(CNN) Tobacco was first used by the peoples of the pre Columbian Americas. Native Americans apparently cultivated the plant and smoked it in pipes for medicinal and ceremonial purposes.
Christopher Columbus brought a few tobacco leaves and seeds with him back to Europe, but most Europeans didn’t get their first taste of tobacco until the mid 16th century, when adventurers and diplomats like France’s Jean Nicot for whom nicotine is named began to popularize its use. Tobacco was introduced to France in 1556, Portugal in 1558, and Spain in 1559, and England in 1565.
The first successful commercial crop was cultivated in Virginia in 1612 by Englishman John Rolfe. Within seven years, it was the colony’s largest export. Over the next two centuries, the growth of tobacco as a cash crop fueled the demand in North America for slave labor.
At first, tobacco was produced mainly for pipe smoking, chewing, and snuff. Cigars didn’t become popular until the early 1800s. Cigarettes, which had been around in crude form since the early 1600s, didn’t become widely popular in the United States until after the Civil War, with the spread of “Bright” tobacco, a uniquely cured yellow leaf grown in Virginia and North Carolina. Cigarette sales surged again with the introduction of the “White Burley” tobacco leaf and the invention of the first practical cigarette making machine, sponsored by tobacco baron James Buchanan “Buck” Duke, in the late 1880s.
The negative health effects of tobacco were not initially known in fact, most early European physicians subscribed to the Native American belief that tobacco can be an effective medicine.
By the early 20th century, with the growth in cigarette smoking, articles addressing the health effects of smoking began to appear in scientific and medical journals. In 1930, researchers in Cologne, Germany, made a statistical correlation between cancer and smoking. Eight years later, Dr. Raymond Pearl of Johns Hopkins University reported that smokers do not live as long as non smokers. By 1944, the American Cancer Society began to warn about possible ill effects of smoking, although it admitted that “no definite evidence exists” linking smoking and lung cancer.
A statistical correlation between smoking and cancer had been demonstrated but no causal relationship had been shown. More importantly, the general public knew little of the growing body of statistics.
That changed in 1952, when Reader’s Digest published “Cancer by the Carton,” an article detailing the dangers of smoking. The effect of the article was enormous Similar reports began appearing in other periodicals, and the smoking public began to take notice. The following year, cigarette sales declined for the first time in over two decades.
The tobacco industry responded swiftly. By 1954 the major U.S. tobacco companies had formed the Tobacco Industry Research Council to counter the growing health concerns. With counsel from TIRC, tobacco companies began mass marketing filtered cigarettes and low tar formulations that promised a “healthier” smoke. The public responded, and soon sales were booming again.
The next big blow to the tobacco industry came in the early 1960s, with the formation of the Surgeon General’s Advisory Committee on Smoking and Health. Convened in response to political pressures and a growing body of scientific evidence suggesting a causal relationship between smoking and cancer, the committee released a 387 page report in 1964 entitled “Smoking and Health.” In unequivocal terms, it concluded that “cigarette smoking is causally related to lung cancer in men.” It said that the data for women, “though less extensive, point in the same direction.” The report noted that the average smoker is nine to 10 times more likely to get lung cancer than the average non smoker and cited specific carcinogens in cigarette smoke, including cadmium, DDT, and arsenic.
The tobacco industry has been on the run albeit profitably ever since. In 1965, Congress passed the Federal Cigarette Labeling and Advertising Act requiring the surgeon general’s warnings on all cigarette packages. In 1971, all broadcast advertising was banned. In 1990, smoking was banned on all interstate buses and all domestic airline flights lasting six hours or less. In 1994, Mississippi filed the first of 22 state lawsuits seeking to recoup millions of dollars from tobacco companies for smokers’ Medicaid bills. And in 1995, President Clinton announced FDA plans to regulate tobacco, especially sales and advertising aimed at minors.
Tobacco has been around longer than the United States, and a causal relationship between smoking and cancer has been acknowledged by the U.S. government for over three decades. So why has it taken so long for the tobacco industry to be forced to settle lawsuits over the dangers of cigarettes?
Previous lawsuits went nowhere. Tobacco companies, with deep pockets for legal maneuvering, easily beat back early suits, including the first one, filed in 1954. Their most serious challenge before the 1990s came in 1983, when Rose Cipollone, a smoker dying from lung cancer, filed suit against Liggett Group, charging the company failed to warn her about the dangers of its products. Cipollone, who eventually died, initially won a $400,000 judgment against the company, but that was later overturned. After two arguments before the Supreme Court, Cipollone’s family, unable to afford the cost of continued litigation, dropped the suit.
Now, however, tobacco companies face a different legal environment. Over the past three decades, the law has changed considerably.
Today, state laws and legal precedents hold manufacturers more liable for the effects of their products. And the old legal defense of “contributing negligence” which prevented lawsuits by people with some measure of responsibility for their own condition is no longer viable in most jurisdictions. Instead, a defendant can be held partially liable and forced to pay a corresponding percentage of damages. Finally, the notion of “strict” liability has developed this means a defendant can be found liable whether or not they are found negligent. If a product such as tobacco causes harm, the company that produced it can be held responsible, even if it wasn’t aware of the potential danger.
Cigarette & cigarette use taxes
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- Cigarette Tax 35 ILCS 130/1 to 130/30
- Cigarette Use Tax 35 ILCS 135/1 to 135/37
Electronic Services
- MyTax Illinois
- Tax Prep Software
Definition
The Cigarette Tax Act imposes a tax on the occupation of selling cigarettes at retail. Licensed distributors prepay the tax through the purchase of stamps, which are affixed (either heat transferred or hand applied) to each cigarette package. The distributor collects the tax from the retailer at or before the time of sale. The retailer passes the tax on to the consumer in the cigarette sale price.
