[Federal Register Volume 61, Number 202 (Thursday, October 17, 1996)]
[Rules and Regulations]
[Pages 54084-54096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26305]
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DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and Firearms
27 CFR Parts 270, 275, 285, and 295
[T.D. 384]
Manufacture of Cigarette Papers and Tubes and Recodification of
Regulations Covering Manufacture of Tobacco Products and Cigarette
Papers and Tubes (88D001)
AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of
the Treasury.
ACTION: Final rule, Treasury decision.
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SUMMARY: ATF is revising and recodifying the regulations governing the
operations of cigarette papers and tubes manufacturers. These revisions
consist of a clear definition of the term ``set,'' as such term is
applied to cigarette papers. This term is clearly defined in ATF Ruling
81-2, A.T.F.Q.B. 1981-3 75, and is being incorporated in this final
rule to provide its ready reference. We have also eliminated obsolete
terms and updated the regulations through the use of modernized
language. ATF believes that these revisions will clarify requirements,
thus simplifying compliance and relieving some regulatory burden on the
industry.
EFFECTIVE DATE: October 17, 1996.
FOR FURTHER INFORMATION CONTACT:
Clifford A. Mullen, Wine, Beer and Spirits Regulations Branch, Bureau
of Alcohol, Tobacco and Firearms, Room 5000, 650 Massachusetts Avenue
NW, Washington, DC 20226; (202) 927-8210.
SUPPLEMENTARY INFORMATION:
Background
On February 21, 1995, President Clinton announced a regulatory
reform initiative. As part of this initiative, each Federal agency was
instructed to conduct a page by page review of all agency regulations
to identify those regulations which are obsolete or burdensome and
those regulations whose goals could be better achieved through the
private sector, self-regulation or state and local governments. In
cases where the agency's review disclosed regulations which should be
revised or eliminated, the agency was instructed to propose changes to
its regulations as soon as possible.
The Bureau completed the page by page review of all regulations as
directed by the President. In addition, on April 13, 1995, the Bureau
published a notice in the Federal Register requesting comments from the
public regarding which ATF regulations could be improved or eliminated.
As a result of both the Bureau's analysis of its regulations and the
public comments received, a number of regulatory initiatives were
developed which are intended to accomplish the President's goals.
However, no public comments were received on part 285. This final rule
implements one of the regulatory initiatives identified by ATF
personnel: to revise and recodify the regulations governing the
operations of cigarette papers and tubes manufacturers from part 285
into 27 CFR part 270, subpart K. This consolidation in one part of all
manufacturing regulations relating to tobacco products and cigarette
papers and tubes is consistent with the existing consolidated approach
in part 275 on the importation of these items.
Definitions
The Bureau held in ATF Ruling 81-2 that any packaging intended for
delivery to the consumer as a unit which contains more than 25
cigarette papers is taxable. The definition of the term ``sets'' is
being added to the definitions in Sec. 270.11. ATF Ruling 81-2 is
therefore obsolete since its provisions are covered by these
regulations.
Subpart K
Subpart K is added to part 270 and contains separate undesignated
center headings for the taxation of cigarette papers and cigarette
tubes, special (occupational) tax provisions, general administrative
provisions, qualification requirements for manufacturers, changes
subsequent to original qualification of manufacturers, bonds and
extensions of coverage of bonds, operations by manufacturers,
discontinuance of operations by manufacturers, and claims. Referring
the reader to this material by means of the undesignated center
headings will offer a more convenient method of locating this
information. As a result of these changes, references to part 285
contained in parts 275 and 295 have been amended to references to part
270.
Bonds and Extensions of Coverage of Bonds
Section 270.407 in subpart K has been amended to include the title
and new number of the ``Extension of Coverage of Bond'' form, ATF Form
2105 (5000.7).
Operations by Manufacturers
The Records, Reports and Inventory sections (Secs. 270.421-270.434)
of amended subpart K have also been amended to include new form
numbers. To assist the industry in the transition to the new numbering
system, the old form numbers will remain in these regulations. However,
immediately after the old form number, the new number will appear
enclosed in parentheses. These amendments do not make any substantive
changes and are only intended to improve the clarity of Title 27 CFR or
relieve regulatory requirements.
Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1995, Pub. L. 104-
13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part
1320, do not apply to this notice because no new requirement to collect
information is imposed. This final rule only transfers 27 CFR part 285
to 27 CFR subpart K.
Regulatory Flexibility Act
The provisions of the Regulatory Flexibility Act relating to an
initial and final regulatory flexibility analysis (5 U.S.C. 604) are
not applicable to this final rule because the agency was not
[[Page 54085]]
required to publish a notice of proposed rulemaking under 5 U.S.C. 553
or any other law. A copy of this final rule was submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on the impact of such regulation on small businesses in accordance with
26 U.S.C. 7805(f).
Executive Order 12866
It has been determined that this rule is not a significant
regulatory action because it will not: (1) Have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local or tribal
governments or communities; (2) Create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866.
Administrative Procedures Act
Because this final rule merely makes technical amendments and
conforming changes to improve the clarity of the regulations, it is
found to be unnecessary and contrary to the public interest to issue
this final rule with notice and public procedure under 5 U.S.C. 553(b).
Similarity it is found to be unnecessary and contrary to the public
interest to subject this final rule to the effective date limitation of
5 U.S.C. 553(d).
Drafting Information
The principal drafter of this document is Clifford A. Mullen, Wine,
Beer and Spirits Regulations Branch, Bureau of Alcohol, Tobacco and
Firearms.
List of Subjects
27 CFR Part 270
Administrative practice and procedure, Authority delegations
(Government agencies), Claims, Electronic fund transfer, Excise taxes,
Labeling, Packaging and containers, Penalties, Reporting requirements,
Seizures and forfeitures, Surety bonds, Tobacco products.
27 CFR Part 275
Administrative practice and procedure, Authority delegations
(Government agencies), Cigarette papers and tubes, Claims, Electronic
fund transfer, Customs duties and inspection, Excise taxes, Imports,
Labeling, Packaging and containers, Penalties, Reporting requirements,
Seizures and forfeitures, Surety bonds, Tobacco products, U.S.
possessions, Warehouses.
27 CFR Part 285
Administrative practice and procedure, Authority delegations,
(Government agencies), Cigarette papers and tubes, Cigars, Cigarettes,
Claims, Electronic fund transfer, Excise taxes, Packaging and
containers, Penalties, Reporting and recordkeeping requirements,
Seizures and forfeitures, Surety bonds.
27 CFR Part 295
Administrative practice and procedure, Authority delegations
(Government agencies), Cigarette papers and tubes, Excise taxes,
Labeling, Packaging and containers, Tobacco products.
Authority and Issuance
Accordingly, ATF is amending Title 27 of the Code of Federal
Regulations as follows:
Sec. A. Title 27 CFR part 270 is amended as follows:
PART 270--MANUFACTURE OF TOBACCO PRODUCTS
Paragraph 1. The authority citation for part 270 continues to read
as follows:
Authority: 26 U.S.C. 5142, 5143, 5146, 5701, 5703-5705, 5711-
5713, 5721-5723, 5731, 5741, 5751, 5753, 5761-5763, 6061, 6065,
6109, 6151, 6301, 6302, 6311, 6313, 6402, 6404, 6423, 6676, 6806,
7011, 7212, 7325, 7342, 7502, 7503, 7606, 7805, 31 U.S.C. 9301,
9303, 9304, 9306.
Par. 2. Section 270.1 is revised to read as follows:
Sec. 270.1 Manufacture of tobacco products and cigarette papers and
tubes.
This part contains regulations relating to the manufacture of
tobacco products and cigarette papers and tubes; the payment by
manufacturers of tobacco products and cigarette papers and tubes of
internal revenue taxes imposed by 26 U.S.C. chapter 52; and the
qualification of and operations by manufacturers of tobacco products.
Par. 3. Section 270.11 is amended by adding and revising the
following definitions:
Sec. 270.11 Meaning of terms.
* * * * *
Cigarette paper. Paper, or any other material except tobacco,
prepared for use as a cigarette wrapper.
Cigarette papers. Taxable books or sets of cigarette papers, i.e.,
books or sets of cigarette papers containing more than 25 papers each.
Cigarette tube. Cigarette paper made into a hollow cylinder for use
in making cigarettes.
* * * * *
Factory. The premises of a manufacturer of tobacco products as
described in his permit issued under 26 U.S.C. chapter 52, or the
premises of a manufacturer of cigarette papers and tubes on which such
business is conducted.
* * * * *
Manufacturer of cigarette papers and tubes. Any person who makes up
cigarette paper into books or sets containing more than 25 papers each,
or into tubes, except for personal use or consumption.
* * * * *
Package. The immediate container in which tobacco products or
cigarette papers or tubes are put up in by the manufacturer and offered
for sale or delivery to the consumer.
