§ 5761. Civil penalties

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 717 · 68A Stat. 717

   Enacted · 26 U.S.C. § 5761

   Aug. 16, 1954, ch. 736, 68A Stat. 717

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 717

2. 1958

   Pub. L. 85–859 title II § 202 · 72 Stat. 1275

   Struck · 26 U.S.C. § 5761(a)

   Pub. L. 85–859 struck out reference to section 6652 of this title

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 85–859 struck out reference to section 6652 of this title.

   Enacted provision · exact public law section
   SEC. 202. AMENDMENT OF CHAPTER 52 OF THE INTERNAL REVENUE CODE OF 1954. Chapter 52 of the Internal Revenue Code of 1954 is amended to 26 USC 5701–5763. read as follows: “CHAPTER 52— TOBACCO, CIGARS, CIGARETTES, AND CIGARETTE PAPERS AND TUBES “Subchapter A. Definitions; rate and payment of tax; exemption from tax; and refund and drawback of tax. “Subchapter B. Qualification requirements for manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and dealers in tobacco materials. “Subchapter C. Operations by manufacturers and importers of tobacco products and cigarette papers and tubes and export warehouse proprietors. “Subchapter D. Operations by dealers in tobacco materials. “Subchapter E. Records of manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and dealers in tobacco materials. “Subchapter F. General provisions. “Subchapter G. Penalties and forfeitures. “Subchapter A— Definitions; Rate and Payment of Tax; Exemption From Tax; and Refund and Drawback of Tax “Sec. 5701. Rate of tax. “Sec. 5702. Definitions. “Sec. 5703. Liability for tax and method of payment. “Sec. 5704. Exemption from tax. “Sec. 5705. Refund or allowance of tax. “Sec. 5706. Drawback of tax. “Sec. 5707. Floor stocks refund on cigarettes. “Sec. 5708. Losses caused by disaster. “SEC. 5701. RATE OF TAX. “(a) Tobacco.— On tobacco, manufactured in or imported into the United States, there shall be imposed a tax of 10 cents per pound. “(b) Cigars.— On cigars, manufactured in or imported into the United States, there shall be imposed the following taxes: “(1) Small cigars.— On cigars, weighing not more than 3 pounds per thousand, 75 cents per thousand; “(2) Large cigars.— On cigars, weighing more than 3 pounds per thousand; “(A) If removed to retail at not more than 2 1/2 cents each, $2.50 per thousand; “(B) If removed to retail at more than 2 1/2 cents each and not more than 4 cents each, $3 per thousand; “(C) If removed to retail at more than 4 cents each and not more than 6 cents each, $4 per thousand; “(D) If removed to retail at more than 6 cents each and not more than 8 cents each, $7 per thousand; “(E) If removed to retail at more than 8 cents each and not more than 15 cents each, $10 per thousand; “(F) If removed to retail at more than 15 cents each and not more than 20 cents each, $15 per thousand; “(G) If removed to retail at more than 20 cents each, $20 per thousand. In determining the retail price, for tax purposes, regard shall be had to the ordinary retail price of a single cigar in its principal market, exclusive of any State or local taxes imposed on the retail sale of cigars. Cigars not exempt from tax under this chapter which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale. “(c) Cigarettes.— On cigarettes, manufactured in or imported into the United States, there shall be imposed the following taxes: “(1) Small cigarettes.— On cigarettes, weighing not more than 3 pounds per thousand, $4 per thousand until July 1, 1959, and $3.50 per thousand on and after July 1, 1959; “(2) Large cigarettes.— On cigarettes, weighing more than 3 pounds per thousand, $8.40 per thousand; except that, if more than inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2% inches, or fraction thereof, of the length of each as one cigarette. “(d) Cigarette Papers.— On each book or set of cigarette papers containing more than 25 papers, manufactured in or imported into the United States, there shall be imposed a tax of cent for each 50 papers or fractional part thereof; except that, if cigarette papers measure more than 6 1/2 inches in length, they shall be taxable at the rate prescribed, counting each 2 3/4 inches, or fraction thereof, of the length of each as one cigarette paper. “(e) Cigarette Tubes.— On cigarette tubes, manufactured in or imported into the United States, there shall be imposed a tax of 1 cent for each 50 tubes or fractional part thereof, except that if cigarette tubes measure more than 6 inches in length, they shall be taxable at the rate prescribed, counting each 2% inches, or fraction thereof, of the length of each as one cigarette tube. “(f) Imported Tobacco Products and Cigarette Papers and Tubes.— The taxes imposed by this section on tobacco products and cigarette papers and tubes imported into the United States shall be in addition to any import duties imposed on such articles. “SEC. 5702. DEFINITIONS. “When used in this chapter— “(a) Manufactured Tobacco.— ‘Manufactured tobacco’ means tobacco (other than cigars and cigarettes) prepared, processed, manipulated, or packaged, for removal, or merely removed, for consumption by smoking or for use in the mouth or nose, and any tobacco (other than cigars and cigarettes), not exempt from tax under this chapter, sold or delivered to any person contrary to this chapter or regulations prescribed thereunder. “(b) Cigar.— ‘Cigar’ means any roll of tobacco wrapped in tobacco. “(c) Cigarette.— ‘Cigarette’ means any roll of tobacco, wrapped in paper or any substance other than tobacco. “(d) Tobacco Products.— ‘Tobacco products’ means manufactured tobacco, cigars, and cigarettes. “(e) Manufacturer of Tobacco Products.— ‘Manufacturer of tobacco products’ means any person who manufactures cigars or cigarettes, or who prepares, processes, manipulates, or packages, for removal, or merely removes, tobacco (other than cigars and cigarettes) for consumption by smoking or for use in the mouth or nose, or who sells or delivers any tobacco (other than cigars and cigarettes) contrary to this chapter or regulations prescribed thereunder. The term ‘manufacturer of tobacco products’ shall not include— “(1) a person who in any manner prepares tobacco, or produces cigars or cigarettes, solely for his own personal consumption or use: or “(2) a proprietor of a customs bonded manufacturing warehouse with respect to the operation of such warehouse; or “(3) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, if it is in the condition as cured on the farm; or “(4) a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm, and if the association maintains records of all leaf tobacco, acquired or received and sold or otherwise disposed of, in such manner as the Secretary or his delegate shall by regulations prescribe. “(f) Cigarette Paper.— ‘Cigarette paper’ means paper, or any other material except tobacco, prepared for use as a cigarette wrapper. “(g) Cigarette Papers.— ‘Cigarette papers’ means taxable books or sets of cigarette papers. “(h) Cigarette Tube.— ‘Cigarette tube’ means cigarette paper made into a hollow cylinder for use in making cigarettes. “(i) Manufacturer of Cigarette Papers and Tubes.— ‘Manufacturer of cigarette papers and tubes’ means any person who makes up cigarette paper into books or sets containing more than 25 papers each, or into tubes, except for his own personal use or consumption. “(j) Export Warehouse.— ‘Export warehouse’ means a bonded internal revenue warehouse for the storage of tobacco products and cigarette papers and tubes, upon which the internal revenue tax has not been paid, for subsequent 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. “(k) Export Warehouse Proprietor.— ‘Export warehouse proprietor’ means any person who operates an export warehouse. “(l) Tobacco Materials.— ‘Tobacco materials’ means tobacco other than manufactured tobacco, cigars, and cigarettes. “(m) Dealer in Tobacco Materials.— ‘Dealer in tobacco materials’ means any person who receives and handles tobacco materials for sale, shipment, or delivery to another dealer in such materials, to a manufacturer of tobacco products, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or who receives tobacco materials, other than stems and waste, for use by him in the production of fertilizer, insecticide, or nicotine. The term ‘dealer in tobacco materials’ shall not include— “(1) an operator of a warehouse who stores tobacco materials solely for a qualified dealer in tobacco materials, for a qualified manufacturer of tobacco products, for a farmer or grower of tobacco, or for a bona fide association of farmers or growers of tobacco; or “(2) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, or a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm: Provided, That such association maintains records of all leaf tobacco acquired or received and sold or otherwise disposed of by the association, in such manner as the Secretary or his delegate shall by regulation prescribe; or “(3) a person who buys leaf tobacco on the floor of an auction warehouse, or who buys leaf tobacco from a farmer or grower, and places the tobacco on the floor of such a warehouse, or who purchases and sells warehouse receipts without taking physical possession of the tobacco covered thereby; or “(4) a qualified manufacturer of tobacco products with respect to tobacco materials received by him under his bond as such a manufacturer. “(n) Removal or Remove.— ‘Removal’ or ‘remove’ means the removal of tobacco products or cigarette papers or tubes from the factory or from internal revenue bond, as the Secretary or his delegate shall by regulation prescribe, or release from customs custody, and shall also include the smuggling or other unlawful importation of such articles into the United States. “(o) Importer.— ‘Importer’ means any person in the United States to whom nontaxpaid tobacco products or cigarette papers or tubes manufactured in a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States are shipped or consigned; any person who removes cigars or cigarettes for sale or consumption in the United States from a customs bonded manufacturing warehouse; and any person who smuggles or otherwise unlawfully brings tobacco products or cigarette papers or tubes into the United States. “SEC. 5703. LIABILITY FOR TAX AND METHOD OF PAYMENT. “(a) Liability for Tax.— “(1) Original mability.— The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by section 5701. “(2) Transfer of liability.— When tobacco products and cigarette papers and tubes are transferred, without payment of tax, pursuant to section 5704, the liability for tax shall be transferred in accordance with the provisions of this paragraph. When tobacco products and cigarette papers and tubes are transferred between the bonded premises of manufacturers and export warehouse proprietors, the transferee shall become liable for the tax upon receipt by him of such articles, and the transferor shall thereupon be relieved of his liability for such tax. When tobacco products and cigarette papers and tubes are released in bond from customs custody for transfer to the bonded premises of a manufacturer of tobacco products or cigarette papers and tubes, the transferee shall become liable for the tax on such articles upon release from customs custody, and the importer shall thereupon be relieved of his liability for such tax. “(b) Method of Payment of Tax.— The taxes imposed by section 5701 shall be determined at the time of removal of the tobacco products and cigarette papers and tubes. Such taxes shall be paid on the basis of a return, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment of the taxes on the basis of a return. The Secretary or his delegate shall, by regulations, prescribe the period or event for which such return shall be made, the information to be furnished on such return, the time for making such return, and the time for payment of such taxes. Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and upon compliance with such requirements, as the Secretary or his delegate may. by regulations, prescribe for the protection of the revenue. The Secretary or his delegate may, by regulations, require payment of tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. All administrative and penal provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5701. “(c) Stamps To Evidence the Tax.— If the Secretary or his delegate shall by regulation provide for the payment of tax by return and require the use of stamps to evidence the tax imposed by this chapter or to indicate compliance therewith, the Secretary or his delegate shall cause to be prepared suitable stamps to be issued to manufacturers and importers of tobacco products, to be used and accounted for. in accordance with such regulations as the Secretary or his delegate shall prescribe. “(d) Use of Government Depositaries.— The Secretary or his delegate may authorize Federal Reserve banks, and incorporated banks or trust companies which are depositaries or financial agents of the United States, to receive any tax imposed by this chapter, in such manner, at such times, and under such conditions as he may prescribe; and he shall prescribe the manner, time, and condition under which the receipt of such tax by such banks and trust companies is to be treated as payment for tax purposes. “(e) Assessment.— Whenever any tax required to be paid by this chapter is not paid in full at the time required for such payment, it shall be the duty of the Secretary or his delegate, subject to the limitations prescribed in section 6501. on proof satisfactory to him, to determine the amount of tax which has been omitted to be paid, and to make an assessment therefor against the person liable for the tax. 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 lie made until and after the person liable for the tax has been afforded reasonable notice and opportunity to show cause, in writing, against such assessment. “SEC. 5704. EXEMPTION FROM TAX. “(a) Tobacco Products Furnished for Employee Use or Experimental Purposes.— Tobacco products may be furnished by a manufacturer of such products, without payment of tax, for use or consumption by employees or for experimental purposes, in such quantities, and in such manner as the Secretary or his delegate shall by Regulation prescribe. “(b) Tobacco Products and Cigarette Papers and Tubes Transferred or Removed in Bond From Domestic Factories and Export Warehouses.— A manufacturer or export warehouse proprietor may transfer tobacco products and cigarette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, 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; and manufacturers may similarly remove such articles for use of the United States: in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. “(c) Tobacco Materials Shipped or Delivered in Bond.— A dealer in tobacco materials or a manufacturer of tobacco products may ship or deliver tobacco materials, without payment of tax, to another such dealer or manufacturer, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the Ignited States; or, in the case of tobacco stems and waste only, to any person for use by him as fertilizer or insecticide or in the production of fertilizer, insecticide, or nicotine; in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. “(d) Tobacco Products, Cigarette Papers and Tubes, and Tobacco Materials Released in Bond From Customs Custody.— Tobacco products, cigarette papers and tubes, and tobacco materials, imported or brought into the United States, may be released from customs custody, without payment of tax, for delivery to a manufacturer of tobacco products or cigarette papers and tubes and such tobacco materials may be similarly released for delivery to a dealer in tobacco materials, in accordance with such regulations and under such bond as the Secretary or his delegate shall prescribe. “SEC. 5705. REFUND OR ALLOWANCE OF TAX. “(a) Refund.— Refund of any tax imposed by this chapter shall be made (without interest) to the manufacturer, importer, or export warehouse proprietor, on proof satisfactory to the Secretary or his delegate that the claimant manufacturer, importer, or export warehouse proprietor has paid the tax on tobacco products and cigarette papers and tubes withdrawn by him from the market; or on such articles lost (otherwise than by theft) or destroyed, by fire, casualty, or act of God, while in the possession or ownership of the claimant. “(b) Allowance.— If the tax has not yet been paid on tobacco products and cigarette papers and tubes proved to have been withdrawn from the market or lost or destroyed as aforesaid, relief from the tax on such articles may be extended upon the filing of a claim for allowance therefor in accordance with such regulations as the Secretary or his delegate shall prescribe. “(c) Limitation.— Any claim for refund of tax under this section shall be filed within 6 months after the date of the withdrawal from the market, loss, or destruction of the articles to which the claim relates, and shall be in such form and contain such information as the Secretary or his delegate shall by regulations prescribe. “SEC. 5706. DRAWBACK OF TAX. “There shall be an allowance of drawback of tax paid on tobacco products and cigarette papers and tubes, when shipped from the United States, in accordance with such regulations and upon the filing of such bond as the Secretary or his delegate shall prescribe. “SEC. 5707. FLOOR STOCKS REFUND ON CIGARETTES. “(a) In General.— With respect to cigarettes, weighing not more than 3 pounds per thousand, upon which the tax imposed by subsection (c) (1) of section 5701 has been paid, and which, on July 1, 1959, are held by any person and intended for sale, or are in transit from foreign countries or insular possessions of the United States to any person in the United States for sale, there shall be credited or refunded to such person (without interest), subject to such regulations as shall be prescribed by the Secretary or his delegate, an amount equal to the difference between the tax paid on such cigarettes and the tax made applicable to such articles on July 1, 1959, if claim for such credit or refund is filed with the Secretary or his delegate before October 1, 1959. “(b) Limitations on Eligibility for Credit or Refund.— No person shall be entitled to credit or refund under subsection (a) unless such person, for such period or periods both before and after July 1, 1959 (but not extending beyond 1 year thereafter), as the Secretary or his delegate shall by regulation prescribe, makes and keeps, and files with the Secretary or his delegate, such records of inventories, sales, and purchases as may be prescribed in such regulations. “(c) Penalty and Administrative Procedures.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on cigarettes shall, insofar as applicable and not inconsistent with this section, be applicable in respect of the credits and refunds provided for in this section to the same extent as if such credits or refunds constituted credits or refunds of such taxes. “SEC. 5708. LOSSES CAUSED BY DISASTER. “(a) Authorization.— Where the President has determined under 64 Stat. 1109. the Act of September 30, 1950 (42 U. S. C., sec. 1855), that a ‘major disaster’ as defined in such Act has occurred in any part of the United States, the Secretary or his delegate shall pay (without interest) an amount equal to the amount of the internal revenue taxes paid or determined and customs duties paid on tobacco products and cigarette papers and tubes removed, which were lost, rendered unmarketable, or condemned by a duly authorized official by reason of such disaster occurring in such part of the United States on and after the effective date of this section, if such tobacco products or cigarette papers or tubes were held and intended for sale at the time of such disaster. The payments authorized by this section shall be made to the person holding such tobacco products or cigarette papers or tubes for sale at the time of such disaster. “(b) Claims.— No claim shall be allowed under this section unless— “(1) filed within 6 months after the date on which the President makes the determination that the disaster referred to in subsection (a) has occurred; and “(2) the claimant furnishes proof to the satisfaction of the Secretary or his delegate that— “(A) he was not indemnified by any valid claim of insurance or otherwise in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes covered by the claim, and “(B) he is entitled to payment under this section. Claims under this section shall be filed under such regulations as the Secretary or his delegate shall prescribe. “(c) Destruction of Tobacco Products or Cigarette Papers or Tubes.— Before the Secretary or his delegate makes payment under this section in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes condemned by a duly authorized official or rendered unmarketable, such tobacco products or cigarette papers or tubes shall be destroyed under such supervision as the Secretary or his delegate may prescribe, unless such tobacco products or cigarette papers or tubes were previously destroyed under supervision satisfactory to the Secretary or his delegate. “(d) Other Laws Applicable.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on tobacco products and cigarette papers and tubes shall, insofar as applicable and not inconsistent with this section, be applied in respect of the payments provided for in this section to the same extent as if such payments constituted refunds of such taxes. “Subchapter B— Qualification Requirements for Manufacturers of Tobacco Products and Cigarette Papers and Tubes, Export Warehouse Proprietors, and Dealers in Tobacco Materials “Sec. 5711. Bond. “Sec. 5712. Application for permit. “Sec. 5713. Permit. “SEC. 5711. BOND. “(a) When Required.— Every person, before commencing business as a manufacturer of tobacco products or cigarette papers and tubes, as an export warehouse proprietor, or as a dealer in tobacco materials, shall file such bond, conditioned upon compliance with this chapter and regulations issued thereunder, in such form, amount, and manner as the Secretary or his delegate shall by regulation prescribe. A new or additional bond may be required whenever the Secretary or his delegate considers such action necessary for the protection of the revenue. “(b) Approval or Disapproval.— No person shall engage in such business until he receives notice of approval of such bond. A bond may be disapproved, upon notice to the principal on the bond, if the Secretary or his delegate determines that the bond is not adequate to protect the revenue. “(c) Cancellation.— Any bond filed hereunder may be canceled, upon notice to the principal on the bond, whenever the Secretary or his delegate determines that the bond no longer adequately protects the revenue. “SEC. 5712. APPLICATION FOR PERMIT. “Every person, before commencing business as a manufacturer of tobacco products or as an export warehouse proprietor, and at such other time as the Secretary or his delegate shall by regulation prescribe, shall make application for the permit provided for in section 5713. The application shall be in such form as the Secretary or his delegate shall prescribe and shall set forth, truthfully and accurately, the information called for on the form. Such application may be rejected and the permit denied if the Secretary or his delegate, after notice and opportunity for hearing, finds that— “(1) the premises on which it is proposed to conduct the business are not adequate to protect the revenue; or “(2) such person (including, in the case of a corporation, any officer, director, or principal stockholder and, in the case of a partnership, a partner) is, by reason of his business experience, financial standing, or trade connections, not likely to maintain operations in compliance with this chapter, or has failed to disclose any material information required or made any material false statement in the application therefor. No person subject to this section, who is lawfully engaged in business on the date of the enactment of the Excise Tax Technical Changes Act of 1958, shall be denied the right to carry on such business pending reasonable opportunity to make application for permit and final action thereon. “SEC. 5713. PERMIT. “(a) Issuance.— A person shall not engage in business as a manufacturer of tobacco products or as an export warehouse proprietor without a permit to engage in such business. Such permit, conditioned upon compliance with this chapter and regulations issued thereunder, shall be issued in such form and in such manner as the Secretary or his delegate shall by regulation prescribe, to every person properly qualified under sections 5711 and 5712. A new permit may be required at such other time as the Secretary or his delegate shall by regulation prescribe. “(b) Revocation.— If the Secretary or his delegate has reason to believe that any person holding a permit has not in good faith complied with this chapter, or with any other provision of this title involving intent to defraud, or has violated the conditions of such permit, or has failed to disclose any material information required or made any material false statement in the application for such permit, or has failed to maintain his premises in such manner as to protect the revenue, the Secretary or his delegate shall issue an order, stating the facts charged, citing such person to show cause why his permit should not be suspended or revoked. If, after hearing, the Secretary or his delegate finds that such person has not in good faith complied with this chapter or with any other provision of this title involving intent to defraud, has violated the conditions of such permit, has failed to disclose any material information required or made any material false statement in the application therefor, or has failed to maintain his premises in such manner as to protect the revenue, such permit shall be suspended for such period as the Secretary or his delegate deems proper or shall be revoked. “Subchapter C— Operations by Manufacturers and Importers of Tobacco Products and Cigarette Papers and Tubes and Export Warehouse Proprietors “Sec. 5721. Inventories. “Sec. 5722. Reports. “Sec. 5723. Packages, marks, labels, notices, and stamps. “SEC. 5721. INVENTORIES. “Every manufacturer of tobacco products or cigarette papers and tubes, and every export warehouse proprietor, shall make a true and accurate inventory at the time of commencing business, at the time of concluding business, and at such other times, in such manner and form, and to include such items, as the Secretary or his delegate shall by regulation prescribe. Such inventories shall be subject to verification by any internal revenue officer. “SEC. 5722. REPORTS. “Every manufacturer of tobacco products or cigarette papers and tubes, and every export warehouse proprietor, shall make reports containing such information, in such form, at such times, and for such periods as the Secretary or his delegate shall by regulation prescribe. “SEC. 5723. PACKAGES, MARKS. LABELS, NOTICES, AND STAMPS. “(a) Packages.— All tobacco products and cigarette papers and tubes shall, before removal, be put up in such packages as the Secretary or his delegate shall by regulation prescribe. “(b) Marks, Labels, Notices, and Stamps.— Every package of tobacco products or cigarette papers or tubes shall, before removal, bear the marks, labels, notices, and stamps, if any, that the Secretary or his delegate by regulation prescribes. “(c) Lottery Features.— No 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 shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products or cigarette papers or tubes. “(d) Indecent or Immoral Material Prohibited.— No indecent or immoral picture, print, or representation shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products or cigarette papers or tubes. “(e) Exceptions.— Tobacco products furnished by manufacturers of such products for use or consumption by their employees, or for experimental purposes, and tobacco products and cigarette papers and tubes transferred to the bonded premises of another manufacturer or export warehouse proprietor or released in bond from customs custody for delivery to a manufacturer of tobacco products or cigarette papers and tubes, may be exempted from subsections (a) and (b) in accordance with such regulations as the Secretary or his delegate shall prescribe. “Subchapter D— Operations by Dealers in Tobacco Materials “Sec. 5731. Shipments and deliveries restricted. “Sec. 5732. Inventory, and statement of shipments and deliveries. “SEC. 5731. SHIPMENTS AND DELIVERIES RESTRICTED. “Every dealer in tobacco materials shall make all shipments or deliveries of tobacco materials in accordance with such regulations as the Secretary or his delegate shall prescribe. Tobacco materials shipped or delivered in violation of such regulations shall be subject to tax as manufactured tobacco and the dealer shipping or delivering the same shall be subject as a manufacturer of tobacco to the provisions of this chapter. “SEC. 5732. INVENTORY, AND STATEMENT OF SHIPMENTS AND DELIVERIES. “A dealer in tobacco materials shall make, upon demand of any internal revenue officer, a true and accurate inventory of all such materials held by the dealer, and shall, upon similar demand, furnish a true and complete statement of the quantity of such materials shipped or delivered to any person named in such demand. “Subchapter E— Records of Manufacturers of Tobacco Products and Cigarette Papers and Tubes, Export Warehouse Proprietors, and Dealers in Tobacco Materials “Sec. 5741. Records to be maintained. “SEC. 5741. RECORDS TO BE MAINTAINED. “Every manufacturer of tobacco products or cigarette papers and tubes, every export warehouse proprietor, and every dealer in tobacco materials shall keep such records in such manner as the Secretary or his delegate shall by regulation prescribe. “Subchapter F— General Provisions “Sec. 5751. Purchase, receipt, possession, or sale of tobacco products and cigarette papers and tubes, after removal. “Sec. 5752. Restrictions relating to marks, labels, notices, stamps, and packages. “Sec. 5753. Disposal of forfeited, condemned, and abandoned tobacco products, cigarette papers and tubes, and tobacco materials. “SEC. 5751. PURCHASE, RECEIPT, POSSESSION, OR SALE OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES, AFTER REMOVAL “(a) Restriction.— No person shall— “(1) with intent, to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes— “(A) upon which the tax has not been paid or determined in the manner and at the time prescribed by this chapter or regulations thereunder; or “(B) which, after removal without payment of tax pursuant to section 5704, have been diverted from the applicable purpose or use specified in that section; or “(2) with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, notices, and stamps, as required under such section; or “(3) otherwise than with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, notices, and stamps, as required under such section. This paragraph shall not prevent the sale or delivery of tobacco products or cigarette papers or tubes directly to consumers from proper packages, nor apply to such articles when so sold or delivered. “(b) Liability to Tax.— Any person who possesses tobacco products or cigarette papers or tubes in violation of subsection (a) (1) or (a) (2) shall be liable for a tax equal to the tax on such articles. “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, STAMPS, AND PACKAGES. “No person shall, with intent to defraud the United States— “(a) destroy, obliterate, or detach any mark, label, notice, or stamp prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied; or “(b) empty any package of tobacco products or cigarette papers or tubes without destroying any stamp thereon to evidence the tax or indicate compliance with this chapter, prescribed by this chapter or regulations thereunder to be affixed to such package; or “(c) detach, or cause to be detached, from any package of tobacco products or cigarette papers or tubes any stamp, prescribed by this chapter or regulations thereunder, to evidence the tax or indicate compliance with this chapter, or purchase, receive, possess, sell, or dispose of, by gift or otherwise, any such stamp which has been so detached; or “(d) purchase, receive, possess, sell, or dispose of, by gift or otherwise, any package which previously contained tobacco products or cigarette papers or tubes which has been emptied, and upon which any stamp prescribed by this chapter or regulations thereunder, to evidence the tax or indicate compliance with this chapter, has not been destroyed. “SEC. 5753. DISPOSAL OF FORFEITED, CONDEMNED, AND ABANDONED TOBACCO PRODUCTS, CIGARETTE PAPERS AND TUBES AND TOBACCO MATERIALS. “If it appears that any forfeited, condemned, or abandoned tobacco products, cigarette papers and tubes, or tobacco materials, when offered for sale, will not bring a price equal to the tax due and payable thereon, and the expenses incident to the sale thereof, such articles and tobacco materials shall not be sold for consumption in the United States but shall be disposed of in accordance with such regulations as the Secretary or his delegate shall prescribe. “Subchapter G— Penalties and Forfeitures “Sec. 5761. Civil penalties. “Sec. 5762. Criminal penalties. “Sec. 5763. Forfeitures. “SEC. 5761. CIVIL PENALTIES. “(a) Omitting Things Required or Doing Things Forbidden.— Whoever willfully omits, neglects, or refuses to comply with any duty imposed upon him by this chapter, or to do, or cause to be done, any of the things required by this chapter, or does anything prohibited by this chapter, shall, in addition to any other penalty provided in this title, be liable to a penalty of $1,000, to be recovered, with costs of suit, in a civil action, except where a penalty under subsection (b) or under section 6651 or 6653 may be collected from such person by assessment. 26 USC 6651, 6653. “(b) Failure To Pay Tax.— Whoever fails to pay any tax imposed by this chapter at the time prescribed by law or regulations, shall, in addition to any other penalty provided in this title, be liable to a penalty of 5 percent of the tax due but unpaid. “(c) Failure To Make Deposit of Taxes.— Section 6656 relating 26 USC 6656. to failure to make deposit of taxes shall apply to the failure to make any deposit of taxes imposed under subchapter A on the date prescribed 26 USC 5001–5149. therefor, except that the penalty for such failure shall be 5 percent of the amount of the underpayment in lieu of the penalty provided by such section. “(d) Applicability of Section 6659.— The penalties imposed by 26 USC 6659. subsections (b) and (c) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6659 (a). “SEC. 5762. CRIMINAL PENALTIES. “(a) Fraudulent Offenses.— Whoever, with intent to defraud the United States— “(1) Engaging in business unlawfully.— Engages in business as a manufacturer of tobacco products or cigarette papers and tubes, as an export warehouse proprietor, or as a dealer in tobacco materials without filing the bond and obtaining the permit where required by this chapter or regulations thereunder; or “(2) Failing to furnish information or furnishing false information.— Fails to keep or make any record, return, report, inventory, or statement, or keeps or makes any false or fraudulent record, return, report, inventory, or statement, required by this chapter or regulations thereunder; or “(3) Refusing to pay or evading tax.— Refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof; or “(4) Removing tobacco products or cigarette papers or tubes unlawfully.— Removes, contrary to this chapter or regulations thereunder, any tobacco products or cigarette papers or tubes subject to tax under this chapter; or “(5) Purchasing, receiving, possessing, or selling tobacco products or cigarette papers or tubes unlawfully.— Violates any provision of section 5751 (a) (1) or (a) (2); or “(6) Affixing improper stamps.— Affixes to any package containing tobacco products or cigarette papers or tubes any improper or counterfeit stamp, or a stamp prescribed by this chapter or regulations thereunder which has been previously used on a package of such articles; or “(7) Destroying, obliterating, or detaching marks, labels, notices, or stamps before packages are emptied.— Violates any provision of section 5752 (a); or “(8) Emptying packages without destroying stamps.— Violates any provision of section 5752 (b); or “(9) Possessing emptied packages bearing stamps.— Violates any provision of section 5752 (d); or “(10) Refilling packages bearing stamps.— Puts tobacco products or cigarette papers or tubes into any package which previously contained such articles and which bears a stamp prescribed by this chapter or regulations thereunder without destroying such stamp; or “(11) Detaching stamps or possessing used stamps.— Violates any provision of section 5752 (c); shall, for each such offense, be fined not more than $10,000, or imprisoned not more than 5 years, or both. “(b) Other Offenses.— Whoever, otherwise than as provided in subsection (a), violates any provision of this chapter, or of regulations prescribed thereunder, shall, for each such offense, be fined not more than $1,000, or imprisoned not more than 1 year, or both. “SEC. 5763. FORFEITURES. “(a) Tobacco Products and Cigarette Papers and Tubes Unlawfully Possessed.— (1) Tobacco products and cigarette papers and tubes possessed with intent to defraud.— All tobacco products and cigarette papers and tubes which, after removal, are possessed with intent to defraud the United States shall be forfeited to the United States. (2) Tobacco products and cigarette papers and tubes not properly packaged.— All tobacco products and cigarette papers and tubes not in packages as required under section 5723 or which are in packages not bearing the marks, labels, notices, and stamps, as required under such section, which, after removal, are possessed otherwise than with intent to defraud the United States, shall lie forfeited to the United States. This paragraph shall not apply to tobacco products or cigarette papers or tubes sold or delivered directly to consumers from proper packages. “(b) Personal Property of Qualified Manufacturers, Export Warehouse Proprietors, and Dealers Acting With Intent To Defraud.— All tobacco products and cigarette papers and tubes, tobacco materials, packages, internal revenue stamps, machinery, fixtures, equipment, and all other materials and personal property on the premises of any qualified manufacturer of tobacco products or cigarette papers and tubes, export warehouse proprietor, or dealer in tobacco materials who, with intent to defraud the United States, fails to keep or make any record, return, report, inventory, or statement, or keeps or makes any false or fraudulent record, return, report, inventory, or statement, required by this chapter: or refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof: or removes, contrary to any provision of this chapter, any article subject to tax under this chapter, shall be forfeited to the United States. “(c) Real and Personal Property of Illicit Operators.— All tobacco products, cigarette papers and tubes, tobacco materials, machinery, fixtures, equipment, and other materials and personal property on the premises of any person engaged in business as a manufacturer of tobacco products or cigarette papers and tubes, export warehouse proprietor, or dealer in tobacco materials, without filing the bond or obtaining the permit, as required by this chapter, together with all his right, title, and interest in the building in which such business is conducted, and the lot or tract of ground on which the building is located, shall be forfeited to the United States. “(d) General.— All property intended for use in violating the provisions of this chapter, or regulations thereunder, or which has been so used, shall be forfeited to the United States as provided in section 7302.” 26 USC 7302.

