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Tobacco FAQsUpdated October 2010 DISCLAIMER - We make every attempt to update the answers to these questions to reflect the latest changes in our regulations and other Federal requirements. To comment on this page or to suggest a question, please send your e-mail to TTBInternetQuestions@ttb.gov or visit the Contact Us page for more information. If you want to know about recent changes in the law and regulations, you may visit the following Web sites: THOMAS (The Library of Congress) and The Federal Register. If you are concerned with the accuracy of this information, please contact TTB or your legal advisor. Cigarette-making Machines in Retail Establishments
General TobaccoT1: What do I need to know about ordering tobacco products, such as cigarettes, through the Internet? Can I receive these products “tax free” or “duty free”? There is currently no Federal law that prohibits Internet tobacco product sales. However, there is also no exemption from Federal laws for tobacco products ordered over the Internet. Therefore, consumers who order tobacco products to be shipped to them from outside the United States are not exempt from payment of Federal excise tax and customs duties due on these products when imported. In addition, consumers who use the Internet to buy cigarettes from vendors outside their State may be liable for their State’s cigarette excise and/or sales taxes, and a State may have prohibitions or restrictions on Internet or mail-order purchases of tobacco products, or may have special requirements for such purchases. For information about State requirements, contact the agency in your State with authority for tax administration. Under Federal law, cigarette vendors who sell and ship cigarettes into another State to anyone other than a licensed distributor must report to the State (1) the name and address of the person(s) to whom cigarettes shipments were made, (2) the brands of cigarettes shipped, and (3) the quantities of cigarettes shipped. (Jenkins Act 15 U.S.C. 375 – 378) Consumers should also be aware that cigarettes manufactured in the U.S. and labeled and shipped for export cannot be brought back into the U.S. except by the original manufacturer or by an export warehouse proprietor authorized by the original manufacturer. No quantity of cigarettes originally manufactured in the U.S. for export may be brought back into the U.S. by you as a consumer, except for the limited quantity that you are allowed to bring back into the country as a returning traveler. This prohibition applies to even small Internet purchases that you make for your own personal use. Cigarettes manufactured in the U.S. for export are required to have a notice on the package. In general, this notice is: “U.S. Tax-exempt. For use outside the U.S.” Packages bearing the export mark may not be sold or held for sale for domestic consumption in the U.S. and are subject to seizure by U.S. officials. T2: What Federal laws does the Alcohol and Tobacco Tax and Trade Bureau (TTB) enforce concerning tobacco products? In general, TTB enforces Chapter 52 of the Internal Revenue Code (Title 26 of the United States Code). Chapter 52 of the Internal Revenue Code deals mainly with the Federal excise taxes on tobacco products and cigarette papers and tubes and other requirements, such as permits required for engaging in business related to the manufacture, importation and other operations involving such products. T3: What other Federal laws relate to tobacco products and who enforces these other Federal laws? As of July 5, 2007, the following Federal laws related to tobacco products apply. Please note that this list may not be comprehensive, is subject to change, and is provided for general information purposes only. TTB does not administer, enforce, or interpret these statutory provisions. For any questions about a statutory provision listed here, please contact the agency responsible for its administration.
