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General Questions & Answers
The Washington State Liquor Control Board became responsible for cigarette and tobacco tax
enforcement in July of 1997 through ESHB 2272. The state imposes taxation on all cigarettes or
tobacco products sold, used, consumed, handled, possessed or distributed in Washington. The tax
is imposed at the wholesale level and is reflected in the price paid by the consumer at licensed
retail outlets.
It is estimated that the state loses more than 223 million in tax revenue each year through the
illegal sale of untaxed cigarettes. That is nearly 28% of all cigarettes consumed annually in
Washington State.
Loss of revenue occurs through illegal purchases of tobacco. Sixty percent of revenue loss is
believed to be from Indian smoke shops. Twenty percent of the revenue loss is from military sales
and another twenty
percent from casual smugglers who bring in cigarettes from out of state.
Source of funding
Tobacco taxes are a source of revenue for the state. The current tax rate is $2.025 cents per
pack of 20 cigarettes. Distribution of taxes goes is among 5 funds:
| 1. |
Health Care |
$1.01 |
| 2. |
General Fund
|
23.0 cents |
| 3. |
Programs to Stop Youth
Violence |
10.5 cents |
| 4. |
Water quality
|
8.0 cents |
| 5. |
Education Programs
|
60.0 cents |
Who is allowed to buy untaxed cigarettes?
Federal law exempts two categories of individuals from state tobacco taxes:
- Active duty and retired military personnel and their immediate families
can buy tax exempt cigarettes at a military facility. However,
federal law prohibits military personnel and dependents from reselling or giving away untaxed
tobacco products to non-military persons.
- Enrolled members of federally-recognized Native American tribes can
buy tax exempt cigarettes on their tribal reservations. However, it is unlawful for tribal
members to sell or give away untaxed tobacco products to non-tribal members unless state taxes
are paid.
Penalties for possession of untaxed cigarettes
It is a gross misdemeanor for any person to possess or transport untaxed cigarettes. If a
person is found in possession of untaxed tobacco products the following penalties apply:
- Seizure of the untaxed tobacco products
- A remedial penalty of $10 per pack of cigarettes or $250 minimum penalty, which ever is
greater.
- Plus cigarette tax and interest
- Plus sales/use tax
- It is a class C felony to be in possession of more than 60,000 untaxed cigarettes
The Liquor Control Board has the authority to forfeit and seize property that is used in the
illegal shipment and distribution of cigarettes. The agency must notify the owner and/or possessor of the property within 5 days and after complying with forfeiture statutes, may eventually retain the property for official use. |