3. 1958

   Pub. L. 85–859 title II § 202 · 72 Stat. 1275

   Substituted · 26 U.S.C. § 5761(b)

   Pub. L. 85–859 substituted provisions relating to failure to pay tax for provisions which made persons willfully failing to pay a tax liable, in addition to any other penalty provided in this title, to a penalty of the amount of the tax evaded, or not paid

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 85–859 substituted provisions relating to failure to pay tax for provisions which made persons willfully failing to pay a tax liable, in addition to any other penalty provided in this title, to a penalty of the amount of the tax evaded, or not paid.

   Enacted provision · exact public law section
   SEC. 202. AMENDMENT OF CHAPTER 52 OF THE INTERNAL REVENUE CODE OF 1954. Chapter 52 of the Internal Revenue Code of 1954 is amended to 26 USC 5701–5763. read as follows: “CHAPTER 52— TOBACCO, CIGARS, CIGARETTES, AND CIGARETTE PAPERS AND TUBES “Subchapter A. Definitions; rate and payment of tax; exemption from tax; and refund and drawback of tax. “Subchapter B. Qualification requirements for manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and dealers in tobacco materials. “Subchapter C. Operations by manufacturers and importers of tobacco products and cigarette papers and tubes and export warehouse proprietors. “Subchapter D. Operations by dealers in tobacco materials. “Subchapter E. Records of manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and dealers in tobacco materials. “Subchapter F. General provisions. “Subchapter G. Penalties and forfeitures. “Subchapter A— Definitions; Rate and Payment of Tax; Exemption From Tax; and Refund and Drawback of Tax “Sec. 5701. Rate of tax. “Sec. 5702. Definitions. “Sec. 5703. Liability for tax and method of payment. “Sec. 5704. Exemption from tax. “Sec. 5705. Refund or allowance of tax. “Sec. 5706. Drawback of tax. “Sec. 5707. Floor stocks refund on cigarettes. “Sec. 5708. Losses caused by disaster. “SEC. 5701. RATE OF TAX. “(a) Tobacco.— On tobacco, manufactured in or imported into the United States, there shall be imposed a tax of 10 cents per pound. “(b) Cigars.— On cigars, manufactured in or imported into the United States, there shall be imposed the following taxes: “(1) Small cigars.— On cigars, weighing not more than 3 pounds per thousand, 75 cents per thousand; “(2) Large cigars.— On cigars, weighing more than 3 pounds per thousand; “(A) If removed to retail at not more than 2 1/2 cents each, $2.50 per thousand; “(B) If removed to retail at more than 2 1/2 cents each and not more than 4 cents each, $3 per thousand; “(C) If removed to retail at more than 4 cents each and not more than 6 cents each, $4 per thousand; “(D) If removed to retail at more than 6 cents each and not more than 8 cents each, $7 per thousand; “(E) If removed to retail at more than 8 cents each and not more than 15 cents each, $10 per thousand; “(F) If removed to retail at more than 15 cents each and not more than 20 cents each, $15 per thousand; “(G) If removed to retail at more than 20 cents each, $20 per thousand. In determining the retail price, for tax purposes, regard shall be had to the ordinary retail price of a single cigar in its principal market, exclusive of any State or local taxes imposed on the retail sale of cigars. Cigars not exempt from tax under this chapter which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale. “(c) Cigarettes.— On cigarettes, manufactured in or imported into the United States, there shall be imposed the following taxes: “(1) Small cigarettes.— On cigarettes, weighing not more than 3 pounds per thousand, $4 per thousand until July 1, 1959, and $3.50 per thousand on and after July 1, 1959; “(2) Large cigarettes.— On cigarettes, weighing more than 3 pounds per thousand, $8.40 per thousand; except that, if more than inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2% inches, or fraction thereof, of the length of each as one cigarette. “(d) Cigarette Papers.— On each book or set of cigarette papers containing more than 25 papers, manufactured in or imported into the United States, there shall be imposed a tax of cent for each 50 papers or fractional part thereof; except that, if cigarette papers measure more than 6 1/2 inches in length, they shall be taxable at the rate prescribed, counting each 2 3/4 inches, or fraction thereof, of the length of each as one cigarette paper. “(e) Cigarette Tubes.— On cigarette tubes, manufactured in or imported into the United States, there shall be imposed a tax of 1 cent for each 50 tubes or fractional part thereof, except that if cigarette tubes measure more than 6 inches in length, they shall be taxable at the rate prescribed, counting each 2% inches, or fraction thereof, of the length of each as one cigarette tube. “(f) Imported Tobacco Products and Cigarette Papers and Tubes.— The taxes imposed by this section on tobacco products and cigarette papers and tubes imported into the United States shall be in addition to any import duties imposed on such articles. “SEC. 5702. DEFINITIONS. “When used in this chapter— “(a) Manufactured Tobacco.— ‘Manufactured tobacco’ means tobacco (other than cigars and cigarettes) prepared, processed, manipulated, or packaged, for removal, or merely removed, for consumption by smoking or for use in the mouth or nose, and any tobacco (other than cigars and cigarettes), not exempt from tax under this chapter, sold or delivered to any person contrary to this chapter or regulations prescribed thereunder. “(b) Cigar.— ‘Cigar’ means any roll of tobacco wrapped in tobacco. “(c) Cigarette.— ‘Cigarette’ means any roll of tobacco, wrapped in paper or any substance other than tobacco. “(d) Tobacco Products.— ‘Tobacco products’ means manufactured tobacco, cigars, and cigarettes. “(e) Manufacturer of Tobacco Products.— ‘Manufacturer of tobacco products’ means any person who manufactures cigars or cigarettes, or who prepares, processes, manipulates, or packages, for removal, or merely removes, tobacco (other than cigars and cigarettes) for consumption by smoking or for use in the mouth or nose, or who sells or delivers any tobacco (other than cigars and cigarettes) contrary to this chapter or regulations prescribed thereunder. The term ‘manufacturer of tobacco products’ shall not include— “(1) a person who in any manner prepares tobacco, or produces cigars or cigarettes, solely for his own personal consumption or use: or “(2) a proprietor of a customs bonded manufacturing warehouse with respect to the operation of such warehouse; or “(3) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, if it is in the condition as cured on the farm; or “(4) a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm, and if the association maintains records of all leaf tobacco, acquired or received and sold or otherwise disposed of, in such manner as the Secretary or his delegate shall by regulations prescribe. “(f) Cigarette Paper.— ‘Cigarette paper’ means paper, or any other material except tobacco, prepared for use as a cigarette wrapper. “(g) Cigarette Papers.— ‘Cigarette papers’ means taxable books or sets of cigarette papers. “(h) Cigarette Tube.— ‘Cigarette tube’ means cigarette paper made into a hollow cylinder for use in making cigarettes. “(i) Manufacturer of Cigarette Papers and Tubes.— ‘Manufacturer of cigarette papers and tubes’ means any person who makes up cigarette paper into books or sets containing more than 25 papers each, or into tubes, except for his own personal use or consumption. “(j) Export Warehouse.— ‘Export warehouse’ means a bonded internal revenue warehouse for the storage of tobacco products and cigarette papers and tubes, upon which the internal revenue tax has not been paid, for subsequent 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. “(k) Export Warehouse Proprietor.— ‘Export warehouse proprietor’ means any person who operates an export warehouse. “(l) Tobacco Materials.— ‘Tobacco materials’ means tobacco other than manufactured tobacco, cigars, and cigarettes. “(m) Dealer in Tobacco Materials.— ‘Dealer in tobacco materials’ means any person who receives and handles tobacco materials for sale, shipment, or delivery to another dealer in such materials, to a manufacturer of tobacco products, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or who receives tobacco materials, other than stems and waste, for use by him in the production of fertilizer, insecticide, or nicotine. The term ‘dealer in tobacco materials’ shall not include— “(1) an operator of a warehouse who stores tobacco materials solely for a qualified dealer in tobacco materials, for a qualified manufacturer of tobacco products, for a farmer or grower of tobacco, or for a bona fide association of farmers or growers of tobacco; or “(2) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, or a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm: Provided, That such association maintains records of all leaf tobacco acquired or received and sold or otherwise disposed of by the association, in such manner as the Secretary or his delegate shall by regulation prescribe; or “(3) a person who buys leaf tobacco on the floor of an auction warehouse, or who buys leaf tobacco from a farmer or grower, and places the tobacco on the floor of such a warehouse, or who purchases and sells warehouse receipts without taking physical possession of the tobacco covered thereby; or “(4) a qualified manufacturer of tobacco products with respect to tobacco materials received by him under his bond as such a manufacturer. “(n) Removal or Remove.— ‘Removal’ or ‘remove’ means the removal of tobacco products or cigarette papers or tubes from the factory or from internal revenue bond, as the Secretary or his delegate shall by regulation prescribe, or release from customs custody, and shall also include the smuggling or other unlawful importation of such articles into the United States. “(o) Importer.— ‘Importer’ means any person in the United States to whom nontaxpaid tobacco products or cigarette papers or tubes manufactured in a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States are shipped or consigned; any person who removes cigars or cigarettes for sale or consumption in the United States from a customs bonded manufacturing warehouse; and any person who smuggles or otherwise unlawfully brings tobacco products or cigarette papers or tubes into the United States. “SEC. 5703. LIABILITY FOR TAX AND METHOD OF PAYMENT. “(a) Liability for Tax.— “(1) Original mability.— The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by section 5701. “(2) Transfer of liability.— When tobacco products and cigarette papers and tubes are transferred, without payment of tax, pursuant to section 5704, the liability for tax shall be transferred in accordance with the provisions of this paragraph. When tobacco products and cigarette papers and tubes are transferred between the bonded premises of manufacturers and export warehouse proprietors, the transferee shall become liable for the tax upon receipt by him of such articles, and the transferor shall thereupon be relieved of his liability for such tax. When tobacco products and cigarette papers and tubes are released in bond from customs custody for transfer to the bonded premises of a manufacturer of tobacco products or cigarette papers and tubes, the transferee shall become liable for the tax on such articles upon release from customs custody, and the importer shall thereupon be relieved of his liability for such tax. “(b) Method of Payment of Tax.— The taxes imposed by section 5701 shall be determined at the time of removal of the tobacco products and cigarette papers and tubes. Such taxes shall be paid on the basis of a return, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment of the taxes on the basis of a return. The Secretary or his delegate shall, by regulations, prescribe the period or event for which such return shall be made, the information to be furnished on such return, the time for making such return, and the time for payment of such taxes. Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and upon compliance with such requirements, as the Secretary or his delegate may. by regulations, prescribe for the protection of the revenue. The Secretary or his delegate may, by regulations, require payment of tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. All administrative and penal provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5701. “(c) Stamps To Evidence the Tax.— If the Secretary or his delegate shall by regulation provide for the payment of tax by return and require the use of stamps to evidence the tax imposed by this chapter or to indicate compliance therewith, the Secretary or his delegate shall cause to be prepared suitable stamps to be issued to manufacturers and importers of tobacco products, to be used and accounted for. in accordance with such regulations as the Secretary or his delegate shall prescribe. “(d) Use of Government Depositaries.— The Secretary or his delegate may authorize Federal Reserve banks, and incorporated banks or trust companies which are depositaries or financial agents of the United States, to receive any tax imposed by this chapter, in such manner, at such times, and under such conditions as he may prescribe; and he shall prescribe the manner, time, and condition under which the receipt of such tax by such banks and trust companies is to be treated as payment for tax purposes. “(e) Assessment.— Whenever any tax required to be paid by this chapter is not paid in full at the time required for such payment, it shall be the duty of the Secretary or his delegate, subject to the limitations prescribed in section 6501. on proof satisfactory to him, to determine the amount of tax which has been omitted to be paid, and to make an assessment therefor against the person liable for the tax. 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 lie made until and after the person liable for the tax has been afforded reasonable notice and opportunity to show cause, in writing, against such assessment. “SEC. 5704. EXEMPTION FROM TAX. “(a) Tobacco Products Furnished for Employee Use or Experimental Purposes.— Tobacco products may be furnished by a manufacturer of such products, without payment of tax, for use or consumption by employees or for experimental purposes, in such quantities, and in such manner as the Secretary or his delegate shall by Regulation prescribe. “(b) Tobacco Products and Cigarette Papers and Tubes Transferred or Removed in Bond From Domestic Factories and Export Warehouses.— A manufacturer or export warehouse proprietor may transfer tobacco products and cigarette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, 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; and manufacturers may similarly remove such articles for use of the United States: in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. “(c) Tobacco Materials Shipped or Delivered in Bond.— A dealer in tobacco materials or a manufacturer of tobacco products may ship or deliver tobacco materials, without payment of tax, to another such dealer or manufacturer, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the Ignited States; or, in the case of tobacco stems and waste only, to any person for use by him as fertilizer or insecticide or in the production of fertilizer, insecticide, or nicotine; in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. “(d) Tobacco Products, Cigarette Papers and Tubes, and Tobacco Materials Released in Bond From Customs Custody.— Tobacco products, cigarette papers and tubes, and tobacco materials, imported or brought into the United States, may be released from customs custody, without payment of tax, for delivery to a manufacturer of tobacco products or cigarette papers and tubes and such tobacco materials may be similarly released for delivery to a dealer in tobacco materials, in accordance with such regulations and under such bond as the Secretary or his delegate shall prescribe. “SEC. 5705. REFUND OR ALLOWANCE OF TAX. “(a) Refund.— Refund of any tax imposed by this chapter shall be made (without interest) to the manufacturer, importer, or export warehouse proprietor, on proof satisfactory to the Secretary or his delegate that the claimant manufacturer, importer, or export warehouse proprietor has paid the tax on tobacco products and cigarette papers and tubes withdrawn by him from the market; or on such articles lost (otherwise than by theft) or destroyed, by fire, casualty, or act of God, while in the possession or ownership of the claimant. “(b) Allowance.— If the tax has not yet been paid on tobacco products and cigarette papers and tubes proved to have been withdrawn from the market or lost or destroyed as aforesaid, relief from the tax on such articles may be extended upon the filing of a claim for allowance therefor in accordance with such regulations as the Secretary or his delegate shall prescribe. “(c) Limitation.— Any claim for refund of tax under this section shall be filed within 6 months after the date of the withdrawal from the market, loss, or destruction of the articles to which the claim relates, and shall be in such form and contain such information as the Secretary or his delegate shall by regulations prescribe. “SEC. 5706. DRAWBACK OF TAX. “There shall be an allowance of drawback of tax paid on tobacco products and cigarette papers and tubes, when shipped from the United States, in accordance with such regulations and upon the filing of such bond as the Secretary or his delegate shall prescribe. “SEC. 5707. FLOOR STOCKS REFUND ON CIGARETTES. “(a) In General.— With respect to cigarettes, weighing not more than 3 pounds per thousand, upon which the tax imposed by subsection (c) (1) of section 5701 has been paid, and which, on July 1, 1959, are held by any person and intended for sale, or are in transit from foreign countries or insular possessions of the United States to any person in the United States for sale, there shall be credited or refunded to such person (without interest), subject to such regulations as shall be prescribed by the Secretary or his delegate, an amount equal to the difference between the tax paid on such cigarettes and the tax made applicable to such articles on July 1, 1959, if claim for such credit or refund is filed with the Secretary or his delegate before October 1, 1959. “(b) Limitations on Eligibility for Credit or Refund.— No person shall be entitled to credit or refund under subsection (a) unless such person, for such period or periods both before and after July 1, 1959 (but not extending beyond 1 year thereafter), as the Secretary or his delegate shall by regulation prescribe, makes and keeps, and files with the Secretary or his delegate, such records of inventories, sales, and purchases as may be prescribed in such regulations. “(c) Penalty and Administrative Procedures.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on cigarettes shall, insofar as applicable and not inconsistent with this section, be applicable in respect of the credits and refunds provided for in this section to the same extent as if such credits or refunds constituted credits or refunds of such taxes. “SEC. 5708. LOSSES CAUSED BY DISASTER. “(a) Authorization.— Where the President has determined under 64 Stat. 1109. the Act of September 30, 1950 (42 U. S. C., sec. 1855), that a ‘major disaster’ as defined in such Act has occurred in any part of the United States, the Secretary or his delegate shall pay (without interest) an amount equal to the amount of the internal revenue taxes paid or determined and customs duties paid on tobacco products and cigarette papers and tubes removed, which were lost, rendered unmarketable, or condemned by a duly authorized official by reason of such disaster occurring in such part of the United States on and after the effective date of this section, if such tobacco products or cigarette papers or tubes were held and intended for sale at the time of such disaster. The payments authorized by this section shall be made to the person holding such tobacco products or cigarette papers or tubes for sale at the time of such disaster. “(b) Claims.— No claim shall be allowed under this section unless— “(1) filed within 6 months after the date on which the President makes the determination that the disaster referred to in subsection (a) has occurred; and “(2) the claimant furnishes proof to the satisfaction of the Secretary or his delegate that— “(A) he was not indemnified by any valid claim of insurance or otherwise in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes covered by the claim, and “(B) he is entitled to payment under this section. Claims under this section shall be filed under such regulations as the Secretary or his delegate shall prescribe. “(c) Destruction of Tobacco Products or Cigarette Papers or Tubes.— Before the Secretary or his delegate makes payment under this section in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes condemned by a duly authorized official or rendered unmarketable, such tobacco products or cigarette papers or tubes shall be destroyed under such supervision as the Secretary or his delegate may prescribe, unless such tobacco products or cigarette papers or tubes were previously destroyed under supervision satisfactory to the Secretary or his delegate. “(d) Other Laws Applicable.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on tobacco products and cigarette papers and tubes shall, insofar as applicable and not inconsistent with this section, be applied in respect of the payments provided for in this section to the same extent as if such payments constituted refunds of such taxes. “Subchapter B— Qualification Requirements for Manufacturers of Tobacco Products and Cigarette Papers and Tubes, Export Warehouse Proprietors, and Dealers in Tobacco Materials “Sec. 5711. Bond. “Sec. 5712. Application for permit. “Sec. 5713. Permit. “SEC. 5711. BOND. “(a) When Required.— Every person, before commencing business as a manufacturer of tobacco products or cigarette papers and tubes, as an export warehouse proprietor, or as a dealer in tobacco materials, shall file such bond, conditioned upon compliance with this chapter and regulations issued thereunder, in such form, amount, and manner as the Secretary or his delegate shall by regulation prescribe. A new or additional bond may be required whenever the Secretary or his delegate considers such action necessary for the protection of the revenue. “(b) Approval or Disapproval.— No person shall engage in such business until he receives notice of approval of such bond. A bond may be disapproved, upon notice to the principal on the bond, if the Secretary or his delegate determines that the bond is not adequate to protect the revenue. “(c) Cancellation.— Any bond filed hereunder may be canceled, upon notice to the principal on the bond, whenever the Secretary or his delegate determines that the bond no longer adequately protects the revenue. “SEC. 5712. APPLICATION FOR PERMIT. “Every person, before commencing business as a manufacturer of tobacco products or as an export warehouse proprietor, and at such other time as the Secretary or his delegate shall by regulation prescribe, shall make application for the permit provided for in section 5713. The application shall be in such form as the Secretary or his delegate shall prescribe and shall set forth, truthfully and accurately, the information called for on the form. Such application may be rejected and the permit denied if the Secretary or his delegate, after notice and opportunity for hearing, finds that— “(1) the premises on which it is proposed to conduct the business are not adequate to protect the revenue; or “(2) such person (including, in the case of a corporation, any officer, director, or principal stockholder and, in the case of a partnership, a partner) is, by reason of his business experience, financial standing, or trade connections, not likely to maintain operations in compliance with this chapter, or has failed to disclose any material information required or made any material false statement in the application therefor. No person subject to this section, who is lawfully engaged in business on the date of the enactment of the Excise Tax Technical Changes Act of 1958, shall be denied the right to carry on such business pending reasonable opportunity to make application for permit and final action thereon. “SEC. 5713. PERMIT. “(a) Issuance.— A person shall not engage in business as a manufacturer of tobacco products or as an export warehouse proprietor without a permit to engage in such business. Such permit, conditioned upon compliance with this chapter and regulations issued thereunder, shall be issued in such form and in such manner as the Secretary or his delegate shall by regulation prescribe, to every person properly qualified under sections 5711 and 5712. A new permit may be required at such other time as the Secretary or his delegate shall by regulation prescribe. “(b) Revocation.— If the Secretary or his delegate has reason to believe that any person holding a permit has not in good faith complied with this chapter, or with any other provision of this title involving intent to defraud, or has violated the conditions of such permit, or has failed to disclose any material information required or made any material false statement in the application for such permit, or has failed to maintain his premises in such manner as to protect the revenue, the Secretary or his delegate shall issue an order, stating the facts charged, citing such person to show cause why his permit should not be suspended or revoked. If, after hearing, the Secretary or his delegate finds that such person has not in good faith complied with this chapter or with any other provision of this title involving intent to defraud, has violated the conditions of such permit, has failed to disclose any material information required or made any material false statement in the application therefor, or has failed to maintain his premises in such manner as to protect the revenue, such permit shall be suspended for such period as the Secretary or his delegate deems proper or shall be revoked. “Subchapter C— Operations by Manufacturers and Importers of Tobacco Products and Cigarette Papers and Tubes and Export Warehouse Proprietors “Sec. 5721. Inventories. “Sec. 5722. Reports. “Sec. 5723. Packages, marks, labels, notices, and stamps. “SEC. 5721. INVENTORIES. “Every manufacturer of tobacco products or cigarette papers and tubes, and every export warehouse proprietor, shall make a true and accurate inventory at the time of commencing business, at the time of concluding business, and at such other times, in such manner and form, and to include such items, as the Secretary or his delegate shall by regulation prescribe. Such inventories shall be subject to verification by any internal revenue officer. “SEC. 5722. REPORTS. “Every manufacturer of tobacco products or cigarette papers and tubes, and every export warehouse proprietor, shall make reports containing such information, in such form, at such times, and for such periods as the Secretary or his delegate shall by regulation prescribe. “SEC. 5723. PACKAGES, MARKS. LABELS, NOTICES, AND STAMPS. “(a) Packages.— All tobacco products and cigarette papers and tubes shall, before removal, be put up in such packages as the Secretary or his delegate shall by regulation prescribe. “(b) Marks, Labels, Notices, and Stamps.— Every package of tobacco products or cigarette papers or tubes shall, before removal, bear the marks, labels, notices, and stamps, if any, that the Secretary or his delegate by regulation prescribes. “(c) Lottery Features.— No 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 shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products or cigarette papers or tubes. “(d) Indecent or Immoral Material Prohibited.— No indecent or immoral picture, print, or representation shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products or cigarette papers or tubes. “(e) Exceptions.— Tobacco products furnished by manufacturers of such products for use or consumption by their employees, or for experimental purposes, and tobacco products and cigarette papers and tubes transferred to the bonded premises of another manufacturer or export warehouse proprietor or released in bond from customs custody for delivery to a manufacturer of tobacco products or cigarette papers and tubes, may be exempted from subsections (a) and (b) in accordance with such regulations as the Secretary or his delegate shall prescribe. “Subchapter D— Operations by Dealers in Tobacco Materials “Sec. 5731. Shipments and deliveries restricted. “Sec. 5732. Inventory, and statement of shipments and deliveries. “SEC. 5731. SHIPMENTS AND DELIVERIES RESTRICTED. “Every dealer in tobacco materials shall make all shipments or deliveries of tobacco materials in accordance with such regulations as the Secretary or his delegate shall prescribe. Tobacco materials shipped or delivered in violation of such regulations shall be subject to tax as manufactured tobacco and the dealer shipping or delivering the same shall be subject as a manufacturer of tobacco to the provisions of this chapter. “SEC. 5732. INVENTORY, AND STATEMENT OF SHIPMENTS AND DELIVERIES. “A dealer in tobacco materials shall make, upon demand of any internal revenue officer, a true and accurate inventory of all such materials held by the dealer, and shall, upon similar demand, furnish a true and complete statement of the quantity of such materials shipped or delivered to any person named in such demand. “Subchapter E— Records of Manufacturers of Tobacco Products and Cigarette Papers and Tubes, Export Warehouse Proprietors, and Dealers in Tobacco Materials “Sec. 5741. Records to be maintained. “SEC. 5741. RECORDS TO BE MAINTAINED. “Every manufacturer of tobacco products or cigarette papers and tubes, every export warehouse proprietor, and every dealer in tobacco materials shall keep such records in such manner as the Secretary or his delegate shall by regulation prescribe. “Subchapter F— General Provisions “Sec. 5751. Purchase, receipt, possession, or sale of tobacco products and cigarette papers and tubes, after removal. “Sec. 5752. Restrictions relating to marks, labels, notices, stamps, and packages. “Sec. 5753. Disposal of forfeited, condemned, and abandoned tobacco products, cigarette papers and tubes, and tobacco materials. “SEC. 5751. PURCHASE, RECEIPT, POSSESSION, OR SALE OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES, AFTER REMOVAL “(a) Restriction.— No person shall— “(1) with intent, to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes— “(A) upon which the tax has not been paid or determined in the manner and at the time prescribed by this chapter or regulations thereunder; or “(B) which, after removal without payment of tax pursuant to section 5704, have been diverted from the applicable purpose or use specified in that section; or “(2) with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, notices, and stamps, as required under such section; or “(3) otherwise than with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, notices, and stamps, as required under such section. This paragraph shall not prevent the sale or delivery of tobacco products or cigarette papers or tubes directly to consumers from proper packages, nor apply to such articles when so sold or delivered. “(b) Liability to Tax.— Any person who possesses tobacco products or cigarette papers or tubes in violation of subsection (a) (1) or (a) (2) shall be liable for a tax equal to the tax on such articles. “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, STAMPS, AND PACKAGES. “No person shall, with intent to defraud the United States— “(a) destroy, obliterate, or detach any mark, label, notice, or stamp prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied; or “(b) empty any package of tobacco products or cigarette papers or tubes without destroying any stamp thereon to evidence the tax or indicate compliance with this chapter, prescribed by this chapter or regulations thereunder to be affixed to such package; or “(c) detach, or cause to be detached, from any package of tobacco products or cigarette papers or tubes any stamp, prescribed by this chapter or regulations thereunder, to evidence the tax or indicate compliance with this chapter, or purchase, receive, possess, sell, or dispose of, by gift or otherwise, any such stamp which has been so detached; or “(d) purchase, receive, possess, sell, or dispose of, by gift or otherwise, any package which previously contained tobacco products or cigarette papers or tubes which has been emptied, and upon which any stamp prescribed by this chapter or regulations thereunder, to evidence the tax or indicate compliance with this chapter, has not been destroyed. “SEC. 5753. DISPOSAL OF FORFEITED, CONDEMNED, AND ABANDONED TOBACCO PRODUCTS, CIGARETTE PAPERS AND TUBES AND TOBACCO MATERIALS. “If it appears that any forfeited, condemned, or abandoned tobacco products, cigarette papers and tubes, or tobacco materials, when offered for sale, will not bring a price equal to the tax due and payable thereon, and the expenses incident to the sale thereof, such articles and tobacco materials shall not be sold for consumption in the United States but shall be disposed of in accordance with such regulations as the Secretary or his delegate shall prescribe. “Subchapter G— Penalties and Forfeitures “Sec. 5761. Civil penalties. “Sec. 5762. Criminal penalties. “Sec. 5763. Forfeitures. “SEC. 5761. CIVIL PENALTIES. “(a) Omitting Things Required or Doing Things Forbidden.— Whoever willfully omits, neglects, or refuses to comply with any duty imposed upon him by this chapter, or to do, or cause to be done, any of the things required by this chapter, or does anything prohibited by this chapter, shall, in addition to any other penalty provided in this title, be liable to a penalty of $1,000, to be recovered, with costs of suit, in a civil action, except where a penalty under subsection (b) or under section 6651 or 6653 may be collected from such person by assessment. 26 USC 6651, 6653. “(b) Failure To Pay Tax.— Whoever fails to pay any tax imposed by this chapter at the time prescribed by law or regulations, shall, in addition to any other penalty provided in this title, be liable to a penalty of 5 percent of the tax due but unpaid. “(c) Failure To Make Deposit of Taxes.— Section 6656 relating 26 USC 6656. to failure to make deposit of taxes shall apply to the failure to make any deposit of taxes imposed under subchapter A on the date prescribed 26 USC 5001–5149. therefor, except that the penalty for such failure shall be 5 percent of the amount of the underpayment in lieu of the penalty provided by such section. “(d) Applicability of Section 6659.— The penalties imposed by 26 USC 6659. subsections (b) and (c) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6659 (a). “SEC. 5762. CRIMINAL PENALTIES. “(a) Fraudulent Offenses.— Whoever, with intent to defraud the United States— “(1) Engaging in business unlawfully.— Engages in business as a manufacturer of tobacco products or cigarette papers and tubes, as an export warehouse proprietor, or as a dealer in tobacco materials without filing the bond and obtaining the permit where required by this chapter or regulations thereunder; or “(2) Failing to furnish information or furnishing false information.— Fails to keep or make any record, return, report, inventory, or statement, or keeps or makes any false or fraudulent record, return, report, inventory, or statement, required by this chapter or regulations thereunder; or “(3) Refusing to pay or evading tax.— Refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof; or “(4) Removing tobacco products or cigarette papers or tubes unlawfully.— Removes, contrary to this chapter or regulations thereunder, any tobacco products or cigarette papers or tubes subject to tax under this chapter; or “(5) Purchasing, receiving, possessing, or selling tobacco products or cigarette papers or tubes unlawfully.— Violates any provision of section 5751 (a) (1) or (a) (2); or “(6) Affixing improper stamps.— Affixes to any package containing tobacco products or cigarette papers or tubes any improper or counterfeit stamp, or a stamp prescribed by this chapter or regulations thereunder which has been previously used on a package of such articles; or “(7) Destroying, obliterating, or detaching marks, labels, notices, or stamps before packages are emptied.— Violates any provision of section 5752 (a); or “(8) Emptying packages without destroying stamps.— Violates any provision of section 5752 (b); or “(9) Possessing emptied packages bearing stamps.— Violates any provision of section 5752 (d); or “(10) Refilling packages bearing stamps.— Puts tobacco products or cigarette papers or tubes into any package which previously contained such articles and which bears a stamp prescribed by this chapter or regulations thereunder without destroying such stamp; or “(11) Detaching stamps or possessing used stamps.— Violates any provision of section 5752 (c); shall, for each such offense, be fined not more than $10,000, or imprisoned not more than 5 years, or both. “(b) Other Offenses.— Whoever, otherwise than as provided in subsection (a), violates any provision of this chapter, or of regulations prescribed thereunder, shall, for each such offense, be fined not more than $1,000, or imprisoned not more than 1 year, or both. “SEC. 5763. FORFEITURES. “(a) Tobacco Products and Cigarette Papers and Tubes Unlawfully Possessed.— (1) Tobacco products and cigarette papers and tubes possessed with intent to defraud.— All tobacco products and cigarette papers and tubes which, after removal, are possessed with intent to defraud the United States shall be forfeited to the United States. (2) Tobacco products and cigarette papers and tubes not properly packaged.— All tobacco products and cigarette papers and tubes not in packages as required under section 5723 or which are in packages not bearing the marks, labels, notices, and stamps, as required under such section, which, after removal, are possessed otherwise than with intent to defraud the United States, shall lie forfeited to the United States. This paragraph shall not apply to tobacco products or cigarette papers or tubes sold or delivered directly to consumers from proper packages. “(b) Personal Property of Qualified Manufacturers, Export Warehouse Proprietors, and Dealers Acting With Intent To Defraud.— All tobacco products and cigarette papers and tubes, tobacco materials, packages, internal revenue stamps, machinery, fixtures, equipment, and all other materials and personal property on the premises of any qualified manufacturer of tobacco products or cigarette papers and tubes, export warehouse proprietor, or dealer in tobacco materials who, with intent to defraud the United States, fails to keep or make any record, return, report, inventory, or statement, or keeps or makes any false or fraudulent record, return, report, inventory, or statement, required by this chapter: or refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof: or removes, contrary to any provision of this chapter, any article subject to tax under this chapter, shall be forfeited to the United States. “(c) Real and Personal Property of Illicit Operators.— All tobacco products, cigarette papers and tubes, tobacco materials, machinery, fixtures, equipment, and other materials and personal property on the premises of any person engaged in business as a manufacturer of tobacco products or cigarette papers and tubes, export warehouse proprietor, or dealer in tobacco materials, without filing the bond or obtaining the permit, as required by this chapter, together with all his right, title, and interest in the building in which such business is conducted, and the lot or tract of ground on which the building is located, shall be forfeited to the United States. “(d) General.— All property intended for use in violating the provisions of this chapter, or regulations thereunder, or which has been so used, shall be forfeited to the United States as provided in section 7302.” 26 USC 7302.

