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Cigarette & Cigarette Use Taxes

Statutory Reference

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Definition

The Cigarette Tax Act imposes a tax on the occupation of selling cigarettes at retail. Licensed distributors prepay the tax through the purchase of stamps, which are affixed (either heat-transferred or hand applied) to each cigarette package. The distributor collects the tax from the retailer at or before the time of sale. The retailer passes the tax on to the consumer in the cigarette sale price.

The Cigarette Use Tax Act imposes a tax on the privilege of using cigarettes in Illinois. This act duplicates the provisions of the Cigarette Tax Act.

“Cigarette” means any roll for smoking made wholly or in part of tobacco irrespective of size or shape and whether or not such tobacco is flavored, adulterated or mixed with any other ingredient, and the wrapper or cover of which is made of paper or any other substance or material except tobacco.

NOTE: Tobacco products other than cigarettes are also taxed. (See "Tobacco Products Tax.")

The Tobacco Products Tax Act imposes the tax on little cigars at the same rate as the tax imposed on cigarettes under the Cigarette Tax Act and the Cigarette Use Tax Act. Little cigars sold in packages of 20 or 25 sticks must be affixed with a cigarette tax stamp. Distributors selling both cigarettes and little cigars are considered “stamping distributors.” See below for licensing and form filing requirements for stamping distributors. Stamping Distributors also must meet all the filing requirements of a tobacco products distributor.

“Little cigar” means and includes any roll, made wholly or in part of tobacco, where such roll has an integrated cellulose acetate filter and weighs less than 4 pounds per thousand and the wrapper or cover of which is made in whole or in part of tobacco.

Tax Rate

Use the “Tax Rate Database” to locate the rate for both Cigarette Tax and Cigarette Use Tax.

Allowable Deductions

Additional Registration, License fee and bonding requirements

In addition to filing Form REG-1, Illinois Business Registration Application, distributors must pay a $250 annual fee and post a $2,500 bond for each location. You may also register using MyTax Illinois.

Form IDR-169, Application for Cigarette Transporter Permit, must be completed if unstamped cigarettes will be
• purchased as a sale for resale in a state other than Illinois,
• transported through Illinois but not sold in Illinois, and
• delivered to another state.

These cigarettes cannot be returned to Illinois.

Distributors selling both cigarettes and little cigars are considered “stamping distributors” and must be licensed under the Cigarette Tax Act or the Cigarette Use Tax Act and the Tobacco Products Tax Act.

Secondary distributors must also be licensed. A secondary distributor is any person engaged in the business of selling cigarettes, who purchases stamped original packages of cigarettes from a licensed distributor under the Cigarette Tax Act or the Cigarette Use Tax Act, sells 75 percent or more of those cigarettes to retailers for resale, and maintains an established business where a substantial stock of cigarettes is available to retailers for resale.

Local Taxes

Cigarette taxes may exist in both home rule and non-home rule municipalities.  The Department of Revenue does not collect locally imposed cigarette taxes.

Form/Filing & Payment Requirements

Cigarette Distributors

Stamping Distributors

Secondary Distributors

Cigarette Manufacturers

Unlicensed Individuals

Electronic Filing

A taxpayer who has 30 or more transactions per month must file electronically. One electronic filing option is the direct transmission method using software you develop or purchase (see Tax-Prep Software). Another option is to use MyTax Illinois, our on-line account management program, to file most Cigarette Tax and Cigarette Use Tax returns and reports.

Electronic Payments

Beginning July 1, 2003, all cigarette tax stamp purchases must be paid by Electronic Funds Transfer (EFT).

Questions?