[Title 27 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2007 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          27


          Parts 40 to 399

                         Revised as of April 1, 2007


          Alcohol, Tobacco Products and Firearms
          



________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of April 1, 2007
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

[[Page ii]]

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[[Page iii]]







As of April 1, 2007

Title 27, Parts 1-399

Revised as of April 1, 2007

Is Replaced by

Title 27, Parts 1-39

and

Title 27, Parts 40-399



[[Page v]]





                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 27:
          Chapter I--Alcohol and Tobacco Tax and Trade Bureau, 
          Department of the Treasury                                 3
  Finding Aids:
      Table of CFR Titles and Chapters........................     391
      Alphabetical List of Agencies Appearing in the CFR......     409
      List of CFR Sections Affected...........................     419

[[Page vi]]





                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 27 CFR 1.1 refers to 
                       title 27, part 1, section 
                       1.

                     ----------------------------

[[Page vii]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
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name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
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[[Page viii]]

Many agencies have begun publishing numerous OMB control numbers as 
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the revision dates of the 50 CFR titles.

[[Page ix]]


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                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

April 1, 2007.

[[Page xi]]



                               THIS TITLE

    Title 27--Alcohol, Tobacco Products, and Firearms is composed of 
three volumes, parts 1-39, parts 40-399, and part 400 to end. The 
contents of these volumes represent all current regulations issued by 
the Alcohol and Tobacco Tax and Trade Bureau, Department of the 
Treasury, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
Department of Justice, as of April 1, 2007.

    For this volume, Elmer Barksdale was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Ann Worley.


[[Page 1]]



            TITLE 27--ALCOHOL, TOBACCO PRODUCTS AND FIREARMS




                   (This book contains parts 1 to 39)

  --------------------------------------------------------------------
                                                                    Part

chapter i--Alcohol and Tobacco Tax and Trade Bureau, 
  Department of the Treasury................................           1


Abbreviations Used in This Chapter:
    ATF = Alcohol, Tobacco and Firearms. T.D. = Treasury Decision. TTB = 
  Alcohol and Tobacco Tax and Trade Bureau.

[[Page 3]]



 CHAPTER I--ALCOHOL AND TOBACCO TAX AND TRADE BUREAU, DEPARTMENT OF THE 
                                TREASURY




  --------------------------------------------------------------------


  Editorial Notes: 1. The regulations appearing in this title were 
originally issued by the Federal Alcohol Administration, which was 
abolished by Reorganization Plan No. III, Apr. 2, 1940, 5 FR 2107, 3 
CFR, 1940 Supp. Treasury Order 30, June 12, 1940, 5 FR 2212, issued 
under sections 2 and 8 of Reorganization Plan No. III (54 Stat. 1232) 
provided that these regulations continue in effect as regulations of the 
Bureau of Alcohol, Tobacco and Firearms.

  2. Nomenclature changes to chapter I appear by T.D. TTB-44, 71 FR 
16920, Apr. 4, 2006.

                          SUBCHAPTER B--TOBACCO
Part                                                                Page
40              Manufacture of tobacco products and 
                    cigarette papers and tubes..............           5
41              Importation of tobacco products and 
                    cigarette papers and tubes..............          61
44              Exportation of tobacco products and 
                    cigarette papers and tubes, without 
                    payment of tax, or with drawback of tax.          97
45              Removal of tobacco products and cigarette 
                    papers and tubes, without payment of 
                    tax, for use of the United States.......         137
46              Miscellaneous regulations relating to 
                    tobacco products and cigarette papers 
                    and tubes...............................         144
                         SUBCHAPTER C--FIREARMS
53              Manufacturers excise taxes--firearms and 
                    ammunition..............................         163
                       SUBCHAPTERS D-E [RESERVED]
                 SUBCHAPTER F--PROCEDURES AND PRACTICES
70              Procedure and administration................         226
71              Rules of practice in permit proceedings.....         356
72              Disposition of seized personal property.....         374

[[Page 4]]

73              Electronic signatures; electronic submission 
                    of forms................................         383
                       SUBCHAPTERS G-L [RESERVED]
          SUBCHAPTER M--ALCOHOL, TOBACCO AND OTHER EXCISE TAXES
194-399         [Reserved]

Supplementary Publications: Additional supplementary publications are 
  issued covering individual parts of the Alcohol, Tobacco and Firearms 
  Regulations, the Tobacco Tax Guide, and Regulations Under Tax 
  Conventions.

[[Page 5]]



                          SUBCHAPTER B_TOBACCO


PART 40_MANUFACTURE OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES--Table 

of Contents




                     Subpart A_Scope of Regulations

Sec.
40.1 Manufacture of tobacco products and cigarette papers and tubes.
40.2 Territorial extent.

                          Subpart B_Definitions

40.11 Meaning of terms.

                             Subpart C_Taxes

40.21 Cigar tax rates.
40.22 Determination of sale price of large cigars.
40.23 Cigarette tax rates.
40.24 Classification of cigarettes.
40.25 Smokeless tobacco tax rates.
40.25a Pipe tobacco and roll-your-own tobacco tax rates.
40.26 Persons liable for tax.
40.27 Assessment.

                 Subpart Ca_Special (Occupational) Taxes

40.31 Liability for special tax.
40.32 Rates of special tax.
40.33 Special tax returns.
40.34 Employer identification number.
40.35 Issuance, distribution, and examination of special tax stamps.
40.36 Changes in special tax stamps.

                   Subpart D_Administrative Provisions

40.41 Forms prescribed.
40.42 Authority of Appropriate TTB officers to enter premises.
40.43 Interference with administration.
40.44 Disposal of forfeited, condemned, and abandoned tobacco products.
40.45 Alternate methods or procedures.
40.46 Emergency variations from requirements.
40.47 Other businesses within factory.
40.48 Penalties and forfeitures.
40.49 Delegations of the Administrator.

         Subpart E_Qualification Requirements for Manufacturers

40.61 Qualification--General.
40.61a Transitional rule.
40.62 Application for permit.
40.63 Corporate documents.
40.64 Articles of partnership or association.
40.65 Trade name certificate.
40.66 Bond.
40.67 Blanket bond.
40.68 Power of attorney.
40.69 Factory premises.
40.70 Separation of and access to factory.
40.71 Factories established prior to October 1, 1961.
40.72 Use of factory premises.
40.73 Additional information.
40.74 Investigation of applicant.
40.75 Issuance of permit.
40.76 Retention of permit and supporting documents.

     Subpart F_Changes After Original Qualification of Manufacturers

                             Changes in Name

40.91 Change in individual name.
40.92 Change in trade name.
40.93 Change in corporate name.

                    Changes in Ownership and Control

40.101 Fiduciary successor.
40.102 Transfer of ownership.
40.103 Change in officers, directors, or stockholders of a corporation.
40.104 Change in control of a corporation.

                     Changes in Location of Factory

40.111 Change in location within same region.
40.112 Change in address.
40.113 Change in location to another region.
40.114 Extension or curtailment of factory.

           Subpart G_Bonds and Extensions of Coverage of Bonds

40.131 Corporate surety.
40.132 Deposit of securities in lieu of corporate surety.
40.133 Amount of individual bond.
40.134 Amount of blanket bond.
40.135 Strengthening bond.
40.136 Superseding bond.
40.137 Extension of coverage of bond.
40.138 Approval of bond and extension of coverage of bond.
40.139 Termination of bond.
40.140 Release of pledged securities.

                  Subpart H_Operations by Manufacturers

         Determination and Payment of Taxes on Tobacco Products

40.161 Determination of tax and method of payment.
40.162 Semimonthly tax return.
40.163 Semimonthly tax return periods.
40.164 Special rule for taxes due for the month of September (effective 
          after December 31, 1994).

[[Page 6]]

40.165 Times for filing semimonthly return.
40.165a Payment of tax by electronic fund transfer.
40.166 Default, prepayment of tax required.
40.167 Prepayment tax return.
40.168 Remittance with return.
40.169 Employer identification number.
40.170 Application for employer identification number.
40.171 Execution and filing of Form SS-4.

                                 Records

40.181 General.
40.182 Record of tobacco.
40.183 Record of tobacco products.
40.184 Record of removals subject to tax.
40.185 Retention of records.
40.186 Record in support of transfers in bond.
40.187 Record of sales prices of large cigars.

                         Inventories and Reports

40.201 Inventories.
40.202 Reports.

                                Packages

40.211 Package.
40.212 Mark.
40.213 Tobacco products labeled for export.
40.214 Notice for cigars.
40.215 Notice for cigarettes.
40.216 Notice for smokeless tobacco.
40.216a Notice for pipe tobacco.
40.216b Notice for roll-your-own tobacco.
40.216c Package use-up rule.
40.217 Repackaging.

                Exemption From Taxes on Tobacco Products

40.231 Consumption by employees.
40.232 Experimental purposes.
40.233 Transfer in bond.
40.234 Removal for use of the United States.
40.235 Removal for export purposes.
40.236 Release from customs custody.

              Other Provisions Relating to Tobacco Products

40.251 Emergency storage.
40.252 Reduction of tobacco products to materials.
40.253 Destruction.
40.254 Receipt into factory.
40.255 Shortages and overages in inventory.

                    Subpart I_Claims by Manufacturers

                                 General

40.281 Abatement of assessment.
40.282 Allowance of tax.
40.283 Credit or refund of tax.
40.284 Remission of tax liability.
40.285 [Reserved]
40.286 Refund of overpayment.
40.287 Remission of tax liability on shortage.

                   Tobacco Products Lost or Destroyed

40.301 Action by claimant.

               Tobacco Products Withdrawn From the Market

40.311 Action by claimant.
40.312 Action by the appropriate TTB officer.
40.313 Disposition of tobacco products and schedule.

 Subpart J_Suspension and Discontinuance of Operations by Manufacturers

40.331 Discontinuance of operations.
40.332 Suspension and revocation of permit.

           Subpart K_Manufacture of Cigarette Papers and Tubes

                                  Taxes

40.351 Cigarette papers.
40.352 Cigarette tubes.
40.353 Persons liable for tax.
40.354 Determination of tax and method of payment.
40.355 Return of manufacturer.
40.356 Adjustments in the return of manufacturer.
40.357 Payment of tax by electronic fund transfer.
40.358 Assessment.
40.359 Employer identification number.
40.360 Application for employer identification number.
40.361 Execution and filing of Form SS-4.

                      Special (Occupational) Taxes

40.371 Liability for special tax.
40.372 Rate of special tax.
40.373 Special tax returns.
40.374 Issuance, distribution, and examination of special tax stamps.
40.375 Changes in special tax stamps.

                                 General

40.382 Authority of TTB officers to enter premises.
40.383 Interference with administration.
40.384 Disposal of forfeited, condemned, and abandoned cigarette papers 
          and tubes.
40.385 Alternate methods or procedures.
40.386 Emergency variations from requirements.
40.387 Penalties and forfeitures.

              Qualification Requirements for Manufacturers

                         Original Qualifications

40.391 Persons required to qualify.
40.392 Bond.
40.393 Power of attorney.
40.394 Notice of approval of bond.

[[Page 7]]

                  Changes After Original Qualification

40.395 Change in name.
40.396 Change in proprietorship.
40.397 Change in location.

                Bonds and Extensions of Coverage of Bonds

40.401 Corporate surety.
40.402 Two or more corporate sureties.
40.403 Deposit of securities in lieu of corporate surety.
40.404 Amount of bond.
40.405 Strengthening bond.
40.406 Superseding bond.
40.407 Extension of coverage of bond.
40.408 Approval of bond and extension of coverage of bond.
40.409 Termination of liability of surety under bond.
40.410 Release of pledged securities.

                       Operations by Manufacturers

                                 Records

40.421 General.

                                 Reports

40.422 General.
40.423 Opening.
40.424 Monthly.
40.425 Special.
40.426 Closing.

                               Inventories

40.431 General.
40.432 Opening.
40.433 Special.
40.434 Closing.

                           Document Retention

40.435 General.

                                Packages

40.441 General.

                        Miscellaneous Operations

40.451 Transfer in bond.
40.452 Release from customs custody.
40.453 Use of the United States.
40.454 Removal for export purposes.

                  Permanent Discontinuance of Business

40.461 Discontinuance of operations.

                         Claims by Manufacturers

                                 General

40.471 Abatement.
40.472 Allowance.
40.473 Credit or refund.
40.474 Remission.

                            Lost or Destroyed

40.475 Action by claimant.

                        Withdrawn From the Market

40.476 Action by claimant.
40.477 Action by the appropriate TTB officer.
40.478 Disposition of cigarette papers and tubes and schedule.

    Authority: 26 U.S.C. 5142, 5143, 5146, 5701, 5703-5705, 5711-5713, 
5721-5723, 5731, 5741, 5751, 5753, 5761-5763, 6061, 6065, 6109, 6151, 
6301, 6302, 6311, 6313, 6402, 6404, 6423, 6676, 6806, 7011, 7212, 7325, 
7342, 7502, 7503, 7606, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.

    Source: 26 FR 8174, Aug. 31, 1961, unless otherwise noted. 
Redesignated at 40 FR 16835, Apr. 15, 1975; 54 FR 48839, Nov. 27, 1989, 
and further redesignated by T.D. ATF-460, 66 FR 39093, July 27, 2001.

    Editorial Note: Nomenclature changes to part 40 appear by T.D. ATF-
460, 66 FR 39094-39096, July 27, 2001 and T.D. ATF-464, 66 FR 43479, 
Aug. 20, 2001.



                     Subpart A_Scope of Regulations



Sec. 40.1  Manufacture of tobacco products and cigarette papers and tubes.

    This part contains regulations relating to the manufacture of 
tobacco products and cigarette papers and tubes; the payment by 
manufacturers of tobacco products and cigarette papers and tubes of 
internal revenue taxes imposed by 26 U.S.C. chapter 52; and the 
qualification of and operations by manufacturers of tobacco products.

[T.D. ATF-384, 61 FR 54085, Oct. 17, 1996]



Sec. 40.2  Territorial extent.

    The provisions of the regulations in this part shall apply in the 
several States of the United States and the District of Columbia.



                          Subpart B_Definitions



Sec. 40.11  Meaning of terms.

    When used in this part and in forms prescribed under this part, the 
following terms shall have the meanings given in this section, unless 
the context clearly indicates otherwise. Words in the plural form shall 
include the singular, and vice versa, and words indicating the masculine 
gender shall include the feminine. The terms ``includes'' and 
``including'' do not exclude things not listed which are in the same 
general class.

[[Page 8]]

    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury, Washington, DC.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.40, Delegation of the Administrator's Authorities in 27 CFR Part 
40, Manufacture of Tobacco Products and Cigarette Papers and Tubes.
    Bank. Any commercial bank.
    Banking day. Any day during which a bank is open to the public for 
carrying on substantially all its banking functions.
    CFR. The Code of Federal Regulations.
    Chewing tobacco. Any leaf tobacco that is not intended to be smoked.
    Cigar. Any roll of tobacco wrapped in leaf tobacco or in any 
substance containing tobacco (other than any roll of tobacco which is a 
cigarette within the meaning of paragraph (2) of the definition for 
cigarette).
    Cigarette. (1) Any roll of tobacco wrapped in paper or in any 
substance not containing tobacco, and
    (2) Any roll of tobacco wrapped in any substance containing tobacco 
which, because of its appearance, the type of tobacco used in the 
filler, or its packaging and labeling, is likely to be offered to, or 
purchased by, consumers as a cigarette described in paragraph (1) of 
this definition.
    Cigarette paper. Paper, or any other material except tobacco, 
prepared for use as a cigarette wrapper.
    Cigarette tube. Cigarette paper made into a hollow cylinder for use 
in making cigarettes.
    Commercial bank. A bank, whether or not a member of the Federal 
Reserve System, which has access to the Federal Reserve Communications 
System (FRCS) or Fedwire. The ``FRCS'' or ``Fedwire'' is a 
communications network that allows Federal Reserve System member banks 
to effect a transfer of funds for their customers (or other commercial 
banks) to the Treasury Account at the Federal Reserve Bank in New York.
    Determine. To establish enough information about taxable products at 
the time of removal to calculate the tax, specifically the quantity 
(pounds or number) and kind (for example, cigarettes, snuff, paper 
tubes). Where the tax rate depends on additional information (such as 
number of cigarette papers to a set before January 1, 2000 or sale price 
of large cigars), that information must also be established as part of 
tax determination.
    Director of the service center. The Director, Internal Revenue 
Service Center, in any of the Internal Revenue regions.
    District director. A district director of internal revenue.
    Electronic fund transfer or EFT. Any transfer of funds effected by a 
manufacturer's commercial bank, either directly or through a 
correspondent banking relationship, via the Federal Reserve 
Communications System (FRCS) or Fedwire to the Treasury Account at the 
Federal Reserve Bank of New York.
    Export warehouse. 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.
    Export warehouse proprietor. Any person who operates an export 
warehouse.
    Factory. The premises of a manufacturer of tobacco products as 
described in his permit issued under 26 U.S.C. chapter 52, or the 
premises of a manufacturer of cigarette papers and tubes on which such 
business is conducted.
    Fiscal year. The period which begins October 1 and ends on the 
following September 30.
    In bond. The status of tobacco products and cigarette papers and 
tubes, which come within the coverage of a bond securing the payment of 
internal revenue taxes imposed by 26 U.S.C. 5701 or 7652, and in respect 
to which such taxes have not been determined as provided by regulations 
in this chapter, including (a) such articles in a factory, (b) such 
articles removed, transferred,

[[Page 9]]

or released, pursuant to 26 U.S.C. 5704, and with respect to which 
relief from the tax liability has not occurred, and (c) such articles on 
which the tax has been determined, or with respect to which relief from 
the tax liability has occurred, which have been returned to the coverage 
of a bond.
    Large cigarettes. Cigarettes weighing more than three pounds per 
thousand.
    Large cigars. Cigars weighing more than three pounds per thousand.
    Manufacturer of cigarette papers and tubes. Any person who 
manufactures cigarette paper, or makes up cigarette paper into tubes, 
except for his own personal use or consumption.
    Manufacturer of tobacco products. Any person who manufactures 
cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own 
tobacco but does not include:
    (1) A person who produces tobacco products solely for that person's 
own consumption or use; or
    (2) A proprietor of a Customs bonded manufacturing warehouse with 
respect to the operation of such warehouse.
    Package. The immediate container in which tobacco products or 
cigarette papers or tubes are put up in by the manufacturer and offered 
for sale or delivery to the consumer.
    Permit number. The combination of (1) the letters indicating the 
kind of permit, (2) the identifying number, and (3) the name or 
abbreviation of the State (or the District of Columbia) in which the 
factory is located, as assigned to the permit by the appropriate TTB 
officer; for example, ``TP-999-Utah''.
    Person. An individual, partnership, association, company, 
corporation, estate, or trust.
    Pipe tobacco. Any tobacco which, because of its appearance, type, 
packaging, or labeling, is suitable for use and likely to be offered to, 
or purchased by, consumers as tobacco to be smoked in a pipe.
    Removal or remove. The removal of tobacco products or cigarette 
papers or tubes from the factory or release from customs custody, 
including the smuggling of other unlawful importation of such articles 
into the United States.
    Roll-your-own tobacco. Any tobacco which, because of its appearance, 
type, packaging, or labeling, is suitable for use and likely to be 
offered to, or purchased by, consumers as tobacco for making cigarettes.
    Sale price. The price for which large cigars are sold by the 
manufacturer, determined in accordance with Sec. 40.22 and used for 
computation of the tax.
    Service center. An Internal Revenue Service Center in any of the 
Internal Revenue regions.
    Service center director. A director of an internal revenue service 
center.
    Sets. Any collection, grouping, or packaging of cigarette papers 
made up by any person for delivery to the consumer as a unit.
    Small cigarettes. Cigarettes weighing not more than three pounds per 
thousand.
    Small cigars. Cigars weighing not more than three pounds per 
thousand.
    Smokeless tobacco. Any snuff or chewing tobacco.
    Snuff. Any finely cut, ground, or powdered tobacco that is not 
intended to be smoked.
    This chapter. Title 27, Code of Federal Regulations, chapter I (27 
CFR chapter I).
    Tobacco products. Cigars, cigarettes, smokeless tobacco, pipe 
tobacco, and roll-your-own tobacco.
    Treasury Account. The Department of the Treasury's General Account 
at the Federal Reserve Bank of New York.
    TTB. The Alcohol and Tobacco Tax and Trade Bureau, Department of the 
Treasury
    U.S.C. The United States Code.

(26 U.S.C. 7805 (68A Stat. 917), 27 U.S.C. 205 (49 Stat. 981 as 
amended), (82 Stat. 959), and Sec. 38, Arms Export Control Act (90 Stat. 
744) Aug. 16, 1954, ch. 736, 68A Stat. 775, as amended (26 U.S.C. 6301); 
June 29, 1956, ch. 462, 70 Stat. 391 (26 U.S.C. 6301))

[T.D. ATF-48, 43 FR 13553, Mar. 31, 1978; 44 FR 55854, Sept. 28, 1979, 
as amended by T.D. ATF-77, 46 FR 3007, Jan. 13, 1981; T.D. ATF-232, 51 
FR 28080, Aug. 5, 1986; T.D. ATF-289, 54 FR 48839, Nov. 27, 1989; T.D. 
ATF-384, 61 FR 54085, Oct. 17, 1996; T.D. ATF-424, 64 FR 71930, Dec. 22, 
1999; T.D. ATF-420, 64 FR 71939, Dec. 22, 1999; T.D. ATF, 457, 66 FR 
32220, June 14, 2001; T.D. ATF-460, 66 FR 39094, July 27, 2001; T.D. 
ATF-467, 66 FR 49532, Sept. 28, 2001; T.D. TTB-44, 71 FR 16948, Apr. 4, 
2006; 71 FR 25753, May 2, 2006]

[[Page 10]]



                             Subpart C_Taxes



Sec. 40.21  Cigar tax rates.

    (a) Cigars are taxed at the following rates under 26 U.S.C. 5701(a):

----------------------------------------------------------------------------------------------------------------
                                                         Tax rate for removals during the years:
            Type and amount            -------------------------------------------------------------------------
                                             1993 to  1999            2000 and  2001          2002 and  after
----------------------------------------------------------------------------------------------------------------
Small cigars per thousand.............  $1.125                   $1.594                   $1.828
Large cigars per thousand *
     percentage of    12.75%                   18.063%                  20.719%
     sale price.
     but not to       $30                      $42.50                   $48.75
     exceed[rarr].
----------------------------------------------------------------------------------------------------------------
*For large cigars, the percentage tax rate applies when the sale price is $235.294 per thousand or less, and the
  flat tax rate applies when the sale price is more than $235.294 per thousand.

    (b) See Sec. 40.22 of this part for rules concerning determination 
of sale price of large cigars.
    (c) Cigars not exempt from tax under 26 U.S.C. chapter 52 and the 
provisions of this part which are removed but not intended for sale 
shall be taxed at the same rate as similar cigars removed for sale.

[ T.D. ATF-420, 64 FR 71939, Dec. 22, 1999]



Sec. 40.22  Determination of sale price of large cigars.

    (a) General rule. The tax imposed on large cigars is computed based 
on the sale price (the price for which the large cigars are sold by the 
manufacturer). In addition to money, goods or services exchanged for 
cigars may be considered as part of the sale price.
    (b) Special cases.--(1) In general. If there is any question 
concerning the applicable sale price for tax purposes, the appropriate 
TTB officer will determine such price, applying rules similar to the 
constructive sale price rules in 26 U.S.C. 4216(b) and the implementing 
regulations in 26 CFR 48.4216(b)-1 through 48.4216(b)-4. These 
constructive sale price rules apply to cigars sold by a manufacturer at 
retail, sold on consignment, or sold (otherwise than through an arm's 
length transaction) at less than the fair market price. Sales of cigars 
between affiliated corporations may be analyzed under the constructive 
sale price rules. The appropriate TTB officer may make this analysis on 
his or her own initiative or upon the written request of a manufacturer. 
If TTB decides it is necessary, we will publish constructive sale price 
determinations in the TTB Bulletin in accordance with Sec. 70.701(d) of 
this chapter.
    (2) Adjustments in sale price.--(i) Reasons for adjustment. 
Adjustments to the sale price may occur as a result of a discount or 
price increase by the manufacturer or as a result of an TTB 
determination pursuant to paragraph (b)(1) above. In either case, the 
manufacturer must make conforming changes to the tax that was computed 
on the sale price before the adjustment.
    (ii) Time of adjustment. If an adjustment is made before the end of 
the same tax return period as the original determination of the tax, the 
adjustment may be made on the same return. If the price is increased or 
decreased retroactively (during a later return period), either by the 
manufacturer or by TTB's determination, the manufacturer must make an 
adjustment on the tax return for the current return period in which the 
price change was determined.
    (iii) Amount of adjustment. The taxpayer must compute the adjustment 
to the tax as the difference between the tax that was paid and the tax 
that should have been paid, based on the newly determined sale price, 
together with interest thereon and any applicable penalties. The 
interest must be computed from the time of payment of the original tax 
until the time the adjustment was made. Upon request, the appropriate 
TTB officer will provide information regarding interest rates applicable 
to specific time periods and any applicable penalties.

[[Page 11]]

    (3) Pricing for different packaging. If different bona fide sale 
prices are applicable to different types of packaging (e. g., boxes of 
25 and boxes of 50), then the cigars in each type of packaging are taxed 
on the basis of their respective sale prices.
    (4) Pricing of seconds. If some of an otherwise identical cigar 
brand and size:
    (i) Are distinctive from other such cigars because of physical 
imperfections, (ii) Are offered to the consumer through clear labeling 
as ``imperfects'', ``seconds'', ``throw-outs'', or a comparable commonly 
understood term, and
    (iii) The manufacturer has a separate sale price for such cigars, 
then they are taxed on the basis of this separate sale price.
    (5) Combination packages. If a manufacturer has a sale price for a 
combination package containing cigars of different sizes, the cigars are 
taxed based on that combination sale price. If there is no sale price 
for the combination, then the cigars are taxed based on their individual 
sale prices.
    (6) Removals for another person. If a manufacturer makes taxable 
removals of a brand and size of cigar only for distribution by others 
who establish the sale price, the tax is based on such sale price even 
though the manufacturer who makes the removals does not establish the 
price.

[T.D. ATF-420, 64 FR 71939, Dec. 22, 1999]



Sec. 40.23  Cigarette tax rates.

    Cigarettes are taxed at the following rates under 26 U.S.C. 5701(b):

------------------------------------------------------------------------
                                     Tax rate per thousand for removals
                                              during the years
             Product              --------------------------------------
                                     1993 to      2000 and     2002 and
                                       1999         2001        after
------------------------------------------------------------------------
Small cigarettes.................          $12          $17       $19.50
Large cigarettes up to 6\1/2\ long....................
Large cigarettes over 6\1/2\ long....................      (2)Taxed at the rate for small
                                      cigarettes, counting each 2\3/4\
                                     inches or fraction thereof of the
                                      length of each as one cigarette.
------------------------------------------------------------------------


[T.D. ATF-420, 64 FR 71940, Dec. 22, 1999]



Sec. 40.24  Classification of cigarettes.

    For tax purposes, small cigarettes are designated Class A and large 
cigarettes are designated Class B.

(72 Stat. 1414; 26 U.S.C. 5701)



Sec. 40.25  Smokeless tobacco tax rates.

    Smokeless tobacco products are taxed at the following rates under 26 
U.S.C. 5701(e):

------------------------------------------------------------------------
                                     Tax rate per pound * for removals
                                              during the years
             Product              --------------------------------------
                                     1993 to      2000 and     2002 and
                                       1999         2001        after
------------------------------------------------------------------------
Snuff............................        $0.36        $0.51       $0.585
Chewing tobacco..................         0.12         0.17        0.195
------------------------------------------------------------------------
* Prorate tax for fractions of a pound.


[T.D. ATF-420, 64 FR 71940, Dec. 22, 1999]



Sec. 40.25a  Pipe tobacco and roll-your-own tobacco tax rates.

    Pipe tobacco and roll-your-own tobacco are taxed at the following 
rates under 26 U.S.C. 5701(f) and (g), respectively:

[[Page 12]]



------------------------------------------------------------------------
                                     Tax rate per pound * for removals
                                              during the years
             Product              --------------------------------------
                                     1993 to      2000 and     2002 and
                                       1999         2001        after
------------------------------------------------------------------------
Pipe tobacco.....................       $0.675      $0.9567      $1.0969
Roll-your-own tobacco............     * No tax       0.9567       1.0969
------------------------------------------------------------------------
* Prorate tax for fractions of a pound.


[T.D. ATF-420, 64 FR 71940, Dec. 22, 1999]



Sec. 40.26  Persons liable for tax.

    The manufacturer of tobacco products shall be liable for the taxes 
imposed on tobacco products by 26 U.S.C. 5701: Provided, That when 
tobacco products are transferred in bond pursuant to 26 U.S.C. 5704, to 
the bonded premises of another such manufacturer or an export warehouse 
proprietor, the transferee shall become liable for the tax upon receipt 
by him of such products and the transferor shall thereupon be relieved 
of his liability for the tax. When tobacco products are released in bond 
from customs custody for transfer to the bonded premises of a 
manufacturer of tobacco products, the transferee shall become liable for 
the tax on such products upon release from customs custody. Any person 
who possesses tobacco products in violation of 26 U.S.C. 5751(a)(1) or 
(2), shall be liable for a tax equal to the tax on such products.

(Sec. 201, Pub. L. 85-859, 72 Stat 1415, as amended, 1424, as amended 
(26 U.S.C. 5703, 5751))

[T.D. 6871, 31 FR 32, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55854, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28080, Aug. 5, 1986; T.D. ATF-243, 52 FR 43194, Dec. 1, 
1986]



Sec. 40.27  Assessment.

    Whenever any person required by law to pay tax on tobacco products 
fails to pay such tax, the tax shall be ascertained and assessed against 
such person, subject to the limitations prescribed in 26 U.S.C. 6501. 
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 be 
made until and after notice has been afforded such person to show cause 
against assessment. The person will be allowed 45 days from the date of 
such notice to show cause, in writing, against such assessment.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1415, as amended (26 U.S.C. 5703))

[T.D. 6871, 31 FR 32, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55854, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28080, Aug. 5, 1986; T.D. ATF-243, 52 FR 43194, Dec. 1, 
1986]



                 Subpart Ca_Special (Occupational) Taxes

    Source: T.D. ATF-271, 53 FR 17560, May 17, 1988, unless otherwise 
noted.



Sec. 40.31  Liability for special tax.

    (a) Manufacturer of tobacco products. Every manufacturer of tobacco 
products shall pay a special (occupational) tax at a rate specified by 
Sec. 40.32 of the part. The tax shall be paid on or before the date of 
commencing the business of manufacturing tobacco products, and 
thereafter every year on or before July 1. On commencing business, the 
tax shall be computed from the first day of the month in which liability 
is incurred, through the following June 30. Thereafter, the tax shall be 
computed for the entire year (July 1 through June 30).
    (b) Transition rule. For purposes of paragraph (a) of this section, 
a proprietor engaged in the business of manufacturing tobacco products 
on January 1, 1988, shall be treated as having commenced business on 
that date. The special tax imposed by this transition rule shall cover 
the period January 1, 1988, through June 30, 1988, and shall be paid on 
or before April 1, 1988.

[[Page 13]]

    (c) Each place of business taxable. A manufacturer of tobacco 
products incurs special tax liability at each place of business in which 
an occupation subject to special tax is conducted. A place of business 
means the entire office, plant or area of the business in any one 
location under the same proprietorship. Passageways, streets, highways, 
rail crossings, waterways, or partitions dividing the premises are not 
sufficient separation to require additional special tax, if the 
divisions of the premises are otherwise contiguous.

(26 U.S.C. 5143, 5731)



Sec. 40.32  Rates of special tax.

    (a) General. Title 26 U.S.C. 5731(a)(1) imposes a special tax of 
$1,000 per year on every manufacturer of tobacco products.
    (b) Reduced rate for small proprietors. Title 26 U.S.C. 5731(b) 
provides for a reduced rate of $500 per year with respect to any 
manufacturer of tobacco products whose gross receipts (for the most 
recent taxable year ending before the first day of the taxable period to 
which the special tax imposed by Sec. 40.31 relates) are less than 
$500,000. The ``taxable year'' to be used for determining gross receipts 
is the taxpayer's income tax year. All gross receipts of the taxpayer 
shall be included, not just the gross receipts of the business subject 
to special tax. Proprietors of new businesses that have not yet begun a 
taxable year, as well as proprietors of existing businesses that have 
not yet ended a taxable year, who commence a new activity subject to 
special tax, qualify for the reduced special (occupational) tax rate, 
unless the business is a member of a ``controlled group''; in that case, 
the rules of paragraph (c) of this section shall apply.
    (c) Controlled group. All persons treated as one taxpayer under 26 
U.S.C. 5061(e)(3) shall be treated as one taxpayer for the purpose of 
determining gross receipts under paragraph (b) of this section. 
``Controlled group'' means a controlled group of corporations, as 
defined in 26 U.S.C. 1563 and implementing regulations in 26 CFR 1.1563-
1 through 1.1563-4, except that the words ``at least 80 percent'' shall 
be replaced by the words ``more than 50 percent'' in each place they 
appear in subsection (a) of 26 U.S.C. 1563, as well as in the 
implementing regulations. Also, the rules for a ``controlled group of 
corporations'' apply in a similar fashion to groups which include 
partnerships and/or sole proprietorships. If one entity maintains more 
than 50% control over a group consisting of corporations and one, or 
more, partnerships and/or sole proprietorships, all of the members of 
the controlled group are one taxpayer for the purpose of this section.
    (d) Short taxable year. Gross receipts for any taxable year of less 
than 12 months shall be annualized by multiplying the gross receipts for 
the short period by 12 and dividing the result by the number of months 
in the short period as required by 26 U.S.C. 448(c)(3).
    (e) Returns and allowances. Gross receipts for any taxable year 
shall be reduced by returns and allowances made during such year under 
26 U.S.C. 448(c)(3).

(26 U.S.C. 448, 5061, 5731)



Sec. 40.33  Special tax returns.

    (a) General. Special tax shall be paid by return. The prescribed 
return is TTB Form 5630.5, Special Tax Registration and Return. Special 
tax returns, with payment of tax, shall be filed with TTB in accordance 
with instructions on the form.
    (b) Preparation of TTB Form 5630.5. All of the information called 
for on Form 5630.5 shall be provided, including:
    (1) The true name of the taxpayer.
    (2) The trade name(s) (if any) of the business(es) subject to 
special tax.
    (3) The employer identification number (see Sec. 40.34).
    (4) The exact location of the place of business, by name and number 
of building or street, or if these do not exist, by some description in 
addition to the post office address. In the case of one return for two 
or more locations, the address to be shown shall be the taxpayer's 
principal place of business (or principal office, in the case of a 
corporate taxpayer).
    (5) The class(es) of special tax to which the taxpayer is subject.
    (6) Ownership and control information: that is, the name, position, 
and residence address of every owner of the business and of every person 
having

[[Page 14]]

power to control its management and policies with respect to the 
activity subject to special tax. ``Owner of the business'' shall include 
every partner, if the taxpayer is a partnership, and every person owning 
10% or more of its stock, if the taxpayer is a corporation. However, the 
ownership and control information required by this paragraph need not be 
stated if the same information has been previously provided to TTB in 
connection with a permit application, and if the information previously 
provided is still current.
    (c) Multiple locations and/or classes of tax. A taxpayer subject to 
special tax for the same period at more than one location or for more 
than one class of tax shall--
    (1) File one special tax return, TTB Form 5630.5, with payment of 
tax, to cover all such locations and classes of tax; and
    (2) Prepare, in duplicate, a list identified with the taxpayer's 
name, address (as shown on TTB Form 5630.5), employer identification 
number, and period covered by the return. The list shall show, by 
States, the name, address, and tax class of each location for which 
special tax is being paid. The original of the list shall be filed with 
TTB in accordance with instructions on the return, and the copy shall be 
retained at the taxpayer's principal place of business (or principal 
office, in the case of a corporate taxpayer) for the period specified in 
Sec. 40.185.
    (d) Signing of TTB Forms 5630.5--(1) Ordinary returns. The return of 
an individual proprietor shall be signed by the individual. The return 
of a partnership shall be signed by a general partner. The return of a 
corporation shall be signed by any officer. In each case, the person 
signing the return shall designate his or her capacity as ``individual 
owner,'' ``member of firm,'' or, in the case of a corporation, the title 
of the officer.
    (2) Fiduciaries. Receivers, trustees, assignees, executors, 
administrators, and other legal representatives who continue the 
business of a bankrupt, insolvent, deceased person, etc., shall indicate 
the fiduciary capacity in which they act.
    (3) Agent or attorney in fact. If a return is signed by an agent or 
attorney in fact, the signature shall be preceded by the name of the 
principal and followed by the title of the agent or attorney in fact. A 
return signed by a person as agent will not be accepted unless there is 
filed, with the TTB office with which the return is required to be 
filed, a power of attorney authorizing the agent to perform the act.
    (4) Perjury statement. TTB Forms 5630.5 shall contain or be verified 
by a written declaration that the return has been executed under the 
penalties of perjury.

(26 U.S.C. 5142, 6061, 6065, 6151, 7011)



Sec. 40.34  Employer identification number.

    (a) Requirement. The employer identification number (defined in 26 
CFR 301.7701-12) of the taxpayer who has been assigned such a number 
shall be shown on each special tax return, including amended returns, 
filed under this subpart. Failure of the taxpayer to include the 
employer identification number may result in the imposition of the 
penalty specified in Sec. 70.113 of this chapter.
    (b) Application for employer identification number. Each taxpayer 
who files a special tax return, who has not already been assigned an 
employer identification number, shall file IRS Form SS-4 to apply for 
one. The taxpayer shall apply for and be assigned only one employer 
identification number, regardless of the number of places of business 
for which the taxpayer is required to file a special tax return. The 
employer identification number shall be applied for no later than 7 days 
after the filing of the taxpayer's first special tax return. IRS Form 
SS-4 may be obtained from the director of an IRS service center or from 
any IRS district director.
    (c) Preparation and filing of IRS Form SS-4. The taxpayer shall 
prepare and file IRS Form SS-4, together with any supplementary 
statement, in accordance with the instructions on the form or issued in 
respect to it.

(26 U.S.C. 6109)

[T.D. ATF-271, 53 FR 17560, May 17, 1988, as amended by T.D. ATF-301, 55 
FR 47658, Nov. 14, 1990]

[[Page 15]]



Sec. 40.35  Issuance, distribution, and examination of special tax stamps.

    (a) Issuance of special tax stamps. Upon filing a properly executed 
return on TTB Form 5630.5 together with the full remittance, the 
taxpayer will be issued an appropriately designated special tax stamp. 
If the return covers multiple locations, the taxpayer will be issued one 
appropriately designated stamp for each location listed on the 
attachment required by Sec. 40.33(c)(2), but showing, as to name and 
address, only the name of the taxpayer and the address of the taxpayer's 
principal place of business (or principal office in the case of a 
corporate taxpayer).
    (b) Distribution of special tax stamps for multiple locations. On 
receipt of the special tax stamps, the taxpayer shall verify that there 
is one stamp for each location listed on the attachment to TTB Form 
5630.5. The taxpayer shall designate one stamp for each location and 
type on each stamp the address of the business conducted at the location 
for which that stamp is designated. The taxpayer shall then forward each 
stamp to the place of business designated on the stamp.
    (c) Examination of special tax stamps. All stamps denoting payment 
of special tax shall be kept available for inspection by appropriate TTB 
officers, at the location for which designated, during business hours.

(26 U.S.C. 5146, 6806)



Sec. 40.36  Changes in special tax stamps.

    (a) Change in name. If there is a change in the corporate or firm 
name, or in the trade name, as shown on TTB Form 5630.5, the 
manufacturer shall file an amended special tax return as soon as 
practicable after the change, covering the new corporate or firm name, 
or trade names. No new special tax is required to be paid. The 
manufacturer shall attach the special tax stamp for endorsement of the 
change in name.
    (b) Change in proprietorship--(1) General. If there is a change in 
the proprietorship of a tobacco factory, the successor shall pay a new 
special tax and obtain the required special tax stamps.
    (2) Exemption for certain successors. Persons having the right of 
succession provided for in paragraph (c) of this section may carry on 
the business for the remainder of the period for which the special tax 
was paid, without paying a new special tax, if within 30 days after the 
date on which the successor begins to carry on the business, the 
successor files a special tax return on Form 5630.5 with TTB, which 
shows the basis of succession. A person who is a successor to a business 
for which special tax has been paid and who fails to register the 
succession is liable for special tax computed from the first day of the 
calendar month in which he or she began to carry on the business.
    (c) Persons having right of succession. Under the conditions 
indicated in paragraph (b)(2) of this section, the right of succession 
will pass to certain persons in the following cases:
    (1) Death. The widowed spouse or child, or executor, administrator, 
or other legal representative of the taxpayer;
    (2) Succession of spouse. A husband or wife succeeding to the 
business of his or her spouse (living);
    (3) Insolvency. A receiver or trustee in bankruptcy, or an assignee 
for benefit of creditors;
    (4) Withdrawal from firm. The partner or partners remaining after 
death or withdrawal of a member.
    (d) Change in location. If there is a change in location of a 
taxable place of business, the manufacturer shall, within 30 days after 
the change, file with TTB an amended special tax return covering the new 
location. The manufacturer shall attach the special tax stamp or stamps, 
for endorsement of the change in location. No new special tax is 
required to be paid. However, if the manufacturer does not file the 
amended return within 30 days, the manufacturer is required to pay a new 
special tax and obtain a new special tax stamp.

(26 U.S.C. 5143, 7011)



                   Subpart D_Administrative Provisions



Sec. 40.41  Forms prescribed.

    (a) The appropriate TTB officer is authorized to prescribe all forms 
required by this part. All of the information

[[Page 16]]

called for in each form shall be furnished as indicated by the headings 
on the form and the instructions on or pertaining to the form. In 
addition, information called for in each form shall be furnished as 
required by this part. When a return, form, claim, or other document 
called for under this part is required by this part, or by the document 
itself, to be executed under penalties of perjury, it shall be executed 
under penalties of perjury.
    (b) Forms prescribed by this part are available for printing through 
the TTB Web site (http://www.ttb.gov) or by mailing a request to the 
Alcohol and Tobacco Tax and Trade Bureau, National Revenue Center, 550 
Main Street, Room 1516, Cincinnati, OH 45202.

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[T.D. ATF-92, 46 FR 46921, Sept. 23, 1981, as amended by T.D. ATF-232, 
51 FR 28080, Aug. 5, 1986; T.D. ATF-243, 52 FR 43194, Dec. 1, 1986; T.D. 
ATF-372, 61 FR 20725, May 8, 1996; T.D. TTB-44, 71 FR 16949, Apr. 4, 
2006]



Sec. 40.42  Authority of Appropriate TTB officers to enter premises.

    Any appropriate TTB officer may enter in the daytime any premises 
where tobacco products are produced or kept, so far as it may be 
neccessary for the purpose of examining such products. When such 
premises are open at night, any appropriate TTB officer may enter them, 
while so open, in the performance of his official duties. The owner of 
such premises, or person having the superintendence of the same, who 
refuses to admit any appropriate TTB officer or permit him to examine 
such products shall be liable to the penalties prescribed by law for the 
offense.

(68A Stat. 872, 903; 26 U.S.C. 7342, 7606)

[T.D. 6871, 31 FR 33, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-232, 51 FR 28080, Aug. 5, 1986; T.D. ATF-243, 52 FR 
43194, Dec. 1, 1986]



Sec. 40.43  Interference with administration.

    Whoever, corruptly or by force or threats of force, endeavors to 
hinder or obstruct the administration of this part, or endeavors to 
intimidate or impede any TTB officer acting in his official capacity, or 
forcibly rescues or attempts to rescue or causes to be rescued any 
property, after it has been duly seized for forfeiture to the United 
States in connection with a violation of the internal revenue laws, 
shall be liable to the penalties prescribed by law.

(68A Stat. 855; 26 U.S.C. 7212)



Sec. 40.44  Disposal of forfeited, condemned, and abandoned tobacco products.