4. 1958

   Pub. L. 85–859 title II § 202 · 72 Stat. 1275

   Substituted · 26 U.S.C. § 5761(c)

   Pub. L. 85–859 substituted provisions relating to failure to make deposit of taxes for provisions which authorized a penalty of 5 percent of the tax due but unpaid where a person failed to pay tax at the time prescribed, and required the penalties to be added to the tax and assessed and collected at the same time, in the same manner, and as a part of the tax

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 85–859 substituted provisions relating to failure to make deposit of taxes for provisions which authorized a penalty of 5 percent of the tax due but unpaid where a person failed to pay tax at the time prescribed, and required the penalties to be added to the tax and assessed and collected at the same time, in the same manner, and as a part of the tax.

   Enacted provision · exact public law section
   SEC. 202. AMENDMENT OF CHAPTER 52 OF THE INTERNAL REVENUE CODE OF 1954. Chapter 52 of the Internal Revenue Code of 1954 is amended to 26 USC 5701–5763. read as follows: “CHAPTER 52— TOBACCO, CIGARS, CIGARETTES, AND CIGARETTE PAPERS AND TUBES “Subchapter A. Definitions; rate and payment of tax; exemption from tax; and refund and drawback of tax. “Subchapter B. Qualification requirements for manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and dealers in tobacco materials. “Subchapter C. Operations by manufacturers and importers of tobacco products and cigarette papers and tubes and export warehouse proprietors. “Subchapter D. Operations by dealers in tobacco materials. “Subchapter E. Records of manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and dealers in tobacco materials. “Subchapter F. General provisions. “Subchapter G. Penalties and forfeitures. “Subchapter A— Definitions; Rate and Payment of Tax; Exemption From Tax; and Refund and Drawback of Tax “Sec. 5701. Rate of tax. “Sec. 5702. Definitions. “Sec. 5703. Liability for tax and method of payment. “Sec. 5704. Exemption from tax. “Sec. 5705. Refund or allowance of tax. “Sec. 5706. Drawback of tax. “Sec. 5707. Floor stocks refund on cigarettes. “Sec. 5708. Losses caused by disaster. “SEC. 5701. RATE OF TAX. “(a) Tobacco.— On tobacco, manufactured in or imported into the United States, there shall be imposed a tax of 10 cents per pound. “(b) Cigars.— On cigars, manufactured in or imported into the United States, there shall be imposed the following taxes: “(1) Small cigars.— On cigars, weighing not more than 3 pounds per thousand, 75 cents per thousand; “(2) Large cigars.— On cigars, weighing more than 3 pounds per thousand; “(A) If removed to retail at not more than 2 1/2 cents each, $2.50 per thousand; “(B) If removed to retail at more than 2 1/2 cents each and not more than 4 cents each, $3 per thousand; “(C) If removed to retail at more than 4 cents each and not more than 6 cents each, $4 per thousand; “(D) If removed to retail at more than 6 cents each and not more than 8 cents each, $7 per thousand; “(E) If removed to retail at more than 8 cents each and not more than 15 cents each, $10 per thousand; “(F) If removed to retail at more than 15 cents each and not more than 20 cents each, $15 per thousand; “(G) If removed to retail at more than 20 cents each, $20 per thousand. In determining the retail price, for tax purposes, regard shall be had to the ordinary retail price of a single cigar in its principal market, exclusive of any State or local taxes imposed on the retail sale of cigars. Cigars not exempt from tax under this chapter which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale. “(c) Cigarettes.— On cigarettes, manufactured in or imported into the United States, there shall be imposed the following taxes: “(1) Small cigarettes.— On cigarettes, weighing not more than 3 pounds per thousand, $4 per thousand until July 1, 1959, and $3.50 per thousand on and after July 1, 1959; “(2) Large cigarettes.— On cigarettes, weighing more than 3 pounds per thousand, $8.40 per thousand; except that, if more than inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2% inches, or fraction thereof, of the length of each as one cigarette. “(d) Cigarette Papers.— On each book or set of cigarette papers containing more than 25 papers, manufactured in or imported into the United States, there shall be imposed a tax of cent for each 50 papers or fractional part thereof; except that, if cigarette papers measure more than 6 1/2 inches in length, they shall be taxable at the rate prescribed, counting each 2 3/4 inches, or fraction thereof, of the length of each as one cigarette paper. “(e) Cigarette Tubes.— On cigarette tubes, manufactured in or imported into the United States, there shall be imposed a tax of 1 cent for each 50 tubes or fractional part thereof, except that if cigarette tubes measure more than 6 inches in length, they shall be taxable at the rate prescribed, counting each 2% inches, or fraction thereof, of the length of each as one cigarette tube. “(f) Imported Tobacco Products and Cigarette Papers and Tubes.— The taxes imposed by this section on tobacco products and cigarette papers and tubes imported into the United States shall be in addition to any import duties imposed on such articles. “SEC. 5702. DEFINITIONS. “When used in this chapter— “(a) Manufactured Tobacco.— ‘Manufactured tobacco’ means tobacco (other than cigars and cigarettes) prepared, processed, manipulated, or packaged, for removal, or merely removed, for consumption by smoking or for use in the mouth or nose, and any tobacco (other than cigars and cigarettes), not exempt from tax under this chapter, sold or delivered to any person contrary to this chapter or regulations prescribed thereunder. “(b) Cigar.— ‘Cigar’ means any roll of tobacco wrapped in tobacco. “(c) Cigarette.— ‘Cigarette’ means any roll of tobacco, wrapped in paper or any substance other than tobacco. “(d) Tobacco Products.— ‘Tobacco products’ means manufactured tobacco, cigars, and cigarettes. “(e) Manufacturer of Tobacco Products.— ‘Manufacturer of tobacco products’ means any person who manufactures cigars or cigarettes, or who prepares, processes, manipulates, or packages, for removal, or merely removes, tobacco (other than cigars and cigarettes) for consumption by smoking or for use in the mouth or nose, or who sells or delivers any tobacco (other than cigars and cigarettes) contrary to this chapter or regulations prescribed thereunder. The term ‘manufacturer of tobacco products’ shall not include— “(1) a person who in any manner prepares tobacco, or produces cigars or cigarettes, solely for his own personal consumption or use: or “(2) a proprietor of a customs bonded manufacturing warehouse with respect to the operation of such warehouse; or “(3) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, if it is in the condition as cured on the farm; or “(4) a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm, and if the association maintains records of all leaf tobacco, acquired or received and sold or otherwise disposed of, in such manner as the Secretary or his delegate shall by regulations prescribe. “(f) Cigarette Paper.— ‘Cigarette paper’ means paper, or any other material except tobacco, prepared for use as a cigarette wrapper. “(g) Cigarette Papers.— ‘Cigarette papers’ means taxable books or sets of cigarette papers. “(h) Cigarette Tube.— ‘Cigarette tube’ means cigarette paper made into a hollow cylinder for use in making cigarettes. “(i) Manufacturer of Cigarette Papers and Tubes.— ‘Manufacturer of cigarette papers and tubes’ means any person who makes up cigarette paper into books or sets containing more than 25 papers each, or into tubes, except for his own personal use or consumption. “(j) Export Warehouse.— ‘Export warehouse’ means a bonded internal revenue warehouse for the storage of tobacco products and cigarette papers and tubes, upon which the internal revenue tax has not been paid, for subsequent 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. “(k) Export Warehouse Proprietor.— ‘Export warehouse proprietor’ means any person who operates an export warehouse. “(l) Tobacco Materials.— ‘Tobacco materials’ means tobacco other than manufactured tobacco, cigars, and cigarettes. “(m) Dealer in Tobacco Materials.— ‘Dealer in tobacco materials’ means any person who receives and handles tobacco materials for sale, shipment, or delivery to another dealer in such materials, to a manufacturer of tobacco products, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or who receives tobacco materials, other than stems and waste, for use by him in the production of fertilizer, insecticide, or nicotine. The term ‘dealer in tobacco materials’ shall not include— “(1) an operator of a warehouse who stores tobacco materials solely for a qualified dealer in tobacco materials, for a qualified manufacturer of tobacco products, for a farmer or grower of tobacco, or for a bona fide association of farmers or growers of tobacco; or “(2) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, or a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm: Provided, That such association maintains records of all leaf tobacco acquired or received and sold or otherwise disposed of by the association, in such manner as the Secretary or his delegate shall by regulation prescribe; or “(3) a person who buys leaf tobacco on the floor of an auction warehouse, or who buys leaf tobacco from a farmer or grower, and places the tobacco on the floor of such a warehouse, or who purchases and sells warehouse receipts without taking physical possession of the tobacco covered thereby; or “(4) a qualified manufacturer of tobacco products with respect to tobacco materials received by him under his bond as such a manufacturer. “(n) Removal or Remove.— ‘Removal’ or ‘remove’ means the removal of tobacco products or cigarette papers or tubes from the factory or from internal revenue bond, as the Secretary or his delegate shall by regulation prescribe, or release from customs custody, and shall also include the smuggling or other unlawful importation of such articles into the United States. “(o) Importer.— ‘Importer’ means any person in the United States to whom nontaxpaid tobacco products or cigarette papers or tubes manufactured in a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States are shipped or consigned; any person who removes cigars or cigarettes for sale or consumption in the United States from a customs bonded manufacturing warehouse; and any person who smuggles or otherwise unlawfully brings tobacco products or cigarette papers or tubes into the United States. “SEC. 5703. LIABILITY FOR TAX AND METHOD OF PAYMENT. “(a) Liability for Tax.— “(1) Original mability.— The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by section 5701. “(2) Transfer of liability.— When tobacco products and cigarette papers and tubes are transferred, without payment of tax, pursuant to section 5704, the liability for tax shall be transferred in accordance with the provisions of this paragraph. When tobacco products and cigarette papers and tubes are transferred between the bonded premises of manufacturers and export warehouse proprietors, the transferee shall become liable for the tax upon receipt by him of such articles, and the transferor shall thereupon be relieved of his liability for such tax. When tobacco products and cigarette papers and tubes are released in bond from customs custody for transfer to the bonded premises of a manufacturer of tobacco products or cigarette papers and tubes, the transferee shall become liable for the tax on such articles upon release from customs custody, and the importer shall thereupon be relieved of his liability for such tax. “(b) Method of Payment of Tax.— The taxes imposed by section 5701 shall be determined at the time of removal of the tobacco products and cigarette papers and tubes. Such taxes shall be paid on the basis of a return, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment of the taxes on the basis of a return. The Secretary or his delegate shall, by regulations, prescribe the period or event for which such return shall be made, the information to be furnished on such return, the time for making such return, and the time for payment of such taxes. Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and upon compliance with such requirements, as the Secretary or his delegate may. by regulations, prescribe for the protection of the revenue. The Secretary or his delegate may, by regulations, require payment of tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. All administrative and penal provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5701. “(c) Stamps To Evidence the Tax.— If the Secretary or his delegate shall by regulation provide for the payment of tax by return and require the use of stamps to evidence the tax imposed by this chapter or to indicate compliance therewith, the Secretary or his delegate shall cause to be prepared suitable stamps to be issued to manufacturers and importers of tobacco products, to be used and accounted for. in accordance with such regulations as the Secretary or his delegate shall prescribe. “(d) Use of Government Depositaries.— The Secretary or his delegate may authorize Federal Reserve banks, and incorporated banks or trust companies which are depositaries or financial agents of the United States, to receive any tax imposed by this chapter, in such manner, at such times, and under such conditions as he may prescribe; and he shall prescribe the manner, time, and condition under which the receipt of such tax by such banks and trust companies is to be treated as payment for tax purposes. “(e) Assessment.— Whenever any tax required to be paid by this chapter is not paid in full at the time required for such payment, it shall be the duty of the Secretary or his delegate, subject to the limitations prescribed in section 6501. on proof satisfactory to him, to determine the amount of tax which has been omitted to be paid, and to make an assessment therefor against the person liable for the tax. 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 lie made until and after the person liable for the tax has been afforded reasonable notice and opportunity to show cause, in writing, against such assessment. “SEC. 5704. EXEMPTION FROM TAX. “(a) Tobacco Products Furnished for Employee Use or Experimental Purposes.— Tobacco products may be furnished by a manufacturer of such products, without payment of tax, for use or consumption by employees or for experimental purposes, in such quantities, and in such manner as the Secretary or his delegate shall by Regulation prescribe. “(b) Tobacco Products and Cigarette Papers and Tubes Transferred or Removed in Bond From Domestic Factories and Export Warehouses.— A manufacturer or export warehouse proprietor may transfer tobacco products and cigarette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, 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; and manufacturers may similarly remove such articles for use of the United States: in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. “(c) Tobacco Materials Shipped or Delivered in Bond.— A dealer in tobacco materials or a manufacturer of tobacco products may ship or deliver tobacco materials, without payment of tax, to another such dealer or manufacturer, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the Ignited States; or, in the case of tobacco stems and waste only, to any person for use by him as fertilizer or insecticide or in the production of fertilizer, insecticide, or nicotine; in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. “(d) Tobacco Products, Cigarette Papers and Tubes, and Tobacco Materials Released in Bond From Customs Custody.— Tobacco products, cigarette papers and tubes, and tobacco materials, imported or brought into the United States, may be released from customs custody, without payment of tax, for delivery to a manufacturer of tobacco products or cigarette papers and tubes and such tobacco materials may be similarly released for delivery to a dealer in tobacco materials, in accordance with such regulations and under such bond as the Secretary or his delegate shall prescribe. “SEC. 5705. REFUND OR ALLOWANCE OF TAX. “(a) Refund.— Refund of any tax imposed by this chapter shall be made (without interest) to the manufacturer, importer, or export warehouse proprietor, on proof satisfactory to the Secretary or his delegate that the claimant manufacturer, importer, or export warehouse proprietor has paid the tax on tobacco products and cigarette papers and tubes withdrawn by him from the market; or on such articles lost (otherwise than by theft) or destroyed, by fire, casualty, or act of God, while in the possession or ownership of the claimant. “(b) Allowance.— If the tax has not yet been paid on tobacco products and cigarette papers and tubes proved to have been withdrawn from the market or lost or destroyed as aforesaid, relief from the tax on such articles may be extended upon the filing of a claim for allowance therefor in accordance with such regulations as the Secretary or his delegate shall prescribe. “(c) Limitation.— Any claim for refund of tax under this section shall be filed within 6 months after the date of the withdrawal from the market, loss, or destruction of the articles to which the claim relates, and shall be in such form and contain such information as the Secretary or his delegate shall by regulations prescribe. “SEC. 5706. DRAWBACK OF TAX. “There shall be an allowance of drawback of tax paid on tobacco products and cigarette papers and tubes, when shipped from the United States, in accordance with such regulations and upon the filing of such bond as the Secretary or his delegate shall prescribe. “SEC. 5707. FLOOR STOCKS REFUND ON CIGARETTES. “(a) In General.— With respect to cigarettes, weighing not more than 3 pounds per thousand, upon which the tax imposed by subsection (c) (1) of section 5701 has been paid, and which, on July 1, 1959, are held by any person and intended for sale, or are in transit from foreign countries or insular possessions of the United States to any person in the United States for sale, there shall be credited or refunded to such person (without interest), subject to such regulations as shall be prescribed by the Secretary or his delegate, an amount equal to the difference between the tax paid on such cigarettes and the tax made applicable to such articles on July 1, 1959, if claim for such credit or refund is filed with the Secretary or his delegate before October 1, 1959. “(b) Limitations on Eligibility for Credit or Refund.— No person shall be entitled to credit or refund under subsection (a) unless such person, for such period or periods both before and after July 1, 1959 (but not extending beyond 1 year thereafter), as the Secretary or his delegate shall by regulation prescribe, makes and keeps, and files with the Secretary or his delegate, such records of inventories, sales, and purchases as may be prescribed in such regulations. “(c) Penalty and Administrative Procedures.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on cigarettes shall, insofar as applicable and not inconsistent with this section, be applicable in respect of the credits and refunds provided for in this section to the same extent as if such credits or refunds constituted credits or refunds of such taxes. “SEC. 5708. LOSSES CAUSED BY DISASTER. “(a) Authorization.— Where the President has determined under 64 Stat. 1109. the Act of September 30, 1950 (42 U. S. C., sec. 1855), that a ‘major disaster’ as defined in such Act has occurred in any part of the United States, the Secretary or his delegate shall pay (without interest) an amount equal to the amount of the internal revenue taxes paid or determined and customs duties paid on tobacco products and cigarette papers and tubes removed, which were lost, rendered unmarketable, or condemned by a duly authorized official by reason of such disaster occurring in such part of the United States on and after the effective date of this section, if such tobacco products or cigarette papers or tubes were held and intended for sale at the time of such disaster. The payments authorized by this section shall be made to the person holding such tobacco products or cigarette papers or tubes for sale at the time of such disaster. “(b) Claims.