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Electronic Nicotine Delivery System (ENDS) & Tax on Consumable Material Frequently Asked Questions

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.

This guidance document may change with updated information or added examples. DOR recommends you do not print this document. Instead, sign up for the subscription service at revenue.nebraska.gov to get updates on your topics of interest.

What is consumable material?

Consumable material means any liquid solution or other material containing nicotine that is depleted as an electronic nicotine delivery system is used.

What is an Electronic Nicotine Delivery System (ENDS)?

Electronic nicotine delivery system means any product or device containing nicotine, tobacco, or tobacco derivatives that employs a heating element, power source, electronic circuit, or other electronic, chemical, or mechanical means, regardless of shape or size, to simulate smoking by delivering the nicotine, tobacco, or tobacco derivatives in vapor, fog, mist, gas, or aerosol form to a person inhaling from the product or device. Electronic nicotine delivery system includes:
Any substance containing nicotine, tobacco, or tobacco derivatives, whether sold separately or sold in combination with a product or device that is intended to deliver to a person nicotine, tobacco, or tobacco derivatives in vapor, fog, mist, gas, or aerosol form;
Any product or device marketed, manufactured, distributed, or sold as an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, electronic hookah, or similar products, names, descriptors, or devices; and
Any component, part, or accessory of such a product or device that is used during operation of the product or device when sold in combination with any substance containing nicotine, tobacco, or tobacco derivatives.
Electronic nicotine delivery system does not include the following:
An alternative nicotine product, cigarette, cigar, or other tobacco product, or any product regulated as a drug or device by the United States Food and Drug Administration under Chapter V of the Federal Food, Drug, and Cosmetic Act; or
Any component, part, or accessory of such a product or device that is used during operation of the product or device when not sold in combination with any substance containing nicotine, tobacco, or tobacco derivatives.

Who is liable for the excise tax under the Tobacco Products Tax Act?

The first owner of tobacco products, including ENDS, is liable for the excise tax. “First owner” means any person who is engaged in the business of selling tobacco products in this state who brings or causes tobacco products to be brought into this state for sale in this state; who makes, manufacturers, or fabricates and sells tobacco products in this state; who is an out-of-state supplier who ships or transports tobacco products to retailers in this state and obtains a license; or an out-of-state retailer who sells ENDS to consumers within Nebraska.

How much is the excise tax on ENDS containing consumable material?

The tax rate of ENDS containing three milliliters or less of consumable material is five cents per milliliter. The tax rate of ENDS containing greater than three milliliters of consumable material is ten percent of the purchase price paid by the first owner or the price at which the first owner who made, manufactured, or fabricated the ENDS sells the item to others.

Are refill inserts containing consumable material subject to the excise tax?

Yes, refill inserts are subject to the excise tax.

How are packages containing multiple ENDS taxed?

The tax is imposed on consumable material contained in each ENDS rather than the total quantity of the package.

Is a consumable vapor product containing zero nicotine subject to the excise tax?

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

How do I apply to become licensed in Nebraska?

Complete Nebraska Cigarette and Tobacco Products License and Registration Application, Form 20CT, to apply for a Tobacco Products License.

Is there a fee for a Tobacco Products License?

Yes, there is a $25 fee.

When is the excise tax on consumable material effective in Nebraska?

The tax on consumable material is effective January 1, 2024.

On January 1, 2024, do I need to pay tax on the inventory I have on hand?

No, there is no floor tax.

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

The filing frequency is monthly, and the due date of the return is the 10th of the month following the end of the filing period.

What form do I use to report the tax on the consumable material?

Taxpayers must complete Nebraska Tobacco Products Tax Return for Products Other than Cigarettes, Form 56, and accompanying schedules (Form 56A, Schedules I- IV) on a monthly basis.

Do I have to file a return even if I do not have any purchases or sales?

Yes, taxpayers must file Form 56 even if there are no taxable purchases or sales for the filing period.

Is electronic filing of Form 56 available?

Electronic filing is not available. The Form 56 must be mailed.

I currently have a Tobacco Products License. Do I need to obtain a new license to sell and remit the tax on consumable material?

No.

I am a retailer in Nebraska. Do I have to have report and pay the tax?

A retailer must register, report, and pay the tax on consumable material if the consumable material was purchased from a distributor or manufacturer who does not have a Tobacco Products License.

I am a retailer and currently manufacture consumable material in Nebraska. Do I need to obtain a license?

Yes, a retailer manufacturing consumable material in Nebraska must register for a license. The retailer must report, and pay the tax on consumable material manufactured and sold in Nebraska.

I am a retailer located outside Nebraska. Do I need to obtain a license?

Yes, an out-of-state retailer who sells consumable material to consumers within Nebraska must register, report, and pay the tax.

Where can I find a list of who has a Tobacco Products License?

A list of Nebraska Licensed Wholesalers of Tobacco Products Other than Cigarettes can be found on the Cigarette & Other Tobacco Products webpage.

Is there a restriction on flavored consumable material?

There is currently no flavor ban for ENDS products under state law.

How long do I need to keep records if I have a Tobacco Products License?

All books, records, and other documents must be preserved for a period of at least three years after the due date of the tax return.

I am a retailer and only buy consumable material from a licensed wholesaler. Do I need to keep records?

Yes. Books, records, and other documents demonstrating consumable material was purchased from a licensed wholesaler must be retained.

Can DOR inspect my location?

At any time during usual business hours, DOR may inspect the premises and records to determine if the location is in full compliance with the Tobacco Products Act.

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