The Smokeless Tobacco Health Education Act, in part requires each manufacturer, packager, or importer of smokeless tobacco products to annually submit to the Department of Health and Human Services the list of ingredients added to tobacco in the manufacture of smokeless tobacco products (Ingredient Report). It further requires the submission of the quantity of nicotine contained in each smokeless tobacco product (Nicotine Report). The Centers for Disease Control and Prevention (CDC), Office on Smoking and Health (OSH), has been delegated the responsibility of implementing these provisions. More information can be found at www.cdc.gov/tobacco. In addition to the reporting requirements, under the FCLAA, Federal Trade Commission has administrative responsibilities for the Surgeon General's health warnings required for cigarettes. The FTC has both administrative and enforcement responsibilities for the health warnings required for smokeless tobacco packaging and advertising under the Comprehensive Smokeless Tobacco Health Education Act of 1986. The FTC’s regulations specify the placement and rotation of the warnings on these products, and require companies to submit plans to the Commission setting forth their rotation schedules. The FTC also enforces the ban in the Smokeless Tobacco Act on broadcasting smokeless tobacco advertisements on radio and television. T4: Who can I contact about a person selling cigarettes or other tobacco products that were intended to be free for customers (for example, buy one pack and get one free)? You can contact the manufacturer listed on the package of cigarettes or other tobacco products. The manufacturer may be interested in knowing that their "free" promotional or complimentary cigarettes are being sold. Also, you may also contact your state tax agency about whether sale of "free" cigarettes or other tobacco products is legal. The Tax and Trade Bureau (TTB) does not regulate how "free" (promotional or complimentary) cigarettes or other tobacco products are sold. TTB regulates the taxation of cigarettes and tobacco products. Federal excise tax is normally collected when a manufacturer removes cigarettes or other tobacco products from a factory or when an importer removes such products from customs custody. T5: Who can I contact about a person in the United States selling cigarettes or other tobacco products that are marked "Tax-exempt. For use outside U.S." or with a similar notice? Report domestic sales of cigarettes or other tobacco products that have been manufactured in the United States and have export markings to the Alcohol and Tobacco Tax and Trade Bureau by e-mail, telephone or writing to: Alcohol and Tobacco Tax and Trade Bureau Also, refer to Industry Circular 2000-4. T6: What must I do if I want to start a business that sells, manufactures or imports tobacco? You do not need a Federal license to sell tobacco products. There are Federal record keeping requirements if you sell more than 10,000 cigarettes in a month. Refer to part 46 of Title 27 of the Code of Federal Regulations (CFR). You should be aware of other requirements that may impact your sales of tobacco products. Please read Industry Circulars 99-2 and 2000-4 and part 46 of Title 27 CFR. If you intend to manufacture tobacco products, or cigarette papers or tubes in the United States, you must apply for and receive TTB approval before you engage in business. These requirements are stated in TTB regulations at 27 CFR part 40. If you need information about applying, you may contact the National Revenue Center, 550 Main St., Cincinnati, OH 45203-3263, by phone 1-800-398-2282, or by e-mail. Also, you must contact the State government agencies where you will be making or selling tobacco products to find out their requirements. If you intend to engage in the business of importing tobacco products, you must apply and receive TTB approval before you engage in business. This requirement is stated in 27 CFR part 41 . If you need assistance with applying for a Federal permit, you may contact the National Revenue Center, 550 Main St., Cincinnati, OH 45203-3263, by phone 1-800-398-2282 or by e-mail. Other TTB forms may be required and may be available from TTB's Forms page . You must meet other customs duties and requirements from U.S. Customs and Border Protection. Also, you must contact the State government agencies where you will be selling tobacco products to find out their requirements. However, in general, you cannot import previously exported cigarettes, other tobacco products, cigarette papers or tubes. Refer to Industry Circular 2000-4 for further information. Also, refer to Industry Circular 99-2 about cigarette sales. T7: What must I do if I want to import tobacco for personal use? The Alcohol and Tobacco Tax and Trade Bureau (TTB) does not regulate tobacco products or cigarette papers or tubes that are imported by a person for their personal use. If you are importing tobacco products or cigarette papers or tubes for personal use, you must to contact the U.S. Customs and Border Protection and your appropriate State government agency regulating such articles. T8: Does the TTB require anything to sell tobacco products on the Internet? TTB has no special rules for sales conducted on the Internet. You are still subject to the same requirements for selling tobacco products or cigarette papers and tubes. State or local law may restrict tobacco products or cigarette papers and tubes sold by e-mail or delivered by U.S. mail or other carrier. However, you must contact the appropriate State government agencies where you and your purchaser are located to find out if you need licenses or permits, need to pay taxes, or must comply with other requirements. T9: Does the TTB conduct studies or collect information about the effects of using tobacco? In general, TTB regulates tobacco products to collect Federal excise taxes. TTB does not provide information about the effects of using tobacco. We have provided a list of some Federal Web sites containing information about the effects of tobacco use.
