[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3288 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3288

To amend the Internal Revenue Code to reduce tobacco smuggling, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 29, 2010

 Mr. Lautenberg (for himself and Mr. Durbin) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code to reduce tobacco smuggling, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Smuggled Tobacco 
Prevention Act of 2010'' or the ``STOP Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title and table of contents.
          TITLE I--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

Sec. 101. Amendment of 1986 code.
Sec. 102. Machines used to manufacture or package cigarettes or other 
                            tobacco products.
Sec. 103. Improved marking and labeling.
Sec. 104. Wholesalers and manufacturers, importers, and sellers of 
                            tobacco production machines required to 
                            have permit.
Sec. 105. Conditions of permit.
Sec. 106. Records to be maintained.
Sec. 107. Reports.
Sec. 108. Fraudulent offenses.
Sec. 109. Penalties.
Sec. 110. Definitions.
Sec. 111. Conforming amendments.
Sec. 112. Effective date.
                         TITLE II--IMPORT FRAUD

Sec. 201. Maximum penalty for importation of tobacco products and 
                            cigarette papers and tubes by fraudulent 
                            means.

          TITLE I--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

SEC. 101. AMENDMENT OF 1986 CODE.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Internal Revenue Code of 
1986.

SEC. 102. MACHINES USED TO MANUFACTURE OR PACKAGE CIGARETTES OR OTHER 
              TOBACCO PRODUCTS.

    (a) In General.--Section 5762 (relating to criminal penalties) is 
amended--
            (1) by redesignating subsection (b) as subsection (c), and
            (2) by inserting after subsection (a) the following new 
        subsection:
    ``(b) Machines Used To Manufacture, Process, or Package Cigarettes 
or Other Tobacco Products.--
            ``(1) Sale, lease, delivery of manufacturing machines to 
        licensed persons.--Any tobacco production machine may be sold, 
        leased, imported, or delivered only to--
                    ``(A) persons--
                            ``(i) lawfully engaged in--
                                    ``(I) the sale, lease, or delivery 
                                of such machines,
                                    ``(II) the manufacture or 
                                processing of tobacco products, or
                                    ``(III) the application of unique 
                                identification markings onto tobacco 
                                product packages pursuant to section 
                                5723, and
                            ``(ii) that have all Federal and State 
                        permits, registrations, and licenses required 
                        to engage in such activities, or
                    ``(B) in the case of a machine which is meant and 
                expected to be used by an individual to make tobacco 
                products for his or her own personal use, such an 
                individual.
            ``(2) Sale, lease, delivery of machines to persons engaged 
        in illegal manufacture of contraband.--No tobacco production 
        machine shall knowingly be manufactured for or be (directly or 
        indirectly) sold, leased, delivered, imported, or otherwise 
        made available to any person engaged in the illegal 
        manufacture, distribution, or sale of counterfeit or contraband 
        tobacco products, unique identification markings, or other tax-
        payment indicia.
            ``(3) Rendering unused machines inoperable.--Any tobacco 
        production machine that is no longer being used as such shall 
        be made irreparably inoperable for such use before being 
        disposed of or put to any other use. This paragraph shall not 
        apply to any such machines being kept solely for display or for 
        historical purposes.
            ``(4) Records.--
                    ``(A) In general.--Any person leasing, importing, 
                exporting, or delivering a tobacco production machine 
                shall maintain and keep records relating to any 
                transfers or deliveries of the machine, including the 
                name, address, other contact information, and any 
                permit, registration, or license number of the person 
                receiving delivery of the machine, or to whom the 
                machine is leased or otherwise transferred, as the case 
                may be.
                    ``(B) 5-year holding period for records.--Any 
                record required to be maintained and kept under 
                subparagraph (A) shall be kept for the 5-year period 
                beginning on the first date such record is required to 
                be so maintained and kept.
                    ``(C) Availability of records.--Such records shall 
                be made available to the Secretary and other Federal 
                and State government law enforcement officials for 
                inspection and audit upon request.
                    ``(D) Safe harbor.--An ordinary commercial record 
                or invoice shall satisfy the requirements of this 
                paragraph if such record describes the transaction and 
                the related machine and provides the date of the 
                transaction and the name, contact information, and any 
                permit, registration, or license number of all parties 
                to the transaction or acting as agents for those 
                parties in regard to the transaction.
            ``(5) Tobacco production machine.--For purposes of this 
        subsection, the term `tobacco production machine' means any 
        machine (or component integral to the operation of such a 
        machine) used to manufacture, process, or package tobacco 
        products or to apply unique identification markings to packages 
        of tobacco products.
            ``(6) Violations.--
                    ``(A) In general.--Whoever knowingly violates 
                paragraph (1), (2), or (3) shall, for each offense, be 
                fined not more than $10,000 or an amount equal to 3 
                times the fair market value of the tobacco product 
                machine involved (whichever is greater), or imprisoned 
                not more than five years, or both.
                    ``(B) Recordkeeping.--Whoever knowingly violates 
                paragraph (4) shall, for each offense, be fined not 
                more than $10,000.''.
    (b) Conforming Amendment.--Subsection (c) of section 5762 (as so 
redesignated) is amended by striking ``subsection (a)'' and inserting 
``subsections (a) and (b)''.
    (c) Effective Date.--The amendment made by this section shall apply 
to sales, leases, and transfers more than 6 months after the date of 
the enactment of this Act.

