Q. What is a vapor product?

A. A vapor product is any nicotine liquid solution or other material containing nicotine that is intended to be used with or in an electronic smoking device. This includes pre-filled tanks used in rechargeable and non-rechargeable (disposable) vapor products. Note the term vapor product does not include devices or components sold separately from the nicotine liquid solution including batteries, cartridges, unfilled tanks or other accessories.

Q. Who is liable for the excise tax?

A. The wholesale dealer or the retail dealer who first acquires or otherwise handles the vapor product in the State of Delaware is liable for the excise tax. However, if you purchase or receive vapor products from a wholesaler or retailer who does not pay the excise tax on the vapor products, then you may be responsible for the tax. The excise tax shall apply only once to the same package or container of tobacco product.

A tobacco product manufacturer or wholesaler that is not liable for the excise tax should designate on its invoices that Delaware excise taxes have NOT been paid.

Q. How much is the excise tax on vapor products?

A. Effective 01/01/2018, the excise tax is imposed on the sale or use of vapor products within the State of Delaware at the rate of five cents ($0.05) per fluid milliliter.

Q. Is the excise tax calculated on the liquid nicotine content in the vapor product or on the entire amount of liquid for each e-cigarette?

A. The excise tax is calculated on the entire amount of liquid for each e-cigarette.

Q. Is an e-cigarette liquid that contains zero nicotine subject to the excise tax?

A. No. The consumable vapor product must contain nicotine for it to be subject to the excise tax.

Q. What form do I fill out to remit the tax on the vapor products?

A. Form TP-1(Wholesale Dealer’s Monthly Report of Other Tobacco Products). This form is to be completed on a monthly basis by wholesalers, retailers, and/or consumers who are liable for the tax. The form can be found on the Division of Revenue’s website under Business Tax Forms at https://revenue.delaware.gov.

Q. On Form TP-1, how do I round if I have a fraction of milliliters after I have totaled the amount of e-cigarette liquids that are subject to the tax?

A. Rounding is to be performed AFTER calculating the grand total of all e-cigarette liquids. If you have a fraction of 0.5 milliliters or above of e-cigarette liquids, please round up to the nearest whole milliliter. If you have a fraction of less than 0.5 milliliters of e-cigarette liquids, please round down to the nearest whole milliliter.

Q. What is the filing frequency and when is the due date?

A. Form TP-1 is to be submitted on a monthly basis and is due on or before the 20th day of the month following the end of the tax or reporting period.

Q. Do I need to obtain a business license from the Delaware Division of Revenue before I sell vapor products?

A. Yes. Anyone conducting business within the State of Delaware must first obtain a business license. The following are the license requirements for a business selling tobacco products, including vapor products:

• Wholesale Tobacco License: $200 (Ch. 53) and $75 (Ch. 29)
• Retail Tobacco License: $150 (triennial-Ch. 53) and $90 (Ch. 29)
• Vending Machine License: $15 (Ch. 53) and $75 (Ch. 29)

Q. What is a retail dealer?

A. A retail dealer is any person who purchases or receives tobacco products, including vapor products, from any source whatsoever for the purpose of sale to the ultimate consumer.

Q. What is a wholesale dealer?

A. A wholesale dealer is any person who regularly sells tobacco products, including vapor products, within the State of Delaware to others who buy for the purpose of resale. A manufacturer who sells tobacco products into the State of Delaware is required to be licensed as a wholesale dealer.

Q. I currently manufacture vapor products in the State of Delaware. Am I responsible for paying the excise tax?

A. Yes. You will need to obtain a manufacturer and a wholesaler dealer business license, and you will be liable for the vapor product excise tax on sales to customers located within the State of Delaware. All invoices for vapor products sold to Delaware customers must include the amount of nicotine liquid solution sold, stated in milliliters.

Q. I currently manufacture the vapor product in Delaware. Do I have to pay the tax on the pure liquid nicotine before it is mixed to become a consumable product?

A. No. The excise tax applies once the component parts are mixed to be a consumable product as a nicotine liquid solution that is capable of being vaporized in an e-cigarette.

