Optional Daily Return System
For the Payment of Tax on Cigars
Manufacturers of cigars, importers of cigars, and proprietors
of customs bonded cigar manufacturing warehouses, class 6,
and others concerned:
1. The purpose of this industry circular is to call your
attention to Treasury decision 6185, recently published in the
Federal Register, which amends regulations, 26 CFR Part 270, to
institute an optional daily return system for the payment of tax
on cigars, effective July 1, 1956.
2. The Assistant Regional Commissioner, Alcohol and Tobacco
Tax, will, upon your request, assist you in your planning to shift
over to the return system.
3. An initial supply of the tax return, Form 2135, prescribed
under such regulations to be filed, in triplicate, with the District
Director of Internal Revenue, will be available at the office of
such Assistant Regional Commissioner by the effective date of the
return system under which the form may be filed.
4. The regulations (26 CFR 270.64) require that each
manufacturer who intends to pay the tax on cigars by return shall
submit notice of such intention to the Assistant Regional Commissioner,
Alcohol and Tobacco Tax, at least five days in advance of the day
on which he desires to shift over to the return system. Such notice
may, if desired, be submitted prior to the effective date of the
Treasury decision. Manufacturers located at considerable distance
from the office of the Assistant Regional Commissioner are requested
to use Air Mail, Special Delivery, or other expeditious means of
communication, in presenting notification of a change over to the
return system, in order that the shift-over can be effectuated on
the date desired.
5. The regulations (26 CFR 270.64) provide that a
manufacturer of cigars who exercises his option to pay the tax
on cigars by return may not revert to the purchase and payment of
tax by stamp. However, he may continue to use the cigar tax stamps
that are in his factory on the date on which he desires to pay tax
by return as indicated in his notice to this effect. If the
manufacturer does not wish to use up such stamps on hand, he may
return them to the Assistant Regional Commissioner with claim on
Form 843 for redemption or refund. The manufacturer may continue
to store and subsequently remove any stamped packages of cigars on
hand in his factory at the time of shifting over to the return
system.
6. Proprietors of customs bonded cigar manufacturing
warehouses, class 6, are afforded the same optional daily return
system for the payment of internal revenue tax on cigars removed
for consumption in the United States, as is afforded to domestic
manufacturers. The regulations (26 CFR 270.199) require proprietors
of such warehouses who intend to pay the tax on such cigars by
return to file with the Assistant Regional Commissioner, Alcohol
and Tobacco Tax, a bond, Form 2100. This form should be
appropriately modified by changing, at each place it appears, the
expression "manufacturer of cigars and cigarettes" to "proprietor
of customs bonded manufacturing warehouse, class 6,"; by changing,
at each place it appears, the expression "factory" to "customs
manufacturing warehouse"; and by deleting the expression", or any
other change which requires the principal to file an application
for a new or amended permit as a manufacturer of cigars and
cigarettes under this bond". The amount of such bond should be
not less than the amount of the tax liability on cigars removed
from such warehouse for consumption in the United States during the
twelve months preceding the month in which the bond is to be filed,
divided by twelve, subject to the usual limitations of $1,000
minimum and $200,000 maximum.
7. No objection will be made to the use of existing stocks
of approved packages, wraps, or labels, for packaging cigars to
be taxpaid by return, until such stocks are exhausted, provided that
the package shows the number of cigars contained in such package and
the proper class designation.
8. In connection with the provisions relating to claims for
remission, allowance, abatement of assessment, refund, and redemption,
the Treasury decision provides that such claims will be filed in
original only.
9. The remittance, with a cigar tax return, should be made
in cash, or by check or money order made payable to the "Internal
Revenue Service."
10. 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.
![sig](https://webarchive.library.unt.edu/web/20130301225402im_/http://www.ttb.gov/images/dwight_avis.jpg)
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
IRS-19950 |