SEC. 103. IMPROVED MARKING AND LABELING.

    (a) In General.--Section 5723 (relating to packages, marks, labels, 
and notices) is amended--
            (1) by striking ``, if any,'' in subsection (b),
            (2) by adding at the end of subsection (b) the following: 
        ``Such marks, labels, and notices shall include marks and 
        notices relating to the following:
            ``(1) General requirements for domestic market.--Each 
        person who is a manufacturer or importer of tobacco products 
        shall (in accordance with final regulations promulgated by the 
        Secretary) ensure that, before the product leaves the person's 
        custody, a unique identification marking is affixed to or forms 
        part of each package of tobacco product manufactured or 
        imported by such person for sale or distribution. To facilitate 
        efficient tracking and tracing of tobacco products through the 
        distribution system, all manufacturers or importers of tobacco 
        products shall, in addition to such unique identification 
        marking, also, in accordance with regulations prescribed by the 
        Secretary, ensure that unique identification markings are 
        affixed to or form part of aggregate packing modes (such as 
        cartons, cases, and master cases for cigarettes). The Secretary 
        shall determine the size, location, and methods for such 
        markings. The Secretary shall establish regulations requiring 
        that all persons within the distribution chain, up to but not 
        including the ultimate retailer, utilize the unique 
        identification markings on aggregate packing modes to 
        facilitate the tracking and tracing of tobacco product through 
        the distribution system.
            ``(2) Marking requirements for exports.--A unique 
        identification marking shall be affixed to or form part of each 
        package of tobacco product that is exported, or sold for 
        export, that distinguishes it from those products intended for 
        distribution or sale within the United States. The Secretary 
        shall by regulation prescribe the size, location, and other 
        characteristics of such marking, and it may contain a serial 
        number that is assigned to the country of export.
            ``(3) Authorization of federal unique identification 
        marking.--Not later than 1 year after the date of the enactment 
        of the Smuggled Tobacco Prevention Act of 2010, the Secretary 
        shall by regulation require the use of a unique identification 
        marking on all products subject to tax under this chapter.'', 
        and
            (3) by adding at the end the following new subsection:
    ``(f) Unique Identification Marking.--
            ``(1) In general.--No tobacco product may be sold, offered 
        for sale, distributed, or otherwise delivered for final sale to 
        any consumer in the United States unless the unique 
        identification marking that meets the requirements of this 
        section (and any regulations prescribed thereunder) is affixed 
        to or forms part of the package in which it is contained. No 
        person shall deliver or mail tobacco products unless the tax 
        imposed by this chapter with respect to such product has been 
        paid and the unique identification marking required under this 
        section is affixed to or forms part of the package containing 
        such product.
            ``(2) System specifications.--
                    ``(A) The Secretary shall design such system to 
                coordinate and avoid interference with State and local 
                tax stamps and markings, facilitate collection of the 
                tax imposed by this chapter, impede contraband tobacco 
                trafficking, minimize counterfeit marking, allow for 
                more effective tracking and tracing of tobacco 
                products, facilitate the enforcement of related Federal 
                laws, and utilize such available technology as may 
                promote the purposes of this chapter.
                    ``(B) The Secretary shall prescribe the method and 
                manner in which such unique identification markings are 
                to be distributed, purchased, and applied to or made 
                part of tobacco product packages, and may provide for 
                the cancellation of such markings.
                    ``(C) The unique identification marking must 
                provide the following information:
                            ``(i) The denominated value of the marking.
                            ``(ii) A unique serial number or tracking 
                        code.
                            ``(iii) The name and address of the person 
                        purchasing the marking (and, if different, of 
                        the person ensuring the marking is affixed to 
                        or made part of the package).
                            ``(iv) The date the marking was purchased 
                        and when it was affixed to or made part of the 
                        package.
                            ``(v) The name and address of the first 
                        unrelated person purchasing or otherwise 
                        receiving the tobacco product from the person 
                        who ensures the marking is affixed to or made 
                        part of the package and the date of such 
                        purchase or transfer.
                            ``(vi) Such other information as the 
                        Secretary may prescribe to carry out the 
                        purposes of this chapter.
                    ``(D) The information described in subparagraph (C) 
                shall, to the extent practicable--
                            ``(i) be cryptographically encrypted, and
                            ``(ii)(I) be readable by a portable 
                        scanning device (or similar device) to be 
                        utilized by law enforcement officials at the 
                        time and place of inspection, or
                            ``(II) be otherwise accessible remotely at 
                        such time and place.
                    ``(E) Tax reporting information shall be held on a 
                secure government-controlled database to monitor 
                tobacco production and for tracking and tracing the 
                product from the point of production through the supply 
                chain to the retailer.
            ``(3) Unrelated person.--For purposes of this subsection, 
        the term `unrelated person' means a person other than a related 
        person within the meaning of section 267(b) or 707(b)(1).''.
    (b) Definitions.--Section 5723, as amended by subsection (a), is 
amended by adding at the end the following new subsections:
    ``(g) Package Defined.--For purposes of this section, the term 
`package' means the innermost sealed container visible from the outside 
of the individual container irrespective of the material from which 
such container is made, in which a tobacco product is placed by the 
manufacturer and in which such tobacco product is offered for sale to a 
member of the general public.
    ``(h) Unique Identification Marking Defined.--For purposes of this 
section, the term `unique identification marking' means a device in 
such design and denomination as the Secretary authorizes by regulation 
that is affixed to or made part of a package of tobacco product as 
evidence that the tax imposed by this chapter is paid. Such markings 
shall contain overt security features for public authentication and 
covert security features embedding a unique, secure, encrypted 
identifier onto the marking, enabling law enforcement authentication, 
production control, and tracking and tracing of the product bearing the 
marking.''.
    (c) Regulations.--The Secretary of the Treasury shall consult with 
the Secretary of Health and Human Services as may be appropriate to 
carry out the purposes of subsection (f), and paragraphs (1), (2), and 
(3) of subsection (b), of section 5723 of the Internal Revenue Code of 
1986.

SEC. 104. WHOLESALERS AND MANUFACTURERS, IMPORTERS, AND SELLERS OF 
              TOBACCO PRODUCTION MACHINES REQUIRED TO HAVE PERMIT.

