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Department of Taxation and Finance

Opioid excise tax

Demo: Opioid Excise Tax Web File Demonstration

Demo: Opioid Excise Tax Web File Demonstration

Opioid Excise Tax Web File is now available

The first return is due by January 21, 2020. To file your return, create a Business Online Services account with the Tax Department, or log in if you already have one.

Effective July 1, 2019, there is an excise tax imposed on the first sale of an opioid unit in New York State by a registrant.

What is a first sale?

A first sale is any transfer of title to an opioid unit for consideration where actual or constructive possession of such opioid unit is transferred by a registrant holding title to such opioid unit to a purchaser or its designee in this state for the first time.

A first sale does not include either:

  • the dispensing of an opioid unit pursuant to a prescription to an ultimate consumer, or
  • the transfer of title to an opioid unit from a manufacturer in this state to a purchaser outside this state when such opioid unit will be used or consumed outside this state.

It is presumed that every sale of an opioid by a registrant within or into this state is the first sale unless it is established otherwise. The burden of proving that a sale does not qualify as a first sale is on the registrant.

Who is considered a registrant?

Registrant means any person, firm, corporation, or association that holds and transfers title to an opioid unit and:

  • is required to register with the New York State Department of Health as a manufacturer or distributor of a controlled substance; or
  • is required to register with the New York State Department of Education (NYS DOE) as a wholesaler, manufacturer, or outsourcing facility; or
  • is a nonresident establishment excepted from registration with the NYS DOE under NYS Education Law § 6808-b(2).

Tax rates

There are two tax rates:

  • a quarter of a cent ($.0025) on each morphine milligram equivalent for opioids with a wholesale acquisition cost of less than $0.50 per unit
  • one and one-half cent ($.015) on each morphine milligram equivalent for opioids with a wholesale acquisition cost of $0.50 or more per unit

Information

All first sales of an opioid unit by a registrant in New York State (NYS) must be reported on a quarterly opioid excise tax return, other than first sales:

  • of buprenorphine, methadone, or morphine;
  • of opioids that are subsequently distributed outside of NYS, within the same filing period as the first sale, for use or consumption outside of NYS; 
  • that are canceled within the same filing period as the first sale.

Visit the Department of Health Opioid Drug List.

All sales must be reported using morphine milligram equivalents (MMEs), calculated using an MME conversion factor. Visit the Department of Health Morphine Milligram Equivalent (MME) Calculation Guidance.

All reportable sales of opioids are taxable, except for sales to:

  • programs operated pursuant to Public Health Law Article 40; or
  • programs operated pursuant to Mental Hygiene Law Article 32.


Note: Sales on which tax was paid in a previous filing period that are canceled or distributed out of NYS, for use or consumption outside of NYS, in a subsequent filing period are subtracted on the return for the filing period the cancellation or distribution out of NYS occurred.

See Reportable Sales for treatment of sales canceled or distributed out of state within the same filing period as the first sale.

Registrants must use the Tax Department’s Opioid Excise Tax Web File application to file their excise tax returns for each calendar quarter. Returns must be filed and the tax paid no later than the 20th day of the month following the quarter in which the opioid was sold. A return must be filed even if the registrant had no sales during the quarter. The registrant must have a Business Online Services account to file tax returns and remit the excise tax.

  1. Log in to your Business Online Services account.
  2. Select the ≡ Services menu in the upper left-hand corner of your Account Summary homepage.
  3. Select Other taxes, then select Opioid excise tax web file from the expanded menu.

For important payment information, see ACH debit block information.

Note: The first required filing will be for an extended period beginning July 1, 2019, and ending December 31, 2019. The return for this period is due by January 21, 2020.

The table below may contain content too wide for the screen. To view all of its content, please use the scrollbar at the bottom of the table, or scroll the table itself if using a touch device.

Reporting periods and due dates
Quarterly period Filing due date
January 1–March 31 April 20
April 1–June 30 July 20
July 1–September 30 October 20
October 1–December 31 January 20

If the due date falls on a Saturday, Sunday, or legal holiday, the return is due on the next business day.

All records must be retained for six years after the due date of the return they relate to, or after the date the return is filed, if later. Records must show the total number of units sold, the MMEs of the units, and provide sufficient detail to independently determine the taxable status of each sale and the amount of tax due for the filing period.

Records include, but are not limited to:

  • sales slips
  • invoices
  • receipts
  • statements or memos of sales
  • documentation of a cancelled sale
  • documentation of a subsequent distribution out of New York State

The records must also show either:

  • the address from which, and to which, the units were shipped or delivered; or
  • the place at which actual physical possession of the units was transferred.

Will there be a list of opioids that are subject to the tax?

Yes. Visit the Department of Health Opioid Drug List.

What if an opioid is not listed on the opioid drug list?

Send an email to mme@health.ny.gov. Include Drug Not Found in the subject line of the email.

