A retailer is not required to obtain a tobacco license to sell tobacco products if the retailer purchases tax-paid tobacco products for resale to the consumer from a Colorado licensed wholesaler. The retailer is required to have a valid Colorado sales tax license in order to sell tangible personal property and to collect the sales tax due on tobacco product sales. A Tobacco Products license is required if a retailer is the first to receive tobacco in the state on which excise tax has not been paid.
Example: A retailer would like to offer a special line of cigars and pipe tobacco. The products are not offered by a licensed Colorado wholesaler. The retailer must obtain a Tobacco Products license and will be responsible for remitting the 40% tobacco excise tax to the Department of Revenue. The retailer is then considered a tobacco products wholesaler or distributor by the department even though their primary business is a retail establishment.
Effective August 5, 2009, every retailer who is not a licensed tobacco products dealer shall keep at its place of business complete and accurate records to show that all tobacco products received by the retailer were purchased from a licensed distributor.
Untaxed Tobacco Products
Effective August 5, 2009, anyone in possession of tobacco products not taxed by the distributor must pay the Colorado tobacco excise tax within 30 days of receiving the product. Payment can be made using form DR 0225. Failure to pay the tax within 30 days will result in 500% penalty plus tax and interest. (Tobacco products are also subject to sales or use taxes). This new law did NOT change the existing requirement that the first person or entity to bring any tobacco product into Colorado must be licensed as a tobacco distributor.
A Tobacco Wholesale Subcontractor license is required if a retailer purchases tobacco products from a licensed Colorado distributor for resale to a retailer in Colorado. For more information about the tobacco products license or the tobacco wholesale subcontractor's license, please see Publication FYI Excise 17, Tobacco Products Distributors-General Information .