    (a) Wholesalers.--Section 5712 (relating to application for permit) 
is amended by inserting ``, wholesaler,'' after ``manufacturer''.
    (b) Manufacturers, Importers, and Sellers of Tobacco Production 
Machines.--Section 5712 is amended by striking ``or as an export 
warehouse proprietor'' and inserting ``, as an export warehouse 
proprietor, or as a manufacturer, seller, or importer of tobacco 
production machines (as defined in section 5762(b)(5))''.

SEC. 105. CONDITIONS OF PERMIT.

    Subsection (a) of section 5713 (relating to issuance of permit) is 
amended to read as follows:
    ``(a) Issuance.--
            ``(1) In general.--A person shall not engage in business as 
        a manufacturer, wholesaler, or importer of tobacco products or 
        processed tobacco, as an export warehouse proprietor, or as a 
        manufacturer, seller, or importer of tobacco production 
        machines (as defined in section 5762(b)(5)) 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 shall by regulation prescribe, to every person 
        properly qualified under section 5711 and 5712. Any entity 
        granted such a permit is not eligible to provide any services 
        the Secretary may elect to procure to facilitate the purposes 
        of section 5723. Permit holders shall automatically count 
        output and register, record, and transmit the quantities 
        measured, in the form, conditions, and time limits established 
        by the Secretary. A new permit may be required at such other 
        time as the Secretary shall by regulation prescribe.
            ``(2) Conditions.--The Secretary shall not issue a permit 
        under this section unless--
                    ``(A) the applicant is in compliance with the 
                requirements of--
                            ``(i) this chapter,
                            ``(ii) chapter 114 of title 18, United 
                        States Code,
                            ``(iii) the Act of October 19, 1949 (15 
                        U.S.C. 375 et seq.; commonly referred to as the 
                        `Jenkins Act'),
                            ``(iv) the Fair and Equitable Tobacco 
                        Reform Act of 2004, and any amendments made 
                        thereby,
                            ``(v) the Family Smoking Prevention and 
                        Tobacco Control Act, and any amendments made 
                        thereby, and
                            ``(vi) any related regulations thereunder, 
                        and
                    ``(B) the applicant certifies that the applicant is 
                in compliance with all other Federal and State laws 
                relating to the taxation, manufacture, importation, 
                exportation, distribution, marketing, sale, or 
                transportation of tobacco products, processed tobacco, 
                or tobacco production machines.
                    ``(C) the applicant identifies in the application 
                any violation of a law described in subparagraph (A) or 
                (B) by the applicant resulting in a penalty under any 
                such law during the 5-year period ending on the date of 
                the application.''.

SEC. 106. RECORDS TO BE MAINTAINED.

    (a) In General.--Section 5741 (relating to records to be 
maintained) is amended--
            (1) by inserting ``(a) In General.--'' before ``Every 
        manufacturer'',
            (2) by inserting ``every wholesaler,'' after ``every 
        importer,'',
            (3) by striking ``such records'' and inserting ``records 
        concerning the chain of custody of the tobacco products 
        (including the foreign country of final destination for 
        packages marked for export) and the serial numbers, marks, 
        labels, and notices required under section 5723, and such other 
        records'', and
            (4) by adding at the end the following new subsections:
    ``(b) Retailers.--Retailers shall maintain records of receipt, and 
any non-retail sale or delivery, of tobacco products. Such records 
shall be available to the Secretary for inspection and audit. An 
ordinary commercial record or invoice shall satisfy the requirements of 
this subsection if such record shows the date of receipt, from whom 
tobacco products were received, and the quantity of tobacco products 
received (or, in the case of non-retail sale or delivery, the date of 
sale or delivery, to whom the tobacco products were sold or delivered, 
and the quantity of the tobacco products sold or delivered). The 
preceding provisions of this subsection shall not be construed to limit 
or preclude other recordkeeping requirements imposed on any retailer.
    ``(c) Records Concerning Marks and Chain of Custody.--Records 
concerning the chain of custody and the marks, labels, and notices 
required under section 5723 shall be made available to Federal and 
State law enforcement officials for inspection and audit upon 
request.''.
    (b) Consultation With Health and Human Services.--The Secretary of 
the Treasury shall consult with the Secretary of Health and Human 
Services as may be appropriate to carry out the purposes of section 
5741 of the Internal Revenue Code of 1986.