T10: How does TTB inform the public of proposed and final changes to the regulations? Like all Federal agencies, TTB publishes official notices of its actions in the Federal Register, a publication of the Government Printing Office. The Federal Register is published daily, both on paper and online. Notices are also available for viewing through Regulations.gov a Federal government Web site whereby the public can search, view, and comment on any Federal regulatory actions. When you access the Federal Register online, you can search by subject or use the Browse Feature to view the Table of Contents of any recent issue. Using either of these means, you can view a document as either a text file or as a PDF file, using Adobe Acrobat. In addition, we place a copy of these documents in Regulations.gov shortly after the Federal Register makes the documents available through their Web site. When you access a notice of proposed rulemaking through Regulations.gov you will have an opportunity to submit a comment in response to the rulemaking. You may also mail your comment to us by using the contact information in the Federal Register notice. As part of publishing a document, the Federal Register places a copy of the manuscript "on file" in its offices the day before it is printed. The public may view the document at that time. Call the Federal Register for details at (202) 741-6000. T11: Can a business get back the tax money from alcohol or tobacco if the product is destroyed in a disaster such as a fire, earthquake, flood, or tornado? Under certain circumstances the tax money may be refunded for alcohol and tobacco products. See TTB Information sheet I 1200.68 (11-2004). T12: What are tobacco products? Federal law (section 5702(c) of Title 26 of the United States Code) defines tobacco products as cigars, cigarettes, smokeless tobacco, pipe tobacco and roll-your-own tobacco. Smokeless tobacco means any snuff or chewing tobacco. T13: Does the TTB regulate the advertising of tobacco products or cigarette papers and tubes? The only law that TTB enforces that relates to advertising of tobacco products and cigarette papers and tubes is a prohibition against lottery features and indecent, immoral picture, print or representation attached to such packages. Refer to section 5723(c) of Title 26 of the United States Code. For advertising in general for such products, the Federal Trade Commission may be helpful. The Federal Trade Commission enforces a variety of federal antitrust and consumer protection laws. T14: Does the TTB enforce the Surgeon General's warning on certain tobacco products? No. The Federal Trade Commission enforces this warning. T15: How does the TTB classify a tobacco product commonly referred to as "bidi", "beedi" and "biri"? TTB has conducted several examinations of samples of these products in the past. All of the examinations concluded the products contained tobacco and for Federal excise tax purposes were cigarettes. See Revenue Ruling 69-488. T16: If I grow tobacco, do I need a license or permit from the TTB? TTB does not license, or require a permit for, growing tobacco. In addition, TTB does not regulate the sale of tobaccos that are not tobacco products. The U.S. Department of Agriculture may regulate the growing and sale of such tobacco. You may find additional information from the U.S. Farm Service Agency. T17: Is the sale of a single cigarette, loose cigarettes or other tobacco products legal? Under Federal law and regulations, dealers must sell cigarettes or other tobacco products from packages in which the manufacturer or importer originally placed them. Manufacturers and importers must place certain notices and marks on packages as required by 27 CFR part 40. Dealers must not remove the cigarettes or other tobacco products from their original package until the customer removes them, or until the dealer removes them in the presence of the customer. For example, dealers are prohibited from selling loose cigarettes that have been removed from their packages and placed in a jar for sale. Dealers should also check with their State agency for additional restrictions. T18: Can I import cigars made in Cuba into the United States? Under most circumstances, you cannot import cigars made in Cuba into the United States. The Office of Foreign Assets Control of the United States Treasury Department enforces sanctions against certain foreign countries, including Cuba. T19: Does the TTB regulate the age of individuals who can purchase, use, possess, sell, or otherwise deal in, tobacco products? TTB does not administer or enforce any laws regulating the age of individuals who can purchase, use, possess, sell, or otherwise deal in, tobacco products. Each State government usually enforces any such laws or regulations. You may contact your State government to determine such laws and regulations and the agency that enforces them. T20: Can the TTB supply me with the names, addresses and other information about manufacturers, importers, wholesalers or retailers of tobacco products? TTB is restricted from supplying you with such information. You must comply with the provisions of the law (section 6103 of Title 26 of the United States Code). In general, TTB cannot give you this information unless: a. The manufacturer, importer, wholesaler or retailer of tobacco products, designates you to receive information that TTB may have; or b. You qualify as a representative