    A Federal, State, or local officer shall not sell or cause to be 
sold for consumption in the United States any forfeited, condemned, or 
abandoned tobacco products in his custody upon which the Federal tax has 
not been paid, if in his opinion the sale thereof will not bring a price 
equal to the tax due and payable thereon and the expenses incident to 
the sale thereof. Where the products are not sold the officer may 
deliver them to a Federal or State hospital or institution (if they are 
fit for consumption) or cause their destruction by burning completely or 
by rendering them unfit for consumption. Where such products are sold 
they shall be released by the officer having custody thereof only after 
they are properly packaged and taxpaid. A receipt from the appropriate 
TTB officer evidencing payment of tax on such products shall be 
presented to the officer having custody of the products, which tax shall 
be considered part of the sales price. Where tobacco products which have 
been packaged under the provisions of part 44 or part 45 of this chapter 
are to be released after payment of tax, the purchaser shall 
appropriately mark each package ``Federal Tax Paid (date)'' before the 
officer having custody of the products releases them:

Provided, That if the purchaser is a qualified manufacturer of tobacco 
products, or for products packaged under part 44 a qualified export 
warehouse proprietor, the products may be released without such marking 
of the packages if the manufacturer or proprietor does not intend to 
place such products on the domestic market for taxable products but will 
dispose of them otherwise, such as by destruction or return to bond 
through claim for refund, and files a written statement to that

[[Page 17]]

effect, in original only, with the officer having custody of the 
products. In the case of products forfeited under the internal revenue 
laws the sale shall be subject to the provisions of part 172 of this 
chapter.

(68A Stat. 870, as amended, 72 Stat. 1425, as amended; 26 U.S.C. 7325, 
5753)

[T.D. 6961, 33 FR 9488, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28080, Aug. 5, 1986; T.D. 
ATF-243, 52 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19339, May 22, 
1987; T.D. ATF-469, 66 FR 56758, Nov. 13, 2001]



Sec. 40.45  Alternate methods or procedures.

    A manufacturer of tobacco products, on specific approval by the 
appropriate TTB officer as provided in this section, may use an 
alternate method or procedure in lieu of a method or procedure 
specifically prescribed in this part. The appropriate TTB officer may 
approve an alternate method or procedure, subject to stated conditions, 
when he finds that--
    (a) Good cause has been shown for the use of the alternate method or 
procedure,
    (b) The alternate method or procedure is within the purpose of, and 
consistent with the effect intended by, the specifically prescribed 
method or procedure, and affords equivalent security to the revenue, and
    (c) The alternate method or procedure will not be contrary to any 
provision of law, and will not result in an increase in cost to the 
Government or hinder the effective administration of this part.

No alternate method or procedure relating to the giving of any bond or 
to the assessment, payment, or collection of tax, shall be authorized 
under this section. Where a manufacturer desires to employ an alternate 
method or procedure, he shall submit a written application to do so, in 
triplicate, to the appropriate TTB officer. The application shall 
specifically describe the proposed alternate method or procedure, and 
shall set forth the reasons therefor. Alternate methods or procedures 
shall not be employed until the application has been approved by the 
appropriate TTB officer. The manufacturer shall, during the period of 
authorization of an alternate method or procedure, comply with the terms 
of the approved application. Authorization for any alternate method or 
procedure may be withdrawn whenever in the judgment of the appropriate 
TTB officer the revenue is jeopardized or the effective administration 
of this part is hindered. The manufacturer shall retain, as part of his 
records, any authorization of the appropriate TTB officer under this 
section.



Sec. 40.46  Emergency variations from requirements.

    The appropriate TTB officer may approve methods of operation other 
than as specified in this part, where he finds that an emergency exists 
and the proposed variations from the specified requirements are 
necessary, and the proposed variations--
    (a) Will afford the security and protection to the revenue intended 
by the prescribed specifications.
    (b) Will not hinder the effective administration of this part, and
    (c) Will not be contrary to any provision of law.

Variations from requirements granted under this section are conditioned 
on compliance with the procedures, conditions, and limitations set forth 
in the approval of the application. Failure to comply in good faith with 
such procedures, conditions, and limitations shall automatically 
terminate the authority for such variations and the manufacturer 
thereupon shall fully comply with the prescribed requirements of 
regulations from which the variations were authorized. Authority for any 
variations may be withdrawn whenever in the judgment of the appropriate 
TTB officer the revenue is jeopardized or the effective administration 
of this part is hindered by the continuation of such variation. Where a 
manufacturer desires to employ such variation, he shall submit a written 
application to do so, in triplicate, to the appropriate TTB officer. The 
application shall describe the proposed variations and set forth the 
reasons therefor. Variations shall not be employed until the application 
has been approved. The manufacturer shall retain, as part of his

[[Page 18]]

records, any authorization of the appropriate TTB officer under this 
section.



Sec. 40.47  Other businesses within factory.

    The appropriate TTB officer may authorize such other businesses 
within the factory as he finds will not jeopardize the revenue, will not 
hinder the effective administration of this part, and will not be 
contrary to law. Where a manufacturer desires to engage in another 
business within the factory he shall submit a written application to do 
so, in triplicate, to the appropriate TTB officer. A manufacturer shall 
not engage in such other business until the application is approved by 
the appropriate TTB officer. The manufacturer shall retain, as part of 
his records, any authorization of the appropriate TTB officer under this 
section.

[T.D. 6840, 30 FR 9310, July 27, 1965. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 40.48  Penalties and forfeitures.

    Anyone who fails to comply with the provisions of this part becomes 
liable to the civil and criminal penalties, and forfeitures, provided by 
law.

(72 Stat. 1425, 1426; 26 U.S.C. 5761, 5762, 5763)



Sec. 40.49  Delegations of the Administrator.

    Most of the regulatory authorities of the Administrator contained in 
this part are delegated to appropriate TTB officers. These TTB officers 
are specified in TTB Order 1135.40, Delegation of the Administrator's 
Authorities in 27 CFR Part 40, Manufacture of Tobacco Products and 
Cigarette Papers and Tubes. You may obtain a copy of this order by 
accessing the TTB Web site (http://www.ttb.gov) or by mailing a request 
to the Alcohol and Tobacco Tax and Trade Bureau, National Revenue 
Center, 550 Main Street, Room 1516, Cincinnati, OH 45202.

[T.D. TTB-44, 71 FR 16949, Apr. 4, 2006]



         Subpart E_Qualification Requirements for Manufacturers



Sec. 40.61  Qualification--General.

    (a) Who must qualify. Every person who produces tobacco products 
except for his or her own personal consumption or use, shall qualify as 
a manufacturer of tobacco products in accordance with the provisions of 
this part.
    (b) Minimum manufacturing and activity requirements. A permit to 
manufacture tobacco products will only be granted to those persons whose 
principal business activity under such permit will be the original 
manufacture of tobacco products. A permit will not be granted to any 
person whose principal activity under such permit will be to receive or 
transfer tobacco products in bond. As a minimum activity requirement, in 
order to qualify for a permit, the quantity of tobacco products 
manufactured under the permit must exceed the quantity to be transferred 
or received in bond under the permit. For the purposes of this section, 
repackaging or relabeling activities alone do not qualify as a 
manufacturing activity.

[T.D. ATF-421, 64 FR 71923, Dec. 22, 1999]



Sec. 40.61a  Transitional rule.

    Any person who:
    (a) On August 5, 1997, was engaged in business as a manufacturer of 
roll-your-own tobacco, and
    (b) Before January 1, 2000, submits an application, as provided in 
this part, to engage in such business, may, continue to engage in such 
business pending final action on such application. Pending such final 
action, all provisions of chapter 52 of the Internal Revenue Code of 
1986 shall apply to such applicant in the same manner and to the same 
extent as if such applicant were a holder of a permit to manufacture 
roll-your-own tobacco under such chapter 52.

[T.D. ATF-424, 64 FR 71931, Dec. 22, 1999]



Sec. 40.62  Application for permit.

    Every person, before commencing business as a manufacturer of 
tobacco products as defined in Sec. 40.11, shall make application for, 
and obtain, the

[[Page 19]]

permit provided in Sec. 40.75, covering operations at each proposed 
factory. Such application shall be made on Form 2093, in duplicate, to 
the appropriate TTB officer. All documents required under this part to 
be furnished with such application shall be made a part thereof. Where 
the applicant for a permit under this section holds a permit or permits 
authorizing the production of any tobacco products at premises to be 
covered by the permit applied for, the applicant shall surrender such 
permit or permits for cancellation, upon the issuance of the permit 
applied for.

(72 Stat. 1421; 26 U.S.C 5712)



Sec. 40.63  Corporate documents.

    Every corporation, before commencing business as a manufacturer of 
tobacco products, shall furnish with its application for permit, 
required by Sec. 40.62, a true copy of the corporate charter or a 
certificate of corporate existence or incorporation executed by the 
appropriate officer of the State in which incorporated. The corporation 
shall likewise furnish duly authenticated extracts of the stockholders' 
meetings, bylaws, or directors' meetings, listing the offices the 
incumbents of which are authorized to sign documents or otherwise act in 
behalf of the corporation in matters relating to 26 U.S.C. chapter 52, 
and regulations issued thereunder. The corporation shall also furnish 
evidence, in duplicate, of the identity of the officers and directors 
and each person who holds more than ten percent of the stock of such 
corporation. Where any of the information required by this section has 
previously been filed with the appropriate TTB officer and such 
information is currently complete and accurate, a written statement to 
that effect, in duplicate, will be sufficient for the purpose of this 
section.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1421, as amended (26 U.S.C. 5712))

[T.D. 6840, 30 FR 9310, July 27, 1965. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55854, Sept. 28, 1979]



Sec. 40.64  Articles of partnership or association.

    Every partnership or association, before commencing business as a 
manufacturer of tobacco products, shall furnish with its application for 
permit, required by Sec. 40.62, a true copy of the articles of 
partnership or association, if any, or certificate of partnership or 
association where required to be filed by any State, county, or 
municipality. Where a partnership or association has previously filed 
such documents with the appropriate TTB officer and such documents are 
currently complete and accurate, a written statement, in duplicate, to 
that effect by the partnership or association will be sufficient for the 
purpose of this section.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 40.65  Trade name certificate.

    Every person, before commencing business under a trade name as a 
manufacturer of tobacco products, shall furnish with his application for 
permit, required by Sec. 40.62, a true copy of the certificate or other 
document, if any, issued by a State, county, or municipal authority in 
connection with the transaction of business under such trade name. If no 
such certificate or other document is so required, a written statement, 
in duplicate, to that effect by such person will be sufficient for the 
purpose of this section.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 40.66  Bond.

    Every person, before commencing business as a manufacturer of 
tobacco products, shall file, in connection with his application for 
permit, a bond on Form 3070, in duplicate, in accordance with the 
applicable provisions of subpart G of this part, conditioned upon 
compliance with the provisions of chapter 52, I.R.C., and regulations 
thereunder, including, but not limited to, the timely payment of taxes 
imposed by such chapter and penalties and interest in connection 
therewith for which he may become liable to the United States: Provided, 
That any person who, on the effective date of this part, October 1, 
1961, has on file a valid and adequate bond, Form 2100, ``Bond--

[[Page 20]]

Manufacturer of Cigars and Cigarettes,'' may continue, under such bond, 
the operations with respect to the permit to which that bond relates, in 
accordance with the provisions of this part.

(72 Stat. 1421, as amended; 26 U.S.C. 5711)

[T.D. 6871, 31 FR 33, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 40.67  Blanket bond.

    Where a manufacturer of tobacco products operates more than one 
factory in the same region he may, in lieu of filing separate bonds, 
file a blanket bond on Form 3070, in duplicate, in accordance with the 
provisions of Sec. 40.134, for any or all of the factories in the same 
region. The total amount of any blanket bond given under this section 
shall be available for the satisfaction of any liability incurred at any 
factory covered by the bond.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.68  Power of attorney.

    If the application for permit or any report, return, notice, 
schedule, or other document required to be executed is to be signed by 
an individual (including one of the partners for a partnership or one of 
the members of an association) as an attorney in fact for any person, or 
if an individual is to otherwise officially represent such person, power 
of attorney on Form 1534 shall be furnished to the appropriate TTB 
officer. (For power of attorney in connection with conference and 
practice requirements see subpart E, part 601 of this chapter.) Such 
power of attorney is not required for persons whose authority is 
furnished with the corporate documents as required by Sec. 40.63. Form 
1534 does not have to be filed again with a appropriate TTB officer 
where such form has previously been submitted to that appropriate TTB 
officer and is still in effect.

[T.D. 6840, 30 FR 9310, July 27, 1965. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 40.69  Factory premises.

    The premises to be used by a manufacturer of tobacco products as his 
factory may consist of more than one building, or portions of buildings, 
which need not be contiguous but must be located in the same city, town, 
or village: Except that, where the appropriate TTB officer determines 
that a building or portion of a building which is not within the city, 
town, or village, is so conveniently and closely situated to the general 
factory premises as to present no jeopardy to the revenue and as to 
offer no hindrance to the administration of this part, he may authorize 
the inclusion of such building or portion of building as part of the 
factory. The buildings or portions of buildings shall be described in 
the application for permit and the bond by number, street, and city, 
town, or village, and State. If any of the following conditions exist a 
diagram shall also be furnished, in duplicate, showing the information 
indicated:
    (a) Where the factory is in more than one building, and each 
building is not identifiable by a separate street address--identify each 
building by a letter, number, or similar designation;
    (b) Where the factory consists of a portion of a building or where 
portions of buildings are part of the factory--show the particular floor 
or floors, or room or rooms, comprising the factory;
    (c) Where there is an adjoining retail store operated by the 
manufacturer tobacco products including any doors or other openings 
between the premises.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6840, 30 FR 9310, July 27, 1965, as amended by T.D. 6871, 31 FR 
33, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 15, 1975, as amended 
by T.D. ATF-232, 51 FR 28080, Aug. 5, 1986; T.D. ATF-243, 52 FR 43194, 
Dec. 1, 1986]



Sec. 40.70  Separation of and access to factory.

    Where the factory consists of a portion of a building, or where 
portions of buildings are part of the factory, the factory shall be 
completely separated by walls from adjoining portions of the building. 
Such walls shall be securely constructed of substantial materials. The 
appropriate TTB officer may, wherever he finds that the revenue will not 
be jeopardized, authorize openings and doors in such walls or means of 
separation other than walls if such

[[Page 21]]

means adequately delineate the factory. The factory shall be accessible 
directly from a street, yard, common passageway, or other common means 
of entrance.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 40.71  Factories established prior to October 1, 1961.

    Factories established prior to the effective date of this part, 
October 1, 1961, shall not be subject to the provisions of Sec. 40.70 
if, in the opinion of the appropriate TTB officer, the existing premises 
afford adequate protection to the revenue.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6871, 31 FR 33, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 40.72  Use of factory premises.

    Unless otherwise authorized by the appropriate TTB officer as 
provided in Sec. 40.47, the factory premises shall be used exclusively 
for the purposes of manufacturing and storing tobacco products; storing 
materials, equipment, and supplies related thereto or used or useful in 
the conduct of the business; and carrying on activities in connection 
with the business of the manufacturer: Provided, That tobacco products 
manufacturers who maintain adequate records in respect to the 
manufacture and storage of smoking tobacco that is not subject to tax 
(as well as with respect to tobacco products), showing the date and 
total quantity in pounds of the tobacco received, shipped or delivered, 
lost, and destroyed, may continue such operations on the tobacco 
products factory premises, without application for authorization as 
prescribed in Sec. 40.47.

[T.D. ATF-232, 51 FR 28080, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986, as amended by T.D. ATF-289, 54 FR 48839, Nov. 27, 1989]



Sec. 40.73  Additional information.

    The appropriate TTB officer may require such additional information 
as he may deem necessary to determine whether the applicant is entitled 
to a permit under the provisions of this part. The applicant shall, when 
required by the appropriate TTB officer, furnish as a part of his 
application for such permit such additional information as may be 
necessary for the appropriate TTB officer to determine whether the 
applicant is entitled to a permit.



Sec. 40.74  Investigation of applicant.

    As the appropriate TTB officer deems necessary he will cause inquiry 
or investigation to be made to verify the information furnished in 
connection with an application for permit and to ascertain whether the 
applicant is, by reason of his business experience, financial standing, 
and trade connections, likely to maintain operations in compliance with 
26 U.S.C. chapter 52, and regulations thereunder; whether such person 
has disclosed all material information required or made any material 
false statement in the application for such permit; and whether the 
premises on which it is proposed to establish the factory are adequate 
to protect the revenue. If the appropriate TTB officer has reason to 
believe that the applicant is not entitled to a permit, he shall 
promptly give the applicant notice of the contemplated disapproval of 
his application and opportunity for hearing thereon in accordance with 
part 71 of this chapter, which part (including the provisions relating 
to the recommended decision and to appeals) is applicable to such 
proceedings. If, after such notice and opportunity for hearing, the 
appropriate TTB officer finds that the applicant is not entitled to a 
permit, he shall, by order stating the findings on which his decision is 
based, deny the permit.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1421, as amended (26 U.S.C. 5713))

[26 FR 8174, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55854, Sept. 28, 1979; T.D. ATF-463, 
66 FR 42734, Aug. 15, 2001]



Sec. 40.75  Issuance of permit.

    If the application for permit, together with the bond and supporting 
documents, required under this part is approved by him, the appropriate 
TTB officer shall issue a permit on Form 2096 to the applicant as a 
manufacturer of tobacco products.

(72 Stat. 1421; 26 U.S.C. 5713)

[T.D. 6871, 31 FR 33, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975]

[[Page 22]]



Sec. 40.76  Retention of permit and supporting documents.

    The manufacturer shall retain his permit, together with the copy of 
the application and supporting documents returned to him with the 
permit, at the same place where the records required by this part are 
kept and they shall be made available for inspection by any appropriate 
TTB officer upon his request.

(72 Stat. 1421, 1423; 26 U.S.C. 5712, 5713, 5741)



     Subpart F_Changes After Original Qualification of Manufacturers

                             Changes in Name



Sec. 40.91  Change in individual name.

    Where there is a change in the name of an individual operating as a 
manufacturer, of tobacco products he shall, within 30 days of such 
change, make application on Form 2098 for an amended permit.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 40.92  Change in trade name.

    Where there is a change in, or an addition or discontinuance of, a 
trade name used by a manufacturer of tobacco products in connection with 
operations authorized by his permit the manufacturer shall, within 30 
days of such change, addition or discontinuance, make application on 
Form 2098 for an amended permit to reflect such change. The manufacturer 
shall also furnish a true copy of any new trade name certificate or 
document issued to him, or statement in lieu thereof, required by Sec. 
40.65.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6840, 30 FR 9311, July 27, 1965. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 40.93  Change in corporate name.

    Where there is a change in the name of a corporate manufacturer of 
tobacco products, the manufacturer shall, within 30 days of such change, 
make application on Form 2098 for an amended permit. The manufacturer 
shall also furnish such documents as may be necessary to establish that 
the corporate name has been changed.

(72 Stat. 1421; 26 U.S.C. 5712)

                    Changes in Ownership and Control



Sec. 40.101  Fiduciary successor.

    If an administrator, executor, receiver, trustee, assignee, or other 
fiduciary, is to take over the business of a manufacturer of tobacco 
products, as a continuing operation, such fiduciary shall, before 
commencing operations, make application for permit and file bond as 
required by subpart E, of this part, furnish certified copies, in 
duplicate, of the order of the court, or other pertinent documents, 
showing his appointment and qualification as such fiduciary, and make a 
commencing inventory, in accordance with the provisions of Sec. 40.201: 
Provided, That where a diagram has been furnished by the predecessor, in 
accordance with the provisions of Sec. 40.69, the successor may adopt 
such diagram if it is currently complete and accurate. However, where a 
fiduciary intends only to liquidate the business, qualification as a 
manufacturer of tobacco products will not be required if he promptly 
files with the appropriate TTB officer a written statement to that 
effect, in duplicate, together with an extension of coverage of the 
predecessor's bond, executed by the fiduciary and the surety on such 
bond, in accordance with the provisions of Sec. 40.137.

(72 Stat. 1421, 1422; 26 U.S.C. 5711, 5712, 5721)



Sec. 40.102  Transfer of ownership.

    If a transfer is to be made in ownership of the business of a 
manufacturer of tobacco products (including a change of any member of a 
partnership or association), such manufacturer shall give notice, in 
writing, to the appropriate TTB officer, naming the proposed successor 
and the desired effective date of such transfer. The proposed successor 
shall, before commencing operations, qualify as a manufacturer of 
tobacco products, in accordance with the applicable provisions of 
subpart E of this part: Provided, That where a diagram has been 
furnished by the manufacturer in accordance with the provisions of Sec. 
40.69, the proposed successor

[[Page 23]]

may adopt such diagram if it is currently complete and accurate. The 
manufacturer shall give such notice of transfer, and the proposed 
successor shall make application for permit and file bond, as required, 
in ample time for examination and approval thereof before the desired 
date of such change. The predecessor shall make a concluding inventory 
and concluding report, in accordance with the provisions of Sec. Sec. 
40.201 and 40.202, respectively, and surrender his permit with such 
inventory and report. The successor shall make a commencing inventory 
and commencing report, in accordance with the provisions of Sec. Sec. 
40.201 and 40.202, respectively.

(72 Stat. 1421, 1422; 26 U.S.C. 5711, 5712, 5713, 5721, 5722)



Sec. 40.103  Change in officers, directors, or stockholders of a corporation.

    Upon election or appointment (excluding successive reelection or 
reappointment) of any officer or director of a corporation operating the 
business of a manufacturer of tobacco products, or upon any occurrence 
which results in a person acquiring ownership or control of more than 
ten percent in aggregate of the outstanding stock of such corporation, 
the manufacturer shall, within 30 days of such action, so notify the 
appropriate TTB officer in writing, giving the identity of such person. 
When there is any change in the authority furnished under Sec. 40.63 
for officers to act in behalf of the corporation the manufacturer shall 
immediately so notify the appropriate TTB officer in writing.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6840, 30 FR 9311, July 27, 1965. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 40.104  Change in control of a corporation.

    Where the issuance, sale, or transfer of the stock of a corporation, 
operating as a manufacturer of tobacco products, results in a change in 
the identity of the principal stockholders exercising actual or legal 
control of the operations of the corporation, the corporate manufacturer 
shall, within 30 days after the change occurs, make application on Form 
2093 for a new permit. Otherwise, the present permit shall be 
automatically terminated at the expiration of such 30-day period, and 
the manufacturer shall dispose of all tobacco products on hand, in 
accordance with this part, make a concluding inventory and concluding 
report, in accordance with the provisions of Sec. Sec. 40.201 and 
40.202, respectively, and surrender his permit with such inventory and 
report. If the application for a new permit is timely made, the present 
permit shall continue in effect pending final action with respect to 
such application.

(72 Stat. 1421, 1422; 26 U.S.C. 5712, 5713, 5721, 5722)

[T.D. 6871, 31 FR 33, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-232, 51 FR 28081, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]

                     Changes in Location of Factory



Sec. 40.111  Change in location within same region.

    Whenever a manufacturer of tobacco products intends to relocate his 
factory within the same region, the manufacturer shall, before 
commencing operations at the new location, make application on Form 2098 
for, and obtain, an amended permit. The application shall be supported 
by an extension of coverage of bond in accordance with the provisions of 
Sec. 40.137.

(72 Stat. 1421; 26 U.S.C. 5711, 5712)



Sec. 40.112  Change in address.

    Whenever any change occurs in the address, but not the location, of 
the factory of a manufacturer of tobacco products, as a result of action 
of local authorities, the manufacturer shall, within 30 days of such 
change, make application on Form 2098 for an amended permit.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 40.113  Change in location to another region.

    Whenever a manufacturer of tobacco products intends to remove his 
factory to another region, the manufacturer shall, before commencing 
operations at the new location, qualify as such a manufacturer in the 
new region, in accordance with the applicable provisions

[[Page 24]]

of subpart E of this part. The manufacturer shall notify the appropriate 
TTB officer for the region from which he is removing his factory of his 
qualification in the new region, giving the address of the new location 
of his factory and the number of the permit issued to him in the new 
region, make a concluding inventory and concluding report in accordance 
with the provisions of Sec. Sec. 40.201 and 40.202, respectively, and 
surrender the permit for his old location with such inventory and 
report.

(72 Stat. 1421, 1422; 26 U.S.C. 5711, 5712, 5713, 5721, 5722)



Sec. 40.114  Extension or curtailment of factory.

    Where a tobacco products factory is to be changed to an extent which 
will make inaccurate the description of the factory as set forth in the 
last application by the manufacturer for permit, on the diagram, if any, 
furnished with such application, the manufacturer shall first make an 
application on Form 2098 for, and obtain, an amended permit. Such 
application shall describe the proposed change in the factory and shall 
be accompanied by a new diagram if required under the provisions of 
Sec. 40.69.

(72 Stat. 1421; 26 U.S.C. 5711, 5712)



           Subpart G_Bonds and Extensions of Coverage of Bonds



Sec. 40.131  Corporate surety.

    (a) Surety bonds required under the provisions of this part may be 
given only with corporate sureties holding certificates of authority 
from the Secretary of the Treasury as acceptable sureties on Federal 
bonds. Each bond and each extension of coverage of bond shall at the 
time of filing be accompanied by a power of attorney authorizing the 
agent or officer who executed the bond to so act on behalf of the 
surety. The appropriate TTB officer who is authorized to approve the 
bond may, whenever he deems it necessary, require additional evidence of 
the authority of the agent or officer to execute the bond or extension 
of coverage of bond. The power of attorney shall be prepared on a form 
provided by the surety company and executed under the corporate seal of 
the company. If the power of attorney submitted is other than a manually 
signed document it shall be accompanied by a certificate of its 
validity. Limitations concerning corporate sureties are prescribed by 
the Secretary in Treasury Department Circular No. 570, as revised. The 
surety shall have no interest whatever in the business covered by the 
bond.
    (b) Treasury Department Circular No. 570 (Companies Holding 
Certificates of Authority as Acceptable Sureties on Federal Bonds and as 
Acceptable Reinsuring Companies) is published in the Federal Register 
annually as of the first workday in July. As they occur, interim 
revisions of the circular are published in the Federal Register. Copies 
may be obtained from the Audit Staff, Bureau of Government Financial 
Operations, Department of the Treasury, Washington, DC 20226.

(61 Stat. 649, 72 Stat. 1421, as amended; 31 U.S.C. 9304, 9306; 26 
U.S.C. 5711; 5 U.S.C. 552(a) (80 Stat. 383, as amended))

[T.D. 6961, 33 FR 9488, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975 and amended by T.D. ATF-92, 46 FR 46921, Sept. 23, 1981]



Sec. 40.132  Deposit of securities in lieu of corporate surety.

    In lieu of corporate surety the manufacturer of tobacco products may 
pledge and deposit, as security for his bond, securities which are 
transferable and are guaranteed as to both interest and principal by the 
United States, in accordance with the provisions of 31 CFR part 225.

(61 Stat. 650, 72 Stat. 1421; 6 U.S.C.9301, 9303; 26 U.S.C. 5711)



Sec. 40.133  Amount of individual bond.

    The amount of the bond of a manufacturer of tobacco products shall 
be not less than the total amount of tax liability on all tobacco 
products manufactured in his factory, received in bond from other 
factories and from export warehouses, and released to him in bond from 
customs custody, during any calendar month. Where the amount of any bond 
is no longer sufficient and the bond is in less than the maximum amount, 
the manufacturer shall immediately file a strengthening or superseding 
bond as required by this

[[Page 25]]

subpart. The amount of any such bond (or the total amount including 
strengthening bonds, if any) need not exceed $250,000 for a manufacturer 
producing or receiving cigarettes in bond; need not exceed $150,000 for 
a manufacturer producing or receiving cigars, smokeless tobacco, pipe 
tobacco, or roll-your-own tobacco in bond; and need not exceed $250,000 
for a manufacturer producing or receiving any combination of tobacco 
products in bond. The bond of a manufacturer of tobacco products shall 
in no case be less than $1,000.

[T.D. ATF-232, 51 FR 28080, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986, as amended by T.D. ATF-289, 54 FR 48839, Nov. 27, 1989; 
T.D. ATF-424, 64 FR 71931, Dec. 22, 1999]



Sec. 40.134  Amount of blanket bond.

    In the case of a blanket bond filed under the provisions of Sec. 
40.67, where the total amount of individual bonds otherwise required for 
the factories under Sec. 40.133 does not exceed $250,000, such blanket 
bond shall be not less than the total amount of such individual bonds. 
Where the total amount of such individual bonds required is in excess of 
$250,000 but not in excess of $500,000, the amount of the blanket bond 
shall be not less than $250,000 plus 50 percent of such total amount 
which is in excess of $250,000. Where the total amount of such 
individual bonds required is in excess of $500,000 the amount of the 
blanket bond shall be not less than $375,000 plus 25 percent of such 
total amount which is in excess of $500,000.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.135  Strengthening bond.

    Where the amount of any bond is no longer sufficient under the 
provisions of Sec. 40.133 or Sec. 40.134, the manufacturer shall 
immediately file a strengthening bond in an appropriate amount with the 
same surety as that on the bond already in effect, unless a superseding 
bond is filed pursuant to Sec. 40.136. Strengthening bonds will not be 
approved where any notation is made thereon which is intended, or which 
may be construed, as a release of any former bond, or as limiting the 
amount of either bond to less than its full amount.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.136  Superseding bond.

    A manufacturer of tobacco products shall immediately file a new bond 
to supersede his current bond when
    (a) The corporate surety on the current bond becomes insolvent,
    (b) The appropriate TTB officer approves a request from the surety 
on the current bond to terminate his liability under the bond,
    (c) Payment of any liability under a bond is made by the surety 
thereon,
    (d) The amount of the bond is no longer sufficient under the 
provisions of Sec. 40.133 or Sec. 40.134 and a strengthening bond has 
not been filed, or
    (e) The appropriate TTB officer considers such a superseding bond 
necessary for the protection of the revenue.

Where a bond is not filed as required under the provisions of this 
section the manufacturer shall discontinue forthwith the operations to 
which such bond relates.

(72 Stat. 1421: 26 U.S.C. 5711)



Sec. 40.137  Extension of coverage of bond.

    An extension of coverage of bond shall be manifested on Form 2105 by 
the manufacturer of tobacco products and by the surety on the bond with 
the same formality and proof of authority as required for the execution 
of the bond.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.138  Approval of bond and extension of coverage of bond.

    No person shall commence operations under any bond, nor extend his 
operations, until he receives from the appropriate TTB officer notice of 
his approval of the bond or of an appropriate extension of coverage of 
the bond required under this part.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.139  Termination of bond.

    Any bond required by this part may be terminated by the appropriate 
TTB officer as to liability for future operations (a) pursuant to 
application by

[[Page 26]]

the surety as provided in the bond, (b) on approval of a superseding 
bond, or (c) when operations by the manufacturer are permanently 
discontinued in accordance with subpart J. After a bond is terminated 
the surety shall remain bound with respect to any liability for unpaid 
taxes, penalties, and interest, not in excess of the amount of the bond, 
incurred by the manufacturer prior to the termination date.

(72 Stat. 1421; 26 U.S.C. 5711)

[T.D. 6840, 30 FR 9311, July 27, 1965. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 40.140  Release of pledged securities.

    Securities of the United States pledged and deposited as provided in 
Sec. 40.132 shall be released only in accordance with the provisions of 
31 CFR part 225. Such securities will not be released by the appropriate 
TTB officer until liability under the bond for which they were pledged 
has been terminated. When the appropriate TTB officer is satisfied that 
they may be released, he shall fix the date or dates on which a part or 
all of such securities may be released. At any time prior to the release 
of such securities, the appropriate TTB officer may extend the date of 
release for such additional length of time as he deems necessary.

(61 Stat. 650, 72 Stat. 1421; 31 U.S.C. 9301, 9303, 26 U.S.C. 5711)



                  Subpart H_Operations by Manufacturers

         Determination and Payment of Taxes on Tobacco Products.



Sec. 40.161  Determination of tax and method of payment.

    Except for removals in bond and transfers in bond, as authorized by 
law, the taxes imposed on tobacco products by section 5701, I.R.C., 
shall be determined at the time of removal of such products and paid on 
the basis of a return, in accordance with the provisions of this part.

(72 Stat. 1417; 26 U.S.C. 5703)

[T.D. 6929, 32 FR 13866, Oct. 5, 1967. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-232, 51 FR 28081, Aug. 5, 1986; T.D. ATF-243, 51 FR 
43194, Dec. 1, 1986]



Sec. 40.162  Semimonthly tax return.

    Every manufacturer of tobacco products shall file, for each of his 
factories, a semimonthly tax return on Form 5000.24 for each return 
period, including any period during which a manufacturer begins or 
discontinues business. The return shall be filed with TTB in accordance 
with the instructions on the form. The manufacturer shall file the 
return at the time specified in Sec. 40.165 regardless of whether 
tobacco products are removed or whether tax is due for that particular 
return period. However, when the manufacturer requests by letter and the 
appropriate TTB officer grants specific authorization, the manufacturer 
need not during the term of such authorization file a tax return for 
which tax is not due or payable.

[T.D. ATF-232, 51 FR 35353, Oct. 3, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986, as amended by T.D. ATF-251, 52 FR 19339, May 22, 1987]



Sec. 40.163  Semimonthly tax return periods.

    Except as provided in section 40.164, the periods to be covered by 
semimonthly tax returns shall be from the 1st day of each month through 
the 15th day of that month and from the 16th day of each month through 
the last day of that month.

[T.D. ATF-365, 60 FR 33675, June 28, 1995]



Sec. 40.164  Special rule for taxes due for the month of September (effective 

after December 31, 1994).

    (a)(1) Except as provided in paragraph (a)(2) of this section, the 
second semimonthly period for the month of September shall be divided 
into two payment periods, from the 16th day through the 26th day, and 
from the 27th day through the 30th day. The manufacturer shall file a 
return on Form 5000.24, and make remittance, for the period September 
16-26, no later than September 29. The manufacturer shall file a return 
on Form 5000.24, and make remittance, for the period September 27-30, no 
later than October 14.
    (2) Taxpayment not by electronic fund transfer. In the case of taxes 
not required to be remitted by electronic fund transfer as prescribed by 
Sec. 40.165a,

[[Page 27]]

the second semimonthly period of September shall be divided into two 
payment periods, from the 16th day through the 25th day, and the 26th 
day through the 30th day. The manufacturer shall file a return on Form 
5000.24, and make remittance, for the period September 16-25, no later 
than September 28. The manufacturer shall file a return on Form 5000.24, 
and make remittance, for the period September 26-30, no later than 
October 14.
    (b) Amount of payment: Safe harbor rule. (1) Taxpayers are 
considered to have met the requirements of paragraph (a)(1) of this 
section, if the amount paid no later than September 29 is not less than 
11/15 (73.3 percent) of the tax liability incurred for the semimonthly 
period beginning on September 1 and ending on September 15, and if any 
underpayment of tax is paid by October 14.
    (2) Taxpayers are considered to have met the requirements of 
paragraph (a)(2) of this section, if the amount paid no later than 
September 28 is not less than 2/3rds (66.7 percent) of the tax liability 
incurred for the semimonthly period beginning on September 1 and ending 
on September 15, and if any underpayment of tax is paid by October 14.
    (c) Last day for payment. If the required due date for taxpayment 
for the periods September 16-25 or September 16-26 as applicable, falls 
on a Saturday or legal holiday, the return and remittance shall be due 
on the immediately preceding day. If the required due date falls on a 
Sunday, the return and remittance shall be due on the immediately 
following day.
    (d) Example. Payment of tax for the month of September--(1) Facts. 
X, a manufacturer of tobacco products required to pay taxes by 
electronic fund transfer, incurred tax liability in the amount of 
$30,000 for the first semimonthly period of September. For the period 
September 16-26, X incurred tax liability in the amount of $45,000, and 
for the period September 27-30, X incurred tax liability in the amount 
of $2,000.
    (2) Payment requirement. X's payment of tax in the amount of $30,000 
for the first semimonthly period of September is due no later than 
September 29 (Sec. 40.165(a)). X's payment of tax for the period 
September 16-26 is also due no later than September 29 (Sec. 
40.164(a)(1)). X may use the safe harbor rule to determine the amount of 
payment due for the period of September 16-26 (Sec. 40.164(b)). Under 
the safe harbor rule, X's payment of tax must equal $21,990.00, 11/15ths 
of the tax liability incurred during the first semimonthly period of 
September. Additionally, X's payment of tax in the amount of $2,000 for 
the period September 27-30 must be paid no later than October 14 (Sec. 
40.164(a)(1)). X must also pay the underpayment of tax, $23,010.00, for 
the period September 16-26, no later than October 14 (Sec. 40.164(b)).

[T.D. ATF-365, 60 FR 33675, June 28, 1995]



Sec. 40.165  Times for filing semimonthly return.

    (a) General. Except as provided by Sec. 40.164, and paragraph (b) 
of this section, semimonthly returns on Form 5000.24 shall be filed, for 
each return period, not later than the 14th day after the last day of 
the return period. If the due date falls on a Saturday, Sunday, or legal 
holiday, the return and remittance shall be due on the immediately 
preceding day which is not a Saturday, Sunday, or legal holiday, except 
as provided by Sec. 40.164(c).
    (b) Postmark. The official postmark of the U.S. Postal Service 
stamped on the cover in which the return was mailed shall be considered 
the date of delivery of the tax return and, if the return was 
accompanied by a remittance, the date of delivery of the remittance. 
When the postmark is illegible, the manufacturer shall prove when the 
postmark was made. When the proprietor sends the tax return with or 
without remittance by registered mail or by certified mail, the date of 
registry or the date of the postmark on the sender's receipt of 
certified mail, as the case may be, shall be treated as the date of 
delivery of the tax return and, if accompanied, of the remittance.

(Approved by the Office of Management and Budget under control number 
1512-0467)

[T.D. ATF-246, 52 FR 669, Jan. 8, 1987, as amended by T.D. ATF-251, 52 
FR 19339, May 22, 1987; T.D. ATF-365, 60 FR 33675, June 28, 1995; T.D. 
ATF-446, 66 FR 16602, Mar. 27, 2001; T.D. ATF-446a, 66 FR 19089, Apr. 
13, 2001]

[[Page 28]]



Sec. 40.165a  Payment of tax by electronic fund transfer.

    (a) General. (1) Each taxpayer who was liable, during a calendar 
year, for a gross amount equal to or exceeding five million dollars in 
taxes on tobacco products, cigarette papers, and cigarette tubes 
combining tax liabilities incurred under this part and part 41 of this 
chapter, shall use a commercial bank in making payment by electronic 
fund transfer (EFT) of taxes on tobacco products, cigarette papers, and 
cigarette tubes during the succeeding calendar year. Payment of taxes on 
tobacco products by cash, check, or money order, as described in Sec. 
40.168, is not authorized for a taxpayer who is required, by this 
section, to make remittances by EFT. For purposes of this section, the 
dollar amount of tax liability is defined as the gross tax liability on 
all taxable withdrawals and importations (including tobacco products, 
cigarette papers, and cigarette tubes brought into the United States 
from Puerto Rico or the Virgin Islands) during the calendar year, 
without regard to any drawbacks, credits, or refunds, for all premises 
from which such activities are conducted by the taxpayer. Overpayments 
are not taken into account in summarizing the gross tax liability.
    (2) For the purposes of this section, a taxpayer includes a 
controlled group of corporations, as defined in 26 U.S.C. 1563, and 
implementing regulations in 26 CFR 1.1563-1 through 1.1563-4, except 
that the words ``at least 80 percent'' shall be replaced by the words 
``more than 50 percent'' in each place it appears in subsection (a) of 
26 U.S.C. 1563, as well as in the implementing regulations. Also, the 
rules for a ``controlled group of corporations'' apply in a similar 
fashion to groups which include partnerships and/or sole 
proprietorships. If one entity maintains more than 50% control over a 
group consisting of corporations and one, or more, partnerships and/or 
sole proprietorships, all of the members of the controlled group are one 
taxpayer for the purpose of determining who is required to make 
remittances by EFT.
    (3) A taxpayer who is required by this section to make remittances 
by EFT, shall make a separate EFT remittance and file a separate return, 
Form 5000.24, for each factory from which tobacco products are withdrawn 
upon determination of tax.
    (b) Requirements. (1) On or before January 10 of each calendar year, 
except for a taxpayer already remitting the tax by EFT, each taxpayer 
who was liable for a gross amount equal to or exceeding five million 
dollars in taxes on tobacco products, cigarette papers, and cigarette 
tubes combining tax liabilities incurred under this part and part 41 of 
this chapter, during the previous calendar year, shall notify, in 
writing, the appropriate TTB officer. The notice shall be an agreement 
to make remittances by EFT.
    (2) For each return filed in accordance with this part, the taxpayer 
shall direct the taxpayer's bank to make an electronic fund transfer in 
the amount of the tax payment to the Treasury Account as provided in 
paragraph (e) of this section. The request shall be made to the bank 
early enough for the transfer to be made to the Treasury Account by no 
later than the close of business on the last day for filing the return, 
prescribed in Sec. 40.165 or Sec. 40.167. The request shall take into 
account any time limit established by the bank.
    (3) If a taxpayer was liable for less than five million dollars in 
taxes on tobacco products, cigarette papers, and cigarette tubes 
combining tax liabilities incurred under this part and part 41 of this 
chapter during the preceding calendar year, the taxpayer may choose 
either to continue remitting the tax as provided in this section or to 
remit the tax with the return on as prescribed by Sec. 40.168. Upon 
filing the first return which the taxpayer chooses to discontinue 
remitting the tax by EFT and to begin remitting the tax with the tax 
return, the taxpayer shall notify the appropriate TTB officer by 
attaching a written notification to Form 5000.24, stating that no taxes 
are due by EFT, because the tax liability during the preceding calendar 
year was less than five million dollars, and that the remittance shall 
be filed with the tax return.
    (c) Remittance. (1) Each taxpayer shall show on the return, Form 
5000.24, information about remitting the tax for that return period by 
EFT and shall

[[Page 29]]

file the return with the TTB, in accordance with the instructions on 
Form 5000.24.
    (2) Remittances shall be considered as made when the taxpayment by 
electronic fund transfer is received by the Treasury Account. For 
purposes of this section, a taxpayment by electronic fund transfer shall 
be considered as received by the Treasury Account when it is paid to a 
Federal Reserve Bank.
    (3) When the taxpayer directs the bank to effect an electronic fund 
transfer message as required by paragraph (b)(2) of this section, any 
transfer data record furnished to the taxpayer, through normal banking 
procedures, will serve as the record of payment, and shall be retained 
as part of required records.
    (d) Failure to make a taxpayment by EFT. The taxpayer is subject to 
a penalty imposed by 26 U.S.C. 5761, 6651, or 6656, as applicable, for 
failure to make a tax payment by EFT on or before the close of business 
on the prescribed last day for filing.
    (e) Procedure. Upon the notification required under paragraph (b)(1) 
of this section, the appropriate TTB officer will issue to the taxpayer 
an TTB Procedure entitled, Payment of Tax by Electronic Fund Transfer. 
This publication outlines the procedure a taxpayer is to follow when 
preparing returns and EFT remittances in accordance with this part. The 
U.S. Customs Service will provide the taxpayer with instructions for 
preparing EFT remittances for payments to be made to the U.S. Customs 
Service.

(Approved by the Office of Management and Budget under control number 
1512-0457)

(Act of August 16, 1954, 68A Stat. 775, as amended (26 U.S.C. 6302); 
sec. 202, Pub. L. 85-859, 72 Stat. 1417, as amended (26 U.S.C. 5703))

[T.D. ATF-198, 49 FR 37582, Sept. 25, 1984, as amended by T.D. ATF-219, 
50 FR 51390, Dec. 17, 1985; T.D. ATF-232, 51 FR 28081, Aug. 5, 1986; 
T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-245, 52 FR 533, Jan. 
7, 1987; T.D. ATF-251, 52 FR 19339, May 22, 1987; T.D. ATF-262, 52 FR 
47560, Dec. 15, 1987; T.D. ATF-446, 66 FR 16602, Mar. 27, 2001; T.D. 
ATF-446a, 66 FR 19089, Apr. 13, 2001; T.D. TTB-16, 69 FR 52423, Aug. 26, 
2004]



Sec. 40.166  Default, prepayment of tax required.