— No claim shall be allowed under this section unless— “(1) filed within 6 months after the date on which the President makes the determination that the disaster referred to in subsection (a) has occurred; and “(2) the claimant furnishes proof to the satisfaction of the Secretary or his delegate that— “(A) he was not indemnified by any valid claim of insurance or otherwise in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes covered by the claim, and “(B) he is entitled to payment under this section. Claims under this section shall be filed under such regulations as the Secretary or his delegate shall prescribe. “(c) Destruction of Tobacco Products or Cigarette Papers or Tubes.— Before the Secretary or his delegate makes payment under this section in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes condemned by a duly authorized official or rendered unmarketable, such tobacco products or cigarette papers or tubes shall be destroyed under such supervision as the Secretary or his delegate may prescribe, unless such tobacco products or cigarette papers or tubes were previously destroyed under supervision satisfactory to the Secretary or his delegate. “(d) Other Laws Applicable.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on tobacco products and cigarette papers and tubes shall, insofar as applicable and not inconsistent with this section, be applied in respect of the payments provided for in this section to the same extent as if such payments constituted refunds of such taxes. “Subchapter B— Qualification Requirements for Manufacturers of Tobacco Products and Cigarette Papers and Tubes, Export Warehouse Proprietors, and Dealers in Tobacco Materials “Sec. 5711. Bond. “Sec. 5712. Application for permit. “Sec. 5713. Permit. “SEC. 5711. BOND. “(a) When Required.— Every person, before commencing business as a manufacturer of tobacco products or cigarette papers and tubes, as an export warehouse proprietor, or as a dealer in tobacco materials, shall file such bond, conditioned upon compliance with this chapter and regulations issued thereunder, in such form, amount, and manner as the Secretary or his delegate shall by regulation prescribe. A new or additional bond may be required whenever the Secretary or his delegate considers such action necessary for the protection of the revenue. “(b) Approval or Disapproval.— No person shall engage in such business until he receives notice of approval of such bond. A bond may be disapproved, upon notice to the principal on the bond, if the Secretary or his delegate determines that the bond is not adequate to protect the revenue. “(c) Cancellation.— Any bond filed hereunder may be canceled, upon notice to the principal on the bond, whenever the Secretary or his delegate determines that the bond no longer adequately protects the revenue. “SEC. 5712. APPLICATION FOR PERMIT. “Every person, before commencing business as a manufacturer of tobacco products or as an export warehouse proprietor, and at such other time as the Secretary or his delegate shall by regulation prescribe, shall make application for the permit provided for in section 5713. The application shall be in such form as the Secretary or his delegate shall prescribe and shall set forth, truthfully and accurately, the information called for on the form. Such application may be rejected and the permit denied if the Secretary or his delegate, after notice and opportunity for hearing, finds that— “(1) the premises on which it is proposed to conduct the business are not adequate to protect the revenue; or “(2) such person (including, in the case of a corporation, any officer, director, or principal stockholder and, in the case of a partnership, a partner) is, by reason of his business experience, financial standing, or trade connections, not likely to maintain operations in compliance with this chapter, or has failed to disclose any material information required or made any material false statement in the application therefor. No person subject to this section, who is lawfully engaged in business on the date of the enactment of the Excise Tax Technical Changes Act of 1958, shall be denied the right to carry on such business pending reasonable opportunity to make application for permit and final action thereon. “SEC. 5713. PERMIT. “(a) Issuance.— A person shall not engage in business as a manufacturer of tobacco products or as an export warehouse proprietor without a permit to engage in such business. Such permit, conditioned upon compliance with this chapter and regulations issued thereunder, shall be issued in such form and in such manner as the Secretary or his delegate shall by regulation prescribe, to every person properly qualified under sections 5711 and 5712. A new permit may be required at such other time as the Secretary or his delegate shall by regulation prescribe. “(b) Revocation.— If the Secretary or his delegate has reason to believe that any person holding a permit has not in good faith complied with this chapter, or with any other provision of this title involving intent to defraud, or has violated the conditions of such permit, or has failed to disclose any material information required or made any material false statement in the application for such permit, or has failed to maintain his premises in such manner as to protect the revenue, the Secretary or his delegate shall issue an order, stating the facts charged, citing such person to show cause why his permit should not be suspended or revoked. If, after hearing, the Secretary or his delegate finds that such person has not in good faith complied with this chapter or with any other provision of this title involving intent to defraud, has violated the conditions of such permit, has failed to disclose any material information required or made any material false statement in the application therefor, or has failed to maintain his premises in such manner as to protect the revenue, such permit shall be suspended for such period as the Secretary or his delegate deems proper or shall be revoked. “Subchapter C— Operations by Manufacturers and Importers of Tobacco Products and Cigarette Papers and Tubes and Export Warehouse Proprietors “Sec. 5721. Inventories. “Sec. 5722. Reports. “Sec. 5723. Packages, marks, labels, notices, and stamps. “SEC. 5721. INVENTORIES. “Every manufacturer of tobacco products or cigarette papers and tubes, and every export warehouse proprietor, shall make a true and accurate inventory at the time of commencing business, at the time of concluding business, and at such other times, in such manner and form, and to include such items, as the Secretary or his delegate shall by regulation prescribe. Such inventories shall be subject to verification by any internal revenue officer. “SEC. 5722. REPORTS. “Every manufacturer of tobacco products or cigarette papers and tubes, and every export warehouse proprietor, shall make reports containing such information, in such form, at such times, and for such periods as the Secretary or his delegate shall by regulation prescribe. “SEC. 5723. PACKAGES, MARKS. LABELS, NOTICES, AND STAMPS. “(a) Packages.— All tobacco products and cigarette papers and tubes shall, before removal, be put up in such packages as the Secretary or his delegate shall by regulation prescribe. “(b) Marks, Labels, Notices, and Stamps.— Every package of tobacco products or cigarette papers or tubes shall, before removal, bear the marks, labels, notices, and stamps, if any, that the Secretary or his delegate by regulation prescribes. “(c) Lottery Features.— No 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 shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products or cigarette papers or tubes. “(d) Indecent or Immoral Material Prohibited.— No indecent or immoral picture, print, or representation shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products or cigarette papers or tubes. “(e) Exceptions.— Tobacco products furnished by manufacturers of such products for use or consumption by their employees, or for experimental purposes, and tobacco products and cigarette papers and tubes transferred to the bonded premises of another manufacturer or export warehouse proprietor or released in bond from customs custody for delivery to a manufacturer of tobacco products or cigarette papers and tubes, may be exempted from subsections (a) and (b) in accordance with such regulations as the Secretary or his delegate shall prescribe. “Subchapter D— Operations by Dealers in Tobacco Materials “Sec. 5731. Shipments and deliveries restricted. “Sec. 5732. Inventory, and statement of shipments and deliveries. “SEC. 5731. SHIPMENTS AND DELIVERIES RESTRICTED. “Every dealer in tobacco materials shall make all shipments or deliveries of tobacco materials in accordance with such regulations as the Secretary or his delegate shall prescribe. Tobacco materials shipped or delivered in violation of such regulations shall be subject to tax as manufactured tobacco and the dealer shipping or delivering the same shall be subject as a manufacturer of tobacco to the provisions of this chapter. “SEC. 5732. INVENTORY, AND STATEMENT OF SHIPMENTS AND DELIVERIES. “A dealer in tobacco materials shall make, upon demand of any internal revenue officer, a true and accurate inventory of all such materials held by the dealer, and shall, upon similar demand, furnish a true and complete statement of the quantity of such materials shipped or delivered to any person named in such demand. “Subchapter E— Records of Manufacturers of Tobacco Products and Cigarette Papers and Tubes, Export Warehouse Proprietors, and Dealers in Tobacco Materials “Sec. 5741. Records to be maintained. “SEC. 5741. RECORDS TO BE MAINTAINED. “Every manufacturer of tobacco products or cigarette papers and tubes, every export warehouse proprietor, and every dealer in tobacco materials shall keep such records in such manner as the Secretary or his delegate shall by regulation prescribe. “Subchapter F— General Provisions “Sec. 5751. Purchase, receipt, possession, or sale of tobacco products and cigarette papers and tubes, after removal. “Sec. 5752. Restrictions relating to marks, labels, notices, stamps, and packages. “Sec. 5753. Disposal of forfeited, condemned, and abandoned tobacco products, cigarette papers and tubes, and tobacco materials. “SEC. 5751. PURCHASE, RECEIPT, POSSESSION, OR SALE OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES, AFTER REMOVAL “(a) Restriction.— No person shall— “(1) with intent, to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes— “(A) upon which the tax has not been paid or determined in the manner and at the time prescribed by this chapter or regulations thereunder; or “(B) which, after removal without payment of tax pursuant to section 5704, have been diverted from the applicable purpose or use specified in that section; or “(2) with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, notices, and stamps, as required under such section; or “(3) otherwise than with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, notices, and stamps, as required under such section. This paragraph shall not prevent the sale or delivery of tobacco products or cigarette papers or tubes directly to consumers from proper packages, nor apply to such articles when so sold or delivered. “(b) Liability to Tax.— Any person who possesses tobacco products or cigarette papers or tubes in violation of subsection (a) (1) or (a) (2) shall be liable for a tax equal to the tax on such articles. “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, STAMPS, AND PACKAGES. “No person shall, with intent to defraud the United States— “(a) destroy, obliterate, or detach any mark, label, notice, or stamp prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied; or “(b) empty any package of tobacco products or cigarette papers or tubes without destroying any stamp thereon to evidence the tax or indicate compliance with this chapter, prescribed by this chapter or regulations thereunder to be affixed to such package; or “(c) detach, or cause to be detached, from any package of tobacco products or cigarette papers or tubes any stamp, prescribed by this chapter or regulations thereunder, to evidence the tax or indicate compliance with this chapter, or purchase, receive, possess, sell, or dispose of, by gift or otherwise, any such stamp which has been so detached; or “(d) purchase, receive, possess, sell, or dispose of, by gift or otherwise, any package which previously contained tobacco products or cigarette papers or tubes which has been emptied, and upon which any stamp prescribed by this chapter or regulations thereunder, to evidence the tax or indicate compliance with this chapter, has not been destroyed. “SEC. 5753. DISPOSAL OF FORFEITED, CONDEMNED, AND ABANDONED TOBACCO PRODUCTS, CIGARETTE PAPERS AND TUBES AND TOBACCO MATERIALS. “If it appears that any forfeited, condemned, or abandoned tobacco products, cigarette papers and tubes, or tobacco materials, when offered for sale, will not bring a price equal to the tax due and payable thereon, and the expenses incident to the sale thereof, such articles and tobacco materials shall not be sold for consumption in the United States but shall be disposed of in accordance with such regulations as the Secretary or his delegate shall prescribe. “Subchapter G— Penalties and Forfeitures “Sec. 5761. Civil penalties. “Sec. 5762. Criminal penalties. “Sec. 5763. Forfeitures. “SEC. 5761. CIVIL PENALTIES. “(a) Omitting Things Required or Doing Things Forbidden.— Whoever willfully omits, neglects, or refuses to comply with any duty imposed upon him by this chapter, or to do, or cause to be done, any of the things required by this chapter, or does anything prohibited by this chapter, shall, in addition to any other penalty provided in this title, be liable to a penalty of $1,000, to be recovered, with costs of suit, in a civil action, except where a penalty under subsection (b) or under section 6651 or 6653 may be collected from such person by assessment. 26 USC 6651, 6653. “(b) Failure To Pay Tax.— Whoever fails to pay any tax imposed by this chapter at the time prescribed by law or regulations, shall, in addition to any other penalty provided in this title, be liable to a penalty of 5 percent of the tax due but unpaid. “(c) Failure To Make Deposit of Taxes.— Section 6656 relating 26 USC 6656. to failure to make deposit of taxes shall apply to the failure to make any deposit of taxes imposed under subchapter A on the date prescribed 26 USC 5001–5149. therefor, except that the penalty for such failure shall be 5 percent of the amount of the underpayment in lieu of the penalty provided by such section. “(d) Applicability of Section 6659.— The penalties imposed by 26 USC 6659. subsections (b) and (c) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6659 (a). “SEC. 5762. CRIMINAL PENALTIES. “(a) Fraudulent Offenses.— Whoever, with intent to defraud the United States— “(1) Engaging in business unlawfully.— Engages in business as a manufacturer of tobacco products or cigarette papers and tubes, as an export warehouse proprietor, or as a dealer in tobacco materials without filing the bond and obtaining the permit where required by this chapter or regulations thereunder; or “(2) Failing to furnish information or furnishing false information.— Fails to keep or make any record, return, report, inventory, or statement, or keeps or makes any false or fraudulent record, return, report, inventory, or statement, required by this chapter or regulations thereunder; or “(3) Refusing to pay or evading tax.— Refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof; or “(4) Removing tobacco products or cigarette papers or tubes unlawfully.— Removes, contrary to this chapter or regulations thereunder, any tobacco products or cigarette papers or tubes subject to tax under this chapter; or “(5) Purchasing, receiving, possessing, or selling tobacco products or cigarette papers or tubes unlawfully.— Violates any provision of section 5751 (a) (1) or (a) (2); or “(6) Affixing improper stamps.— Affixes to any package containing tobacco products or cigarette papers or tubes any improper or counterfeit stamp, or a stamp prescribed by this chapter or regulations thereunder which has been previously used on a package of such articles; or “(7) Destroying, obliterating, or detaching marks, labels, notices, or stamps before packages are emptied.— Violates any provision of section 5752 (a); or “(8) Emptying packages without destroying stamps.— Violates any provision of section 5752 (b); or “(9) Possessing emptied packages bearing stamps.— Violates any provision of section 5752 (d); or “(10) Refilling packages bearing stamps.— Puts tobacco products or cigarette papers or tubes into any package which previously contained such articles and which bears a stamp prescribed by this chapter or regulations thereunder without destroying such stamp; or “(11) Detaching stamps or possessing used stamps.— Violates any provision of section 5752 (c); shall, for each such offense, be fined not more than $10,000, or imprisoned not more than 5 years, or both. “(b) Other Offenses.— Whoever, otherwise than as provided in subsection (a), violates any provision of this chapter, or of regulations prescribed thereunder, shall, for each such offense, be fined not more than $1,000, or imprisoned not more than 1 year, or both. “SEC. 5763. FORFEITURES. “(a) Tobacco Products and Cigarette Papers and Tubes Unlawfully Possessed.— (1) Tobacco products and cigarette papers and tubes possessed with intent to defraud.— All tobacco products and cigarette papers and tubes which, after removal, are possessed with intent to defraud the United States shall be forfeited to the United States. (2) Tobacco products and cigarette papers and tubes not properly packaged.— All tobacco products and cigarette papers and tubes not in packages as required under section 5723 or which are in packages not bearing the marks, labels, notices, and stamps, as required under such section, which, after removal, are possessed otherwise than with intent to defraud the United States, shall lie forfeited to the United States. This paragraph shall not apply to tobacco products or cigarette papers or tubes sold or delivered directly to consumers from proper packages. “(b) Personal Property of Qualified Manufacturers, Export Warehouse Proprietors, and Dealers Acting With Intent To Defraud.— All tobacco products and cigarette papers and tubes, tobacco materials, packages, internal revenue stamps, machinery, fixtures, equipment, and all other materials and personal property on the premises of any qualified manufacturer of tobacco products or cigarette papers and tubes, export warehouse proprietor, or dealer in tobacco materials who, with intent to defraud the United States, fails to keep or make any record, return, report, inventory, or statement, or keeps or makes any false or fraudulent record, return, report, inventory, or statement, required by this chapter: or refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof: or removes, contrary to any provision of this chapter, any article subject to tax under this chapter, shall be forfeited to the United States. “(c) Real and Personal Property of Illicit Operators.— All tobacco products, cigarette papers and tubes, tobacco materials, machinery, fixtures, equipment, and other materials and personal property on the premises of any person engaged in business as a manufacturer of tobacco products or cigarette papers and tubes, export warehouse proprietor, or dealer in tobacco materials, without filing the bond or obtaining the permit, as required by this chapter, together with all his right, title, and interest in the building in which such business is conducted, and the lot or tract of ground on which the building is located, shall be forfeited to the United States. “(d) General.— All property intended for use in violating the provisions of this chapter, or regulations thereunder, or which has been so used, shall be forfeited to the United States as provided in section 7302.” 26 USC 7302.