Q. I currently manufacture vapor products outside Delaware, but ship the product to wholesale and retail dealers in Delaware via common carrier. Do I need to obtain a business license?

A. Manufacturers who sell tobacco products into the State of Delaware are treated as wholesalers. Wholesalers with nexus in Delaware are required to obtain a wholesale business license and remit the appropriate excise tax on Form TP-1. A business is deemed to have nexus if it or any of its affiliates has a presence in Delaware. Nexus is created if your company or any of its affiliates maintain a temporary or permanent presence of employees or property (inventory, offices, warehouses) in Delaware. If you are shipping vapor products using company-owned vehicles, then you would need a business license as a wholesale dealer.

Q. I currently manufacture the vapor product that is sold to Delaware customers. Is there specific information that must be included on customer invoices?

A. All invoices for vapor products sold to Delaware customers must include the amount of nicotine liquid solution sold stated in milliliters.

A tobacco product manufacturer or wholesaler that is not liable for the excise tax should designate on its invoices that Delaware excise taxes have NOT been paid.

Q. I just opened a vapor shop in Delaware. What do I need to do for excise tax purposes?

A. A retail dealer who first acquires or otherwise handles vapor products with respect to which the excise tax has not yet been paid is liable for the excise tax. You will need to complete Form TP-1 on a monthly basis. However, if you are acquiring vapor products with respect to which the excise tax has been paid, then you are not required to file and pay the excise tax on vapor products.

Q. I am a convenience store in Delaware that buys all my vapor products from a licensed wholesale dealer. Do I need to pay excise tax?

A. If you are buying vapor products on which taxes have been paid, then you are not required to file and pay the excise tax on vapor products, but you will need a tobacco retail dealer license. If at any time you buy vapor products on which taxes have not been paid, you would be liable for the excise tax and must file Form TP-1 on a monthly basis.
Q. I need to return some vapor product back to the manufacturer. What do I need to do?

A. A wholesale dealer or retail dealer who is primarily liable for the vapor products tax and is in possession of stale or otherwise unsalable vapor products upon which the tax has been paid may return the products to the manufacturer and apply to the Division of Revenue for refund of the tax. The refund of taxes paid can be filed on Form 1049C-9602 (Claim for Revision). The form can be found on the Division of Revenue’s website under Business Tax Forms at revenue.delaware.gov.

Q. I am an Internet retail dealer with nexus in Delaware. How do I report the tax on sales of vapor products to Delaware customers?

A. Internet retail dealers with nexus in Delaware are required to obtain a tobacco retail business license and remit the appropriate excise tax on Form TP-1. Note that sales of tobacco products directly to consumers over the Internet, including vapor products, are subject to additional requirements under the Delaware Delivery Sales provisions (30 Del. C., Ch. 53, Sec. 5361 – 5369). These requirements include age verification, disclosure requirements, shipping requirements, registration & reporting requirements, and tax collection requirements.

To clarify, with respect to adult signature requests for all deliveries, the delivery service must obtain the signature of either the purchaser or an adult of minimum legal age at the purchaser’s address, using a government-issued ID to check age.

Q. I am an Internet retail dealer with no nexus in Delaware. How do I report the tax on the sales of vapor products to Delaware customers?

A. Internet retail dealers with no nexus in Delaware are not required to report and remit taxes on internet sales. However, the purchaser is required to report and remit tax on the purchases.

Please note that sales of tobacco products directly to consumers over the internet, including vapor products, are subject to additional requirements under the Delaware delivery sales provisions (30 Del. C., Ch. 53, Sec. 5361 – 5369). These requirements include age verification, disclosure requirements, shipping requirements, registration & reporting requirements, and tax collection requirements.

To clarify, with respect to adult signature requests for all deliveries, the delivery service must obtain the signature of either the purchaser or an adult of minimum legal age at the purchaser’s address, using a government-issued ID to check age.

Q. What if I have additional questions?

A. For further assistance, you may contact the Business Audit Section at (302)-577-8780.