SALE OF CERTAIN TOBACCO PRODUCTS AND CIGARETTE
PAPERS AND TUBES ON OR AFTER FEBRUARY 7, 2001
Importers of Tobacco Products, Manufacturers of Tobacco Products
or Cigarette Papers or Tubes, and others concerned.
Purpose. This industry circular warns businesses about selling
or holding for sale tobacco products and cigarette papers or tubes
manufactured in the United States and labeled for exportation. On
or after February 7, 2001, if you sell or hold for sale such products
for domestic consumption, you may incur civil and criminal penalties.
New Law. A new law takes effect on February 7, 2001. This new law
prohibits in the United States the sale or holding for sale for
domestic consumption of tobacco products and cigarette papers or
tubes manufactured in the United States and labeled for exportation
under chapter 52 of the Internal Revenue Code of 1986, as amended
(IRC). The new law is Section 4002 of Title IV of P.L. 106-476,
Imported Cigarette Compliance Act of 2000.
1. What are tobacco products? Tobacco products are defined as cigarettes,
cigars, smokeless tobacco, pipe tobacco, and roll-your-own tobacco.
2. Do I have tobacco products or cigarette papers or tubes manufactured
in the United States and labeled for exportation?
Look at the package of the tobacco products or cigarette papers
or tubes. The package is the container that the manufacturer puts
up for delivery to the consumer.
a. Is there a label or notice with the words "Tax-exempt.
For use outside the U.S.", "U.S. Tax-exempt. For use
outside U.S." or "For Export With Drawback of Tax."?
b. Is there a stamp, sticker or notice of a foreign country or
U.S. possession that identifies such foreign country or U.S. possession?
If you answer yes to question a or b, then you have a package
that has been labeled for exportation. Next, find out if the package
has a mark about the manufacturer.
c. Is there a mark indicating the name of the manufacturer, the
city and State in the United States (50 States and the District
of Columbia) or a "TP" code? A TP code begins with the
letters TP and then followed by the postal abbreviation for the
State or District of Columbia and a number. For example, TP-DC-1.
If you answer yes to question c, the tobacco product or cigarette
papers or tubes have been very likely manufactured in the United
States.
3. What if I cannot find the mark of the manufacturer (see 2c.
above) indicating the place of the manufacturer?
Look for a statement on the package, including stickers, that state
where the product was manufactured. If it states a place in the
United States (50 States and the District of Columbia), the tobacco
product or cigarette paper or tubes is very likely to have been
manufactured in the United States.
4. What are the Federal penalties for selling tobacco products
or cigarette papers or tubes that have been manufactured and labeled
for exportation in the United States?
Civil and criminal penalties may be imposed. The civil penalty
is at least $1,000, and the tobacco products and cigarette papers
and tubes are subject to forfeiture to the United States. A larger
civil penalty may be imposed if the amount of Federal excise tax
on the tobacco products and cigarette papers or tubes is greater
than $200. Additional taxes, criminal penalties and forfeiture of
other property may be imposed by the IRC. In addition, State law
may also impose penalties if you sell or hold for sale such products.
We suggest that you contact the appropriate State agency that administers
taxes on such products.
5. Does this change the advice given in the answer for question
3 of ATF Industry Circular 2000-1?
Yes. In question 3 of ATF Industry Circular 2000-1, you could sell
or hold for sale previously exported tobacco products or cigarette
papers or tubes that were lawfully entered into the United States
before January 1, 2000. The new law (Title IV of the Cigarette Compliance
Act of 2000) prohibits selling or holding for sale tobacco products
or cigarette papers or tubes for domestic consumption, which have
been manufactured and labeled for exportation in the United States.
Questions. Ask the Regulations Division, Room 5003, ATF, Washington,
DC 20226 (202-927-8210). Also, you may send an e-mail to alctob@atfhq.atf.treas.gov.
Bradley A. Buckles
Director |