Other Tobacco Products
The term “other tobacco products” (OTP) is defined in the law to mean “cigars, cheroots, stogies, periques, granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco, snuff, snuff flour, cavendish, plug and twist tobacco, fine-cut, and other chewing tobacco, shorts, refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds and forms of tobacco, prepared in a manner to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing or smoking, but does not include cigarettes.”
How to File & Pay:
- Anyone selling, purchasing, distributing, or importing Other Tobacco Products (OTP) in South Carolina is required to file and pay their Monthly Other Tobacco Products (OTP) Return electronically using MyDORWAY.
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Due Date: The Monthly Other Tobacco Products (OTP) Return must be filed within 20 days of the close of each month.
Frequently Asked Questions
What is the tax rate on OTP?
The tax rate is 5% of the manufacturer’s price. The manufacturer’s price is “the established price at which a manufacturer sells to a wholesaler.”
Regarding the "established manufacturer's price," South Carolina Revenue Ruling #94-7 advised:
- The “established price” of snuff, chewing tobacco and smoking tobacco for purposes of calculating the tobacco tax on promotional packages, products received free of charge, and promotional allowances, as described in the facts, is as follows:
- Promotional Packaging - A product packaged for the consumer as part of a “buy one get one free” or similar promotion by the manufacturer is a packaged unit with an established price that is distinct and separate from the established price for the same product sold individually. Therefore, the established price is the recognized and accepted sum of money asked by the manufacturer for each packaged unit during the promotion.
- Products Received Free of Charge - If a manufacturer offers a wholesaler, during a specified time period, the opportunity to receive one case of a product free of charge if he purchases one or more cases of the same product, the total price that the wholesaler pays is the “established price” for all the cases of the product received under the promotion.
For example, if the wholesaler purchases 10 cases for $200 and receives 1 case free, the established price upon which the tax is calculated for all 11 cases is $200. A transaction must be viewed based upon its substance rather than its form. As such, the taxpayer in the example has purchased 11 cases for $200. - Promotional Allowance - If a manufacturer offers a promotion that merely reduces the price of the product, the established price is the recognized and accepted sum of money asked by the manufacturer for the product during the promotion.
For example, the product may normally sell for $175 per case; however, the manufacturer is offering for a limited time the product for $160 per case with the invoice showing a unit price of $175 and a promotional allowance of $15. As a result of the promotion, the established price is $160.
- The “established price” for the purpose of calculating the tobacco tax is the amount charged by the manufacturer to the wholesaler before any cash discounts for early payment are taken.
How is the Excise Tax on OTP paid?
All licensed distributors are required to file one return for OTP and a separate informational report for cigarettes each month.
For OTP, distributors file a Tobacco Tax Return for Other Tobacco Products (OTP) reporting all OTP purchased for the month and paying the Excise Tax at the rate of 5% of manufacturer’s cost less a 3.5% discount if the return and Excise Tax are timely filed and paid.
Is the State of South Carolina a participant in the Master Settlement Agreement?
Who should be licensed as an Other Tobacco Products wholesaler?
A License to Purchase, Sell and Distribute Manufactured Tobacco (L-915) must be obtained, at no cost, by the following persons before engaging in the sale of other tobacco products in South Carolina:
- Wholesalers of tobacco products
- Retailers that purchase untaxed tobacco products
- Vending machine operators selling tobacco products through vending machines placed on another person’s premises
- Sales representatives for manufacturers of tobacco products
Wholesalers and retailers must obtain a license for each place of business. However, vending machine operators and sales representatives are only required to obtain one license. Vending machine operators must maintain an up-to-date list of the location of each tobacco products vending machine in South Carolina.
Do tobacco products representatives have to be licensed by the SCDOR?
What is the cost to apply for a License to Purchase, Sell and Distribute Manufactured Tobacco?
There is no cost to obtain an OTP license.
Are smoke shops required to obtain an OTP license if they purchase all tax-paid products?
No. Retailers are only required to obtain a license if they purchase untaxed tobacco products.
Are OTP licenses transferable?
No. A license is only valid for the person in whose name it is issued and only for the transaction of business at the place designated in the license.
Is a bond required in order to obtain a license?
A bond is not specifically required with respect to the Other Tobacco Products (OTP) Tax. However, OTP licensees who are not liable for the Cigarette Tax can be required to post a bond if the licensee fails to pay the OTP Tax for as many as two filing periods in a 12 month period.
Are tobacco products substitutes subject to the tax?
Only substitutes for cigarettes are subject to the tax. The tax on tobacco products applies to forms of tobacco prepared in a manner suitable for chewing, smoking or other consumption.
Are any sales exempt from the OTP Tax?
- Sales to the United States Government;
- Sales to a United States Government instrumentality for Army, Navy, Marine or Air Force purposes and delivered to a place lawfully ceded to the United States; and
- Sales to a United States Government instrumentality for Army, Navy, Marine or Air Force purposes and delivered to a ship belonging to the United States Navy for distribution and sale to members of the military establishment only.
Under what circumstances may a distributor request a refund for OTP?
Refunds will only be made for:
- Other Tobacco Products returned as unsellable back to the manufacturer;
- Damaged Other Tobacco Products returned back to the manufacturer
- South Carolina Tax-Paid Other Tobacco Products sold outside of the geographic limits of South Carolina in accordance with the provisions of Section 12-21-90;
- Any other circumstance authorized by the General Assembly.
Note: Line 1 & 2 should be submitted on the Application for Other Tobacco Products (OTP) Tax Refund (L-1030) to accompany Manufacturers Returned Good(s) Affidavit and Credit Memorandum.
Where do you report any evidence of possession of contraband cigarettes?
Where do you report any sales to minors?
Information concerning retail sales of cigarettes or OTP to minors should be reported to the local law enforcement agency.