* * * * *
Removal or remove. The removal of tobacco products or cigarette
papers or tubes from the factory or release from customs custody,
including the smuggling of other unlawful importation of such articles
into the United States.
* * * * *
Sets. Any collection, grouping, or packaging of cigarette papers
made up by any person for delivery to the consumer as a unit.
* * * * *
Par. 4. Subpart K is added to read as follows:
Subpart K--MANUFACTURE OF CIGARETTE PAPERS AND TUBES
Taxes
Sec.
270.351 Cigarette papers.
270.352 Cigarette tubes.
270.353 Persons liable for tax.
270.354 Determination of tax and method of payment.
270.355 Return of manufacturer.
270.356 Adjustments in the return of manufacturer.
270.357 Payment of tax by electronic fund transfer.
270.358 Assessment.
270.359 Employer identification number.
270.360 Application for employer identification number.
270.361 Execution and filing of Form SS-4.
Special (Occupational) Taxes
270.371 Liability for special tax.
270.372 Rate of special tax.
270.373 Special tax returns.
[[Page 54086]]
270.374 Issuance, distribution, and examination of special tax
stamps.
270.375 Changes in special tax stamps.
General
270.382 Authority of ATF officers to enter premises.
270.383 Interference with administration.
270.384 Disposal of forfeited, condemned, and abandoned cigarette
papers and tubes.
270.385 Alternate methods or procedures.
270.386 Emergency variations from requirements.
270.387 Penalties and forfeitures.
Qualification Requirements for Manufacturers
Original Qualifications
270.391 Persons required to qualify.
270.392 Bond.
270.393 Power of attorney.
270.394 Notice of approval of bond.
Changes After Original Qualification
270.395 Change in name.
270.396 Change in proprietorship.
270.397 Change in location.
Bonds and Extensions of Coverage of Bonds
270.401 Corporate surety.
270.402 Two or more corporate sureties.
270.403 Deposit of securities in lieu of corporate surety.
270.404 Amount of bond.
270.405 Strengthening bond.
270.406 Superseding bond.
270.407 Extension of coverage of bond.
270.408 Approval of bond and extension of coverage of bond.
270.409 Termination of liability of surety under bond.
270.410 Release of pledged securities.
Operations by Manufacturers
Records
270.421 General.
Reports
270.422 General.
270.423 Opening.
270.424 Monthly.
270.425 Special.
270.426 Closing.
Inventories
270.431 General.
270.432 Opening.
270.433 Special.
270.434 Closing.
Document Retention
270.435 General.
Packages
270.441 General.
Miscellaneous Operations
270.451 Transfer in bond.
270.452 Release from customs custody.
270.453 Use of the United States.
270.454 Removal for export purposes.
Permanent Discontinuance of Business
270.461 Discontinuance of operations.
Claims by Manufacturers
General
270.471 Abatement.
270.472 Credit or refund.
270.474 Remission.
Lost or Destroyed
270.475 Action by claimant.
Withdrawn From the Market
270.476 Action by claimant.
270.477 Action by regional director (compliance).
270.478 Disposition of cigarette papers and tubes and schedule.
Sec. 270.351 Cigarette papers.
On each book or set of cigarette papers containing more than 25
papers, manufactured in or imported into the United States, the
following taxes are imposed by law:
(a) Cigarette papers removed before January 1, 1991, \1/2\ cent for
each 50 papers or fractional part thereof.
(b) Cigarette papers removed on or after January 1, 1991, and
before January 1, 1993, 0.625 cent for each 50 papers or fractional
part thereof.
(c) Cigarette papers removed on or after January 1, 1993, 0.75 cent
for each 50 papers or fractional part thereof.
(d) Where cigarette papers measure more than 6\1/2\ inches in
length, they shall be taxable at the above rates, counting each 2\3/4\
inches, or fraction thereof, of the length of each as one cigarette
paper.
(72 Stat. 1414; 26 U.S.C. 5701)
Sec. 270.352 Cigarette tubes.
On cigarette tubes, manufactured in or imported into the United
States, the following tax is imposed by law for each 50 tubes or
fractional part thereof:
(a) Cigarette tubes removed before January 1, 1991, 1 cent.
(b) Cigarette tubes removed on or after January 1, 1991 and before
January 1, 1993, 1.25 cents.
(c) Cigarette tubes removed on or after January 1, 1993, 1.5 cents.
(d) Where cigarette tubes measure more than 6\1/2\ inches in
length, they shall be taxable at the above rates, counting each 2\3/4\
inches, or fraction thereof, of the length of each as one cigarette
tube.
(72 Stat. 1414; 26 U.S.C. 5701)
Sec. 270.353 Persons liable for tax.
The manufacturer of cigarette papers and tubes shall be liable for
the taxes imposed on such articles by 26 U.S.C. 5701. When a
manufacturer of cigarette papers and tubes transfers such papers and
tubes without payment of tax, pursuant to 26 U.S.C. 5704 to the bonded
premises of another such manufacturer, a manufacturer of tobacco
products, or an export warehouse proprietor, the transferee shall
become liable for the tax upon receipt of such papers and tubes and the
transferor shall thereupon be relieved of liability for the tax. When
cigarette papers and tubes are released in bond from customs custody
for transfer to the bonded premises of a manufacturer of such papers
and tubes or a manufacturer of tobacco products, the transferee shall
become liable for the tax on the papers and tubes upon release from
customs custody. Any person who possesses cigarette papers and tubes in
violation of 26 U.S.C. 5751(a) (1) or (2), shall be liable for a tax
equal to the rate of tax applicable to such articles.
(72 Stat. 1417, 1424; 26 U.S.C. 5703, 5751)
Sec. 270.354 Determination of tax and method of payment.
Except for removals without payment of tax and transfers in bond,
as authorized by law, no cigarette papers and tubes shall be removed
until the taxes imposed by section 5701, I.R.C., have been determined.
The payment of taxes on cigarette papers and tubes which are removed on
determination of tax shall be made by return in accordance with the
provisions of this subpart.
(72 Stat. 1417; 26 U.S.C. 5703)
Sec. 270.355 Return of manufacturer.
(a) Requirement for filing. A manufacturer of cigarette papers and
tubes shall file, for each factory, a semimonthly tax return on ATF
Form 5000.24. A return shall be filed for each semimonthly return
period regardless of whether cigarette papers and tubes were removed
subject to tax or whether tax is due for that particular return period.
(b) Waiver from filing. The manufacturer need not file a return for
each semimonthly return period if:
(1) Cigarette papers and tubes were not removed subject to tax
during the period, and
(2) The regional director (compliance) has granted a waiver from
filing in response to a written request from the manufacturer.
(c) Semimonthly return periods. Except as provided by paragraph (g)
of this section, semimonthly return periods shall run from the first
day of the month through the 15th day of the month, and from the 16th
day of the month through the last day of the month.
(d) Preparation and filing. The return shall be executed and filed
with ATF in accordance with the instructions on the form.
(e) Remittance of tax. Except as provided in Sec. 270.357,
remittance of the tax, if any, shall accompany the return.
(f) Time for filing. Except as provided by paragraph (g) of this
section, for each
[[Page 54087]]
semimonthly return period, the return shall be filed not later than the
14th day after the last day of the return period. If the due date falls
on a Saturday, Sunday, or legal holiday, the return and remittance
shall be due on the immediately preceding day which is not a Saturday,
Sunday or legal holiday.
(g) Special rule for taxes due for the month of September
(effective after December 31, 1994). (1) Except as provided in
paragraph (g)(2) of this section, the second semimonthly period for the
month of September shall be divided into two payment periods, from the
16th day through the 26th day, and from the 27th day through the 30th
day. The manufacturer shall file a return on Form 5000.24, and make
remittance, for the period September 16-26, no later than September 29.
The manufacturer shall file a return on Form 5000.24, and make
remittance, for the period September 27-30, no later than October 14.
(2) Taxpayment not by electronic fund transfer. In the case of
taxes not required to be remitted by electronic fund transfer as
prescribed by Sec. 270.357, the second semimonthly period of September
shall be divided into two payment periods, from the 16th day through
the 25th day, and the 26th day through the 30th day. The manufacturer
shall file a return on Form 5000.24, and remittance, for the period
September 16-25, no later than September 28. The manufacturer shall
file a return on Form 5000.24, and make remittance, for the period
September 26-30, no later than October 14.
(3) Amount of payment: Safe harbor rule. (i) Taxpayers are
considered to have met the requirements of paragraph (g)(1) of this
section, if the amount paid no later than September 29 is not less than
\11/15\ (73.3 percent) of the tax liability incurred for the
semimonthly period beginning on September 1 and ending on September 15,
and if any underpayment of tax is paid by October 14.
(ii) Taxpayers are considered to have met the requirements of
paragraph (g)(2) of this section, if the amount paid no later than
September 28 is not less than two-thirds (66.7 percent) of the tax
liability incurred for the semimonthly period beginning on September 1
and ending on September 15, and if any underpayment of tax is paid by
October 14.
