CHAPTER 52 - TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES
Title 26 > CHAPTER 52
Sections (26)
§ 5701 Rate of tax
(a) Cigars On cigars, manufactured in or imported into the United States, there shall be imposed the following taxes: On cigars, weighing not more than 3 pounds per thousand, $50.33 per thousand; On cigars weighing more than 3 pounds per thousand, a tax equal to 52.75 percent of the price for which sold but not more than 40.26 cents per cigar. Cigars not exempt from tax under this chapter which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale.
(b) Cigarettes On cigarettes, manufactured in or imported into the United States, there shall be imposed the following taxes: On cigarettes, weighing not more than 3 pounds per thousand, 105.69 per thousand; except that, if more than 6½ inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2¾ inches, or fraction thereof, of the length of each as one cigarette.
(c) Cigarette papers On cigarette papers, manufactured in or imported into the United States, there shall be imposed a tax of 3.15 cents for each 50 papers or fractional part thereof; except that, if cigarette papers measure more than 6½ inches in length, they shall be taxable at the rate prescribed, counting each 2¾ inches, or fraction thereof, of the length of each as one cigarette paper.
(d) Cigarette tubes On cigarette tubes, manufactured in or imported into the United States, there shall be imposed a tax of 6.30 cents for each 50 tubes or fractional part thereof, except that if cigarette tubes measure more than 6½ inches in length, they shall be taxable at the rate prescribed, counting each 2¾ inches, or fraction thereof, of the length of each as one cigarette tube.
(e) Smokeless tobacco On smokeless tobacco, manufactured in or imported into the United States, there shall be imposed the following taxes: On snuff, $1.51 per pound and a proportionate tax at the like rate on all fractional parts of a pound. On chewing tobacco, 50.33 cents per pound and a proportionate tax at the like rate on all fractional parts of a pound.
(f) Pipe tobacco On pipe tobacco, manufactured in or imported into the United States, there shall be imposed a tax of $2.8311 cents per pound (and a proportionate tax at the like rate on all fractional parts of a pound).
(g) Roll-your-own tobacco On roll-your-own tobacco, manufactured in or imported into the United States, there shall be imposed a tax of $24.78 per pound (and a proportionate tax at the like rate on all fractional parts of a pound).
(h) Imported tobacco products and cigarette papers and tubes The taxes imposed by this section on tobacco products and cigarette papers and tubes imported into the United States shall be in addition to any import duties imposed on such articles, unless such import duties are imposed in lieu of internal revenue tax.
§ 5702 Definitions
(a) Cigar “Cigar” means any roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco (other than any roll of tobacco which is a cigarette within the meaning of subsection (b)(2)).
(b) Cigarette “Cigarette” means— any roll of tobacco wrapped in paper or in any substance not containing tobacco, and any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in paragraph (1).
(c) Tobacco products “Tobacco products” means cigars, cigarettes, smokeless tobacco, pipe tobacco, and roll-your-own tobacco.
(d) Manufacturer of tobacco products “Manufacturer of tobacco products” means any person who manufactures cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own tobacco, except that such term shall not include— a person who produces cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own tobacco solely for the person’s own personal consumption or use, and a proprietor of a customs bonded manufacturing warehouse with respect to the operation of such warehouse. Such term shall include any person who for commercial purposes makes available for consumer use (including such consumer’s personal consumption or use under paragraph (1)) a machine capable of making cigarettes, cigars, or other tobacco products. A person making such a machine available for consumer use shall be deemed the person making the removal as defined by subsection (j) with respect to any tobacco products manufactured by such machine. A person who sells a machine directly to a consumer at retail for a consumer’s personal home use is not making a machine available for commercial purposes if such machine is not used at a retail premises and is designed to produce tobacco products only in personal use quantities.
(e) Cigarette paper “Cigarette paper” means paper, or any other material except tobacco, prepared for use as a cigarette wrapper.
(f) Cigarette tube “Cigarette tube” means cigarette paper made into a hollow cylinder for use in making cigarettes.
(g) Manufacturer of cigarette papers and tubes “Manufacturer of cigarette papers and tubes” means any person who manufactures cigarette paper, or makes up cigarette paper into tubes, except for his own personal use or consumption.
(h) Export warehouse “Export warehouse” means a bonded internal revenue warehouse for the storage of tobacco products or cigarette papers or tubes or any processed tobacco, upon which the internal revenue tax has not been paid, for subsequent shipment to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States.
(i) Export warehouse proprietor “Export warehouse proprietor” means any person who operates an export warehouse.
(j) Removal or remove “Removal” or “remove” means the removal of tobacco products or cigarette papers or tubes, or any processed tobacco, from the factory or from internal revenue bond under section 5704, as the Secretary shall by regulation prescribe, or release from customs custody, and shall also include the smuggling or other unlawful importation of such articles into the United States.
