Retailers in the state will need to mark up cigarettes as of July 31, 2013 at least an additional 25 cents per pack due to the $1 per pack tax increase because the state minimum cigarette price law requires a 25% minimum retail mark up.

The Massachusetts Department of Revenue has issued a notice that a $1 per pack cigarette tax increase goes into effect on July 31, 2013.

Effective July 31, 2013 the excise on cigarettes will increase as follows:

• A package of 20 cigarettes will increase from $2.51 to  $3.51 (a $1 increase).

• A package of 25 cigarettes will increase from $3.1375 to $4.3875 (a $1.25 increase).

Massachusetts Cigarette Retailer Licensees are required to take an inventory of all cigarettes on hand and complete Form CIN (Cigarette Inventory Tax Return for Non-Stampers) at the opening of business on July 31, 2013. Form CIN is used to report and pay the increase in the excise due on stamped packages of cigarettes, including stamped packages of little cigars, in inventory as of the opening of business on July 31, 2013.

Retailers with two or more locations may file a consolidated return so long as they follow the instructions on Form CIN. Payment of the inventory tax must be remitted with Form CIN by Aug. 20, 2013.

Failure to comply with this recent legislation may result in the imposition of penalties provided by law, including suspension or revocation of your license.

Retailers are told to retain all documentation for audit purposes. In order to ensure compliance with these provisions, Department of Revenue personnel may visit your business.

The color of the stamps also changed to orange for 20 cigarettes per pack and to pink for 25 cigarettes per pack. As the wholesalers use up their inventory of the old color stamps, you may be receiving stamps with both the old (red and gold) and the new (orange and pink) colors.

If Massachusetts retailers have any questions regarding your responsibilities to report and pay the cigarette excise increase on your inventory, please call the Department’s Cigarette and Tobacco Excise Unit at 617-887-5090.

The National Association of Tobacco Outlets (NATO) noted that, according to Massachusetts Department of Revenue staff, the department is mailing to each wholesaler and retailer the floor stocks tax return for cigarettes. The floor stocks tax only applies to cigarettes, not to other tobacco products.  Also, retailers will need to mark up cigarettes as of July 31, 2013 at least an additional 25 cents per pack due to the $1 per pack tax increase because the state minimum cigarette price law requires a 25% minimum retail mark up. In addition, department of revenue staff clarified that the new 40% tobacco tax rate applies to cigars, roll-your-own tobacco and pipe tobacco while the new 210% tobacco tax rate applies to smokeless tobacco, including chewing tobacco and moist snuff.  The new tax rates on these other tobacco products also go into effect on July 31, 2013.