    Where a check or money order tendered with any return, whether semi-
monthly or prepayment, for payment of tax on tobacco products is not 
paid on presentment, where a manufacturer fails to remit with the return 
the full amount of tax due thereunder, or where a manufacturer is 
otherwise in default in payment of tax on tobacco products under the 
internal revenue laws or this chapter, during the period of such default 
and until the appropriate TTB officer finds that the revenue will not be 
jeopardized by the deferred payment of tax pursuant to the provisions of 
this part, no tobacco products shall be removed subject to tax until the 
tax thereon has first been paid as provided in Sec. 40.167. Any 
remittance made during the period of a default shall be in cash, or in 
the form of a certified, cashier's, or treasurer's check drawn on any 
bank or trust company incorporated under the laws of the United States, 
or under the laws of any State, Territory, or possession of the United 
States, or in the form of a U.S. postal money order or other money 
order, and defined in Sec. 70.61 of this chapter (payment by check or 
money order), or shall be delivered in the form of an electronic fund 
transfer message as provided in Sec. 40.165a.

(68A Stat. 777, 72 Stat. 1417; 26 U.S.C. 6311, 5703; Aug. 16, 1954, ch. 
736, 68A Stat. 707 (26 U.S.C. 5703); Aug. 16, 1954, ch. 736, 68A Stat. 
777 (26 U.S.C. 6311))

[T.D. 6871, 31 FR 34, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. 
ATF-77, 46 FR 3008, Jan. 13, 1981; T.D. ATF-232, 51 FR 28081, Aug. 5, 
1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-301, 55 FR 
47658, Nov. 14, 1990]



Sec. 40.167  Prepayment tax return.

    (a) To prepay the tax on tobacco products a manufacturer shall file 
a prepayment tax return on Form 5000.24 showing the tax to be paid on 
the tobacco products prior to removal. The return shall be executed and 
filed, prior to the removal of such products, with TTB, in accordance 
with the instructions on the form. A manufacturer prepaying the taxes on 
tobacco products under the provisions of this section

[[Page 30]]

shall continue to file semimonthly returns as required by Sec. 40.162.
    (b) However, if a manufacturer is required by Sec. 40.165a to pay 
the tax by electronic fund transfer, the manufacturer shall prepay the 
tax before any tobacco products can be removed for consumption or sale 
by completing the return and filing it with TTB, in accordance with the 
instructions on the form. At the same time, the manufacturer shall 
direct his bank to effect an EFT.

(Sec. 202, Pub. L. 85-859, 68A Stat. 1417 (26 U.S.C. 5703); sec. 202, 
Pub. L. 85-859, 72 Stat. 1423, as amended (26 U.S.C. 5741); (Aug. 16, 
1954, ch. 736, 68A Stat. 775, as amended (26 U.S.C. 6302)); 26 U.S.C. 
7805 (68A Stat. 917, as amended))

[T.D. 6871, 31 FR 34, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-77, 46 FR 3008, Jan. 13, 1981; T.D. 
ATF-219, 50 FR 51390, Dec. 17, 1985; T.D. ATF-232, 51 FR 28081, Aug. 5, 
1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 
19340, May 22, 1987]



Sec. 40.168  Remittance with return.

    Except when an electronic fund transfer has been made under Sec. 
40.165a for the full amount of tax due, the tax on tobacco products 
shown to be due and payable on any return shall be paid by remittance in 
full with the tax return. The remittance may be in the form which the 
appropriate TTB officer is authorized to accept under Sec. 70.61 of 
this chapter (Payment by check or money order) and which is acceptable 
to him, except as otherwise specified in Sec. 40.166. Checks and money 
orders shall be made payable to the ``Alcohol and Tobacco Tax and Trade 
Bureau''. In paying the tax, a fractional part of a cent shall be 
disregarded unless it amounts to one-half cent or more, in which case it 
shall be increased to one cent.

(68A Stat. 778, 72 Stat. 1417; 26 U.S.C. 6313, 5703; Aug. 16, 1954, ch. 
736, 68A Stat. 707, as amended (26 U.S.C. 5703))

[T.D. 6871, 31 FR 35, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. 
ATF-77, 46 FR 3009, Jan. 13, 1981; T.D. ATF-232, 51 FR 28081, Aug. 5, 
1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-301, 55 FR 
47658, Nov. 14, 1990]



Sec. 40.169  Employer identification number.

    The employer identification number (defined at 26 CFR 301.7701-12) 
of a manufacturer of tobacco products who has been assigned such a 
number shall be shown on each tax return, Form 5000.24. Failure of the 
manufacturer to include his employer identification number on Form 
5000.24 may result in assertion and collection of the penalty specified 
in Sec. 70.113 of this chapter.

[T.D. ATF-219, 50 FR 51390, Dec. 17, 1985, as amended by T.D. ATF-301, 
55 FR 47658, Nov. 14, 1990]



Sec. 40.170  Application for employer identification number.

    Every manufacturer of tobacco products who has neither secured an 
employer identification number nor made application therefor shall file 
an application on Form SS-4. Form SS-4 may be obtained from any service 
center director or from any district director. Such application shall be 
filed on or before the seventh day after the date on which any tax 
return under this part is filed. Each manufacturer shall make 
application for and shall be assigned only one employer identification 
number for all internal revenue tax purposes.

(75 Stat. 828; 26 U.S.C. 6109)

[T.D. 7055, 35 FR 13515, Aug. 25, 1970. Redesignated at 40 FR 16835, 
Apr. 15, 1975]



Sec. 40.171  Execution and filing of Form SS-4.

    The application on Form SS-4, together with any supplementary 
statement, shall be prepared in accordance with the form, instructions, 
and regulations applicable thereto, and shall set forth fully and 
clearly the data therein called for. The application shall be filed with 
the service center director serving any internal revenue district where 
the applicant is required to file returns under this part, except that 
hand-carried applications may be filed with the district director of any 
such district as provided for in 26 CFR 301.6091-1. The application 
shall be signed by (a) the individual if the person is an individual; 
(b) the president, vice president, or other principal officer if the 
person is a corporation; (c) a

[[Page 31]]

responsible and duly authorized member or officer having knowledge of 
its affairs if the person is a partnership or other unincorporated 
organization; or (d) the fiduciary if the person is a trust or estate.

(75 Stat. 828; 26 U.S.C. 6109)

[T.D. 7055, 35 FR 13515, Aug. 25, 1970. Redesignated at 40 FR 16835, 
Apr. 15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979]

                                 Records



Sec. 40.181  General.

    Every manufacturer of tobacco products must keep records of his 
operations and transactions which shall reflect, for each day, the 
information specified in Sec. Sec. 40.182 and 40.183. For this purpose 
day shall mean calendar day, except that the appropriate TTB officer 
may, upon application of the manufacturer by letter, in duplicate, 
authorize as such day for a factory a 24-hour cycle of operation other 
than the calendar day. A day once so established as other than the 
calendar day may be changed only by another application approved by the 
appropriate TTB officer. No specific form is required. The manufacturer 
may use commercial records from which the required information may be 
readily ascertained for this purpose. The manufacturer shall keep the 
auxiliary and supplemental records from which such records are compiled 
and shall keep supporting records, as specified in Sec. Sec. 40.184 and 
40.186, of tobacco products removed subject to tax and transferred in 
bond. Except as provided in Sec. Sec. 40.184 and 40.186, the entries in 
the commercial records so maintained or kept shall be made not later 
than the close of the next business day following the day on which the 
transaction(s) occurred. As used in this section the term business day 
shall mean any day other than Saturday, Sunday, a legal holiday in the 
District of Columbia, or a statewide legal holiday in the State wherein 
the factory to which the records relate is located.

(72 Stat. 1423, as amended; 26 U.S.C. 5741)

[T.D. ATF-424, 64 FR 71931, Dec. 22, 1999]



Sec. 40.182  Record of tobacco.

    The record of a manufacturer of tobacco products shall show the date 
and total quantity in pounds, of all tobacco other than tobacco 
products:
    (a) Received (including tobacco resulting from reduction of cigars 
and cigarettes, and unpackaging of smokeless tobacco, pipe tobacco and 
roll-your-own tobacco), together with the name and address of the person 
from whom received;
    (b) Shipped or delivered, together with the name and address of the 
person to whom shipped or delivered;
    (c) Lost; and
    (d) Destroyed.

(Approved by the Office of Management and Budget under control number 
1512-0358)

[T.D. 6871, 31 FR 35, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-172, 49 FR 14943, Apr. 16, 1984; T.D. 
ATF-232, 51 FR 28081, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986; T.D. ATF-289, 54 FR 48840, Nov. 27, 1989; T.D. ATF-424, 64 FR 
71931, Dec. 22, 1999]



Sec. 40.183  Record of tobacco products.

    The record of a manufacturer of tobacco products shall show the date 
and total quantities of all tobacco products, by kind (small cigars-
large cigars; small cigarettes-large cigarettes; chewing tobacco-snuff; 
pipe tobacco; roll-your-own tobacco):
    (a) Manufactured;
    (b) Received in bond by--
    (1) Transfer from other factories,
    (2) Release from customs custody,
    (3) Transfer from export warehouses, and
    (4) Transfer from foreign trade zone;
    (c) Received by return to bond;
    (d) Disclosed as an overage by inventory;
    (e) Removed subject to tax (itemize large cigars by sale price in 
accordance with Sec. 40.22, except cigars that cost more than $235.294 
may optionally be shown as if the price were $236 per thousand);
    (f) Removed, in bond, for--
    (1) Export,
    (2) Transfer to export warehouses,
    (3) Transfer to other factories,
    (4) Transfer to a foreign trade zone
    (5) Use of the United States, and
    (6) Experimental purposes off factory premises;

[[Page 32]]

    (g) Otherwise disposed of, without determination of tax, by--
    (1) Consumption by employees on factory premises,
    (2) Consumption by employees off factory premises, together with the 
number of employees to whom furnished,
    (3) Use for experimental purposes on factory premises,
    (4) Loss,
    (5) Destruction, and
    (6) Reduction to materials;
    (h) Disclosed as a shortage by inventory; and
    (i) On which the tax has been determined and which are--
    (1) Received, and
    (2) Disposed of.

(Approved by the Office of Management and Budget under control number 
1512-0358)

[T.D. ATF-421, 64 FR 71923, Dec. 22, 1999, as amended by T.D. ATF-424, 
64 FR 71931, Dec. 22, 1999; T.D. ATF-420, 64 FR 71940, Dec. 22, 1999]



Sec. 40.184  Record of removals subject to tax.

    (a) Requirement. Every manufacturer of tobacco products must keep a 
record of tobacco products removed from the factory subject to tax. The 
manufacturer must make entries in this record at the time of removal. 
The record for each removal must show:
    (1) The date of removal,
    (2) The name and address of the person to whom shipped or delivered,
    (3) The kind and quantity of tobacco products removed, and
    (4) For large cigars, show the sale price (If the sale price is more 
than $235.294 per thousand, you may place a note to that effect in the 
record instead of the actual price).
    (b) Exceptions. (1) The record of removal may consist of the 
manufacturer's commercial documents, such as copies of invoices, rather 
than records prepared expressly to meet the requirements of this 
section. If commercial documents are used, they must be kept at the 
factory, contain all the details required by this section, and be clear 
and accurate. Commercial documents that do not show specifically the tax 
classification of tobacco products (including sale price of large 
cigars) are still acceptable if they contain adequate information for an 
appropriate TTB officer to readily ascertain the applicable tax.
    (2) Where tobacco products are delivered within the factory directly 
to the consumer, the record need not show the name and address of the 
consumer.

(Sec. 2128(c), Pub. L. 94-455, 90 Stat. 1921 (26 U.S.C. 5741))

[T.D. ATF-420, 64 FR 71941, Dec. 22, 1999]



Sec. 40.185  Retention of records.

    All records required to be kept under this part, including copies of 
authorizations, claims, inventories, notices, reports, returns and 
schedules, shall be retained by the manufacturer for three years 
following the close of the calendar year in which filed or made, or in 
the case of an authorization, for three years following the close of the 
calendar year in which the operation under such authorization is 
concluded. Such records shall be kept in the factory or a place 
convenient thereto, and shall be made available for inspection by any 
appropriate TTB officer upon his request.

(72 Stat. 1423; 26 U.S.C. 5741)



Sec. 40.186  Record in support of transfers in bond.

    Every manufacturer of tobacco products shall keep a supporting 
record of tobacco products transferred in bond to or received in bond 
from other factories, and shall make the entries therein at the time of 
each receipt or removal of such products. Such supporting records shall 
show the date of receipt or removal, the name of the manufacturer and 
address of the factory from which received or to which removed or the 
permit number of such factory, and the kind and quantity of tobacco 
products. Where the manufacturer keeps, at the factory, copies of 
invoices or other commercial records containing the information required 
as to each receipt and removal, in such orderly manner that the 
information may be readily ascertained therefrom,

[[Page 33]]

such copies will be considered the supporting record required by this 
section.

(Approved by the Office of Management and Budget under control number 
1512-0358)

(72 Stat. 1423, as amended; 26 U.S.C. 5741)

[T.D. 6871, 31 FR 35, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-172, 49 FR 14943, Apr. 16, 1984; T.D. 
ATF-232, 51 FR 28081, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986]



Sec. 40.187  Record of sales prices of large cigars.

    Every manufacturer of tobacco products who removes large cigars from 
the factory shall keep such records as are necessary to establish and 
verify the price for which the cigars are sold, in accordance with Sec. 
40.22. The record shall be a continuing one of each brand and size of 
cigar so that the sale price on which the tax is based may be readily 
ascertained.

[ T.D. ATF-307, 55 FR 52743, Dec. 21, 1990. Redesignated and amended by 
T.D. ATF-420, 64 FR 71941, Dec. 22, 1999; T.D. ATF-420, 65 FR 1676, Jan. 
11, 2000]

                         Inventories and Reports



Sec. 40.201  Inventories.

    Every manufacturer of tobacco products shall make true and accurate 
inventories on Form 5210.9, which inventories shall include all tobacco 
products and tobacco on hand required to be accounted for in the records 
kept under this part. The manufacturer shall make such an inventory at 
the time of commencing business, which shall be the effective date of 
the permit issued upon original qualification under this part; at the 
time of transferring ownership; at the time of changing the location of 
his factory to a different region; at the time of concluding business; 
and at such other time as any appropriate TTB officer may require. Each 
inventory shall be prepared in duplicate, and shall be subject to 
verification by an appropriate TTB officer. The original of each such 
inventory shall be submitted to the appropriate TTB officer, and the 
duplicate shall be retained by the manufacturer.

(Approved by the Office of Management and Budget under control number 
1512-0358)

(72 Stat. 1422, 1423, as amended; 26 U.S.C. 5721, 5741)

[T.D. 6871, 31 FR 35, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-172, 49 FR 14943, Apr. 16, 1984; T.D. 
ATF-232, 51 FR 28081, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986; T.D. ATF-424, 64 FR 71931, Dec. 22, 1999]



Sec. 40.202  Reports.

    (a) Monthly report. Every manufacturer of tobacco products shall 
make a report on Form 5210.5, in duplicate, for each month and for any 
portion of a month during which he engages in such business. Such report 
shall be made regardless of whether any operations or transactions 
occurred during the month or portion of a month covered therein. The 
report for a month or portion of a month in which business is commenced 
or is concluded shall be conspicuously marked ``Commencing Report'' or 
``Concluding Report,'' respectively. The original of the report shall be 
submitted to the appropriate TTB officer not later than the 20th day of 
the month succeeding the month covered therein, and the duplicate shall 
be retained by the manufacturer. Each report shall show, for the period 
covered, the total quantity of tobacco products:
    (1) Manufactured,
    (2) Received in bond,
    (3) Received by return to bond,
    (4) Disclosed by inventory as an overage,
    (5) Removed subject to tax,
    (6) Removed in bond,
    (7) Otherwise disposed of without determination of tax,
    (8) Disclosed by inventory as a shortage, and
    (9) On hand, in bond, beginning of and end of month.
    (b) Report of wholesale prices of large cigars removed before 
January 1, 1991. Every manufacturer of tobacco products who removes 
large cigars from his factory, and who issues announcements such as 
those described in this paragraph, shall make a report of each 
establishment or change of wholesale

[[Page 34]]

price (suggested delivered price to retailers) for large cigars. The 
report shall consist of a copy of each general announcement that the 
manufacturer issues within his organization or to the trade about 
establishment or changes of wholesale prices. Only one copy of an 
announcement need be submitted even if it relates to tobacco products 
removed subject to tax from more than one factory. If this copy does not 
show the actual date when the announcement was issued, or identify the 
factory or factories from which removals of the cigars covered by the 
announcement are made, then the copy shall be annotated to show this 
information. The factory or factories shall be identified either by 
permit number(s) or by name, city and state. If an intraorganizational 
announcement involves a forthcoming price change or new product which at 
the time of issuance is to remain confidential until a later date, the 
manufacturer may include a statement to this effect on the copy 
submitted. The copy shall be submitted to the appropriate TTB officer 
within five business days after the day issued.

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5722))

(Approved by the Office of Management and Budget under Control No. 1512-
0358)

[T.D. 6871, 31 FR 36, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-40, 42 FR 5001, Jan. 26, 1977; T.D. 
ATF-232, 51 FR 28081, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986; T.D. ATF-307, 55 FR 52743, Dec. 21, 1990; T.D. ATF-424, 64 FR 
71931, Dec. 22, 1999]

                                Packages



Sec. 40.211  Package.

    All tobacco products shall, before removal subject to tax, be put up 
by the manufacturer in packages which shall be of such construction as 
will securely contain the products therein and maintain the mark and the 
notice thereon as required by this part. No package of tobacco products 
shall have contained therein, attached thereto, or stamped, marked, 
written, or printed thereon (a) any 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, (b) any indecent or immoral 
picture, print, or representation, or (c) any statement or indication 
that United States tax has been paid.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 36, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28081, Aug. 5, 1986 T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 40.212  Mark.

    Every package of tobacco products packaged in a domestic factory 
shall, before removal subject to tax, have adequately imprinted thereon, 
or on a label securely affixed thereto, a mark as specified in this 
section. The mark may consist of the name of the manufacturer removing 
the product subject to tax and the location (by city and State) of the 
factory from which the products are to be so removed, or may consist of 
the permit number of the factory from which the products are to be so 
removed. (Any trade name of the manufacturer approved as provided in 
Sec. 40.65 may be used in the mark as the name of the manufacturer.) As 
an alternative, where tobacco products are packaged and removed subject 
to tax by the same manufacturer, either at the same or different 
factories, the mark may consist of the name of such manufacturer if the 
factory where packaged is identified on or in the package by a means 
approved by the appropriate TTB officer. Before using the alternative, 
the manufacturer shall notify the appropriate TTB officer in writing of 
the name to be used as the name of the manufacturer and the means to be 
used for identifying the factory where packaged. If approved by him the 
appropriate TTB officer shall return approved copies of the notice to 
the manufacturer. A copy of the approved notice shall be retained as 
part of the factory records at each of the factories operated by the 
manufacturer.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 36, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-232, 51 FR 28081, Aug. 5, 1986; T.D. ATF-243, 52 FR 
43194, Dec. 1, 1986]

[[Page 35]]



Sec. 40.213  Tobacco products labeled for export.

    Tobacco products labeled for export are ineligible for removal from 
the factory and distribution into the domestic U.S. market. Such 
products may only be sold, transferred or delivered onto the domestic 
U.S. market by a manufacturer of tobacco products after repackaging of 
the product. For the purposes of this section, ``repackaging'' shall 
mean the removal of the tobacco product from its original package 
bearing the export marks and placement of the product in a new package. 
The new packages, marks and notices must conform to the requirements of 
this subpart.

[T.D. ATF-421, 64 FR 71924, Dec. 22, 1999]



Sec. 40.214  Notice for cigars.

    Before removal subject to tax, every package of cigars shall have 
adequately imprinted on it, or on a label securely affixed to it--
    (a) The designation ``cigars'';
    (b) The quantity of cigars contained in the package; and
    (c) For small cigars, the classification of the product for tax 
purposes (i.e., either ``small'' or ``little'').

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-80, 46 FR 18310, Mar. 24, 1981]



Sec. 40.215  Notice for cigarettes.

    Every package of cigarettes shall, before removal subject to tax, 
have adequately imprinted thereon, or on a label securely affixed 
thereto, the designation ``cigarettes'', the quantity of such product 
contained therein, and the classification for tax purposes, i.e., for 
small cigarettes, either ``small'' or ``Class A'', and for large 
cigarettes, either ``large'' or ``Class B''.

(72 Stat. 1422; 26 U.S.C. 5723)



Sec. 40.216  Notice for smokeless tobacco.

    (a) Product designation. Every package of chewing tobacco or snuff 
shall, before removal subject to tax, have adequately imprinted thereon, 
or on a label securely affixed thereto, the designation ``chewing 
tobacco'' or ``snuff.'' As an alternative, packages of chewing tobacco 
may be designated ``Tax Class C'', and packages of snuff may be 
designated ``Tax Class M''.
    (b) Product weight. Every package of chewing tobacco or snuff shall, 
before removal subject to tax, have adequately imprinted thereon, or on 
a label securely affixed thereto, a clear statement of the actual pounds 
and ounces of the product contained therein. As an alternative, the 
shipping cases containing packages of chewing tobacco or snuff may, 
before removal, have adequately imprinted thereon, or on a label 
securely affixed thereto, a clear statement, in pounds and ounces, of 
the total weight of the product, the tax class of the product, and the 
total number of the packages of product contained therein.

(Approved by the Office of Management and Budget under control number 
1512-0502)

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-243, 51 FR 43194, Dec. 1, 1986, as amended by T.D. ATF-446, 66 
FR 16602, Mar. 27, 2001]



Sec. 40.216a  Notice for pipe tobacco.

    (a) Product designation. Every package of pipe tobacco shall, before 
removal subject to tax, have adequately imprinted thereon, or on a label 
securely affixed thereto, the designation ``pipe tobacco.'' As an 
alternative, packages of pipe tobacco may be designated ``Tax Class L.''
    (b) Product weight. Every package of pipe tobacco shall, before 
removal subject to tax, have adequately imprinted thereon, or on a label 
securely affixed thereto, a clear statement of the actual pounds and 
ounces of the product contained therein.

[T.D. ATF-289, 54 FR 48840, Nov. 27, 1989. Redesignated at T.D. ATF-424, 
64 FR 71931, Dec. 22, 1999]



Sec. 40.216b  Notice for roll-your-own tobacco.

    (a) Product designation. Before removal subject to tax, roll-your-
own tobacco must have adequately imprinted on, or on a label securely 
affixed to, the package, the designation ``roll-your-own tobacco'' or 
``cigarette tobacco'' or ``Tax Class J.''
    (b) Product weight. Before removal subject to tax, roll-your-own 
tobacco

[[Page 36]]

must have a clear statement of the actual weight in pounds and ounces of 
the product in the package. This statement must be adequately imprinted 
on, or on a label securely affixed to, the package.

(Approved by the Office of Management and Budget under control number 
1512-0502)

[T.D. ATF-429, 65 FR 57547, Sept. 25, 2000]



Sec. 40.216c  Package use-up rule.

    (a) A manufacturer must have used such packaging for roll-your-own 
tobacco before January 1, 2000.
    (b) A manufacturer of roll-your-own tobacco may continue to place 
roll-your-own tobacco in packages that do not meet the marking 
requirements of Sec. Sec. 40.212 and 40.216b(b) until April 1, 2000.
    (c) A manufacturer of roll-your-tobacco may continue to place roll-
your-tobacco in packages that do not meet the requirements of Sec. 
40.216b(a) until October 1, 2000.

[T.D. ATF-427, 65 FR 40051, June 29, 2000]



Sec. 40.217  Repackaging.

    Where a manufacturer of tobacco products desires to repackage, 
outside the factory, tobacco products on which the tax has been 
determined or which were removed for a tax-exempt purpose or transferred 
in bond to an export warehouse, or to repackage tax determined tobacco 
products in the factory, he shall make application for authorization to 
do so, in duplicate, to the appropriate TTB officer. The application 
shall set forth the location and the number of packages, a description 
of the contents, the tax status of the tobacco products the reason for 
wanting to repackage the products (e.g., packages soiled, damaged, or 
otherwise in a condition making the product unsalable), and a 
description of the package to be used for repackaging. The packages to 
be used must comply with the package, mark, and notice provisions of 
this chapter applicable to the tobacco products being repackaged. The 
operations authorized under this section are limited solely to 
repackaging for good cause by a manufacturer, pursuant to an approved 
application, of the specified tobacco products in the described 
packages, and do not include any manufacturing processes. If the 
appropriate TTB officer approves the application, he may assign an 
appropriate TTB officer to supervise the repackaging or he may authorize 
the manufacturer to repackage the products without supervision by so 
stating on a copy of the application returned to the manufacturer. Where 
the manufacturer is authorized to repackage he shall record the date of 
repackaging on the approved application and retain it as part of his 
records.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 36, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]

                Exemption From Taxes on Tobacco Products



Sec. 40.231  Consumption by employees.

    A manufacturer of tobacco products may gratuitously furnish tobacco 
products, without determination and payment of tax, for personal 
consumption by employees in the factory in such quantities as desired. 
Each employee may also be gratuitously furnished by the manufacturer, 
for off-factory personal consumption, not more than 5 large cigars or 
cigarettes, 20 small cigars or cigarettes, or one retail package of 
chewing tobacco, snuff, pipe tobacco or roll-your-own tobacco, or a 
proportionate quantity of each, without determination and payment of 
tax, on each day the employee is at work. For the purposes of this 
section, the term ``employee'' shall mean those persons whose duties 
require their presence in the factory of whose duties relate to the 
manufacture, distribution, or sale of tobacco products and who receive 
compensation from the manufacturer, or a parent, subsidiary, or 
auxiliary company or corporation of the manufacturer. Such product 
furnished for off-factory consumption shall be furnished to the employee 
within the factory and taken from the factory by the employee on the day 
for which furnished. Employees shall not sell, offer

[[Page 37]]

for sale, or give away products so furnished.

[T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986, as amended by T.D. ATF-289, 54 FR 48840, Nov. 27, 1989; 
T.D. ATF-424, 64 FR 71931, Dec. 22, 1999]



Sec. 40.232  Experimental purposes.

    A manufacturer of tobacco products may use tobacco products for 
experimental purposes without determination and payment of tax as set 
forth in this section.
    (a) What are experimental purposes? Experimental purposes are 
operations or tests carried out under controlled conditions to discover 
an unknown scientific principle or fact, to gather or confirm data about 
a known scientific principle or fact, or to test manufacturing, 
packaging, or other such equipment. Examples of uses for experimental 
purposes are:
    (1) Use by manufacturers to determine scientific facts relating to 
tobacco products, such as their chemical content;
    (2) Use by producers of packaging machines to test the operation of 
such machines; and
    (3) Use by laboratories, hospitals, medical centers, institutes, 
colleges, or universities, for scientific, technical, or medical 
research.
    (b) What purposes are not experimental? The uses of tobacco products 
outside the factory premises for advertising or consumer testing or as 
salespersons' or customers' samples are not experimental purposes.
    (c) Use in factory. A manufacturer of tobacco products may use 
tobacco products without determination and payment of tax for 
experimental purposes in a factory.
    (d) Use outside factory. A manufacturer may remove tobacco products 
in bond for experimental purposes outside a factory. When tobacco 
products are shipped for experimental purposes outside the factory, the 
proprietor of the factory remains liable for the taxes imposed by 26 
U.S.C. 5701 until the occurrence of one of the following events:
    (1) The tobacco products are returned to the premises of the factory 
from which they were shipped; or
    (2) The tobacco products are destroyed during or after their use for 
experimental purposes.
    (e) Record of use. In addition to the records prescribed by Sec. 
40.183, a manufacturer who removes tobacco products in bond for 
experimental purposes outside a factory must prepare and maintain a 
record containing the following information:
    (1) Name and address of the consignee;
    (2) Kind and quantity of tobacco products removed;
    (3) Description of packaging, if any, of the tobacco products 
removed;
    (4) Description of how and when the consignee will use the tobacco 
products; and
    (5) Disposition of any remaining tobacco products after the 
consignee's use.

(Approved by the Office of Management and Budget under Control Number 
1512-0562)

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. ATF-478, 67 FR 19333, Apr. 19, 2002]



Sec. 40.233  Transfer in bond.

    A manufacturer of tobacco products may transfer tobacco products in 
bond, to the factory of any manufacturer of tobacco products. The 
transfer of tobacco products in bond to the premises of an export 
warehouse proprietor shall be in accordance with the provisions of part 
44 of this chapter. Tobacco products are not eligible for transfer in 
bond to a manufacturer of tobacco products or to an export warehouse 
unless they bear all required marks, labels, or notices.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 37, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71924, Dec. 22, 
1999]



Sec. 40.234  Removal for use of the United States.

    The removal of tobacco products in bond, for use of the United 
States,

[[Page 38]]

shall be in accordance with the provisions of part 45 of this chapter.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 37, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. ATF-243, 51 FR 
43194, Dec. 1, 1986; T.D. ATF-469, 66 FR 56758, Nov. 13, 2001]



Sec. 40.235  Removal for export purposes.

    The removal of tobacco products in bond, 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, shall be in accordance with the 
provisions of part 44 of this chapter.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 37, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 40.236  Release from customs custody.

    The release of tobacco products from customs custody, in bond, for 
transfer to the premises of a tobacco products factory, shall be in 
accordance with the provisions of part 41 of this chapter.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 37, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. TTB-16, 69 FR 52423, Aug. 26, 
2004]

              Other Provisions Relating to Tobacco Products



Sec. 40.251  Emergency storage.

    In cases of emergency, the appropriate TTB officer may authorize, 
for a stated period, the temporary storage of tobacco products at a 
place outside the factory without the application for amended permit 
required under Sec. 40.114, where such action will not hinder the 
effective administration of this part, is not contrary to law, and will 
not jeopardize the revenue. Application for authorization to so store 
tobacco products shall be submitted to the appropriate TTB officer by 
letter, in duplicate. All tobacco products so stored outside the factory 
shall be accounted for in the records and reports required under 
Sec. Sec. 40.183 and 40.202 the same as products within the factory.

(72 Stat. 1422, 1423, as amended; 26 U.S.C. 5722, 5741)

[T.D. 6871, 31 FR 37, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. ATF-243, 51 FR 
43194, Dec. 1, 1986]



Sec. 40.252  Reduction of tobacco products to materials.

    A manufacturer may reduce tobacco products to materials without 
supervision. If the tobacco products have been entered in the factory 
record as manufactured or received, an entry shall be made in such 
record of the quantity of pipe tobacco or roll-your-own tobacco and the 
kind and quantity of cigars, cigarettes, and smokeless tobacco reduced 
to materials and of the quantity of tobacco resulting from the 
reduction. Where the manufacturer intends to file claims for credit 
allowance, or refund of tax on such tobacco products, he shall comply 
with the provisions of Sec. Sec. 40.311 and 40.313.

[T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986, as amended by T.D. ATF-289, 54 FR 48840, Nov. 27, 1989; 
T.D. ATF-424, 64 FR 71931, Dec. 22, 1999]



Sec. 40.253  Destruction.

    When a manufacturer of tobacco products desires to destroy tobacco 
products which have been entered in the factory record as manufactured 
or received, without salvaging the tobacco, he shall notify the 
appropriate TTB officer by letter, in duplicate, of the kind and 
quantity of tobacco products to be destroyed, the intended method of 
destruction, and the date on which he desires to destroy such products. 
The appropriate TTB officer may assign an appropriate TTB officer to 
supervise destruction of the tobacco products or he may authorize the 
manufacturer to destroy such products without supervision by so stating 
on a copy of the manufacturer's notice returned to the manufacturer. 
When so authorized by the appropriate TTB officer, the manufacturer 
shall destroy the tobacco products by burning completely or by rendering 
them unfit for consumption. Upon completion of the destruction, the 
manufacturer shall

[[Page 39]]

make an entry of such destruction in his factory record, and where 
destruction without supervision is authorized, shall record the date and 
method of destruction on the notice returned to him by the appropriate 
TTB officer, which notice the manufacturer shall retain. Where the 
manufacturer intends to file claim for credit, allowance, or refund of 
tax on such products he shall comply with the provisions of Sec. Sec. 
40.311 and 40.313.

(72 Stat. 1423, as amended; 26 U.S.C. 5741)

[T.D. 6871, 31 FR 37, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 40.254  Receipt into factory.

    A manufacturer of tobacco products may receive in bond into his 
factory tobacco products and may also receive into his factory tobacco 
products on which the tax has been determined (including products on 
which the tax has been paid). Cigars and cigarettes on which the tax has 
been determined which are so received shall be segregated and identified 
as products on which the tax has been determined. If tax determined 
products received into the factory are so handled that they cannot be 
identified both physically and in the records as tax determined products 
they shall be accounted for as returned to bond and upon subsequent 
removal shall be tax determined. Where returned tax determined tobacco 
products are to be repackaged without being returned to bond the 
manufacturer shall make application for authorization to do so to the 
appropriate TTB officer in accordance with Sec. 40.217. Where the 
manufacturer intends to file claim for credit, allowance, or refund of 
tax on tax determined products he shall comply with the provisions of 
Sec. Sec. 40.311 and 40.313.

[T.D. 6871, 31 FR 37, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. 
ATF-243, 52 FR 43194, Dec. 1, 1986]



Sec. 40.255  Shortages and overages in inventory.

    Whenever a manufacturer of tobacco products makes a physical 
inventory of packaged tobacco products in bond, either as part of normal 
operations or when required by an appropriate TTB officer, and such 
inventory discloses a shortage or overage in such products by kind as 
recorded and reported (i.e., small cigars, large cigars, chewing 
tobacco, snuff, pipe tobacco, or roll-your-own tobacco), the 
manufacturer shall enter such shortage or overage in the records 
required by Sec. 40.183. Shortages or overages in inventories made at 
different times may not be used to offset each other, but shall be 
recorded and reported separately. Unless the manufacturer establishes 
that a shortage was not caused by a removal subject to the tax the 
manufacturer shall determine the tax on any shortage, make an adjustment 
in Schedule A of his next semimonthly tax return and pay the tax 
thereon. If, after paying the tax on a shortage, the manufacturer 
satisfactorily establishes that the shortage was not caused by a removal 
subject to tax, then such payment would be an overpayment of tax which 
the manufacturer may recover as provided in Sec. 40.286. Where the 
manufacturer can establish prior to paying the tax on a shortage, that 
the shortage was not the result of a removal subject to tax he shall 
submit an explanation of such shortage with his report for the month in 
which the shortage was disclosed and, if appropriate, he may file claim 
for remission of tax liability as provided in Sec. 40.287. When an 
overage is disclosed which the manufacturer can explain, he shall 
include such explanation in his monthly report and refund of any 
overpayment may be recovered as provided in Sec. 40.286. Whenever a 
physical inventory discloses a shortage or overage of tobacco products 
which have not been packaged the manufacturer shall appropriately enter 
such shortage or overage in his records and shall, at the time required 
by the appropriate TTB officer, furnish an explanation in the form of a 
claim for remission of tax liability as provided in Sec. 40.287. The 
manufacturer shall pay the tax on any shortage or portion thereof

[[Page 40]]

for which he is unable to furnish an explanation acceptable to the 
appropriate TTB officer.

[T.D. ATF-232, 51 FR 28082, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986, as amended by T.D. ATF-289, 54 FR 48840, Nov. 27, 1989; 
T.D. ATF-424, 64 FR 71931, Dec. 22, 1999]



                    Subpart I_Claims by Manufacturers

                                 General



Sec. 40.281  Abatement of assessment.

    A claim for abatement of the unpaid portion of the assessment of any 
tax on tobacco products or any liability in respect thereof, may be 
allowed to the extent that such assessment is excessive in amount, is 
assessed after expiration of the applicable period of limitation, or is 
erroneously or illegally assessed. Any claim under this section shall be 
prepared on Form 2635 (5620.8), in duplicate, and shall set forth the 
particulars under which the claim is filed. The original of the claim, 
accompanied by such evidence as is necessary to establish to the 
satisfaction of the appropriate TTB officer that the claim is valid, 
shall be filed with the appropriate TTB officer, and the duplicate of 
the claim shall be retained by the manufacturer.

(68A Stat. 792; 26 U.S.C. 6404)

[T.D. 6871, 31 FR 38, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19340, May 22, 
1987]



Sec. 40.282  Allowance of tax.

    Relief from the payment of tax on tobacco products may be extended 
to a manufacturer by allowance of the tax where the tobacco products 
after removal from the factory upon determination of tax and prior to 
the payment of such tax, are lost (otherwise than by theft) or 
destroyed, by fire, casualty, or act of God, while in the possession or 
ownership of the manufacturer who removed such products, or are 
withdrawn by him from the market. Any claim for allowance under this 
section shall be filed on Form 2635, in duplicate, with the appropriate 
TTB officer, and shall show the date the tobacco products were removed 
from the factory. A claim relating to products lost or destroyed shall 
be supported as prescribed in Sec. 40.301. In the case of a claim 
relating to tobacco products withdrawn from the market the schedule 
prescribed in Sec. 40.311 shall be filed with the appropriate TTB 
officer. The manufacturer may not anticipate allowance of his claim by 
making the adjusting entry in a tax return pending consideration and 
action on the claim. Tobacco products to which such a claim relates must 
be shown as removed on determination of tax in the return covering the 
period during which such products were so removed. Upon action on the 
claim by the appropriate TTB officer he will return the copy of Form 
2635 to the manufacturer as notice of such action, which copy, with the 
copy of any verified supporting schedules, shall be retained by the 
manufacturer. When such notification of allowance of the claim or any 
part thereof is received prior to the time the return covering the tax 
on the tobacco products to which the claim relates is to be filed, the 
manufacturer may make an adjusting entry and explanatory statement in 
that tax return. Where the notice of allowance is received after the 
filing of the return and taxpayment of the tobacco products to which the 
claim relates, the manufacturer may make an adjusting entry and 
explanatory statement in the next tax return(s) to the extent necessary 
to take credit in the amount of the allowance.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6961, 33 FR 9488, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 40.283  Credit or refund of tax.

    The taxes paid on tobacco products may be credited or refunded 
(without interest) to a manufacturer on proof satisfactory to the 
appropriate TTB officer that the claimant manufacturer paid the tax on 
tobacco products lost (otherwise than by theft) or destroyed, by fire, 
casualty, or act of God, while in the possession or ownership of such 
manufacturer, or withdrawn by him from the market. Any claim for credit

[[Page 41]]

or refund under this section shall be prepared on Form 2635 (5620.8), in 
duplicate. Claims shall include a statement that the tax imposed on 
tobacco products by 26 U.S.C. 7652 or chapter 52, was paid in respect to 
the tobacco products covered by the claim, and that the products were 
lost, destroyed, or withdrawn from the market within 6 months preceding 
the date the claim is filed. A claim for credit or refund relating to 
products lost or destroyed shall be supported as prescribed in Sec. 
40.301, and a claim relating to products withdrawn from the market shall 
be accompanied by a schedule prepared and verified as prescribed in 
Sec. Sec. 40.311 and 40.313. The original and one copy of Form 2635 
(5620.8), claim for credit, or the original of Form 2635 (5620.8), claim 
for refund, shall be filed with the appropriate TTB officer. Upon action 
by the appropriate TTB officer on a claim for credit he will return the 
copy of Form 2635 to the manufacturer as notification of allowance or 
disallowance of the claim or any part thereof, which copy, with the copy 
of any verified supporting schedules, shall be retained by the 
manufacturer. When the manufacturer is notified of allowance of the 
claim for credit or any part thereof he shall make an adjusting entry 
and explanatory statement in the next tax return(s) to the extent 
necessary to take credit in the amount of the allowance. Prior to 
consideration and action on his claim the manufacturer may not 
anticipate allowance of his claim by taking credit in his tax return. 
The duplicate of a claim for refund, with the copy of any verified 
supporting schedules, shall be retained by the manufacturer.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1419)

[T.D. 6961, 33 FR 9489, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. 
ATF-219, 50 FR 51389, Dec. 17, 1985; T.D. ATF-232, 51 FR 28083, Aug. 5, 
1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 
19340, May 22, 1987]



Sec. 40.284  Remission of tax liability.

    Remission of the tax liability on tobacco products may be extended 
to the manufacturer liable for the tax where tobacco products in bond 
are lost (otherwise than by theft) or destroyed, by fire, casualty, or 
act of God, while in the possession or ownership of such manufacturer. 
Where tobacco products are so lost or destroyed the manufacturer shall 
report promptly such fact, and the circumstances, to the appropriate TTB 
officer. If the manufacturer wishes to be relieved of the tax liability 
thereon he shall also prepare a claim on Form 2635, in duplicate, 
setting forth the nature, date, place, and extent of the loss or 
destruction. Both copies of the claim, accompanied by such evidence as 
is necessary to establish to the satisfaction of the appropriate TTB 
officer that the claim is valid, shall be filed with the appropriate TTB 
officer. Upon action on the claim by the appropriate TTB officer he will 
return the copy of Form 2635 to the manufacturer as notice of such 
action, which copy shall be retained by the manufacturer.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6961, 33 FR 9489, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 40.285  [Reserved]



Sec. 40.286  Refund of overpayment.

    Where an error in computation of the quantity of tobacco products or 
in computation of the amount of tax due results in an overpayment and 
such error is specifically identified and supported by records, the 
manufacturer may file claim for refund or may make an adjustment in his 
semimonthly tax return as provided in Sec. 40.164. (Section 6511, 26 
U.S.C., provides that, in most cases, any adjustment of claim for refund 
of an overpayment of tax on tobacco products must be made or filed 
within three years after the tax is paid.) If the manufacturer elects to 
file a claim for refund of an overpayment resulting from such a 
computational error, he shall do so on Form 2635 (5620.8), in duplicate. 
The original shall be filed with the appropriate TTB officer, and the 
duplicate retained by the manufacturer. Where an overpayment of tax on 
tobacco products results from other than a computational error any claim 
for refund or credit shall be

[[Page 42]]

made in accordance with subpart A of part 46 of this chapter.

(68A Stat. 791, 72 Stat. 9; 26 U.S.C. 6402, 6423)

[T.D. 6871, 31 FR 39, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986; T.D. ATF-251, 52 FR 19340, May 22, 1987; T.D. ATF-457, 66 FR 
32220, June 14, 2001]



Sec. 40.287  Remission of tax liability on shortage.

    Whenever a manufacturer of tobacco products desires to submit a 
claim for remission of tax liability on shortages of tobacco products in 
bond, disclosed by physical inventory as set forth in Sec. 40.255, he 
shall prepare such claim on Form 2635, in duplicate. Both copies of the 
claim shall be filed with the appropriate TTB officer. The claim shall 
specify the quantities of tobacco products on which claim is made and 
the tax liability in respect thereof, and shall set forth the 
circumstances surrounding the shortage and the reason the manufacturer 
believes tax is not due or payable. The appropriate TTB officer will, 
after such investigation as he deems appropriate, allow the claim to the 
extent he is satisfied the shortage was due to operating losses such as 
damage during grading, sorting, or packaging, and was not caused by 
theft or other unlawful or improper removal. Upon action on the claim by 
the appropriate TTB officer he will return the copy of Form 2635 to the 
manufacturer as notice of such action, which copy shall be retained by 
the manufacturer.

(72 Stat. 1414, as amended, 1417, 1419, as amended; 26 U.S.C. 5701, 
5703, 5705)

[T.D. 6961, 33 FR 9489, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]

                   Tobacco Products Lost or Destroyed



Sec. 40.301  Action by claimant.

    Where tobacco products are lost (otherwise than by theft) or 
destroyed, by fire, casualty, or act of God, and the manufacturer 
desires to file a claim for the tax on such products under the 
provisions of Sec. 40.282 or Sec. 40.283, he shall indicate on the 
claim the nature, date, place, and extent of such loss or destruction. 
The claim shall be accompanied by such evidence as is necessary to 
establish to the satisfaction of the appropriate TTB officer that the 
claim is valid.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 39, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. 
ATF-243, 52 FR 43194, Dec. 1, 1986]

               Tobacco Products Withdrawn From the Market



Sec. 40.311  Action by claimant.

    (a) General. Where tobacco products are withdrawn from the market 
and the manufacturer desires to file claim under the provisions of Sec. 
40.282 or Sec. 40.283, he shall assemble the products in or adjacent to 
a factory if they are to be returned to bond or at any suitable place if 
they are to be destroyed or reduced to materials. The manufacturer shall 
group the products according to the rates of tax applicable to the 
products, and shall prepare a schedule of the products, on TTB Form 
5200.7, in triplicate. All copies of the schedule shall be forwarded to 
the appropriate TTB officer.
    (b) Large cigars. Refund or credit of tax on large cigars withdrawn 
from the market is limited to the lowest tax paid on that brand and size 
of cigar during the required record retention period (see Sec. 40.185), 
except where the manufacturer establishes that a greater amount was 
actually paid. For each claim involving large cigars withdrawn from the 
market, the manufacturer must include a certification on either Form 
5200.7 or Form 2635 (5620.8) to read as follows:

    The amounts claimed relating to large cigars are based on the lowest 
sale price applicable to the cigars during the required record retention 
period, except where specific documentation is submitted with the

[[Page 43]]

claim to establish that any greater amount of tax claimed was actually 
paid.