(k) Importer “Importer” means any person in the United States to whom nontaxpaid tobacco products or cigarette papers or tubes, or any processed tobacco, manufactured in a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States are shipped or consigned; any person who removes cigars or cigarettes for sale or consumption in the United States from a customs bonded manufacturing warehouse; and any person who smuggles or otherwise unlawfully brings tobacco products or cigarette papers or tubes, or any processed tobacco, into the United States.
(l) Determination of price on cigars In determining price for purposes of section 5701(a)(2)— there shall be included any charge incident to placing the article in condition ready for use, there shall be excluded— the amount of the tax imposed by this chapter or section 7652, and if stated as a separate charge, the amount of any retail sales tax imposed by any State or political subdivision thereof or the District of Columbia, whether the liability for such tax is imposed on the vendor or vendee, and rules similar to the rules of section 4216(b) shall apply.
(m) Definitions relating to smokeless tobacco The term “smokeless tobacco” means any snuff or chewing tobacco. The term “snuff” means any finely cut, ground, or powdered tobacco that is not intended to be smoked. The term “chewing tobacco” means any leaf tobacco that is not intended to be smoked.
(n) Pipe tobacco The term “pipe tobacco” means 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.
(o) Roll-your-own tobacco The term “roll-your-own tobacco” means 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 for making cigarettes or cigars, or for use as wrappers thereof.
(p) Manufacturer of processed tobacco The term “manufacturer of processed tobacco” means any person who processes any tobacco other than tobacco products. The processing of tobacco shall not include the farming or growing of tobacco or the handling of tobacco solely for sale, shipment, or delivery to a manufacturer of tobacco products or processed tobacco.
§ 5703 Liability for tax and method of payment
(a) Liability for tax The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by section 5701. When tobacco products and cigarette papers and tubes are transferred, without payment of tax, pursuant to section 5704, the liability for tax shall be transferred in accordance with the provisions of this paragraph. When tobacco products and cigarette papers and tubes are transferred between the bonded premises of manufacturers and export warehouse proprietors, the transferee shall become liable for the tax upon receipt by him of such articles, and the transferor shall thereupon be relieved of his liability for such tax. When tobacco products and cigarette papers and tubes are released in bond from customs custody for transfer to the bonded premises of a manufacturer of tobacco products or cigarette papers and tubes, the transferee shall become liable for the tax on such articles upon release from customs custody, and the importer shall thereupon be relieved of his liability for such tax. All provisions of this chapter applicable to tobacco products and cigarette papers and tubes in bond shall be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose.
(b) Method of payment of tax The taxes imposed by section 5701 shall be determined at the time of removal of the tobacco products and cigarette papers and tubes. Such taxes shall be paid on the basis of return. The Secretary shall, by regulations, prescribe the period or the event for which such return shall be made and the information to be furnished on such return. Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and upon compliance with such requirements, as the Secretary may prescribe for the protection of the revenue. The Secretary may, by regulations, require payment of tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. All administrative and penalty provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5701. Except as otherwise provided in this paragraph, in the case of taxes on tobacco products and cigarette papers and tubes removed during any semimonthly period under bond for deferred payment of tax, the last day for payment of such taxes shall be the 14th day after the last day of such semimonthly period. In the case of tobacco products and cigarette papers and tubes which are imported into the United States— The last day for payment of tax shall be the 14th day after the last day of the semimonthly period during which the article is entered into the customs territory of the United States. Except as provided in clause (iv), in the case of an entry for warehousing, the last day for payment of tax shall not be later than the 14th day after the last day of the semimonthly period during which the article is removed from the 1st such warehouse. Except as provided in clause (iv) and in regulations prescribed by the Secretary, articles brought into a foreign trade zone shall, notwithstanding any other provision of law, be treated for purposes of this subsection as if such zone were a single customs warehouse. Clauses (ii) and (iii) shall not apply to any article which is shown to the satisfaction of the Secretary to be destined for export. In the case of tobacco products and cigarette papers and tubes which are brought into the United States from Puerto Rico, the last day for payment of tax shall be the 14th day after the last day of the semimonthly period during which the article is brought into the United States. Notwithstanding the preceding provisions of this paragraph, the taxes on tobacco products and cigarette papers and tubes for the period beginning on September 16 and ending on September 26 shall be paid not later than September 29. The requirement of clause (i) shall be treated as met if the amount paid not later than September 29 is not less than 11 ⁄ 15 of the taxes on tobacco products and cigarette papers and tubes for the period beginning on September 1 and ending on September 15. In the case of payments not required to be made by electronic funds transfer, clauses (i) and (ii) shall be applied by substituting “September 25” for “September 26”, “September 28” for “September 29”, and “⅔” for “ 11 ⁄ 15 ”. Notwithstanding section 7503, if, but for this subparagraph, the due date under this paragraph would fall on a Saturday, Sunday, or a legal holiday (as defined in section 7503), such due date shall be the immediately preceding day which is not a Saturday, Sunday, or such a holiday (or the immediately following day where the due date described in subparagraph (D) falls on a Sunday). In the case of any tobacco products, cigarette paper, or cigarette tubes manufactured in the United States at any place other than the premises of a manufacturer of tobacco products, cigarette paper, or cigarette tubes that has filed the bond and obtained the permit required under this chapter, tax shall be due and payable immediately upon manufacture. Any person who in any 12-month period, ending December 31, was liable for a gross amount equal to or exceeding 5,000,000 amount specified in the preceding sentence.
