To prevent the usage and traffic of interstate smoking and non-smoking tobacco products, the Attorney general has delegated the bureau of ATF (Alcohol, Tobacco and Firearms and Explosive) to administer the PACT Act as soon as possible.
Under the act, the department is now fully responsible for governing the collection of taxes and trafficking of all tobacco products sold, bought, and shipped. If required or found offense, they have all the liberty to act accordingly.
Table of Contents
What is the PACT Act?
The PACT stands for Prevent All Cigarette Trafficking and has been a federal law (15 USC sections 375-377) since 2009.
It is popularly known as the Jenkins Act, which came into existence to revise the governing of interstate profit of tobacco and smokeless tobacco sales tax formation and trafficking that happens directly or remotely.
Under the act, anyone selling these products must register with the ATF and file monthly reports and annual taxation before the 10th of each month.
The PACT (Prevent All Cigarette Trafficking) includes
- Regulatory of cigarettes and smokeless tobacco products mailings to consumers through the U.S. Postal Service
- New requirements for registration, reporting, delivery, and recordkeeping, including a List of Unregistered or Non-Compliant Delivery Sellers
- To increase the criminal offense penalty years and make it up to 3 years imprisonment
- Allowing ATF authorities to inspect or examine any tobacco or cigarette packet kept on-premises or in records.
Who Can Comply With The PACT Act?
The PACT is specifically designed for those involved in interstate commerce selling, shipping, or transferring profit cigarettes or smokeless tobacco.
First, they need to register by providing all the details with the ATF under the PACT Act guidelines.
Secondly and most importantly, the federal government, by all means, has included ENDS (Vapor products, e-cigarettes, e-Hookahs, eCigars, electronic pipes, etc.) on the federal PACT Act forms, effective from March 27, 2021.
Individuals or companies selling or shipping ENDS into interstates must submit their END product sales information to comply with those states’ PACT laws, including licensing, tax filing, and reporting to cope with the rules.
PACT Registration Process
Any person who indulges in the selling, transfer, or shipment of Cigarettes or smokeless tobacco products inside a state, their locality, or Indian territories must register themselves first with the ATF and with the tobacco administration of the states.
The registration forms include
-> Individual’s Full Name –
-> Trade/Business Name (If Any) –
-> Business Address (Primary and Secondary) –
-> Telephone Number (Primary and Secondary Places) –
-> Email Address –
-> Website (If Any) –
This doesn’t apply to foreign manufacturers, only if they
- Ship tobacco products through customs to a bonded warehouse inside the state
- Not have the tag of importer or distributor
- Not offering the product for sale in any circumstances
- Not bringing any profit cigarettes or tobacco products in interstate commerce for sale.
However, if a foreign manufacturer has both the importer and distributor tag and offers interstate commerce tobacco sales, they must register under the PACT Act.
PACT Report Submission Guidelines (State by State)
One thing that is subtle and is not subject t change is that the PACT act differs state-wise. Each state has their way of filling out forms and submission style.
To submit the PACT reports, you usually have three fundamental ways
- Mail the final report to the mentioned Physical Address
- Email the report to a specific personality of the state ATF authority
- E-file report to a particular and approved format (XML)
In case of need, you might ask to submit the PACT report to the State Attorney General.
Submitting a PACT report and a state tax return report are two different things. If you find difficulties understanding both, you can contact state authorities to help you with licensing and tax reporting accounts outside PACT reports.
Delivery Requirements
The dealers must enclose any common carrier or other delivery services that can assure the correct placement of the order. Else, they can assign another individual who can sign and take full responsibility for the containers ensuring safe deliverables at the mentioned address.
However, before handing over the shipment, they are advised to check the carrier’s identification, which involves government-issued identification bearing a photograph of the individual mentioning the minimum age for the legal sale or purchase of smoking and non-smoking tobacco products, as determined by the PACT Act at the place of delivery.
Any delivery seller needs to go through the below-mentioned identification details before accepting any delivery sale:
- Whether the person with the identification has everything in order and the correct form, including Name, Residential Address, Age (Date of Birth), etc.
- They can verify the information using a commercially available database or the one used by government or business officials to confirm the correct authentication.
Non-Reporting PACT Penalties
The PACT Act of 2009 (15 USC sections 375-377) consists of civil and criminal penalties, primarily applicable to delivery violations carried by common carriers or independent delivery services.
The Civil penalties include fines greater than $5,000 or 2% of the gross sales during the one year ending on the violation date. The civil penalty of $5,000 is for the first-timer.
Any repetitive action might cost you $10,000. However, the criminal offense has up to 3 years in jail.
Most importantly, you will make your way to the Federal PACT Non-Compliant list, which can lead to product seizure along with the usual fine.
Due to the increasing workload and standard Tax calculation fluctuation in the PACT Act, we at Metizsoft Solutions – A leading web and mobile app development company, have come forward with a comprehensive PACT Tax System solution.
Using this system, the aligned team can easily add, edit and calculate the tax on smoking and non-smoking tobacco product distribution in the USA region and generate real-time reports.