The Cigarette Use Tax Act imposes a tax on the privilege of using cigarettes in Illinois. This act duplicates the provisions of the Cigarette Tax Act.
“Cigarette” means any roll for smoking made wholly or in part of tobacco irrespective of size or shape and whether or not such tobacco is flavored, adulterated or mixed with any other ingredient, and the wrapper or cover of which is made of paper or any other substance or material except tobacco.
NOTE Tobacco products other than cigarettes are also taxed. (See “Tobacco Products Tax.”)
The Tobacco Products Tax Act imposes the tax on little cigars at the same rate as the tax imposed on cigarettes under the Cigarette Tax Act and the Cigarette Use Tax Act. Little cigars sold in packages of 20 or 25 sticks must be affixed with a cigarette tax stamp. Distributors selling both cigarettes and little cigars are considered “stamping distributors.” See below for licensing and form filing requirements for stamping distributors. Stamping Distributors also must meet all the filing requirements of a tobacco products distributor.
“Little cigar” means and includes any roll, made wholly or in part of tobacco, where such roll has an integrated cellulose acetate filter and weighs less than 4 pounds per thousand and the wrapper or cover of which is made in whole or in part of tobacco.
Tax Rate
Use the “Tax Rate Database” to locate the rate for both Cigarette Tax and Cigarette Use Tax.
Allowable Deductions
- sales out of state
- cigarettes and little cigars returned to manufacturers
- cigarettes and little cigars lost through fire, theft, etc., if the loss is supported by proper documentation
- sales to residents incarcerated in penal institutions and to resident patients of state operated mental health facilities when the cigarettes or little cigars have been manufactured as part of a correctional industries program
- sales to U.S. military personnel through officially recognized agencies physically located at military bases and
- direct sales to U.S. veteran’s hospitals.
Additional Registration, License fee and bonding requirements
In addition to filing Form REG 1, Illinois Business Registration Application, distributors must pay a $250 annual fee and post a $2,500 bond for each location. You may also register using MyTax Illinois.
Form IDR 169, Application for Cigarette Transporter Permit, must be completed if unstamped cigarettes will be
&bull purchased as a sale for resale in a state other than Illinois,
&bull transported through Illinois but not sold in Illinois, and
&bull delivered to another state.
These cigarettes cannot be returned to Illinois.
Distributors selling both cigarettes and little cigars are considered “stamping distributors” and must be licensed under the Cigarette Tax Act or the Cigarette Use Tax Act and the Tobacco Products Tax Act.
Secondary distributors must also be licensed. A secondary distributor is any person engaged in the business of selling cigarettes, who purchases stamped original packages of cigarettes from a licensed distributor under the Cigarette Tax Act or the Cigarette Use Tax Act, sells 75 percent or more of those cigarettes to retailers for resale, and maintains an established business where a substantial stock of cigarettes is available to retailers for resale.
Local Taxes
Cigarette taxes may exist in both home rule and non home rule municipalities. The Department of Revenue does not collect locally imposed cigarette taxes.
Form/Filing & Payment Requirements Cigarette Distributors
- The in state distributors return, Form RC 6, Cigarette and Little Cigar Revenue Return, is due monthly by the 15th day of the month following the end of the reporting period.
- The out of state distributors return, Form RC 6 A, Out of State Cigarette and Little Cigar Revenue Return, is due monthly by the 15th day of the month following the end of the reporting period.
- Form RC 25, Cigarette Importation Report, must be filed by distributors by the first business day of the month following the end of the reporting period.
- Form RC 1 A, Cigarette Tax Stamp Order Invoice, is filed as needed to purchase cigarette tax stamps.
- Form RCS 36 Schedule CSM, Sales of Cigarettes and Little Cigars to Illinois Secondary Cigarette Distributors, must be filed using MyTax Illinois and is due by the 15th day of the month following the transaction being reported.
- Form RC 55, Unstamped Little Cigar Sticks Tax Return, is due monthly by the 15th day of the month following the end of the reporting period.
Stamping Distributors
- Form RC 6
- Form RC 6 A
- Form RC 25
- Form RC 1 A
- Form RCS 36 Schedule CSM
- Form RC 55
- Form TP 1, Tobacco Products Tax Return, is due by the 15th day of the month following the month in which the tobacco products were sold or otherwise disposed.
Secondary Distributors
- Form RCS 1, Secondary Distributors/Manufacturer Representatives Report, must be filed using MyTax Illinois and is due monthly by the 15th day of the month following the end of the reporting period.
Cigarette Manufacturers
- Form RC 36 Schedule CM, Sales of Cigarettes and Little Cigars into Illinois by Manufacturers or Importers, is due by the 5th day of the month following the transaction being reported.
Unlicensed Individuals
- Form RC 44, Cigarette Use Tax Return, is filed as needed, on a per purchase basis, to pay tax on unstamped cigarettes purchased from a seller and is due within 30 days of the purchase.
Electronic Filing
A taxpayer who has 30 or more transactions per month must file electronically. For more information refer to RC 750, Electronic Filing Cigarette Returns. Most Cigarette Tax and Cigarette Use Tax returns and reports can be filed for free at MyTax Illinois.
Electronic Payments
Beginning July 1, 2003, all cigarette tax stamp purchases must be paid by Electronic Funds Transfer (EFT).
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