Cigarette Distributors

Cigarette Wholesalers/Distributors

There are two types of cigarette wholesalers/distributors in Colorado:

  • A cigarette distributor - a person, firm, limited liability company, partnership, or corporation who imports cigarettes into Colorado for sale or resale (includes any means of exchange) and/or purchasing and affixing tax stamps to packs of cigarettes.
  • A cigarette wholesale subcontractor - Purchasing stamped cigarettes from a Colorado licensed distributor for resale to a retailer in Colorado.

A cigarette distributor license is granted to wholesalers/distributors who own or operate the places from which cigarette sales are to be made. If sales are made from two or more separate locations by a wholesaler, a cigarette license for each location is required.

Printable PDF copies of the forms listed below can be found on the Forms Look Up web page. 

How to Apply for a Cigarette Distributor License

  • You must provide proof that you have a sales tax license when you apply for the cigarette distributor license. Select "Wholesale License" in section E on the Colorado Sales Tax Account Application (CR 0100AP) and submit the application prior to applying for the cigarette distributor license.
  • Complete and submit the Cigarette Distributor Application (DR 0218) with the license fee.
  • Cigarette distributors must pay cigarette excise tax by Electronic Funds Transfer. Complete and submit an Authorization for Electronic Funds Transfer (DR 5785) with the application.
  • Complete a Cigarette Licensee Surety Bond (DR 0219). The bond amount must be equal to your anticipated total monthly purchase of cigarette stamps. A company authorized to do business in Colorado must issue the surety bond.
  • Cigarette Tax Return must be filed electronically through Revenue Online.
  • Complete the Master Settlement Agreement (MSA) reporting on form DR 1286 and/or DR 1285.
  • Provide a letter of intent documenting you will purchase cigarettes from at least one cigarette manufacturer who is currently listed on the Certified Brands Directory. This document should include the name of the certified manufacturer and brand style, and should include verification from the manufacturer.

A new cigarette distributor will not get a license if the applicant owes the state any delinquent taxes or interest administered by the Department. The license will be in effect until June 30 following the date of issue and must be renewed each year with a renewal fee.

Submit completed applications to:

Colorado Department of Revenue
Excise Tax Accounting Section, Room 237
PO Box 17087
Denver, CO 80217-0087

How to Renew a License

Along with the renewal form and payment, documents required for license renewal include:

  • proof that you have a valid sales tax license
  • any unfiled MSA documents (Licensed Distributor Reporting Form (DR 1285) or Tobacco Distributor's Certificate of Exemption (DR 1286)
  • any unfiled tax returns
  • payment of outstanding debt(s) due to the department
  • a bond, if required, and
  • a letter of evidence from a distributor that supplies product to the licensee. The product should either be from a participating manufacturer or a manufacturer who remits escrow to an applicable Colorado tobacco escrow account.

Bond Requirement

Per statute, cigarette distributors who have a surety bond are allowed to reduce the bond amount by 20% annually if they have not had a cigarette tax delinquency in the previous year. The Department sends out a letter before the renewal of the cigarette licenses regarding a licensee's bond status.

Filing a Return & Reporting Requirements

Colorado Cigarette Distributors must file a Cigarette Tax Return electronically each month. To file a Cigarette Tax Return, visit our forms page.  The return must be filed and the payment, which is required to be made by Electronic Funds Transfer (EFT), must be submitted by the 10th day of the month following the month in which stamps were ordered (example: for stamps ordered between July 1 and July 31, the payment is due on August 10).

Distributors must file a return even if no tax is due for that month. The amount paid to the Department may be reduced by 0.9524% of the tax due to cover the distributor’s expense in the collection and remittance of the tax (discount) if the payment is submitted by the due date.

Cigarette Distributors are also required to file Master Settlement Agreement (MSA) reports monthly or annually.  For more information on MSA reporting, see the Master Settlement Agreement Reporting web page. The return is due on the 10th day of the month following the reporting period. Payment is required to be made by Electronic Funds Transfer by 4 PM Mountain Time on return's due date. For example, stamps ordered July 5th would have payment due before 4 PM August 10th.