(See 26 U.S.C. 5705)

[T.D. ATF-80, 46 FR 18310, Mar. 24, 1981, as amended by T.D. ATF-232, 51 
FR 28083, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-251, 52 FR 19340, May 22, 1987; T.D. ATF-307, 55 FR 52743, Dec. 21, 
1990; T.D. ATF-424, 64 FR 71932, Dec. 22, 1999; T.D. ATF-420, 64 FR 
71941, Dec. 22, 1999]



Sec. 40.312  Action by the appropriate TTB officer.

    Upon receipt of a schedule of tobacco products withdrawn from the 
market, the appropriate TTB officer may assign a TTB officer to verify 
the schedule and supervise disposition of the tobacco products (and 
destruction of the stamps, if any), or he may authorize the manufacturer 
to dispose of the products (and destroy the stamps, if any) without 
supervision by so stating on the original and one copy of the schedule 
returned to the manufacturer.

[T.D. 6871, 31 FR 39, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 40.313  Disposition of tobacco products and schedule.

    When so authorized, as evidenced by the appropriate TTB officer's 
statement on the schedule, the manufacturer shall dispose of the tobacco 
products (and destroy the stamps, if any) as specified in the schedule. 
After the manufacturer has disposed of the products (and destroyed the 
stamps, if any), he shall execute a certificate on both copies of the 
schedule returned to him by the appropriate TTB officer, to show the 
disposition and the date of disposition of the products (and stamps, if 
any). In connection with a claim for allowance the manufacturer then 
shall return the original of the schedule to the appropriate TTB officer 
who authorized such disposition, who will cause such schedule to be 
associated with the claim, Form 2635 (5620.8), filed under Sec. 40.282. 
In connection with a claim for credit or refund the manufacturer shall 
attach the original of the schedule to his claim for credit, Form 2635 
(5620.8), or claim for refund, Form 2635 (5620.8), filed under Sec. 
40.283. When an appropriate TTB officer is assigned to verify the 
schedule and supervise disposition of the tobacco products, such officer 
shall, upon completion of his assignment, execute a certificate on all 
copies of the schedule to show the disposition and the date of 
disposition of the products. In connection with a claim for allowance 
the officer shall return one copy of the schedule to be included in the 
manufacturers records, and in connection with a claim for credit or 
refund, the officer shall return the original and one copy of the 
schedule to the manufacturer, the original of which the manufacturer 
shall attach to the claim, Form 2635 (5620.8), filed under Sec. 40.283.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 39, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19340, May 22, 
1987]



 Subpart J_Suspension and Discontinuance of Operations by Manufacturers



Sec. 40.331  Discontinuance of operations.

    Every manufacturer of tobacco products who desires to discontinue 
operations under this part shall dispose of all tobacco products on 
hand, in accordance with this part, and make a concluding inventory and 
concluding report in accordance with the provisions of Sec. 40.201 and 
Sec. 40.202, respectively. The manufacturer shall surrender his permit, 
with such inventory and report, to the appropriate TTB officer as notice 
of such discontinuance. The appropriate TTB officer may then terminate 
the liability of the surety on the bond of the manufacturer.

(72 Stat. 1422; 26 U.S.C. 5721, 5722)

[T.D. 6871, 37 FR 40, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 40.332  Suspension and revocation of permit.

    Where the appropriate TTB officer has reason to believe that a 
manufacturer of tobacco products has not in good faith complied with the 
provisions of 26 U.S.C. chapter 52, and regulations

[[Page 44]]

thereunder, or with any other provision of 26 U.S.C. with intent to 
defraud, or has violated any condition of his permit, or has failed to 
disclose any material information required or made any material false 
statement in the application for the permit, or has failed to maintain 
his premises in such manner as to protect the revenue, the appropriate 
TTB officer shall issue an order, stating the facts charged, citing such 
person to show cause why his permit should not be suspended or revoked. 
Such citation shall be issued and opportunity for hearing afforded in 
accordance with part 71 of this chapter, which part is applicable to 
such proceedings. If the hearing examiner, or on appeal, the 
Administrator, decides the permit should be suspended or revoked, the 
appropriate TTB officer shall by order give effect to such decision.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1421, as amended (26 U.S.C. 5713))

[26 FR 8174, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. ATF-463, 
66 FR 42734, Aug. 15, 2001]



           Subpart K_Manufacture of Cigarette Papers and Tubes

    Source: T.D. ATF-384, 61 FR 54085, Oct. 17, 1996, unless otherwise 
noted.

                                  Taxes



Sec. 40.351  Cigarette papers.

    Cigarette papers are taxed at the following rates under 26 U.S.C. 
5701(c):

------------------------------------------------------------------------
                                    Tax rate for each 50 papers \1\ for
                                         removals during the years:
             Product              --------------------------------------
                                     1993 to      2000 and     2002 and
                                     1999 \2\       2001        after
------------------------------------------------------------------------
Cigarette papers up to 6\1/2\ long....................
Cigarette papers over 6\1/2\ long....................   Use rates above, but count each 2\3/
                                     4\ inches, or fraction thereof, of
                                    the length of each as one cigarette
                                                   paper.
------------------------------------------------------------------------
\1\ Tax rate for less than 50 papers is the same. The tax is not
  prorated.
\2\ Before January 1, 2000, books or sets containing 25 papers or less
  were not taxable. On and after January 1, 2000, all cigarette papers
  are taxable.


(72 Stat. 1414; 26 U.S.C. 5701)

[T.D. ATF-420, 64 FR 71941, Dec. 22, 1999]



Sec. 40.352  Cigarette tubes.

    Cigarette tubes are taxed at the following rates under 26 U.S.C. 
5701(d):

------------------------------------------------------------------------
                                      Tax rate for each 50 tubes* for
                                         removals during the years
             Product              --------------------------------------
                                     1993 to      2000 and     2002 and
                                       1999         2001        after
------------------------------------------------------------------------
Cigarette tubes up to 6\1/2\ long....................
Cigarette tubes over 6\1/2\ long....................   Use rates above, but count each 2\3/
                                     4\ inches, or fraction thereof, of
                                    the length of each as one cigarette
                                                   tube.
------------------------------------------------------------------------
*Tax rate for less than 50 tubes is the same. The tax is not prorated.


(72 Stat. 1414; 26 U.S.C. 5701)

[T.D. ATF-420, 64 FR 71941, Dec. 22, 1999]



Sec. 40.353  Persons liable for tax.

    The manufacturer of cigarette papers and tubes shall be liable for 
the taxes imposed on such articles by 26 U.S.C. 5701. When a 
manufacturer of cigarette papers and tubes transfers such papers and 
tubes without payment of tax, pursuant to 26 U.S.C. 5704 to the bonded

[[Page 45]]

premises of another such manufacturer, a manufacturer of tobacco 
products, or an export warehouse proprietor, the transferee shall become 
liable for the tax upon receipt of such papers and tubes and the 
transferor shall thereupon be relieved of liability for the tax. When 
cigarette papers and tubes are released in bond from customs custody for 
transfer to the bonded premises of a manufacturer of such papers and 
tubes or a manufacturer of tobacco products, the transferee shall become 
liable for the tax on the papers and tubes upon release from customs 
custody. Any person who possesses cigarette papers and tubes in 
violation of 26 U.S.C. 5751(a) (1) or (2), shall be liable for a tax 
equal to the rate of tax applicable to such articles.

(72 Stat. 1417, 1424; 26 U.S.C. 5703, 5751)



Sec. 40.354  Determination of tax and method of payment.

    Except for removals without payment of tax and transfers in bond, as 
authorized by law, no cigarette papers and tubes shall be removed until 
the taxes imposed by section 5701, I.R.C., have been determined. The 
payment of taxes on cigarette papers and tubes which are removed on 
determination of tax shall be made by return in accordance with the 
provisions of this subpart.

(72 Stat. 1417; 26 U.S.C. 5703)



Sec. 40.355  Return of manufacturer.

    (a) Requirement for filing. A manufacturer of cigarette papers and 
tubes shall file, for each factory, a semimonthly tax return on TTB Form 
5000.24. A return shall be filed for each semimonthly return period 
regardless of whether cigarette papers and tubes were removed subject to 
tax or whether tax is due for that particular return period.
    (b) Waiver from filing. The manufacturer need not file a return for 
each semimonthly return period if:
    (1) Cigarette papers and tubes were not removed subject to tax 
during the period, and
    (2) The appropriate TTB officer has granted a waiver from filing in 
response to a written request from the manufacturer.
    (c) Semimonthly return periods. Except as provided by paragraph (g) 
of this section, semimonthly return periods shall run from the first day 
of the month through the 15th day of the month, and from the 16th day of 
the month through the last day of the month.
    (d) Preparation and filing. The return shall be executed and filed 
with TTB in accordance with the instructions on the form.
    (e) Remittance of tax. Except as provided in Sec. 40.357, 
remittance of the tax, if any, shall accompany the return.
    (f) Time for filing. Except as provided by paragraph (g) of this 
section, for each semimonthly return period, the return shall be filed 
not later than the 14th day after the last day of the return period. If 
the due date falls on a Saturday, Sunday, or legal holiday, the return 
and remittance shall be due on the immediately preceding day which is 
not a Saturday, Sunday or legal holiday.
    (g) Special rule for taxes due for the month of September (effective 
after December 31, 1994). (1) Except as provided in paragraph (g)(2) of 
this section, the second semimonthly period for the month of September 
shall be divided into two payment periods, from the 16th day through the 
26th day, and from the 27th day through the 30th day. The manufacturer 
shall file a return on Form 5000.24, and make remittance, for the period 
September 16-26, no later than September 29. The manufacturer shall file 
a return on Form 5000.24, and make remittance, for the period September 
27-30, no later than October 14.
    (2) Taxpayment not by electronic fund transfer. In the case of taxes 
not required to be remitted by electronic fund transfer as prescribed by 
Sec. 40.357, the second semimonthly period of September shall be 
divided into two payment periods, from the 16th day through the 25th 
day, and the 26th day through the 30th day. The manufacturer shall file 
a return on Form 5000.24, and remittance, for the period September 16-
25, no later than September 28. The manufacturer shall file a return on 
Form 5000.24, and make remittance, for the period September 26-30, no 
later than October 14.

[[Page 46]]

    (3) Amount of payment: Safe harbor rule. (i) Taxpayers are 
considered to have met the requirements of paragraph (g)(1) of this 
section, if the amount paid no later than September 29 is not less than 
\11/15\ (73.3 percent) of the tax liability incurred for the semimonthly 
period beginning on September 1 and ending on September 15, and if any 
underpayment of tax is paid by October 14.
    (ii) Taxpayers are considered to have met the requirements of 
paragraph (g)(2) of this section, if the amount paid no later than 
September 28 is not less than two-thirds (66.7 percent) of the tax 
liability incurred for the semimonthly period beginning on September 1 
and ending on September 15, and if any underpayment of tax is paid by 
October 14.
    (4) Last day for payment. If the required due date for taxpayment 
for the periods September 16-25 or September 16-26, as applicable, falls 
on a Saturday, the return and remittance shall be due on the immediately 
preceding day. If the required due date falls on a Sunday, the return 
and remittance shall be due on the immediately following day.

(Approved by the Office of Management and Budget under Control Number 
1512-0467)



Sec. 40.356  Adjustments in the return of manufacturer.

    Adjustments may be made in Schedules A and B of the manufacturer's 
semimonthly tax return, TTB Form 5000.24, as provided in this section. 
Schedule A of the return will be used where an unintentional error in a 
previous return resulted in an underpayment of tax. Schedule B of the 
return will be used where an unintentional error in a previous return 
resulted in an overpayment of tax, or where notice has been received 
from the appropriate TTB officer that a claim for allowance of tax has 
been approved. In the case of an overpayment, the manufacturer shall 
have the option of filing a claim on TTB Form 2635 (5620.8) for refund 
or taking credit in Schedule B of the return, both subject to the period 
of limitations prescribed in 26 U.S.C. 6511. Any adjustment made in a 
return must be fully explained in the appropriate schedule or in a 
statement attached to and made a part of the return in which such 
adjustment is made.

(72 Stat. 1417, 68A Stat. 791; 26 U.S.C. 5703, 6402)



Sec. 40.357  Payment of tax by electronic fund transfer.

    (a) General. (1) Each taxpayer who was liable, during a calendar 
year, for a gross amount equal to or exceeding five millions dollars in 
taxes on tobacco products, cigarette papers, and cigarette tubes 
combining tax liabilities incurred under this part and part 41 of this 
chapter, shall use a commercial bank in making payment by electronic 
fund transfer (EFT) of taxes on tobacco products, cigarette papers, and 
cigarette tubes during the succeeding calendar year. Payment of taxes on 
tobacco products, cigarette papers, and cigarette tubes in any other 
form of remittance, as authorized in Sec. 40.355, is not authorized for 
a taxpayer who is required, by this section, to make remittances by EFT. 
For purposes of this section, the dollar amount of tax liability is 
defined as the gross tax liability on all taxable withdrawals and 
importations (including tobacco products, cigarette papers, and 
cigarette tubes brought into the United States from Puerto Rico or the 
Virgin Islands) during the calendar year, without regard to any 
drawbacks, credits, or refunds, for all premises from which such 
activities are conducted by the taxpayer. Overpayments are not taken 
into account in summarizing the gross tax liability.
    (2) For the purposes of this section, a taxpayer includes a 
controlled group of corporations, as defined in 26 U.S.C. 1563, and 
implementing regulations in 26 CFR Sec. Sec. 1.563-1 through 1.1563-4. 
Also, the rules for a ``controlled group of corporations'' apply in a 
similar fashion to groups which include partnerships and/or sole 
proprietorships. If one entity maintains more than 50% control over a 
group consisting of corporations and one, or more, partnerships and/or 
sole proprietorships, all of the members of the controlled group are one 
taxpayer for the purpose of determining who is required to make 
remittances by EFT.
    (3) A taxpayer who is required by this section to make remittances 
by EFT

[[Page 47]]

shall make a separate EFT remittance and file a separate return, TTB 
Form 5000.24, for each factory from which cigarette papers or cigarette 
tubes are withdrawn upon determination of tax.
    (b) Requirements. (1) On or before January 10 of each calendar year, 
except for a taxpayer already remitting the tax by EFT, each taxpayer 
who was liable for a gross amount equal to or exceeding five million 
dollars in taxes on tobacco products, cigarette papers, and cigarette 
tubes combining tax liabilities incurred under this part and part 41 of 
this chapter during the previous calendar year, shall notify, in 
writing, the appropriate TTB officer. The notice shall be an agreement 
to make remittances by EFT.
    (2) For each return filed in accordance with this part, the taxpayer 
shall direct the taxpayer's bank to make an electronic fund transfer in 
the amount of the taxpayment to the Department of the Treasury's General 
Account or the Federal Reserve Bank of New York as provided in paragraph 
(e) of this section. The request shall be made to the bank early enough 
for the transfer to be made to the Treasury Account by no later than the 
close of business on the last day for filing the return, prescribed in 
Sec. 40.355. The request shall take into account any time limit 
established by the bank.
    (3) If a taxpayer was liable for less than five million dollars in 
taxes on tobacco products, cigarette papers, and cigarette tubes 
combining tax liabilities incurred under this part and part 41 of this 
chapter during the preceding calendar year, the taxpayer may choose 
either to continue remitting the tax as provided in this section or to 
remit the tax with the return as prescribed by Sec. 40.355. Upon filing 
the first return on which the taxpayer chooses to discontinue remitting 
the tax by EFT and to begin remitting the tax with the tax return, the 
taxpayer shall notify the appropriate TTB officer by attaching a written 
notification to TTB Form 5000.24, stating that no taxes are due by EFT, 
because the tax liability during the preceding calendar year was less 
than five million dollars, and that the remittance shall be filed with 
the tax return.
    (c) Remittance. (1) Each taxpayer shall show on the return, TTB Form 
5000.24, information about remitting the tax for that return period by 
EFT and shall file the return with TTB, in accordance with the 
instructions of TTB Form 5000.24.
    (2) Remittances shall be considered as made when the taxpayment by 
EFT is received by the Treasury Account. For purposes of this section, a 
taxpayment by EFT shall be considered as received by the Treasury 
Account when it is paid to a Federal Reserve Bank.
    (3) When the taxpayer directs the bank to effect an EFT message as 
required by paragraph (b)(2) of this section, any transfer data record 
furnished to the taxpayer, through normal banking procedures, will serve 
as the record of payment, and shall be retained as part of required 
records.
    (d) Failure to make a taxpayment by EFT. The taxpayer is subject to 
a penalty imposed by 26 U.S.C. 5761, 6651, or 6656, as applicable, for 
failure to make a taxpayment by EFT on or before the close of business 
on the prescribed last day for filing.
    (e) Procedure. Upon the notification required under paragraph (b)(1) 
of this section, the appropriate TTB officer will issue to the taxpayer 
an TTB Procedure entitled Payment of Tax by Electronic Fund Transfer. 
This publication outlines the procedure a taxpayer is to follow when 
preparing returns and EFT remittances in accordance with this part. The 
U.S. Customs Service will provide the taxpayer with instructions for 
preparing EFT remittances for payments to be made to the U.S. Customs 
Service.

(Approved by the Office of Management and Budget under control number 
1512-0457)

(Act of August 16, 1954, 68A Stat. 775, as amended (26 U.S.C. 6302); 
sec. 202, Pub. L. 85-859, 72 Stat. 1417, as amended (26 U.S.C. 5703))

[T.D. ATF-384, 61 FR 54085, Oct. 17, 1996, as amended by T.D. TTB-16, 69 
FR 52423, Aug. 26, 2004]



Sec. 40.358  Assessment.

    Whenever any person required by law to pay tax on cigarette papers 
and tubes fails to pay such tax, the tax shall be ascertained and 
assessed

[[Page 48]]

against such person, subject to the limitations prescribed in 26 U.S.C. 
6501. 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 be made until and after notice has been afforded such 
person to show cause against assessment. The person will be allowed 45 
days from the date of such notice to show cause, in writing, against 
such assessment.

(72 Stat. 1417; 26 U.S.C. 5703)



Sec. 40.359  Employer identification number.

    The employer identification number (EIN) (defined at 26 CFR 
301.7701-12) of a manufacturer of cigarette papers and/or tubes who has 
been assigned such a number shall be shown on each semimonthly tax 
return, TTB Form 5000.24, and special tax return (including amended 
returns), TTB Form 5630.5, filed under this subpart. Failure of the 
taxpayer to include the EIN on TTB Form 5000.24 may result in assertion 
and collection of the penalty specified in Sec. 70.113 of this chapter. 
Failure of the taxpayer to include the EIN on TTB Form 5630.5 may result 
in the imposition of the penalty specified in 27 CFR 70.113 of this 
chapter.

(75 Stat. 828; 26 U.S.C. 6109, 6676)



Sec. 40.360  Application for employer identification number.

    Each manufacturer of cigarette papers and tubes who has neither 
secured an EIN nor made application therefor shall file an application 
on IRS Form SS-4. IRS Form SS-4 may be obtained from any service center 
director or from any district director. Such application shall be filed 
on or before the seventh day after the date on which any tax return 
under this subpart is filed. Each manufacturer shall make application 
for and shall be assigned only one EIN for all internal revenue 
purposes.

(75 Stat. 828; 26 U.S.C. 6109)



Sec. 40.361  Execution and filing of Form SS-4.

    The application on IRS form SS-4, together with any supplementary 
statement, shall be prepared in accordance with the applicable form, 
instructions, and regulations, and the data called for shall be set 
forth fully and clearly. The application shall be filed with the service 
center director serving the internal revenue district where the 
applicant is required to file returns under this subpart, except that 
hand-carried applications may be filed with the district director of any 
such district as provided for in 26 CFR Sec. 301.6091-1. The 
application shall be signed by:
    (a) The individual if the person is an individual;
    (b) The president, vice president, or other principal officer if the 
person is a corporation;
    (c) A responsible and duly authorized member or officer having 
knowledge of its affairs if the person is a partnership or other 
unincorporated organization; or
    (d) The fiduciary if the person is a trust or estate.

(75 Stat. 828; 26 U.S.C. 6109)

                      Special (Occupational) Taxes



Sec. 40.371  Liability for special tax.

    (a) Manufacturer of cigarette papers and tubes. Every manufacturer 
of cigarette papers and tubes shall pay a special (occupational) tax at 
a rate specified by Sec. 40.372 of this part. The tax shall be paid on 
or before July 1. On commencing business, the tax shall be computed from 
the first day of the month in which liability is incurred, through the 
following June 30. Thereafter, the tax shall be computed for the entire 
year (July 1 through June 30).
    (b) Each place of business taxable. A manufacturer of cigarette 
papers and tubes incurs special tax liability at each place of business 
in which an occupation subject to special tax is conducted. A place of 
business means the entire office, plant or area of the business in any 
one location under the same proprietorship. Passageways, streets, 
highways, rail crossings, waterways, or partitions dividing the premises 
are not sufficient separation

[[Page 49]]

to require additional special tax, if the divisions of the premises are 
otherwise contiguous.

(26 U.S.C. 5143, 5731)



Sec. 40.372  Rate of special tax.

    (a) General. Title 26 U.S.C. 5731(a)(2) imposes a special tax of 
$1,000 per year on every manufacturer of cigarette papers and tubes.
    (b) Reduced rate for small proprietors. Title 26 U.S.C. 5731(b) 
provides for a reduced rate of $500 per year with respect to any 
manufacturer of cigarette papers and tubes whose gross receipts (for the 
most recent taxable year ending before the first day of the taxable 
period to which the special tax imposed by Sec. 40.371 relates) are 
less than $500,000. The ``taxable year'' to be used for determining 
gross receipts is the taxpayer's income tax year. All gross receipts of 
the taxpayer shall be included, not just the gross receipts of the 
business subject to special tax. Proprietors of new businesses that have 
not yet begun a taxable year, as well as proprietors of existing 
businesses that have not yet ended a taxable year, who commence a new 
activity subject to special tax, qualify for the reduced special 
(occupational) tax rate, unless the business is a member of a 
``controlled group''; in that case the rules of paragraph (c) of this 
section shall apply.
    (c) Controlled group. All persons treated as one taxpayer under 26 
U.S.C. 5061(e)(3) shall be treated as one taxpayer for the purpose of 
determining gross receipts under paragraph (b) of this section. 
``Controlled group'' means a controlled group of corporations, as 
defined in 26 U.S.C. 1563 and implementing regulations in 26 CFR 1.1563-
1 through 1.1563-4. Also, the rules for a ``controlled group of 
corporations'' apply in a similar fashion to groups which include 
partnerships and/or sole proprietorships. If one entity maintains more 
than 50% control over a group consisting of corporations and one, or 
more, partnerships and/or sole proprietorships, all of the members of 
the controlled group are one taxpayer for the purpose of this section.
    (d) Short taxable year. Gross receipts for any taxable year of less 
than 12 months shall be annualized by multiplying the gross receipts for 
the short period by 12 and dividing the result by the number of months 
in the short period as required by 26 U.S.C. 448(c)(3).
    (e) Returns and allowances. Gross receipts for any taxable year 
shall be reduced by returns and allowances made during such year under 
26 U.S.C. 448(c)(3).

(26 U.S.C. 448, 5061, 5731)



Sec. 40.373  Special tax returns.

    (a) General. Special tax shall be paid by return. The prescribed 
return is TTB Form 5630.5, Special Tax Registration and Return. Special 
tax returns, with payment of tax, shall be filed with TTB in accordance 
with instructions on the form.
    (b) Preparation of TTB Form 5630.5. All of the information called 
for on TTB Form 5630.5 shall be provided including:
    (1) The true name of the taxpayer.
    (2) The trade name(s) (if any) of the business(es) subject to 
special tax.
    (3) The employer identification number (see Sec. Sec. 40.359-361).
    (4) The exact location of the place of business, by name and number 
of building or street, or if these do not exist, by some description in 
addition to the post office address. In the case of one return for two 
or more locations, the address to be shown shall be the taxpayer's 
principal place of business (or principal office, in the case of a 
corporate taxpayer).
    (5) The class(es) of special tax to which the taxpayer is subject.
    (6) Ownership and control information: That is, the name, position, 
and residence address of every owner of the business and of every person 
having power to control its management and policies with respect to the 
activity subject to special tax. ``Owner of the business'' shall include 
every partner, if the taxpayer is a partnership, and every person owning 
10% or more of its stock, if the taxpayer is a corporation. However, the 
ownership and control information required by this paragraph need not be 
stated if the same information has been previously provided to TTB in 
connection with a permit application, and if the information previously 
provided is still current.
    (c) Multiple locations and/or classes of tax. A taxpayer subject to 
special tax

[[Page 50]]

for the same period at more than one location or for more than one class 
of tax shall--
    (1) File one special tax return, TTB Form 5630.5, with payment of 
tax, to cover all such locations and classes of tax; and
    (2) Prepare, in duplicate, a list identified with the taxpayer's 
name, address (as shown on TTB Form 5630.5), employer identification 
number, and period covered by the return. The list shall show, by State, 
the name, address, and tax class of each location for which special tax 
is being paid. The original of the list shall be filed with TTB in 
accordance with instructions on the return, and the copy shall be 
retained at the taxpayer's principal place of business (or principal 
office, in the case of a corporate taxpayer) for the period specified in 
Sec. 40.371.
    (d) Signing of TTB Forms 5630.5--(1) Ordinary returns. The return of 
an individual proprietor shall be signed by the individual. The return 
of a partnership shall be signed by a general partner. The return of a 
corporation shall be signed by any officer. In each case, the person 
signing the return shall designate his or her capacity as ``individual 
owner,'' ``member of firm,'' or, in the case of a corporation, the title 
of the officer.
    (2) Fiduciaries. Receivers, trustees, assignees, executors, 
administrators, and other legal representatives who continue the 
business of a bankrupt, insolvent, deceased person, etc., shall indicate 
the fiduciary capacity in which they act.
    (3) Agent or attorney in fact. If a return is signed by an agent or 
attorney in fact, the signature shall be preceded by the name of the 
principal and followed by the title of the agent or attorney in fact. A 
return signed by a person as agent will not be accepted unless there is 
filed, with the TTB office with which the return is required to be 
filed, a power of attorney authorizing the agent to perform the act.
    (4) Perjury statement. TTB Forms 5630.5 shall contain or be verified 
by a written declaration that the return has been executed under the 
penalties of perjury.



Sec. 40.374  Issuance, distribution, and examination of special tax stamps.

    (a) Issuance of special tax stamps. Upon filing a properly executed 
return on TTB Form 5630.5 together with the full remittance, the 
taxpayer will be issued an appropriately designated special tax stamp. 
If the return covers multiple locations, the taxpayer will be issued one 
appropriately designated stamp for each location listed on the 
attachment required by Sec. 40.373(c)(2), but showing, as to name and 
address, only the name of the taxpayer and the address of the taxpayer's 
principal place of business (or principal office in the case of a 
corporate taxpayer).
    (b) Distribution of special tax stamps for multiple locations. On 
receipt of the special tax stamps, the taxpayer shall verify that there 
is one stamp for each location listed on the attachment to TTB Form 
5630.5. The taxpayer shall designate one stamp for each location and 
type on each stamp the address of the business conducted at the location 
for which that stamp is designated. The taxpayer shall then forward each 
stamp to the place of business designated on the stamp.
    (c) Examination of special tax stamps. All stamps denoting payment 
of special tax shall be kept available for inspection by the appropriate 
TTB officers, at the location for which designated, during business 
hours.

(26 U.S.C. 5142, 5146, 6806)



Sec. 40.375  Changes in special tax stamps.

    (a) Change in name. If there is a change in the corporate or firm 
name, or in the trade name, as shown on TTB Form 5630.5, the 
manufacturer shall file an amended special tax return as soon as 
practicable after the change, covering the new corporate or firm name, 
or trade names. No new special tax is required to be paid. The 
manufacturer shall attach the special tax stamp for endorsement of the 
change in name.
    (b) Change in proprietorship--(1) General. If there is a change in 
the proprietorship of a cigarette papers and tubes factory, the 
successor shall pay a new special tax and obtain the required special 
tax stamps.

[[Page 51]]

    (2) Exemption for certain successors. Persons having the right of 
succession provided for in paragraph (c) of this section may carry on 
the business for the remainder of the period for which the special tax 
was paid, without paying a new special tax, if within 30 days after the 
date on which the successor begins to carry on the business, the 
successor files a special tax return on TTB Form 5630.5 with TTB, which 
shows the basis of succession. A person who is a successor to a business 
for which special tax has been paid and who fails to register the 
succession is liable for special tax computed from the first day of the 
calendar month in which the successor began to carry on the business.
    (c) Persons having right of succession. Under the conditions 
indicated in paragraph (b)(2) of this section, the right of succession 
will pass to certain persons in the following cases:
    (1) Death. The spouse or child, or executor, administrator, or other 
legal representative of the taxpayer;
    (2) Succession of spouse. A husband or wife succeeding to the 
business of his or her spouse (living);
    (3) Insolvency. A receiver or trustee in bankruptcy, or an assignee 
for benefit of creditors;
    (4) Withdrawal from firm. The partner or partners remaining after 
death or withdrawal of a member.
    (d) Change in location. If there is a change in location of a 
taxable place of business, the manufacturer shall within 30 days after 
the change, file with TTB an amended special tax return covering the new 
location. The manufacturer shall attach the special tax stamp or stamps 
for endorsement of the change in location. No new special tax is 
required to be paid. However, if the manufacturer does not file the 
amended return within 30 days, the manufacturer is required to pay a new 
special tax and obtain a new special tax stamp.

(26 U.S.C. 5143, 7011)

                                 General



Sec. 40.382  Authority of TTB officers to enter premises.

    The appropriate TTB officer may enter in the daytime any premises 
where cigarette papers and tubes are produced or kept, so far as it may 
be necessary for the purpose of examining such articles. When such 
premises are open at night, the appropriate TTB officer may enter them, 
while so open, in the performance of his or her official duties. The 
owner of such premises, or person having the superintendence of the 
same, who refuses to admit the appropriate TTB officer or permit the 
appropriate TTB officer to examine such cigarette papers and tubes shall 
be liable to the penalties prescribed by law for the offense.

(68A Stat. 872; 903 26 U.S.C. 7342, 7606)



Sec. 40.383  Interference with administration.

    Whoever, corruptly or by force or threats of force, endeavors to 
hinder or obstruct the administration of this subpart, or endeavors to 
intimidate or impede any TTB officer acting in an official capacity, or 
forcibly rescues or attempts to rescue or causes to be rescued any 
property, after it has been duly seized for forfeiture to the United 
States in connection with a violation or intended violation of this 
subpart, shall be liable to the penalties prescribed by law.

(68A Stat. 855; 26 U.S.C. 7212)



Sec. 40.384  Disposal of forfeited, condemned, and abandoned cigarette papers 

and tubes.

    Forfeited, condemned, or abandoned cigarette papers or tubes in the 
custody of a Federal, State, or local officer upon which the Federal tax 
has not been paid shall not be sold or caused to be sold for consumption 
in the United States if, in the opinion of the officer, the sale of such 
papers and tubes will not bring a price equal to the tax due and 
payable, and the expenses incident to the sale. Where the cigarette 
papers or tubes are not sold the officer may deliver them to a Federal 
or State institution (if they are fit for consumption) or cause their 
destruction by burning completely or by rendering them unfit for 
consumption. Where such papers or tubes are sold, release by the officer 
having custody shall be made only after such papers and tubes are 
properly packaged and taxpaid. A

[[Page 52]]

receipt from the appropriate TTB officer evidencing payment of tax on 
such papers or tubes shall be presented to the officer having custody of 
the articles, which tax shall be considered part of the sales price. 
Where cigarette papers or tubes which have been packaged under the 
provisions of part 45 of this chapter are to be released after payment 
of tax, the purchaser shall appropriately mark each package ``Federal 
Tax Paid (date)'' before the officer having custody of the papers or 
tubes releases them. However, the articles may be released without such 
marking of the packages if the purchaser is a qualified manufacturer of 
cigarette papers and tubes and does not intend to place such papers or 
tubes on the domestic market for taxable articles but will otherwise 
dispose of them. A written statement of notification of disposal by 
destruction or return to bond through claim for refund, shall be filed, 
in original only, with the officer having custody of the articles. In 
the case of cigarette papers and tubes forfeited under the internal 
revenue laws, the sale shall be subject to the provisions of part 72 of 
this chapter.

(68A Stat. 870, as amended, 72 Stat. 1425, as amended; 26 U.S.C. 7325, 
5753)

[26 FR 8174, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and further redesignated at 54 FR 48839, Nov. 27, 1989, and further 
redesignated by T.D. ATF-460, 66 FR 39093, July 27, 2001, as amended by 
T.D. ATF-469, 66 FR 56758, Nov. 13, 2001]



Sec. 40.385  Alternate methods or procedures.

    A manufacturer of cigarette papers and tubes, on specific approval 
by the appropriate TTB officer as provided in this section, may use an 
alternate method or procedure in lieu of a method or procedure 
specifically prescribed in this subpart. The appropriate TTB officer may 
approve an alternate method or procedure, subject to stated conditions, 
when the appropriate TTB officer finds that--
    (a) Good cause has been shown for the use of the alternate method or 
procedure,
    (b) The alternate method or procedure is within the purpose of, and 
consistent with the effect intended by, the specifically prescribed 
method or procedure, and affords equivalent security to the revenue, and
    (c) The alternate method or procedure will not be contrary to any 
provision of law, and will not result in an increase in cost to the 
Government or hinder the effective administration of this subpart.
    No alternate method or procedure relating to the giving of any bond 
or to the assessment, payment, or collection of tax, shall be authorized 
under this section. A manufacturer who desires to employ an alternate 
method or procedure shall submit a written application, in triplicate, 
to the appropriate TTB officer. The application shall specifically 
describe the proposed alternate method or procedure, and shall set forth 
the reasons therefor. Alternate methods or procedures shall not be 
employed until the application has been approved by the appropriate TTB 
officer. The manufacturer shall, during the period of authorization of 
an alternate method or procedure, comply with the terms of the approved 
application. Authorization for any alternate method or procedure may be 
withdrawn whenever, in the judgment of the appropriate TTB officer, the 
revenue is jeopardized or the effective administration of this part is 
hindered. Any authorization of the appropriate TTB officer under this 
section shall be retained as part of the manufacturer's record in 
accordance with this subpart.



Sec. 40.386  Emergency variations from requirements.

    The appropriate TTB officer may approve methods of operation other 
than as specified in this subpart, where it is determined that an 
emergency exists and the proposed variations from the specified 
requirements are necessary, and the proposed variations--
    (a) Will afford the security and protection to the revenue intended 
by the prescribed specifications;
    (b) Will not hinder the effective administration of this subpart; 
and
    (c) Will not be contrary to any provision of law. Variations from 
requirements granted under this section are conditioned on compliance 
with the procedures, conditions, and limitations set forth in the 
approval of the application. Failure to comply in good faith

[[Page 53]]

with such procedures, conditions and limitations shall automatically 
terminate the authority for such variations and the manufacturer 
thereupon shall fully comply with the prescribed requirements of 
regulations from which the variations were authorized. Authority for any 
variation may be withdrawn whenever in the judgment of the appropriate 
TTB officer the revenue is jeopardized or the effective administration 
of this subpart is hindered by the continuation of such variation. Where 
a manufacturer desires to employ such variation, the manufacturer shall 
submit a written application to do so (in triplicate) to the appropriate 
TTB officer. The application shall describe the proposed variations and 
set forth the reasons therefor. Variations shall not be employed until 
the application has been approved. In accordance with this subpart, any 
authorization of the appropriate TTB officer under this section shall be 
retained as part of the manufacturer's records.



Sec. 40.387  Penalties and forfeitures.

    Anyone who fails to comply with the provisions of this subpart 
becomes liable to the civil and criminal penalties, and forfeitures, 
provided by law.

(72 Stat. 1425, 1426; 26 U.S.C. 5761, 5762, 5763)

              Qualification Requirements for Manufacturers

                         Original Qualifications



Sec. 40.391  Persons required to qualify.

    Every person who manufactures cigarette paper, or makes up cigarette 
paper into tubes, except for his own personal use or consumption, must 
first qualify as a manufacturer of cigarette papers and tubes in 
accordance with the provisions of this subpart.

[ATF-467, 66 FR 49532, Sept. 28, 2001]



Sec. 40.392  Bond.

    Every person, before commencing business as a manufacturer of 
cigarette papers and tubes, shall file a bond on TTB Form 2102 (5210.1). 
Such bond shall be filed in accordance with the applicable provisions of 
subpart G of this part and conditioned upon compliance with the 
provisions of 26 U.S.C. Chapter 52, and regulations thereunder, 
including, but not limited to, the timely payment of taxes imposed by 
such chapter and penalties and interest in connection therewith for 
which the manufacturer may become liable to the United States.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.393  Power of attorney.

    If the bond or any other document required under this part is signed 
by an attorney in fact for an individual, partnership, association, 
company, or corporation, by one of the partners for a partnership, or by 
one of the members of an association, a power of attorney on TTB Form 
1534 (5000.8) shall be furnished to the appropriate TTB officer. If such 
bond or other document is signed on behalf of a corporation by an 
officer thereof, it must be supported by duly authenticated extracts of 
the stockholders' meeting, by-laws, or directors' meeting authorizing 
such officer to execute such document for the corporation. TTB Form 
5000.8 or support of authority does not have to be filed again with a 
appropriate TTB officer where such form or support has previously been 
submitted to that appropriate TTB officer and is still in effect.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.394  Notice of approval of bond.

    If the bond required under this subpart is approved by the 
appropriate TTB officer, a number will be assigned to the factory of the 
manufacturer of cigarette papers and tubes for internal revenue 
purposes. The appropriate TTB officer will immediately notify the 
manufacturer, in writing, of the bond approval, in order that the 
manufacturer may commence operations.

(72 Stat. 1421; 26 U.S.C. 5711)

                  Changes after Original Qualifications



Sec. 40.395  Change in name.

    Where there is a change in the individual, trade, or corporate name 
of a manufacturer of cigarette papers and tubes, the manufacturer shall, 
within

[[Page 54]]

30 days of the change, furnish the appropriate TTB officer a written 
notice of such change.

(72 Stat. 1422; 26 U.S.C. 5722)



Sec. 40.396  Change in proprietorship.

    Where there is to be any change in proprietorship (including a 
change in the identity of the members of a partnership or association, 
but excluding any change in stock ownership in a corporation) of the 
business of a manufacturer of cigarette papers and tubes, the proposed 
successor shall, before commencing operations, qualify as a manufacturer 
of cigarette papers and tubes, in accordance with this part. If such 
manufacturer promptly files the required documentation with the 
appropriate TTB officer, an administrator, executor, receiver, trustee, 
assignee, or other fiduciary successor may liquidate the business 
without qualifying as a manufacturer. The manufacturer must promptly 
file with the appropriate TTB officer a statement of the intent to 
liquidate and furnish a certified copy of the order of the court, or 
other pertinent documents. These documents must show the appointment and 
qualification of any administrator, executor, receiver, trustee, 
assignee, or other fiduciary, together with an extension of coverage of 
the predecessor's bond executed by the administrator, executor, 
receiver, trustee, assignee, or other fiduciary and the surety, in 
accordance with the provisions of Sec. 40.407. The predecessor shall 
make a closing inventory and closing report in accordance with the 
provisions of Sec. Sec. 40.434 and 40.426, respectively, and the 
successor shall make an opening inventory and opening report, in 
accordance with the provision of Sec. Sec. 40.432 and 40.423, 
respectively.

(72 Stat. 1421, 1422; 26 U.S.C. 5711, 5721, and 5722)



Sec. 40.397  Change in location.

    Whenever a manufacturer of cigarette papers and tubes contemplates a 
change in location of a factory within the same region, the manufacturer 
shall, before commencing operations at the new location, file an 
extension of coverage of bond in accordance with the provisions of Sec. 
40.407. Whenever a manufacturer of cigarette papers and tubes 
contemplates changing the location of a factory to another region, the 
manufacturer shall, before commencing operations at the new location, 
qualify as a manufacturer in the new region, in accordance with the 
applicable provisions of this subpart, and make a closing inventory and 
closing report, in accordance with the provisions of Sec. Sec. 40.434 
and 40.426, respectively.

(72 Stat. 1421, 1422; 26 U.S.C. 5711, 5721, and 5722)

                Bonds and Extensions of Coverage of Bonds



Sec. 40.401  Corporate surety.

    (a) Surety bonds required by this subpart may be given only with 
corporate sureties holding certificates of authority from, and subject 
to any limitations prescribed by the Secretary of the Treasury as set 
forth in the current revision of Treasury Department Circular No. 570 
(Companies Holding Certificates of Authority as Acceptable Sureties on 
Federal Bonds and as Acceptable Reinsuring Companies). The surety shall 
have no interest whatever in the business covered by the bond.
    (b) Each bond and each extension of coverage of bond shall at the 
time of filing be accompanied by a power of attorney authorizing the 
agent or officer who executed the bond to so act on behalf of the 
surety. The appropriate TTB officer who is authorized to approve the 
bond may, whenever deemed necessary, require additional evidence of the 
authority of the agent or officer to execute the bond or extension of 
coverage of bond. The power of attorney shall be prepared on a form 
provided by the surety company and executed under the corporate seal of 
the company. If the power of attorney submitted is other than a manually 
signed document, it shall be accompanied by a certificate of its 
validity.
    (c) Treasury Department Circular No. 570 is published in the Federal 
Register annually as of the first workday in July. As they occur, 
interim revisions of the circular are published in the Federal Register. 
Copies may be obtained from the Surety Bond Branch,

[[Page 55]]

Financial Management Service, Department of the Treasury, Washington, 
D.C. 20220.

(July 30, 1947, ch. 390, 61 Stat. 648, as amended (31 U.S.C. 9304, 
9306); sec. 202. Pub. L. 85-859, 72 Stat. 1421, as amended (26 U.S.C. 
5711))



Sec. 40.402  Two or more corporate sureties.

    A bond executed by two or more corporate sureties shall be the joint 
and several liability of the principal and the sureties. However, each 
corporate surety may limit its liability in terms upon the face of the 
bond in a definite, specific amount, which amount shall not exceed the 
limitations prescribed for such corporate surety by the Secretary, as 
set forth in the current revision of Treasury Department Circular 570 
(Companies Holding Certificates of Authority as Acceptable Sureties on 
Federal Bonds and as Acceptable Reinsuring Companies). (See Sec. 
40.401(c)) When the sureties so limit their liability, the aggregate of 
such limited liabilities must equal the required amount of the bond.

(July 30, 1947, ch. 390, 61 Stat. 648, as amended (31 U.S.C. 9304, 
9306); sec. 202. Pub. L. 85-859, 72 Stat. 1421, as amended (26 U.S.C. 
5711))



Sec. 40.403  Deposit of securities in lieu of corporate surety.

    In lieu of corporate surety, the manufacturer of cigarette papers 
and tubes may pledge and deposit, as security for the bond, securities 
which are transferable and are guaranteed as to both interest and 
principal by the United States, in accordance with the provisions of 31 
CFR Part 225--Acceptance of Bonds, Notes or Other Obligations Issued or 
Guaranteed by the United States as Security in Lieu of Surety or 
Sureties on Penal Bonds.

(61 Stat. 650, 72 Stat. 1421, 31 U.S.C. 9301, 9303, 26 U.S.C. 5711, 5 
U.S.C. 552(a) (80 Stat. 383, as amended))



Sec. 40.404  Amount of bond.

    The amount of the bond of a manufacturer of cigarette papers and 
tubes shall be not less than the maximum amount of the tax liability on 
the cigarette papers and tubes manufactured in the factory, received 
without payment of tax from other factories, and released without 
payment of tax from customs custody as provided in Sec. 40.452, during 
any month. In the case of a manufacturer commencing business, the 
production, receipts from other factories, and releases from customs 
custody, without payment of tax, shall be estimated for the purpose of 
this section. The amount of any such bond (or the total amount where 
strengthening bonds are filed) shall not exceed $20,000, nor be less 
than $1,000.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.405  Strengthening bond.

