’s Nu Mark have become the hot topic of conversation over the Thanksgiving table due to the increasing nationwide respiratory illness developed by young adults through inhaling a nonflammable liquid and, or gel with or without nicotine that are manufactured into a finished product for use of an electronic cigarette As of November 21, 2019, the Centers for Disease Control and Prevention (CDC) has confirmed 2,290 vaping related lung injury cases, with 47 deaths. Due to the increased publicized risk with using vapor products, states such as New York have taken additional precautions to help keep the product out of the hands of young consumers.

THE TAX:

New York State governor Andrew Cuomo implemented a 20% supplemental sales tax for Vapor Products dealers in his 2019-2020 budget which is set to go into effect on Sunday, December 1, 2019. The tax will be charged to the consumer and collected by the vapor products dealer. In addition, any business that sells or plans to sell must be registered as a vapor products dealer which costs $300 annually. Registration must be renewed and filed with the New York State Department of Taxation and finance by September 20th each year.

VAPE SHOP OBLIGATION:

If you sell cigarettes and tobacco products, you must also register as a vapor products dealer if you make retail sales of vapor products. Form DTF-720, Retail Dealer Certificate of Registration for Cigarettes and Tobacco Products and/or Form DTF-721, Vending Machine Registration Certificate for Cigarettes and Tobacco Products does not allow you to sell vapor products.

WHAT IF YOU DON’T REGISTER BY DECEMBER 1ST?

Any person, including a vapor products dealer, that sells vapor products at an unregistered location or while registration for such retail location is suspended or revoked, may be subject to a civil fine and suspension or revocation of its Vapor Products Dealer Certificate of Registration. The first violation would be a civil fine that could cost from $5,000 to $25,000 along with getting your Vapor Products Dealer Certificate either suspended or taken away for up to six months. If you receive a second violation within three years the fine can be between $10,000 to $35,000 and a suspension of your certificate up to a year and a half. A third violation would put a dealer out of business for at least five years.

FINAL REMARKS:

The 20% “vapor tax” as we like to call it will drastically increase the price of vapor products to the consumer. What used to cost $10, will now cost $12. As a dealer, you are serving as a sales tax collection agent for your respective state which you operate or sell to. It is your responsibility to pay the collected sales tax to New York State monthly, quarterly or annually.

How will this recent legislation impact vape shops in New York State post-December 1st 2019? They might go up in smoke, well not literally, but in clouds? 

Contact us today

Your 2021 Tax Filing Deadline is just days away!


Scroll to Top