of a Federal or State government. T21: Are cigarettes marked "not for sale" or "complimentary" subject to the new Floor Stocks Tax in 2002? If cigarettes are sold "complimentary/not for sale" as a promotion such as "buy two, get one free," all three packs of cigarettes are subject to floor stocks tax and must be included in the book or record inventory. If cigarettes are given away as "complimentary/not for sale" for a promotion and not sold, these cigarettes are not subject to tax and do not have to be included in the book or record inventory T22: May I purchase, for my personal consumption or use, tobacco products or cigarette papers or tubes on which Federal excise tax has not been paid? You may purchase, for your personal consumption or use, tobacco products or cigarette papers or tubes on which the Federal excise tax has not been paid if:
Otherwise, Federal law provides both criminal and civil penalties regarding sales of tobacco products or cigarette papers or tubes, for personal consumption or use, on which Federal excise tax has not been paid. T23: How can I obtain more information on Industry Circular 2004-3, Alcohol and Tobacco Export Documentation Procedures? T24: When do TTB’s recordkeeping and reporting requirements begin for manufacturers and importers of processed tobacco, and for manufacturers of tobacco products who remove processed tobacco other than for destruction, who are operating under the transitional rule? Manufacturer of processed tobacco requirements. A manufacturer of processed tobacco operating under the transitional rule set forth in 27 CFR 40.493 must comply with the recordkeeping requirements set forth in 27 CFR 40.521, and with the reporting requirements set forth in 27 CFR 40.522, beginning either on June 22, 2009, or on the date the manufacturer submits an application for a permit, whichever date is later. The reporting requirements under § 40.522 include a monthly report. The manufacturer of processed tobacco operating under the transitional rule must submit the first monthly report by the 20th day of the month following the month in which TTB provides written acknowledgement of the receipt of the application for a permit as a manufacturer of processed tobacco. With this first report, the manufacturer must also submit reports for all previous months back to April 2009. Manufacturer of tobacco products requirements. A manufacturer of tobacco products operating under an existing permit who removes processed tobacco from the tobacco products factory premises for purposes other than destruction and who is operating under the transitional rule set forth in 27 CFR 40.47(b) must comply with the recordkeeping requirements set forth in 27 CFR 40.521, and with the reporting requirements set forth in 27 CFR 40.522, beginning either on June 22, 2009, or on the date the manufacturer submits an application for authorization to conduct such other business within the factory, whichever date is later. The reporting requirements under § 40.522 include a monthly report. The manufacturer of tobacco products operating under the transitional rule must submit the first monthly report by the 20th day of the month following the month in which TTB provides written acknowledgement of the receipt of the application filed for authorization to remove processed tobacco for purposes other than destruction. With this first report, the manufacturer must also submit reports for all previous months back to April 2009. Importer of processed tobacco requirements. An importer of processed tobacco operating under the transitional rule set forth in 27 CFR 41.233 must comply with the recordkeeping requirements set forth in 27 CFR 41.261, and with the reporting requirements set forth in 27 CFR 41.262, beginning either on June 22, 2009, or on the date the importer submits an application for a permit or for an amended permit, whichever date is later. The reporting requirements under § 41.262 include a monthly report. The importer of processed tobacco operating under the transitional rule must submit the first monthly report by the 15th day of the month following the month in which TTB provides written acknowledgement of the receipt of the application for a permit or for an amended permit. T25: May manufacturers and importers of large cigars exclude the “Tobacco Buyout” assessments paid to the USDA Commodity Credit Corporation from the taxable price of large cigars? No. Section 5702(l) of the Internal Revenue Code of 1986 (IRC) provides that, in determining the price of cigars for Federal excise tax purposes, the following shall be excluded:
No other exclusions are provided in Section 5702(l). Under the Fair and Equitable Tobacco Reform Act of 2004 (P.L. 108-357), beginning in fiscal year 2005, the United States Department of Agriculture (USDA) Commodity Credit Corporation has imposed quarterly assessments on tobacco product manufacturers and importers. The assessments will continue through fiscal year 2014. The USDA assessment payments are not taxes imposed under the IRC, or State or local taxes. Manufacturers and importers may not exclude these payments in determining the price of cigars for Federal excise tax purposes. Any questions about the USDA assessment program should be directed to USDA. The USDA website discussing this topic is: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=toba&topic=landing. |
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