Some Cigar Excise Taxes Officially Delayed by 90 Days

Cigar companies and others will get an additional 90 days to pay the federal excise taxes they owe on products that were imported between March 1, 2020-April 30, 2020.

The delay—which applies to federal taxes paid on tobacco products, alcohol and others—was originally announced last month but was quickly put on hold because Steven T. Mnuchin, secretary of the Department of the Treasury, did not have the proper authority to enforce the action. The issue was that the taxes are collected by U.S. Customs and Border Protection (CBP) which is not under Mnuchin’s authority. Now the various agencies—including CBP—have announced the plan for delayed excise tax payments but with some notable changes.

First, the delay only affects shipments imported between March 1-April 30, the original announcement would have covered March 1-June 30. Furthermore, because it’s now well into April, the taxes due for March shipments and some of April’s shipments have likely already been paid as most companies pay them within two weeks of import.

Additionally, this will only to importers who have suffered “significant financial hardship,” which means their revenue is “less than 60 percent of the gross receipts for the comparable period in 2019.” The companies won’t need to submit any paperwork showing this, but they will be expected to have financial records that could prove this if asked.

The new order will cover more than just excise taxes, though it’s still unlikely to apply to user fees as those are imposed by FDA on a quarterly basis, not on an import basis.

For cigar companies that qualify, this will mean an additional 90 days to make federal excise tax payments, which are set at 52.75 percent of the “manufacturer’s price” of a cigar, capped at 40.26 cents per cigar. That money is used to fund a program to provide underprivileged children health care.

The excise tax is built-in to the wholesale price of a cigar that a manufacturer charges a retailer, meaning the government is effectively giving manufacturers an interest-free 90-day loan worth the amount of their excise tax bills.

Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.