(c) Use of government depositaries The Secretary may authorize Federal Reserve banks, and incorporated banks or trust companies which are depositaries or financial agents of the United States, to receive any tax imposed by this chapter, in such manner, at such times, and under such conditions as he may prescribe; and he shall prescribe the manner, time, and condition under which the receipt of such tax by such banks and trust companies is to be treated as payment for tax purposes.
(d) Assessment Whenever any tax required to be paid by this chapter is not paid in full at the time required for such payment, it shall be the duty of the Secretary, subject to the limitations prescribed in section 6501, on proof satisfactory to him, to determine the amount of tax which has been omitted to be paid, and to make an assessment therefor against the person liable for the tax. The tax so assessed shall be in addition to the penalties imposed by law for failure to pay such tax when required. Except in cases where delay may jeopardize collection of the tax, or where the amount is nominal or the result of an evident mathematical error, no such assessment shall be made until and after the person liable for the tax has been afforded reasonable notice and opportunity to show cause, in writing, against such assessment.
§ 5704 Exemption from tax
(a) Tobacco products furnished for employee use or experimental purposes Tobacco products may be furnished by a manufacturer of such products, without payment of tax, for use or consumption by employees or for experimental purposes, in such quantities, and in such manner as the Secretary shall by regulation prescribed.
(b) Tobacco products and cigarette papers and tubes transferred or removed in bond from domestic factories and export warehouses A manufacturer or export warehouse proprietor may transfer tobacco products and cigarette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, without payment of tax, for shipment to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States; and manufacturers may similarly remove such articles for use of the United States; in accordance with such regulations and under such bonds as the Secretary shall prescribe. Tobacco products and cigarette papers and tubes may not be transferred or removed under this subsection unless such products or papers and tubes bear such marks, labels, or notices as the Secretary shall by regulations prescribe.
(c) Tobacco products and cigarette papers and tubes released in bond from customs custody Tobacco products and cigarette papers and tubes, imported or brought into the United States, may be released from customs custody, without payment of tax, for delivery to the proprietor of an export warehouse, or to a manufacturer of tobacco products or cigarette papers and tubes if such articles are not put up in packages, in accordance with such regulations and under such bond as the Secretary shall prescribe.
(d) Tobacco products and cigarette papers and tubes exported and returned Tobacco products and cigarette papers and tubes classifiable under item 804.00 of title I of the Tariff Act of 1930 (relating to duty on certain articles previously exported and returned) may be released from customs custody, without payment of that part of the duty attributable to the internal revenue tax for delivery to the original manufacturer of such tobacco products or cigarette papers and tubes or to the proprietor of an export warehouse authorized by such manufacturer to receive such articles, in accordance with such regulations and under such bond as the Secretary shall prescribe. Upon such release such products, papers, and tubes shall be subject to this chapter as if they had not been exported or otherwise removed from internal-revenue bond.
§ 5705 Credit, refund, or allowance of tax
(a) Credit or refund Credit or refund of any tax imposed by this chapter or section 7652 shall be allowed or made (without interest) to the manufacturer, importer, or export warehouse proprietor, on proof satisfactory to the Secretary that the claimant manufacturer, importer, or export warehouse proprietor has paid the tax on tobacco products and cigarette papers and tubes withdrawn by him from the market; or on such articles lost (otherwise than by theft) or destroyed, by fire, casualty, or act of God, while in the possession of ownership of the claimant.
(b) Allowance If the tax has not yet been paid on tobacco products and cigarette papers and tubes provided to have been withdrawn from the market or lost or destroyed as aforesaid, relief from the tax on such articles may be extended upon the filing of a claim for allowance therefor in accordance with such regulations as the Secretary shall prescribe.
(c) Limitation Any claim for credit or refund of tax under this section shall be filed within 6 months after the date of the withdrawal from the market, loss, or destruction of the articles to which the claim relates, and shall be in such form and contain such information as the Secretary shall by regulations prescribe.