    Where the appropriate TTB officer determines that the amount of the 
bond, under which a manufacturer of cigarette papers and tubes is 
currently carrying on such business, no longer adequately protects the 
revenue, the appropriate TTB officer may require the manufacturer to 
file a strengthening bond in an appropriate amount with the same surety 
as that on the bond already in effect, in lieu of a superseding bond to 
cover the full liability on the basis of Sec. 40.404. The appropriate 
TTB officer shall refuse to approve any strengthening bond where any 
notation is made thereon which is intended or which may be construed as 
a release of any former bond, or as limiting the amount of either bond 
to less than its full amount.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.406  Superseding bond.

    A manufacturer of cigarette papers and tubes shall file a new bond 
to supersede the current bond immediately when:
    (a) The corporate surety on the current bond becomes insolvent,
    (b) The appropriate TTB officer approves a request from the surety 
of the current bond to terminate liability under the bond,
    (c) Payment of any liability under a bond is made by the surety 
thereon, or
    (d) The appropriate TTB officer considers such a superseding bond 
necessary for the protection of the revenue.

(72 Stat. 1421; 26 U.S.C. 5711)

[[Page 56]]



Sec. 40.407  Extension of coverage of bond.

    An extension of the coverage of bond filed under this subpart shall 
be manifested on TTB Form 2105 (5000.7), Extension of Coverage of Bond, 
by the manufacturer of cigarette papers and tubes and by the surety on 
the bond with the same formality and proof of authority as required for 
the execution of the bond.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.408  Approval of bond and extension of coverage of bond.

    No person shall commence operations under any bond, nor extend 
operations, until such person receives from the appropriate TTB officer 
notice of approval of the bond or an appropriate extension of coverage 
of the bond required under this subpart. Upon receipt of an approved 
bond or extension of coverage of bond from the appropriate TTB officer, 
such bond or extension of coverage of bond shall be retained by the 
manufacturer of cigarette papers and tubes in factory and shall be made 
available for inspection by any TTB officer upon request.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.409  Termination of liability of surety under bond.

    The liability of a surety on any bond required by this subpart shall 
be terminated only as to operations on and after the effective date of a 
superseding bond, or the date of approval of the discontinuance of 
operations by the manufacturer of cigarette papers and tubes, or 
otherwise in accordance with the termination provisions of the bond. The 
surety shall remain bound in respect of any liability for unpaid taxes, 
penalties and interest, not in excess of the amount of the bond, 
incurred by the manufacturer while the bond is in force.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 40.410  Release of pledged securities.

    Securities of the United States pledged and deposited as provided in 
Sec. 40.403 shall be released only in accordance with the provisions of 
31 CFR part 225. Such securities will not be released by the appropriate 
TTB officer until liability under the bond for which they were pledged 
has been terminated. When the appropriate TTB officer is satisfied that 
they may be released, the appropriate TTB officer shall fix the date or 
dates on which a part or all of such securities may be released. At any 
time prior to the release of such securities, the appropriate TTB 
officer may extend the date of release for such additional length of 
time as is deemed necessary.

(61 Stat. 650, 72 Stat. 1421; 31 U.S.C. 9301, 9303; 26 U.S.C. 5711)

                       Operations By Manufacturers

                                 Records



Sec. 40.421  General.

    (a) Every manufacturer of cigarette papers and tubes must keep 
records of daily operations and transactions. Records maintained must 
reflect the date and number of cigarette papers and the date and number 
of cigarette tubes:
    (1) Manufactured;
    (2) Received, without payment of tax from another factory, an export 
warehouse, customs custody, or by withdrawal from the market;
    (3) Removed, subject to tax;
    (4) Removed, without payment of tax, for export purposes, use of the 
United States or transfer in bond pursuant to Sec. 40.451; or
    (5) Lost or destroyed.
    (b) The entries for each day in the records maintained or kept under 
this subpart must be made by the close of the business day following 
that on which the operations or transactions occur. No particular form 
of records is prescribed, but the information required must be readily 
ascertainable from the records kept.
    (c) Records maintained under this section prior to January 1, 2000, 
must reflect the date and number of books or sets of cigarette papers of 
each different numerical content and the date and number of cigarette 
tubes.

(26 U.S.C. 5741.)

[T.D. ATF-240, 64 FR 71941, Dec. 22, 1999]

[[Page 57]]

                                 Reports



Sec. 40.422  General.

    Every manufacturer of cigarette papers and tubes must prepare a 
report on TTB Form 5230.3 in accordance with instructions for the form. 
The report must be prepared at the times specified in this subpart and 
must be prepared whether or not any operations or transactions occurred 
during the period covered by the report. The manufacturer must retain a 
copy of each report in accordance with the provisions of this subpart.
    (a) Reports for periods on or after January 1, 2000. Reports 
submitted must reflect the total number of cigarette papers and 
cigarette tubes manufactured, received and lost or destroyed.
    (b) Reports for periods prior to January 1, 2000. Reports submitted 
must reflect the number of books or sets of cigarette papers of each 
different numerical content and the number of cigarette tubes 
manufactured, received, removed and lost or destroyed.

(26 U.S.C. 5722)

[T.D. ATF-240, 64 FR 71942, Dec. 22, 1999]



Sec. 40.423  Opening.

    An opening report, covering the period from the date of the opening 
inventory to the end of the month, shall be made on or before the 10th 
day following the end of the month in which the business was commenced.

(72 Stat. 1422; 26 U.S.C. 5722)



Sec. 40.424  Monthly.

    A report for each calendar month shall be made on or before the 20th 
day of the next succeeding month.

(72 Stat. 1422; 26 U.S.C. 5722)



Sec. 40.425  Special.

    A special report, covering the unreported period to the day 
preceding the date of any special inventory required by an appropriate 
TTB officer, shall be made with such inventory. Another report, covering 
the period from the date of the special inventory to the end of the 
month, shall be made on or before the 14th day following the end of the 
month in which the inventory was made.

(72 Stat. 1422; 26 U.S.C. 5722)



Sec. 40.426  Closing.

    A closing report, covering the period from the first of the month to 
the date of the closing inventory, shall be made with such inventory.

(72 Stat. 1422; 26 U.S.C. 5722)

                               Inventories



Sec. 40.431  General.

    Every manufacturer of cigarette papers and tubes must provide a true 
and accurate inventory on TTB Form 5230.2 in accordance with 
instructions for the form. Such inventory is subject to verification by 
the appropriate TTB officer. The manufacturer must retain a copy of each 
inventory completed on TTB Form 5230.2 in accordance with this subpart.
    (a) Reports of inventory for periods on or after January 1, 2000. 
Reports of inventory submitted must reflect the total number of 
cigarette papers and cigarette tubes held at the times specified in the 
subpart.
    (b) Reports of inventory for periods prior to January 1, 2000. 
Reports of inventory submitted must reflect the number of books or sets 
of cigarette papers of each different numerical content and the number 
of cigarette tubes held at the times specified in this subpart.

(26 U.S.C. 5721)

[T.D. ATF-240, 64 FR 71942, Dec. 22, 1999]



Sec. 40.432  Opening.

    An opening inventory shall be made by the manufacturer of cigarette 
papers and tubes at the time of first commencing business.

(72 Stat. 1422; 26 U.S.C. 5721)



Sec. 40.433  Special.

    A special inventory shall be made by the manufacturer of cigarette 
papers and tubes when required by the appropriate TTB officer.

(72 Stat. 1422; 26 U.S.C. 5721)

[[Page 58]]



Sec. 40.434  Closing.

    A closing inventory shall be made by the manufacturer of cigarette 
papers and tubes when a change in proprietorship occurs, or when the 
manufacturer changes location of the factory to another region, or 
concludes business. Where a change in proprietorship occurs, the closing 
inventory shall be made as of the day preceding the date of the opening 
inventory of the successor.

(72 Stat. 1422; 26 U.S.C. 5721)

                           Document Retention



Sec. 40.435  General.

    All records and reports required to be kept or maintained under this 
subpart, including copies of authorizations, inventories, reports, 
returns, and claims filed with verified supporting schedules, shall be 
retained by the manufacturer for three years following the close of the 
calendar year in which filed or made, or in the case of an 
authorization, for three years following the close of the calendar year 
in which the operation under such authorization is concluded. Such 
records shall be made available for inspection by the appropriate TTB 
officer upon request.

(72 Stat. 1423; 26 U.S.C. 5741)

                                Packages



Sec. 40.441  General.

    All cigarette papers and tubes shall, before removal subject to tax, 
be put up by the manufacturer in packages which shall be of such 
construction as will securely contain the papers or tubes therein. No 
package of cigarette papers or tubes shall have contained therein, 
attached thereto, or stamped, marked, written, or printed thereon:
    (a) Any 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,
    (b) Any indecent or immoral picture, print, or representation, or
    (c) Any statement or indication that United States tax has been 
paid.

(72 Stat. 1422; 26 U.S.C. 5723)

                        Miscellaneous Operations



Sec. 40.451  Transfer in bond.

    A manufacturer of cigarette papers and tubes may transfer such 
papers and tubes, under bond, without payment of tax, to the bonded 
premises of any manufacturer of cigarette papers and tubes, or to the 
bonded premises of a manufacturer of tobacco products solely for use in 
the manufacture of cigarettes. The transfer of cigarette papers and 
tubes, without payment of tax, to the bonded premises of an export 
warehouse proprietor shall be in accordance with the provisions of part 
44 of this chapter.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)



Sec. 40.452  Release from customs custody.

    Cigarette papers and tubes which were made in the United States, 
exported, and subsequently returned to the United States, may be removed 
from customs custody for transfer to the premises of a manufacturer 
without payment of the internal revenue tax, upon compliance with part 
41 of this chapter.

(72 Stat. 1418; 26 U.S.C. 5704)

[T.D. ATF-384, 61 FR 54085, Oct. 17, 1996, as amended by T.D. TTB-16, 69 
FR 52423, Aug. 26, 2004]



Sec. 40.453  Use of the United States.

    A manufacturer of cigarette papers and tubes may remove cigarette 
papers and tubes covered under bond, without payment of tax, for use of 
the United States. Such removal shall be in accordance with the 
provisions of part 45 of this chapter.

(72 Stat. 1418; 26 U.S.C. 5704)

[26 FR 8174, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and further redesignated at 54 FR 48839, Nov. 27, 1989, and further 
redesignated by T.D. ATF-460, 66 FR 39093, July 27, 2001, as amended by 
T.D. ATF-469, 66 FR 56758, Nov. 13, 2001]



Sec. 40.454  Removal for export purposes.

    The removal of cigarette papers and tubes, 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

[[Page 59]]

States, shall be in accordance with the provisions of part 44 of this 
chapter.

(72 Stat. 1418; 26 U.S.C. 5704)

                  Permanent Discontinuance of Business



Sec. 40.461  Discontinuance of operations.

    Every manufacturer of cigarette papers and tubes who desires to 
discontinue operations and close out a factory shall dispose of all 
cigarette papers and tubes on hand, in accordance with this subpart, and 
make a closing inventory and closing report, in accordance with the 
provisions of Sec. Sec. 40.434 and 40.426, respectively.

(72 Stat. 1422; 26 U.S.C. 5721, 5722)

                         Claims By Manufacturers

                                 General



Sec. 40.471  Abatement.

    A claim for abatement of the unpaid portion of the assessment of any 
tax on cigarette papers and tubes, or any liability in respect thereof, 
may be allowed to the extent that such assessment is excessive in 
amount, is assessed after the expiration of the applicable period of 
limitation, or is erroneously or illegally assessed. Any claim under 
this section shall be prepared on TTB Form 2635 (5620.8), in duplicate, 
and shall set forth the particulars under which the claim is filed. The 
original of the claim, accompanied by such evidence as is necessary to 
establish to the satisfaction of the appropriate TTB officer that the 
claim is valid, shall be filed with the appropriate TTB officer.

(68A Stat. 792, 6404)



Sec. 40.472  Allowance.

    Relief from the payment of tax on cigarette papers and tubes may be 
extended to a manufacturer by allowance of the tax where the cigarette 
papers and tubes, after removal from the factory upon determination of 
tax and prior to the payment of such tax, are lost (otherwise than by 
theft) or destroyed by fire, casualty, or act of God, while in the 
possession or ownership of the manufacturer who removed such articles, 
or are withdrawn by the manufacturer from the market. Any claim for 
allowance under this section shall be filed on TTB Form 2635 (5620.8) 
with the appropriate TTB officer, shall be executed under penalties and 
perjury and shall show the date the cigarette papers and tubes were 
removed from the factory. A claim relating to articles lost or destroyed 
shall be supported as prescribed in Sec. 40.475. In the case of a claim 
relating to cigarette papers or tubes withdrawn from the market the 
schedule prescribed in Sec. 40.476 shall be filed with the appropriate 
TTB officer. The manufacturer may not anticipate allowance of a claim by 
making the adjusting entry in a tax return pending consideration and 
action on the claim. Cigarette papers and tubes to which such a claim 
relates must be shown as removed on determination of tax in the return 
covering the period during which such articles were so removed. Upon 
action on the claim by the appropriate TTB officer a copy of TTB Form 
2635 (5620.8) will be returned to the manufacturer as notice of such 
action. This copy of TTB Form 2635 (5620.8), with the copy of any 
verified supporting schedules, shall be retained by the manufacturer. 
When such notification of allowance of the claim or any part thereof is 
received prior to the time the return covering the tax on the cigarette 
papers or tubes to which the claim relates is to be filed, the 
manufacturer may make an adjusting entry and explanatory statement in 
that tax return. Where the notice of allowance is received after the 
filing of the return and taxpayment of the cigarette papers or tubes to 
which the claim relates, the manufacturer may make an adjusting entry 
and explanatory statement in the next tax return(s) to the extent 
necessary to take credit in the amount of the allowance.

(72 Stat. 1419, as amended, 26 U.S.C. 5705)



Sec. 40.473  Credit or refund.

    The taxes paid on cigarette papers and tubes may be credited or 
refunded (without interest) to a manufacturer on proof satisfactory to 
the appropriate TTB officer that the claimant manufacturer paid the tax 
on cigarette papers and tubes lost (otherwise than

[[Page 60]]

by theft) or destroyed, by fire, casualty, or act of God, while in the 
possession or ownership of such manufacturer, or withdrawn by the 
manufacturer from the market. Any claim for credit or refund under this 
section shall be prepared on TTB Form 2635 (5620.8), in duplicate. 
Claims shall include a statement that the tax imposed on cigarette 
papers and tubes by 26 U.S.C. 7652 or Chapter 52, was paid in respect to 
the cigarette papers or tubes covered by the claim, and that the 
articles were lost, destroyed, or withdrawn from the market within 6 
months preceding the date the claim is filed. A claim for credit or 
refund relating to articles lost or destroyed shall be supported as 
prescribed in Sec. 40.475, and a claim relating to articles withdrawn 
from the market shall be accompanied by a schedule prepared and verified 
as prescribed in Sec. Sec. 40.476, and 40.477. The original and one 
copy of TTB Form 2635 (5620.8), shall be filed with the appropriate TTB 
officer. Upon action by the appropriate TTB officer on a claim for 
credit, a copy of TTB Form 2635 (5620.8) will be returned to the 
manufacturer as notification of allowance or disallowance of the claim 
or any part thereof. This copy, with the copy of any verified supporting 
schedules, shall be retained by the manufacturer. When the manufacturer 
is notified of allowance of the claim for credit or any part thereof, 
the manufacturer shall make an adjusting entry and explanatory statement 
in the next tax return(s) to the extent necessary to take credit in the 
amount of the allowance. The manufacturer may not anticipate allowance 
of a claim by taking credit on a tax return prior to consideration and 
action on such claim. The duplicate of a claim for refund or credit, 
with a copy of any verified supporting schedules, shall be retained by 
the manufacturer.

(72 Stat. 1419, as amended, 26 U.S.C. 5705)



Sec. 40.474  Remission.

    Remission of the tax liability on cigarette papers and tubes may be 
extended to the manufacturer liable for the tax where cigarette papers 
and tubes in bond are lost (other than by theft) or destroyed, by fire, 
casualty, or act of God, while in the possession or ownership of such 
manufacturer. Where cigarette papers and tubes are so lost or destroyed 
the manufacturer shall report promptly such fact, and the circumstances, 
to the appropriate TTB officer. If the manufacturer wishes to be 
relieved of the tax liability, a claim on TTB Form 2635 (5620.8), in 
duplicate, shall also be prepared, setting forth the nature, date, 
place, and extent of the loss or destruction. The original and one copy 
of the claim, accompanied by such evidence as is necessary to establish 
to the satisfaction of the appropriate TTB officer that the claim is 
valid, shall be filed with the appropriate TTB officer. Upon action on 
the claim by the appropriate TTB officer, the copy of TTB Form 2635 
(5620.8) will be returned to the manufacturer as notice of such action, 
which copy shall be retained by the manufacturer.

(72 Stat. 1419, as amended, 26 U.S.C. 5707)

                            Lost or Destroyed



Sec. 40.475  Action by claimant.

    Where cigarette papers and tubes are lost (other than by theft) or 
destroyed, by fire, casualty, or act of God, and the manufacturer 
desires to file claim under the provisions of Sec. 40.472 or Sec. 
40.473, the manufacturer shall indicate on the claim the nature, date, 
and extent of such loss or destruction. The claim shall be accompanied 
by such evidence as necessary to establish to the satisfaction of the 
appropriate TTB officer that the claim is valid.

(72 Stat. 1419; 26 U.S.C. 5705)

                       Withdrawn From the Market.



Sec. 40.476  Action by claimant.

    Where cigarette papers and tubes are withdrawn from the market and 
the manufacturer desires to file claim under the provisions of Sec. 
40.472 or Sec. 40.473, the manufacturer shall assemble the articles in 
or adjacent to a factory if they are to be retained in or received into 
such factory, or at any suitable place if they are to be destroyed. The 
manufacturer shall group the articles according to the rate of tax 
applicable thereto, and shall prepare and submit a schedule of the 
articles, on TTB Form 5200.7 in accordance with

[[Page 61]]

the instructions, on the form. All copies of the schedule shall be 
forwarded to the appropriate TTB officer.

(72 Stat. 1419; 26 U.S.C. 5705)

[T.D. ATF-384, 61 FR 54085, Oct. 17, 1996, as amended by T.D. ATF-424, 
64 FR 71932, Dec. 22, 1999]



Sec. 40.477  Action by the appropriate TTB officer.

    Upon receipt of a schedule of cigarette papers and tubes withdrawn 
from the market, the appropriate TTB officer may assign a TTB officer to 
verify the schedule and supervise disposition of the cigarette papers 
and tubes, or may authorize the manufacturer to dispose of the articles 
without supervision by so stating on the original and one copy of the 
schedule returned to the manufacturer.

(72 Stat. 1419; 26 U.S.C. 5705)



Sec. 40.478  Disposition of cigarette papers and tubes and schedule.

    When so authorized, as evidenced by the appropriate TTB officer's 
statement on the schedule, the manufacturer shall dispose of the 
cigarette papers and tubes as specified in the schedule. After the 
articles are disposed of, the manufacturer shall execute a certificate 
on both copies of the schedule received from the appropriate TTB 
officer, to show the disposition and the date of disposition of the 
articles. In connection with a claim for credit or refund, the 
manufacturer shall attach the original of the schedule to the claim for 
credit or refund, TTB Form 2635 (5620.8), filed under Sec. 40.473. When 
an appropriate TTB officer is assigned to verify the schedule and 
supervise disposition of the cigarette papers and tubes, such officer 
shall, upon completion of the assignment, execute a certificate on all 
copies of the schedule to show the disposition and the date of 
disposition of the articles. In connection with a claim for allowance, 
the officer shall return one copy of the schedule to the manufacturer 
for the record, and in connection with a claim for credit or refund, the 
officer shall return the original and one copy of the schedule to the 
manufacturer, the original of which the manufacturer shall attach to the 
claim filed under Sec. 40.473.

(72 Stat. 1419, as amended; 26 U.S.C. 26 U.S.C. 5705)



PART 41_IMPORTATION OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES--Table 

of Contents




                     Subpart A_Scope of Regulations

Sec.
41.1 Importation of tobacco products and cigarette papers and tubes.

                          Subpart B_Definitions

41.11 Meaning of terms.

                            Subpart C_General

41.21 Forms prescribed.
41.22 Retention of records.
41.23 Authority of TTB officers to enter premises.
41.24 Interference with administration.
41.25 Disposal of forfeited, condemned, and abandoned tobacco products 
          and cigarette papers and tubes.
41.26 Alternate methods or procedures.
41.27 Emergency variations from requirements.
41.28 Penalties and forfeitures.
41.29 Delegations of the Administrator.

                             Subpart D_Taxes

                                Tax Rates

41.30 Pipe tobacco and roll-your-own tobacco.
41.31 Cigar tax rates.
41.32 Cigarette tax rates.
41.33 Smokeless tobacco tax rates.
41.34 Cigarette papers.
41.35 Cigarette tubes.

              Classification of Large Cigars and Cigarettes

41.37 [Reserved]
41.38 Cigarettes.
41.39 Determination of sale price of large cigars.

                   Liability for and Payment of Taxes

41.40 Persons liable for tax.
41.41 Determination and payment of tax.

                    Exemptions from Taxes and Permits

41.50 Exemptions.

                           Assessment of Taxes

41.60 Assessment.

[[Page 62]]

                      Customs' Collection of Taxes

41.62 Customs' collection of internal revenue taxes on tobacco products 
          and cigarette papers and tubes, imported or brought into the 
          United States.
41.63 Payment of tax by electronic fund transfer.

                           Subpart E_Packages

41.71 Package.
41.72 Notice for smokeless tobacco.
41.72a Notice for pipe tobacco.
41.72b Notice for roll-your-own tobacco.
41.72c Package use-up rule.
41.73 Notice for cigars.
41.74 Notice for cigarettes.
41.75 Exemptions.

Subpart F_Tobacco Products and Cigarette Papers and Tubes, Imported Into 
                    or Returned to the United States

41.81 Taxpayment.

 Release From Customs Custody of Tobacco Products and Cigarette Papers 
            and Tubes Without Payment of Tax or Certain Duty

41.82 Restrictions on tobacco products labeled for export.
41.83 Penalties and forfeiture for products labeled or shipped for 
          export.
41.85 Release from customs custody of imported tobacco articles.
41.85a Release from customs custody of returned articles.
41.86 Procedure for release.

Subpart G_Puerto Rican Tobacco Products and Cigarette Papers and Tubes, 
                     Brought Into the United States

41.101 General.

   Prepayment of Tax in Puerto Rico on Tobacco Products and Cigarette 
                            Papers and Tubes

41.105 Prepayment of tax.
41.106 Examination and record of shipment by taxpayer.
41.107-41.108 [Reserved]

       Deferred Payment of Tax in Puerto Rico on Tobacco Products

41.109 Bond required for deferred taxpayment.
41.110 Record of tax computation and shipment by bonded manufacturer 
          under deferred taxpayment.
41.111 Agreement to pay tax.
41.112 Tax return.
41.113 Return periods.
41.114 Time for filing.
41.114a Qualification for extended deferral.
41.115 Remittance with return.
41.115a Payment of tax by electronic fund transfer.
41.116 Default.
41.117-41.118 [Reserved]
41.119 Corporate surety.
41.120 Deposit of securities in lieu of corporate surety.
41.121 Amount and account of bond.
41.122 Strengthening bond.
41.123 Superseding bond.
41.124 Extension of coverage of bond.
41.125 Approval of bond and extension of coverage of bond.
41.126 Termination of bond.
41.127 Application of surety for relief from bond.
41.128 Relief of surety from bond.
41.129 Release of pledged securities.
41.135-41.138 [Reserved]
41.139 Records.
41.140 Taxpayment in the United States.
41.141 Reports.

                          Subpart H [Reserved]

41.151-41.153 [Reserved]

                            Subpart I_Claims

                                 General

41.161 Abatement of assessment.
41.162 Losses caused by disaster occurring after September 2, 1958.
41.163 Refund of tax.

   Tobacco Products, and Cigarette Papers and Tubes Lost or Destroyed

41.165 Action by taxpayer.

   Tobacco Products and Cigarette Papers and Tubes Withdrawn From the 
                                 Market

41.170 Reduction of tobacco products to materials; TTB action.
41.171 Reduction of tobacco products to materials, action by appropriate 
          TTB officer.
41.172 Return to nontaxpaid status; action by taxpayer.
41.173 Return to nontaxpaid status; action by appropriate TTB officer.
41.174 Disposition of tobacco products and cigarette papers and tubes, 
          and schedule.

                      Subpart J_Records and Reports

41.181 Records of large cigars.
41.182 Availability of records.
41.183 [Reserved]

                  Subpart K_Tobacco Products Importers

41.190 Persons required to qualify.
41.191 Application for permit.
41.192 Transitional rule.
41.193 Corporate documents.
41.194 Articles of partnership or association.
41.195 Trade name certificate.

[[Page 63]]

41.196 Power of attorney.
41.197 Additional information.
41.198 Investigation of applicant.
41.199 Notice of contemplated disapproval.
41.200 Issuance of permit.
41.201 Duration of permit.
41.202 Renewal of permit.
41.203 Retention of permit and supporting documents.

                      Required Records and Reports

41.204 General.
41.205 Recordkeeping requirements.

               Filing and Retention of Records and Reports

41.206 Reports.
41.207 Filing.
41.208 Retention.

       Subpart L_Changes After Original Qualification of Importers

                             Changes in Name

41.220 Change in individual name.
41.221 Change in trade name.
41.222 Change in corporate name.

                    Changes in Ownership and Control

41.223 Fiduciary successor.
41.224 Transfer of ownership.
41.225 Change in officers, directors, or stockholders of a corporation.
41.226 Change in control of a corporation.

                     Changes in Location or Address

41.227 Change in location.
41.228 Change in address.

    Authority: 18 U.S.C. 2342; 26 U.S.C. 5701, 5703, 5704, 5705, 5708, 
5712, 5713, 5721-5723, 5741, 5754, 5761-5763, 6301, 6302, 6313, 6404, 
7101, 7212, 7342, 7606, 7651, 7652, 7805; 31 U.S.C. 9301, 9303, 9304, 
9306.

    Source: Redesignated by T.D. TTB-16, 69 FR 52424, Aug. 26, 2004, 
unless otherwise noted.

    Editorial Note: Nomenclature changes to part 41 (formerly part 275) 
appear at T.D. ATF-460, 66 FR 39093, July 27, 2001.



                     Subpart A_Scope of Regulations



Sec. 41.1  Importation of tobacco products and cigarette papers and tubes.

    This part contains regulations relating to tobacco products and 
cigarette papers and tubes imported into the United States from a 
foreign country or brought into the United States from Puerto Rico, the 
Virgin Islands, or a possession of the United States; the removal of 
tobacco products from a customs bonded manufacturing warehouse, class 6; 
restrictions on the importation of previously exported tobacco products 
and cigarette papers and tubes; and the release of tobacco products and 
cigarette papers and tubes from customs custody, without payment of 
internal revenue tax or customs duty attributable to the internal 
revenue tax.

[T.D. ATF-421, 64 FR 71924, Dec. 22, 1999]



                          Subpart B_Definitions



Sec. 41.11  Meaning of terms.

    When used in this part and in forms prescribed under this part, the 
following terms shall have the meanings given in this section, unless 
the context clearly indicates otherwise. Words in the plural form shall 
include the singular, and vice versa, and words indicating the masculine 
gender shall include the feminine. The terms ``includes'' and 
``including'' do not exclude things not listed which are in the same 
general class.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury, Washington, DC.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.41, Delegation of the Administrator's Authorities in 27 CFR Part 
41, Importation of Tobacco Products and Cigarette Papers and Tubes.
    Bank. Any commercial bank.
    Banking day. Any day during which a bank is open to the public for 
carrying on substantially all its banking functions.
    Business day. Any day, other than a Saturday, Sunday, or a legal 
holiday. (The term legal holiday includes all holidays in the District 
of Columbia and, in the case of bonded manufacturers in Puerto Rico, all 
legal holidays in the Commonwealth of Puerto Rico.)
    Bonded manufacturer. A manufacturer of tobacco products in Puerto 
Rico who has an approved bond, in accordance with the provisions of this 
part, authorizing him to defer the payment in

[[Page 64]]

Puerto Rico on the internal revenue tax imposed on such products by 26 
U.S.C. 7652(a) as provided in this part.
    CFR. The Code of Federal Regulations.
    Chewing Tobacco. Any leaf tobacco that is not intended to be smoked.
    Cigar. Any roll of tobacco wrapped in leaf tobacco or in any 
substance containing tobacco (other than any roll of tobacco which is a 
cigarette within the meaning of paragraph (2) of the definition for 
cigarette).
    Cigarette. (1) Any roll of tobacco wrapped in paper or in any 
substance not containing tobacco, and
    (2) Any roll of tobacco wrapped in any substance containing tobacco 
which, because of its appearance, the type of tobacco used in the 
filler, or its packaging and labeling, is likely to be offered to, or 
purchased by, consumers as a cigarette described in paragraph (1) of 
this definition.
    Cigarette paper. Paper, or any other material except tobacco, 
prepared for use as a cigarette wrapper.
    Cigarette tube. Cigarette paper made into a hollow cylinder for use 
in making cigarettes.
    Commercial bank. A bank, whether or not a member of the Federal 
Reserve System, which has access to the Federal Reserve Communications 
System (FRCS) or Fedwire. The ``FRCS'' or ``Fedwire'' is a 
communications network that allows Federal Reserve System member banks 
to effect a transfer of funds for their customers (or other commercial 
banks) to the Treasury Account at the Federal Reserve Bank in New York.
    Computation or computed. When used with respect to the tax on 
tobacco products of Puerto Rican manufacture, computation or computed 
shall mean that the bonded manufacturer has ascertained the quantity and 
kind (small cigars, large cigars, small cigarettes, large cigarettes, 
chewing tobacco, snuff, pipe tobacco, or roll-your-own tobacco) of 
tobacco products and the sale price of large cigars being shipped to the 
United States; that adequate bond has been posted to cover the payment, 
in Puerto Rico, of the tax on such products to be deferred under subpart 
G of this part; that the tax imposed on such products by 26 U.S.C. 
7652(a) has been calculated; that the bonded manufacturer has executed 
an agreement to pay the internal revenue tax which will become due with 
respect to such products, as provided in this part; and that a TTB 
officer has verified and executed a certification of such calculation.
    Customs officer. Any officer of the Customs Service or any 
commissioned, warrant, or petty officer of the Coast Guard, or any agent 
or other person authorized by law or designated by the Secretary of the 
Treasury to perform any duties of an officer of the Customs Service.
    Determine. To establish enough information about taxable products at 
the time of removal to calculate the tax, specifically the quantity 
(pounds or number) and kind (for example, cigarettes, snuff, paper 
tubes). Where the tax rate depends on additional information (such as 
number of cigarette papers to a set before 1/1/2000 or sale price of 
large cigars), that information must also be established as part of tax 
determination.
    Electronic fund transfer or EFT. Any transfer of funds effected by a 
bonded manufacturer's commercial bank, either directly or through a 
correspondent banking relationship, via the Federal Reserve 
Communications System (FRCS) or Fedwire to the Treasury Account at the 
Federal Reserve Bank of New York.
    Export warehouse. 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.
    Export warehouse proprietor. Any person who operates an export 
warehouse.
    Factory. The premises of a manufacturer of tobacco products or 
cigarette papers or tubes in which he carries on such business.
    Fiscal year. The period which begins October 1 and ends on the 
following September 30.
    HTS. The Harmonized Tariff Schedule of the United States, as 
published by

[[Page 65]]

the United States International Trade Commission.
    Importer. Any person in the United States to whom non-taxpaid 
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 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.
    Large cigarettes. Cigarettes weighing more than three pounds per 
thousand.
    Large cigars. Cigars weighing more than three pounds per thousand.
    Manufacturer of cigarette papers and tubes. Any person who 
manufactures cigarette paper, or makes up cigarette paper into tubes, 
except for his own personal use or consumption.
    Manufacturer of tobacco products. Any person who manufactures 
cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own 
tobacco but does not include:
    (1) A person who produces tobacco products solely for that person's 
own consumption or use; or
    (2) A proprietor of a Customs bonded manufacturing warehouse with 
respect to the operation of such warehouse.
    Package. The container in which tobacco products or cigarette papers 
or tubes are put up by the manufacturer or the importer for delivery to 
the consumer.
    Person. An individual, partnership, association, company, 
corporation, estate, or trust.
    Pipe tobacco. Any tobacco which because of its appearance, type, 
packaging, or labeling, is suitable for use and likely to be offered to, 
or purchased by, consumers as tobacco to be smoked in a pipe.
    Port Director of Customs. The director of any port or port of entry 
as defined in 19 CFR 101.1. A list of ports is set forth in 19 CFR 
101.3.
    Records. Statements, declarations, books, papers, correspondence, 
accounts, technical data, automated record storage devices (e.g., 
magnetic discs and tapes), computer programs necessary to retrieve 
information in a usable form, and other documents that:
    (1) Pertain to any importation of tobacco products or cigarette 
papers or tubes, or to the information contained in the documents 
required by law or regulation under the Tariff Act of 1930, as amended, 
in connection with the importation or shipment into the United states 
from Puerto Rico of merchandise; and
    (2) Are of the type normally kept in the ordinary course of 
business; and
    (3) Are sufficiently detailed to:
    (i) Establish the right to make the importation or shipment into the 
United States from Puerto Rico;
    (ii) Establish the correctness of any importation or shipment into 
the United States from Puerto Rico;
    (iii) Determine the liability of any person for duties and taxes 
due, or which may be due, to the United States;
    (iv) Determine the liability of any person for fines, penalties, and 
forfeitures; and
    (v) Determine whether the person has complied with the laws and 
regulations administered by TTB and the Customs Service, and any other 
documents required under laws or regulations administered by TTB and the 
Customs Service.
    Relanding. Any tobacco products, cigarette papers or tubes, which 
have been labeled or shipped for exportation (including to Puerto Rico) 
as prescribed in this chapter, previously exported and returned within 
the jurisdiction of the United States.
    Removal or Remove. The removal of tobacco products or cigarette 
papers or tubes from the factory or release from internal revenue bond 
under 26 U.S.C. 5704, or release from customs custody, including 
conditional release in accordance with 19 CFR 141.0a(i), and shall also 
include the smuggling or other unlawful importation of such articles 
into the United States.
    Roll-your-own tobacco. Any tobacco which, because of its appearance, 
type, packaging, or labeling, is suitable for use and likely to be 
offered to, or purchased by, consumers as tobacco for making cigarettes.

[[Page 66]]

    Sale price. The price for which large cigars are sold by the 
importer or manufacturer, determined in accordance with Sec. 41.39 and 
used for computation of the excise tax.
    Small cigarettes. Cigarettes weighing not more than three pounds per 
thousand.
    Small cigars. Cigars weighing not more than three pounds per 
thousand.
    Smokeless tobacco. Any chewing tobacco or snuff.
    Snuff. Any finely cut, ground, or powdered tobacco that is not 
intended to be smoked.
    This chapter. Chapter I, title 27, Code of Federal Regulations.
    Tobacco products. Cigars, cigarettes, smokeless tobacco, pipe 
tobacco, and roll-your-own tobacco.
    Treasury Account. The Department of the Treasury's General Account 
at the Federal Reserve Bank of New York.
    United States. When used in a geographical sense shall include only 
the States and the District of Columbia.
    U.S.C. The United States Code.

(Aug. 16, 1954, ch. 736, 68A Stat. 775, as amended (26 U.S.C. 6301); 
June 29, 1956, ch. 462, 70 Stat. 391 (26 U.S.C. 6301))

[T.D. ATF-48, 43 FR 13554, Mar. 31, 1978; 44 FR 55855, Sept. 28, 1979, 
as amended by T.D. ATF-77, 46 FR 3009, Jan. 13, 1981; T.D. ATF-232, 51 
FR 28084, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-251, 52 FR 19340, May 22, 1987; T.D. ATF-284, 54 FR 12190, Mar 24, 
1989; T.D. ATF-289, 54 FR 48840, Nov. 27, 1989; T.D. ATF-421, 64 FR 
71924, Dec. 22, 1999; T.D. ATF-424, 64 FR 71932, Dec. 22, 1999; T.D. 
ATF-420, 64 FR 71942, Dec. 22, 1999; T.D. ATF-422, 64 FR 71948, Dec. 22, 
1999; T.D. ATF-422c, 65 FR 63545, Oct. 24, 2000; T.D. ATF-444, 66 FR 
13850, Mar. 8, 2001; T.D. ATF-465, 66 FR 45618, Aug. 29, 2001; T.D. ATF-
467, 66 FR 49532, Sept. 28, 2001; T.D. TTB-16, 69 FR 52424, Aug. 26, 
2004]



                            Subpart C_General



Sec. 41.21  Forms prescribed.

    (a) The Administrator is authorized to prescribe all forms required 
by this part. All of the information called for in each form shall be 
furnished as indicated by the headings on the form and the instructions 
on or pertaining to the form. In addition, information called for in 
each form shall be furnished as required by this part. When a return, 
form, claim, or other document called for under this part is required by 
this part, or by the document itself, to be executed under penalties of 
perjury, it shall be executed under penalties of perjury.
    (b) Forms prescribed by this part are available for printing through 
the TTB Web site (http://www.ttb.gov) or by mailing a request to the 
Alcohol and Tobacco Tax and Trade Bureau, National Revenue Center, 550 
Main Street, Room 1516, Cincinnati, OH 45202.

(5 U.S.C. 552(a) (80 Stat. 383, as amended)

[T.D. ATF-92, 46 FR 46922, Sept. 23, 1981, as amended by T.D. ATF-232, 
51 FR 28084, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-372, 61 FR 20725, May 8, 1996; T.D. TTB-16, 69 FR 52424, Aug. 26, 
2004]



Sec. 41.22  Retention of records.

    All records required to be kept under this part, including copies of 
claims and schedules, authorizations, notices of release, reports, and 
returns, shall be retained for three years following the close of the 
year in which filed or made, or in the case of an authorization, for 
three years following the close of the calendar year in which the 
operation under such authorization is concluded. Such records shall be 
made available for inspection by any appropriate TTB officer upon his 
request.

(72 Stat. 1423; 26 U.S.C. 5741)

[26 FR 8189, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and further redesignated and amended by T.D. TTB-16, 69 FR 52424, Aug. 
26, 2004]



Sec. 41.23  Authority of TTB officers to enter premises.

    Any appropriate TTB officer may enter in the daytime any premises 
where tobacco products or cigarette papers or tubes are produced or kept 
so far as it may be necessary for the purpose of examining such 
articles. When such premises are open at night, any appropriate TTB 
officer may enter them, while so open, in the performance of his 
official duties. The owner of such premises, or person having the 
superintendence of the same, who refuses to admit any appropriate TTB 
officer or permit him to examine such articles

[[Page 67]]

shall be liable to the penalties prescribed by law for the offense.

(68A Stat. 872, 903; 26 U.S.C. 7342, 7606)

[T.D. 6871, 31 FR 40, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28084, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, Aug. 26, 2004]



Sec. 41.24  Interference with administration.

    Whoever, corruptly or by force or threats of force, endeavors to 
hinder or obstruct the administration of this part, or endeavors to 
intimidate or impede any appropriate TTB officer acting in his official 
capacity, or forcibly rescues or attempts to rescue or causes to be 
rescued any property, after it has been duly seized for forfeiture to 
the United States in connection with a violation of the internal revenue 
laws, shall be liable to the penalties prescribed by law.

(68A Stat. 855; 26 U.S.C. 7212)

[26 FR 8189, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and further redesignated and amended by T.D. TTB-16, 69 FR 52424, Aug. 
26, 2004]



Sec. 41.25  Disposal of forfeited, condemned, and abandoned tobacco products 

and cigarette papers and tubes.

    When any Federal, State, or local officer having custody of 
forfeited, condemned, or abandoned tobacco products or cigarette papers 
or tubes, upon which the Federal tax has not been paid, is of the 
opinion that the sale thereof will not bring a price equal to the tax 
due and payable thereon, and the expenses incident to the sale thereof, 
he shall not sell, nor cause to be sold, such articles for consumption 
in the United States. Where the articles are not sold, the officer may 
deliver them to a Federal or State hospital or institution (if they are 
fit for consumption) or cause their destruction by burning completely or 
by rendering them unfit for consumption. Where such articles are sold, 
they shall not be released by the officer having custody thereof until 
they are properly packaged and taxpaid, which tax shall be considered as 
a portion of the sales price. Except where the tax is to be paid to the 
Port Directors of Customs or other authorized customs officer in 
accordance with Customs regulations (19 CFR part 127) on sales of 
articles by customs officers, the payment of tax on such articles must 
be evidenced by presentation, to the officer having custody of the 
articles, of a receipt from the appropriate TTB officer showing such 
payment. In the case of such articles held by or for the Federal 
Government, the sale thereof shall be subject to the applicable 
provisions of the Regulations of the General Services Administration, 
Title 1, Personal Property Management.

(68A Stat. 872, 903; 26 U.S.C. 7342, 7606)

[T.D. 6871, 31 FR 40, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28084, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-422, 64 FR 71948, Dec. 22, 
1999. Redesignated and amended by T.D. TTB-16, 69 FR 52424, Aug. 26, 
2004]



Sec. 41.26  Alternate methods or procedures.

    An importer, on specific approval by the appropriate TTB officer as 
provided in this section, may use an alternate method or procedure in 
lieu of a method or procedure specifically prescribed in this part. The 
appropriate TTB officer may approve an alternate method or procedure, 
subject to stated conditions, when he finds that--
    (a) Good cause has been shown for the use of the alternate method or 
procedure,
    (b) The alternate method or procedure is within the purpose of, and 
consistent with the effect intended by, the specifically prescribed 
method or procedure, and affords equivalent security to the revenue, and
    (c) The alternate method of procedure will not be contrary to any 
provision of law, and will not result in an increase in cost to the 
Government or hinder the effective administration of this part.

No alternate method or procedure relating to the giving of any bond or 
to the assessment, payment, or collection of tax, shall be authorized 
under this section. When an importer desires to

[[Page 68]]

employ an alternate method or procedure, he shall submit a written 
application to do so, in triplicate, to the appropriate TTB officer. The 
application shall specifically describe the proposed alternate method or 
procedure, and shall set forth the reasons therefor. Alternate methods 
or procedures shall not be employed until the application has been 
approved by the appropriate TTB officer. The importer shall, during the 
period of authorization of an alternate method or procedure, comply with 
the terms of the approved application. Authorization for any alternate 
method or procedure may be withdrawn whenever in the judgment of the 
appropriate TTB officer the revenue is jeopardized or the effective 
administration of this part is hindered. The importer shall retain, as 
part of his records, any authorization of the appropriate TTB officer 
under this section.

[26 FR 8190, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and further redesignated and amended by T.D. TTB-16, 69 FR 52424, Aug. 
26, 2004]



Sec. 41.27  Emergency variations from requirements.

    The appropriate TTB officer may approve methods of operation other 
than as specified in this part, where he finds that an emergency exists 
and the proposed variations from the specified requirements are 
necessary, and the proposed variations--
    (a) Will afford the security and protection to the revenue intended 
by the prescribed specifications,
    (b) Will not hinder the effective administration of this part, and
    (c) Will not be contrary to any provision of law.

Variations from requirements granted under this section are conditioned 
on compliance with the procedures, conditions, and limitations set forth 
in the approval of the application. Failure to comply in good faith and 
with such procedures, conditions, and limitations shall automatically 
terminate the authority for such variations and the importer thereupon 
shall fully comply with the prescribed requirements of regulations from 
which the variations were authorized. Authority for any variations may 
be withdrawn whenever in the judgment of the appropriate TTB officer the 
revenue is jeopardized or the effective administration of this part is 
hindered by the continuation of such variation. Where an importer 
desires to employ such variation, he shall submit a written application 
to do so, in triplicate, to the appropriate TTB officer. The application 
shall describe the proposed variations and set forth the reasons 
therefor. Variations shall not be employed until the application has 
been approved. The importer shall retain, as part of his records, any 
authorization of the appropriate TTB officer under this section.

[26 FR 8190, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and further redesignated and amended by T.D. TTB-16, 69 FR 52424, Aug. 
26, 2004]



Sec. 41.28  Penalties and forfeitures.

    Anyone who fails to comply with the provisions of this part becomes 
liable to the civil and criminal penalties, and forfeitures, provided by 
law.

(72 Stat. 1425, 1426; 26 U.S.C. 5761, 5762, 5763)

[26 FR 8190, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975]



Sec. 41.29  Delegations of the Administrator.