(4) Last day for payment. If the required due date for taxpayment
for the periods September 16-25 or September 16-26, as applicable,
falls on a Saturday, the return and remittance shall be due on the
immediately preceding day. If the required due date falls on a Sunday,
the return and remittance shall be due on the immediately following
day.
(Approved by the Office of Management and Budget under Control
Number 1512-0467).
Sec. 270.356 Adjustments in the return of manufacturer.
Adjustments may be made in Schedules A and B of the manufacturer's
semimonthly tax return, ATF Form 5000.24, as provided in this section.
Schedule A of the return will be used where an unintentional error in a
previous return resulted in an underpayment of tax. Schedule B of the
return will be used where an unintentional error in a previous return
resulted in an overpayment of tax, or where notice has been received
from the regional director (compliance) that a claim for allowance of
tax has been approved. In the case of an overpayment, the manufacturer
shall have the option of filing a claim on ATF Form 2635 (5620.8) for
refund or taking credit in Schedule B of the return, both subject to
the period of limitations prescribed in 26 U.S.C. 6511. Any adjustment
made in a return must be fully explained in the appropriate schedule or
in a statement attached to and made a part of the return in which such
adjustment is made.
(72 Stat. 1417, 68A Stat. 791; 26 U.S.C. 5703, 6402)
Sec. 270.357 Payment of tax by electronic fund transfer.
(a) General. (1) Each taxpayer who was liable, during a calendar
year, for a gross amount equal to or exceeding five millions dollars in
taxes on tobacco products, cigarette papers, and cigarette tubes
combining tax liabilities incurred under this part and part 275 of this
chapter, shall use a commercial bank in making payment by electronic
fund transfer (EFT) of taxes on tobacco products, cigarette papers, and
cigarette tubes during the succeeding calendar year. Payment of taxes
on tobacco products, cigarette papers, and cigarette tubes in any other
form of remittance, as authorized in Sec. 270.355, is not authorized
for a taxpayer who is required, by this section, to make remittances by
EFT. For purposes of this section, the dollar amount of tax liability
is defined as the gross tax liability on all taxable withdrawals and
importations (including tobacco products, cigarette papers, and
cigarette tubes brought into the United States from Puerto Rico or the
Virgin Islands) during the calendar year, without regard to any
drawbacks, credits, or refunds, for all premises from which such
activities are conducted by the taxpayer. Overpayments are not taken
into account in summarizing the gross tax liability.
(2) For the purposes of this section, a taxpayer includes a
controlled group of corporations, as defined in 26 U.S.C. 1563, and
implementing regulations in 26 CFR Secs. 1.563-1 through 1.1563-4.
Also, the rules for a ``controlled group of corporations'' apply in a
similar fashion to groups which include partnerships and/or sole
proprietorships. If one entity maintains more than 50% control over a
group consisting of corporations and one, or more, partnerships and/or
sole proprietorships, all of the members of the controlled group are
one taxpayer for the purpose of determining who is required to make
remittances by EFT.
(3) A taxpayer who is required by this section to make remittances
by EFT shall make a separate EFT remittance and file a separate return,
ATF Form 5000.24, for each factory from which cigarette papers or
cigarette tubes are withdrawn upon determination of tax.
(b) Requirements. (1) On or before January 10 of each calendar
year, except for a taxpayer already remitting the tax by EFT, each
taxpayer who was liable for a gross amount equal to or exceeding five
million dollars in taxes on tobacco products, cigarette papers, and
cigarette tubes combining tax liabilities incurred under this part and
part 275 of this chapter during the previous calendar year, shall
notify, in writing, the regional director (compliance), for each region
in which taxes are paid. The notice shall be an agreement to make
remittances by EFT.
(2) For each return filed in accordance with this part, the
taxpayer shall direct the taxpayer's bank to make an electronic fund
transfer in the amount of the taxpayment to the Department of the
Treasury's General Account or the Federal Reserve Bank of New York as
provided in paragraph (e) of this section. The request shall be made to
the bank early enough for the transfer to be made to the Treasury
Account by no later than the close of business on the last day for
filing the return, prescribed in Sec. 270.355. The request shall take
into account any time limit established by the bank.
(3) If a taxpayer was liable for less than five million dollars in
taxes on tobacco products, cigarette papers, and cigarette tubes
combining tax liabilities incurred under this part and part 275 of this
chapter during the preceding calendar year, the taxpayer may choose
either to continue remitting the tax as provided in this section or to
remit the tax with the return as prescribed by Sec. 270.355. Upon
filing the first return on
[[Page 54088]]
which the taxpayer chooses to discontinue remitting the tax by EFT and
to begin remitting the tax with the tax return, the taxpayer shall
notify the regional director (compliance) by attaching a written
notification to ATF Form 5000.24, stating that no taxes are due by EFT,
because the tax liability during the preceding calendar year was less
than five million dollars, and that the remittance shall be filed with
the tax return.
c. Remittance. (1) Each taxpayer shall show on the return, ATF Form
5000.24, information about remitting the tax for that return period by
EFT and shall file the return with ATF, in accordance with the
instructions of ATF Form 5000.24.
(2) Remittances shall be considered as made when the taxpayment by
EFT is received by the Treasury Account. For purposes of this section,
a taxpayment by EFT shall be considered as received by the Treasury
Account when it is paid to a Federal Reserve Bank.
(3) When the taxpayer directs the bank to effect an EFT message as
required by paragraph (b)(2) of this section, any transfer data record
furnished to the taxpayer, through normal banking procedures, will
serve as the record of payment, and shall be retained as part of
required records.
(d) Failure to make a taxpayment by EFT. The taxpayer is subject to
a penalty imposed by 26 U.S.C. 5761, 6651, or 6656, as applicable, for
failure to make a taxpayment by EFT on or before the close of business
on the prescribed last day for filing.
(e) Procedure. Upon the notification required under paragraph
(b)(1) of this section, the regional director (compliance) will issue
to the taxpayer an AFT Procedure entitled Payment of Tax by Electronic
Fund Transfer. This publication outlines the procedure a taxpayer is to
follow when preparing returns and EFT remittances in accordance with
this part. The U.S. Customs Service will provide the taxpayer with
instructions for preparing EFT remittances for payments to be made to
the U.S. Customs Service.
(Approved by the Office of Management and Budget under control
number 1512-0457)
(Act of August 16, 1954, 68A Stat. 775, as amended (26 U.S.C. 6302);
sec. 202, Pub. L. 85-859, 72 Stat. 1417, as amended (26 U.S.C.
5703))
Sec. 270.358 Assessment.
Whenever any person required by law to pay tax on cigarette papers
and tubes fails to pay such tax, the tax shall be ascertained and
assessed against such person, subject to the limitations prescribed in
26 U.S.C. 6501. 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 notice has been
afforded such person to show cause against assessment. The person will
be allowed 45 days from the date of such notice to show cause, in
writing, against such assessment.
(72 Stat. 1417; 26 U.S.C. 5703)
Sec. 270.359 Employer identification number.
The employer identification number (EIN) (defined at 26 CFR
301.7701-12) of a manufacturer of cigarette papers and/or tubes who has
been assigned such a number shall be shown on each semimonthly tax
return, ATF Form 5000.24, and special tax return (including amended
returns), ATF Form 5630.5, filed under this subpart. Failure of the
taxpayer to include the EIN on ATF Form 5000.24 may result in assertion
and collection of the penalty specified in Sec. 70.113 of this chapter.
Failure of the taxpayer to include the EIN on ATF Form 5630.5 may
result in the imposition of the penalty specified in 27 CFR 70.113 of
this chapter.
(75 Stat. 828; 26 U.S.C. 6109, 6676)
Sec. 270.360 Application for employer identification number.
Each manufacturer of cigarette papers and tubes who has neither
secured an EIN nor made application therefor shall file an application
on IRS Form SS-4. IRS Form SS-4 may be obtained from any service center
director or from any district director. Such application shall be filed
on or before the seventh day after the date on which any tax return
under this subpart is filed. Each manufacturer shall make application
for and shall be assigned only one EIN for all internal revenue
purposes.
(75 Stat. 828; 26 U.S.C. 6109)
Sec. 270.361 Execution and filing of Form SS-4.
The application on IRS form SS-4, together with any supplementary
statement, shall be prepared in accordance with the applicable form,
instructions, and regulations, and the data called for shall be set
forth fully and clearly. The application shall be filed with the
service center director serving the internal revenue district where the
applicant is required to file returns under this subpart, except that
hand-carried applications may be filed with the district director of
any such district as provided for in 26 CFR Sec. 301.6091-1. The
application shall be signed by:
(a) the individual if the person is an individual;
(b) the president, vice president, or other principal officer if
the person is a corporation;
(c) a responsible and duly authorized member or officer having
knowledge of its affairs if the person is a partnership or other
unincorporated organization; or
(d) the fiduciary if the person is a trust or estate.