§ 5706 Drawback of tax
There shall be an allowance of drawback of tax paid on tobacco products and cigarette papers and tubes, when shipped from the United States, in accordance with such regulations and upon the filing of such bond as the Secretary shall prescribe. ( Aug. 16, 1954, ch. 736 , 68A Stat. 709 ; Pub. L. 85–859, title II, § 202 , Sept. 2, 1958 , 72 Stat. 1419 ; Pub. L. 94–455, title XIX, § 1906(b)(13)(A) , Oct. 4, 1976 , 90 Stat. 1834 .)
[§ 5707 Repealed. Pub. L. 89–44, title V, § 501(g), June 21, 1965, 79 Stat. 150]
§ 5708 Losses caused by disaster
(a) Authorization Where the President has determined under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, that a “major disaster” as defined in such Act has occurred in any part of the United States, the Secretary shall pay (without interest) an amount equal to the amount of the internal revenue taxes paid or determined and customs duties paid on tobacco products and cigarette papers and tubes removed, which were lost, rendered unmarketable, or condemned by a duly authorized official by reason of such disaster occurring in such part of the United States on and after the effective date of this section, if such tobacco products or cigarette papers or tubes were held and intended for sale at the time of such disaster. The payments authorized by this section shall be made to the person holding such tobacco products or cigarette papers or tubes for sale at the time of the disaster.
(b) Claims No claim shall be allowed under this section unless— filed within 6 months after the date on which the President makes the determination that the disaster referred to in subsection (a) has occurred; and the claimant furnishes proof to the satisfaction of the Secretary that— he was not indemnified by any valid claim of insurance or otherwise in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes covered by the claim, and he is entitled to payment under this section. Claims under this section shall be filed under such regulations as the Secretary shall prescribe.
(c) Destruction of tobacco products or cigarette papers or tubes Before the Secretary makes payment under this section in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes condemned by a duly authorized official or rendered unmarketable, such tobacco products or cigarette papers or tubes shall be destroyed under such supervision as the Secretary may prescribe, unless such tobacco products or cigarette papers or tubes were previously destroyed under supervision satisfactory to the Secretary.
(d) Other laws applicable All provisions of law, including penalties, applicable in respect of internal revenue taxes on tobacco products and cigarette papers and tubes shall, insofar as applicable and not inconsistent with this section, be applied in respect of the payments provided for in this section to the same extent as if such payments constituted refunds of such taxes.
§ 5711 Bond
(a) When required Every person, before commencing business as a manufacturer of tobacco products or cigarette papers and tubes, or as an export warehouse proprietor, shall file such bond, conditioned upon compliance with this chapter and regulations issued thereunder, in such form, amount, and manner as the Secretary shall by regulation prescribe. A new or additional bond may be required whenever the Secretary considers such action necessary for the protection of the revenue.
(b) Approval or disapproval No person shall engage in such business until he receives notice of approval of such bond. A bond may be disapproved, upon notice to the principal on the bond, if the Secretary determines that the bond is not adequate to protect the revenue.
(c) Cancellation Any bond filed hereunder may be canceled, upon notice to the principal on the bond, whenever the Secretary determines that the bond no longer adequately protects the revenue.
§ 5712 Application for permit
Every person, before commencing business as a manufacturer or importer of tobacco products or processed tobacco or as an export warehouse proprietor, and at such other time as the Secretary shall by regulation prescribe, shall make application for the permit provided for in section 5713. The application shall be in such form as the Secretary shall prescribe and shall set forth, truthfully and accurately, the information called for on the form. Such application may be rejected and the permit denied if the Secretary, after notice and opportunity for hearing, find that— the premises on which it is proposed to conduct the business are not adequate to protect the revenue; the activity proposed to be carried out at such premises does not meet such minimum capacity or activity requirements as the Secretary may prescribe, 1 or such person (including, in the case of a corporation, any officer, director, or principal stockholder and, in the case of a partnership, a partner)— is, by reason of his business experience, financial standing, or trade connections or by reason of previous or current legal proceedings involving a felony violation of any other provision of Federal criminal law relating to tobacco products, processed tobacco, cigarette paper, or cigarette tubes, not likely to maintain operations in compliance with this chapter, has been convicted of a felony violation of any provision of Federal or State criminal law relating to tobacco products, processed tobacco, cigarette paper, or cigarette tubes, or has failed to disclose any material information required or made any material false statement in the application therefor. ( Aug. 16, 1954, ch. 736 , 68A Stat. 712 ; Pub. L. 85–859, title II, § 202 , Sept. 2, 1958 , 72 Stat. 1421 ; Pub. L. 94–455, title XIX , §§ 1905(a)(27), 1906(b)(13)(A), Oct. 4, 1976 , 90 Stat. 1821 , 1834; Pub. L. 105–33, title IX, § 9302(h)(2)(A) , (5), Aug. 5, 1997 , 111 Stat. 674 ; Pub. L. 111–3, title VII, § 702(a)(1)(A) , (b)(1), Feb. 4, 2009 , 123 Stat. 108 , 109.)