    The regulatory authorities of the Administrator contained in this 
part are delegated to appropriate TTB officers. These TTB officers are 
specified in TTB Order 1135.41, Delegation of the Administrator's 
Authorities in 27 CFR Part 41, Importation of Tobacco Products and 
Cigarette Papers and Tubes. You may obtain a copy of this order by 
accessing the TTB Web site (http://www.ttb.gov) or by mailing a request 
to the Alcohol and Tobacco Tax and Trade Bureau, National Revenue 
Center, 550 Main Street, Room 1516, Cincinnati, OH 45202.

[T.D. TTB-16, 69 FR 52424, Aug. 26, 2004]



                             Subpart D_Taxes

                                Tax Rates



Sec. 41.30  Pipe tobacco and roll-your-own tobacco.

    Pipe tobacco and roll-your-own tobacco are taxed at the following 
rates under 26 U.S.C. 5701(f) and (g), respectively:

[[Page 69]]



----------------------------------------------------------------------------------------------------------------
                                                  Tax rate per pound \1\ for removals during the years
                Product                -------------------------------------------------------------------------
                                             1993 to  1999            2000 and  2001          2002 and  after
----------------------------------------------------------------------------------------------------------------
Pipe tobacco..........................  $0.675                   $0.9567                  $1.0969
Roll-your-own tobacco.................  No tax                   0.9567                   1.0969
----------------------------------------------------------------------------------------------------------------
\1\ Prorate tax for fractions of a pound.


[T.D. ATF-420, 64 FR 71942, Dec. 22, 1999]



Sec. 41.31  Cigar tax rates.

    (a) Cigars are taxed at the following rates under 26 U.S.C. 5701(a):

----------------------------------------------------------------------------------------------------------------
                                                         Tax rate for removals during the years
                Product                -------------------------------------------------------------------------
                                             1993 to  1999            2000 and  2001          2002 and  after
----------------------------------------------------------------------------------------------------------------
Small cigars (per thousand)...........  $1.125                   $1.594                   $1.828
Large cigars \1\
    percentage of sale price..........  12.75%                   18.063%                  20.719%
    but not to exceed per thousand....  $30                      $42.50                   $48.75
----------------------------------------------------------------------------------------------------------------
\1\ For large cigars, the percentage tax rate applies when the sale price is $235.294 per thousand or less, and
  the flat tax rate applies when the sale price is more than $235.294.

    (b) See Sec. 41.39 of this part for rules concerning determination 
of sale price of large cigars.
    (c) Cigars not exempt from tax under 26 U.S.C. chapter 52 and the 
provisions of this part which are removed but not intended for sale 
shall be taxed at the same rate as similar cigars removed for sale.

[T.D. ATF-420, 64 FR 71942, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.32  Cigarette tax rates.

    Cigarettes are taxed at the following rates under 26 U.S.C. 5701(b):

----------------------------------------------------------------------------------------------------------------
                                                   Tax rate per thousand for removals during the years
                Product                -------------------------------------------------------------------------
                                             1993 to  1999            2000 and  2001          2002 and  after
----------------------------------------------------------------------------------------------------------------
Small cigarettes......................  $12                      $17                      $19.50
Large cigarettes up to 6\1/2\ long.
Large cigarettes over 6\1/2\ long.                                       fraction thereof of the length of each as one cigarette.
----------------------------------------------------------------------------------------------------------------


[T.D. ATF-420, 64 FR 71943, Dec. 22, 1999]



Sec. 41.33  Smokeless tobacco tax rates.

    Smokeless tobacco products are taxed at the following rates under 26 
U.S.C. 5701(e):

------------------------------------------------------------------------
                                    Tax rate per pound \1\ for removals
                                              during the years
             Product              --------------------------------------
                                     1993 to      2000 or      2002 and
                                       1999         2001        after
------------------------------------------------------------------------
Snuff............................        $0.36        $0.51       $0.585

[[Page 70]]

 
Chewing tobacco..................        $0.12        $0.17       $0.195
------------------------------------------------------------------------
\1\ Prorate tax for fractions of a pound.


[T.D. ATF-420, 64 FR 71943, Dec. 22, 1999]



Sec. 41.34  Cigarette papers.

    Cigarette papers are taxed at the following rates under 26 U.S.C. 
5701(c):

------------------------------------------------------------------------
                                    Tax rate for each 50 papers \1\ for
                                         removals during the years
             Product              --------------------------------------
                                     1993 to      2000 or      2002 and
                                     1999 \2\       2001        after
------------------------------------------------------------------------
Cigarette papers up to 6\1/2\ long....................
Cigarette papers over 6\1/2\ long....................   Use rates above, but count each 2\3/
                                     4\ inches, or fraction thereof, of
                                    the length of each as one cigarette
                                                   paper.
------------------------------------------------------------------------
\1\ Tax rate for less than 50 papers is the same. The tax is not
  prorated.
\2\ Before January 1, 2000, books or sets containing 25 papers or less
  were not taxable. On and after January 1, 2000, all cigarette papers
  are taxable.


[T.D. ATF-420, 64 FR 71943, Dec. 22, 1999]



Sec. 41.35  Cigarette tubes.

    Cigarette tubes are taxed at the following rates under 26 U.S.C. 
5701(d):

------------------------------------------------------------------------
                                     Tax rate for each 50 tubes \1\ for
                                         removals during the years
             Product              --------------------------------------
                                     1993 to      2000 and     2002 and
                                       1999         2001        after
------------------------------------------------------------------------
Cigarette tubes up to 6\1/2\ long....................
Cigarette tubes over 6\1/2\ long....................   Use rates above, but count each 2\3/
                                     4\ inches, or fraction thereof, of
                                    the length of each as one cigarette
                                                   tube.
------------------------------------------------------------------------
\1\ Tax rate for less than 50 tubes is the same. The tax is not
  prorated.


[T.D. ATF-420, 64 FR 71943, Dec. 22, 1999]

              Classification of Large Cigars and Cigarettes



Sec. 41.37  [Reserved]



Sec. 41.38  Cigarettes.

    For internal revenue tax purposes, small cigarettes are designated 
Class A and large cigarettes are designated Class B.

(72 Stat. 1414; 26 U.S.C. 5701)

[26 FR 8191, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975]



Sec. 41.39  Determination of sale price of large cigars.

    The tax imposed on large cigars is computed based on the sale price 
(the price for which the large cigars are sold by the importer or 
manufacturer). In addition to money, goods or services exchanged for 
cigars may be considered as part of the sale price. See Sec. 40.22(b) 
of

[[Page 71]]

this chapter for information on determining the sale price in special 
cases.

[T.D. ATF-420, 64 FR 71944, Dec. 22, 1999; T.D. ATF-422, 64 FR 71948, 
Dec. 22, 1999; T.D. ATF-422a, 65 FR 15058, Mar. 31, 2000; T.D. ATF-460, 
66 FR 39093, July 27, 2001]

                   Liability for and Payment of Taxes



Sec. 41.40  Persons liable for tax.

    The importer of tobacco products or cigarette papers and tubes will 
be liable for the internal revenue taxes imposed thereon by 26 U.S.C. 
5701 or 7652: Provided, That tobacco products or cigarette papers or 
tubes (other than those previously exported and returned) imported or 
brought into the United States, may be released from customs custody 
without payment of tax, for delivery to the proprietor of an export 
warehouse, to a manufacturer of tobacco products, or to a manufacturer 
of cigarette papers or tubes (except for tobacco products), if such 
articles are not put up in packages (see Sec. 41.11). Under these 
circumstances the transferee will become liable for the internal revenue 
tax on such articles upon release from customs custody and the importer 
will thereupon be relieved of the liability for such tax. If the 
transferee is also the importer, then the importer will not be relieved 
of the liability for such tax.

(Aug. 16, 1954, Chapter 736, 68A Stat. 907, as amended (26 U.S.C. 7652); 
sec. 201, Pub. L. 85-859, Stat. 1417, as amended (26 U.S.C. 5703))

[T.D. ATF-422, 64 FR 71948, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.41  Determination and payment of tax.

    Tobacco products and cigarette papers and tubes, imported or brought 
into the United States, on which internal revenue taxes are due and 
payable, must not be released from customs custody until such taxes have 
been determined and paid.

(68A Stat. 907, as amended, 72 Stat. 1417; 26 U.S.C. 7652, 5703)

[T.D. ATF-422, 64 FR 71949, Dec. 22, 1999]

                    Exemptions From Taxes and Permits



Sec. 41.50  Exemptions.

    The Harmonized Tariff Schedule of the United States (19 U.S.C. 1202) 
and Customs Regulations, 19 CFR, chapter I, provide for certain 
exemptions from internal revenue taxes with respect to tobacco products 
and cigarette papers and tubes imported into the United States. These 
exemptions include, but are not limited to, certain importations in 
passengers' baggage, for use of crew members, and by foreign officials. 
Those persons importing tobacco products and cigarette papers or tubes 
as described in this section are not required to obtain a permit.

[T.D. 6871, 31 FR 41, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28084, Aug. 5, 1986; T.D. 
ATF-243, 52 FR 43194, Dec. 1, 1986; T.D. ATF-284, 54 FR 12190, Mar. 24, 
1989; T.D. ATF-422, 64 FR 71949, Dec. 22, 1999]

                           Assessment of Taxes



Sec. 41.60  Assessment.

    Whenever any person required by law to pay internal revenue tax on 
tobacco products or cigarette papers or tubes fails to pay such tax, the 
tax shall be ascertained and assessed against such person, subject to 
the limitations prescribed in 26 U.S.C. 6501. 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 be made until and after 
notice has been afforded such person to show cause against assessment. 
The person will be allowed 45 days from the date of such notice to show 
cause, in writing, against such assessment.

(72 Stat. 1417; 26 U.S.C. 5703)

[T.D. 6871, 31 FR 41, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28084, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986]

[[Page 72]]

                      Customs' Collection of Taxes



Sec. 41.62  Customs' collection of internal revenue taxes on tobacco products 

and cigarette papers and tubes, imported or brought into the United States.

    Internal revenue taxes on tobacco products and cigarette papers and 
tubes, imported or brought into the United States, which are to be paid 
to the Port Director of Customs or other authorized customs employee, in 
accordance with this part, must be collected, accounted for, and 
deposited as internal revenue collections by the Port Director of 
Customs, in accordance with customs procedures and regulations.

[T.D. ATF-422, 64 FR 71949, Dec. 22, 1999]



Sec. 41.63  Payment of tax by electronic fund transfer.

    (a) Each importer who was liable, during a calendar year, for a 
gross amount equal to or exceeding five million dollars in taxes on 
cigars, cigarettes, cigarette papers, and cigarette tubes combining tax 
liabilities incurred under this part and part 40 of this chapter, shall 
use a commercial bank in making payment by electronic fund transfer 
(EFT) of such taxes during the succeeding calendar year. Payment of such 
taxes by cash, check, or money order is not authorized for an importer 
who is required, by this section, to make remittances by EFT. For 
purposes of this section, the dollar amount of tax liability is defined 
as the gross tax liability on all taxable withdrawals and importations 
(including similar products brought into the United States from Puerto 
Rico or the Virgin Islands) during the calendar year, without regard to 
any drawbacks, credits, or refunds, for all premises from which such 
activities are conducted by the taxpayer.
    (b) For the purposes of this section, a taxpayer includes a 
controlled group of corporations, as defined in 26 U.S.C. 1563, and 
implementing regulations in 26 CFR 1.1563-1 through 1.1563-4, except 
that the words ``at least 80 percent'' shall be replaced by the words 
``more than 50 percent'' in each place it appears in subsection (a) of 
26 U.S.C. 1563, as well as in the implementing regulations. Also, the 
rules for a ``controlled group of corporations'' apply in a similar 
fashion to groups which include partnerships and/or sole 
proprietorships. If one entity maintains more than 50% control over a 
group consisting of corporations and one, or more, partnerships and/or 
sole proprietorships, all of the members of the controlled group are one 
taxpayer for the purpose of determining who is required to make 
remittances by EFT.
    (c) For the purposes of this section, (1) electronic fund transfer 
or EFT means any transfer of funds, other than a transaction originated 
by check, draft, or similar paper instrument, which is initiated through 
an electronic terminal, telephonic instrument, or computer of magnetic 
tape, so as to order, instruct, or authorize a financial institution to 
either debit or credit an account, in accordance with procedures 
established by the U.S. Customs Service, and (2) electronic fund 
transfer or EFT does not have the meaning defined in Sec. 41.11 for use 
elswhere in this part.
    (d) An importer who is required by this section to make remittances 
by EFT, shall make the EFT remittance in accordance with the 
requirements of the U.S. Customs Service.

(Act of August 16, 1954, 68A Stat. 775, as amended (26 U.S.C. 6302); 
Sec. 202, Pub. L. 85-859, 72 Stat. 1417, as amended (26 U.S.C. 5703))

[T.D. ATF-245, 52 FR 534, Jan. 7, 1987, as amended by T.D. ATF-384, 61 
FR 54095, Oct. 17, 1996. Redesignated and amended by T.D. TTB-16, 69 FR 
52424, 52425, Aug. 26, 2004]



                           Subpart E_Packages



Sec. 41.71  Package.

    All tobacco products, cigarette papers and tubes, except as provided 
in Sec. 41.75, shall, before removal subject to internal revenue tax, 
be put up in packages which shall be of such construction as will 
securely contain the articles therein and maintain the notice thereon as 
required by this subpart. No package of tobacco products or cigarette 
papers or tubes shall have contained in, attached to, or stamped, 
marked, written, or printed thereon (a) any certificate, coupon, or 
other device purporting to be or to represent a ticket, chance, share, 
or an interest in, or

[[Page 73]]

dependent on, the event of a lottery, (b) any indecent or immoral 
picture, print, or representation, or (c) any statement or indication 
that United States tax has been paid.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 41, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28084, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.72  Notice for smokeless tobacco.

    (a) Product designation. Every package of chewing tobacco or snuff 
shall, before removal subject to internal revenue tax, have adequately 
imprinted thereon, or on a label securely affixed thereto, the 
designation ``chewing tobacco'' or ``snuff.'' As an alternative, 
packages of chewing tobacco may be designated ``Tax Class C,'' and 
packages of snuff may be designated ``Tax Class M.''
    (b) Product weight. Every package of chewing tobacco or snuff shall, 
before removal subject to internal revenue tax, have adequately 
imprinted thereon, or on a label securely affixed thereto, a clear 
statement of the actual pounds and ounces of the product contained 
therein. As an alternative, the shipping cases containing packages of 
chewing tobacco or snuff may, before removal, have adequately imprinted 
thereon, or on a label securely affixed thereto, a clear statement, in 
pounds and ounces, of the total weight of the product, the tax class of 
the product, and the total number of the packages of product contained 
therein.

(Approved by the Office of Management and Budget under control number 
1512-0502)

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-243, 51 FR 43194, Dec. 1, 1986, as amended by T.D. ATF-446, 66 
FR 16602, Mar. 27, 2001]



Sec. 41.72a  Notice for pipe tobacco.

    (a) Product designation. Every package of pipe tobacco shall, before 
removal subject to internal revenue tax, have adequately imprinted 
thereon, or on a label securely fixed thereto, the designation ``pipe 
tobacco.'' As an alternative, packages of pipe tobacco may be designated 
``Tax Class L.''
    (b) Product weight. Every package of pipe tobacco shall, before 
removal subject to internal revenue tax, have adequately imprinted 
thereon, or on a label securely affixed thereto, a clear statement of 
the actual pounds and ounces of the product contained therein.

[T.D. ATF-289, 54 FR 48841, Nov. 27, 1989. Redesignated by T.D. ATF-381, 
61 FR 37004, July 16, 1996]



Sec. 41.72b  Notice for roll-your-own tobacco.

    (a) Product designation. Before removal subject to tax, roll-your-
own tobacco must have adequately imprinted on, or on a label securely 
affixed to, the package, the designation ``roll-your-own tobacco'' or 
``cigarette tobacco'' or ``Tax Class J.''
    (b) Product weight. Before removal subject to tax, roll-your-own 
tobacco must have a clear statement of the actual weight in pounds and 
ounces of the product in the package. This statement must be adequately 
imprinted on, or on a label securely affixed to, the package.

(Approved by the Office of Management and Budget under control number 
1512-0502)

[T.D. ATF-429, 65 FR 57547, Sept. 25, 2000]



Sec. 41.72c  Package use-up rule.

    (a) An importer must have used such packaging for roll-your-own 
tobacco before January 1, 2000.
    (b) An importer of roll-your-own tobacco may continue to place roll-
your-own tobacco in packages that do not meet the marking requirements 
of Sec. 41.72b(b) until April 1, 2000.
    (c) An importer of roll-your-own tobacco may continue to place roll-
your-own tobacco in packages that do not meet the requirements of Sec. 
41.72b(a) until October 1, 2000.

[T.D. ATF-427, 65 FR 40051, June 29, 2000. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.73  Notice for cigars.

    Before removal subject to internal revenue tax, every package of 
cigars, except as provided in Sec. 41.75, shall have

[[Page 74]]

adequately imprinted on it, or on a label securely affixed to it--
    (a) The designation ``cigars'';
    (b) The quantity of cigars contained in the package; and
    (c) For small cigars, the classification of the product for tax 
purposes (i.e., either ``small'' or ``little'').

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-80, 46 FR 18310, Mar. 24, 1981. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.74  Notice for cigarettes.

    Every package of cigarettes, except as provided in Sec. 41.75, 
shall, before removal subject to internal revenue tax, have adequately 
imprinted thereon, or on a label securely affixed thereto, the 
designation ``cigarettes'', the quantity of such product contained 
therein; and the classification for tax purposes, i.e., for small 
cigarettes either ``small'' or ``Class A'', and for large cigarettes, 
either ``large'' or ``Class B''.

(72 Stat. 1422; 26 U.S.C. 5723)

[26 FR 8192, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
further redesignated and amended by T.D. TTB-16, 69 FR 52424, 52425, 
Aug. 26, 2004]



Sec. 41.75  Exemptions.

    The provisions of this subpart requiring that tobacco products and 
cigarette papers and tubes be put up in packages and that proper notice 
be placed on such packages shall not apply to imported tobacco products 
and cigarette papers and tubes authorized to be released from customs 
custody, without payment of internal revenue tax, pursuant to Sec. 
41.50, and shall not apply to tobacco products imported in passengers' 
baggage, or by mail where the value does not exceed $250, where such 
products are solely for the personal consumption of the importer or for 
disposition as his bona fide gift.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 41, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-232, 51 FR 28085, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Subpart F_Tobacco Products and Cigarette Papers and Tubes, Imported Into 
                    or Returned to the United States



Sec. 41.81  Taxpayment.

    (a) General. The provisions of this section apply to tobacco 
products, cigarette papers, and cigarette tubes upon which internal 
revenue tax is payable, and which are imported into the United States 
from a foreign country or are brought into the United States from Puerto 
Rico, the Virgin Islands, or a possession of the United States. For 
provisions relating to the importation of previously exported tobacco 
products and cigarette papers and tubes, see section 41.82.
    (b) Method of payment. Except in the case of articles imported or 
brought into the United States under Sec. Sec. 41.85 and 41.85a, the 
internal revenue tax must be determined and paid to the Port Director of 
Customs before the tobacco products, cigarette papers, or cigarette 
tubes are removed from customs custody. The tax must be paid on the 
basis of a return on the customs form or by authorized electronic 
transmission by which the tobacco products, cigarette papers, or 
cigarette tubes are duty and tax paid to Customs.
    (c) Required information. When tobacco products, cigarette papers, 
or cigarette tubes enter the United States for consumption, or when they 
are removed for consumption, the importer must include on the customs 
form or authorized electronic transmission the following internal 
revenue tax information.
    (1) For cigarette papers: For cigarette papers imported on or after 
January 1, 2000, the importer will show the total number of cigarette 
papers, the rate of tax, and the amount of tax due. For cigarette papers 
imported prior to January 1, 2000, the importer will show the number of 
books or sets, the number of papers in each book or set, the rate of 
tax, and the amount of tax due.
    (2) For cigarette tubes: The importer will show the number of tubes, 
the rate of tax, and the tax due.
    (3) For cigarettes: The importer will show whether the cigarettes 
are small (class A) or large (class B), the number

[[Page 75]]

of cigarettes, the rate of tax, and the tax due.
    (4) For cigars. The importer will show:
    (i) The number imported under each HTS item number;
    (ii) For large cigars with a sale price of not more than $235.294 
per thousand, the number and total sale price of such cigars;
    (iii) For large cigars with a sale price of more than $235.294 per 
thousand, the number of cigars;
    (iv) The applicable tax rate, as specified by Sec. 41.31; and
    (v) The tax due.
    (5) For smokeless tobacco: The importer will show whether the 
product is chewing tobacco or snuff, the number of pounds and ounces, 
the rate of tax and the tax due.
    (6) For pipe tobacco: The importer will show the designation ``pipe 
tobacco'' or ``Tax Class L,'' the number of pounds and ounces, the rate 
of tax and the tax due.
    (7) For roll-your-own tobacco: The importer will show the 
designation ``roll-your-own'' or ``Tax Class J'', the number of pounds 
and ounces, the rate of tax and the amount of tax due.
    (d) Exceptions. The provisions of this section shall not apply to:
    (1) Tobacco products, cigarette papers, or cigarette tubes released 
from customs custody and transferred in bond to a U.S. manufacturer of 
tobacco products or cigarette papers and tubes (see Sec. Sec. 41.85, 
41.85a, or 41.135);
    (2) Puerto Rican products on which the tax is prepaid or deferred 
(see subpart G); and
    (3) Tax payments of cigars from class 6, customs bonded 
manufacturing warehouses (see Sec. 41.151).

(68A Stat. 907, as amended (26 U.S.C. 7652); sec. 202, Pub. L. 85-859, 
72 Stat. 1417 (26 U.S.C. 5703))

[T.D. ATF-27, 41 FR 23951, June 14, 1976, as amended by T.D. ATF-40, 42 
FR 5005, Jan. 26, 1977; T.D. ATF-232, 51 FR 28085, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-246, 52 FR 669, Jan. 8, 
1987; T.D. ATF-284, 54 FR 12190, Mar. 24, 1989; T.D. ATF-289, 54 FR 
48841, Nov. 27, 1989; T.D. ATF-307, 55 FR 52744, Dec. 21, 1990: T.D. 
ATF-421, 64 FR 71924, Dec. 22, 1999; T.D. ATF-424, 64 FR 71932, Dec. 22, 
1999; T.D. ATF-420, 64 FR 71944, Dec. 22, 1999; T.D. ATF-422a, 65 FR 
15059, Mar. 21, 2000. Redesignated and amended by T.D. TTB-16, 69 FR 
52424, 52425, Aug. 26, 2004]

 Release From Customs Custody of Tobacco Products and Cigarette Papers 
            and Tubes Without Payment of Tax or Certain Duty



Sec. 41.82  Restrictions on tobacco products labeled for export.

    (a) The provisions of this section apply to tobacco products and 
cigarette papers and tubes manufactured in the United States and labeled 
for exportation under parts 44 and 270 of this chapter.
    (b) Articles described in paragraph (a) of this section may be 
transferred to or removed from the premises of a manufacturer or an 
export warehouse proprietor only if such articles are being transferred 
or removed without tax as provided in this part.
    (c) Articles described in paragraph (a) of this section may only be 
imported or brought into the United States, after their exportation, 
under the provisions of 26 U.S.C. 5704(d), by release from Customs 
custody for delivery to the original manufacturer of such tobacco 
products or cigarette papers or tubes or to the proprietor of an export 
warehouse authorized by such manufacturer to receive such articles. 
These products are transferred in bond and are released from Customs 
custody without payment of that part of the duty attributable to 
internal revenue tax.
    (d) Articles described in paragraph (a) of this section that are not 
put up in packages may be imported or brought into the United States 
under 26 U.S.C. 5704(c) by release from Customs custody without payment 
of tax for delivery to the original manufacturer of such articles. 
However, because such articles are also eligible for release under 26 
U.S.C. 5704(d), such articles will be treated as though released under 
section 5704(d), due to the penalty provisions in section 5761(c).
    (e) Articles described in paragraph (a) of this section may not be 
sold or held for sale for domestic consumption in the United States 
unless such articles are removed from their export packaging and 
repackaged by the original manufacturer into new packaging that does not 
contain an export label. The new packages, marks and notices

[[Page 76]]

must conform to the requirements of 27 CFR part 270.
    (f) The provisions of this section shall apply to articles labeled 
for export even if the packaging or the appearance of such packaging to 
the consumer of such articles has been modified or altered by a person 
other than the original manufacturer so as to remove or conceal or 
attempt to remove or conceal (including by placement of a sticker over) 
any export label.
    (g) For purposes of this section, an article is labeled for export 
or contains an export label if it bears the mark, label, or notice 
required by Sec. 44.185 of this chapter.
    (h) For purposes of this section, references to exportation shall be 
treated as including a reference to shipment to the Commonwealth of 
Puerto Rico.
    (i) The provisions of this section do not apply to any person who, 
when entering U.S. manufactured tobacco products labeled for export 
under parts 44 and 270 of this chapter, claims and is granted an 
exemption from duty and tax for such products under chapter 98 of the 
Harmonized Tariff Schedule of the United States. The quantity of tobacco 
products entered may not exceed the quantity limit imposed on such 
products under the applicable tariff provision. A traveler claiming an 
exemption under this subsection upon arrival at the border may 
voluntarily relinquish to the U. S. Customs Service at the time of entry 
any excess of such quantity without incurring the penalty under section 
Sec. 41.83.
    (j) For civil penalties and forfeiture provisions related to 
violations of this section, see Sec. 41.83. For a criminal penalty 
applicable to any violation of this section see 26 U.S.C. 5762(b).

[T.D. ATF-465, 66 FR 45618, Aug. 29, 2001. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.83  Penalties and forfeiture for products labeled or shipped for export.

    Except for the return of exported products that are specifically 
authorized under Sec. 41.82(b) and (c):
    (a) 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 
parts 44 and 270 of this chapter;
    (b) Every person who sells or receives such relanded tobacco 
products or cigarette papers or tubes; and,
    (c) Every person who aids or abets in such selling, relanding, or 
receiving, shall, in addition to the tax and any other penalty provided 
for in title 26 U.S.C., be liable for a penalty equal to the greater of 
$1,000 or 5 times the amount of the tax imposed by title 26 U.S.C. All 
tobacco products and cigarette papers and tubes relanded within 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.
    (d) The provisions of this section do not apply to any person who, 
when entering U.S. manufactured tobacco products labeled for export, 
claims and is granted an exemption from duty and tax for such products 
under chapter 98 of the Harmonized Tariff Schedule of the United States. 
The quantity of tobacco products entered may not exceed the quantity 
limit imposed on such products under the applicable tariff provision. A 
traveler claiming an exemption under this subsection upon arrival at the 
border may voluntarily relinquish to the U. S. Customs Service at the 
time of entry any excess of such quantity without incurring the penalty 
under this section.
    (e) For purposes of this section, references to exportation shall be 
treated as including a reference to shipment to the Commonwealth of 
Puerto Rico.

[T.D. ATF-465, 66 FR 45619, Aug. 29, 2001. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.85  Release from customs custody of imported tobacco articles.

    (a) The provisions of this section apply only to tobacco products, 
cigarette papers, and cigarettes tubes, which are not put up in 
packages, i.e., not placed by the manufacturer or importer in packages 
in which the products will be sold to consumers. Tobacco products 
manufactured in a foreign

[[Page 77]]

country, the Virgin Islands, or a possession of the United States may be 
released by the Port Director of Customs or authorized customs officer 
from customs custody, without payment of internal revenue tax, for 
transfer to the factory of any manufacturer of tobacco products under 
the internal revenue bond of the manufacturer to whom such articles are 
released. Cigarette papers and tubes manufactured in a foreign country, 
the Virgin Islands, or a possession of the United States may be released 
by the Port Director of Customs or authorized customs officer from 
customs custody, without payment of internal revenue tax, for transfer, 
under the internal revenue bond of the manufacturer to whom such 
articles are released, to the factory of a manufacturer of cigarette 
papers and tubes; or a manufacturer of tobacco products solely for use 
in the manufacture of cigarettes. Releases under this section must be in 
accordance with Sec. 41.86: Provided, however, that in the case of 
products exported from the Virgin Islands, in order for a manufacturer 
of tobacco products or a manufacturer of cigarette papers and tubes to 
remove such products from customs custody in the United States under the 
manufacturer's internal revenue bond without payment of internal revenue 
tax, the manufacturer must file an extension of coverage of the internal 
revenue bond on TTB Form 2105, and receive a notice of approval from the 
appropriate TTB officer. The extension of coverage must be executed by 
the principal and the surety and must be in the following form:

    ``Whereas the purpose of this extension is to bind the obligors for 
the purpose of the tax imposed by 26 U.S.C. 7652(b), on tobacco products 
and tubes exported from the Virgin Islands and removed from customs 
custody in the United States without payment of internal revenue tax, 
for delivery to the principal on said bond.''
    ``Now, therefore, the said bond is further specifically conditioned 
that the principal named therein must pay all taxes imposed by 26 U.S.C. 
7652(b) plus penalties, if any, and interest, for which he may become 
liable with respect to these products exported from the Virgin Islands 
and removed from customs custody in the United States without payment of 
internal revenue tax thereon, and must comply with all provision of law 
and regulations with respect thereto.''

    (b) Articles received into the factory of a manufacturer under the 
provision of this section are subject to the provisions of part 40 of 
this chapter.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. ATF-422, 64 FR 71949, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.85a  Release from customs custody of returned articles.

    (a) Domestically produced tobacco products (classifiable under item 
9801.00.80 of the Harmonized Tariff Schedule of the United States, 19 
U.S.C. 1202) exported from and returned to the United States without 
change to the product or the shipping container may be released, under 
the bond of the manufacturer or export warehouse proprietor to whom such 
articles are released, from customs custody in the United States without 
payment of that part of the duty attributable to the internal revenue 
tax for delivery to the factory of any tobacco products manufacturer or 
to the permit premises of an export warehouse proprietor.
    (b) Domestically produced cigarette papers and tubes (classifiable 
under item 9801.00.80 of the Harmonized Tariff Schedule of the United 
States, 19 U.S.C. 1202) exported from and returned to the United States 
without change to the product or the shipping container may be released 
from customs custody in the United States without payment of that part 
of the duty attributable to the internal revenue tax for delivery, under 
the bond of the manufacturer to whom such articles are released, to the 
factory of:
    (1) A manufacturer of cigarette papers and tubes; or
    (2) A manufacturer of tobacco products solely for use in the 
manufacture of cigarettes.
    (c) Releases under this section must be in accordance with the 
procedures set forth in Sec. 41.86. Once released, the tobacco products 
and cigarette papers and tubes will be subject to the tax and all other 
provisions of 26 U.S.C. chapter 52, and, as applicable, subject to the 
provisions of the regulations in part 40 of this chapter as if they had 
not been

[[Page 78]]

exported or otherwise removed from internal revenue bond.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. ATF-422, 64 FR 71949, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.86  Procedure for release.

    (a) Every manufacturer of tobacco products and cigarette papers and 
tubes and every export warehouse proprietor who desires to obtain the 
release of tobacco products and cigarette papers and tubes from customs 
custody, without payment of internal revenue tax, under its internal 
revenue bond, as provided in Sec. Sec. 41.85 or 41.85a, must prepare a 
notice of release, Form 5200.11, in triplicate, and file the three 
copies of the form with the appropriate TTB officer. The appropriate TTB 
officer will not certify Form 5200.11 covering the release of tobacco 
products and cigarette papers and tubes unless the manufacturer is 
authorized, under part 40 of this chapter, to receive, without payment 
of tax, the kinds of articles set forth in the form.
    (b) Importers who are either manufacturers of tobacco products and 
cigarette papers and tubes or export warehouse proprietors, or their 
authorized agents, who request the release of tobacco products or 
cigarette papers and tubes from customs custody in the United States 
under this section, using customs electronic filing procedures, must not 
request such release until they have received the TTB Form 5200.11 
certified by the appropriate TTB officer. Once Customs releases the 
tobacco products or cigarette papers and tubes in accordance with 19 CFR 
Part 143, Customs Directives, and any other applicable instructions, the 
importer will send a copy of the TTB Form 5200.11 along with a copy of 
the electronic filing and customs release to the appropriate TTB officer 
at the address shown thereon. The importer will retain one copy of the 
TTB Form 5200.11 to meet TTB recordkeeping requirements and one copy to 
meet customs recordkeeping requirements.
    (c) Importers or their authorized agents requesting release of 
tobacco products or cigarette papers and tubes from customs custody in 
the United States under any other authorized procedure will submit all 
copies of the TTB Form 5200.11 to the appropriate customs officer along 
with their request for release. The customs officer will verify that the 
TTB Form 5200.11 has been certified by the appropriate TTB officer and 
return all copies to the importer or the importer's authorized 
representative.
    (d) Once Customs releases the tobacco products or cigarette papers 
and tubes in accordance with 19 CFR Part 143, Customs Directives, and 
any other applicable instructions, the importer will send a copy of the 
TTB Form 5200.11 along with a copy of the customs release to the 
appropriate TTB office at the address shown thereon. The importer will 
retain one copy of the TTB Form 5200.11 to meet TTB recordkeeping 
requirements and one copy to meet customs recordkeeping requirements.

(72 Stat. 1418, as amended, 1423, as amended; 26 U.S.C. 5704, 5741)

[T.D. ATF-422, 64 FR 71950, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Subpart G_Puerto Rican Tobacco Products and Cigarette Papers and Tubes, 
                     Brought Into the United States



Sec. 41.101  General.

    (a) Tobacco products and cigarette papers and tubes manufactured in 
Puerto Rico which are brought into the United States and withdrawn for 
consumption or sale are subject to the tax imposed by 26 U.S.C. 7652(a), 
at the rates set forth in 26 U.S.C. 5701.
    (b) The excise taxes collected on tobacco products and cigarette 
papers and tubes manufactured in Puerto Rico are covered into the 
Treasury of Puerto Rico. Tobacco products and cigarette papers and tubes 
are considered as manufactured in Puerto Rico for purposes of 26 U.S.C. 
7652(a)(3) if the sum of the cost or value of the materials produced in 
Puerto Rico, plus the direct costs of processing operations performed in 
Puerto Rico, equals or exceeds 50 percent of the value of the product 
when it is brought into the United States.

[[Page 79]]

    (c) The excise tax on tobacco products and cigarette papers and 
tubes of Puerto Rican manufacture may be prepaid in Puerto Rico prior to 
shipment of such articles to the United States in accordance with Sec. 
41.105. In the case of tobacco products such tax may be paid in Puerto 
Rico on the basis of a semi-monthly return in accordance with the 
applicable provisions of this subpart.

(68A Stat. 907, as amended, 72 Stat. 1417, 1418, as amended (26 U.S.C. 
7652, 5703, 5704))

[T.D. ATF-206, 50 FR 15888, Apr. 23, 1985, as amended by T.D. ATF-232, 
51 FR 28085, Aug. 5, 1986; T.D. ATF-243, 52 FR 43194, Dec. 1, 1986; T.D. 
ATF-246, 52 FR 669, Jan. 8, 1987; T.D. ATF-422, 64 FR 71950, Dec. 22, 
1999. Redesignated and amended by T.D. TTB-16, 69 FR 52424, 52425, Aug. 
26, 2004]

   Prepayment of Tax in Puerto Rico on Tobacco products and Cigarette 
                            Papers and Tubes



Sec. 41.105  Prepayment of tax.

    To prepay, in Puerto Rico, the internal revenue tax imposed by 26 
U.S.C. 7652(a), on tobacco products and cigarette paper and tubes of 
Puerto Rican manufacture which are to be shipped to the United States, 
the shipper must file, or cause to be filed, a tax return, TTB Form 
5000.25, with full remittance of tax which will become due on such 
tobacco products and cigarette papers and tubes.

(Approved by the Office of Management and Budget under control number 
1512-0497)

[T.D. ATF-444, 66 FR 13850, Mar. 8, 2001. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.106  Examination and record of shipment by taxpayer.

    (a) Shipments other than noncommercial mail shipment. The taxpayer 
will ensure that the tax has been prepaid on the tobacco products and 
cigarette papers and tubes in each shipment. The taxpayer will identify 
the tobacco products or cigarette papers or tubes on the bill of lading 
or similar record to accompany the shipment with the following 
information:
    (1) The marks and numbers on shipping containers;
    (2) The number of containers;
    (3) The kind of taxable article and the rate of tax, as specified by 
41.30 through 41.35;
    (4) The number of small cigarettes, large cigarettes or small cigars 
to be shipped;
    (5) The number and total sale price of large cigars with a price of 
not more than $235.294 per thousand to be shipped;
    (6) The number of large cigars with a sale price of more than 
$235.294 per thousand to be shipped;
    (7) The pounds and ounces of chewing tobacco or snuff to be shipped;
    (8) The pounds and ounces of pipe tobacco or roll-your-own tobacco 
to be shipped;
    (9) The number of cigarette papers or tubes to be shipped;
    (10) The amount of the tax paid on such articles under the 
provisions of this subpart; and
    (11) The name and address of the consignee in the United States to 
whom such products are being shipped. The taxpayer will note such bills 
of lading or similar records to identify the particular TTB Form 5000.25 
on which taxes have been prepaid.
    (b) Noncommercial mail shipments. Noncommercial mail shipments of 
tobacco products and cigarette papers and tubes to the United States are 
exempt from the provisions of paragraph (a) of this section, except that 
the taxpayer will provide a copy of the TTB Form 5000.25 upon request of 
an appropriate TTB officer.

(Approved by the Office of Management and Budget under control number 
1512-0560)

[T.D. ATF-444, 66 FR 13850, Mar. 8, 2001. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. Sec. 41.107-41.108  [Reserved]

       Deferred Payment of Tax in Puerto Rico on Tobacco Products



Sec. 41.109  Bond required for deferred taxpayment.

    Where a manufacturer of tobacco products in Puerto Rico desires to 
defer payment in Puerto Rico of the internal revenue tax imposed by 26 
U.S.C. 7652(a), on tobacco products of Puerto Rican manufacture coming 
into the United States, he shall file a bond,

[[Page 80]]

Form 2986, with the appropriate TTB officer, in accordance with the 
provisions of this subpart. Such bond shall be conditioned on the 
payment, at the time and in the manner prescribed in this subpart, of 
the full amount of tax computed under the provisions of this subpart 
with respect to tobacco products which are released for shipment to the 
United States on computation of tax. All taxes which are computed under 
the provisions of this subpart shall be chargeable against the bond, 
until such taxes are paid, as provided in Sec. 41.112. The bond shall 
show the location of the factory from which the tobacco products to 
which it relates are to be shipped.

[T.D. 6871, 31 FR 43, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28085, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986; T.D. ATF-251, 52 FR 19340, May 22, 1987. Redesignated and amended 
by T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.110  Record of tax computation and shipment by bonded manufacturer 

under deferred taxpayment.

    Where tobacco products or cigarette papers or tubes are to be 
shipped to the United States involving deferred taxpayment, the bonded 
manufacturer must calculate the tax from the information contained in 
the bill of lading or a similar record. The bonded manufacturer will 
identify each shipment on such record with the following information:
    (a) The marks and numbers on shipping containers;
    (b) The number of containers;
    (c) The kind of taxable article and the rate of tax as specified in 
41.30 through 41.35;
    (d) The number of small cigarettes, large cigarettes or small cigars 
to shipped;
    (e) The number and total sale price of large cigars with a price of 
not more than $235.294 per thousand to be shipped;
    (f) The number of large cigars with a sale price of more than 
$235.294 per thousand to be shipped;
    (g) The pounds and ounces of chewing tobacco or snuff to be shipped;
    (h) The pounds and ounces of pipe tobacco or roll-your-own tobacco 
to be shipped;
    (i) The number of cigarette papers or tubes;
    (j) The amount of the tax to be paid on such articles under the 
provisions of this subpart; and
    (k) The name and address of the consignee in the United States to 
whom such products are being shipped. The date of completing such record 
will be treated as the date of computation of the tax. Tobacco products 
or cigarette papers or tubes may be shipped to the United States in 
accordance with the provisions of this section only after computation of 
the tax.

(Approved by the Office of Management and Budget under control number 
1512-0560)

[T.D. ATF-444, 66 FR 13851, Mar. 8, 2001. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.111  Agreement to Pay Tax.

    Upon shipment of tobacco products and cigarette papers or tubes the 
bonded manufacturer agrees:
    (a) To pay the tax on the shipment;
    (b) That there is no default in payment of tax chargeable against 
the manufacturer's bond on TTB Form 2986 (5210.12); and
    (c) That the amount of the manufacturer's bond is sufficient or in 
the maximum penal sum to cover the tax due on the shipment.

[T.D. ATF-444, 66 FR 13851, Mar. 8, 2001. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.112  Tax return.

    The internal revenue taxes imposed by 26 U.S.C. 7652(a), with 
respect to tobacco products manufactured in Puerto Rico and shipped to 
the United States on computation of tax under the provisions of this 
subpart shall be paid on the basis of a semimonthly tax return. The 
bonded manufacturer of such products shall prepare TTB Form 5000.25 in 
duplicate, and file the original with the appropriate TTB officer, and 
maintain one copy for the file for each semimonthly return period. The 
bonded manufacturer shall execute the return, TTB Form 5000.25, under 
the penalties of perjury. He shall file a return for

[[Page 81]]

each return period at the time specified in Sec. 41.114, regardless of 
whether tax is due for that return period. However, where the 
appropriate TTB officer, grants specific authorization, the bonded 
manufacturer need not file a tax return during the term of such 
authorization for any period in which tax liability was not incurred 
under the provisions of this subpart.

(Approved by the Office of Management and Budget under control number 
1512-0497)

[T.D. ATF-40, 42 FR 5006, Jan. 26, 1977, as amended by T.D. ATF-125, 48 
FR 2123, Jan. 18, 1983; T.D. ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19340, May 22, 
1987; T.D. ATF-277, 53 FR 45269, Nov. 9, 1988. Redesignated and amended 
by T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.113  Return periods.

    Except as provided by Sec. 41.114, the periods to be covered in the 
semimonthly tax returns shall be from the 1st day through the 15th day 
of each month, and from the 16th day through the last day of each month.

[T.D. ATF-365, 60 FR 33675, June 28, 1995. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.114  Time for filing.

    (a) General rule. Semimonthly tax returns under this subpart shall 
be filed by the bonded manufacturer, for each return period, not later 
than the 14th day after the last day of the return period, except as 
provided by paragraph (b) of this section. The tax shall be paid in full 
by remittance at the time the return is filed as prescribed in Sec. 
41.115 or Sec. 41.115a.
    (b) Special rule for taxes due for the month of September (effective 
after December 31, 1994). (1) The second semimonthly period for the 
month of September shall be divided into two payment periods, from the 
16th day through the 26th day, and from the 27th day through the 30th 
day. The bonded manufacturer shall file a return on Form 5000.25, and 
make remittance, for the period September 16-26, no later than September 
29. The bonded manufacturer shall file a return on Form 5000.25, and 
make remittance, for the period September 27-30, no later than October 
14.
    (2) Taxpayment not by electronic fund transfer. In the case of taxes 
not required to be remitted by electronic fund transfer as prescribed by 
Sec. 41.115a, the second semimonthly period of September shall be 
divided into two payment periods, from the 16th day through the 25th 
day, and the 26th day through the 30th day. The bonded manufacturer 
shall file a return on Form 5000.25, and make remittance, for the period 
September 16-25, no later than September 28. The bonded manufacturer 
shall file a return on Form 5000.25, and make remittance, for the period 
September 26-30, no later than October 14.
    (3) Amount of payment: Safe harbor rule. (i) Taxpayers are 
considered to have met the requirements of paragraph (b)(1) of this 
section, if the amount paid no later than September 29 is not less than 
11/15 (73.3 percent) of the tax liability incurred for the semimonthly 
period beginning on September 1 and ending on September 15, and if any 
underpayment of tax is paid by October 14.
    (ii) Taxpayers are considered to have met the requirements of 
paragraph (b)(2) of this section, if the amount paid no later than 
September 28 is not less than 2/3rds (66.7 percent) of the tax liability 
incurred for the semimonthly period beginning on September 1 and ending 
on September 15, and if any underpayment of tax is paid by October 14.
    (4) Last day for payment. If the required due date for taxpayment 
for the periods September 16-25 or September 16-26 as applicable, falls 
on a Saturday or legal holiday, the return and remittance shall be due 
on the immediately preceding day. If the required due date falls on a 
Sunday, the return and remittance shall be due on the immediately 
following day.
    (c) Postmark. If the return, and remittance as the case may be, are 
delivered by U.S. Mail to the appropriate TTB officer, the date of the 
official postmark of the U.S. Postal Service stamped on the cover in 
which the return, and remittance as the case may be, were mailed shall 
be treated as the date of delivery.

