What did House Bill 2568 require of cigarette manufacturers and roll-your-own tobacco distributors in Kansas?

Plain-English summary

This notice summarizes House Bill 2568 (1999), which implements the tobacco Master Settlement Agreement in Kansas, effective May 20, 1999.

• Any tobacco product manufacturer selling cigarettes to Kansas consumers must either become a participating manufacturer of the November 23, 1998 Master Settlement Agreement or place money into a qualified escrow fund by April 15 of the year after each calendar year, based on units sold.
• For Master Settlement purposes, 'cigarettes' includes roll-your-own tobacco -- but there is no change to how roll-your-own is taxed.
• The Department reports units sold from the excise tax it collects.

New reporting: beginning with shipments entering Kansas on May 21, 1999, distributors must document roll-your-own tobacco by manufacturer on a new Schedule 2C (Monthly Report of Roll-Your-Own Tobacco Products) attached to the monthly tobacco products report. In-state distributors carry the total net invoice price to line 1b; out-of-state distributors attach Schedule 2C to Schedule 6. Filing procedures for cigarettes themselves did not change. Questions about the Master Settlement go to the Kansas Attorney General's office.

What this means for you

If you manufacture or distribute cigarettes or roll-your-own tobacco sold in Kansas, HB 2568 means non-participating manufacturers must fund a Master Settlement escrow each year, and distributors must start reporting roll-your-own quantities by manufacturer on Schedule 2C.

Common questions

Q: Does roll-your-own tobacco get taxed differently under HB 2568?
A: No. Roll-your-own is counted as 'cigarettes' for Master Settlement purposes, but there is no change in how it is taxed.

Q: What must a manufacturer do if it is not a Master Settlement participant?
A: Place an amount based on cigarette units sold into a qualified escrow fund by April 15 of the year following each calendar year.

Citations and references

• 1999 House Bill 2568 (tobacco Master Settlement escrow requirement; roll-your-own reporting)
• Schedule 2C (Monthly Report of Roll-Your-Own Tobacco Products)

Subject

Summary of 1999 Cigarette and Tobacco Legislation

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 99-02

Original ruling text

Notice
Notice Number: 99-02
Tax Type: Cigarette and Tobacco Products
Brief Description: House Bill 2568 implementation notice.
Keywords:
Effective Date: 05/20/1999
Approval Date: 05/20/1999

Body:
NOTICE 99-02

                   Summary of 1999 Cigarette and Tobacco Legislation

House Bill 2568, as enacted by the 1999 Kansas Legislature, requires any tobacco product manufacturer selling
cigarettes to consumers within the state of Kansas to either become a participating manufacturer of the master
settlement agreement entered into on
November 23, 1998, or place into a qualified escrow fund by April 15 of the year following the end of a calendar year
an amount based on the number of cigarette units sold. For the purposes of the master tobacco settlement, the
legislation defines cigarettes to include roll-your-own tobacco. There are no changes in how the roll-your-own
tobacco is taxed. The Kansas Department of Revenue is responsible for reporting the number of units sold based on
the excise tax collected. The law is effective May 20, 1999.

For roll-your-own tobacco products, a change in the tobacco excise tax reporting is required to capture the quantity of
roll-your-own tobacco products, by manufacturer, being shipped into Kansas. Beginning with shipments entering
Kansas on May 21, 1999, the reporting of roll-your-own tobacco products must be documented. Attached is a new
Schedule 2C, Monthly Report of Roll-Your-Own Tobacco Products, to report the quantity of the product being
shipped into Kansas. A separate schedule will be completed for each manufacturer.

In-State Distributors: The Total Manufacturer’s Net Invoice Price will be carried from Schedule 2C to line 1b on the
Kansas Distributor’s Tobacco Products Monthly Report. All other tobacco products will be reported using existing
schedules and reported on line 1a of the monthly report.

Out-of-State Distributors: Complete Schedule 2C as an attachment to your monthly report, Out-of-State Tobacco
Products Distributors Selling into Kansas (Schedule 6). There are no changes to the monthly report. On Schedule 6
you will continue to report by consignee.

There are no changes to the filing procedures for the reporting and remitting of tax for cigarettes brought into Kansas.
The department can quantify the units sold for cigarettes from the current tax data collected.

Copies of Schedule 2C and the revised tobacco monthly report are enclosed for use in filing of the May return.
Additional supplies of Schedule 2C and the monthly report will be mailed in June for subsequent reporting periods.

Taxpayer Assistance

If you have questions about these new provisions or their application, contact the office below.

                                          Cigarette and Tobacco Excise Tax
                                           Kansas Department of Revenue
                                                915 SW Harrison St.

Page 2

                                             Topeka, KS 66625-0001
                                             Phone: (785) 296-5329

                                  Hearing Impaired TTY: (785) 296-3909

For questions regarding the legislation and the master settlement agreement contact the Kansas Attorney General’s
office at (785) 296-2215.

Notice 99-02
May 27, 1999

Date Composed: 05/27/1999 Date Modified: 10/09/2001

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