5. 1958

   Pub. L. 85–859 title II § 202 · 72 Stat. 1275

   Added · 26 U.S.C. § 5761(d)

   Pub. L. 85–859 added subsec. (d). Similar provisions were formerly contained in subsec. (c) of this section

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 85–859 added subsec. (d). Similar provisions were formerly contained in subsec. (c) of this section.

   Enacted provision · exact public law section
   SEC. 202. AMENDMENT OF CHAPTER 52 OF THE INTERNAL REVENUE CODE OF 1954. Chapter 52 of the Internal Revenue Code of 1954 is amended to 26 USC 5701–5763. read as follows: “CHAPTER 52— TOBACCO, CIGARS, CIGARETTES, AND CIGARETTE PAPERS AND TUBES “Subchapter A. Definitions; rate and payment of tax; exemption from tax; and refund and drawback of tax. “Subchapter B. Qualification requirements for manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and dealers in tobacco materials. “Subchapter C. Operations by manufacturers and importers of tobacco products and cigarette papers and tubes and export warehouse proprietors. “Subchapter D. Operations by dealers in tobacco materials. “Subchapter E. Records of manufacturers of tobacco products and cigarette papers and tubes, export warehouse proprietors, and dealers in tobacco materials. “Subchapter F. General provisions. “Subchapter G. Penalties and forfeitures. “Subchapter A— Definitions; Rate and Payment of Tax; Exemption From Tax; and Refund and Drawback of Tax “Sec. 5701. Rate of tax. “Sec. 5702. Definitions. “Sec. 5703. Liability for tax and method of payment. “Sec. 5704. Exemption from tax. “Sec. 5705. Refund or allowance of tax. “Sec. 5706. Drawback of tax. “Sec. 5707. Floor stocks refund on cigarettes. “Sec. 5708. Losses caused by disaster. “SEC. 5701. RATE OF TAX. “(a) Tobacco.— On tobacco, manufactured in or imported into the United States, there shall be imposed a tax of 10 cents per pound. “(b) Cigars.— On cigars, manufactured in or imported into the United States, there shall be imposed the following taxes: “(1) Small cigars.— On cigars, weighing not more than 3 pounds per thousand, 75 cents per thousand; “(2) Large cigars.— On cigars, weighing more than 3 pounds per thousand; “(A) If removed to retail at not more than 2 1/2 cents each, $2.50 per thousand; “(B) If removed to retail at more than 2 1/2 cents each and not more than 4 cents each, $3 per thousand; “(C) If removed to retail at more than 4 cents each and not more than 6 cents each, $4 per thousand; “(D) If removed to retail at more than 6 cents each and not more than 8 cents each, $7 per thousand; “(E) If removed to retail at more than 8 cents each and not more than 15 cents each, $10 per thousand; “(F) If removed to retail at more than 15 cents each and not more than 20 cents each, $15 per thousand; “(G) If removed to retail at more than 20 cents each, $20 per thousand. In determining the retail price, for tax purposes, regard shall be had to the ordinary retail price of a single cigar in its principal market, exclusive of any State or local taxes imposed on the retail sale of cigars. Cigars not exempt from tax under this chapter which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale. “(c) Cigarettes.— On cigarettes, manufactured in or imported into the United States, there shall be imposed the following taxes: “(1) Small cigarettes.— On cigarettes, weighing not more than 3 pounds per thousand, $4 per thousand until July 1, 1959, and $3.50 per thousand on and after July 1, 1959; “(2) Large cigarettes.— On cigarettes, weighing more than 3 pounds per thousand, $8.40 per thousand; except that, if more than inches in length, they shall be taxable at the rate prescribed for cigarettes weighing not more than 3 pounds per thousand, counting each 2% inches, or fraction thereof, of the length of each as one cigarette. “(d) Cigarette Papers.— On each book or set of cigarette papers containing more than 25 papers, manufactured in or imported into the United States, there shall be imposed a tax of cent for each 50 papers or fractional part thereof; except that, if cigarette papers measure more than 6 1/2 inches in length, they shall be taxable at the rate prescribed, counting each 2 3/4 inches, or fraction thereof, of the length of each as one cigarette paper. “(e) Cigarette Tubes.— On cigarette tubes, manufactured in or imported into the United States, there shall be imposed a tax of 1 cent for each 50 tubes or fractional part thereof, except that if cigarette tubes measure more than 6 inches in length, they shall be taxable at the rate prescribed, counting each 2% inches, or fraction thereof, of the length of each as one cigarette tube. “(f) Imported Tobacco Products and Cigarette Papers and Tubes.— The taxes imposed by this section on tobacco products and cigarette papers and tubes imported into the United States shall be in addition to any import duties imposed on such articles. “SEC. 5702. DEFINITIONS. “When used in this chapter— “(a) Manufactured Tobacco.— ‘Manufactured tobacco’ means tobacco (other than cigars and cigarettes) prepared, processed, manipulated, or packaged, for removal, or merely removed, for consumption by smoking or for use in the mouth or nose, and any tobacco (other than cigars and cigarettes), not exempt from tax under this chapter, sold or delivered to any person contrary to this chapter or regulations prescribed thereunder. “(b) Cigar.— ‘Cigar’ means any roll of tobacco wrapped in tobacco. “(c) Cigarette.— ‘Cigarette’ means any roll of tobacco, wrapped in paper or any substance other than tobacco. “(d) Tobacco Products.— ‘Tobacco products’ means manufactured tobacco, cigars, and cigarettes. “(e) Manufacturer of Tobacco Products.— ‘Manufacturer of tobacco products’ means any person who manufactures cigars or cigarettes, or who prepares, processes, manipulates, or packages, for removal, or merely removes, tobacco (other than cigars and cigarettes) for consumption by smoking or for use in the mouth or nose, or who sells or delivers any tobacco (other than cigars and cigarettes) contrary to this chapter or regulations prescribed thereunder. The term ‘manufacturer of tobacco products’ shall not include— “(1) a person who in any manner prepares tobacco, or produces cigars or cigarettes, solely for his own personal consumption or use: or “(2) a proprietor of a customs bonded manufacturing warehouse with respect to the operation of such warehouse; or “(3) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, if it is in the condition as cured on the farm; or “(4) a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm, and if the association maintains records of all leaf tobacco, acquired or received and sold or otherwise disposed of, in such manner as the Secretary or his delegate shall by regulations prescribe. “(f) Cigarette Paper.— ‘Cigarette paper’ means paper, or any other material except tobacco, prepared for use as a cigarette wrapper. “(g) Cigarette Papers.— ‘Cigarette papers’ means taxable books or sets of cigarette papers. “(h) Cigarette Tube.— ‘Cigarette tube’ means cigarette paper made into a hollow cylinder for use in making cigarettes. “(i) Manufacturer of Cigarette Papers and Tubes.— ‘Manufacturer of cigarette papers and tubes’ means any person who makes up cigarette paper into books or sets containing more than 25 papers each, or into tubes, except for his own personal use or consumption. “(j) Export Warehouse.— ‘Export warehouse’ means a bonded internal revenue warehouse for the storage of tobacco products and cigarette papers and tubes, upon which the internal revenue tax has not been paid, for subsequent 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. “(k) Export Warehouse Proprietor.— ‘Export warehouse proprietor’ means any person who operates an export warehouse. “(l) Tobacco Materials.— ‘Tobacco materials’ means tobacco other than manufactured tobacco, cigars, and cigarettes. “(m) Dealer in Tobacco Materials.— ‘Dealer in tobacco materials’ means any person who receives and handles tobacco materials for sale, shipment, or delivery to another dealer in such materials, to a manufacturer of tobacco products, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or who receives tobacco materials, other than stems and waste, for use by him in the production of fertilizer, insecticide, or nicotine. The term ‘dealer in tobacco materials’ shall not include— “(1) an operator of a warehouse who stores tobacco materials solely for a qualified dealer in tobacco materials, for a qualified manufacturer of tobacco products, for a farmer or grower of tobacco, or for a bona fide association of farmers or growers of tobacco; or “(2) a farmer or grower of tobacco with respect to the sale of leaf tobacco of his own growth or raising, or a bona fide association of farmers or growers of tobacco with respect to sales of leaf tobacco grown by farmer or grower members, if the tobacco so sold is in the condition as cured on the farm: Provided, That such association maintains records of all leaf tobacco acquired or received and sold or otherwise disposed of by the association, in such manner as the Secretary or his delegate shall by regulation prescribe; or “(3) a person who buys leaf tobacco on the floor of an auction warehouse, or who buys leaf tobacco from a farmer or grower, and places the tobacco on the floor of such a warehouse, or who purchases and sells warehouse receipts without taking physical possession of the tobacco covered thereby; or “(4) a qualified manufacturer of tobacco products with respect to tobacco materials received by him under his bond as such a manufacturer. “(n) Removal or Remove.— ‘Removal’ or ‘remove’ means the removal of tobacco products or cigarette papers or tubes from the factory or from internal revenue bond, as the Secretary or his delegate shall by regulation prescribe, or release from customs custody, and shall also include the smuggling or other unlawful importation of such articles into the United States. “(o) Importer.— ‘Importer’ means any person in the United States to whom nontaxpaid tobacco products or cigarette papers or tubes manufactured in a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States are shipped or consigned; any person who removes cigars or cigarettes for sale or consumption in the United States from a customs bonded manufacturing warehouse; and any person who smuggles or otherwise unlawfully brings tobacco products or cigarette papers or tubes into the United States. “SEC. 5703. LIABILITY FOR TAX AND METHOD OF PAYMENT. “(a) Liability for Tax.— “(1) Original mability.— The manufacturer or importer of tobacco products and cigarette papers and tubes shall be liable for the taxes imposed thereon by section 5701. “(2) Transfer of liability.— When tobacco products and cigarette papers and tubes are transferred, without payment of tax, pursuant to section 5704, the liability for tax shall be transferred in accordance with the provisions of this paragraph. When tobacco products and cigarette papers and tubes are transferred between the bonded premises of manufacturers and export warehouse proprietors, the transferee shall become liable for the tax upon receipt by him of such articles, and the transferor shall thereupon be relieved of his liability for such tax. When tobacco products and cigarette papers and tubes are released in bond from customs custody for transfer to the bonded premises of a manufacturer of tobacco products or cigarette papers and tubes, the transferee shall become liable for the tax on such articles upon release from customs custody, and the importer shall thereupon be relieved of his liability for such tax. “(b) Method of Payment of Tax.— The taxes imposed by section 5701 shall be determined at the time of removal of the tobacco products and cigarette papers and tubes. Such taxes shall be paid on the basis of a return, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment of the taxes on the basis of a return. The Secretary or his delegate shall, by regulations, prescribe the period or event for which such return shall be made, the information to be furnished on such return, the time for making such return, and the time for payment of such taxes. Any postponement under this subsection of the payment of taxes determined at the time of removal shall be conditioned upon the filing of such additional bonds, and upon compliance with such requirements, as the Secretary or his delegate may. by regulations, prescribe for the protection of the revenue. The Secretary or his delegate may, by regulations, require payment of tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of tax on the basis of a return under this subsection or regulations prescribed thereunder. All administrative and penal provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5701. “(c) Stamps To Evidence the Tax.— If the Secretary or his delegate shall by regulation provide for the payment of tax by return and require the use of stamps to evidence the tax imposed by this chapter or to indicate compliance therewith, the Secretary or his delegate shall cause to be prepared suitable stamps to be issued to manufacturers and importers of tobacco products, to be used and accounted for. in accordance with such regulations as the Secretary or his delegate shall prescribe. “(d) Use of Government Depositaries.— The Secretary or his delegate may authorize Federal Reserve banks, and incorporated banks or trust companies which are depositaries or financial agents of the United States, to receive any tax imposed by this chapter, in such manner, at such times, and under such conditions as he may prescribe; and he shall prescribe the manner, time, and condition under which the receipt of such tax by such banks and trust companies is to be treated as payment for tax purposes. “(e) Assessment.— Whenever any tax required to be paid by this chapter is not paid in full at the time required for such payment, it shall be the duty of the Secretary or his delegate, subject to the limitations prescribed in section 6501. on proof satisfactory to him, to determine the amount of tax which has been omitted to be paid, and to make an assessment therefor against the person liable for the tax. 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 lie made until and after the person liable for the tax has been afforded reasonable notice and opportunity to show cause, in writing, against such assessment. “SEC. 5704. EXEMPTION FROM TAX. “(a) Tobacco Products Furnished for Employee Use or Experimental Purposes.— Tobacco products may be furnished by a manufacturer of such products, without payment of tax, for use or consumption by employees or for experimental purposes, in such quantities, and in such manner as the Secretary or his delegate shall by Regulation prescribe. “(b) Tobacco Products and Cigarette Papers and Tubes Transferred or Removed in Bond From Domestic Factories and Export Warehouses.— A manufacturer or export warehouse proprietor may transfer tobacco products and cigarette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, 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; and manufacturers may similarly remove such articles for use of the United States: in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. “(c) Tobacco Materials Shipped or Delivered in Bond.— A dealer in tobacco materials or a manufacturer of tobacco products may ship or deliver tobacco materials, without payment of tax, to another such dealer or manufacturer, or to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the Ignited States; or, in the case of tobacco stems and waste only, to any person for use by him as fertilizer or insecticide or in the production of fertilizer, insecticide, or nicotine; in accordance with such regulations and under such bonds as the Secretary or his delegate shall prescribe. “(d) Tobacco Products, Cigarette Papers and Tubes, and Tobacco Materials Released in Bond From Customs Custody.— Tobacco products, cigarette papers and tubes, and tobacco materials, imported or brought into the United States, may be released from customs custody, without payment of tax, for delivery to a manufacturer of tobacco products or cigarette papers and tubes and such tobacco materials may be similarly released for delivery to a dealer in tobacco materials, in accordance with such regulations and under such bond as the Secretary or his delegate shall prescribe. “SEC. 5705. REFUND OR ALLOWANCE OF TAX. “(a) Refund.— Refund of any tax imposed by this chapter shall be made (without interest) to the manufacturer, importer, or export warehouse proprietor, on proof satisfactory to the Secretary or his delegate that the claimant manufacturer, importer, or export warehouse proprietor has paid the tax on tobacco products and cigarette papers and tubes withdrawn by him from the market; or on such articles lost (otherwise than by theft) or destroyed, by fire, casualty, or act of God, while in the possession or ownership of the claimant. “(b) Allowance.— If the tax has not yet been paid on tobacco products and cigarette papers and tubes proved to have been withdrawn from the market or lost or destroyed as aforesaid, relief from the tax on such articles may be extended upon the filing of a claim for allowance therefor in accordance with such regulations as the Secretary or his delegate shall prescribe. “(c) Limitation.— Any claim for refund of tax under this section shall be filed within 6 months after the date of the withdrawal from the market, loss, or destruction of the articles to which the claim relates, and shall be in such form and contain such information as the Secretary or his delegate shall by regulations prescribe. “SEC. 5706. DRAWBACK OF TAX. “There shall be an allowance of drawback of tax paid on tobacco products and cigarette papers and tubes, when shipped from the United States, in accordance with such regulations and upon the filing of such bond as the Secretary or his delegate shall prescribe. “SEC. 5707. FLOOR STOCKS REFUND ON CIGARETTES. “(a) In General.— With respect to cigarettes, weighing not more than 3 pounds per thousand, upon which the tax imposed by subsection (c) (1) of section 5701 has been paid, and which, on July 1, 1959, are held by any person and intended for sale, or are in transit from foreign countries or insular possessions of the United States to any person in the United States for sale, there shall be credited or refunded to such person (without interest), subject to such regulations as shall be prescribed by the Secretary or his delegate, an amount equal to the difference between the tax paid on such cigarettes and the tax made applicable to such articles on July 1, 1959, if claim for such credit or refund is filed with the Secretary or his delegate before October 1, 1959. “(b) Limitations on Eligibility for Credit or Refund.— No person shall be entitled to credit or refund under subsection (a) unless such person, for such period or periods both before and after July 1, 1959 (but not extending beyond 1 year thereafter), as the Secretary or his delegate shall by regulation prescribe, makes and keeps, and files with the Secretary or his delegate, such records of inventories, sales, and purchases as may be prescribed in such regulations. “(c) Penalty and Administrative Procedures.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on cigarettes shall, insofar as applicable and not inconsistent with this section, be applicable in respect of the credits and refunds provided for in this section to the same extent as if such credits or refunds constituted credits or refunds of such taxes. “SEC. 5708. LOSSES CAUSED BY DISASTER. “(a) Authorization.— Where the President has determined under 64 Stat. 1109. the Act of September 30, 1950 (42 U. S. C., sec. 1855), that a ‘major disaster’ as defined in such Act has occurred in any part of the United States, the Secretary or his delegate shall pay (without interest) an amount equal to the amount of the internal revenue taxes paid or determined and customs duties paid on tobacco products and cigarette papers and tubes removed, which were lost, rendered unmarketable, or condemned by a duly authorized official by reason of such disaster occurring in such part of the United States on and after the effective date of this section, if such tobacco products or cigarette papers or tubes were held and intended for sale at the time of such disaster. The payments authorized by this section shall be made to the person holding such tobacco products or cigarette papers or tubes for sale at the time of such disaster. “(b) Claims.