[[Page 82]]

    (d) Weekends and holidays. Except as provided in paragraph (b)(4) of 
this section, if the due date falls on a Saturday, Sunday, or legal 
holiday, the return and remittance shall be due on the immediately 
preceding day which is not a Saturday, Sunday, or legal holiday.

(Approved by the Office of Management and Budget under control number 
1512-0467)

[T.D. ATF-246, 52 FR 669, Jan. 8, 1987, as amended by T.D. ATF-251, 52 
FR 19340, May 22, 1987; T.D. ATF-365, 60 FR 33675, June 28, 1995; T.D. 
ATF-444, 66 FR 13851, Mar. 8, 2001. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.114a  Qualification for extended deferral.

    Note: This section applies only to removals made before January 1, 
1983.
    (a) Bonded manufacturers with bonds executed before September 1, 
1973. Bonded manufacturers with bonds on Form 2936 executed before 
September 1, 1973, who desire to file returns under this subpart with 
benefit of the extended deferral permitted by Sec. 41.114 shall file 
with the appropriate TTB officer an extension of coverage of bond on 
Form 2105. Such extension of coverage shall identify the particular bond 
to which it applies and shall contain a statement of purpose as follows:

    To continue in effect said bond (including all extensions or 
limitations of terms and conditions previously consented to and 
approved) notwithstanding that the time for payment of the tax may be 
deferred by the extended deferral period permitted by regulations in 27 
CFR 41.114.


If the bond on Form 2986 is in an amount insufficient to cover an 
extended deferral period, according to the requirements of Sec. 41.121, 
the bonded manufacturer must either file a new bond or file a 
strengthening bond to increase the total amount of the bonds then in 
force to a sufficient amount.
    (b) Bonded manufacturers with bonds executed after September 1, 
1973. Bonded manufacturers operating under original or superseding bonds 
executed after September 1, 1973, are automatically qualified for the 
extended deferral permitted by Sec. 41.114 (unless found in default as 
provided in Sec. 41.116). Such bonds must be executed in an amount 
sufficient to cover an extended deferral period, according to the 
requirements of Sec. 41.121.
    (c) Commencement of extended deferral. Bonded manufacturers may file 
returns with benefit of extended deferral only after the applicable 
bonds and extensions of coverage required by this section have been 
filed with and approved by the appropriate TTB officer.

(68A Stat. 847, as amended, 907, as amended; 26 U.S.C. 7101, 7652(a); 26 
U.S.C. 7805)

[T.D. ATF-5, 38 FR 19688, July 23, 1973. Redesignated at 40 FR 16835, 
Apr. 15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; 
T.D. ATF-125, 48 FR 2123, Jan. 18, 1983; T.D. ATF-251, 52 FR 19340, May 
22, 1987. Redesignated and amended by T.D. TTB-16, 69 FR 52424, 52425, 
Aug. 26, 2004]



Sec. 41.115  Remittance with return.

    Remittance of the full amount of internal revenue tax computed 
during the return period shall accompany the return, except as 
prescribed in Sec. 41.115a. Such remittance may be in any form the 
appropriate TTB officer is authorized to accept under the provisions of 
Sec. 70.61 of this chapter (Payment by check or money order) and which 
is acceptable to that officer. In paying the tax, a fractional part of a 
cent shall be disregarded unless it amounts to one-half cent or more, in 
which case it shall be increased to one cent.

(Aug. 16, 1954, Ch. 736, 68A Stat. 778 (26 U.S.C. 6313) Aug. 16, 1954, 
ch. 736, 68A Stat. 775 (26 U.S.C. 6301); June 29, 1956, ch. 462, 70 
Stat. 391 (26 U.S.C. 6301))

[26 FR 8195, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. ATF-77, 46 
FR 3009, Jan. 13, 1981; T.D. ATF-251, 52 FR 19340, May 22, 1987; T.D. 
ATF-301, 55 FR 47658, Nov. 14, 1990. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.115a  Payment of tax by electronic fund transfer.

    (a) General. (1) Each taxpayer who was liable, during a calendar 
year, for a gross amount equal to or exceeding five million dollars in 
taxes on tobacco products, cigarette papers, and cigarette tubes 
combining tax liabilities incurred under this part and part 40 of this 
chapter, shall use a commercial bank in making payment by electronic 
fund transfer (EFT) of taxes on tobacco

[[Page 83]]

products, cigarette papers, and cigarette tubes during the succeeding 
calendar year. Payment of taxes on tobacco products, cigarette papers, 
and cigarette tubes by cash, check, or money order, as described in 
Sec. 41.115, is not authorized for a taxpayer who is required, by this 
section, to make remittances by EFT. For purposes of this section, the 
dollar amount of tax liability is defined as the gross tax liability of 
all taxes which are paid in accordance with this subpart, taxable 
withdrawals from premises in the United States, and importations during 
the calendar year, without regard to any drawbacks, credits, or refunds, 
for all premises from which such activities are conducted by the 
taxpayer. Overpayments are not taken into account in summarizing the 
gross tax liability.
    (2) For the purposes of this section, a taxpayer includes a 
controlled group of corporations, as defined in 26 U.S.C. 1563, and 
implementing regulations in 26 CFR 1.1563-1 through 1.1563-4, except 
that the words ``at least 80 percent'' shall be replaced by the words 
``more than 50 percent'' in each place it appears in subsection (a) of 
26 U.S.C. 1563, as well as in the implementing regulations. Also, the 
rules for a ``controlled group of corporations'' apply in a similar 
fashion to groups which include partnerships and/or sole 
proprietorships. If one entity maintains more than 50% control over a 
group consisting of corporations and one, or more, partnerships and/or 
sole proprietorships, all of the members of the controlled group are one 
taxpayer for the purpose of determining who is required to make 
remittances by EFT.
    (3) A taxpayer who is required by this section to make remittances 
by EFT, shall make a separate EFT remittance and file a separate tax 
return for each factory which tobacco products, or cigarette papers, or 
cigarette tubes are withdrawn upon determination of tax.
    (b) Requirements. (1) On or before January 10 of each calendar year, 
except for a taxpayer already remitting the tax by EFT, each taxpayer 
who was liable for a gross amount equal to or exceeding five million 
dollars in taxes on tobacco products, cigarette papers, and cigarette 
tubes combining tax liabilities incurred under this part and part 40 of 
this chapter during the previous calender year, shall notify, in 
writing, the appropriate TTB officer. The notice shall be an agreement 
to make remittances by EFT.
    (2) For each return filed in accordance with this part, the taxpayer 
shall direct the taxpayer's bank to make an electronic fund transfer in 
the amount of the taxpayment to the Treasury Account as provided in 
paragraph (e) of this section. The request shall be made to the bank 
early enough for the transfer to be made to the Treasury Account by no 
later than the close of business on the last day for filing the return, 
prescribed in Sec. 41.105 or Sec. 41.114. The request shall take into 
account any time limit established by the bank.
    (3) If a taxpayer was liable for less than five million dollars in 
taxes on tobacco products, cigarette papers, and cigarette tubes during 
the preceding calendar year, the taxpayer may choose either to continue 
remitting the tax as provided in this section or to remit the tax with 
the return as prescribed by Sec. 41.115. On the first return on which 
the taxpayer chooses to discontinue remitting the tax by EFT and to 
begin remitting the tax with the tax return, the taxpayer shall notify 
the appropriate TTB officer by attaching a written notification to the 
tax return, stating that no taxes are due by EFT, because the tax 
liability during the preceding calendar year was less than five million 
dollars, and that the remittance shall be filed with the tax return.
    (c) Remittance. (1) Each taxpayer shall show on the tax return, 
information about remitting the tax for that return by EFT and shall 
file the return with the appropriate TTB officer.
    (2) Remittances shall be considered as made when the taxpayment by 
electronic fund transfer is received by the Treasury Account. For 
purposes of this section, a taxpayment by electronic fund transfer shall 
be considered as received by the Treasury Account when it is paid to a 
Federal Reserve Bank.
    (3) When the taxpayer directs the bank to effect an electronic fund 
transfer message as required by paragraph (b)(2) of this section, any 
transfer data record furnished to the taxpayer, through normal banking 
procedures,

[[Page 84]]

will serve as the record of payment, and shall be retained as part of 
required records.
    (d) Failure to make a taxpayment by EFT. The taxpayer is subject to 
a penalty imposed by 26 U.S.C. 5761, 6651, or 6656, as applicable, for 
failure to make a taxpayment by EFT on or before the close of business 
on the prescribed last day for filing.
    (e) Procedure. Upon the notification required under paragraph (b)(1) 
of this section, the appropriate TTB officer will issue to the taxpayer 
an TTB Procedure entitled, Payment of Tax by Electronic Fund Transfer. 
This publication outlines the procedure a taxpayer is to follow when 
preparing returns and EFT remittances in accordance with this part.

(Approved by the Office of Management and Budget under Control Number 
1512-0457)

(Act of August 16, 1954, 68A Stat. 775, as amended (26 U.S.C. 6302); 
sec. 202, Pub. L. 85-859, 72 Stat. 1417, as amended (26 U.S.C. 5703))

[T.D. ATF-185, 49 FR 37583, Sept. 25, 1984, as amended by T.D. ATF-232, 
51 FR 28086, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-245, 52 FR 534, Jan. 7, 1987; T.D. ATF-251, 52 FR 19340, May 22, 
1987; T.D. ATF-262, 52 FR 47560, Dec. 15, 1987; T.D. ATF-277, 53 FR 
45269, Nov. 9, 1988; T.D. ATF-384, 61 FR 54095, Oct. 17, 1996; T.D. ATF-
422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by T.D. TTB-
16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.116  Default.

    Where a check or money order tendered with a semimonthly return for 
payment of internal revenue tax under the provisions of this subpart is 
not paid on presentment, where a bonded manufacturer fails to remit with 
the semimonthly return the full amount of tax due thereunder, or where a 
bonded manufacturer is otherwise in default in payment of tax under the 
provisions of this subpart, he shall not ship tobacco products to the 
United States on computation of tax, until the appropriate TTB officer 
finds that the revenue will not be jeopardized by deferred payment of 
tax under the provisions of this subpart.

[T.D. 6871, 31 FR 44, Jan 4, 1966. Redesignated at 40 FR 16835, Apr. 15, 
1975, and amended by T.D. ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. ATF-
243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19340, May 22, 1987. 
Redesignated and amended by T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 
2004]



Sec. Sec. 41.117-41.118  [Reserved]



Sec. 41.119  Corporate surety.

    (a) Surety bonds, required under the provisions of this subpart, may 
be given only with corporate sureties holding certificates of authority 
from the Secretary of the Treasury as acceptable sureties on Federal 
bonds. Limitations concerning corporate sureties are prescribed by the 
Secretary in the current revision of Treasury Department Circular No. 
570 (Companies Holding Certificates of Authority as Acceptable Sureties 
on Federal Bonds and as Acceptable Reinsuring Companies). The surety 
shall have no interest whatever in the business covered by the bond.
    (b) Treasury Department Circular No. 570 is published in the Federal 
Register annually as of the first workday of July. As they occur, 
interim revisions of the circular are published in the Federal Register. 
Copies may be obtained from the Audit Staff, Bureau of Government 
Financial Operations, Department of the Treasury, Washington, DC 20226.

(July 30, 1947, ch. 390, 61 Stat. 648, as amended (6 U.S.C. 6, 7))

[T.D. ATF-92, 46 FR 46922, Sept. 23, 1981]



Sec. 41.120  Deposit of securities in lieu of corporate surety.

    In lieu of corporate surety, the manufacturer of tobacco products in 
Puerto Rico may pledge and deposit, as security for his bond, securities 
which are transferrable and are guaranteed both as to interest and as to 
principal by the United States, in accordance with the provisions of 31 
CFR part 225.

(61 Stat. 650; 6 U.S.C. 15)

[T.D. 6871, 31 FR 44, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]

[[Page 85]]



Sec. 41.121  Amount and Account of bond.

    (a) Bond amount. Except for the maximum and minimum amounts stated 
in this paragraph, the total amount of the bond or bonds for tobacco 
products or cigarette papers or tubes under the provisions of this 
subpart must be in an amount not less than the amount of unpaid tax 
chargeable at any one time against the bond. A manufacturer who will 
defer payment of tax for a shipment of tobacco products or cigarette 
papers or tubes under the provisions of this subpart must have 
sufficient credit in this account to cover the taxes prior to making the 
shipment to the United States. The maximum and minimum amounts of such 
bond or bonds are as follows:

------------------------------------------------------------------------
                                            Bond amount     Bond amount
             Taxable article                  maximum         minimum
------------------------------------------------------------------------
(1) Cigarettes..........................        $250,000          $1,000
(2) Any combination of taxable articles.         250,000           1,000
(3) One kind of taxable article other            150,000           1,000
 than cigarettes........................
------------------------------------------------------------------------

    (b) Bond Account. Where the amount of a bonded manufacturer's bond 
is less than the maximum amount prescribed in paragraph (a) of this 
section, a bonded manufacturer must maintain an account reflecting all 
outstanding taxes with which the manufacturer's bond is chargeable. A 
manufacturer must debit such account with the amount of tax that was 
agreed to be paid under Sec. 41.111 or is otherwise chargeable against 
such bond and then must credit the account for the amount paid on Form 
5000.25 or other TTB-prescribed document, at the time it is filed.

(Approved by the Office of Management and Budget under control number 
1512-0560)

[T.D. ATF-444, 66 FR 13851, Mar. 8, 2001. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.122  Strengthening bond.

    Where the amount of any bond is no longer sufficient under the 
provisions of Sec. 41.121, the bonded manufacturer shall immediately 
file a strengthening bond in an appropriate amount with the same surety 
as that on the bond already in effect, unless a superseding bond is 
filed pursuant to Sec. 41.123. A strengthening bond will not be 
approved where any notation is made thereon which is intended, or which 
may be construed, as a release of any former bond, or as limiting the 
amount of either bond to less than its full amount.

[26 FR 8195, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and further redesignated and amended by T.D. TTB-16, 69 FR 52424, 52425, 
Aug. 26, 2004]



Sec. 41.123  Superseding bond.

    A bonded manufacturer shall immediately file a new bond to supersede 
his current bond when (a) the corporate surety on the current bond 
becomes insolvent, (b) the appropriate TTB officer approves a request 
from the surety on the current bond to terminate his liability under the 
bond, (c) the payment of any liability under a bond is made by the 
surety thereon, (d) the amount of the bond is no longer sufficient under 
the provisions of Sec. 41.121 and a strengthening bond has not been 
filed, or (e) the appropriate TTB officer considers a superseding bond 
necessary for the protection of the revenue.

[26 FR 8195, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-251, 52 FR 19341, May 22, 1987. Redesignated and 
amended by T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.124  Extension of coverage of bond.

    An extension of coverage of the bond of a bonded manufacturer shall 
be required (a) as provided in Sec. 41.114a, and (b) in the case of any 
change in the location of the factory as set forth in the bond. Such 
extension of coverage of the bond shall be manifested on Form 2105 by 
the bonded manufacturer and by the surety on the bond with the same 
formality and proof of authority as required for the execution of the 
bond.

[T.D. ATF-5, 38 FR 19689, July 23, 1973. Redesignated at 40 FR 16835, 
Apr. 15, 1975, and further redesignated and amended by T.D. TTB-16, 69 
FR 52424, 52425, Aug. 26, 2004]

[[Page 86]]



Sec. 41.125  Approval of bond and extension of coverage of bond.

    The appropriate TTB officer is authorized to approve all bonds and 
extensions of coverage of bonds (except under Sec. 41.136) filed under 
this subpart. No manufacturer of tobacco products in Puerto Rico shall 
defer taxes under this subpart until he receives from the appropriate 
TTB officer notice of approval of the bond or of an appropriate 
extension of coverage of the bond required under this subpart. Upon 
receipt of the duplicate copy of an approved bond or extension of 
coverage of bond from the appropriate TTB officer, such copy of the bond 
or extension of coverage of bond shall be retained by the bonded 
manufacturer and shall be made available for inspection by the 
appropriate TTB officer upon his request.

[T.D. 6871, 31 FR 45, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19341, May 22, 
1987. Redesignated and amended by T.D. TTB-16, 69 FR 52424, 52425, Aug. 
26, 2004]



Sec. 41.126  Termination of bond.

    Any bond given under the provisions of this subpart may be 
terminated as to future transactions, by the appropriate TTB officer, 
(a) pursuant to application of surety as provided in Sec. 41.127; (b) 
on approval of a superseding bond; (c) on notification by the bonded 
manufacturer to the appropriate TTB officer that he has discontinued the 
deferral of taxes under the bond; or (d) on notification by the bonded 
manufacturer to the appropriate TTB officer that he has discontinued 
business. When any bond is terminated, the appropriate TTB officer shall 
notify both the bonded manufacturer and surety on such bond, in writing, 
of such action.

[26 FR 8196, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-251, 52 FR 19341, May 22, 1987. Redesignated and 
amended by T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.127  Application of surety for relief from bond.

    A surety on any bond given under the provisions of this subpart may 
at any time in writing notify the bonded manufacturer and the 
appropriate TTB officer that he desires, after a date named, to be 
relieved of liability under said bond. Such date shall be not less than 
10 days after the date the notice is received by the appropriate TTB 
officer. The surety shall also file with the appropriate TTB officer an 
acknowledgement or other proof of service on the bonded manufacturer. If 
such notice is not thereafter in writing withdrawn, the rights of the 
bonded manufacturer as supported by said bond shall be terminated on the 
date named in the notice, and the surety shall be relieved from 
liability to the extent set forth in Sec. 41.128.

[26 FR 8196, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-251, 52 FR 19341, May 22, 1987. Redesignated and 
amended by T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.128  Relief of surety from bond.

    Where the surety on a bond given under the provisions of this 
subpart has filed application for relief from liability as provided in 
Sec. 41.127, the surety shall be relieved from liability for 
transactions occurring wholly subsequent to the date specified in the 
notice, or the effective date of a new bond, if one is given.

[26 FR 8196, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and further redesignated and amended by T.D. TTB-16, 69 FR 52424, 52425, 
Aug. 26, 2004]



Sec. 41.129  Release of pledged securities.

    Securities of the United States, pledged and deposited as provided 
in Sec. 41.120, shall be released only in accordance with the 
provisions of 31 CFR part 225. Such securities will not be released by 
the appropriate TTB officer until the liability under the bond for which 
they were pledged has been terminated. When the appropriate TTB officer 
is satisfied that they may be released, he shall fix the date or dates 
on which a part or all of such securities may be released. At any time 
prior to the release of such securities, the appropriate TTB officer may 
extend the

[[Page 87]]

date of release for such additional length of time as he deems 
necessary.

(61 Stat. 650; 6 U.S.C. 15)

[26 FR 8196, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-251, 52 FR 19341, May 22, 1987. Redesignated and 
amended by T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. Sec. 41.135-41.138  [Reserved]



Sec. 41.139  Records.

    Every manufacturer of tobacco products and cigarette papers and 
tubes in the United States who receives tobacco products or cigarette 
papers or tubes or Puerto Rican manufacture, without payment of internal 
revenue tax, under his bond, shall keep separate records of all items 
received, removed subject to tax, removed for tax-exempt purposes, and 
otherwise disposed of, showing the following information:
    (a) Date, quantity, kind of cigars, cigarettes, smokeless tobacco, 
pipe tobacco and roll-your-own tobacco (number of small cigars--large 
cigars; number of small cigarettes--large cigarettes; pounds and ounces 
of chewing tobacco--snuff; pounds and ounces of pipe tobacco--roll-your-
own tobacco).
    (b) The sale price of large cigars removed subject to tax, except 
that if the price is more than $235.294 per thousand, it may be shown as 
if it were $236 per thousand.
    (c) Cigarette papers:
    (1) Before January 1, 2000, the date and number of books or sets of 
cigarette papers of each numerical content.
    (2) On and after January 1, 2000, the date and number of cigarette 
papers.
    (d) The date and number of cigarette tubes.

(Approved by the Office of Management and Budget under control number 
1512-0362)

(Sec. 2128(c), Pub. L. 94-455, 90 Stat. 1921 (26 U.S.C. 5741))

[T.D. ATF-80, 46 FR 18311, Mar. 24, 1981, as amended by T.D. ATF-172, 49 
FR 14943, Apr. 16, 1984; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-289, 54 FR 48841, Nov. 27, 1989; T.D. ATF-307, 55 FR 52745, Dec. 21, 
1990; T.D. ATF-424, 64 FR 71933, Dec. 22, 1999; T.D. ATF-420, 64 FR 
71944, Dec. 22, 1999]



Sec. 41.140  Taxpayment in the United States.

    Every manufacturer of tobacco products or cigarette papers or tubes 
in the United States who receives Puerto Rican tobacco products or 
cigarette papers or tubes without payment of internal revenue tax, under 
his bond, and subsequently removes such products, subject to tax, must 
pay the tax imposed on such products by 26 U.S.C. 7652(a), at the rates 
prescribed in 26 U.S.C. 5701, on the basis of a return under the 
provisions of part 40 of this chapter applicable to the taxpayment of 
tobacco products. Similarly, every manufacturer of cigarette papers and 
tubes in the United States who receives Puerto Rican cigarette papers 
and tubes and subsequently removes such articles, shall pay the tax 
imposed on such articles by 26 U.S.C. 7652(a), at the rates prescribed 
in 26 U.S.C. 5701, on the basis of a return under the provisions of part 
40 of this chapter applicable to taxpayment of cigarette papers and 
tubes. Such tobacco products and cigarettes papers and tubes shall be 
separately listed and identified as articles of Puerto Rican manufacture 
on Form 5000.24. The amount of tax paid on such articles shall be 
separately stated on Form 5000.24.

[T.D. 6871, 31 FR 45, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986; T.D. ATF-384, 61 FR 54095, Oct. 17, 1996; T.D. ATF-424, 64 FR 
71933, Dec. 22, 1999; T.D. ATF-422, 64 FR 71951, Dec. 22, 1999]



Sec. 41.141  Reports.

    Every manufacturer of tobacco products or cigarette papers or tubes 
in the United States who receives Puerto Rican tobacco products, or 
cigarette papers or tubes without payment of internal revenue tax, under 
his bond, must report the receipt and disposition of such tobacco 
products and cigarette papers and tubes on supplemental monthly reports. 
Such supplemental reports shall be made on Form 5210.5 or Form 2138 and 
shall have inserted thereon the heading, ``Cigars and Cigarettes of 
Puerto Rican Manufacture'' or ``Cigarette Papers and Tubes of Puerto 
Rican Manufacture,'' as the

[[Page 88]]

case may be. The original of such supplemental report shall be attached 
to the manufacturer's regular monthly report when filed.

(72 Stat. 1422; 26 U.S.C. 5722)

[T.D. 6871, 31 FR 46, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. ATF-243, 51 FR 
43194, Dec. 1, 1986; T.D. ATF-424, 64 FR 71933, Dec. 22, 1999; T.D. ATF-
422, 64 FR 71951, Dec. 22, 1999]



                          Subpart H [Reserved]



Sec. Sec. 41.151-41.153  [Reserved]



                            Subpart I_Claims

                                 General



Sec. 41.161  Abatement of assessment.

    A claim for abatement of the unpaid portion of the assessment of any 
tax on tobacco products and cigarette papers and tubes, or any liability 
in respect thereof, may be allowed to the extent that such assessment is 
excessive in amount, is assessed after expiration of the applicable 
period of limitation, or is erroneously or illegally assessed. Any claim 
under this section shall be prepared on Form 2635 (5620.8), in 
duplicate, and shall set forth the particulars under which the claim is 
filed. The original of the claim, accompanied by such evidence as is 
necessary to establish to the satisfaction of the appropriate TTB 
officer that the claim is valid, shall be filed with the appropriate TTB 
officer, and the duplicate of the claim shall be retained by the 
claimant.

(68A Stat. 792; 26 U.S.C. 6404)

[T.D. 6871, 31 FR 46, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19341, May 22, 
1987. Redesignated and amended by T.D. TTB-16, 69 FR 52424, 52425, Aug. 
26, 2004]



Sec. 41.162  Losses caused by disaster occurring after September 2, 1958.

    Claims involving internal revenue tax paid or determined and customs 
duty paid on tobacco products and cigarette papers and tubes removed, 
which are lost, rendered unmarketable, or condemned by a duly authorized 
official by reason of a ``major disaster'' occurring in the United 
States after September 2, 1958, shall be filed in accordance with the 
provisions of subpart C of part 46 of this chapter.

(72 Stat. 1420; 26 U.S.C. 5708)

[T.D. 6871, 31 FR 46, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-457, 66 FR 32220, June 14, 
2001]



Sec. 41.163  Refund of tax.

    The taxes paid on tobacco products and cigarette papers and tubes 
imported or brought into the United States may be refunded (without 
interest) to the taxpayer on proof satisfactory to the appropriate TTB 
officer that the taxpayer has paid the tax on tobacco products and 
cigarette papers and tubes lost (otherwise than by theft) or destroyed, 
by fire, casualty, or act of God, while in the possession or ownership 
of such taxpayer, or withdrawn by him from the market. Any claim for 
refund of tax under this section shall be prepared on Form 2635 
(5620.8), in duplicate, and shall include a statement that the tax 
imposed on tobacco products and cigarette papers and tubes by 26 U.S.C. 
7652 or chapter 52, as applicable, has been paid in respect to the 
articles covered in the claim, and that the articles were lost, 
destroyed, or withdrawn from the market, within six months preceding the 
date the claim is filed and shall be executed under the penalties of 
perjury. A claim for refund relating to articles lost or destroyed shall 
be supported as prescribed in Sec. 41.165, and a claim relating to 
articles withdrawn from the market shall include a schedule prepared and 
verified as prescribed in Sec. Sec. 41.170 and 41.171 or Sec. Sec. 
41.172 and 41.173. The original of the claim shall be filed with the 
appropriate TTB officer. The duplicate of the claim, with the copy of

[[Page 89]]

any verified supporting schedules, shall be retained by the claimant.

(68A Stat. 907, as amended, 72 Stat. 1419, as amended; 26 U.S.C. 7652, 
5705)

[T.D. 6871, 31 FR 46, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. ATF-243, 52 FR 43194, Dec. 1, 
1986; T.D. ATF-251, 52 FR 19341, May 22, 1987. Redesignated and amended 
by T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]

    Tobacco Products and Cigarette Papers and Tubes Lost or Destroyed



Sec. 41.165  Action by taxpayer.

    Where tobacco products and cigarette papers and tubes which have 
been imported or brought into the United States are lost (otherwise than 
by theft) or destroyed, by fire, casualty, or act of God, and the 
taxpayer desires to file claim for refund of the tax on such articles, 
he shall, in addition to complying with the requirements of Sec. 
41.163, indicate on the claim the nature, date, place, and extent of 
such loss or destruction. The claim shall be accompanied by such 
evidence as is necessary to establish to the satisfaction of the 
appropriate TTB officer that the claim is valid.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 46, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28086, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]

   Tobacco Products and Cigarette Papers and Tubes Withdrawn From the 
                                 Market



Sec. 41.170  Reduction of tobacco products to materials; TTB action.

    (a) General. Where tobacco products and cigarette papers and tubes 
which have been imported or brought into the United States are withdrawn 
from the market and the taxpayer desires to file claim for refund of the 
tax on the articles, he shall, in addition to the requirements of Sec. 
41.163, assemble the articles at any suitable place, if they are to be 
destroyed or reduced to tobacco. The taxpayer shall group the articles 
according to the rates of tax applicable to the articles, and shall 
prepare a schedule of the articles on TTB Form 5200.7, in triplicate. 
All copies of the schedule shall be forwarded to the appropriate TTB 
officer.
    (b) Large cigars. Refund or credit of tax on large cigars withdrawn 
from the market is limited to the lowest tax applicable to that brand 
and size of cigar during the required record retention period (see Sec. 
41.22) except where the importer establishes that a greater amount was 
actually paid. For each claim involving large cigars withdrawn from the 
market, the importer must include a certification on either TTB Form 
5200.7 or TTB Form 2635 (5620.8) to read as follows:

    The amounts claimed relating to large cigars are based on the lowest 
sale price applicable to the cigars during the required record retention 
period, except where specific documentation is submitted with the claim 
to establish that any greater amount of tax claimed was actually paid.


(See 26 U.S.C. 5705)

[T.D. ATF-80, 46 FR 18311, Mar. 24, 1981, as amended by T.D. ATF-232, 51 
FR 28086, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-251, 52 FR 19341, May 22, 1987; T.D. ATF-307, 55 FR 52745, Dec. 21, 
1990; T.D. ATF-424, 64 FR 71933, Dec. 22, 1999; T.D. ATF-420, 64 FR 
71944, Dec. 22, 1999. Redesignated and amended by T.D. TTB-16, 69 FR 
52424, 52425, Aug. 26, 2004]



Sec. 41.171  Reduction of tobacco products to materials, action by 

appropriate TTB officer.

    Upon receipt of a schedule of tobacco products and cigarette papers 
and tubes which have been imported or brought into the United States and 
which are withdrawn from the market by a taxpayer who desires to destroy 
such articles or, in the case of tobacco products, reduce them to 
tobacco, the appropriate TTB officer may verify the schedule and 
supervise destruction of the articles (and stamps, if any) or the 
reduction of tobacco products to tobacco, or the appropriate TTB officer 
may authorize the taxpayer to destroy the articles (and stamps, if any) 
or reduce tobacco products to tobacco without supervision by so stating 
on the

[[Page 90]]

original and one copy of the schedule returned to the taxpayer.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 46, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.172  Return to nontaxpaid status, action by taxpayer.

    (a) General. Where tobacco products and cigarette papers and tubes 
which have been imported or brought into the United States are withdrawn 
from the market and the taxpayer desires to file a claim for refund of 
the tax on the articles and return them to a nontaxpaid status, he 
shall, in addition to the requirements of Sec. 41.163, assemble the 
articles in or adjacent to the factory in which the articles are to be 
retained or received in a nontaxpaid status. The taxpayer shall group 
the articles according to the rates of tax applicable to the articles, 
and shall prepare a schedule of the articles, on Form 5200.7, in 
triplicate. All copies of the schedule shall be forwarded to the 
appropriate TTB officer.
    (b) Large cigars. Refund or credit of tax on large cigars withdrawn 
from the market is limited to the lowest tax applicable to that brand 
and size of cigar during the required record retention period (see Sec. 
41.22) except where the importer establishes that a greater amount was 
actually paid. For each claim involving large cigars withdrawn from the 
market, the importer must include a certification on either TTB Form 
5200.7 or TTB Form 2635 (5620.8) to read as follows:

    The amounts claimed relating to large cigars are based on the lowest 
sale price applicable to the cigars during the required record retention 
period, except where specific documentation is submitted with the claim 
to establish that any greater amount of tax claimed was actually paid.


(See 26 U.S.C. 5705)

[T.D. ATF-80, 46 FR 18311, Mar. 24, 1981, and amended by T.D. ATF-232, 
51 FR 28087, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-251, 52 FR 19341, May 22, 1987; T.D. ATF-307, 55 FR 52745, Dec. 21, 
1990; T.D. ATF-424, 64 FR 71933, Dec. 22, 1999; T.D. ATF-420, 64 FR 
71944, Dec. 22, 1999. Redesignated and amended by T.D. TTB-16, 69 FR 
52424, 52425, Aug. 26, 2004]



Sec. 41.173  Return to nontaxpaid status, action by appropriate TTB officer.

    Upon receipt of a schedule of tobacco products and cigarette papers 
and tubes which have been imported or brought into the United States and 
which are withdrawn from the market by a taxpayer who desires to return 
such articles to a nontaxpaid status, the appropriate TTB to officer may 
verify the schedule and supervise disposition of the articles (and 
destruction of the stamps, if any) or the appropriate TTB officer may 
authorize the receiving manufacturer to verify the schedule and 
disposition of the articles (and destruction of the stamps, if any) 
covered therein, without supervision, by so stating on the original and 
one copy of the schedule returned to the manufacturer. Where the receipt 
in a factory of tobacco products and cigarette papers and tubes has been 
verified, such articles shall be treated by the receiving manufacturer 
as nontaxpaid and shall be covered by the manufacturer's bond.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 47, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.174  Disposition of tobacco products and cigarette papers and tubes, 

and schedule.

    When the appropriate TTB officer is assigned to verify the schedule 
and supervise destruction or other disposition of tobacco products and 
cigarette papers and tubes which have been imported or brought into the 
United

[[Page 91]]

States, such officer shall, upon completion of his assignment, execute a 
certificate on all copies of the schedule to show the disposition and 
the date of disposition of such articles. The appropriate TTB officer 
shall return the original and one copy of the certified schedule to the 
taxpayer. When a taxpayer destroys such articles (and stamps, if any) or 
reduces tobacco products to materials, or a receiving manufacturer 
verifies the schedule and disposition of such articles (and stamps, if 
any), he shall execute a certificate on the original and the copy of the 
schedule returned to him, to show the disposition and the date of 
disposition of the articles. The taxpayer shall attach the original of 
the certified schedule to his claim for refund.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 47, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D. 
TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



                      Subpart J_Records and Reports

    Source: T.D. ATF-40, 42 FR 5007, Jan. 26, 1977, unless otherwise 
noted.



Sec. 41.181  Records of large cigars.

    Every person who imports large cigars for sale within the United 
States must keep such records as are necessary to establish and verify 
the sale price that applies to large cigars removed (entered or 
withdrawn).
    (a) Basic record. The importer must keep a record to show each sale 
price (as determined under Sec. 41.39), which is applicable to large 
cigars removed. No later than the tenth business day in January of each 
year the importer must prepare such a record to show the sale price in 
effect on the first day of that year for each brand and size of large 
cigars. The importer must note any change in a price from that shown in 
the record within ten business days after such change in price. The 
record must be a continuing one for each brand and size of cigar (and 
type of packaging, if pertinent), so that the taxable price on any date 
may be readily ascertained. If an importer removes new types of large 
cigars after the beginning of the year, the importer must enter the sale 
price and its effective date for such large cigars in the basic record 
within ten business days after such removal.
    (b) Copies of price announcements. The importer must keep a copy of 
each general announcement that is issued internally or to the trade 
about establishment or change of large cigar sale prices. If the copy 
does not show the actual date when issued it must be annotated to show 
this information.
    (c) Copies of entry and withdrawal forms. The importer must keep a 
copy of each customs entry or withdrawal form on which internal revenue 
tax for large cigars is declared pursuant to Sec. 41.81.
    (d) Alternative record. If an importer has so few import 
transactions and/or brands and sizes of large cigars that retention of 
an appropriate copy of each entry and withdrawal form required under 
paragraph (c) of this section will provide an adequate record of sale 
prices, then the record required under paragraph (a) of this section 
need not be kept. In such case the entry and withdrawal forms must 
identify the brands and sizes of cigars covered and show the 
corresponding quantity and sale price for each. If such information was 
not originally entered on the form it may be included by annotation. 
Whenever the appropriate TTB officer finds that alternative records 
being kept pursuant to this paragraph are inadequate for the intended 
purpose, he or she may so notify the importer in writing, after which 
time the importer must keep the record required under paragraph (a) of 
this section.

(Approved by the Office of Management and Budget under control number 
1512-0368)

[T.D. ATF-420, 64 FR 71944, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.182  Availability of records.

    The records required under Sec. 41.181 shall be kept by the 
importer at his usual place of business unless otherwise authorized in 
writing by the appropriate TTB officer, and shall be made available for 
inspection by the

[[Page 92]]

appropriate TTB officer upon his request. (For retention period, see 
Sec. 41.22.)

[T.D. ATF-40, 42 FR 5007, Jan. 26, 1977. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.183  [Reserved]



                  Subpart K_Tobacco Products Importers

    Source: T.D. ATF-422, 64 FR 71951, Dec. 22, 1999, unless otherwise 
noted.



Sec. 41.190  Persons required to qualify.

    Any person who engages in the business as an importer of tobacco 
products must qualify as an importer of tobacco products in accordance 
with the provisions of this part. Any person eligible for the exemption 
in Sec. 41.50 is not engaged in the business as an importer of tobacco 
products.
    Persons importing tobacco products and cigarette papers and tubes 
for personal use, in such quantities as may be allowed by Customs 
without payment of tax, do not require an importer's permit.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.191  Application for permit.

    Except as provided in Sec. 41.192, every person, before commencing 
business as an importer of tobacco products as defined in Sec. 41.11, 
must make application for, and obtain, the permit provided by this 
subpart K. Such application must be made on TTB Form 5230.4, according 
to the instructions for the form. All documents required under this part 
to be furnished with such application must be made a part thereof.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.192  Transitional rule.

    Any person who--
    (a) Was engaged in the business as an importer of tobacco products 
before January 1, 2000, and
    (b) Who files an application with TTB before January 1, 2000, may 
continue to import tobacco products and cigarette papers and tubes 
pending action on their application by TTB. Pending such final action, 
all provisions of chapter 52 of the Internal Revenue Code of 1986 will 
apply to such applicant.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.193  Corporate documents.

    Every corporation, before commencing business as an importer of 
tobacco products, must furnish with its application for permit, required 
by Sec. 41.191, a true copy of the corporate charter or a certificate 
of corporate existence or incorporation executed by the appropriate 
officer of the State in which incorporated. The corporation must 
likewise furnish duly authenticated extracts of the stockholders' 
meetings, bylaws, or directors' meetings, listing the offices the 
incumbents of which are authorized to sign documents or otherwise act in 
behalf of the corporation in matters relating to 26 U.S.C. chapter 52, 
and regulations issued thereunder. The corporation must also furnish 
evidence, in duplicate, of the identity of the officers and directors 
and each person who holds more than ten percent of the stock of such 
corporation. Where any of the information required by this section has 
previously been filed with the appropriate TTB officer, and such 
information is currently complete and accurate, a written statement to 
that effect, in duplicate, will be sufficient for the purpose of this 
section.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.194  Articles of partnership or association.

    Every partnership or association, before commencing business as an 
importer of tobacco products, must furnish with its application for 
permit required by Sec. 41.191 a true copy of the articles of 
partnership or association, if any, or certificate of partnership or 
association where required to be filed by any State, county, or 
municipality. Where a partnership or association has previously filed 
such documents with the appropriate TTB officer and such documents are 
currently complete and

[[Page 93]]

accurate, a written statement, in duplicate, to that effect by the 
partnership or association will be sufficient for the purpose of this 
section.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.195  Trade name certificate.

    Every person, before commencing business under a trade name as an 
importer of tobacco products, must furnish with his application for a 
permit, required by Sec. 41.191, a true copy of the certificate or 
other document, if any, issued by a State, county, or municipal 
authority in connection with the transaction of business under such 
trade name. If no such true copy of the certificate or other document is 
so required, a written statement, in duplicate, to that effect by such 
person will be sufficient for the purpose of this section.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.196  Power of attorney.

    If the application for permit or any report, return, notice, 
schedule, or other document required to be executed is to be signed by 
an individual (including one of the partners for a partnership or one of 
the members of an association) as an attorney in fact for any person, or 
if an individual is to otherwise officially represent such person, power 
of attorney on Form 1534 must be furnished to the appropriate TTB 
officer. (For power of attorney in connection with conference and 
practice requirements see subpart E, part 70 of this chapter.) Such 
power of attorney is not required for persons whose authority is 
furnished with the corporate documents as required by Sec. 41.194. Form 
1534 does not have to be filed again with the appropriate TTB officer if 
such form has previously been submitted to TTB and is still in effect.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.197  Additional information.

    The appropriate TTB officer may require such additional information 
as may be deemed necessary to determine whether the applicant is 
entitled to a permit under the provisions of this part. The applicant 
must, when required by the appropriate TTB officer, furnish as a part of 
his application for such permit such additional information as the 
appropriate TTB officer deems necessary to determine whether the 
applicant is entitled to a permit.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.198  Investigation of applicant.

    Appropriate TTB officers may inquire or investigate to verify the 
information in connection with an application for a permit. The 
investigation will ascertain whether the applicant is, by reason of his 
business experience, financial standing, and trade connections, likely 
to maintain operations in compliance with 26 U.S.C. chapter 52, and 
regulations thereunder; whether the applicant has disclosed all material 
information required, or whether the applicant has made any material 
false statement in the application for such permit.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.199  Notice of contemplated disapproval.

    If the appropriate TTB officer has reason to believe that the 
applicant is not entitled to a permit, the appropriate TTB officer will 
promptly give to the applicant a notice of the contemplated disapproval 
of the application and opportunity for hearing thereon in accordance 
with part 71 of this chapter. If, after such notice and opportunity for 
hearing, the appropriate TTB officer finds that the applicant is not 
entitled to a permit, an order will be prepared stating the findings on 
which the permit request is denied.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999, as amended by T.D. ATF-463, 
66 FR 42734, Aug. 15, 2001. Redesignated and amended by T.D. TTB-16, 69 
FR 52424, 52425, Aug. 26, 2004]



Sec. 41.200  Issuance of permit.

    If the application for permit, together with the required supporting

[[Page 94]]

documents, is approved, the appropriate TTB officer will issue a permit 
on TTB F 5200.24 to the applicant as an importer of tobacco products.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.201  Duration of permit.

    (a) Permits other than temporary permits issued under paragraph (b) 
of this section will be valid for a period of three years from the 
effective date shown on the permit, TTB F 5200.24.
    (b) Temporary permits will be issued for a one-year period to those 
applicants described in Sec. 41.192.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.202  Renewal of permit.

    Importers wishing to continue operations beyond the expiration of 
their current permit must renew their permit by making application 
within 30 days of such expiration on TTB F 5200.24, in accordance with 
instructions for the form. The expiring permit will continue in effect 
until final action is taken by TTB on the application for renewal, 
provided a timely application for renewal is filed.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.203  Retention of permit and supporting documents.

    The importer must retain the permit, together with the copy of the 
application and supporting documents returned with the permit, at the 
same place where the records required by this part are kept. The permit 
and supporting documents must be made available for inspection by any 
appropriate TTB officer upon request.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]

                      Required Records and Reports



Sec. 41.204  General.

    Every tobacco products importer must keep such records and, when 
required by this part, submit such reports, of the physical receipt and 
disposition of tobacco products. Records and reports will not be 
required under this part with respect to tobacco products while in 
customs custody.



Sec. 41.205  Recordkeeping requirements.

    Any owner, importer, consignee, or their agent who imports, or 
knowingly causes to be imported, any tobacco product or cigarette papers 
or tubes must make and keep records. A person purchasing a tobacco 
product from the importer in a domestic transaction and who does not 
knowingly cause merchandise to be imported is not required to make and 
keep records unless:
    (a) The terms and conditions of the importation are controlled by 
the person placing the order with the importer (e.g., the importer is 
not an independent contractor but the agent of the person placing the 
order).
    (b) The tobacco products purchased from the importer include more 
than 60,000 cigarettes, in which case the importer and the person 
placing the order with the importer must keep the records required by 27 
CFR Part 46, Subpart F, Distribution of Cigarettes. Dividing a single 
shipment of more than 60,000 cigarettes into smaller components of 
60,000 cigarettes or less does not exempt any person from the 
recordkeeping requirements of this subpart.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999, as amended by T.D. ATF-457, 
66 FR 32220, June 14, 2001]

               Filing and Retention of Records and Reports



Sec. 41.206  Reports.

    (a) Importers must file a monthly report on TTB F 5220.6 in 
accordance with the format and instructions for the form.
    (b) The first report(s) must be submitted by the 15th day of the 
month following the month in which the permit is issued; all previous 
months beginning January 1, 2000, must also be reported at that time.

For example:

    An importer who is issued a permit with a date of August 17, 2000, 
would be required to submit by September 15, 2000, a total of eight 
reports for the months January-August, 2000.


[[Page 95]]


    (c) Reports with the notation ``No Activity'' must be made for those 
months in which no activity occurs.
    (d) When a transfer of ownership of the business of an importer of 
tobacco products described in Sec. 41.224, or when a change in control 
of a corporation described in Sec. 41.226 occurs, a concluding report 
with the notation ``Concluding Report'' must be made for the month or 
partial month during which the transfer of ownership or change in 
control becomes effective.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.207  Filing.

