Tobacco Products Distributors

Tobacco Products Distributor 

A tobacco products distributor is every person who first receives tobacco product in this state, every person who sells tobacco products in Colorado who is primarily liable for the tobacco products tax and every person who first sells or offers for sale tobacco products imported into Colorado.

A tobacco products distributor license is required when a distributor:

  • Operates the place from which wholesale tobacco products are purchased. If sales or shipments are made from two or more separate locations by a wholesaler, a license for each location is required.
  • Brings or causes tobacco products to be brought into Colorado.
  • Makes, manufacturers, or fabricates tobacco products in Colorado for sale in Colorado, or
  • Ships or transports tobacco products to retailers in Colorado.

How to Apply for a Tobacco Products Distributor License

  • You must provide proof that you have a Colorado sales tax license when you apply for the tobacco distributor license.
  • Complete the Colorado Sales Tax Account Application (CR 0100) and submit the application prior to applying for the tobacco distributor license.
  • Complete and submit a Tobacco Products Distributor Application (DR 0222) along with the license fee.
  • A completed Authorization for Electronic Funds Transfer (DR 5785) must be submitted with your application. Electronic Funds Transfer (EFT) is required for payment of tobacco products excise tax.
  • Complete the Master Settlement Agreement (MSA) reporting on form DR 1286 and/or DR 1285.
  • Applicant must not owe the state any delinquent taxes or interest. Licenses are effective from the date of issue to 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

The tobacco products excise tax in Colorado is 40% of the manufacturer’s list price, before discounts are applied. The tax must be collected upon the sale, use, consumption, handling or distribution of these products in Colorado and remitted to the Department of Revenue.

The tobacco products tax is imposed at the time the distributor:

  • Brings tobacco products or causes tobacco products to be brought into Colorado for sale; or
  • Makes, manufactures, or fabricates tobacco products in Colorado for sale in Colorado; or
  • Ships or transports tobacco products to retailers in Colorado to be sold by those retailers.

Renewing a License

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

  • 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 valid sales tax license, if tobacco products are sold directly to consumers and/or sold at wholesale to retailers. 

Filing a Return & Reporting Requirements

Colorado tobacco products distributors must file a Tobacco Products tax return electronically each quarter. The return must be filed and the payment, which is required to be made by Electronic Funds Transfer (EFT), must be submitted by the 20th day of the month following the reporting quarter.

Distributors must file a return even if no tax is due for that quarter. The amount paid to the department may be reduced by 1.665% 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.

Tobacco Products 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.

In addition, distributors who sell roll-your-own and smokeless tobacco into Colorado, are required to file PACT Act registration and submit PACT Act reports by the 10th of each month. 

For questions on filing requirements, contact the Excise Tax Unit at DOR_ExciseTax@state.co.us, call 303-205-6848 or 303-626-6628.

Exemption and Credits Claimed on the Tobacco Products Tax Return​

Exempt sales (line 2), credits claimed for tobacco exported to retailers out-of-state (line 5), tobacco products returned to the manufacturer (line 6) and tobacco products destroyed (line 7) must be claimed based on the manufacturer’s list price, not the sales price.

Credit for Tobacco Products Shipped to Out-of-State Consumers

Tobacco product distributors are allowed to claim a credit for tobacco products shipped or transported to out of state consumers between Sept. 1, 2015 and Sept.1, 2018.  These sales can be claimed on line 6 of the third quarter 2015 through third quarter 2018 Tobacco Products Tax Return.  If you are eligible for the credit but did not claim it on your returns, you can file amended returns to correct your filings.  After amending your return, complete and submit a Claim for Refund (DR 0137), along with supporting documentation via web message through your Revenue Online account, or mail to:


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

Recordkeeping

For Tobacco Product 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.

Roll-Your-Own Cigarette Making Machine

Due to the passage of the 2012 federal highway bill (MAP-21), any person who makes available to consumers a machine capable of making tobacco products such as cigarettes is considered a manufacturer on the Federal level and must be licensed by the Tobacco and Trade Bureau. Once federal requirements have been met, the owner must certify the product through the Attorney General's office. Once certification is approved, please call the Excise Tax Accounting Section at 303-626-6628 for more information.

Refund

Credits are allowed for tax paid on tobacco products (claim on the Tobacco Products Tax Return) when:

  • Shipped to retailers outside of Colorado for sale by those retailers
  • Shipped to consumers outside Colorado between Sept. 1, 2015 and Aug. 31, 2018 
  • Returned to the manufacturer
  • Destroyed by the distributor

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.

In addition, the department shall give credit for taxes paid on tobacco products that are bad debts. The credit is prohibited unless the bad debt has been charged off as uncollectible on the books of the wholesaler. The wholesaler will be required to repay the credit if payment is received for the bad debt subsequent to receiving the credit. A distributor must amend their Tobacco Products tax return for the period where the bad debt occurred, and form DR 0137 must be submitted for a refund to be issued.

Overpayment on tax from prior periods requires an amended tobacco products tax return and form DR 0137 to be submitted with supporting documentation.

Send the Claim for Refund, along with supporting documentation via web message through your Revenue Online account, or mail to:

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