§ 5713 Permit
(a) Issuance A person shall not engage in business as a manufacturer or importer of tobacco products or processed tobacco or as an export warehouse proprietor without a permit to engage in such business. Such permit, conditioned upon compliance with this chapter and regulations issued thereunder, shall be issued in such form and in such manner as the Secretary shall by regulation prescribe, to every person properly qualified under sections 5711 and 5712. A new permit may be required at such other time as the Secretary shall by regulation prescribe.
(b) Suspension or revocation If the Secretary has reason to believe that any person holding a permit— has not in good faith complied with this chapter, or with any other provision of this title involving intent to defraud, has violated the conditions of such permit, has failed to disclose any material information required or made any material false statement in the application for such permit, has failed to maintain his premises in such manner as to protect the revenue, is, by reason of previous or current legal proceedings involving a felony violation of any other provision of Federal criminal law relating to tobacco products, processed tobacco, cigarette paper, or cigarette tubes, not likely to maintain operations in compliance with this chapter, or has been convicted of a felony violation of any provision of Federal or State criminal law relating to tobacco products, processed tobacco, cigarette paper, or cigarette tubes, the Secretary shall issue an order, stating the facts charged, citing such person to show cause why his permit should not be suspended or revoked. If, after hearing, the Secretary finds that such person has not shown cause why his permit should not be suspended or revoked, such permit shall be suspended for such period as the Secretary deems proper or shall be revoked.
§ 5721 Inventories
Every manufacturer or importer of tobacco products, processed tobacco, or cigarette papers and tubes, and every export warehouse proprietor, shall make a true and accurate inventory at the time of commencing business, at the time of concluding business, and at such other times, in such manner and form, and to include such items, as the Secretary shall by regulation prescribe. Such inventories shall be subject to verification by any internal revenue officer. ( Aug. 16, 1954, ch. 736 , 68A Stat. 713 ; Pub. L. 85–859, title II, § 202 , Sept. 2, 1958 , 72 Stat. 1422 ; Pub. L. 94–455, title XIX, § 1906(b)(13)(A) , Oct. 4, 1976 , 90 Stat. 1834 ; Pub. L. 105–33, title IX, § 9302(h)(2)(A) , Aug. 5, 1997 , 111 Stat. 674 ; Pub. L. 111–3, title VII, § 702(a)(2)(A) , Feb. 4, 2009 , 123 Stat. 108 .)
§ 5722 Reports
Every manufacturer or importer of tobacco products, processed tobacco, or cigarette papers and tubes, and every export warehouse proprietor, shall make reports containing such information, in such form, at such times, and for such periods as the Secretary shall by regulation prescribe. ( Aug. 16, 1954, ch. 736 , 68A Stat. 713 ; Pub. L. 85–859, title II, § 202 , Sept. 2, 1958 , 72 Stat. 1422 ; Pub. L. 94–455, title XIX, § 1906(b)(13)(A) , Oct. 4, 1976 , 90 Stat. 1834 ; Pub. L. 105–33, title IX, § 9302(h)(2)(A) , Aug. 5, 1997 , 111 Stat. 674 ; Pub. L. 111–3, title VII, § 702(a)(2)(B) , Feb. 4, 2009 , 123 Stat. 108 .)
§ 5723 Packages, marks, labels, and notices
(a) Packages All tobacco products, processed tobacco, and cigarette papers and tubes shall, before removal, be put up in such packages as the Secretary shall by regulation prescribe.
(b) Marks, labels, and notices Every package of tobacco products, processed tobacco, or cigarette papers or tubes shall, before removal, bear the marks, labels, and notices if any, that the Secretary by regulation prescribes.
(c) Lottery features No certificate, coupon, or other device purporting to be or to represent a ticket, chance, share, or an interest in, or dependent on, the event of a lottery shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products, processed tobacco, or cigarette papers or tubes.
(d) Indecent or immoral material prohibited No indecent or immoral picture, print, or representation shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products, processed tobacco, or cigarette papers or tubes.
(e) Exceptions Tobacco products furnished by manufacturers of such products for use or consumption by their employees, or for experimental purposes, and tobacco products, processed tobacco, and cigarette papers and tubes transferred to the bonded premises of another manufacturer or export warehouse proprietor or released in bond from customs custody for deliver to a manufacturer of tobacco products, processed tobacco, or cigarette papers and tubes, may be exempted from subsection (a) and (b) in accordance with such regulations as the Secretary shall prescribe.
§ 5731 Imposition and rate of tax
(a) General rule Every person engaged in business as— a manufacturer of tobacco products, a manufacturer of cigarette papers and tubes, or an export warehouse proprietor, shall pay a tax of $1,000 per year in respect of each premises at which such business is carried on.