— No claim shall be allowed under this section unless— “(1) filed within 6 months after the date on which the President makes the determination that the disaster referred to in subsection (a) has occurred; and “(2) the claimant furnishes proof to the satisfaction of the Secretary or his delegate that— “(A) he was not indemnified by any valid claim of insurance or otherwise in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes covered by the claim, and “(B) he is entitled to payment under this section. Claims under this section shall be filed under such regulations as the Secretary or his delegate shall prescribe. “(c) Destruction of Tobacco Products or Cigarette Papers or Tubes.— Before the Secretary or his delegate makes payment under this section in respect of the tax, or tax and duty, on the tobacco products or cigarette papers or tubes condemned by a duly authorized official or rendered unmarketable, such tobacco products or cigarette papers or tubes shall be destroyed under such supervision as the Secretary or his delegate may prescribe, unless such tobacco products or cigarette papers or tubes were previously destroyed under supervision satisfactory to the Secretary or his delegate. “(d) Other Laws Applicable.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on tobacco products and cigarette papers and tubes shall, insofar as applicable and not inconsistent with this section, be applied in respect of the payments provided for in this section to the same extent as if such payments constituted refunds of such taxes. “Subchapter B— Qualification Requirements for Manufacturers of Tobacco Products and Cigarette Papers and Tubes, Export Warehouse Proprietors, and Dealers in Tobacco Materials “Sec. 5711. Bond. “Sec. 5712. Application for permit. “Sec. 5713. Permit. “SEC. 5711. BOND. “(a) When Required.— Every person, before commencing business as a manufacturer of tobacco products or cigarette papers and tubes, as an export warehouse proprietor, or as a dealer in tobacco materials, shall file such bond, conditioned upon compliance with this chapter and regulations issued thereunder, in such form, amount, and manner as the Secretary or his delegate shall by regulation prescribe. A new or additional bond may be required whenever the Secretary or his delegate considers such action necessary for the protection of the revenue. “(b) Approval or Disapproval.— No person shall engage in such business until he receives notice of approval of such bond. A bond may be disapproved, upon notice to the principal on the bond, if the Secretary or his delegate determines that the bond is not adequate to protect the revenue. “(c) Cancellation.— Any bond filed hereunder may be canceled, upon notice to the principal on the bond, whenever the Secretary or his delegate determines that the bond no longer adequately protects the revenue. “SEC. 5712. APPLICATION FOR PERMIT. “Every person, before commencing business as a manufacturer of tobacco products or as an export warehouse proprietor, and at such other time as the Secretary or his delegate shall by regulation prescribe, shall make application for the permit provided for in section 5713. The application shall be in such form as the Secretary or his delegate shall prescribe and shall set forth, truthfully and accurately, the information called for on the form. Such application may be rejected and the permit denied if the Secretary or his delegate, after notice and opportunity for hearing, finds that— “(1) the premises on which it is proposed to conduct the business are not adequate to protect the revenue; or “(2) such person (including, in the case of a corporation, any officer, director, or principal stockholder and, in the case of a partnership, a partner) is, by reason of his business experience, financial standing, or trade connections, not likely to maintain operations in compliance with this chapter, or has failed to disclose any material information required or made any material false statement in the application therefor. No person subject to this section, who is lawfully engaged in business on the date of the enactment of the Excise Tax Technical Changes Act of 1958, shall be denied the right to carry on such business pending reasonable opportunity to make application for permit and final action thereon. “SEC. 5713. PERMIT. “(a) Issuance.— A person shall not engage in business as a manufacturer of tobacco products or as an export warehouse proprietor without a permit to engage in such business. Such permit, conditioned upon compliance with this chapter and regulations issued thereunder, shall be issued in such form and in such manner as the Secretary or his delegate shall by regulation prescribe, to every person properly qualified under sections 5711 and 5712. A new permit may be required at such other time as the Secretary or his delegate shall by regulation prescribe. “(b) Revocation.— If the Secretary or his delegate has reason to believe that any person holding a permit has not in good faith complied with this chapter, or with any other provision of this title involving intent to defraud, or has violated the conditions of such permit, or has failed to disclose any material information required or made any material false statement in the application for such permit, or has failed to maintain his premises in such manner as to protect the revenue, the Secretary or his delegate shall issue an order, stating the facts charged, citing such person to show cause why his permit should not be suspended or revoked. If, after hearing, the Secretary or his delegate finds that such person has not in good faith complied with this chapter or with any other provision of this title involving intent to defraud, has violated the conditions of such permit, has failed to disclose any material information required or made any material false statement in the application therefor, or has failed to maintain his premises in such manner as to protect the revenue, such permit shall be suspended for such period as the Secretary or his delegate deems proper or shall be revoked. “Subchapter C— Operations by Manufacturers and Importers of Tobacco Products and Cigarette Papers and Tubes and Export Warehouse Proprietors “Sec. 5721. Inventories. “Sec. 5722. Reports. “Sec. 5723. Packages, marks, labels, notices, and stamps. “SEC. 5721. INVENTORIES. “Every manufacturer of tobacco products or cigarette papers and tubes, and every export warehouse proprietor, shall make a true and accurate inventory at the time of commencing business, at the time of concluding business, and at such other times, in such manner and form, and to include such items, as the Secretary or his delegate shall by regulation prescribe. Such inventories shall be subject to verification by any internal revenue officer. “SEC. 5722. REPORTS. “Every manufacturer of tobacco products or cigarette papers and tubes, and every export warehouse proprietor, shall make reports containing such information, in such form, at such times, and for such periods as the Secretary or his delegate shall by regulation prescribe. “SEC. 5723. PACKAGES, MARKS. LABELS, NOTICES, AND STAMPS. “(a) Packages.— All tobacco products and cigarette papers and tubes shall, before removal, be put up in such packages as the Secretary or his delegate shall by regulation prescribe. “(b) Marks, Labels, Notices, and Stamps.— Every package of tobacco products or cigarette papers or tubes shall, before removal, bear the marks, labels, notices, and stamps, if any, that the Secretary or his delegate by regulation prescribes. “(c) Lottery Features.— No 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 shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products or cigarette papers or tubes. “(d) Indecent or Immoral Material Prohibited.— No indecent or immoral picture, print, or representation shall be contained in, attached to, or stamped, marked, written, or printed on any package of tobacco products or cigarette papers or tubes. “(e) Exceptions.— Tobacco products furnished by manufacturers of such products for use or consumption by their employees, or for experimental purposes, and tobacco products and cigarette papers and tubes transferred to the bonded premises of another manufacturer or export warehouse proprietor or released in bond from customs custody for delivery to a manufacturer of tobacco products or cigarette papers and tubes, may be exempted from subsections (a) and (b) in accordance with such regulations as the Secretary or his delegate shall prescribe. “Subchapter D— Operations by Dealers in Tobacco Materials “Sec. 5731. Shipments and deliveries restricted. “Sec. 5732. Inventory, and statement of shipments and deliveries. “SEC. 5731. SHIPMENTS AND DELIVERIES RESTRICTED. “Every dealer in tobacco materials shall make all shipments or deliveries of tobacco materials in accordance with such regulations as the Secretary or his delegate shall prescribe. Tobacco materials shipped or delivered in violation of such regulations shall be subject to tax as manufactured tobacco and the dealer shipping or delivering the same shall be subject as a manufacturer of tobacco to the provisions of this chapter. “SEC. 5732. INVENTORY, AND STATEMENT OF SHIPMENTS AND DELIVERIES. “A dealer in tobacco materials shall make, upon demand of any internal revenue officer, a true and accurate inventory of all such materials held by the dealer, and shall, upon similar demand, furnish a true and complete statement of the quantity of such materials shipped or delivered to any person named in such demand. “Subchapter E— Records of Manufacturers of Tobacco Products and Cigarette Papers and Tubes, Export Warehouse Proprietors, and Dealers in Tobacco Materials “Sec. 5741. Records to be maintained. “SEC. 5741. RECORDS TO BE MAINTAINED. “Every manufacturer of tobacco products or cigarette papers and tubes, every export warehouse proprietor, and every dealer in tobacco materials shall keep such records in such manner as the Secretary or his delegate shall by regulation prescribe. “Subchapter F— General Provisions “Sec. 5751. Purchase, receipt, possession, or sale of tobacco products and cigarette papers and tubes, after removal. “Sec. 5752. Restrictions relating to marks, labels, notices, stamps, and packages. “Sec. 5753. Disposal of forfeited, condemned, and abandoned tobacco products, cigarette papers and tubes, and tobacco materials. “SEC. 5751. PURCHASE, RECEIPT, POSSESSION, OR SALE OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES, AFTER REMOVAL “(a) Restriction.— No person shall— “(1) with intent, to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes— “(A) upon which the tax has not been paid or determined in the manner and at the time prescribed by this chapter or regulations thereunder; or “(B) which, after removal without payment of tax pursuant to section 5704, have been diverted from the applicable purpose or use specified in that section; or “(2) with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, notices, and stamps, as required under such section; or “(3) otherwise than with intent to defraud the United States, purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any tobacco products or cigarette papers or tubes, which are not put up in packages as required under section 5723 or which are put up in packages not bearing the marks, labels, notices, and stamps, as required under such section. This paragraph shall not prevent the sale or delivery of tobacco products or cigarette papers or tubes directly to consumers from proper packages, nor apply to such articles when so sold or delivered. “(b) Liability to Tax.— Any person who possesses tobacco products or cigarette papers or tubes in violation of subsection (a) (1) or (a) (2) shall be liable for a tax equal to the tax on such articles. “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, STAMPS, AND PACKAGES. “No person shall, with intent to defraud the United States— “(a) destroy, obliterate, or detach any mark, label, notice, or stamp prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied; or “(b) empty any package of tobacco products or cigarette papers or tubes without destroying any stamp thereon to evidence the tax or indicate compliance with this chapter, prescribed by this chapter or regulations thereunder to be affixed to such package; or “(c) detach, or cause to be detached, from any package of tobacco products or cigarette papers or tubes any stamp, prescribed by this chapter or regulations thereunder, to evidence the tax or indicate compliance with this chapter, or purchase, receive, possess, sell, or dispose of, by gift or otherwise, any such stamp which has been so detached; or “(d) purchase, receive, possess, sell, or dispose of, by gift or otherwise, any package which previously contained tobacco products or cigarette papers or tubes which has been emptied, and upon which any stamp prescribed by this chapter or regulations thereunder, to evidence the tax or indicate compliance with this chapter, has not been destroyed. “SEC. 5753. DISPOSAL OF FORFEITED, CONDEMNED, AND ABANDONED TOBACCO PRODUCTS, CIGARETTE PAPERS AND TUBES AND TOBACCO MATERIALS. “If it appears that any forfeited, condemned, or abandoned tobacco products, cigarette papers and tubes, or tobacco materials, when offered for sale, will not bring a price equal to the tax due and payable thereon, and the expenses incident to the sale thereof, such articles and tobacco materials shall not be sold for consumption in the United States but shall be disposed of in accordance with such regulations as the Secretary or his delegate shall prescribe. “Subchapter G— Penalties and Forfeitures “Sec. 5761. Civil penalties. “Sec. 5762. Criminal penalties. “Sec. 5763. Forfeitures. “SEC. 5761. CIVIL PENALTIES. “(a) Omitting Things Required or Doing Things Forbidden.— Whoever willfully omits, neglects, or refuses to comply with any duty imposed upon him by this chapter, or to do, or cause to be done, any of the things required by this chapter, or does anything prohibited by this chapter, shall, in addition to any other penalty provided in this title, be liable to a penalty of $1,000, to be recovered, with costs of suit, in a civil action, except where a penalty under subsection (b) or under section 6651 or 6653 may be collected from such person by assessment. 26 USC 6651, 6653. “(b) Failure To Pay Tax.— Whoever fails to pay any tax imposed by this chapter at the time prescribed by law or regulations, shall, in addition to any other penalty provided in this title, be liable to a penalty of 5 percent of the tax due but unpaid. “(c) Failure To Make Deposit of Taxes.— Section 6656 relating 26 USC 6656. to failure to make deposit of taxes shall apply to the failure to make any deposit of taxes imposed under subchapter A on the date prescribed 26 USC 5001–5149. therefor, except that the penalty for such failure shall be 5 percent of the amount of the underpayment in lieu of the penalty provided by such section. “(d) Applicability of Section 6659.— The penalties imposed by 26 USC 6659. subsections (b) and (c) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6659 (a). “SEC. 5762. CRIMINAL PENALTIES. “(a) Fraudulent Offenses.— Whoever, with intent to defraud the United States— “(1) Engaging in business unlawfully.— Engages in business as a manufacturer of tobacco products or cigarette papers and tubes, as an export warehouse proprietor, or as a dealer in tobacco materials without filing the bond and obtaining the permit where required by this chapter or regulations thereunder; or “(2) Failing to furnish information or furnishing false information.— Fails to keep or make any record, return, report, inventory, or statement, or keeps or makes any false or fraudulent record, return, report, inventory, or statement, required by this chapter or regulations thereunder; or “(3) Refusing to pay or evading tax.— Refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof; or “(4) Removing tobacco products or cigarette papers or tubes unlawfully.— Removes, contrary to this chapter or regulations thereunder, any tobacco products or cigarette papers or tubes subject to tax under this chapter; or “(5) Purchasing, receiving, possessing, or selling tobacco products or cigarette papers or tubes unlawfully.— Violates any provision of section 5751 (a) (1) or (a) (2); or “(6) Affixing improper stamps.— Affixes to any package containing tobacco products or cigarette papers or tubes any improper or counterfeit stamp, or a stamp prescribed by this chapter or regulations thereunder which has been previously used on a package of such articles; or “(7) Destroying, obliterating, or detaching marks, labels, notices, or stamps before packages are emptied.— Violates any provision of section 5752 (a); or “(8) Emptying packages without destroying stamps.— Violates any provision of section 5752 (b); or “(9) Possessing emptied packages bearing stamps.— Violates any provision of section 5752 (d); or “(10) Refilling packages bearing stamps.— Puts tobacco products or cigarette papers or tubes into any package which previously contained such articles and which bears a stamp prescribed by this chapter or regulations thereunder without destroying such stamp; or “(11) Detaching stamps or possessing used stamps.— Violates any provision of section 5752 (c); shall, for each such offense, be fined not more than $10,000, or imprisoned not more than 5 years, or both. “(b) Other Offenses.— Whoever, otherwise than as provided in subsection (a), violates any provision of this chapter, or of regulations prescribed thereunder, shall, for each such offense, be fined not more than $1,000, or imprisoned not more than 1 year, or both. “SEC. 5763. FORFEITURES. “(a) Tobacco Products and Cigarette Papers and Tubes Unlawfully Possessed.— (1) Tobacco products and cigarette papers and tubes possessed with intent to defraud.— All tobacco products and cigarette papers and tubes which, after removal, are possessed with intent to defraud the United States shall be forfeited to the United States. (2) Tobacco products and cigarette papers and tubes not properly packaged.— All tobacco products and cigarette papers and tubes not in packages as required under section 5723 or which are in packages not bearing the marks, labels, notices, and stamps, as required under such section, which, after removal, are possessed otherwise than with intent to defraud the United States, shall lie forfeited to the United States. This paragraph shall not apply to tobacco products or cigarette papers or tubes sold or delivered directly to consumers from proper packages. “(b) Personal Property of Qualified Manufacturers, Export Warehouse Proprietors, and Dealers Acting With Intent To Defraud.— All tobacco products and cigarette papers and tubes, tobacco materials, packages, internal revenue stamps, machinery, fixtures, equipment, and all other materials and personal property on the premises of any qualified manufacturer of tobacco products or cigarette papers and tubes, export warehouse proprietor, or dealer in tobacco materials who, with intent to defraud the United States, fails to keep or make any record, return, report, inventory, or statement, or keeps or makes any false or fraudulent record, return, report, inventory, or statement, required by this chapter: or refuses to pay any tax imposed by this chapter, or attempts in any manner to evade or defeat the tax or the payment thereof: or removes, contrary to any provision of this chapter, any article subject to tax under this chapter, shall be forfeited to the United States. “(c) Real and Personal Property of Illicit Operators.— All tobacco products, cigarette papers and tubes, tobacco materials, machinery, fixtures, equipment, and other materials and personal property on the premises of any person engaged in business as a manufacturer of tobacco products or cigarette papers and tubes, export warehouse proprietor, or dealer in tobacco materials, without filing the bond or obtaining the permit, as required by this chapter, together with all his right, title, and interest in the building in which such business is conducted, and the lot or tract of ground on which the building is located, shall be forfeited to the United States. “(d) General.— All property intended for use in violating the provisions of this chapter, or regulations thereunder, or which has been so used, shall be forfeited to the United States as provided in section 7302.” 26 USC 7302.

