February 27, 2025
Re: Request for Ruling: Virginia Tobacco Products Tax
Dear *****:
This letter is in reply to your request regarding the application of the Virginia tobacco products tax to tobacco leaf wraps.
FACTS
A wholesaler of various tobacco products (the “Taxpayer”) seeks to offer tobacco leaf wraps for sale. Tobacco leaf wraps are whole tobacco leaves used to wrap other tobacco products or other substances for smoking. The Taxpayer indicates that the tobacco leaf wraps are not rolls of tobacco nor can they be smoked in a pipe due to their large diameter. The Taxpayer requests a ruling concerning the taxability of tobacco leaf wraps under Virginia’s tobacco products tax.
This response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.
RULING
Pursuant to Virginia Code § 58.1 1021.02, the Virginia tobacco products tax is imposed on a tobacco products distributor that: (1) brings or causes to be brought from outside Virginia into the Commonwealth tobacco products for sale; (2) makes, manufactures, or fabricates tobacco products in Virginia for sale in the Commonwealth; or (3) ships or transports tobacco products to retailers in Virginia to be sold by those retailers. The tax is due when tobacco products are sold in Virginia.
Virginia Code § 58.1-1021.01 defines tobacco products to include cigars, smokeless tobacco, pipe tobacco, and loose leaf tobacco. For purposes of the Virginia tobacco products tax, “tobacco products” means:
(i) “cigar” as defined in § 5702(a) of the Internal Revenue Code, and as such section may be amended; (ii) “smokeless tobacco” as defined in § 5702(m) of the Internal Revenue Code, and as such section may be amended; or (iii) “pipe tobacco” as defined in § 5702(n) of the Internal Revenue Code, and as such section may be amended. “Tobacco products” also includes loose leaf tobacco.
In Public Document (P.D.) 06-48 (4/11/2006), the Department determined that whole leaf tobacco was not subject to the tobacco products tax because the Alcohol and Tobacco Tax and Trade Bureau of the United States Department of the Treasury (“TTB”) determined that such product did not meet the definition of “tobacco products” provided by Internal Revenue Code (“IRC”) § 5702. See P.D. 06-48 and P.D. 20-103 (6/16/2020). In the present case, the Taxpayer has provided no information regarding whether the TTB has issued guidance regarding the tobacco leaf products under consideration. Accordingly, the Department must consider the relevant statutory definitions of “tobacco products” to determine whether such product is subject to the tobacco products tax.
For purposes of the Virginia tobacco products tax, the following definitions apply:
• “Cigar” is defined as “any roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco…other than any roll of tobacco which is a cigarette…” See IRC § 5702(a).
• “Smokeless tobacco” is defined as “any snuff or chewing tobacco.” “Snuff” is defined as “any finely cut, ground, or powdered tobacco that is not intended to be smoked.”
• “Chewing tobacco” is defined as “any leaf tobacco that is not intended to be smoked.” See IRC § 5702(m).
• “Pipe tobacco” is defined as “any tobacco which, because of its appearance, type, packaging, or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco to be smoked in a pipe.” See IRC § 5702(n).
• “Loose leaf tobacco” is defined as “any leaf tobacco that is not intended to be smoked but does not include moist snuff.” See Virginia Code § 58.1-1021.01
Based on the facts provided by the Taxpayer, the tobacco leaf wraps at issue do not meet the definitions of “cigar,” “smokeless tobacco,” “pipe tobacco,” or “loose leaf tobacco” as set forth above. Accordingly, the tobacco leaf wraps described by the Taxpayer do not meet the definition of “tobacco products” as set forth in Virginia Code § 58.1-1021.01 and, therefore, are not subject to the tobacco products tax.
While the tobacco leaf wraps described by the taxpayer do not appear to meet the definition of cigars, smokeless tobacco, pipe tobacco, or loose leaf tobacco as set forth in Virginia Code § 58.1-1021.01 for purposes of the Virginia tobacco products tax, such products do likely meet the definition of “roll-your-own tobacco” set forth in Virginia Code § 58.1-1000. Accordingly, the Taxpayer is advised to consider whether tobacco leaf wraps are roll-your-own tobacco for purposes of the Virginia cigarette excise tax.
The Code of Virginia sections cited are available online at law.lis.virginia.gov. The public documents cited are available at tax.virginia.gov in the Laws, Rules, & Decisions section of the Department’s website. If you have any questions regarding this ruling, you may contact ***** in the Office of Tax Policy and Legal Affairs, Tax Adjudication and Resolution, at ***** or *****.
Sincerely,
James J. Alex
Tax Commissioner
Commonwealth of Virginia
AR/4087.B