(b) Reduced rates for small proprietors Subsection (a) shall be applied by substituting “1,000” with respect to any taxpayer the gross receipts of which (for the most recent taxable year ending before the 1st day of the taxable period to which the tax imposed by subsection (a) relates) are less than $500,000. All persons treated as 1 taxpayer under section 5061(e)(3) shall be treated as 1 taxpayer for purposes of paragraph (1). For purposes of paragraph (1), rules similar to the rules of subparagraphs (B) and (C) of section 448(c)(3) shall apply.
(c) Penalty for failure to register Any person engaged in a business referred to in subsection (a) who willfully fails to pay the tax imposed by subsection (a) shall be fined not more than $5,000, or imprisoned not more than 2 years, or both, for each such offense.
§ 5732 Payment of tax
(a) Condition precedent to carrying on business No person shall be engaged in or carry on any trade or business subject to tax under this subchapter until he has paid the special tax therefor.
(b) Computation All special taxes under this subchapter shall be imposed as of on the first day of July in each year, or on commencing any trade or business on which such tax is imposed. In the former case the tax shall be reckoned for 1 year, and in the latter case it shall be reckoned proportionately, from the first day of the month in which the liability to a special tax commenced, to and including the 30th day of June following.
(c) How paid The special taxes imposed by this subchapter shall be paid on the basis of a return under such regulations as the Secretary shall prescribe. After receiving a properly executed return and remittance of any special tax imposed by this subchapter, the Secretary shall issue to the taxpayer an appropriate stamp as a receipt denoting payment of the tax. This paragraph shall not apply in the case of a return covering liability for a past period.
§ 5733 Provisions relating to liability for occupational taxes
(a) Partners Any number of persons doing business in partnership at any one place shall be required to pay but one special tax.
(b) Different businesses of same ownership and location Whenever more than one of the pursuits or occupations described in this subchapter are carried on in the same place by the same person at the same time, except as otherwise provided in this subchapter, the tax shall be paid for each according to the rates severally prescribed.
(c) Businesses in more than one location The payment of a special tax imposed by this subchapter shall not exempt from an additional special tax the person carrying on a trade or business in any other place than that stated in the register kept in the office of the official in charge of the internal revenue district. Nothing contained in paragraph (1) shall require a special tax for the storage of tobacco products and cigarette papers and tubes at a location other than the place where tobacco products and cigarette papers and tubes are sold or offered for sale. The term “place” as used in this section means the entire office, plant or area of the business in any one location under the same proprietorship; and passageways, streets, highways, rail crossings, waterways, or partitions dividing the premises, shall not be deemed sufficient separation to require additional special tax, if the various divisions are otherwise contiguous.
(d) Death or change of location Certain persons, other than the person who has paid the special tax under this subchapter for the carrying on of any business at any place, may secure the right to carry on, without incurring additional special tax, the same business at the same place for the remainder of the taxable period for which the special tax was paid. The persons who may secure such right are: the surviving spouse or child, or executor or administrator or other legal representative, of a deceased taxpayer; a husband or wife succeeding to the business of his or her living spouse; a receiver or trustee in bankruptcy, or an assignee for benefit of creditors; and the partner or partners remaining after death or withdrawal of a member of a partnership. When any person moves to any place other than the place for which special tax was paid for the carrying on of any business, he may secure the right to carry on, without incurring additional special tax, the same business at his new location for the remainder of the taxable period for which the special tax was paid. To secure the right to carry on the business without incurring additional special tax, the successor, or the person relocating his business, must register the succession or relocation with the Secretary in accordance with regulations prescribed by the Secretary.
(e) Federal agencies or instrumentalities Any tax imposed by this subchapter shall apply to any agency or instrumentality of the United States unless such agency or instrumentality is granted by statute a specific exemption from such tax.
§ 5734 Application of State laws
The payment of any tax imposed by this subchapter for carrying on any trade or business shall not be held to exempt any person from any penalty or punishment provided by the laws of any State for carrying on such trade or business within such State, or in any manner to authorize the commencement or continuance of such trade or business contrary to the laws of such State or in places prohibited by municipal law; nor shall the payment of any such tax be held to prohibit any State from placing a duty or tax on the same trade or business, for State or other purposes. (Added Pub. L. 85–859, title II, § 201 , Sept. 2, 1958 , 72 Stat. 1348 , § 5145; renumbered § 5734 and amended Pub. L. 109–59, title XI, § 11125(b)(20)(A) , Aug. 10, 2005 , 119 Stat. 1956 .)
§ 5741 Records to be maintained
Every manufacturer of tobacco products, processed tobacco, or cigarette papers and tubes, every importer, and every export warehouse proprietor shall keep such records in such manner as the Secretary shall by regulation prescribe. The records required under this section shall be available for inspection by any internal revenue officer during business hours. ( Aug. 16, 1954, ch. 736 , 68A Stat. 715 ; Pub. L. 85–859, title II, § 202 , Sept. 2, 1958 , 72 Stat. 1423 ; Pub. L. 89–44, title V, § 502(b)(9) , June 21, 1965 , 79 Stat. 151 ; Pub. L. 94–455, title XXI, § 2128(c) , Oct. 4, 1976 , 90 Stat. 1921 ; Pub. L. 111–3, title VII, § 702(a)(3) , Feb. 4, 2009 , 123 Stat. 108 .)