(75 Stat. 828; 26 U.S.C. 6109)
Special (Occupational) Taxes
Sec. 270.371 Liability for special tax.
(a) Manufacturer of cigarette papers and tubes. Every manufacturer
of cigarette papers and tubes shall pay a special (occupational) tax at
a rate specified by Sec. 270.372 of this part. The tax shall be paid on
or before July 1. On commencing business, the tax shall be computed
from the first day of the month in which liability is incurred, through
the following June 30. Thereafter, the tax shall be computed for the
entire year (July 1 through June 30).
(b) Each place of business taxable. A manufacturer of cigarette
papers and tubes incurs special tax liability at each place of business
in which an occupation subject to special tax is conducted. A place of
business means the entire office, plant or area of the business in any
one location under the same proprietorship. Passageways, streets,
highways, rail crossings, waterways, or partitions dividing the
premises are not sufficient separation to require additional special
tax, if the divisions of the premises are otherwise contiguous.
(26 U.S.C. 5143, 5731)
Sec. 270.372 Rate of special tax.
(a) General. Title 26 U.S.C. 5731(a)(2) imposes a special tax of
$1,000 per year on every manufacturer of cigarette papers and tubes.
(b) Reduced rate for small proprietors. Title 26 U.S.C. 5731(b)
provides for a reduced rate of $500 per year with respect to any
manufacturer of cigarette papers and tubes whose gross receipts (for
the most recent taxable year ending before the first day of the taxable
period to which the special tax imposed by Sec. 270.371 relates) are
less than $500,000. The ``taxable year'' to be used for determining
gross receipts is the taxpayer's income tax year. All gross receipts of
the taxpayer shall be included, not just the gross receipts of the
business subject to special tax. Proprietors of new businesses that
have not yet begun a taxable year, as well as proprietors of existing
businesses that have not yet ended a taxable year, who
[[Page 54089]]
commence a new activity subject to special tax, qualify for the reduced
special (occupational) tax rate, unless the business is a member of a
``controlled group''; in that case the rules of paragraph (c) of this
section shall apply.
(c) Controlled group. All persons treated as one taxpayer under 26
U.S.C. 5061(e)(3) shall be treated as one taxpayer for the purpose of
determining gross receipts under paragraph (b) of this section.
``Controlled group'' means a controlled group of corporations, as
defined in 26 U.S.C. 1563 and implementing regulations in 26 CFR
1.1563-1 through 1.1563-4. Also, the rules for a ``controlled group of
corporations'' apply in a similar fashion to groups which include
partnerships and/or sole proprietorships. If one entity maintains more
than 50% control over a group consisting of corporations and one, or
more, partnerships and/or sole proprietorships, all of the members of
the controlled group are one taxpayer for the purpose of this section.
(d) Short taxable year. Gross receipts for any taxable year of less
than 12 months shall be annualized by multiplying the gross receipts
for the short period by 12 and dividing the result by the number of
months in the short period as required by 26 U.S.C. 448(c)(3).
(e) Returns and allowances. Gross receipts for any taxable year
shall be reduced by returns and allowances made during such year under
26 U.S.C. 448(c)(3).
(26 U.S.C. 448, 5061, 5731)
Sec. 270.373 Special tax returns.
(a) General. Special tax shall be paid by return. The prescribed
return is ATF Form 5630.5, Special Tax Registration and Return. Special
tax returns, with payment of tax, shall be filed with ATF in accordance
with instructions on the form.
(b) Preparation of ATF Form 5630.5. All of the information called
for on ATF Form 5630.5 shall be provided including:
(1) The true name of the taxpayer.
(2) The trade name(s) (if any) of the business(es) subject to
special tax.
(3) The employer identification number (see Secs. 270.359-361).
(4) The exact location of the place of business, by name and number
of building or street, or if these do not exist, by some description in
addition to the post office address. In the case of one return for two
or more locations, the address to be shown shall be the taxpayer's
principal place of business (or principal office, in the case of a
corporate taxpayer).
(5) The class(es) of special tax to which the taxpayer is subject.
(6) Ownership and control information: That is, the name, position,
and residence address of every owner of the business and of every
person having power to control its management and policies with respect
to the activity subject to special tax. ``Owner of the business'' shall
include every partner, if the taxpayer is a partnership, and every
person owning 10% or more of its stock, if the taxpayer is a
corporation. However, the ownership and control information required by
this paragraph need not be stated if the same information has been
previously provided to ATF in connection with a permit application, and
if the information previously provided is still current.
(c) Multiple locations and/or classes of tax.
A taxpayer subject to special tax for the same period at more than
one location or for more than one class of tax shall--
(1) File one special tax return, ATF Form 5630.5, with payment of
tax, to cover all such locations and classes of tax; and
(2) Prepare, in duplicate, a list identified with the taxpayer's
name, address (as shown on ATF Form 5630.5), employer identification
number, and period covered by the return. The list shall show, by
State, the name, address, and tax class of each location for which
special tax is being paid. The original of the list shall be filed with
ATF in accordance with instructions on the return, and the copy shall
be retained at the taxpayer's principal place of business (or principal
office, in the case of a corporate taxpayer) for the period specified
in Sec. 270.371.
(d) Signing of ATF Forms 5630.5.--(1) Ordinary returns. The return
of an individual proprietor shall be signed by the individual. The
return of a partnership shall be signed by a general partner. The
return of a corporation shall be signed by any officer. In each case,
the person signing the return shall designate his or her capacity as
``individual owner,'' ``member of firm,'' or, in the case of a
corporation, the title of the officer.
(2) Fiduciaries. Receivers, trustees, assignees, executors,
administrators, and other legal representatives who continue the
business of a bankrupt, insolvent, deceased person, etc., shall
indicate the fiduciary capacity in which they act.
(3) Agent or attorney in fact. If a return is signed by an agent or
attorney in fact, the signature shall be preceded by the name of the
principal and followed by the title of the agent or attorney in fact. A
return signed by a person as agent will not be accepted unless there is
filed, with the ATF office with which the return is required to be
filed, a power of attorney authorizing the agent to perform the act.
(4) Perjury statement. ATF Forms 5630.5 shall contain or be
verified by a written declaration that the return has been executed
under the penalties of perjury.
Sec. 270.374 Issuance, distribution, and examination of special tax
stamps.
(a) Issuance of special tax stamps. Upon filing a properly executed
return on ATF Form 5630.5 together with the full remittance, the
taxpayer will be issued an appropriately designated special tax stamp.
If the return covers multiple locations, the taxpayer will be issued
one appropriately designated stamp for each location listed on the
attachment required by Sec. 270.373(c)(2), but showing, as to name and
address, only the name of the taxpayer and the address of the
taxpayer's principal place of business (or principal office in the case
of a corporate taxpayer).
(b) Distribution of special tax stamps for multiple locations. On
receipt of the special tax stamps, the taxpayer shall verify that there
is one stamp for each location listed on the attachment to ATF Form
5630.5. The taxpayer shall designate one stamp for each location and
type on each stamp the address of the business conducted at the
location for which that stamp is designated. The taxpayer shall then
forward each stamp to the place of business designated on the stamp.
(c) Examination of special tax stamps. All stamps denoting payment
of special tax shall be kept available for inspection by ATF officers,
at the location for which designated, during business hours.
(26 U.S.C. 5142, 5146, 6806)
Sec. 270.375 Changes in special tax stamps.
(a) Change in name. If there is a change in the corporate or firm
name, or in the trade name, as shown on ATF Form 5630.5, the
manufacturer shall file an amended special tax return as soon as
practicable after the change, covering the new corporate or firm name,
or trade names. No new special tax is required to be paid. The
manufacturer shall attach the special tax stamp for endorsement of the
change in name.
(b) Change in proprietorship.--(1) General. If there is a change in
the proprietorship of a cigarette papers and tubes factory, the
successor shall pay a
[[Page 54090]]
new special tax and obtain the required special tax stamps.
(2) Exemption for certain successors. Persons having the right of
succession provided for in paragraph (c) of this section may carry on
the business for the remainder of the period for which the special tax
was paid, without paying a new special tax, if within 30 days after the
date on which the successor begins to carry on the business, the
successor files a special tax return on ATF Form 5630.5 with ATF, which
shows the basis of succession. A person who is a successor to a
business for which special tax has been paid and who fails to register
the succession is liable for special tax computed from the first day of
the calendar month in which the successor began to carry on the
business.
(c) Persons having right of succession. Under the conditions
indicated in paragraph (b)(2) of this section, the right of succession
will pass to certain persons in the following cases:
(1) Death. The spouse or child, or executor, administrator, or
other legal representative of the taxpayer;
(2) Succession of spouse. A husband or wife succeeding to the
business of his or her spouse (living);
(3) Insolvency. A receiver or trustee in bankruptcy, or an assignee
for benefit of creditors;
(4) Withdrawal from firm. The partner or partners remaining after
death or withdrawal of a member.
