Frequently Asked Questions Regarding the Tax Rate Method for Snuff, New Tax on Alternative Nicotine, and Tobacco Product Inventory When a Tax Rate Changes

The tax rate change for the weight-based tax on snuff and the new tax on alternative nicotine products (ANP) is effective July 1, 2025.

Yes. The new tax applies to sales or purchases occurring on or after July 1, 2025.

Pursuant to N.C.G.S. 105-113.4G, every person required to obtain a tobacco product license and every person required to make reports for the tobacco products excise tax, shall keep complete and accurate records of all purchases, inventories, sales, shipments, and deliveries of tobacco products.

Pursuant to N.C.G.S. 105-113.38B, a remote seller required to be licensed must maintain the following:

• A list, updated annually, showing the cost price paid by the remote seller for each stock keeping unit of cigars.
• Invoices documenting remote or delivery sales to consumers in this State.
• Records necessary to document the cost price, weight, or count based on the applicable tax imposed, of purchases of all tobacco products sold to consumers in North Carolina.

No. A separate form must be completed for each licensed location.

In accordance with N.C.G.S. 105-113.39A (a1), a wholesale dealer or retail dealer must obtain an Other Tobacco Products (OTP) License for each location:

• Where a wholesale dealer makes tobacco products other than vapor products.
• Where a wholesale dealer or a retail dealer receives or stores non-excise-tax-paid tobacco products other than vapor products.
• Where a retail dealer that is a delivery seller or remote seller receives or stores non-excise-tax-paid tobacco products for delivery sales or remote sales of tobacco products other than vapor products.

NOTE: If you receive or sell non-excise-tax-paid cigarettes or vapor products, additional licensing is required for each location.

A person who holds an Other Tobacco Products (OTP) License can sell tobacco products other than cigarettes and vapor products. A separate license must be obtained for each location at which product is received or sold. Cigarettes and vapor products require additional licenses.

Yes. In accordance with N.C.G.S. 105-113.4B (a2), an Other Tobacco Products (OTP) License may be revoked for any of the following:

• Failure to obtain a license in a timely manner or for all places of business
• Failure to file returns
• Failure to pay tax when due
• Making a false statement in an application or return
• Failure to keep records
• Refusing to allow examination of records
• Failure to disclose the correct amount of tobacco product taxable in this State
• Failure to file a replacement bond or an additional bond if required
• Failure to maintain business status requirements set out in N.C.G.S. 105-113.4A(b)

Pursuant to N.C.G.S. 105-113.36A (d), other exemptions include:

• A tobacco product sold outside North Carolina
• A tobacco product sold to the federal government or Its Instrumentalities
• A sample tobacco product distributed without charge
• Manufacturer’s option

NOTE: Modified Risk tobacco product tax rate reductions are reported on Form B-A-101 and B-A-102 on the “other exemption” line.

Modified Risk Tobacco Products are tobacco products that are sold or distributed for use to reduce harm or the risk of tobacco-related disease associated with commercially marketed tobacco products. Those products must be reported to the Department by:

• Completing and attaching Form B-A-MR50, Schedule of Modified Risk Tobacco Products for a 50% excise tax reduction, or
• Completing and attaching Form B-A-MR25, Schedule of Modified Risk Tobacco Products for a 25% excise tax reduction.

NOTE: The Food and Drug Administration issues orders for modified risk tobacco products under 21 U.S.C. § 387k(g).

Yes. An Other Tobacco Products (OTP) License is required for each location at which non-excise-tax-paid snuff is sold or stored.

The term "powdered tobacco" refers to smokeless tobacco, specifically snuff, which is a finely cut, ground, or powdered tobacco product intended for oral or nasal use without being burned.

Powdered tobacco is taxed based on weight in accordance with N.C.G.S. 105-113.36A(a)(2a).

The term "finely cut tobacco" refers to smokeless tobacco, specifically snuff, which is a finely cut, ground, or powdered tobacco product intended for oral or nasal use without being burned.

Finely cut tobacco is taxed based on weight in accordance with N.C.G.S. 105-113.36A(a)(2a).

The term "ground tobacco" refers to smokeless tobacco, specifically snuff, which is a finely cut, ground, or powdered tobacco intended for oral or nasal consumption without combustion.

Ground tobacco is taxed based on weight in accordance with N.C.G.S. 105-113.36A(a)(2a).

Chewing tobacco is any leaf tobacco that is not intended to be smoked and is taxed based on cost price in accordance with N.C.G.S. 105-113.36A(a)(3).

NOTE: For tax purposes, chewing tobacco is not snuff as defined in N.C.G.S. 105-113.4(10d).

Yes. Snus contains ground tobacco, loose or in pouches, and meets the definition of snuff found in N.C.G.S. 105-113.4(10d). Snus is taxed-based on weight in accordance with N.C.G.S. 105-113.36A(a)(2a).

The term “long cut tobacco” is a smokeless tobacco product that consists of shredded tobacco leaves packed into a can and is taxed based on the cost price of the product in accordance with N.C.G.S. 105-113.36A(a)(3).

Yes, both moist and dry snuff are subject to a weight-based taxation methodology.

Moist snuff is made of cured and fermented tobacco processed into fine particles and is consumed orally. Dry snuff is fire-cured tobacco processed into a powder, which can be inhaled or put in the mouth. Both moist and dry snuff are taxed based on weight in accordance with N.C.G.S. 105-113.36A(a)(2a).

No. Snuff products that do not contain tobacco are not subject to weight-based excise tax at this time. However, these products may be taxed as alternative nicotine products in accordance with N.C.G.S. 105-113.36A(a)(2b).