SEC. 107. REPORTS.

    Section 5722 (relating to reports) is amended--
            (1) by inserting ``(a) In General.--'' before ``Every 
        manufacturer'', and
            (2) by adding at the end the following new subsection:
    ``(b) Reports by Export Warehouse Proprietors.--
            ``(1) In general.--Prior to exportation of tobacco products 
        from the United States, the export warehouse proprietor shall 
        submit a report (in such manner and form as the Secretary may 
        by regulation prescribe) to enable the Secretary to identify 
        the shipment and assure that it reaches its intended 
        destination.
            ``(2) Agreements with foreign governments.--Notwithstanding 
        section 6103 of this title, the Secretary is authorized to 
        enter into agreements with foreign governments to exchange or 
        share information contained in reports received from export 
        warehouse proprietors of tobacco products if--
                    ``(A) the Secretary believes that such agreement 
                will assist in--
                            ``(i) ensuring compliance with the 
                        provisions of this chapter or regulations 
                        promulgated thereunder, or
                            ``(ii) preventing or detecting violations 
                        of the provisions of this chapter or 
                        regulations promulgated thereunder, and
                    ``(B) the Secretary obtains written assurances from 
                such government that the information will be held in 
                confidence and used only for the purposes specified in 
                clauses (i) and (ii) of subparagraph (A).
        No information may be exchanged or shared with any government 
        that has violated such assurances.''.

SEC. 108. FRAUDULENT OFFENSES.