(d) Change in location. If there is a change in location of a
taxable place of business, the manufacturer shall within 30 days after
the change, file with ATF an amended special tax return covering the
new location. The manufacturer shall attach the special tax stamp or
stamps for endorsement of the change in location. No new special tax is
required to be paid. However, if the manufacturer does not file the
amended return within 30 days, the manufacturer is required to pay a
new special tax and obtain a new special tax stamp.
(26 U.S.C. 5143, 7011)
General
Sec. 270.382 Authority of ATF officers to enter premises.
Any ATF officer may enter in the daytime any premises where
cigarette papers and tubes are produced or kept, so far as it may be
necessary for the purpose of examining such articles. When such
premises are open at night, any ATF officer may enter them, while so
open, in the performance of his or her official duties. The owner of
such premises, or person having the superintendence of the same, who
refuses to admit any ATF officer or permit any AFT officer to examine
such cigarette papers and tubes shall be liable to the penalties
prescribed by law for the offense.
(68A Stat. 872; 903 26 U.S.C. 7342, 7606)
Sec. 270.383 Interference with administration.
Whoever, corruptly or by force or threats of force, endeavors to
hinder or obstruct the administration of this subpart, or endeavors to
intimidate or impede any ATF officer acting in an official capacity, or
forcibly rescues or attempts to rescue or causes to be rescued any
property, after it has been duly seized for forfeiture to the United
States in connection with a violation or intended violation of this
subpart, shall be liable to the penalties prescribed by law.
(68A Stat. 855; 26 U.S.C. 7212)
Sec. 270.384 Disposal of forfeited, condemned, and abandoned cigarette
papers and tubes.
Forfeited, condemned, or abandoned cigarette papers or tubes in the
custody of a Federal, State, or local officer upon which the Federal
tax has not been paid shall not be sold or caused to be sold for
consumption in the United States if, in the opinion of the officer, the
sale of such papers and tubes will not bring a price equal to the tax
due and payable, and the expenses incident to the sale. Where the
cigarette papers or tubes are not sold the officer may deliver them to
a Federal or State institution (if they are fit for consumption) or
cause their destruction by burning completely or by rendering them
unfit for consumption. Where such papers or tubes are sold, release by
the officer having custody shall be made only after such papers and
tubes are properly packaged and taxpaid. A receipt from the regional
director (compliance) evidencing payment of tax on such papers or tubes
shall be presented to the officer having custody of the articles, which
tax shall be considered part of the sales price. Where cigarette papers
or tubes which have been packaged under the provisions of part 295 of
this chapter are to be released after payment of tax, the purchaser
shall appropriately mark each package ``Federal Tax Paid (date)''
before the officer having custody of the papers or tubes releases them.
However, the articles may be released without such marking of the
packages if the purchaser is a qualified manufacturer of cigarette
papers and tubes and does not intend to place such papers or tubes on
the domestic market for taxable articles but will otherwise dispose of
them. A written statement of notification of disposal by destruction or
return to bond through claim for refund, shall be filed, in original
only, with the officer having custody of the articles. In the case of
cigarette papers and tubes forfeited under the internal revenue laws,
the sale shall be subject to the provisions of part 72 of this chapter.
(68A Stat. 870, as amended, 72 Stat. 1425, as amended; 26 U.S.C.
7325, 5753)
Sec. 270.385 Alternate methods or procedures.
A manufacturer of cigarette papers and tubes, on specific approval
by the Director as provided in this section, may use an alternate
method or procedure in lieu of a method or procedure specifically
prescribed in this subpart. The Director may approve an alternate
method or procedure, subject to stated conditions, when the Director
finds that--
(a) Good cause has been shown for the use of the alternate method
or procedure,
(b) The alternate method or procedure is within the purpose of, and
consistent with the effect intended by, the specifically prescribed
method or procedure, and affords equivalent security to the revenue,
and
(c) The alternate method or procedure will not be contrary to any
provision of law, and will not result in an increase in cost to the
Government or hinder the effective administration of this subpart.
No alternate method or procedure relating to the giving of any bond
or to the assessment, payment, or collection of tax, shall be
authorized under this section. A manufacturer who desires to employ an
alternate method or procedure shall submit a written application, in
triplicate, to the regional director (compliance) for transmittal to
the Director. The application shall specifically describe the proposed
alternate method or procedure, and shall set forth the reasons
therefor. Alternate methods or procedures shall not be employed until
the application has been approved by the Director. The manufacturer
shall, during the period of authorization of an alternate method or
procedure, comply with the terms of the approved application.
Authorization for any alternate method or procedure may be withdrawn
whenever, in the judgment of the Director, the revenue is jeopardized
or the effective administration of this part is hindered. Any
authorization of the Director under this section shall be retained as
part of the manufacturer's record in accordance with this subpart.
[[Page 54091]]
Sec. 270.386 Emergency variations from requirements.
The Director may approve methods of operation other than as
specified in this subpart, where it is determined that an emergency
exists and the proposed variations from the specified requirements are
necessary, and the proposed variations--
(a) Will afford the security and protection to the revenue intended
by the prescribed specifications;
(b) Will not hinder the effective administration of this subpart;
and
(c) Will not be contrary to any provision of law. Variations from
requirements granted under this section are conditioned on compliance
with the procedures, conditions, and limitations set forth in the
approval of the application. Failure to comply in good faith with such
procedures, conditions and limitations shall automatically terminate
the authority for such variations and the manufacturer thereupon shall
fully comply with the prescribed requirements of regulations from which
the variations were authorized. Authority for any variation may be
withdrawn whenever in the judgment of the Director the revenue is
jeopardized or the effective administration of this subpart is hindered
by the continuation of such variation. Where a manufacturer desires to
employ such variation, the manufacturer shall submit a written
application to do so (in triplicate) to the regional director
(compliance) for transmittal to the Director. The application shall
describe the proposed variations and set forth the reasons therefor.
Variations shall not be employed until the application has been
approved. In accordance with this subpart, any authorization of the
Director under this section shall be retained as part of the
manufacturer's records.
Sec. 270.387 Penalties and forfeitures.
Anyone who fails to comply with the provisions of this subpart
becomes liable to the civil and criminal penalties, and forfeitures,
provided by law.
(72 Stat. 1425, 1426; 26 U.S.C. 5761, 5762, 5763)
Qualification Requirements for Manufacturers
Original Qualifications
Sec. 270.391 Persons required to qualify.
Every person who makes up cigarette paper into books or sets
containing more than 25 papers each, or into tubes, except for his or
her own personal use or consumption, shall first qualify as a
manufacturer of cigarette papers and tubes in accordance with the
provisions of this subpart.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.392 Bond.
Every person, before commencing business as a manufacturer of
cigarette papers and tubes, shall file a bond on ATF Form 2102
(5210.1). Such bond shall be filed in accordance with the applicable
provisions of subpart G of this part and conditioned upon compliance
with the provisions of 26 U.S.C. Chapter 52, and regulations
thereunder, including, but not limited to, the timely payment of taxes
imposed by such chapter and penalties and interest in connection
therewith for which the manufacturer may become liable to the United
States.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.393 Power of attorney.
If the bond or any other document required under this part is
signed by an attorney in fact for an individual, partnership,
association, company, or corporation, by one of the partners for a
partnership, or by one of the members of an association, a power of
attorney on ATF Form 1534 (5000.8) shall be furnished to the regional
director (compliance). If such bond or other document is signed on
behalf of a corporation by an officer thereof, it must be supported by
duly authenticated extracts of the stockholders' meeting, by-laws, or
directors' meeting authorizing such officer to execute such document
for the corporation. ATF Form 5000.8 or support of authority does not
have to be filed again with a regional director (compliance) where such
form or support has previously been submitted to that regional director
(compliance) and is still in effect.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.394 Notice of approval of bond.
If the bond required under this subpart is approved by the regional
director (compliance), a number will be assigned to the factory of the
manufacturer of cigarette papers and tubes for internal revenue
purposes. The regional director (compliance) will immediately notify
the manufacturer, in writing, of the bond approval, in order that the
manufacturer may commence operations.
(72 Stat. 1421; 26 U.S.C. 5711)
Changes after Original Qualifications
Sec. 270.395 Change in name.
Where there is a change in the individual, trade, or corporate name
of a manufacturer of cigarette papers and tubes, the manufacturer
shall, within 30 days of the change, furnish the regional director
(compliance) a written notice of such change.
(72 Stat. 1422; 26 U.S.C. 5722)
Sec. 270.396 Change in proprietorship.