No. Long cut, also known as loose leaf, does not meet the definition of snuff in N.C.G.S. 105-113.4(10d) and is therefore taxed based on the cost price of the product in accordance with N.C.G.S. 105-113.36A(a)(3).

NOTE: Snuff is specifically defined as finely cut, ground, or powdered tobacco intended for oral or nasal consumption without combustion.

No. Rough cut, also known as ribbon cut, does not meet the definition of snuff in N.C.G.S. 105-113.4(10d) and is therefore taxed based on the cost price of the product in accordance with N.C.G.S. 105-113.36A(a)(3).

NOTE: Snuff is specifically defined as finely cut, ground, or powdered tobacco intended for oral or nasal consumption without combustion.

No. Snuff may be sold in pouches or cans. The packaging of a product does not determine the taxable status.

Yes. Single serving pouched products consisting of finely cut or ground tobacco would be considered snuff and taxed based on weight in accordance with N.C.G.S. 105-113.36A(a)(2a).

An alternative nicotine product (ANP) is defined in N.C.G.S. 105-113.4(1b) as a noncombustible product that contains natural or synthetic nicotine but does not contain tobacco and is intended for human consumption whether chewed, absorbed, dissolved, ingested, or by other means. ANP is taxed based on units in accordance with N.C.G.S. 105-113.36A(a)(2b).

NOTE:  ANP is considered a tobacco product but does not include cigarettes or vapor products.

ANP is taxed at a rate of ten cents (10¢) per container containing up to 20 units, and at the rate of one-half cent (1/2¢) per unit for any amount in a container containing over 20 units. ANP is taxed based on units in accordance with N.C.G.S. 105-113.36A(a)(2b). See example in the table below.

Yes. An Other Tobacco Products (OTP) License is required for each location at which non-excise-tax-paid ANP is received or stored.

In accordance with N.C.G.S. 105-113.39A (a1), a wholesale dealer or retail dealer must obtain an Other Tobacco Products License for each location:

• Where a wholesale dealer makes tobacco products other than vapor products.
• Where a wholesale dealer or a retail dealer receives or stores non-excise-tax-paid tobacco products other than vapor products.
• Where a retail dealer that is a delivery seller or remote seller receives or stores non-excise-tax-paid tobacco products for delivery sales or remote sales of tobacco products other than vapor products.

NOTE: If you receive or sell non-excise-tax-paid cigarettes or vapor products, additional licensing is required for each location.

A “unit” refers to each individual item inside in a container of ANP.

A “container” is the smallest individual package of ANP that has the FDA labeling required for sale.

Inventory tax, also referred to as floor tax, is based on the amount of product on hand at the time a new tax or a tax rate increase becomes effective.

The B-A-120 Alternative Nicotine Products Floor Tax Form is required to be filed by wholesale dealers and retail dealers who do not exclusively purchase alternative nicotine product inventory with the North Carolina excise tax already paid AND do not have an excise tax Other Tobacco Products (OTP) license for the location where the inventory is received, stored, and offered for sale.

A Form B-A-102 Monthly Vapor and Alternative Nicotine Products Excise Tax Return must be filed even if there is no activity.

NOTE:  If you are a licensed wholesale dealer or retail dealer you are required to file form B-A-120 Alternative Nicotine Products Floor Tax Form.

If the invoice is for non-excise-tax paid ANP not yet received, the product will be reported on the next monthly return using form B-A-102 Monthly Vapor and Alternative Nicotine Products Excise Tax Return.

If the invoice is for excise tax paid ANP not yet received, the product will be reported on the B-A-120 Alternative Nicotine Products Floor Tax Form.

The B-A-105 Snuff Floor Tax Form is required to be filed by all wholesale dealers and retail dealers who do not exclusively purchase snuff inventory with the North Carolina tobacco excise tax already paid AND do not have an excise tax Other Tobacco Products (OTP) license for the location where the inventory is received, stored, and offered for sale.

A Form B-A-101 Monthly Other Tobacco Products (OTP) Excise Tax Return (Excluding Vapor and Alternative Nicotine Products) Return must be filed even if there is no activity.

NOTE: If you are a licensed wholesale dealer or retail dealer of other tobacco products you are required to file form B-A-105 Snuff Floor Tax Return Form.

If the invoice is for non-excise-tax paid snuff not yet received, the product will be reported on the next monthly return using form B-A-101 Monthly Other Tobacco Products (OTP) Excise Tax Return (Excluding Vapor and Alternative Nicotine Products).

If the invoice is for excise tax paid snuff not yet received, the product will be reported on the B-A-105 Snuff Floor Tax Form.

Yes. The inventory (floor) tax applies to all products on hand July 1, 2025.

Additional tax on inventory refers to the difference between the old tax rate and the new tax rate enacted into law. Additional tax is due on product in inventory on which the old tax rate was paid in order to eliminate any differential in total tax that would otherwise exist on subsequently purchased products.

Additional tax for excise tax-paid inventory on hand is charged to the licensed wholesaler dealers and retail dealers, so that all inventories are taxed at the new rate after the change.

Yes. You must pay the excise tax rate difference based on the cost price at the time of purchase as reflected on the supplier invoice and the new tax rate basis.

See instructions for the applicable forms B-A-105 or B-A-120.

Form B-A-105, Snuff Floor Tax Form is available on the Department’s website.

Form B-A-120, Alternative Nicotine Products Floor Tax Form is available on the Department’s website.

Please mail the completed floor tax form and a check or money order for the amount due to the following address:

North Carolina Department of Revenue
PO Box 25000
Raleigh, North Carolina 27640-0950

NOTE:  Electronic payments and ACH payments are not available for this form.

The floor tax form and payment are due no later than July 20, 2025.

No. There is no statutory provision for floor tax refunds.