    (a) In General.--Subsection (a) of section 5762 is amended--
            (1) by striking paragraph (1) and redesignating paragraphs 
        (2) through (6) as paragraphs (1) through (5), respectively, 
        and
            (2) by striking ``not more than $10,000'' and inserting 
        ``not more than $10,000 or an amount equal to 3 times the 
        amount of the tax imposed under this chapter on the tobacco 
        product involved (whichever is greater)''.
    (b) Offenses Relating to Distribution of Tobacco Products.--
            (1) In general.--Section 5762 (as amended by section 102 of 
        this Act) is amended--
                    (A) by redesignating subsection (c) as subsection 
                (d), and
                    (B) by inserting after subsection (b) the following 
                new subsection:
    ``(c) Offenses Relating to Distribution of Tobacco Products.--It 
shall be unlawful--
            ``(1) for any person to engage in business as a 
        manufacturer or importer of tobacco products or cigarette 
        papers and tubes, as a wholesaler or an export warehouse 
        proprietor, or as a manufacturer, seller, or importer of 
        tobacco production machines without filing the bond and 
        obtaining the permit where required by this chapter or 
        regulations thereunder,
            ``(2) for a manufacturer, importer, or wholesaler to 
        knowingly ship, transport, deliver, or receive any tobacco 
        products from or to any person other than a person who has 
        obtained the permit required by this chapter, a retailer, or a 
        person handling such products solely for purposes of shipment 
        or delivery; except an importer who has obtained the permit 
        required by this chapter may receive, from a foreign 
        manufacturer or a foreign distributor, foreign tobacco products 
        that have not previously entered the United States,
            ``(3) for a manufacturer of processed tobacco to knowingly 
        ship, transport, sell, or deliver processed tobacco to any 
        person other than a manufacturer of processed tobacco, a 
        manufacturer of tobacco products, or an export warehouse 
        proprietor,
            ``(4) for any person (other than the original manufacturer 
        of such tobacco products or an export warehouse proprietor 
        authorized to receive any tobacco products that have previously 
        been exported and returned to the United States) to knowingly 
        receive any tobacco products that have previously been exported 
        and returned to the United States,
            ``(5) for any export warehouse proprietor to knowingly 
        ship, transport, sell, or deliver for sale any tobacco products 
        to any person other than the original manufacturer of such 
        tobacco products, another export warehouse proprietor, or a 
        foreign purchaser,
            ``(6) for any person (other than a manufacturer or an 
        export warehouse proprietor permitted under this chapter) to 
        knowingly ship, transport, receive, or possess, for purposes of 
        resale, any tobacco product in packages marked pursuant to 
        regulations issued under section 5723, other than for direct 
        return to a manufacturer for repacking or for re-exportation or 
        to an export warehouse proprietor for re-exportation,
            ``(7) for any manufacturer, importer, export warehouse 
        proprietor, or wholesaler permitted under this chapter to make 
        any false entry in, to fail to make an entry in, or to 
        knowingly fail to maintain properly any record or report 
        required by this chapter or the regulations promulgated 
        thereunder with the intent to defraud the United States,