6. 1981

   Economic Recovery Tax Act of 1981

   Pub. L. 97–34 § 724(b)(5) · 95 Stat. 175

   Struck · 26 U.S.C. § 5761(c)

   Pub. L. 97–34, § 724(b)(5), added subsec. (c). Former subsec. (c), which related to applicability of section 6656 to failure to make deposit of taxes imposed under subchapter A on the prescribed date and imposition of penalty, was struck out

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 97–34, § 724(b)(5), added subsec. (c). Former subsec. (c), which related to applicability of section 6656 to failure to make deposit of taxes imposed under subchapter A on the prescribed date and imposition of penalty, was struck out.

   Enacted provision · exact public law section
   (5) Section 5761 (relating to civil penalties) is amended by 26 USC 5761. striking out subsections (c) and (d) and inserting in lieu thereof the following: “(c) Applicability of Section 6659.— The penalty imposed by Ante, p. 341. subsection (b) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6659(a). “(d) Cross References.— “For penalty for failure to make deposits or for overstatement of deposits, see section 6656.”

7. 1981

   Economic Recovery Tax Act of 1981

   Pub. L. 97–34 title VII · 95 Stat. 175

   Struck · 26 U.S.C. § 5761(d)

   Pub. L. 97–34, §§ 722(a)(3), 724(b)(5), added subsec. (d). Former subsec. (d), which related to applicability of section 6660 and penalties imposed by subsections (b) and (c) to be assessed, collected, and paid in the manner as taxes provided in section 6660(a), was struck out. See subsec. (c)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 97–34, §§ 722(a)(3), 724(b)(5), added subsec. (d). Former subsec. (d), which related to applicability of section 6660 and penalties imposed by subsections (b) and (c) to be assessed, collected, and paid in the manner as taxes provided in section 6660(a), was struck out. See subsec. (c).

   Enacted provision · exact public law
   TITLE VII— ADMINISTRATIVE PROVISIONS Subtitle A— Prohibition of Disclosure of Audit Methods SEC. 701. PROHIBITION OF DISCLOSURE OF METHODS FOR SELECTION OF TAX RETURNS FOR AUDITS. (a) General Rule.— Paragraph (2) of section 6103(b) (defining return information) is amended by adding at the end thereof the following new sentence: “Nothing in the preceding sentence, or in any other provision of law, shall be construed to require the disclosure of standards used or to be used for the selection of returns for examination, or data used or to be used for determining such standards, if the Secretary determines that such disclosure will seriously impair assessment, collection, or enforcement under the internal revenue laws.” (b) Effective Date.— The amendment made by subsection (a) shall apply to disclosures after July 19, 1981. Subtitle B— Changes in Interest Rate for Overpayments and Underpayments SEC. 711. CHANGES IN RATE OF INTEREST FOR OVERPAYMENTS AND UNDERPAYMENTS. (a) Annual Adjustment to Rate of Interest.— Subsection (b) of 26 USC 6621. section 6621 (relating to adjustment of interest rate) is amended by striking out the last sentence thereof. (b) Rate of Interest To Be Based on 100 Percent Of Prime Rate.— Subsection (c) of section 6621 is amended by striking out “90 percent of”. (c) New Rate To Take Effect on January 1 of Each Year After 1982.— Subsection (b) of section 6621 is amended by striking out “February 1” and inserting in lieu thereof “January 1”. (d) Effective Dates.— (1) For subsections (a) and (b).— The amendments made by subsections (a) and (b) shall apply to adjustments made after the date of the enactment of this Act. (2) For subsection (c).— The amendment made by subsection (c) shall apply to adjustments made for periods after 1982. Subtitle C— Changes in Certain Penalties and in Requirements Relating to Returns SEC. 721. CHANGES IN PENALTIES FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. (a) Civil Penalty.— Section 6682 (relating to false information with respect to withholding allowances based on itemized deductions) is amended to read as follows: “SEC. 6682. FALSE INFORMATION WITH RESPECT TO WITHHOLDING. “(a) Civil Penalty.— In addition to any criminal penalty provided by law, if— “(1) any individual makes a statement under section 3402 which results in a decrease in the amounts deducted and withheld under chapter 24, and 26 USC 3401 et seq. “(2) as of the time such statement was made, there was no reasonable basis for such statement, such individual shall pay a penalty of $500 for such statement. “(b) Exception.— The Secretary may waive (in whole or in part) the penalty imposed under subsection (a) if the taxes imposed with respect to the individual under subtitle A for the taxable year are equal to or less than the sum of— “(1) the credits against such taxes allowed by part IV of subchapter A of chapter 1, and 26 USC 31. “(2) the payments of estimated tax which are considered payments on account of such taxes. “(c) Deficiency Procedures Not To Apply.— Subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, 26 USC 6211. and certain excise taxes) shall not apply in respect to the assessment or collection of any penalty imposed by subsection (a).” (b) Criminal Penalty.— Section 7205 (relating to fraudulent withholding 26 USC 7205. exemption certificate or failure to supply information) is amended by striking out “$500” and inserting in lieu thereof “$1,000”. (c) Clerical Amendment.— The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6682 and inserting in lieu thereof the following: “Sec. 6682. False information with respect to withholding.” (d) Effective Date.— The amendments made by this section shall 26 USC 6682 note. apply to acts and failures to act after December 31, 1981. SEC. 722. ADDITIONS TO TAX IN THE CASE OF VALUATION OVERSTATEMENTS, INCREASE IN NEGLIGENCE PENALTY. (a) Valuation Overstatements.— (1) In General.— Subchapter A of chapter 68 (relating to additions to tax) is amended by redesignating section 6659 as section 6660 and by inserting after section 6658 the following new 26 USC 6660. section: “SEC. 6659. ADDITION TO TAX IN THE CASE OF VALUATION OVERSTATEMENTS FOR PURPOSES OF THE INCOME TAX. “(a) Addition to the Tax.— If— “(1) an individual, or “(2) a closely held corporation or a personal service corporation, has an underpayment of the tax imposed by chapter 1 for the taxable year which is attributable to a valuation overstatement, then there shall be added to the tax an amount equal to the applicable percentage of the underpayment so attributable. “(b) Applicable Percentage Defined.— For purposes of subsection (a), the applicable percentage shall be determined under the following table: “If the valuation claimed is the following percent of the correct valuation— The applicable percentage is:  150 percent or more but not more than 200 percent 10  More than 200 percent but not more than 250 percent 20  More than 250 percent 30 “(c) Valuation Overstatement Defined.— “(1) In general.— For purposes of this section, there is a valuation overstatement if the value of any property, or the adjusted basis of any property, claimed on any return exceeds 150 percent of the amount determined to be the correct amount of such valuation or adjusted basis (as the case may be). “(2) Property must have been acquired within last 5 years.— This section shall not apply to any property which, as of the close of the taxable year for which there is a valuation overstatement, has been held by the taxpayer for more than 5 years. “(d) Underpayment Must Be at Least $1,000.— This section shall not apply if the underpayment for the taxable year attributable to the valuation overstatement is less than $1,000. “(e) Authority To Waive.— The Secretary may waive all or any part of the addition to the tax provided by this section on a showing by the taxpayer that there was a reasonable basis for the valuation or adjusted basis claimed on the return and that such claim was made in good faith. “(f) Other Definitions.— For purposes of this section— “(1) Underpayment.— The term ‘underpayment’ has the meaning given to such term by section 6653(c)(1). “(2) Closely held corporation.— The term ‘closely held corporation’ means any corporation described in section 465(a)(1)(C). “(3) Personal service corporation.— The term ‘personal service corporation’ means any corporation which is a service organization (within the meaning of section 414(m)(3)).” (2) Clerical amendment.— The table of sections for subchapter A of chapter 68 is amended by striking out the last item and inserting in lieu thereof the following: “Sec. 6659. Addition to tax in the case of valuation overstatements for purposes of the income tax. “Sec. 6660. Applicable rules.” (3) Technical amendment.— Subsection (c) of section 5684 (relating to penalties for the payment and collection of liquor 26 USC 5684, 5761. taxes) and subsection (d) of section 5761 (relating to civil penalties) are each amended by striking out “6659” in the heading and text thereof and inserting in lieu thereof “6660”. (4) Effective date.— The amendments made by this subsection shall apply to returns filed after December 31, 1981. (b) Increase in Negligence Penalty.— (1) In general.— Subsection (a) of section 6653 (relating to failure to pay tax) is amended to read as follows: “(a) Negligence or Intentional Disregard of Rules and Regulations With Respect to Income, Gift, or Windfall Profit Taxes.— “(1) In general.— If any part of any underpayment (as defined in subsection (c)(1)) of any tax imposed by subtitle A, by chapter 26 USC 1, 2501 et seq. 94 Stat. 230. 26 USC 4986 et seq. 12 of subtitle B, or by chapter 45 (relating to windfall profit tax) is due to negligence or intentional disregard of rules or regulations (but without intent to defraud), there shall be added to the tax an amount equal to 5 percent of the underpayment. “(2) Additional amount for portion attributable to negligence, etc.— There shall be added to the tax (in addition to the amount determined under paragraph (1)) an amount equal to 50 percent of the interest payable under section 6601— “(A) with respect to the portion of the underpayment described in paragraph (1) which is attributable to the negligence or intentional disregard referred to in paragraph (1), and “(B) for the period beginning on the last date prescribed by law for payment of such underpayment (determined without regard to any extension) and ending on the date of the assessment of the tax.” (2) Effective date.— The amendment made by paragraph (1) 26 USC 6653 note. shall apply to taxes the last date prescribed for payment of which is after December 31, 1981. SEC. 723. CHANGES IN REQUIREMENTS RELATING TO INFORMATION RETURNS. (a) Increases in Penalties for Failure To File Certain Returns or Furnish Certain Statements.— (1) Certain returns.— Paragraph (1) of section 6652(a) (relating 26 USC 6652. to failure to file certain information returns, registration statements, etc.) is amended to read as follows: “(1) to file a statement of the aggregate amount of payments to another person required by— “(A) section 6041 (a) or (b) (relating to certain information at source), “(B) section 6042(a)(1) (relating to payments of dividends aggregating $10 or more), “(C) section 6044(a)(1) (relating to payments of patronage dividends aggregating $10 or more), “(D) section 6049(a)(1) (relating to payments of interest aggregating $10 or more), “(E) section 6050A(a) (relating to reporting requirements of certain fishing boat operators), or “(F) section 6051(d) (relating to information returns with respect to income tax withheld), or”. (2) Certain statements.— Section 6678 (relating to failure to 26 USC 6678. furnish certain statements) is amended by striking out “or” at the end of paragraph (1), by inserting “or” at the end of paragraph (2), and by inserting after paragraph (2) the following new paragraph: “(3) to furnish a statement under— “(A) section 6050A(b) (relating to statements furnished by certain fishing boat operators), “(B) section 6050C (relating to information regarding windfall profit tax on crude oil), “(C) section 6051 (relating to information returns with respect to income tax withheld) if the statement is required to be furnished to the employee, or “(D) section 6053(b) (relating to statements furnished by employers with respect to tips), on the date prescribed therefor to a person with respect to whom such a statement is required,”. (3) Retention of existing penalties for failure to file certain statements.— Subsection (b) of section 6652 is amended 26 USC 6652. to read as follows: “(b) Other Returns.— In the case of each failure to file a statement of a payment to another person required under the authority of— “(1) section 6042(a)(2) (relating to payments of dividends aggregating less than $10), “(2) section 6044(a)(2) (relating to payments of patronage dividends aggregating less than $10), “(3) section 6049(a)(2) (relating to payments of interest aggregating less than $10), or “(4) section 6049(a)(3) (relating to other payments of interest by corporations), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid (upon notice and demand by the Secretary and in the same manner as tax) by the person failing to so file the statement, $1 for each such statement not so filed, but the total amount imposed on the delinquent person for all such failures during the calendar year shall not exceed $1,000.” (4) Clerical amendment.— The subsection heading of subsection (a) of section 6652 is amended by inserting “Information at Source,” before “Payments of Dividends”. (b) Requirement of Statements To Be Furnished to Persons With Respect to Whom Information Is Furnished on Payments of $600 or More.— (1) In general.— Section 6041 (relating to information at source) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: “(d) Statements To Be Furnished to Persons With Respect to Whom Information Is Furnished.— Every person making a return under subsection (a) shall furnish to each person whose name is set forth in such return a written statement showing— “(1) the name, address, and identification number of the person making such return, and “(2) the aggregate amount of payments to the person shown on the return. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) was made. To the extent provided in regulations prescribed by the Secretary, this subsection shall also apply to persons making returns under subsection (b).” (2) Penalty for failure to furnish statement.— Paragraph 26 USC 6678. (1) of section 6678 (relating to failure to furnish certain statements) is amended— (A) by inserting “6041(d),” before “6042(c)”, and (B) by inserting “6041(a),” before “6042(a)(1)”. (c) Effective Date.— The amendments made by this section shall apply to returns and statements required to be furnished after December 31, 1981. SEC. 724. PENALTY FOR OVERSTATED DEPOSIT CLAIMS. (a) General Rule.— Subsection (b) of section 6656 (relating to failure to make deposit of taxes) is amended to read as follows: “(b) Overstated Deposit Claims.— “(1) Imposition of penalty.— Any person who makes an overstated deposit claim shall be subject to a penalty equal to 25 percent of such claim. “(2) Overstated deposit claim defined.— For purposes of this subsection, the term ‘overstated deposit claim’ means the excess of— “(A) the amount of tax under this title which any person claims, in a return filed with the Secretary, that such person has deposited in a government depositary under section 6302(c) for any period, over “(B) the aggregate amount such person has deposited in a government depositary under section 6302(c), for such period, on or before the date such return is filed. “(3) Penalty not imposed in certain cases.— The penalty under paragraph (1) shall not apply if it is shown that the excess described in paragraph (2) is due to reasonable cause and not due to willful neglect. “(4) Penalty in addition to other penalties.— The penalty under paragraph (1) shall be in addition to any other penalty provided by law.” (b) Clerical Amendments.— (1) The heading of section 6656 is amended by inserting “OR OVERSTATEMENT OF DEPOSITS” after “TAXES”. (2) The table of sections for subchapter A of chapter 68 is amended by striking out the item relating to section 6656 and inserting in lieu thereof the following: “Sec. 6656. Failure to make deposit of taxes or overstatement of deposits.” (3) The heading of subsection (a) of section 6656 is amended by striking out “Penalty” and inserting in lieu thereof “Underpayment of Deposits”. (4) (A) Section 5684 (relating to penalties relating to the payment 26 USC 5684. and collection of liquor taxes) is amended by striking out subsection (b) and by redesignating subsections (c) and (d) as subsections (b) and (c), respectively. (B) Subsection (c) of section 5684, as redesignated by subparagraph (A), is amended by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by inserting after paragraph (3) the following new paragraph: “(4) For penalty for failure to make deposits or for overstatement of deposits, see section 6656.” (5) Section 5761 (relating to civil penalties) is amended by 26 USC 5761. striking out subsections (c) and (d) and inserting in lieu thereof the following: “(c) Applicability of Section 6659.— The penalty imposed by Ante, p. 341. subsection (b) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6659(a). “(d) Cross References.— “For penalty for failure to make deposits or for overstatement of deposits, see section 6656.” (c) Effective Date.— The amendments made by this section shall 26 USC 6656 note. apply to returns filed after the date of the enactment of this Act. SEC. 725. DECLARATION OF ESTIMATED TAX NOT REQUIRED IN CERTAIN CASES. (a) General Rule.— Section 6015 (relating to declaration of estimated 26 USC 6015. tax by individuals) is amended by redesignating subsections (b) through (i) as subsections (c) through (j), respectively, and by inserting after subsection (a) the following new subsection: “(b) Declaration Not Required in Certain Cases.— No declaration shall be required under subsection (a) if the estimated tax (as defined in subsection (d)) is less than the amount determined in accordance with the following table: “In the case of taxable years beginning in: The amount is:  1981 $100   1982 200   1983 300   1984 400   1985 and thereafter 500.” (b) No Penalty for Failure To Pay Estimated Tax in Certain Cases.— Section 6654 (relating to failure by individual to pay estimated tax) is amended by redesignating subsections (f) and (g) as subsections (g) and (h), respectively, and by inserting after subsection (e) the following new subsection: “(f) Exception Where Tax Is Small Amount.— “(1) In general.— No addition to tax shall be imposed under subsection (a) for any taxable year if the tax shown on the return for such taxable year (or, if no return is filed, the tax) is less than the amount determined under the following table: “In the case of taxable years beginning in: The amount is:  1981 $100  1982 200  1983 300  1984 400  1985 and thereafter 500. “(2) Special rule.— For purposes of subsection (b), the amount of any installment required to be paid shall be determined without regard to subsection (b) of section 6015.” (c) Technical Amendments.— (1) Paragraph (6) of section 871(g) is amended by striking out “6015(i)” and inserting in lieu thereof “6015(j)”. (2) Subsection (a) of section 6015 is amended by striking out the last sentence. (3) Subsection (a) of section 6153 is amended by striking out “6015(c)” and inserting in lieu thereof “6015(d)”. (4) Subparagraph (A) of section 7701(a)(34) is amended by striking out “6015(c)” and inserting in lieu thereof “6015(d)”. (5) Subsection (g) of such section 6654 (as redesignated by subsection (b)) is amended by striking out “subsections (b) and (d)” and inserting in lieu thereof “subsections (b), (d), and (f)”. (d) Effective Date.— The amendments made by this section shall apply to estimated tax for taxable years beginning after December 31, 1980. Subtitle D— Cash Management SEC. 731. CASH MANAGEMENT. (a) In General.— Paragraph (1) of section 6655(h) (relating to large corporations required to pay at least 60 percent of current year tax) is amended to read as follows: “(1) Minimum percentage.— “(A) In general.— Except as provided in subparagraph (B), in the case of a large corporation, paragraphs (1) and (2) of subsection (d) shall not apply. “(B) Transition rule.— For taxable years beginning before 1984, in the case of a large corporation, the amount treated as the estimated tax for the taxable year under paragraphs (1) and (2) of subsection (d) shall in no event be less than the applicable percentage of— “(i) the tax shown on the return for the taxable year, or “(ii) if no return was filed, the tax for such year. “(C) Applicable percentage.— For purposes of subparagraph (B), the applicable percentage shall be determined in accordance with the following table: “If the taxable year begins in: The applicable percentage is:  1982 65   1983 75.” (b) Clerical Amendment.— The heading of subsection (h) of section 6655 (relating to failure by corporations to pay estimated income tax) 26 USC 6655. is amended by striking out “at Least 60 Percent” and inserting in lieu thereof “Minimum Percentage”. (c) Effective Date.— The amendments made by this section shall 26 USC 6655 note. apply to taxable years beginning after December 31, 1981. note. Subtitle E— Financing of Railroad Retirement System SEC. 741. INCREASES IN EMPLOYER AND EMPLOYEE TAXES. (a) Tax on Employees.— Section 3201 (relating to rate of tax on 26 USC 3201. employees) is amended by striking out all that precedes “the rate of the tax” and inserting in lieu thereof the following: “(a) In addition to other taxes, there is hereby imposed on the income of each employee a tax equal to 2.0 percent of so much of the compensation paid in any calendar month to such employee for services rendered by him as is not in excess of an amount equal to one-twelfth of the current maximum annual taxable ‘wages’ as defined in section 3121 for any month. “(b) The rate of tax imposed by subsection (a) shall be increased by”. (b) Tax on Employee Representatives.— Subsection (a) of section 3211 (relating to tax on employee representatives) is amended by 26 USC 3211. striking out “9.5” and inserting in lieu thereof “11.75”. (c) Tax on Employers.— The first sentence of section 3221(a) 26 USC 3221. (relating to tax on employers) is amended by striking out “9.5” and inserting in lieu thereof “11.75”. (d) Conforming Amendments.— (1) The last sentence of section 230(c) of the Social Security Act 42 USC 430. is amended— (A) by inserting “employee and” before “employer”, (B) by striking out “section 3221(a)” and inserting in lieu thereof “sections 3201(a) and 3221(a)”, and (C) by striking out “9.5” and inserting in lieu thereof “11.75”. (2) Paragraph (1) of section 3231(e) (defining compensation) is 26 USC 3231. amended by striking out “(iii)” and all that follows through “(iv)” and inserting in lieu thereof “or (iii)”. (e) Effective Date.— The amendments made by this section shall 26 USC 3201 note. apply to compensation paid for services rendered after September 30, 1981. SEC. 742. ADVANCE TRANSFER OF AMOUNTS PAYABLE UNDER SOCIAL SECURITY FINANCIAL INTERCHANGE. 45 USC 231n. Section 15(b) of the Railroad Retirement Act of 1974 is amended by inserting “(1)” after “(b)” and by inserting at the end thereof the following new subdivision: “(2) In any month when the Board finds that the balance in the Railroad Retirement Account is insufficient to pay annuity amounts due to be paid during the following month, the Board shall report to the Secretary of the Treasury the additional amount of money necessary in order to make such annuity payments, and the Secretary shall transfer to the credit of the Railroad Retirement Account such additional amount upon receiving such report from the Board. The total amount of money outstanding to the Railroad Retirement Account from the general fund at any time during any fiscal year shall not exceed the total amount of money the Board and the Trustees of the Social Security Trust Funds estimate will be transferred 45 USC 231f. to the Railroad Retirement Account pursuant to section 7(c)(2) of this Act with respect to such fiscal year. Whenever the Board determines that the sums in the Railroad Retirement Account are sufficient to pay annuity amounts, the Board shall request the Secretary of the Treasury to retransfer to the general fund from the Railroad Retirement Account all or any part of the amount outstanding, and the Secretary of the Treasury shall make such retransfer of the amount requested. Not later than 10 days after a transfer to the Railroad Retirement Account under section 7(c)(2) of this Act, any amount of money outstanding to the Railroad Retirement Account from the general fund under this subdivision shall be retransferred in accordance with this subdivision. Any amount retransferred shall include an amount of interest computed at a rate determined in accordance with the following two sentences: The rate of interest payable with respect to an amount outstanding for any month shall be equal to the average investment yield for the most recent auction (before such month) of United States Treasury bills with maturities of 52 weeks, deeming any amount outstanding at the beginning of a month to have been borrowed at the beginning of such month. For this purpose the amount of interest computed in accordance with the preceding sentence but not repaid by the end of such month shall be added to the amount outstanding at the beginning of the next month.” SEC. 743. AMENDMENTS TO SECTION 3231 CLARIFYING DEFINITION OF COMPENSATION. (a) Paragraph (1) of section 3231(e) (defining compensation) is amended by adding after the third sentence thereof the following new sentence: Compensation which is paid in one calendar month but which would be payable in a prior or subsequent taxable month but for the fact that prescribed date of payment would fall on a Saturday, Sunday or legal holiday shall be deemed to have been paid in such prior or subsequent taxable month.” (b) Paragraph (2) of section 3231(e) is amended by adding at the beginning thereof the following new sentence: “A payment made by an employer to an individual through the employer’s payroll shall be presumed, in the absence of evidence to the contrary, to be compensation for service rendered by such individual as an employee of the employer in the period with respect to which the payment is made.” (c) Paragraph (2) of section 3231(e), as amended by subsection (b), is amended by striking from the second sentence thereof the words “An employee” and inserting instead the words: “An employee receiving retroactive wage payments”. (d) The amendments made by this section shall apply for taxable 26 USC 3231 note. years beginning after December 31, 1981. Subtitle F— Filing Fees SEC. 751. FEES FOR FILING PETITIONS. (a) In General.— Section 7451 is amended by striking out “$10” 26 USC 7451. and inserting in lieu thereof “$60”. (b) Effective Date.— The amendment made by this section shall 26 USC 7451 note. apply to petitions filed after December 31, 1981.

