New York tightens vaping regulations with another tax

On Behalf of | Feb 20, 2020 | Tax Collection

The New York State Department of Taxation and Finance has a new 20% supplemental sales tax on retail sales of vapor products in the state. The law, which went into effect December 1, 2019, applies to the sale of e-liquid as well as e-liquid units with battery and charge. It does not apply to battery and chargers without e-liquid. This is true of all liquids manufactured for use in an electronic cigarette, cigar, cigarillo, pip, vaping pen, hookah pen or similar device. Examples include CBD liquid and vitamin liquids.

How does this work?

New York businesses that currently sell vapor products must register with the Tax Department. Registration costs $300 per location and requires annual renewal. The retailer must then collect the tax, file returns and remit taxes due. Retailers should pay this new tax with other applicable sales tax returns.

It is important to note that this is not a part of the total gross receipt for sales tax. The state expects the retailer to apply the tax to the retail price of the product.

What does this mean?

Essentially, this means the state has provided another hurdle for retailers who sell these products. New York has strict regulations within this market and applies serious penalties to violations. For example, the state can revoke registration for retailers who sell these products at unregistered locations. Additional penalties can include $5,000 to $25,000 in fines for a first violation and $10,000 to $35,000 for a second violation within three years of a prior violation.

Businesses that find themselves navigating tax collection issues with tax authorities are wise to seek legal counsel. The attorneys at Goldburd McCone are familiar with these issues and can provide guidance to better ensure your business interests are protected.