Where there is to be any change in proprietorship (including a
change in the identity of the members of a partnership or association,
but excluding any change in stock ownership in a corporation) of the
business of a manufacturer of cigarette papers and tubes, the proposed
successor shall, before commencing operations, qualify as a
manufacturer of cigarette papers and tubes, in accordance with this
part. If such manufacturer promptly files the required documentation
with the regional director (compliance), an administrator, executor,
receiver, trustee, assignee, or other fiduciary successor may liquidate
the business without qualifying as a manufacturer. The manufacturer
must promptly file with the regional director (compliance) a statement
of the intent to liquidate and furnish a certified copy of the order of
the court, or other pertinent documents. These documents must show the
appointment and qualification of any administrator, executor, receiver,
trustee, assignee, or other fiduciary, together with an extension of
coverage of the predecessor's bond executed by the administrator,
executor, receiver, trustee, assignee, or other fiduciary and the
surety, in accordance with the provisions of Sec. 270.407. The
predecessor shall make a closing inventory and closing report in
accordance with the provisions of Secs. 270.434 and 270.426,
respectively, and the successor shall make an opening inventory and
opening report, in accordance with the provision of Secs. 270.432 and
270.423, respectively.
(72 Stat. 1421, 1422; 26 U.S.C. 5711, 5721, and 5722)
Sec. 270.397 Change in location.
Whenever a manufacturer of cigarette papers and tubes contemplates
a change in location of a factory within the same region, the
manufacturer shall, before commencing operations at the new location,
file an extension of coverage of bond in accordance with the provisions
of Sec. 270.407. Whenever a manufacturer of cigarette papers and tubes
contemplates changing the location of a factory to another region, the
manufacturer shall, before commencing operations at the new location,
qualify as a manufacturer in the new region, in accordance with the
applicable provisions of this subpart, and make a closing inventory and
closing report, in
[[Page 54092]]
accordance with the provisions of Secs. 270.434 and 270.426,
respectively.
(72 Stat. 1421, 1422; 26 U.S.C. 5711, 5721, and 5722)
Bonds and Extensions of Coverage of Bonds
Sec. 270.401 Corporate surety.
(a) Surety bonds required by this subpart may be given only with
corporate sureties holding certificates of authority from, and subject
to any limitations prescribed by the Secretary of the Treasury as set
forth in the current revision of Treasury Department Circular No. 570
(Companies Holding Certificates of Authority as Acceptable Sureties on
Federal Bonds and as Acceptable Reinsuring Companies). The surety shall
have no interest whatever in the business covered by the bond.
(b) Each bond and each extension of coverage of bond shall at the
time of filing be accompanied by a power of attorney authorizing the
agent or officer who executed the bond to so act on behalf of the
surety. The regional director (compliance) who is authorized to approve
the bond may, whenever deemed necessary, require additional evidence of
the authority of the agent or officer to execute the bond or extension
of coverage of bond. The power of attorney shall be prepared on a form
provided by the surety company and executed under the corporate seal of
the company. If the power of attorney submitted is other than a
manually signed document, it shall be accompanied by a certificate of
its validity.
(c) Treasury Department Circular No. 570 is published in the
Federal Register annually as of the first workday in July. As they
occur, interim revisions of the circular are published in the Federal
Register. Copies may be obtained from the Surety Bond Branch, Financial
Management Service, Department of the Treasury, Washington, D.C. 20220.
(July 30, 1947, ch. 390, 61 Stat. 648, as amended (31 U.S.C. 9304,
9306); sec. 202. Pub. L. 85-859, 72 Stat. 1421, as amended (26
U.S.C. 5711))
Sec. 270.402 Two or more corporate sureties.
A bond executed by two or more corporate sureties shall be the
joint and several liability of the principal and the sureties. However,
each corporate surety may limit its liability in terms upon the face of
the bond in a definite, specific amount, which amount shall not exceed
the limitations prescribed for such corporate surety by the Secretary,
as set forth in the current revision of Treasury Department Circular
570 (Companies Holding Certificates of Authority as Acceptable Sureties
on Federal Bonds and as Acceptable Reinsuring Companies). (See
Sec. 270.401(c)) When the sureties so limit their liability, the
aggregate of such limited liabilities must equal the required amount of
the bond.
(July 30, 1947, ch. 390, 61 Stat. 648, as amended (31 U.S.C. 9304,
9306); sec. 202. Pub. L. 85-859, 72 Stat. 1421, as amended (26
U.S.C. 5711))
Sec. 270.403 Deposit of securities in lieu of corporate surety.
In lieu of corporate surety, the manufacturer of cigarette papers
and tubes may pledge and deposit, as security for the bond, securities
which are transferable and are guaranteed as to both interest and
principal by the United States, in accordance with the provisions of 31
CFR Part 225--Acceptance of Bonds, Notes or Other Obligations Issued or
Guaranteed by the United States as Security in Lieu of Surety or
Sureties on Penal Bonds.
(61 Stat. 650, 72 Stat. 1421, 31 U.S.C. 9301, 9303, 26 U.S.C. 5711,
5 U.S.C. 552(a) (80 Stat. 383, as amended))
Sec. 270.404 Amount of bond.
The amount of the bond of a manufacturer of cigarette papers and
tubes shall be not less than the maximum amount of the tax liability on
the cigarette papers and tubes manufactured in the factory, received
without payment of tax from other factories, and released without
payment of tax from customs custody as provided in Sec. 270.452, during
any month. In the case of a manufacturer commencing business, the
production, receipts from other factories, and releases from customs
custody, without payment of tax, shall be estimated for the purpose of
this section. The amount of any such bond (or the total amount where
strengthening bonds are filed) shall not exceed $20,000, nor be less
than $1,000.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.405 Strengthening bond.
Where the regional director (compliance) determines that the amount
of the bond, under which a manufacturer of cigarette papers and tubes
is currently carrying on such business, no longer adequately protects
the revenue, the regional director (compliance) may require the
manufacturer to file a strengthening bond in an appropriate amount with
the same surety as that on the bond already in effect, in lieu of a
superseding bond to cover the full liability on the basis of
Sec. 270.404. The regional director (compliance) shall refuse to
approve any strengthening bond where any notation is made thereon which
is intended or which may be construed as a release of any former bond,
or as limiting the amount of either bond to less than its full amount.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.406 Superseding bond.
A manufacturer of cigarette papers and tubes shall file a new bond
to supersede the current bond immediately when:
(a) The corporate surety on the current bond becomes insolvent,
(b) The regional director (compliance) approves a request from the
surety of the current bond to terminate liability under the bond,
(c) Payment of any liability under a bond is made by the surety
thereon, or
(d) The regional director (compliance) considers such a superseding
bond necessary for the protection of the revenue.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.407 Extension of coverage of bond.
An extension of the coverage of bond filed under this subpart shall
be manifested on ATF Form 2105 (5000.7), Extension of Coverage of Bond,
by the manufacturer of cigarette papers and tubes and by the surety on
the bond with the same formality and proof of authority as required for
the execution of the bond.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.408 Approval of bond and extension of coverage of bond.
No person shall commence operations under any bond, nor extend
operations, until such person receives from the regional director
(compliance) notice of approval of the bond or an appropriate extension
of coverage of the bond required under this subpart. Upon receipt of an
approved bond or extension of coverage of bond from the regional
director (compliance), such bond or extension of coverage of bond shall
be retained by the manufacturer of cigarette papers and tubes in
factory and shall be made available for inspection by any ATF officer
upon request.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.409 Termination of liability of surety under bond.
The liability of a surety on any bond required by this subpart
shall be terminated only as to operations on and after the effective
date of a superseding bond, or the date of approval of the
discontinuance of operations by the manufacturer of cigarette papers
and tubes, or otherwise in accordance with the termination provisions
of the bond. The surety shall remain bound in
[[Page 54093]]
respect of any liability for unpaid taxes, penalties and interest, not
in excess of the amount of the bond, incurred by the manufacturer while
the bond is in force.
(72 Stat. 1421; 26 U.S.C. 5711)
Sec. 270.410 Release of pledged securities.
Securities of the United States pledged and deposited as provided
in Sec. 270.403 shall be released only in accordance with the
provisions of 31 CFR Part 225. Such securities will not be released by
the regional director (compliance) until liability under the bond for
which they were pledged has been terminated. When the regional director
(compliance) is satisfied that they may be released, the regional
director (compliance) shall fix the date or dates on which a part or
all of such securities may be released. At any time prior to the
release of such securities, the regional director (compliance) may
extend the date of release for such additional length of time as is
deemed necessary.
(61 Stat. 650, 72 Stat. 1421; 31 U.S.C. 9301, 9303; 26 U.S.C. 5711)
Operations By Manufacturers
Records
Sec. 270.421 General.