§ 5751 Purchase, receipt, possession, or sale of tobacco products and cigarette papers and tubes, after removal
(a) Restriction No person shall— with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes— upon which the tax has not been paid or determined in the manner and at the time prescribed by this chapter or regulations thereunder; or which, after removal without payment of tax pursuant to section 5704, have been diverted from the applicable purpose or use specified in that section; or with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, and notices, as required under such section; or otherwise than with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, and notices, as required under such section. This paragraph shall not prevent the sale or delivery of tobacco products or cigarette papers or tubes directly to consumers from proper packages, nor apply to such articles when so sold or delivered.
(b) Liability to tax Any person who possesses tobacco products or cigarette papers or tubes in violation of subsection (a)(1) or (a)(2) shall be liable for a tax equal to the tax on such articles.
§ 5752 Restrictions relating to marks, labels, notices, and packages
No person shall, with intent to defraud the United States, destroy, obliterate, or detach any mark, label, or notice prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied. ( Aug. 16, 1954, ch. 736 , 68A Stat. 716 ; Pub. L. 85–859, title II, § 202 , Sept. 2, 1958 , 72 Stat. 1424 ; Pub. L. 94–455, title XIX, § 1905(b)(7)(B)(i) , Oct. 4, 1976 , 90 Stat. 1823 .)
§ 5753 Disposal of forfeited, condemned, and abandoned tobacco products, and cigarette papers and tubes
If it appears that any forfeited, condemned, or abandoned tobacco products, or cigarette papers and tubes, when offered for sale, will not bring a price equal to the tax due and payable thereon, and the expenses incident to the sale thereof, such articles shall not be sold for consumption in the United States but shall be disposed of in accordance with such regulations as the Secretary shall prescribe. ( Aug. 16, 1954, ch. 736 , 68A Stat. 716 ; Pub. L. 85–859, title II, § 202 , Sept. 2, 1958 , 72 Stat. 1425 ; Pub. L. 89–44, title V, § 502(b)(11) , June 21, 1965 , 79 Stat. 152 ; Pub. L. 94–455, title XIX, § 1906(b)(13)(A) , Oct. 4, 1976 , 90 Stat. 1834 .)
§ 5754 Restriction on importation of previously exported tobacco products
(a) Export-labeled tobacco products Tobacco products and cigarette papers and tubes manufactured in the United States and labeled for exportation under this chapter— may be transferred to or removed from the premises of a manufacturer or an export warehouse proprietor only if such articles are being transferred or removed without tax in accordance with section 5704; may be imported or brought into the United States, after their exportation, only if such articles either are eligible to be released from customs custody with the partial duty exemption provided in section 5704(d) or are returned to the original manufacturer of such article as provided in section 5704(c); and may not be sold or held for sale for domestic consumption in the United States unless such articles are removed from their export packaging and repackaged by the original manufacturer into new packaging that does not contain an export label. This section shall apply to articles labeled for export even if the packaging or the appearance of such packaging to the consumer of such articles has been modified or altered by a person other than the original manufacturer so as to remove or conceal or attempt to remove or conceal (including by the placement of a sticker over) any export label. For purposes of this section, section 5704(d), section 5761, and such other provisions as the Secretary may specify by regulations, references to exportation shall be treated as including a reference to shipment to the Commonwealth of Puerto Rico.
(b) Export label For purposes of this section, an article is labeled for export or contains an export label if it bears the mark, label, or notice required under section 5704(b).
(c) Cross references For exception to this section for personal use, see section 5761(d). For civil penalties related to violations of this section, see section 5761(c). For a criminal penalty applicable to any violation of this section, see section 5762(b). For forfeiture provisions related to violations of this section, see section 5761(c).
§ 5761 Civil penalties
(a) Omitting things required or doing things forbidden Whoever willfully omits, neglects, or refuses to comply with any duty imposed upon him by this chapter, or to do, or cause to be done, any of the things required by this chapter, or does anything prohibited by this chapter, shall in addition to any other penalty provided in this title, be liable to a penalty of $1,000, to be recovered, with costs of suit, in a civil action, except where a penalty under subsection (b) or (c) or under section 6651 or 6653 or part II of subchapter A of chapter 68 may be collected from such person by assessment.
(b) Failure to pay tax Whoever fails to pay any tax imposed by this chapter at the time prescribed by law or regulations, shall, in addition to any other penalty provided in this title, be liable to a penalty of 5 percent of the tax due but unpaid.