            ``(8) for any person, with the intent to defraud the United 
        States, to alter, mutilate, destroy, obliterate, or remove any 
        mark or label required under this chapter upon a tobacco 
        product held for sale, or to create, possess, or apply on any 
        tobacco product or its packaging any counterfeit versions of 
        any such marks or labels, and
            ``(9) for any person to sell at retail more than 3,000 
        cigarettes in a single transaction or in a series of related 
        transactions, or, in the case of other tobacco products, an 
        equivalent quantity as determined by regulation.
Any person violating any of the provisions of this subsection shall, 
upon conviction, be fined as provided in section 3571 of title 18, 
United States Code, or imprisoned for not more than 5 years, or 
both.''.
            (2) Conforming amendment.--Section 5762(d) (as so 
        redesignated) is amended by striking ``and (b)'' inserting ``, 
        (b), and (c)''.
    (c) Other Offenses.--Subsection (d) of section 5762 (as so 
redesignated) is amended by striking ``not more than $1,000'' and 
inserting ``not more than $2,500 or an amount equal to the tax imposed 
under this chapter on the tobacco product involved (whichever is 
greater)''.

SEC. 109. PENALTIES.

    (a) In General.--
            (1) Subsection (a) of section 5761 (relating to civil 
        penalties) is amended--
                    (A) by striking ``willfully'' and inserting 
                ``knowingly'', and
                    (B) by striking ``$1,000'' and inserting 
                ``$10,000''.
            (2) Subsection (b) of section 5761 (relating to failure to 
        pay tax) is amended by striking ``5 percent'' and inserting 
        ``10 percent''.
    (b) Use of Increase in Penalties and Fines.--Subchapter G of 
chapter 52 is amended by adding at the end the following new section:

``SEC. 5764. USE OF CERTAIN PENALTIES AND FINES.

    ``(a) In General.--There is established a separate account in the 
Treasury known as the `Anti-Contraband Tobacco Trafficking Fund'. 
Amounts equivalent to 50 percent of the increase in revenues from 
criminal and civil penalties and fines collected under this chapter and 
attributable to title I of the Smuggled Tobacco Prevention Act of 2010 
(or the amendments made thereby) shall be transferred into the Anti-
Contraband Tobacco Trafficking Fund. Such amounts shall be available, 
as provided in appropriations Acts, to the Secretary solely for the 
purpose of expanding government efforts and available resources  to 
enforce this chapter and other laws relating to contraband or illegal 
tobacco products.
    ``(b) Allocation of Funds.--Of the respective amounts available to 
the Secretary under subsection (a), not less than 50 percent shall be 
allocated to the Federal departments and agencies that are responsible 
for the enforcement actions (including underlying investigations and 
administrative and judicial proceedings) in which such penalties and 
fines were imposed.''.
    (c) Penalty Amounts Adjusted for Inflation.--Section 5761 of such 
Code is amended by redesignating subsection (f) as subsection (g) and 
inserting after subsection (e) the following new subsection:
    ``(f) Inflation Adjustment.--
            ``(1) In general.--In the case of a calendar year beginning 
        after 2011, the penalty dollar amounts provided under this 
        chapter shall each be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year, determined 
                by substituting `calendar year 2010' for `calendar year 
                1992' in subparagraph (B) thereof.
            ``(2) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $10, such amount shall be rounded to 
        the next highest multiple of $10.''.