8. 1983

   Pub. L. 97–448 title I § 107(b) · 96 Stat. 2365

   1. Substituted · 26 U.S.C. § 5761(c)

      Pub. L. 97–448 substituted “section 6660” for “section 6659” in heading

   2. Substituted · 26 U.S.C. § 5761(c)

      Pub. L. 97–448 substituted “section 6660(a)” for “section 6659(a)” in text

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 97–448 substituted “section 6660” for “section 6659” in heading, and substituted “section 6660(a)” for “section 6659(a)” in text.

   Enacted provision · exact public law section
   (b) Amendments Related to Section 724.— Subsection (c) of section 95 Stat. 344. 5761 (relating to application of section 6659) is amended— (1) by striking out “section 6659(a)” and inserting in lieu thereof “section 6660(a)”, and (2) by striking out “Section 6659” in the heading and inserting in lieu thereof “Section 6660”.

9. 1984

   Tax Reform Act of 1984

   Pub. L. 98–369 div. A title VII § 714(h)(2) · 98 Stat. 494

   1. Substituted · 26 U.S.C. § 5761(c)

      Pub. L. 98–369 substituted “section 6662” for “section 6660” in text

   2. Substituted · 26 U.S.C. § 5761(c)

      Pub. L. 98–369 substituted “section 6662(a)” for “section 6660(a)” in text

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 98–369 substituted “section 6662” for “section 6660” in heading and “section 6662(a)” for “section 6660(a)” in text.

   Enacted provision · exact public law section
   (2) Subsection (c) of section 5761 is amended— (A) by striking out “Section 6660” in the heading and inserting in lieu thereof “Section 6662”, and (B) by striking out “section 6660(a)” in the text and inserting in lieu thereof “section 6662(a)”.

10. 1989

    Improved Penalty Administration and Compliance Tax Act

    Pub. L. 101–239 § 7721(c)(4) · 103 Stat. 2106

    Inserted · 26 U.S.C. § 5761(a)

    Pub. L. 101–239, § 7721(c)(4), inserted “or part II of subchapter A of chapter 68” after “or 6653”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 101–239, § 7721(c)(4), inserted “or part II of subchapter A of chapter 68” after “or 6653”.

    Enacted provision · exact public law section
    (4) Subsection (a) of section 5761 is amended by striking “or 6653” and inserting “or 6653 or part II of subchapter A of chapter 68”.

11. 1989

    Improved Penalty Administration and Compliance Tax Act

    Pub. L. 101–239 § 7721(c)(5) · 103 Stat. 2106

    1. Substituted · 26 U.S.C. § 5761(c)

       Pub. L. 101–239, § 7721(c)(5), substituted “6665” for “6662” in text

    2. Substituted · 26 U.S.C. § 5761(c)

       Pub. L. 101–239, § 7721(c)(5), substituted “6665(a)” for “6662(a)” in text

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 101–239, § 7721(c)(5), substituted “6665” for “6662” in heading and “6665(a)” for “6662(a)” in text.

    Enacted provision · exact public law section
    (5) Subsection (c) of section 5761 is amended— (A) by striking “6662(a)” and inserting “6665(a)”, and (B) by striking “6662” in the subsection heading and inserting “6665”.

12. 1997

    Balanced Budget Act of 1997

    Pub. L. 105–33 § 9302(h)(1)(C) · 111 Stat. 251

    Substituted · 26 U.S.C. § 5761(a)

    Pub. L. 105–33, § 9302(h)(1)(C), substituted “subsection (b) or (c)” for “subsection (b)”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 105–33, § 9302(h)(1)(C), substituted “subsection (b) or (c)” for “subsection (b)”.

    Enacted provision · exact public law section
    (C) Subsection (a) of section 5761 of such Code is amended by striking “subsection (b)” and inserting “subsection (b) or (c)”.

13. 1997

    Balanced Budget Act of 1997

    Pub. L. 105–33 § 9302(h)(1)(B) · 111 Stat. 251

    Redesignated · 26 U.S.C. § 5761(c)

    Pub. L. 105–33, § 9302(h)(1)(B), added subsec. (c). Former subsec. (c) redesignated (d)

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 105–33, § 9302(h)(1)(B), added subsec. (c). Former subsec. (c) redesignated (d).

    Enacted provision · exact public law section
    (B) Section 5761 of such Code is amended by redesignating subsections (c) and (d) as subsections (d) and (e), respectively, and by inserting after subsection (b) the following new subsection: “(c) Sale of Tobacco Products and Cigarette Papers and Tubes for Export.— Except as provided in subsections (b) and (d) of section 5704— “(1) every person who sells, relands, or receives within the jurisdiction of the United States any tobacco products or cigarette papers or tubes which have been labeled or shipped for exportation under this chapter, “(2) every person who sells or receives such relanded tobacco products or cigarette papers or tubes, and “(3) every person who aids or abets in such selling, relanding, or receiving, shall, in addition to the tax and any other penalty provided in this title, be liable for a penalty equal to the greater of $1,000 or 5 times the amount of the tax imposed by this chapter. All tobacco products and cigarette papers and tubes relanded within the jurisdiction of the United States, and all vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.”.

14. 1997

    Balanced Budget Act of 1997

    Pub. L. 105–33 § 9302(h)(1)(D) · 111 Stat. 251

    Substituted · 26 U.S.C. § 5761(d)

    Pub. L. 105–33, § 9302(h)(1)(D), substituted “The penalties imposed by subsections (b) and (c)” for “The penalty imposed by subsection (b)”

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 105–33, § 9302(h)(1)(D), substituted “The penalties imposed by subsections (b) and (c)” for “The penalty imposed by subsection (b)”.

    Enacted provision · exact public law section
    (D) Subsection (d) of section 5761 of such Code, as redesignated by subparagraph (B), is amended by striking “The penalty imposed by subsection (b)” and inserting “The penalties imposed by subsections (b) and (c)”.

15. 1997

    Balanced Budget Act of 1997

    Pub. L. 105–33 § 9302(h)(1)(B) · 111 Stat. 251

    Redesignated · 26 U.S.C. § 5761(d)

    Pub. L. 105–33, § 9302(h)(1)(B), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (e)

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 105–33, § 9302(h)(1)(B), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (e).

    Enacted provision · exact public law section
    (B) Section 5761 of such Code is amended by redesignating subsections (c) and (d) as subsections (d) and (e), respectively, and by inserting after subsection (b) the following new subsection: “(c) Sale of Tobacco Products and Cigarette Papers and Tubes for Export.— Except as provided in subsections (b) and (d) of section 5704— “(1) every person who sells, relands, or receives within the jurisdiction of the United States any tobacco products or cigarette papers or tubes which have been labeled or shipped for exportation under this chapter, “(2) every person who sells or receives such relanded tobacco products or cigarette papers or tubes, and “(3) every person who aids or abets in such selling, relanding, or receiving, shall, in addition to the tax and any other penalty provided in this title, be liable for a penalty equal to the greater of $1,000 or 5 times the amount of the tax imposed by this chapter. All tobacco products and cigarette papers and tubes relanded within the jurisdiction of the United States, and all vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.”.

16. 1997

    Balanced Budget Act of 1997

    Pub. L. 105–33 § 9302(h)(1)(B) · 111 Stat. 251

    Redesignated · 26 U.S.C. § 5761(e)

    Pub. L. 105–33, § 9302(h)(1)(B), redesignated subsec. (d) as (e)

    Source evidence

    Code amendment note
    Subsec. (e). Pub. L. 105–33, § 9302(h)(1)(B), redesignated subsec. (d) as (e).

    Enacted provision · exact public law section
    (B) Section 5761 of such Code is amended by redesignating subsections (c) and (d) as subsections (d) and (e), respectively, and by inserting after subsection (b) the following new subsection: “(c) Sale of Tobacco Products and Cigarette Papers and Tubes for Export.— Except as provided in subsections (b) and (d) of section 5704— “(1) every person who sells, relands, or receives within the jurisdiction of the United States any tobacco products or cigarette papers or tubes which have been labeled or shipped for exportation under this chapter, “(2) every person who sells or receives such relanded tobacco products or cigarette papers or tubes, and “(3) every person who aids or abets in such selling, relanding, or receiving, shall, in addition to the tax and any other penalty provided in this title, be liable for a penalty equal to the greater of $1,000 or 5 times the amount of the tax imposed by this chapter. All tobacco products and cigarette papers and tubes relanded within the jurisdiction of the United States, and all vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.”.

17. 2000

    Pub. L. 106–476 § 4003(a) · 114 Stat. 2101

    Inserted · 26 U.S.C. § 5761(c)

    Pub. L. 106–476, § 4003(a), inserted at end “This subsection and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under subchapter IV of chapter 98 of the Harmonized Tariff Schedule of the United States. No quantity of tobacco products other than the quantity referred to in the preceding sentence may be relanded or received as a personal use quantity.”

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 106–476, § 4003(a), inserted at end “This subsection and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under subchapter IV of chapter 98 of the Harmonized Tariff Schedule of the United States. No quantity of tobacco products other than the quantity referred to in the preceding sentence may be relanded or received as a personal use quantity.”

    Enacted provision · exact public law section
    (a) In General.— Subsection (c) of section 5761 of the Internal 26 USC 5761. Revenue Code of 1986 is amended by adding at the end the following: “This subsection and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under subchapter IV of chapter 98 of the Harmonized Tariff Schedule of the United States. No quantity of tobacco products other than the quantity referred to in the preceding sentence may be relanded or received as a personal use quantity.”.

18. 2000

    Pub. L. 106–476 § 4002(c) · 114 Stat. 2101

    Substituted · 26 U.S.C. § 5761(c)

    Pub. L. 106–476, § 4002(c), which directed amendment of the last sentence of subsec. (c) by substituting “the jurisdiction of the United States shall be forfeited to the United States and destroyed. All vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.” for “the jurisdiction of the United States” and all that followed through the end period, was executed by making the substitution for “the jurisdiction of the United States, and all vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.” in the second sentence of subsec. (c) to reflect the probable intent of Congress and the intervening retroactive amendments by Pub. L. 106–476, § 4003(a), and Pub. L. 106–554. See above

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 106–476, § 4002(c), which directed amendment of the last sentence of subsec. (c) by substituting “the jurisdiction of the United States shall be forfeited to the United States and destroyed. All vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.” for “the jurisdiction of the United States” and all that followed through the end period, was executed by making the substitution for “the jurisdiction of the United States, and all vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.” in the second sentence of subsec. (c) to reflect the probable intent of Congress and the intervening retroactive amendments by Pub. L. 106–476, § 4003(a), and Pub. L. 106–554. See above.

    Enacted provision · exact public law section
    (c) Requirement to Destroy Forfeited Tobacco Products.— The last sentence of subsection (c) of section 5761 of such 26 USC 5761. Code is amended by striking “the jurisdiction of the United States” and all that follows through the end period and inserting “the jurisdiction of the United States shall be forfeited to the United States and destroyed. All vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.”.

19. 2000

    Consolidated Appropriations Act, 2001

    Pub. L. 106–554 § 1(a)(7)(tIII)(s315)(a)(3) · 114 Stat. 2763

    Inserted · 26 U.S.C. § 5761(c)

    Pub. L. 106–554 inserted at end “This subsection and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under chapter 98 of the Harmonized Tariff Schedule of the United States, and such person may voluntarily relinquish to the Secretary at the time of entry any excess of such quantity without incurring the penalty under this subsection. No quantity of tobacco products other than the quantity referred to in the preceding sentence may be relanded or received as a personal use quantity.”

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 106–554 inserted at end “This subsection and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under chapter 98 of the Harmonized Tariff Schedule of the United States, and such person may voluntarily relinquish to the Secretary at the time of entry any excess of such quantity without incurring the penalty under this subsection. No quantity of tobacco products other than the quantity referred to in the preceding sentence may be relanded or received as a personal use quantity.”

    Enacted provision · exact public law section
    (7) H.R. 5662, as introduced on December 14, 2000.

20. 2006

    Tax Relief and Health Care Act of 2006

    Pub. L. 109–432 § 401(f)(2)(A) · 120 Stat. 2922

    Struck · 26 U.S.C. § 5761(c)

    Pub. L. 109–432, § 401(f)(2)(A), struck out at end “This subsection and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under chapter 98 of the Harmonized Tariff Schedule of the United States, and such person may voluntarily relinquish to the Secretary at the time of entry any excess of such quantity without incurring the penalty under this subsection. No quantity of tobacco products other than the quantity referred to in the preceding sentence may be relanded or received as a personal use quantity.”

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 109–432, § 401(f)(2)(A), struck out at end “This subsection and section 5754 shall not apply to any person who relands or receives tobacco products in the quantity allowed entry free of tax and duty under chapter 98 of the Harmonized Tariff Schedule of the United States, and such person may voluntarily relinquish to the Secretary at the time of entry any excess of such quantity without incurring the penalty under this subsection. No quantity of tobacco products other than the quantity referred to in the preceding sentence may be relanded or received as a personal use quantity.”

    Enacted provision · exact public law section
    SEC. 401. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO. (a) In General.— Subsection (d) of section 199 26 USC 199. (relating to definitions and special rules) is amended by redesignating paragraph (8) as paragraph (9) and by inserting after paragraph (7) the following new paragraph: “(8) Treatment of activities in puerto rico.— “(A) In general.— In the case of any taxpayer with gross receipts for any taxable year from sources within the Commonwealth of Puerto Rico, if all of such receipts are taxable under section 1 or 11 for such taxable year, then for purposes of determining the domestic production gross receipts of such taxpayer for such taxable year under subsection (c)(4), the term ‘United States’ shall include the Commonwealth of Puerto Rico. “(B) Special rule for applying wage limitation.— In the case of any taxpayer described in subparagraph (A), for purposes of applying the limitation under subsection (b) for any taxable year, the determination of W–2 wages of such taxpayer shall be made without regard to any exclusion under section 3401(a)(8) for remuneration paid for services performed in Puerto Rico. “(C) Termination.— This paragraph shall apply only with respect to the first 2 taxable years of the taxpayer beginning after December 31, 2005, and before January 1, 2008.” . (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years beginning after December 31, 2005.

    Effective date note
    Amendment by Pub. L. 109–432 applicable with respect to goods entered, or withdrawn from warehouse for consumption, on or after the 15th day after Dec. 20, 2006, see section 401(g) of Pub. L. 109–432, set out as a note under section 1681 of Title 19, Customs Duties.

21. 2006

    Tax Relief and Health Care Act of 2006

    Pub. L. 109–432 § 401(f)(1) · 120 Stat. 2922

    1. Added · 26 U.S.C. § 5761(d)(f)

       Pub. L. 109–432, § 401(f)(1), added subsec. (d)

    2. Redesignated · 26 U.S.C. § 5761(d)(f)

       Pub. L. 109–432, § 401(f)(1), redesignated former subsecs. (d) and (e) as (e) and (f), respectively

    Source evidence

    Code amendment note
    Subsecs. (d) to (f). Pub. L. 109–432, § 401(f)(1), added subsec. (d) and redesignated former subsecs. (d) and (e) as (e) and (f), respectively.

    Enacted provision · exact public law section
    SEC. 401. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO. (a) In General.— Subsection (d) of section 199 26 USC 199. (relating to definitions and special rules) is amended by redesignating paragraph (8) as paragraph (9) and by inserting after paragraph (7) the following new paragraph: “(8) Treatment of activities in puerto rico.— “(A) In general.— In the case of any taxpayer with gross receipts for any taxable year from sources within the Commonwealth of Puerto Rico, if all of such receipts are taxable under section 1 or 11 for such taxable year, then for purposes of determining the domestic production gross receipts of such taxpayer for such taxable year under subsection (c)(4), the term ‘United States’ shall include the Commonwealth of Puerto Rico. “(B) Special rule for applying wage limitation.— In the case of any taxpayer described in subparagraph (A), for purposes of applying the limitation under subsection (b) for any taxable year, the determination of W–2 wages of such taxpayer shall be made without regard to any exclusion under section 3401(a)(8) for remuneration paid for services performed in Puerto Rico. “(C) Termination.— This paragraph shall apply only with respect to the first 2 taxable years of the taxpayer beginning after December 31, 2005, and before January 1, 2008.” . (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years beginning after December 31, 2005.

    Effective date note
    Amendment by Pub. L. 109–432 applicable with respect to goods entered, or withdrawn from warehouse for consumption, on or after the 15th day after Dec. 20, 2006, see section 401(g) of Pub. L. 109–432, set out as a note under section 1681 of Title 19, Customs Duties.

23 of 25 references resolved to an enrolled provision · 2 partial