Storage, Shipment, and Delivery of Tobacco Materials
Dealers in tobacco materials and manufacturers of tobacco products:
1. The purpose of this industry circular is to call your
attention to certain requirements and restrictions placed on the
storage, shipment, and delivery of tobacco materials by the new regulations, Parts 270, 275, and 280 of Title 26 CFR (1954).
2. It has been brought to the attention of the National Office
that certain dealers in tobacco materials and manufacturers of tobacco
products are having tobacco materials stored in warehouses (other than
those of qualified dealers in tobacco materials and manufacturers of
tobacco products) which are not covered by the bonds as outside, places
of storage of such dealers and manufacturers. While 26 CFR 280.50
exempts warehousemen from qualifying as dealers in tobacco materials,
nevertheless where such a warehouseman stores tobacco materials for a
dealer in tobacco materials or a manufacturer of tobacco products, it
is necessary for such dealer or manufacturer to set forth the warehouse
as an outside place of storage, in connection with his qualification as
such dealer or manufacturer and in accordance with the applicable provisions of regulations (26 CFR 280.61, 280.65, and 280.89; 26 CFR
270.156; and 26 CFR 275.145). The privilege of using such warehouses
as outside places of storage is consistent with the intent of the new
Code and regulations to provide dealers in tobacco materials and manufacturers of tobacco products with greater freedom in their operations,
and to liberalize the controls and requirements formerly imposed, in
connection with tobacco materials. The National Office is interested,
primarily, in the movement and possession of tobacco materials rather
than in ownership or title. Under the provisions of Sections 270.156
and 275.145 of regulations, Parts 270 and 275, manufacturers of tobacco
products are permitted certain industry operations and functions beyond
city, town, or State lines. However, for reasons of effective administration, such operations and functions have not been permitted to be
extended beyond regional lines except in the case of outside places of
storage of tobacco materials by dealers in tobacco materials.
3. Following the above concept, a qualified dealer in tobacco
materials may be permitted to include in the premises of his establishment any buildings, or portions of buildings, in the same internal
revenue region, to be used by him in carrying on such business,
provided consolidated records are maintained by him, at one of the
buildings comprising his establishment, of all tobacco materials
received and handled under his bond and permit. On the other hand,
the dealer may elect to exclude from the premises of his establishment
any buildings in the same region in which his establishment is situated
which he uses merely for the storage of his tobacco materials. Such
buildings which are excluded from the premises of his establishment
maybe shown by the dealer as outside places of storage. In addition,
a dealer is also permitted by the new regulations to cover under the
bond and permit of his establishment any warehouses in the United States
as outside places of storage, provided consolidated records of all
tobacco materials received therein are maintained at the qualified
establishment of the dealer. Similarly, a qualified manufacturer of
tobacco products may be permitted to include in the premises of his
factory any buildings or portions of buildings, in the same city, town,
or village, to be used by him in carrying on such business. In addition,
a manufacturer is also permitted by the new regulations to cover under
his factory bond any warehouses, in the same region as his factory, as
outside places of storage. Outside places of storage are restricted to
the storage of tobacco materials (including fumigation of tobacco
materials since fumigation involves, primarily, the storage of tobacco
materials). The premises of the establishment of a qualified dealer
in tobacco materials or the factory of a qualified manufacturer of
tobacco products may not be regarded or shown as an outside place of
storage by other dealers or manufacturers. On the other hand, a
warehouse intended to be used merely as an outside place of storage
may be qualified by any number of dealers and manufacturers as an
outside place of storage.
4. A qualified dealer in tobacco materials may show the premises
of a warehouseman as an outside place of storage for his tobacco
materials. Similarly, a qualified manufacturer of tobacco products
may show the premises of a warehouseman as an outside place of storage
for his tobacco materials that are located in the same region as the
factory. However, where such warehouseman operates more than one
storage warehouse in the same city, town, or village, it will be
sufficient for the qualified dealer or manufacturer to show as his
outside place of storage the principal warehouse address of the
warehouseman to whom the tobacco materials are shipped for storage.
5. All tobacco materials stored by a dealer in the premises of
his establishment for other qualified dealers or manufacturers of
tobacco products should be included in the records of the storing
dealer and such tobacco materials should be included in the records of
the shipping dealer or manufacturer as shipped to the storing dealer.
Similarly, when the tobacco materials are shipped out of storage,
record of the shipment should be made in the records of the storing
dealer, and record of the receipt of such materials should be made
in the records of the dealer or manufacturer to whom shipped, when
the tobacco materials are actually received in the latter's establishment or factory or outside place of storage.
6. In connection with the information set forth above,
reference is made to Form 2093, Application for Permit, required to be
filed by every person to qualify as a dealer in tobacco materials.
Under item 3 on this form, the applicant should appropriately set
forth the location of each building, or portion of a building, in the
same region to be included in the premises of his qualified establishment.
The building of such establishment in which consolidated records of the
dealer's operations will be maintained should be properly indicated by
the use of the terms "Major location" or "Records maintained here."
7. Inquiries in regard to this industry circular should refer to
the number thereof and should be directed to the appropriate Assistant
Regional Commissioner, Alcohol and Tobacco Tax.
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
IRS-15987
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