(c) Sale of tobacco products and cigarette papers and tubes for export Except as provided in subsections (b) and (d) of section 5704— every person who sells, relands, or receives within the jurisdiction of the United States any tobacco products or cigarette papers or tubes which have been labeled or shipped for exportation under this chapter, every person who sells or receives such relanded tobacco products or cigarette papers or tubes, and every person who aids or abets in such selling, relanding, or receiving, shall, in addition to the tax and any other penalty provided in this title, be liable for a penalty equal to the greater of $1,000 or 5 times the amount of the tax imposed by this chapter. All tobacco products and cigarette papers and tubes relanded within the jurisdiction of the United States shall be forfeited to the United States and destroyed. All vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States. This subsection and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under subchapter IV of chapter 98 of the Harmonized Tariff Schedule of the United States. No quantity of tobacco products other than the quantity referred to in the preceding sentence may be relanded or received as a personal use quantity.
(d) Personal use quantities No quantity of tobacco products other than the quantity referred to in paragraph (2) may be relanded or received as a personal use quantity. Subsection (c) and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under chapter 98 of the Harmonized Tariff Schedule of the United States, and such person may voluntarily relinquish to the Secretary at the time of entry any excess of such quantity without incurring the penalty under subsection (c). Paragraph (2) shall not apply to any tobacco product sold in connection with a delivery sale. For purposes of subparagraph (A), the term “delivery sale” means any sale of a tobacco product to a consumer if— the consumer submits the order for such sale by means of a telephone or other method of voice transmission, the mail, or the Internet or other online service, or the seller is otherwise not in the physical presence of the buyer when the request for purchase or order is made, or the tobacco product is delivered by use of a common carrier, private delivery service, or the mail, or the seller is not in the physical presence of the buyer when the buyer obtains personal possession of the tobacco product.
(e) Applicability of section 6665 The penalties imposed by subsections (b) and (c) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6665(a).
(f) Cross references For penalty for failure to make deposits or for overstatement of deposits, see section 6656.
§ 5762 Criminal penalties
(a) Fraudulent offenses Whoever, with intent to defraud the United States— Engages in business as a manufacturer or importer of tobacco products or cigarette papers and tubes, or as an export warehouse proprietor, without filing the bond and obtaining the permit where required by this chapter or regulations thereunder; or Fails to keep or make any record, return, report, or inventory, or keeps or makes any false or fraudulent record, return, report, or inventory, required by this chapter or regulations thereunder; or Refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof; or Removes, contrary to this chapter or regulations thereunder, any tobacco products or cigarette papers or tubes subject to tax under this chapter; or Violates any provision of section 5751(a)(1) or (a)(2); or Violates any provision of section 5752; shall, for each such offense, be fined not more than $10,000, or imprisoned not more than 5 years, or both.
(b) Other offenses Whoever, otherwise than as provided in subsection (a), violates any provision of this chapter, or of regulations prescribed thereunder, shall, for each such offense, be fined not more than $1,000, or imprisoned not more than 1 year, or both.
§ 5763 Forfeitures
(a) Tobacco products and cigarette papers and tubes unlawfully possessed All tobacco products and cigarette papers and tubes which, after removal, are possessed with intent to defraud the United States shall be forfeited to the United States. All tobacco products and cigarette papers and tubes not in packages as required under section 5723 or which are in packages not bearing the marks, labels, and notices, as required under such section, which, after removal, are possessed otherwise than with intent to defraud the United States, shall be forfeited to the United States. This paragraph shall not apply to tobacco products or cigarette papers or tubes sold or delivered directly to consumers from proper packages.
(b) Personal property of qualified manufacturers, qualified importers, and export warehouse proprietors, acting with intent to defraud All tobacco products and cigarette papers and tubes, packages, machinery, fixtures, equipment, and all other materials and personal property on the premises of any qualified manufacturer or importer of tobacco products or cigarette papers and tubes, or export warehouse proprietor, who, with intent to defraud the United States, fails to keep or make any record, return, report, or inventory, or keeps or makes any false or fraudulent record, return, report, or inventory, required by this chapter; or refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof; or removes, contrary to any provision of this chapter, any article subject to tax under this chapter, shall be forfeited to the United States.
(c) Real and personal property of illicit operators All tobacco products, cigarette papers and tubes, machinery, fixtures, equipment, and other materials and personal property on the premises of any person engaged in business as a manufacturer or importer of tobacco products or cigarette papers and tubes, or export warehouse proprietor, without filing the bond or obtaining the permit, as required by this chapter, together with all his right, title, and interest in the building in which such business is conducted, and the lot or tract of ground on which the building is located, shall be forfeited to the United States.
(d) General All property intended for use in violating the provisions of this chapter, or regulations thereunder, or which has been so used, shall be forfeited to the United States as provided in section 7302.