Every manufacturer of cigarette papers and tubes shall keep records
of the daily operations and transactions, which shall reflect the date
and number of books or sets of cigarette papers of each different
numerical content and the date and number of cigarette tubes:
(a) Manufactured;
(b) Received, without payment of tax from another factory, an
export warehouse, customs custody, or by withdrawal from the market;
(c) Removed subject to tax;
(d) Removed, without payment of tax, for export purposes, use of
the transfer in bond pursuant to Sec. 270.451; or
(e) Lost or destroyed.
The entries for each day in the records maintained or kept under
this subpart will be considered timely if made by the close of the
business day following that on which the operations or transactions
occur. No particular form of records is prescribed, but the information
required shall be readily ascertainable from the records kept.
(72 Stat. 1423; 26 U.S.C. 5741)
Reports
Sec. 270.422 General.
Every manufacturer of cigarette papers and tubes shall make a
report, on ATF Form 2138 (5230.3), to the regional director
(compliance), of the number of books or sets of cigarette papers of
each different numerical content and the number of cigarette tubes
manufactured, received, removed, and lost or destroyed. The report
shall be made at the times specified in this subpart and shall be made
whether or not any operations or transactions occurred during the
period covered by the report. A copy of each report shall be retained
by the manufacturer in accordance with the provisions of this subpart.
(72 Stat. 1422; 26 U.S.C. 5722)
Sec. 270.423 Opening.
An opening report, covering the period from the date of the opening
inventory to the end of the month, shall be made on or before the 10th
day following the end of the month in which the business was commenced.
(72 Stat. 1422; 26 U.S.C. 5722)
Sec. 270.424 Monthly.
A report for each calendar month shall be made on or before the
20th day of the next succeeding month.
(72 Stat. 1422; 26 U.S.C. 5722)
Sec. 270.425 Special.
A special report, covering the unreported period to the day
preceding the date of any special inventory required by an ATF officer,
shall be made with such inventory. Another report, covering the period
from the date of the special inventory to the end of the month, shall
be made on or before the 14th day following the end of the month in
which the inventory was made.
(72 Stat. 1422; 26 U.S.C. 5722)
Sec. 270.426 Closing.
A closing report, covering the period from the first of the month
to the date of the closing inventory, shall be made with such
inventory.
(72 Stat. 1422; 26 U.S.C. 5722)
Inventories
Sec. 270.431 General.
Every manufacturer of cigarette papers and tubes shall provide a
true and accurate inventory, on ATF Form 2132 (5230.2), to the regional
director (compliance), of the number of books or sets of cigarette
papers of each different numerical content and the number of cigarette
tubes held at the times specified in this subpart. Such inventory shall
be subject to verification by an ATF officer. A copy of each inventory
shall be retained by the manufacturer in accordance with this subpart.
(72 Stat. 1422; 26 U.S.C. 5721)
Sec. 270.432 Opening.
An opening inventory shall be made by the manufacturer of cigarette
papers and tubes at the time of first commencing business.
(72 Stat. 1422; 26 U.S.C. 5721)
Sec. 270.433 Special.
A special inventory shall be made by the manufacturer of cigarette
papers and tubes when required by any ATF officer.
(72 Stat. 1422; 26 U.S.C. 5721)
Sec. 270.434 Closing.
A closing inventory shall be made by the manufacturer of cigarette
papers and tubes when a change in proprietorship occurs, or when the
manufacturer changes location of the factory to another region, or
concludes business. Where a change in proprietorship occurs, the
closing inventory shall be made as of the day preceding the date of the
opening inventory of the successor.
(72 Stat. 1422; 26 U.S.C. 5721)
Document Retention
Sec. 270.435 General.
All records and reports required to be kept or maintained under
this subpart, including copies of authorizations, inventories, reports,
returns, and claims filed with verified supporting schedules, shall be
retained by the manufacturer for three years following the close of the
calendar year in which filed or made, or in the case of an
authorization, for three years following the close of the calendar year
in which the operation under such authorization is concluded. Such
records shall be made available for inspection by any ATF officer upon
request.
(72 Stat. 1423; 26 U.S.C. 5741)
Packages
Sec. 270.441 General.
All cigarette papers and tubes shall, before removal subject to
tax, be put up by the manufacturer in packages which shall be of such
construction as will securely contain the papers or tubes therein. No
package of cigarette papers or tubes shall have contained therein,
attached thereto, or stamped, marked, written, or printed thereon:
(a) Any 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,
(b) Any indecent or immoral picture, print, or representation, or
(c) Any statement or indication that United States tax has been
paid.
(72 Stat. 1422; 26 U.S.C. 5723)
[[Page 54094]]
Miscellaneous Operations
Sec. 270.451 Transfer in bond.
A manufacturer of cigarette papers and tubes may transfer such
papers and tubes, under bond, without payment of tax, to the bonded
premises of any manufacturer of cigarette papers and tubes, or to the
bonded premises of a manufacturer of tobacco products solely for use in
the manufacture of cigarettes. The transfer of cigarette papers and
tubes, without payment of tax, to the bonded premises of an export
warehouse proprietor shall be in accordance with the provisions of part
290 of this chapter.
(72 Stat. 1418, as amended; 26 U.S.C. 5704)
Sec. 270.452 Release from customs custody.
Cigarette papers and tubes which were made in the United States,
exported, and subsequently returned to the United States, may be
removed from customs custody for transfer to the premises of a
manufacturer without payment of the internal revenue tax, upon
compliance with part 275 of this chapter.
(72 Stat. 1418; 26 U.S.C. 5704)
Sec. 270.453 Use of the United States.
A manufacturer of cigarette papers and tubes may remove cigarette
papers and tubes covered under bond, without payment of tax, for use of
the United States. Such removal shall be in accordance with the
provisions of part 295 of this chapter.
(72 Stat. 1418; 26 U.S.C. 5704)
Sec. 270.454 Removal for export purposes.
The removal of cigarette papers and tubes, 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, shall
be in accordance with the provisions of part 290 of this chapter.
(72 Stat. 1418; 26 U.S.C. 5704)
Permanent Discontinuance of Business
Sec. 270.461 Discontinuance of operations.
Every manufacturer of cigarette papers and tubes who desires to
discontinue operations and close out a factory shall dispose of all
cigarette papers and tubes on hand, in accordance with this subpart,
and make a closing inventory and closing report, in accordance with the
provisions of Secs. 270.434 and 270.426, respectively.
(72 Stat. 1422; 26 U.S.C. 5721, 5722)
Claims By Manufacturers
General
Sec. 270.471 Abatement.
A claim for abatement of the unpaid portion of the assessment of
any tax on cigarette papers and tubes, or any liability in respect
thereof, may be allowed to the extent that such assessment is excessive
in amount, is assessed after the expiration of the applicable period of
limitation, or is erroneously or illegally assessed. Any claim under
this section shall be prepared on ATF Form 2635 (5620.8), in duplicate,
and shall set forth the particulars under which the claim is filed. The
original of the claim, accompanied by such evidence as is necessary to
establish to the satisfaction of the regional director (compliance)
that the claim is valid, shall be filed with the regional director
(compliance) for the region in which the tax or liability was assessed.
(68A Stat. 792, 6404)
Sec. 270.472 Allowance.
Relief from the payment of tax on cigarette papers and tubes may be
extended to a manufacturer by allowance of the tax where the cigarette
papers and tubes, after removal from the factory upon determination of
tax and prior to the payment of such tax, are lost (otherwise than by
theft) or destroyed by fire, casualty, or act of God, while in the
possession or ownership of the manufacturer who removed such articles,
or are withdrawn by the manufacturer from the market. Any claim for
allowance under this section shall be filed on ATF Form 2635 (5620.8)
with the regional director (compliance) for the region in which the
articles were removed, shall be executed under penalties and perjury
and shall show the date the cigarette papers and tubes were removed
from the factory. A claim relating to articles lost or destroyed shall
be supported as prescribed in Sec. 270.475. In the case of a claim
relating to cigarette papers or tubes withdrawn from the market the
schedule prescribed in Sec. 270.476 shall be filed with the regional
director (compliance) for the region in which the articles are
assembled. The manufacturer may not anticipate allowance of a claim by
making the adjusting entry in a tax return pending consideration and
action on the claim. Cigarette papers and tubes to which such a claim
relates must be shown as removed on determination of tax in the return
covering the period during which such articles were so removed. Upon
action on the claim by the regional director (compliance) a copy of ATF
Form 2635 (5620.8) will be returned to the manufacturer as notice of
such action. This copy of ATF Form 2635 (5620.8), with the copy of any
verified supporting schedules, shall be retained by the manufacturer.
When such notification of allowance of the claim or any part thereof is
received prior to the time the return covering the tax on the cigarette
papers or tubes to which the claim relates is to be filed, the
manufacturer may make an adjusting entry and explanatory statement in
that tax return. Where the notice of allowance is received after the
filing of the return and taxpayment of the cigarette papers or tubes to
which the claim relates, the manufacturer may make an adjusting entry
and explanatory statement in the next tax return(s) to the extent
necessary to take credit in the amount of the allowance.
