Indian Reservation Cigarettes

Do you want to know more about Indian reservation cigarettes? Wondering why Indian reservation cigarettes are so cheap? Want to know about the controversies surrounding Indian reservation cigarette sellers? Read on for more info…

It is a well-known fact that Indian reservation cigarettes are sold for less than half the price of a pack of cigarette outside the reservation grounds. One of the primary reasons for this is the low Indian reservation tobacco tax. The Indian Reservation tobacco tax pertains to the sale of Indian reservation cigarettes, cigars, plug tobacco, snuff, smoking tobacco and other tobacco products on an Indian reservation to non Indians. This tax is generally levied on the consumer and not the seller. However, Indian reservation cigarettes are exempt from this tax and this is the reason why cigarette shops can afford t sell them Indian reservation cigarettes at astoundingly cheap rates.

However, the tax exemption on the sale of Indian reservation cigarettes is restricted to retailers of the Indian tribe or Indian retailers who are enrolled members of the tribe or a federally licensed Indian trader. The tax does not apply if the full luxury tax has been paid. Normally, when a packet of cigarettes is sold by a non-Indian retailer to a non-Indian consumer a tax of 58 cents is levied on a pack of 20 cigarettes. The tax exemption is not arbitrary and on the basis of tribal membership each tribe has been allocated a maximum number of cigarettes or other tobacco products that can be sold annually on the reservation without paying taxes on them.

However, the Indian tribes do have the liberty to impose their own tobacco tax. In such a scenario the distributors and the retailers are notified of the taxes and are provided with information on how to stamp the cigarettes. But in the absence of such tax, the annual allocation of tax exempt cigarettes is provided to each tribe and this is subsequently divided into a monthly quota and all the distributors and retailers are informed each month about the maximum number of cigarettes which can be sold during that particular month without taxes to each Indian tribe member or an Indian retailer who is registered with the Department of Revenue.

If you are a retailer of Indian reservation cigarettes, you will have to complete the Reservation Retailer’s Monthly Report Form 805. This form should be filed with the Department of Revenue before the 20th day of each month for the following month for which the returns have been prepared. This report entails information about the number of tobacco products and cigarettes sold including sale figures of tax-free Indian reservation cigarettes. If the tobacco products are taxed, a charge of 40 cents is applicable on a pack of 20 cigarettes which comes to 2 cents per cigarette.


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