Chapter 2

Cigarette Tax Imposition

A. Imposition

The cigarette tax is imposed upon:

(1) every person engaged within South Carolina in the business of selling cigarettes, or

(2) every person within South Carolina importing, receiving or acquiring cigarettes from outside of South Carolina or from any source whatsoever.

The tax is imposed on the person first receiving the untaxed cigarettes for sale, distribution or other disposition in South Carolina and upon any person first importing, receiving or acquiring untaxed cigarettes from outside South Carolina for use or consumption.

The tax applies whether the cigarettes are sold or otherwise disposed of in South Carolina, unless the sale or disposition is otherwise exempt under the law. In other words, if the person liable for the tax is unable to account for any cigarettes, such cigarettes are subject to the tax.
B. Definition of a Cigarette
A “cigarette” is defined under the cigarette tax law as:
(1) any roll for smoking containing tobacco or any substitute for tobacco wrapped in paper or in any substance other than a tobacco leaf; or
(2) any roll for smoking containing tobacco or any substitute for tobacco, wrapped in any substance, weighing three pounds per thousand or less; however labeled or named, which because of its appearance, size, type of tobacco used in the filler, or its packaging, pricing, marketing, or labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in item (1).

Since the imposition of the cigarette tax applies to “all cigarettes made of tobacco or any substitute for tobacco,” cigarettes that do not contain tobacco, such as clove cigarettes, are subject to the tax.

In addition, a cigar (or any other roll for smoking that contains tobacco or any substitute for tobacco) which weighs three pounds per thousand or less, regardless of how its labeled or named, is considered a cigarette for the purposes of the cigarette tax if because of its appearance, size, type of tobacco used in the filler, or its packaging, pricing, marketing, or labeling, it is likely to be offered to, or purchased by, consumers as a cigarette.
C. Tax Rate
The tax rate for cigarettes is $0.0285, on each cigarette. Cigarettes are typically sold in packs of 20 or packs of 25; therefore, the tax on a pack of 20 cigarettes is $0.57 and the tax on a pack of 25 cigarettes is $0.7125.

The tax applies to all cigarettes – whether sold, used, consumed, given-away or otherwise disposed of – unless the transaction is exempt under the law. In addition, once the cigarette tax has been paid with respect to a pack of cigarettes, no additional cigarette taxes are due with respect to that pack regardless of the number of times the pack is resold in South Carolina.
D. Examples of Persons Liable for the Cigarette Tax

The following are examples of persons who are liable for the cigarette tax:

(1) Wholesalers first receiving untaxed cigarettes from outside of South Carolina for sale or distribution in South Carolina.

Most persons liable for the cigarette tax will fall within this category.

(2) Retailers first receiving untaxed cigarettes from outside of South Carolina for sale or distribution in South Carolina.

While most retailers will not be liable for the cigarette tax since they are purchasing taxed cigarettes from the wholesalers listed above, some retailers specializing in selling cigarettes and tobacco products will fall into this category. These specialty tobacco shops may directly import or receive untaxed cigarettes from outside of South Carolina.

(3) Manufacturers who bring untaxed cigarettes into South Carolina for give-away promotions.

These manufacturers are liable for the tax as a person importing, receiving or acquiring cigarettes from outside South Carolina for use or consumption.

(4) Manufacturer who employ sales representatives who bring untaxed cigarettes into South Carolina for promotional and other purposes. For example, manufacturers may send “car stock” to their sales representative in South Carolina for restocking or promotional purposes.

These manufacturers are liable for the tax as either as a person engaged in selling cigarettes in South Carolina or a person importing, receiving or acquiring cigarettes from outside South Carolina for use of consumption.

(5) Operators of fairs, circuses and carnivals, or vendors at such locations, who bring untaxed cigarettes into South Carolina to sell or give-away as prizes.

These persons are liable for the tax as either as a person engaged in selling cigarettes in South Carolina or a person importing, receiving or acquiring cigarettes from outside South Carolina for use of consumption.

(6) Individuals who bring untaxed cigarettes into South Carolina for their own use or consumption.

These individuals are liable for the tax as a person importing, receiving or acquiring cigarettes from outside South Carolina for use of consumption.
E. Examples of Persons Not Liable for the Cigarette Tax

The following are examples of persons who are not liable for the cigarette tax:

(1) Retailer only receiving taxed cigarettes from South Carolina wholesalers.

Since the South Carolina wholesaler was the first person to receive the untaxed cigarettes into South Carolina, the wholesaler, not the retailer, is liable for the tax.

(2) Individuals only purchasing taxed cigarettes from South Carolina retailers.

Since either a South Carolina wholesaler or retailer was the first person to receive the untaxed cigarettes into South Carolina, the wholesaler or retailer, not the individual consumer, is liable for the tax.

(3) Operators of fairs, circuses and carnivals, or vendors at such locations, who only purchase taxed cigarettes from South Carolina wholesalers or retailers.

Since either a South Carolina wholesaler or retailer was the first person to receive the untaxed cigarettes into South Carolina, the wholesaler or retailer is liable for the tax.