Are the sales of buprenorphine, methadone, or morphine required to be reported? 

No. Reportable sales will not include the sale of these drugs.

How will the wholesale acquisition cost be determined?

Wholesale acquisition cost is the manufacturers list price for an opioid unit to wholesalers or direct purchasers in the United States. This price is subject to change on a monthly basis. See definition of wholesale acquisition cost in Definitions below for more information. 

Where can we find the morphine milligram equivalent (MME) conversion factor? 

How are the morphine milligram equivalents (MMEs) calculated? 

The formula for calculating the MMEs is:

# of units x strength per unit x MME conversion factor

Example for the calculation of MME for tablets, capsules, and other solid  dosage forms: For 5 mg hydrocodone tablets, the current conversion factor listed on the MME conversion Table is 1 MME.

  • For one bottle of 500 tablets, the calculation of MMEs is:
    500 tablets x 5mg x 1 MME = 2,500 MMEs per bottle
  • For the distribution of 20 bottles each containing 2,500 MME:
    20 bottles x 2,500 MME per bottle = 50,000 Total MMEs

Example for the calculation of MME for liquids: For a 50 mg/mL meperidine hydrochloride solution, the current conversion factor listed on the MME conversion table is 0.1 MME

  • For a box of 25 x 0.5 mL ampules, the quantity = 12.5 mL
    12.5 mL x 50 mg x 0.1= 62.5 MMEs per box
  • For the distribution of 40 boxes each containing 62.5 MME:
    40 boxes x 62.5 MME = 2,500 Total MMEs

Example for the calculation of MME for a transdermal patch: For a 75 mcg/hour patch, the current conversion factor listed on the MME conversion table is 7.2 MME.

  • For a box with 5 x 1 patch, the quantity = 5 patches
    5 patches x 75 mcg x 7.2 = 2,700 MME per box
  • For the distribution of 60 boxes each containing 2700 MME:
    60 boxes x 2,700 MME = 162,000 Total MMEs

How will sales to the programs that are excepted under the Public Health or Mental Hygiene Law be handled?  

You will report the sales in each quarter, and then you will be allowed a subtraction for the amounts sold to these programs.

What documentation will be required to substantiate that a sale was eventually distributed out of state and considered an exception to the tax?   

We would require the trail of documentation from the first sale to the time that the inventory in that sale was distributed out of state and sold in another state.

An out-of-NYS manufacturer holds title to an opioid and transfers title (for consideration) and possession of the opioid to a purchaser in NYS. Is the sale a reportable sale if possession transfers in NYS but the title passes outside of NYS?       

Yes. This is a reportable sale regardless of where the title passes. The out-of-NYS manufacturer must report the sale and pay the opioid excise tax due, because it made the first sale.

A NYS manufacturer holds title to an opioid and transfers title (for consideration) and possession of the opioid to an out-of-NYS wholesaler. Subsequently, the out-of-NYS wholesaler transfers title (for consideration) and possession of that opioid to a purchaser in NYS. Which entity is responsible for reporting the sale and paying the opioid excise tax due?           

The out-of-NYS wholesaler must report the sale and pay the opioid excise tax due, because it made the first sale. A first sale, by definition, must be within or into NYS.

An out-of-NYS manufacturer holding title to an opioid transfers title (for consideration) and possession of the opioid to an out-of-NYS wholesaler. Subsequently, the out-of-NYS wholesaler transfers title (for consideration) and possession of that opioid to a purchaser in NYS. Which entity is responsible for reporting the sale and paying the opioid excise tax due?           

The out-of-NYS wholesaler must report the sale and pay the opioid excise tax due, because it made the first sale. A first sale, by definition, must be within or into NYS.

In the first calendar quarter of 2020 a NYS manufacturer holds title to an opioid and transfers title (for consideration) and possession of the opioid to a NYS distributor (the first sale). Subsequently, within the same calendar quarter as the first sale, the NYS distributor distributes the opioid outside of New York State, for use or consumption outside of New York State. Must the NYS manufacturer report the sale and pay the opioid excise tax due?              

The sale by the NYS manufacturer is the first sale. However, if the NYS manufacturer has documentation that proves that the opioid was subsequently distributed outside of New York State, within the same filing period as the first sale, for use or consumption outside of New York State, then the first sale is not a reportable sale and no opioid excise tax is due on the sale. Otherwise, the NYS manufacturer must report the sale and pay the opioid excise tax due.

In the first calendar quarter of 2020 a NYS manufacturer holds title to an opioid and transfers title (for consideration) and possession of the opioid to a NYS distributor (the first sale). Then, in a filing period subsequent to the filing period of the first sale, the NYS distributor distributes the opioid outside of New York State, for use or consumption outside of New York State. Must the NYS manufacturer report the sale and pay the opioid excise tax due?              