Recordkeeping

For Cigarette Tax Returns, distributors are required to keep true and accurate records of their activities for at least three years after filing their returns.
 
For Master Settlement Agreement (MSA) reporting, distributors must keep their records for at least five years.

PACT Act Requirements

Federal law under the PACT Act states that distributors selling tobacco products in interstate commerce, into Colorado (which includes sales into Indian Reservations located in Colorado) are required to file the PACT Act registration form. In addition, distributors are required to file by the 10th day of the month a memorandum or a copy of the invoice covering every shipment of cigarettes, roll your own (RYO), and smokeless tobacco made into Colorado during the previous month. Submit these reports to the Department via web message through your Revenue Online account or email to DOR_ExciseTax@state.co.us.

Cigarette Stamps

The cigarette excise tax in Colorado is 4.2 cents per cigarette and is represented by a $0.84 or $1.05 stamp depending on the number of cigarettes in the pack. The wholesaler affixes the tax stamp on each pack of cigarettes sold, and this indicates the cigarette excise taxes have been paid.
 
Cigarette stamps are available to licensed wholesalers from the Department of Revenue in 20 cigarettes per stamp rolls, wide 20 count rolls, 20 count sheets and 25 cigarette per stamp rolls. Licensed distributors may order cigarette stamps by calling the Department of Revenue at 303-866-2570.
 
Shipping of cigarette tax stamps must be paid by the distributors. The distributors must provide to the department their carrier of choice and their account number for the carrier. The department will include a “Cigarette Tax Shipment Advice” along with each order of cigarette tax stamps. It should be retained because the information on it will be used in completing the cigarette tax return.
 
Cigarette stamps cannot be transferred or sold between wholesalers.

Due Date for Cigarette Stamp Orders
The date the stamp order is received by the department determines the due date for cigarette stamps, not shipment or receipt date. This information is found in the cigarette tax shipment invoice letter that is delivered with the stamps.

Unstamped Cigarettes

Every pack of cigarettes sold to consumers in Colorado must have a Colorado cigarette stamp affixed to the bottom of the pack; this includes cigarettes ordered by telephone, mail, or online.

The stamp should clearly indicate "State of Colorado.” Cigarettes that do not have a stamp affixed are contraband (illegal). It is unlawful for any person, firm, limited liability company, partnership or corporation to import cigarettes into Colorado for sale or resale without obtaining a license or without first affixing the proper stamp to each package of cigarettes. Unstamped cigarettes not in the possession of a licensed cigarette wholesaler are subject to seizure at any place in Colorado and should not be sold to a consumer.

A penalty of twenty-five (25) cents per cigarette will be imposed upon any unstamped cigarettes, either purchased or possessed.

Credits & Refunds

Credit will be given by the Department for cigarette taxes on unsalable merchandise when the cigarettes have been returned to the manufacturer. A manufacturers’ credit invoice must be attached to the return to substantiate the credits claimed. If credits exceed the amount of cigarette tax due, or a zero return is filed, a Claim for Refund (DR 0137) must be submitted to request a refund.

A refund of any unused or damaged stamps by the distributor will only be allowed if the stamps are returned within one year after the date of issue by the Department. The unused or damaged stamps for which a refund is being claimed must be submitted with a separate DR 0137.

Credit shall be given by the department to a wholesaler for taxes paid on cigarettes that are bad debts. The credit is prohibited unless the bad debt has been charged off as uncollectible on the books of the distributor. The distributor will be required to repay the credit if payment is received for the bad debt subsequent to receiving the credit. The credit will be processed as a refund on the DR 0137.

If the credit exceeds the amount of tax for the period, the excess credit can be claimed and refunded from the period in which the tax was incurred. A Claim for Refund (DR 0137) must be submitted, along with supporting documentation, to request a refund.

Send form DR 0137, along with supporting documentation through your Revenue Online account via web message, or mail to:

Colorado Department of Revenue
Excise Tax Accounting Section, Room 237
PO Box 17087
Denver, CO 80217-0087