The PACT Act for remote sellers

What the PACT Act covers

The PACT Act uses the word "cigarette" as a defined term. By statute it includes roll-your-own tobacco and, since the 2020 amendment, electronic nicotine delivery systems (ENDS) such as e-cigarettes, e-hookahs and vape pens and their components. Smokeless tobacco is covered separately.

The definition expressly says that "cigarette" does not include a cigar as defined in 26 U.S.C. 5702. Pipe tobacco is not in the list of covered products. A business that sells only cigars and pipe tobacco therefore has no PACT Act registration or reporting duty, although state rules may still apply.

The ENDS amendment was enacted on December 27, 2020 and took effect 90 days later, on March 27, 2021. The original PACT Act was enacted on March 31, 2010 and took effect 90 days after enactment.

• Covered: cigarettes, roll-your-own tobacco, smokeless tobacco, ENDS and their components or liquids
• Not covered: cigars (26 U.S.C. 5702 definition) and pipe tobacco
• FDA-approved cessation or therapeutic products are excluded from the ENDS definition

15 U.S.C. 375 and statutory notes Source

Who must register, and where

Any person who sells, transfers or ships covered products for profit in interstate commerce into a state, locality or tribal area that taxes them, or who advertises or offers them for such a sale, must first file a registration statement. The filing goes to the U.S. Attorney General (administered by ATF) and to the tobacco tax administrator of each state and place the products are shipped into or where the advertising reaches.

The statement lists the business name and trade name, the principal and other business addresses with phone numbers, a principal email address, all website addresses, and the name, address and phone number of an in-state agent authorized to accept service.

ATF accepts the federal registration on ATF Form 5070.1 (with continuation sheet 5070.1A if needed) by email to PACTActregistrationinbox@atf.gov or by mail.

• Register before the first shipment or advertisement into the state
• One federal filing with ATF plus a separate filing with each state tobacco tax administrator
• Keep the in-state agent for service current for every state

15 U.S.C. 376(a)(1); ATF PACT Act page Source

The monthly report (due the 10th)

By the 10th day of each calendar month, the seller must file with the tobacco tax administrator of each state it shipped into a memorandum or invoice copy covering every shipment made into that state during the previous month. Reports go to the states, not to ATF.

Each entry must show the recipient's name and address, the brand, the quantity, and the name, address and phone number of the person who delivered the shipment on the seller's behalf. Customer information must be organized by city or town and by ZIP code. Copies must also go to local and tribal tax administrators and chief law enforcement officers in the state that impose their own tax on these products.

• Recipient name and address
• Brand and quantity
• Carrier or delivery person name, address and phone
• Sorted by city or town and ZIP code

15 U.S.C. 376(a)(2)-(3) Source

Delivery sales to consumers

A delivery sale is any sale of covered products to a consumer where the order or the delivery is remote, for example online, by phone or by mail. Delivery sellers must comply with all state, local and tribal laws that apply to these products as if the sale happened in-state, including excise taxes, licensing and tax-stamping, and restrictions on sales to minors. State and local excise taxes must be paid, and any required stamps affixed, before the product is sold or shipped.

Each shipping package must carry this statement on the bill of lading and on the same surface as the delivery address: "CIGARETTES/NICOTINE/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS". No single sale or delivery may exceed 10 pounds.

Before accepting an order the seller must collect the buyer's full name, birth date and residential address and verify them through a commercially available database built mainly from government sources. Shipping must use a method that requires an adult of legal age to sign for the package and show valid government-issued photo ID at delivery. Records of each delivery sale must be kept until the end of the 4th full calendar year after the sale.

15 U.S.C. 376a Source

The USPS mailing ban and its exceptions

Cigarettes and smokeless tobacco are nonmailable under 18 U.S.C. 1716E, and USPS applies the same ban to ENDS under its final rule effective October 21, 2021. Cigars as defined in 26 U.S.C. 5702 are expressly excluded from the ban.

The exceptions are narrow: intrastate shipments within Alaska or Hawaii; business or regulatory shipments between licensed businesses or government agencies that hold a USPS eligibility letter (PS Form 4615 or 4615-E); limited noncommercial mailings by adults, such as gifts or returns, capped at 10 ounces per package and 10 mailings per 30 days; and consumer testing by permitted cigarette manufacturers only. Every exception requires a face-to-face tender at a USPS counter, adult signature service and age verification at delivery. The USPS minimum age is 21, or higher where state or local law requires.

• No USPS exception covers ordinary online sales to consumers
• Business exception: approved mailers only, Priority Mail Express, Priority Mail or USPS Ground Advantage, Adult Signature, return receipt
• USPS requires mailers to keep exception records for 6 years

18 U.S.C. 1716E; USPS Publication 52, sections 471-473 Source

The ATF non-compliant list

The Attorney General compiles a list of delivery sellers who have not registered or are otherwise not complying, updates it at least once every 4 months, and distributes it to state officials and common carriers. Starting 60 days after it is distributed, no one who receives the list may knowingly complete a delivery for a listed seller, subject to limited exceptions.

USPS treats a sender's presence on this list as reasonable cause to suspect a package contains nonmailable products. Carriers that operate under specific settlement agreements named in the statute (for example, UPS's 2005 Assurance of Discontinuance with the New York Attorney General, with parallel provisions for DHL and FedEx) are exempt from some of the list-based delivery restrictions while those agreements are honored nationwide.

15 U.S.C. 376a(e); USPS Publication 52, section 472.3 Source

Penalties

A knowing violation is a federal crime punishable by up to 3 years in prison, a fine, or both.

Delivery sellers face civil penalties equal to the greater of $5,000 for a first violation or $10,000 for any later violation, or 2 percent of the seller's gross sales of covered products in the year before the violation. Common carriers and other delivery services face $2,500 for a first violation and $5,000 for a violation within one year of a prior one, unless they have effective compliance policies in place.

15 U.S.C. 377 Source