The sale by the NYS manufacturer is the first sale. The NYS manufacturer must report the sale and pay the opioid excise tax due, on the opioid excise tax return for the first quarter of 2020, because it made the first sale. However, if the NYS manufacturer has documentation that proves that the opioid was subsequently distributed outside of New York State, in a filing period subsequent to the filing period of the first sale, for use or consumption outside of New York State, then the NYS manufacturer can claim a subtraction for the MME’s for the opioid subsequently distributed out of NYS when calculating taxable sales on the opioid excise tax return for that subsequent filing period.

An out-of-NYS manufacturer holding title to an opioid and transfers title (for consideration) and possession of the opioid to a Hospice program in NYS (operated pursuant to Public Health Law Article 40). Is this a reportable sale for purposes of the opioid excise tax? Is this a taxable sale for purposes of the opioid excise tax?           

The out-of-NYS manufacturer must report the sale; it is a reportable sale for purposes of the opioid excise tax. However, it is not a taxable sale for purposes of the opioid excise tax.

An out-of-NYS manufacturer holds title to an opioid and transfers title (for consideration) and possession of the opioid to a NYS distributor. Subsequently, the NYS distributor transfers title (for consideration) and possession of that opioid to a Hospice program in NYS (operated pursuant to Public Health Law Article 40). Which entity is responsible for reporting the sale and paying the opioid excise tax due?            

The out-of-NYS manufacturer must report the sale and pay the opioid excise tax due, because it made the first sale; the sale by the out-of-NYS manufacturer is a reportable sale and a taxable sale. The subsequent sale by the NYS distributor to a Hospice program in NYS does not affect the opioid excise tax due on the first sale.

A NYS manufacturer holds title to an opioid and transfers title (for consideration) to a company headquartered out of NYS but transfers possession of the opioid to a NYS distribution center of that company. The opioid is shipped directly to the NYS distribution center. Must the NYS manufacturer report the sale and pay the opioid excise tax due?           

Yes. The NYS manufacturer must report the sale and pay the opioid excise tax due, because it made the first sale.

A NYS manufacturer holds title to an opioid and transfers title (for consideration) to Company B, headquartered in NYS, but transfers possession of the opioid directly to an out-of-NYS distribution center of Company B. The opioid is shipped by the NYS manufacturer directly to the out-of-NYS distribution center. Must the NYS manufacturer report the sale and pay the opioid excise tax due?            

No. A first sale, by definition, must be within or into NYS; the NYS manufacturer did not make a first sale. In this example there is only one transfer of title for consideration, and since the opioids were not sold within or into NYS, there is no first sale. Note that if Company B subsequently transfers title (for consideration) and possession of the opioid to a purchaser in NYS, then Company B must report the sale and pay the opioid excise tax due, because it would have then made the first sale.

A first sale is any transfer of title to an opioid unit for consideration where actual or constructive possession of such opioid unit is transferred by a registrant holding title to such opioid unit to a purchaser or its designee in this state for the first time. A first sale does not include either:

  • the dispensing of an opioid unit pursuant to a prescription to an ultimate consumer, or
  • the transfer of title to an opioid unit from a manufacturer in this state to a purchaser outside this state when such opioid unit will be used or consumed outside this state.

Opioid is an opiate, as defined by Public Health Law § 3302(23), and any natural, synthetic, or semisynthetic narcotic drug, as defined by Public Health Law § 3302(22), that has agonist, partial agonist, or agonist/antagonist morphine-like activities or effects similar to natural opium alkaloids, and any derivative, congener, or combination thereof listed in schedules II-V of Public Health Law § 3306. For purposes of the opioid excise tax, the term opioid does not include buprenorphine, methadone, or morphine.

Registrant means any person, firm, corporation, or association that holds and transfers title to an opioid unit and:

  • is required to register with the New York State Department of Health as a manufacturer or distributor of a controlled substance; or
  • is required to register with the New York State Department of Education (NYS DOE) as a wholesaler, manufacturer, or outsourcing facility; or
  • is a nonresident establishment excepted from registration with the NYS DOE under NYS Education Law § 6808-b(2).

Morphine milligram equivalents (MMEs) means the number of units multiplied by the strength per unit multiplied by the morphine milligram equivalent conversion factor.

  • Unit is a single finished dosage form of an opioid, such as a pill, tablet, capsule, suppository, transdermal patch, buccal film, milliliter of liquid, milligram of topical preparation, or any other form.
  • Strength per unit is the amount of opioid in a unit, as measured by weight, volume, concentration or other measure.
  • Morphine milligram equivalent conversion factor is that reference standard of a particular opioid as it relates in potency to morphine as determined by the Commissioner of Health.

Wholesale acquisition cost is the manufacturer’s list price for an opioid unit to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of drug or biological pricing data.

Visit the Department of Health website at Opioid Excise Tax.

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