SEC. 110. DEFINITIONS.

    (a) Export Warehouse Proprietor.--Subsection (i) of section 5702 
(relating to definition of export warehouse proprietor) is amended by 
inserting before the period the following: ``or any person engaged in 
the business of exporting tobacco products from the United States for 
purposes of sale or distribution. Any duty free store that sells, 
offers for sale, or otherwise distributes to any person in any single 
transaction (or series of related transactions) more than 3,000 
cigarettes, or an equivalent quantity of other tobacco products as the 
Secretary shall by regulation prescribe, shall be deemed an export 
warehouse proprietor under this chapter''.
    (b) Retailer; Wholesaler.--Section 5702 is amended by adding at the 
end the following new subsections:
    ``(p) Retailer.--The term `retailer' means any dealer who sells, or 
offers for sale, any tobacco product at retail. The term `retailer' 
includes any duty free store that sells, offers for sale, or otherwise 
distributes at retail in any single transaction (or series of related 
transactions) 3,000 or fewer of cigarettes, or an equivalent quantity 
of other tobacco products as the Secretary shall by regulation 
prescribe.
    ``(q) Wholesaler.--The term `wholesaler' means any person engaged 
in the business of purchasing tobacco products for resale at wholesale, 
or any person acting as an agent or broker for any person engaged in 
the business of purchasing tobacco products for resale at wholesale.''.

SEC. 111. CONFORMING AMENDMENTS.

    (a) Section 2341 of title 18, United States Code is amended--
            (1) in paragraph (2), by inserting ``Federal taxes, 
        wherever found, or'' after ``payment of applicable''; and
            (2) in paragraph (2)(C), by inserting ``in regard to State 
        or local taxes,'' before ``a person''.
    (b) Sections 2314 and 2315 of title 18, United States Code, are 
each amended--
            (1) by striking ``state'' in the heading thereof; and
            (2) by striking ``tax stamps'' each place it appears and 
        inserting ``tax stamps or markings''.

SEC. 112. EFFECTIVE DATE.

    Except as otherwise provided in this title, the amendments made by 
this title shall take effect 1 year after the date of the enactment of 
this Act.

                         TITLE II--IMPORT FRAUD

SEC. 201. MAXIMUM PENALTY FOR IMPORTATION OF TOBACCO PRODUCTS AND 
              CIGARETTE PAPERS AND TUBES BY FRAUDULENT MEANS.

    (a) Maximum Penalty.--Section 592(c)(1) of the Tariff Act of 1930 
(19 U.S.C. 1592(c)(1)) is amended--
            (1) by striking ``A fraudulent violation of subsection 
        (a)'' and inserting the following:
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a fraudulent violation of subsection 
                (a)''; and
            (2) by adding at the end the following:
                    ``(B) Tobacco products and cigarette papers and 
                tubes.--In the case of importation of tobacco products 
                and cigarette papers and tubes subject to tax under 
                chapter 52 of the Internal Revenue Code of 1986, a 
                fraudulent violation of subsection (a) is punishable by 
                a civil penalty in an amount not to exceed the sum of--
                            ``(i) the domestic value of the 
                        merchandise, and
                            ``(ii) four times the amount of Federal 
                        excise tax that could be imposed on the 
                        merchandise, if applicable.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on January 1, 2011, and shall apply with respect to 
violations of section 592 of the Tariff Act of 1930 (as so amended) 
that occur on or after that date.
                                 <all>