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New E-Vapor Tax and PACT Act Rules Impact on Remote Vape Sellers

As a result of the COVID-19 relief bill, vape selling will become a complicated process

Tax and PACT Act rules changes for the vape industry

The PACT Act was amended to include all vaping products. If you sell vapor products, you will now need to keep accurate records of who you sold to and report all sales in the PACT Act report or form to required General Attorney offices every month. 

Vapor sellers are required to be licensed in the states they do business. If the business is  shipping to all 50 states, the new law requires the vendor to obtain a tobacco license in each state. 

State tobacco licenses come with more requirements. Depending on the state Department of Revenue (DOR), there is process for applying for a license. In some states an applicant may first need to obtain a state department tax number or sales tax license before applying for a tobacco license. An applicant may also need to have a local agent. Refer to individual states for licensing requirements and instructions 

Tobacco licenses come with tax rules including filing tax returns with schedules, and paying excise tax due. Most states have different filing procedures. Some states requirements are simpler than others depending on the filing process (paper, data entry or e-filing).  

Vapor sellers must register with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and comply with monthly reporting rules. Depending on your product you may be required to report a sales summary to the ATF every month. The bill also mandates ATF to keep a non-compliant list of sellers. 

The Pact Act’s original definition of “cigarette” has been modified to include Electronic Nicotine Delivery Systems (ENDS). The term “ENDS” includes all vaping products and liquids. Everything used in consumer vaping is now regulated by the government. The new bill includes all sellable products of vaping without regard to whether the product is e-liquid, a device, or an accessory sold separately. 

Shipping to end consumers by using USPS is not legal any more

FedEx and UPS volunteered to follow USPS rules and stop shipping vapor products. This presents big challenges to remote vape sellers as they now they need to find a carrier that can move their products across state lines. 

Other shipping rules force e-vapor manufactures to include harmful warnings on vape products.  

Noncompliance means possible fines and criminal penalties

According to Dentons, vape vendors not in compliance with the PACT Act risk having fines ranging from $5,000 to $10,000 per violation and other criminal penalties are possible. The choice for vaping vendors is to either comply by March 28, 2021, or cease selling all vape products.

For more details:

See Public Law 116-260

See New requirements for ENDS online vaping retailers in Massachusetts Effective March 27, 2021

See Ohio Webinar:  Vapor Products Tax Electronic Filing Presentation

Indiana Registration and filing information is available at PACT Act

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