(72 Stat. 1419, as amended, 26 U.S.C. 5705)
Sec. 270.473 Credit or refund.
The taxes paid on cigarette papers and tubes may be credited or
refunded (without interest) to a manufacturer on proof satisfactory to
the regional director (compliance) that the claimant manufacturer paid
the tax on cigarette papers and tubes lost (otherwise than by theft) or
destroyed, by fire, casualty, or act of God, while in the possession or
ownership of such manufacturer, or withdrawn by the manufacturer from
the market. Any claim for credit or refund under this section shall be
prepared on ATF Form 2635 (5620.8), in duplicate. Claims shall include
a statement that the tax imposed on cigarette papers and tubes by 26
U.S.C. 7652 or Chapter 52, was paid in respect to the cigarette papers
or tubes covered by the claim, and that the articles were lost,
destroyed, or withdrawn from the market within 6 months preceding the
date the claim is filed. A claim for credit or refund relating to
articles lost or destroyed shall be supported as prescribed in
Sec. 270.475, and a claim relating to articles withdrawn from the
market shall be accompanied by a schedule prepared and verified as
prescribed in Secs. 270.476, and 270.477. The original and one copy of
ATF Form 2635 (5620.8), shall be filed with the regional director
(compliance) for the region in which the tax was paid, or where the tax
was paid in more than one region with the regional director
(compliance) for any one of the regions in which the tax was paid. Upon
action by the regional director (compliance) on a claim for credit, a
copy of ATF Form 2635 (5620.8) will be returned to the manufacturer as
notification of
[[Page 54095]]
allowance or disallowance of the claim or any part thereof. This copy,
with the copy of any verified supporting schedules, shall be retained
by the manufacturer. When the manufacturer is notified of allowance of
the claim for credit or any part thereof, the manufacturer shall make
an adjusting entry and explanatory statement in the next tax return(s)
to the extent necessary to take credit in the amount of the allowance.
The manufacturer may not anticipate allowance of a claim by taking
credit on a tax return prior to consideration and action on such claim.
The duplicate of a claim for refund or credit, with a copy of any
verified supporting schedules, shall be retained by the manufacturer.
(72 Stat. 1419, as amended, 26 U.S.C. 5705)
Sec. 270.474 Remission.
Remission of the tax liability on cigarette papers and tubes may be
extended to the manufacturer liable for the tax where cigarette papers
and tubes in bond are lost (other than by theft) or destroyed, by fire,
casualty, or act of God, while in the possession or ownership of such
manufacturer. Where cigarette papers and tubes are so lost or destroyed
the manufacturer shall report promptly such fact, and the
circumstances, to the regional director (compliance) for the region in
which the factory is located. If the manufacturer wishes to be relieved
of the tax liability, a claim on ATF Form 2635 (5620.8), in duplicate,
shall also be prepared, setting forth the nature, date, place, and
extent of the loss or destruction. The original and one copy of the
claim, accompanied by such evidence as is necessary to establish to the
satisfaction of the regional director (compliance) that the claim is
valid, shall be filed with the regional director (compliance) for the
region in which the factory is located. Upon action on the claim by the
regional director (compliance), the copy of ATF Form 2635 (5620.8) will
be returned to the manufacturer as notice of such action, which copy
shall be retained by the manufacturer.
(72 Stat. 1419, as amended, 26 U.S.C. 5707)
Lost or Destroyed
Sec. 270.475 Action by claimant.
Where cigarette papers and tubes are lost (other than by theft) or
destroyed, by fire, casualty, or act of God, and the manufacturer
desires to file claim under the provisions of Sec. 270.472 or
Sec. 270.473, the manufacturer shall indicate on the claim the nature,
date, and extent of such loss or destruction. The claim shall be
accompanied by such evidence as necessary to establish to the
satisfaction of the regional director (compliance) that the claim is
valid.
(72 Stat. 1419; 26 U.S.C. 5705)
Withdrawn From the Market.
Sec. 270.476 Action by Claimant.
Where cigarette papers and tubes are withdrawn from the market and
the manufacturer desires to file claim under the provisions of
Sec. 270.472 or Sec. 270.473, the manufacturer shall assemble the
articles in or adjacent to a factory if they are to be retained in or
received into such factory, or at any suitable place if they are to be
destroyed. The manufacturer shall group the articles according to the
rate of tax applicable thereto, and shall prepare and submit a schedule
of the articles, on ATF Form 3069 (5200.7) in accordance with the
instructions, on the form. All copies of the schedule shall be
forwarded to the regional director (compliance) for the region in which
the articles are assembled.
(72 Stat. 1419; 26 U.S.C. 5705)
Sec. 270.477 Action by regional director (compliance).
Upon receipt of a schedule of cigarette papers and tubes withdrawn
from the market, the regional director (compliance) may assign an ATF
officer to verify the schedule and supervise disposition of the
cigarette papers and tubes, or may authorize the manufacturer to
dispose of the articles without supervision by so stating on the
original and one copy of the schedule returned to the manufacturer.
(72 Stat. 1419; 26 U.S.C. 5705)
Sec. 270.478 Disposition of cigarette papers and tubes and schedule.
When so authorized, as evidenced by the regional director's
(compliance) statement on the schedule, the manufacturer shall dispose
of the cigarette papers and tubes as specified in the schedule. After
the articles are disposed of, the manufacturer shall execute a
certificate on both copies of the schedule received from the regional
director (compliance), to show the disposition and the date of
disposition of the articles. In connection with a claim for credit or
refund, the manufacturer shall attach the original of the schedule to
the claim for credit or refund, ATF Form 2635 (5620.8), filed under
Sec. 270.473. When an ATF officer is assigned to verify the schedule
and supervise disposition of the cigarette papers and tubes, such
officer shall, upon completion of the assignment, execute a certificate
on all copies of the schedule to show the disposition and the date of
disposition of the articles. In connection with a claim for allowance,
the officer shall return one copy of the schedule to the manufacturer
for the record, and in connection with a claim for credit or refund,
the officer shall return the original and one copy of the schedule to
the manufacturer, the original of which the manufacturer shall attach
to the claim filed under Sec. 270.473.
(72 Stat. 1419, as amended; 26 U.S.C. 26 U.S.C. 5705)
Sec. B. The regulations in 27 CFR part 275 are amended as follows:
PART 275--IMPORTATION OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND
TUBES
Paragraph 1. The authority citation for part 275 continues to read
as follows:
Authority: 26 U.S.C. 5701, 5703-5705, 5708, 5722, 5723, 5741,
5761-5763, 6301, 6302, 6313, 6404, 7101, 7212, 7342, 7606, 7652; 31
U.S.C. 9301, 9303, 9304, 9306.
Sec. 275.63 [Amended]
Par. 2. Section 275.63(a) is amended by removing ``parts 270 and
285'' and adding ``part 270''.
Sec. 275.85 [Amended]
Par. 3. Section 275.85 concluding text is amended by removing
``part 270 and part 285'' and adding ``part 270''.
Par. 4. Section 275.85a(b) is amended by removing ``part 270 or
285'' and adding ``part 270''.
Sec. 275.86 [Amended]
Par. 5. Section 275.86 is amended by removing ``parts 270 and 285''
and adding ``part 270''.
Sec. 275.115 [Amended]
Par. 6. Section 275.115a (a)(1) and (b)(1) are amended by removing
``parts 270 and 285'' and adding ``part 270''.
Sec. 275.137 [Amended]
Par. 7. Section 275.137 introductory text is amended by removing
``parts 270 and 285'' and adding ``part 270''.
Sec. 275.140 [Amended]
Par. 8. Section 275.140 is amended by removing ``part 285'' and
adding ``part 270''.
Sec. C. The regulations in 27 CFR part 285 are amended as follows:
PART 285--MANUFACTURE OF CIGARETTE PAPERS AND TUBES
PART 285--[REMOVED AND RESERVED]
Paragraph 1. Part 285 is removed and reserved.
[[Page 54096]]
Sec. D. The regulations in 27 CFR part 295 are amended as follows:
PART 295--REMOVAL OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND
TUBES, WITHOUT PAYMENT OF TAX FOR USE OF THE UNITED STATES
Paragraph 1. The authority citation for part 295 continues to read
as follows:
Authority: 26 U.S.C. 5703, 5704, 5705, 5723, 5741, 5751, 5762,
5763, 6313, 7212, 7342, 7606, 7805; 44 U.S.C. 3504(h).
Par. 2. Section 295.34 is amended by removing the phrase ``or Part
285''.
Signed: June 10, 1996.
John W. Magaw,
Director.
Approved: July 29, 1996.
Dennis M. O'Donnell,
Acting Deputy Assistant Secretary (Regulatory, Tariff and Trade
Enforcement).
[FR Doc. 96-26305 Filed 10-16-96; 8:45 am]
BILLING CODE 4810-31-M