    All records and reports required by this part will be maintained 
separately, chronologically by transaction or reporting date, at the 
importer's place of business. The appropriate TTB officer may, pursuant 
to an application, authorize files, or an individual file, to be 
maintained at another business location under the control of the 
importer, if the alternative location does not cause undue inconvenience 
to TTB or Customs officers desiring to examine the files or delay in the 
timely transmittal of any documents required to be submitted.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.208  Retention.

    (a) All records and reports required by this part, documents or 
copies of documents supporting these records or reports, and file copies 
of reports required by this part to be submitted to TTB must be retained 
for not less than three years following the close of the calendar year 
in which filed or made, and during this period must be available for 
inspection and copying by TTB during business hours.
    (b) Furthermore, the appropriate TTB officer may require these 
records to be kept for an additional period of not more than three years 
in any case where it is determined that such record retention is 
necessary to protect the revenue. Any records, or copies thereof, 
containing any of the information required by this part to be prepared, 
wherever kept, must also be made available for inspection and copying.

[T.D. ATF-422, 64 FR 71951, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



       Subpart L_Changes After Original Qualification of Importers

    Source: T.D. ATF-422, 64 FR 71953, Dec. 22, 1999, unless otherwise 
noted.

                             Changes in Name



Sec. 41.220  Change in individual name.

    Where there is a change in the name of an individual operating as an 
importer of tobacco products, the importer must make application on TTB 
Form 5230.5 for an amended permit within 30 days of such change.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.221  Change in trade name.

    Where there is a change in, or an addition or discontinuance of, a 
trade name used by an importer of tobacco products in connection with 
operations authorized by the permit, the importer must make application 
on TTB Form 5230.5 for an amended permit to reflect such change within 
30 days of such change. The importer must also furnish a true copy of 
any new trade name certificate or document issued to the business, or 
statement in lieu thereof, required by Sec. 41.195.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.222  Change in corporate name.

    Where there is a change in the corporate name of an importer of 
tobacco products, the importer must make application on TTB Form 5230.5 
for an amended permit within 30 days of such change. The importer must 
also furnish such documents as may be necessary to establish that the 
corporate name has been changed.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]

[[Page 96]]

                    Changes in Ownership and Control



Sec. 41.223  Fiduciary successor.

    If an administrator, executor, receiver, trustee, assignee, or other 
fiduciary, is to take over the business of an importer of tobacco 
products, as a continuing operation, such fiduciary must make 
application for permit, before commencing operations as required by 
subpart K of this part, furnish certified copies, in duplicate, of the 
order of the court, or other pertinent documents, showing his 
appointment and qualification as such fiduciary. However, where a 
fiduciary intends only to liquidate the business, qualification as an 
importer of tobacco products will not be required if the fiduciary 
promptly files with the appropriate TTB officer a written statement to 
that effect.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.224  Transfer of ownership.

    If a transfer is to be made in ownership of the business of an 
importer of tobacco products (including a change of any member of a 
partnership or association), such importer must give notice, in writing, 
to the appropriate TTB officer, naming the proposed successor and the 
desired effective date of such transfer. The proposed successor must 
qualify as an importer of tobacco products, before commencing 
operations, in accordance with the applicable provisions of subpart K of 
this part. The importer must give such notice of transfer, and the 
proposed successor must make application for permit in ample time for 
examination and approval thereof before the desired date of such change. 
The predecessor must make a concluding report, in accordance with the 
provisions of Sec. 41.205, and surrender the permit with such report. 
The successor must make a commencing report, in accordance with the 
provisions of Sec. 41.206.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.225  Change in officers, directors, or stockholders of a corporation.

    Upon election or appointment (excluding successive reelection or 
reappointment) of any officer or director of a corporation operating the 
business of an importer of tobacco products, or upon any occurrence 
which results in a person acquiring ownership or control of more than 
ten percent in aggregate of the outstanding stock of such corporation, 
the importer must, within 30 days of such action, so notify the 
appropriate TTB officer in writing, giving the identity of such person. 
In the event that the acquisition of ten or more percent in aggregate of 
the outstanding stock of such corporation results in a change of control 
of such corporation, the provisions of Sec. 41.226 will apply. When 
there is any change in the authority furnished under Sec. 41.196 for 
officers to act on behalf of the corporation the importer must 
immediately so notify the appropriate TTB officer in writing.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41.226  Change in control of a corporation.

    Where the issuance, sale, or transfer of the stock of a corporation 
operating as an importer of tobacco products results in a change in the 
identity of the principal stockholders exercising actual or legal 
control of the operations of the corporation, the corporate importer 
must make application on TTB Form 5230.4 for a new permit within 30 days 
after the change occurs. Otherwise, the present permit will be 
automatically terminated at the expiration of such 30-day period, and 
the importer will dispose of all tobacco products on hand, in accordance 
with this part, make a concluding report, in accordance with the 
provisions of Sec. 41.206, and surrender his permit with such report. 
If the application for a new permit is timely made, the present permit 
will continue in effect pending final action with respect to such 
application.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]

[[Page 97]]

                     Changes in Location or Address



Sec. 41.227  Change in location.

    Whenever an importer of tobacco products intends to relocate the 
principal business office, the importer must, before commencing 
operations at the new location, make application on TTB Form 5230.5 for, 
and obtain, an amended permit.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



Sec. 41. 228  Change in address.

    Whenever any change occurs in the address, but not the location, of 
the principal business office of an importer of tobacco products, as a 
result of action of local authorities, the importer must make 
application on TTB Form 5230.5 for an amended permit within 30 days of 
such change.

[T.D. ATF-422, 64 FR 71953, Dec. 22, 1999. Redesignated and amended by 
T.D. TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]



PART 44_EXPORTATION OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES, 

WITHOUT PAYMENT OF TAX, OR WITH DRAWBACK OF TAX--Table of Contents




                     Subpart A_Scope of Regulations

Sec.
44.1 Exportation of tobacco products, and cigarette papers and tubes, 
          without payment of tax, or with drawback of tax.
44.2 Forms prescribed.
44.3 Delegations of the Administrator.

                          Subpart B_Definitions

44.11 Meaning of terms.

                 Subpart Ba_Special (Occupational) Taxes

44.31 Liability for special tax.
44.32 Rate of special tax.
44.33 Special tax returns.
44.34 Employer identification number.
44.35 Issuance, distribution, and examination of special tax stamps.
44.36 Changes in special tax stamps.

                            Subpart C_General

44.61 Removals, withdrawals, and shipments authorized.
44.61a Deliveries to foreign-trade zones--export status.
44.62 Restrictions on deliveries of tobacco products, and cigarette 
          papers and tubes to vessels and aircraft, as supplies.
44.63 Restrictions on disposal of tobacco products, and cigarette papers 
          and tubes on vessels and aircraft.
44.64 Responsibility for delivery or exportation of tobacco products, 
          and cigarette papers and tubes.
44.65 Liability for tax on tobacco products, and cigarette papers and 
          tubes.
44.66 Relief from liability for tax.
44.67 Payment of tax.
44.68 [Reserved]
44.69 Assessment.
44.70 Authority of appropriate TTB officers to enter premises.
44.71 Interference with administration.

                      Variations From Requirements

44.72 Alternate methods or procedures.
44.73 Emergency variations from requirements.

  Subpart D_Qualification Requirements for Export Warehouse Proprietors

44.81 Persons required to qualify.
44.82 Application for permit.
44.83 Corporate documents.
44.84 Articles of partnership or association.
44.85 Trade name certificate.
44.86 Bond.
44.87 Power of attorney.
44.88 Description and diagram of premises.
44.89 Separation of premises.
44.90 Restrictions relating to export warehouse premises.
44.91 Additional information.
44.92 Investigation of applicant.
44.93 Issuance of permit.

    Subpart E_Changes Subsequent to Original Qualification of Export 
                          Warehouse Proprietors

                             Changes in Name

44.101 Change in individual name.
44.102 Change in trade name.
44.103 Change in corporate name.

                    Changes in Ownership and Control

44.104 Fiduciary successor.
44.105 Transfer of ownership.
44.106 Change in officers or directors of a corporation.
44.107 Change in stockholders of a corporation.

                    Changes in Location and Premises

44.108 Change in location.
44.109 Change in address.
44.110 [Reserved]
44.111 Change in export warehouse premises.
44.112 Emergency premises.

[[Page 98]]

           Subpart F_Bonds and Extensions of Coverage of Bonds

44.121 Corporate surety.
44.122 Deposits of bonds, notes, or obligations in lieu of corporate 
          surety.
44.123 Amount of bond.
44.124 Strengthening bond.
44.125 Superseding bond.
44.126 Extension of coverage of bond.
44.127 Approval of bond and extension of coverage of bond.
44.128 Termination of liability of surety under bond.
44.129 Release of bonds, notes, and obligations.

          Subpart G_Operations by Export Warehouse Proprietors

44.141 Sign.
44.142 Records.

                               Inventories

44.143 General.
44.144 Opening.
44.145 Special.
44.146 Closing.

                                 Reports

44.147 General.
44.148 Opening.
44.149 Monthly.
44.150 Special.
44.151 Closing.

                                 Claims

44.152 Claim for remission of tax liability.
44.153 Claim for abatement of assessment.
44.154 Claim for refund of tax.

          Subpart H_Suspension and Discontinuance of Operations

44.161 Discontinuance of operations.
44.162 Suspension and revocation of permit.

Subpart I [Reserved]

Subpart J_Removal of Shipments of Tobacco Products and Cigarette Papers 
       and Tubes by Manufacturers and Export Warehouse Proprietors

                         Packaging Requirements

44.181 Packages.
44.182 Lottery features.
44.183 Indecent or immoral material.
44.184 Mark.
44.185 Label or notice.
44.186 Tax classification for cigars.
44.187 Shipping containers.

                         Consignment of Shipment

44.188 General.
44.189 Transfers between factories and export warehouses.
44.190 Return of shipment to a manufacturer or customs warehouse 
          proprietor.
44.191 To officers of the armed forces for subsequent exportation.
44.192 To vessels and aircraft for shipment to noncontiguous foreign 
          countries and possessions of the United States.
44.193 To a Federal department or agency.
44.194 To district director of customs for shipment to contiguous 
          foreign countries.
44.195 To Government vessels and aircraft for consumption as supplies.
44.196 To district director of customs for consumption as supplies on 
          commercial vessels and aircraft.
44.196a To a foreign-trade zone.
44.197 For export by parcel post.

                      Notice of Removal of Shipment

44.198 Preparation.
44.199 Disposition.
44.200 Transfers between factories and export warehouses.
44.201 Return to manufacturer or customs warehouse proprietor.
44.202 To officers of the armed forces for subsequent exportation.
44.203 To noncontiguous foreign countries and possessions of the United 
          States.
44.204 To a Federal department or agency.
44.205 To contiguous foreign countries.
44.206 To Government vessels and aircraft for consumption as supplies.
44.207 To commercial vessels and aircraft for consumption as supplies.
44.207a To a foreign-trade zone.
44.208 For export by parcel post.

                        Miscellaneous Provisions

44.209 Diversion of shipment to another consignee.
44.210 Return of shipment to factory or export warehouse.
44.211 [Reserved]
44.212 Delay in lading at port of exportation.
44.213 Destruction of tobacco products, and cigarette papers and tubes.

                        Subpart K_Drawback of Tax

44.221 Application of drawback of tax.
44.222 Claim.
44.223 Drawback bond.
44.224 Inspection by an appropriate TTB officer.
44.225 Delivery of tobacco products, or cigarette papers or tubes for 
          export other than by parcel post.
44.226 Delivery of tobacco products, and cigarette papers and tubes for 
          export by parcel post.
44.227 Customs procedure.
44.228 Landing certificate.

[[Page 99]]

44.229 Collateral evidence as to landing.
44.230 Proof of loss.
44.231 Extension of time.
44.232 Allowance of claim.

         Subpart L_Withdrawal of Cigars From Customs Warehouses

44.241 Shipment restricted.
44.242 Responsibility for tax on cigars.

                                  Bonds

44.243 Bond required.
44.244 Amount of bond.
44.245 Strengthening bond.
44.246 Superseding bond.
44.247 Termination of liability of surety under bond.

                         Packaging Requirements

44.248 Packages.
44.249 Lottery features.
44.250 Indecent or immoral material.
44.251 Mark.
44.252 Label or notice.
44.253 Tax classification for cigars.
44.254 Shipping containers.

                         Consignment of Shipment

44.255 Consignment of cigars.

                      Notice of Removal of Shipment

44.256 Preparation.
44.257 Disposition.
44.258 To officers of the armed forces for subsequent exportation.
44.259 To noncontiguous foreign countries and possessions of the United 
          States.
44.260 To a Federal department or agency.
44.261 To contiguous foreign countries.
44.262 To Government vessels and aircraft for consumption as supplies.
44.263 To commercial vessels and aircraft for consumption as supplies.
44.264 To export warehouses.
44.264a To a foreign-trade zone.
44.265 For export by parcel post.

                           Return of Shipment

44.266 Return of cigars from export warehouses.
44.267 Return of cigars from other sources.

    Authority: 26 U.S.C. 5142, 5143, 5146, 5701, 5703-5705, 5711-5713, 
5721-5723, 5731, 5741, 5751, 5754, 6061, 6065, 6151, 6402, 6404, 6806, 
7011, 7212, 7342, 7606, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.

    Source: Redesignated by T.D. ATF-464, 66 FR 43480, Aug. 20, 2001.

    Editorial Note: Nomenclature changes to part 44 appear by T.D. ATF-
464, 66 FR 43480, Aug. 20, 2001, and T.D. ATF-480, 67 FR 30801-30803, 
May 8, 2002.



                     Subpart A_Scope of Regulations



Sec. 44.1  Exportation of tobacco products, and cigarette papers and tubes, 

without payment of tax, or with drawback of tax.

    This part contains the regulations relating to the exportation 
(including supplies for vessels and aircraft) of tobacco products and 
cigarette papers and tubes, without payment of tax; the qualification 
of, and operations by, export warehouse proprietors; and the allowance 
of drawback of tax paid on tobacco products, and cigarette papers and 
tubes exported.

[T.D. 6871, 31 FR 48, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.2  Forms prescribed.

    (a) The appropriate appropriate TTB officer is authorized to 
prescribe all forms required by this part. All of the information called 
for in each form shall be furnished as indicated by the headings on the 
form and the instructions on or pertaining to the form. In addition, 
information called for in each form shall be furnished as required by 
this part. The form will be filed in accordance with the instructions 
for the form.
    (b) Forms prescribed by this part are available for printing through 
the TTB Web site (http://www.ttb.gov) or by mailing a request to the 
Alcohol and Tobacco Tax and Trade Bureau, National Revenue Center, 550 
Main Street, Room 1516, Cincinnati, OH 45202.

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[T.D. ATF-92, 46 FR 46922, Sept. 23, 1981, as amended by T.D. ATF-232, 
51 FR 28087, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-372, 61 FR 20725, May 8, 1996; T.D. ATF-480, 67 FR 30801, May 8, 
2002; T.D. TTB-44, 71 FR 16952, Apr. 4, 2006]



Sec. 44.3  Delegations of the Administrator.

    Most of the regulatory authorities of the Administrator contained in 
this part are delegated to appropriate TTB officers. These TTB officers 
are specified in TTB Order 1135.44, Delegation of the Administrator's 
Authorities in 27 CFR Part 44, Exportation of Tobacco

[[Page 100]]

Products and Cigarette Papers and Tubes, Without Payment of Tax, or With 
Drawback of Tax. You may obtain a copy of this order by accessing the 
TTB Web site (http://www.ttb.gov) or by mailing a request to the Alcohol 
and Tobacco Tax and Trade Bureau, National Revenue Center, 550 Main 
Street, Room 1516, Cincinnati, OH 45202.

[T.D. TTB-44, 71 FR 16952, Apr. 4, 2006]



                          Subpart B_Definitions



Sec. 44.11  Meaning of terms.

    When used in this part and in forms prescribed under this part, the 
following terms shall have the meanings given in this section, unless 
the context clearly indicates otherwise. Words in the plural form shall 
include the singular, and vice versa, and words indicating the masculine 
gender shall include the feminine. The terms ``includes'' and 
``including'' do not exclude things not listed which are in the same 
general class.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury, Washington, DC.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.44, Delegation of the Administrator's Authorities in 27 CFR Part 
44, Exportation of Tobacco Products and Cigarette Papers and Tubes, 
Without Payment of Tax, or With Drawback of Tax.
    Chewing tobacco. Any leaf tobacco that is not intended to be smoked.
    Cigar. Any roll of tobacco wrapped in leaf tobacco or in any 
substance containing tobacco (other than any roll of tobacco which is a 
cigarette within the definition of ``cigarette'' given in this section).
    Cigarette. (a) Any roll of tobacco wrapped in paper or in any 
substance not containing tobacco, and
    (b) Any roll of tobacco wrapped in any substance containing tobacco 
which, because of its appearance, the type of tobacco used in the 
filler, or its packaging and labeling, is likely to be offered to, or 
purchased by, consumers as a cigarette described in paragraph (a) of 
this definition.
    Cigarette paper. Paper, or other material except tobacco, prepared 
for use as a cigarette wrapper.
    Cigarette tube. Cigarette paper made into a hollow cylinder for use 
in making cigarettes.
    Customs warehouse. A customs bonded manufacturing warehouse, class 
6, where cigars are manufactured of imported tobacco.
    District director of customs. The district director of customs at a 
headquarters port of the district (except the district of New York, 
N.Y.); the area directors of customs in the district of New York, N.Y.; 
and the port director at a port not designated as a headquarters port.
    Exportation or export. A severance of tobacco products or cigarette 
papers or tubes from the mass of things belonging to the United States 
with the intention of uniting them to the mass of things belonging to 
some foreign country. For the purposes of this part, shipment from the 
United States to Puerto Rico, the Virgin Islands, or a possession of the 
United States, shall be deemed exportation, as will the clearance from 
the United States of tobacco products and cigarette papers and tubes for 
consumption beyond the jurisdiction of the internal revenue laws of the 
United States, i.e., beyond the 3-mile limit or international boundary, 
as the case may be.
    Export warehouse. 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.
    Export warehouse proprietor. Any person who operates an export 
warehouse.
    Factory. The premises of a manufacturer of tobacco products or 
cigarette papers and tubes in which he carries on such business.
    Foreign-trade zone. A foreign-trade zone established and operated 
pursuant to the Act of June 18, 1934, as amended.

[[Page 101]]

    In bond. The status of tobacco products and cigarette papers and 
tubes, which come within the coverage of a bond securing the payment of 
internal revenue taxes imposed by 26 U.S.C. 5701 or 7652, and in respect 
to which such taxes have not been determined as provided by regulations 
in this chapter, including (a) such articles in a factory or an export 
warehouse, (b) such articles removed, transferred, or released, pursuant 
to 26 U.S.C. 5704, and with respect to which relief from the tax 
liability has not occurred, and (c) such articles on which the tax has 
been determined, or with respect to which relief from the tax liability 
has occurred, which have been returned to the coverage of a bond.
    Manufacturer of cigarette papers and tubes. Any person who 
manufactures cigarette paper, or makes up cigarette paper into tubes, 
except for his own personal use or consumption.
    Manufacturer of tobacco products. Any person who manufactures 
cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own 
tobacco but does not include:
    (1) A person who produces tobacco products solely for that person's 
own consumption or use; or
    (2) A proprietor of a Customs bonded manufacturing warehouse with 
respect to the operation of such warehouse.
    Package. The container in which tobacco products or cigarette papers 
or tubes are put up by the manufacturer and delivered to the consumer.
    Person. An individual, partnership, association, company, 
corporation, estate, or trust.
    Pipe tobacco. Any tobacco which, because of its appearance, type, 
packaging, or labeling, is suitable for use and likely to be offered to, 
or purchased by, consumers as tobacco to be smoked in a pipe.
    Removal or remove. The removal of tobacco products or cigarette 
papers or tubes from either the factory or the export warehouse covered 
by the bond of the manufacturer or proprietor.
    Roll-your-own tobacco. Any tobacco which, because of its appearance, 
type, packaging, or labeling, is suitable for use and likely to be 
offered to, or purchased by, consumers as tobacco for making cigarettes.
    Sale price. The price for which large cigars are sold by the 
manufacturer, determined in accordance with Sec. Sec. 40.22 or 41.39.
    State. ``State'' shall, for the purposes of this part, be construed 
to include the District of Columbia.
    Smokeless tobacco. Any snuff or chewing tobacco.
    Snuff. Any finely cut, ground, or powdered tobacco that is not 
intended to be smoked.
    Tobacco products. Cigars, cigarettes, smokeless tobacco, pipe 
tobacco, and roll-your-own tobacco.
    United States. ``United States'' when used in a geographical sense 
shall include only the States and the District of Columbia.
    U.S.C. The United States Code.
    Zone operator. The person to whom the privilege of establishing, 
operating, and maintaining a foreign-trade zone has been granted by the 
Foreign-Trade Zones Board created by the Act of June 18, 1934, as 
amended.
    Zone restricted status. Tobacco products, cigarette papers and 
cigarette tubes which have been taken into a foreign trade zone from the 
United States Customs territory for the sole purpose of exportation or 
storage until exported.

[T.D. ATF-48, 43 FR 13556, Mar. 31, 1978; 44 FR 55856, Sept. 28, 1979, 
as amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D. ATF-243, 51 
FR 43194, Dec. 1, 1986; T.D. ATF-289, 54 FR 48841, Nov. 27, 1989; T.D. 
ATF-421, 64 FR 71925, Dec. 22, 1999; T.D. ATF-424, 64 FR 71933, Dec. 22, 
1999; T.D. ATF-420, 64 FR 71945, Dec. 22, 1999; T.D. ATF-460, 66 FR 
39093, July 27, 2001; T.D. ATF-467, 66 FR 49532, Sept. 28, 2001; T.D. 
ATF-480, 67 FR 30801, May 8, 2002; T.D. TTB-16, 69 FR 52423, Aug. 26, 
2004; T.D. TTB-44, 71 FR 16952, Apr. 4, 2006]



                 Subpart Ba_Special (Occupational) Taxes

    Source: T.D. ATF-271, 53 FR 17563, May 17, 1988, unless otherwise 
noted.



Sec. 44.31  Liability for special tax.

    (a) Export warehouse proprietor. Every export warehouse proprietor 
shall pay a special (occupational) tax at a rate specified by Sec. 
44.32. The tax shall be paid on or before the date of commencing the 
business of an export

[[Page 102]]

warehouseman, and thereafter every year on or before July 1. On 
commencing business, the tax shall be computed from the first day of the 
month in which liability is incurred, through the following June 30. 
Thereafter, the tax shall be computed for the entire year (July 1 
through June 30).
    (b) Transition rule. For purposes of paragraph (a) of this section, 
a proprietor engaged in the business of an export warehouseman on 
January 1, 1988, shall be treated as having commenced business on that 
date. The special tax imposed by this transition rule shall cover the 
period January 1, 1988, through June 30, 1988, and shall be paid on or 
before April 1, 1988.
    (c) Each place of business taxable. An export warehouse proprietor 
under this part incurs special tax liability at each place of business 
in which an occupation subject to special tax is conducted. A place of 
business means the entire office, plant or area of the business in any 
one location under the same proprietorship. Passageways, streets, 
highways, rail crossings, waterways, or partitions dividing the premises 
are not sufficient separation to require additional special tax, if the 
divisions of the premises are otherwise contiguous.

(26 U.S.C. 5143, 5731)



Sec. 44.32  Rate of special tax.

    (a) General. Title 26 U.S.C. 5731(a)(3) imposes a special tax of 
$1,000 per year on every export warehouse proprietor.
    (b) Reduced rate for small proprietors. Title 26 U.S.C. 5731(b) 
provides for a reduced rate of $500 per year with respect to any export 
warehouse proprietor whose gross receipts (for the most recent taxable 
year ending before the first day of the taxable period to which the 
special tax imposed by Sec. 44.31 relates) are less than $500,000. The 
``taxable year'' to be used for determining gross receipts is the 
taxpayer's income tax year. All gross receipts of the taxpayer shall be 
included, not just the gross receipts of the business subject to special 
tax. Proprietors of new businesses that have not yet begun a taxable 
year, as well as proprietors of existing businesses that have not yet 
ended a taxable year, who commence a new activity subject to special 
tax, qualify for the reduced special (occupational) tax rate, unless the 
business is a member of a ``controlled group''; in that case, the rules 
of paragraph (c) of this section shall apply.
    (c) Controlled group. All persons treated as one taxpayer under 26 
U.S.C. 5061(e)(3) shall be treated as one taxpayer for the purpose of 
determining gross receipts under paragraph (b) of this section. 
``Controlled group'' means a controlled group of corporations, as 
defined in 26 U.S.C. 1563 and implementing regulations in 26 CFR 1.1563-
1 through 1.1563-4, except that the words ``at least 80 percent'' shall 
be replaced by the words ``more than 50 percent'' in each place they 
appear in subsection (a) of 26 U.S.C. 1563, as well as in the 
implementing regulations. Also, the rules for a ``controlled group of 
corporations'' apply in a similar fashion to groups which include 
partnerships and/or sole proprietorships. If one entity maintains more 
than 50% control over a group consisting of corporations and one, or 
more, partnerships and/or sole proprietorships, all of the members of 
the controlled group are one taxpayer for the purpose of this section.
    (d) Short taxable year. Gross receipts for any taxable year of less 
than 12 months shall be annualized by multiplying the gross receipts for 
the short period by 12 and dividing the result by the number of months 
in the short period as required by 26 U.S.C. 448(c)(3).
    (e) Returns and allowances. Gross receipts for any taxable year 
shall be reduced by returns and allowances made during such year under 
26 U.S.C. 448(c)(3).

(26 U.S.C. 448, 5061, 5731)



Sec. 44.33  Special tax returns.

    (a) General. Special tax shall be paid by return. The prescribed 
return is TTB Form 5630.5, Special Tax Registration and Return. Special 
tax returns, with payment of tax, shall be filed with TTB in accordance 
with instructions on the form.
    (b) Preparation of TTB Form 5630.5. All of the information called 
for on Form 5630.5 shall be provided, including:
    (1) The true name of the taxpayer.
    (2) The trade name(s) (if any) of the business(es) subject to 
special tax.

[[Page 103]]

    (3) The employer identification number (see Sec. 44.34).
    (4) The exact location of the place of business, by name and number 
of building or street, or if these do not exist, by some description in 
addition to the post office address. In the case of one return for two 
or more locations, the address to be shown shall be the taxpayer's 
principal place of business (or principal office, in the case of a 
corporate taxpayer).
    (5) The class(es) of special tax to which the taxpayer is subject.
    (6) Ownership and control information: that is, the name, position, 
and residence address of every owner of the business and of every person 
having power to control its management and policies with respect to the 
activity subject to special tax. ``Owner of the business'' shall include 
every partner, if the taxpayer is a partnership, and every person owning 
10% or more of its stock, if the taxpayer is a corporation. However, the 
ownership and control information required by this paragraph need not be 
stated if the same information has been previously provided to TTB in 
connection with a permit application, and if the information previously 
provided is still current.
    (c) Multiple locations and/or classes of tax. A taxpayer subject to 
special tax for the same period at more than one location or for more 
than one class of tax shall--
    (1) File one special tax return, TTB Form 5630.5, with payment of 
tax, to cover all such locations and classes of tax; and
    (2) Prepare, in duplicate, a list identified with the taxpayer's 
name, address (as shown on TTB Form 5630.5), employer identification 
number, and period covered by the return. The list shall show, by 
States, the name, address, and tax class of each location for which 
special tax is being paid. The original of the list shall be filed with 
TTB in accordance with instructions on the return, and the copy shall be 
retained at the taxpayer's principal place of business (or principal 
office, in the case of a corporate taxpayer) for the period specified in 
Sec. 44.142.
    (d) Signing of TTB Forms 5630.5--(1) Ordinary returns. The return of 
an individual proprietor shall be signed by the individual. The return 
of a partnership shall be signed by a general partner. The return of a 
corporation shall be signed by an officer. In each case, the person 
signing the return shall designate his or her capacity as ``individual 
owner,'' ``member of firm,'' or, in the case of a corporation, the title 
of the officer.
    (2) Fiduciaries. Receivers, trustees, assignees, executors, 
administrators, and other legal representatives who continue the 
business of a bankrupt, insolvent, deceased person, etc., shall indicate 
the fiduciary capacity in which they act.
    (3) Agent or attorney in fact. If a return is signed by an agent or 
attorney in fact, the signature shall be preceded by the name of the 
principal and followed by the title of the agent or attorney in fact. A 
return signed by a person as agent will not be accepted unless there is 
filed, with the TTB office with which the return is required to be 
filed, a power of attorney authorizing the agent to perform the act.
    (4) Perjury statement. TTB Forms 5630.5 shall contain or be verified 
by a written declaration that the return has been executed under the 
penalties of perjury.

(26 U.S.C. 6061, 6065, 6151, 7011)



Sec. 44.34  Employer identification number.

    (a) Requirement. The employer identification number (defined in 26 
CFR 301.7701-12) of the taxpayer who has been assigned such a number 
shall be shown on each special tax return, including amended returns, 
filed under this subpart. Failure of the taxpayer to include the 
employer identification number may result in the imposition of the 
penalty specified in Sec. 70.113 of this chapter.
    (b) Application for employer identification number. Each taxpayer 
who files a special tax return, who has not already been assigned an 
employer identification number, shall file IRS Form SS-4 to apply for 
one. The taxpayer shall apply for and be assigned only one employer 
identification number, regardless of the number of places of business 
for which the taxpayer is required to file a special tax return. The 
employer identification number shall be applied

[[Page 104]]

for no later than 7 days after the filing of the taxpayer's first 
special tax return. IRS Form SS-4 may be obtained from the director of 
an IRS service center or from any IRS district director.
    (c) Preparation and filing of IRS Form SS-4. The taxpayer shall 
prepare and file IRS Form SS-4, together with any supplementary 
statement, in accordance with the instructions on the form or issued in 
respect to it.

(26 U.S.C. 6109)

[T.D. ATF-271, 53 FR 17563, May 17, 1988, as amended by T.D. ATF-301, 55 
FR 47658, Nov. 14, 1990]



Sec. 44.35  Issuance, distribution, and examination of special tax stamps.

    (a) Issuance of special tax stamps. Upon filing a properly executed 
return on TTB Form 5630.5 together with the full remittance, the 
taxpayer will be issued an appropriately designated special tax stamp. 
If the return covers multiple locations, the taxpayer will be issued one 
appropriately designated stamp for each location listed on the 
attachment to TTB Form 5630.5 required by Sec. 44.33(c)(2), but 
showing, as to name and address, only the name of the taxpayer and the 
address of the taxpayer's principal place of business (or principal 
office in the case of a corporate taxpayer).
    (b) Distribution of special tax stamps for multiple locations. On 
receipt of the special tax stamps, the taxpayer shall verify that there 
is one stamp for each location listed on the attachment to TTB Form 
5630.5. The taxpayer shall designate one stamp for each location and 
type on each stamp the address of the business conducted at the location 
for which that stamp is designated. The taxpayer shall then forward each 
stamp to the place of business designated on the stamp.
    (c) Examination of special tax stamps. All stamps denoting payment 
of special tax shall be kept available for inspection by appropriate TTB 
officers, at the location for which designated, during business hours.

(26 U.S.C. 5146, 6806)



Sec. 44.36  Changes in special tax stamps.

    (a) Change in name. If there is a change in the corporate or firm 
name, or in the trade name, as shown on TTB Form 5630.5, the export 
warehouse proprietor shall file an amended special tax return as soon as 
practicable after the change, covering the new corporate or firm name, 
or trade names. No new special tax is required to be paid. The export 
warehouse proprietor shall attach the special tax stamp for endorsement 
of the change in name.
    (b) Change in proprietorship--(1) General. If there is a change in 
the proprietorship of an export warehouse, the successor shall pay a new 
special tax and obtain the required special tax stamps.
    (2) Exemption for certain successors. Persons having the right of 
succession provided for in paragraph (c) of this section may carry on 
the business for the remainder of the period for which the special tax 
was paid, without paying a new special tax, if within 30 days after the 
date on which the successor begins to carry on the business, the 
successor files a special tax return on TTB Form 5630.5 with TTB, which 
shows the basis of succession. A person who is a successor to a business 
for which special tax has been paid and who fails to register the 
succession is liable for special tax computed from the first day of the 
calendar month in which he or she began to carry on the business.
    (c) Persons having right of succession. Under the conditions 
indicated in paragraph (b)(2) of this section, the right of succession 
will pass to certain persons in the following cases:
    (1) Death. The widowed spouse or child, or executor, administrator 
or other legal representative of the taxpayer;
    (2) Succession of spouse. A husband or wife succeeding to the 
business of his or her spouse (living);
    (3) Insolvency. A receiver or trustee in bankruptcy, or an assignee 
for benefit of creditors;
    (4) Withdrawal from firm. The partner or partners remaining after 
death or withdrawal of a member.
    (d) Change in location. If there is a change in location of a 
taxable place of business, the export warehouse proprietor shall, within 
30 days after the

[[Page 105]]

change, file with TTB an amended special tax return covering the new 
location. The export warehouse proprietor shall attach the special tax 
stamp or stamps, for endorsement of the change in location. No new 
special tax is required to be paid. However, if the export warehouse 
proprietor does not file the amended return within 30 days, he or she is 
required to pay a new special tax and obtain a new special tax stamp.

(26 U.S.C. 5143, 7011)



                            Subpart C_General



Sec. 44.61  Removals, withdrawals, and shipments authorized.

    (a) Tobacco products, and cigarette papers and tubes may be removed 
from a factory or an export warehouse, and cigars may be withdrawn from 
a customs warehouse, without payment of tax, for direct exportation or 
for delivery for subsequent exportation, in accordance with the 
provisions of this part.
    (b) Tobacco products and cigarette papers and tubes are not eligible 
for removal or transfer in bond under this part unless they bear the 
marks, labels or notices required by this part.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. ATF-421, 64 FR 71925, Dec. 22, 1999]



Sec. 44.61a  Deliveries to foreign-trade zones--export status.

    Tobacco products, and cigarette papers and tubes may be removed from 
a factory or an export warehouse and cigars may be withdrawn from a 
customs warehouse, without payment of tax, for delivery to a foreign-
trade zone for exportation or storage pending exportation in accordance 
with the provisions of this part. Such articles delivered to a foreign-
trade zone under this part shall be considered exported for the purpose 
of the statutes and bonds under which removed and for the purposes of 
the internal revenue laws generally and the regulations thereunder. 
However, export status is not acquired until an application for 
admission of the articles into the zone with zone restricted status has 
been approved by the district director of customs pursuant to the 
appropriate provisions of 19 CFR chapter I and the required certificate 
of receipt of the articles in the zone has been made on Form 5200.14 as 
prescribed in this part.

(48 Stat. 999, as amended, 72 Stat. 1418, as amended; 19 U.S.C. 81c; 26 
U.S.C. 5704)

[T.D. 6961, 33 FR 9491, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71925, Dec. 22, 
1999]



Sec. 44.62  Restrictions on deliveries of tobacco products, and cigarette 

papers and tubes to vessels and aircraft, as supplies.

    Tobacco products, and cigarette papers and tubes may be removed from 
a factory or an export warehouse and cigars may be withdrawn from a 
customs warehouse, without payment of tax, for delivery to vessels and 
aircraft, as supplies, for consumption beyond the jurisdiction of the 
internal revenue laws of the United States, subject to the applicable 
provisions of this part. Deliveries may be made to vessels actually 
engaged in foreign, intercoastal, or noncontiguous territory trade 
(i.e., vessels operating on a regular schedule in trade or actually 
transporting passengers and/or cargo (a) between a port in the United 
States and a foreign port; (b) between the Atlantic and Pacific ports of 
the United States; or (c) between a port on the mainland of the United 
States and a port in Alaska, Hawaii, Puerto Rico, the Virgin Islands, or 
a possession of the United States; between a port in Alaska and a port 
in Hawaii; or between a port in Alaska or Hawaii and a port in Puerto 
Rico, the Virgin Islands, or a possession of the United States); to 
vessels clearing through customs for a port beyond the jurisdiction of 
the internal revenue laws of the United States; to vessels of war or 
other governmental activity; or to vessels of the United States 
documented to engage in the fishing business (including the whaling 
business), and foreign fishing (including whaling) vessels of 5 net tons 
or over. Such deliveries to vessels shall be subject to lading under 
customs supervision as provided in Sec. Sec. 44.207 and 44.263. As a 
condition to the lading of the tobacco products, and cigarette papers 
and tubes, the customs authorities at the

[[Page 106]]

port of lading may, if they deem it necessary in order to protect the 
revenue, require assurances, satisfactory to them, from the master of 
the receiving vessel that the quantities to be laden are reasonable, 
considering the number of persons to be carried, the vessel's itinerary, 
the duration of its intended voyage, etc., and that such articles are to 
be used exclusively as supplies on the voyage. For this purpose, the 
customs authorities may require the master of the receiving vessel to 
submit for customs approval, prior to lading, customs documentation for 
permission to lade the articles. Where the customs authorities allow 
only a portion of a shipment to be laden, the remainder of the shipment 
shall be returned to the bonded premises of the manufacturer, export 
warehouse proprietor, or customs warehouse proprietor making the 
shipment, or otherwise disposed of as approved by the appropriate TTB 
officer. Deliveries may be made to aircraft clearing through customs en 
route to a place or places beyond the jurisdiction of the internal 
revenue laws of the United States, and to aircraft operating on a 
regular schedule between U.S. customs areas as defined in the Air 
Commerce Regulations (19 CFR part 122). Deliveries may not be made to a 
vessel or aircraft stationed in the United States for an indefinite 
period and where its schedule does not include operations outside such 
jurisdiction.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 48, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71925, Dec. 22, 
1999; T.D. ATF-480, 67 FR 30801, May 8, 2002]



Sec. 44.63  Restrictions on disposal of tobacco products, and cigarette 

papers and tubes on vessels and aircraft.

    Tobacco products, and cigarette papers and tubes delivered to a 
vessel or aircraft, without payment of tax, pursuant to Sec. 44.62, 
shall not be sold, offered for sale, or otherwise disposed of until the 
vessel or aircraft is outside the jurisdiction of the internal revenue 
laws of the United States, i.e., outside the 3-mile limit or 
international boundary, as the case may be, of the United States. Where 
the vessel or aircraft returns within the jurisdiction of the internal 
revenue laws with such articles on board, the articles shall be subject 
to treatment under the tariff laws of the United States.

(72 Stat. 1418, as amended; 26 U.S.C. 5704; 19 U.S.C. 1317)

[T.D. 6871, 31 FR 49, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.64  Responsibility for delivery or exportation of tobacco products, 

and cigarette papers and tubes.

    Responsibility for compliance with the provisions of this part with 
respect to the removal under bond of tobacco products, and cigarette 
papers and tubes, without payment of tax, for export, and for the proper 
delivery or exportation of such articles, and with respect to the 
exportation of tobacco products, and cigarette papers and tubes with 
benefit of drawback of tax, shall rest upon the manufacturer of such 
articles or the proprietor of an export warehouse or customs warehouse 
from whose premises such articles are removed for export, and upon the 
exporter who exports tobacco products, and cigarette papers and tubes 
with benefit of drawback of tax.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 49, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.65  Liability for tax on tobacco products, and cigarette papers and 

tubes.

    The manufacturer of tobacco products and cigarette papers and tubes 
shall be liable for the taxes imposed thereon by 26 U.S.C. 5701: 
Provided, That when tobacco products, and cigarette papers and tubes are 
transferred, without payment of tax, pursuant to 26 U.S.C. 5704, between 
the bonded premises of manufacturers and/or export warehouse 
proprietors, the transferee shall become liable for the tax upon receipt 
by him of such articles. Any person who possesses tobacco products, or 
cigarette papers or tubes in violation

[[Page 107]]

of 26 U.S.C. 5751(a)(1) or (2), shall be liable for a tax equal to the 
tax on such articles.

(72 Stat. 1417, 1424; 26 U.S.C. 5703, 5751)

[T.D. 6871, 31 FR 49, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55856, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986]



Sec. 44.66  Relief from liability for tax.

    A manufacturer of tobacco products or cigarette papers and tubes or 
an export warehouse proprietor is relieved of the liability for tax on 
tobacco products, or cigarette papers or tubes upon providing evidence 
satisfactory to the appropriate TTB officer of exportation or proper 
delivery. The evidence must comply with this part. Such evidence shall 
be furnished within 90 days of the date of removal of the tobacco 
products, or cigarette papers or tubes: Provided, That this period may 
be extended for good cause shown.

(72 Stat. 1417; 26 U.S.C. 5703)

[T.D. 6871, 31 FR 49, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. ATF-243, 51 FR 
43194, Dec. 1, 1986; T.D. ATF-480, 67 FR 30801, May 8, 2002]



Sec. 44.67  Payment of tax.

    (a) General. The taxes on tobacco products, and cigarette papers and 
tubes with respect to which the evidence described in Sec. 44.66 is not 
timely furnished shall become immediately due and payable. The taxes 
shall be paid to TTB, with sufficient information to identify the 
taxpayer, the nature and purpose of the payment, and the articles 
covered by the payment. (TTB Form 5000.24 may be used for this purpose.)
    (b) Large cigars. The amount of tax liability on large cigars shall 
be based on the maximum tax rate prescribed in Sec. 40.21 of this part, 
unless the person liable for the tax establishes that a lower tax rate 
is applicable.

(All recordkeeping requirements have been approved under OMB Control No. 
1512-0180)

[T.D. ATF-80, 46 FR 18311, Mar. 24, 1981, as amended by T.D. ATF-232, 51 
FR 28088, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-251, 52 FR 19341, May 22, 1987; T.D. ATF-307, 55 FR 52745, Dec. 21, 
1990; T.D. ATF-460, 66 FR 39093, July 27, 2001]



Sec. 44.68  [Reserved]



Sec. 44.69  Assessment.

    Whenever any person required by law to pay tax on tobacco products, 
and cigarette papers and tubes fails to pay such tax, the tax shall be 
ascertained and assessed against such person, subject to the limitations 
prescribed in 26 U.S.C. 6501. 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 be made until and after 
notice has been afforded such person to show cause against assessment. 
The person will be allowed 45 days from the date of such notice to show 
cause, in writing, against such assessment.

(72 Stat. 1417; 26 U.S.C. 5703)

[T.D. 6871, 31 FR 49, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55856, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986]



Sec. 44.70  Authority of appropriate TTB officers to enter premises.

    Any appropriate TTB officer may enter in the daytime any premises 
where tobacco products, or cigarette papers or tubes are produced or 
kept, so far as it may be necessary for the purpose of examining such 
articles. When such premises are open at night, any appropriate TTB 
officer may enter them, while so open, in the performance of his 
official duties. The owner of such premises, or person having the 
superintendence of the same, who refuses to admit any appropriate TTB 
officer or permit him to examine such articles

[[Page 108]]

shall be liable to the penalties prescribed by law for the offense.

(68A Stat. 872, 903; 26 U.S.C. 7342, 7606)

[T.D. 6871, 31 FR 49, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.71  Interference with administration.

    Whoever, corruptly or by force or threats of force, endeavors to 
hinder or obstruct the administration of this part, or endeavors to 
intimidate or impede any appropriate TTB officer acting in his official 
capacity, or forcibly rescues or attempts to rescue or causes to be 
rescued any property, after it has been duly seized for forfeiture to 
the United States in connection with a violation of the internal revenue 
laws, shall be liable to the penalties prescribed by law.

(68A Stat. 855; 26 U.S.C. 7212)

[25 FR 4716, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975]

                      Variations From Requirements



Sec. 44.72  Alternate methods or procedures.

    A manufacturer of tobacco products, an export warehouse proprietor, 
or a customs warehouse proprietor, on specific approval by the 
appropriate TTB officer as provided in this section, may use an 
alternate method or procedure in lieu of a method or procedure 
specifically prescribed in this part. The appropriate TTB officer may 
approve an alternate method or procedure, subject to stated conditions, 
when he finds that--
    (a) Good cause has been shown for the use of the alternate method or 
procedure.
    (b) The alternate method or procedure is within the purpose of, and 
consistent with the effect intended by, the specifically prescribed 
method or procedure, and affords equivalent security to the revenue, and
    (c) The alternate method or procedure will not be contrary to any 
provision of law, and will not result in an increase in cost to the 
Government or hinder the effective administration of this part. No 
alternate method or procedure relating to the giving of any bond or to 
the assessment, payment, or collection of tax, shall be authorized under 
this section. Where a manufacturer or proprietor desires to employ an 
alternate method or procedure, he shall submit a written application to 
the appropriate TTB officer. The application shall specifically describe 
the proposed alternate method or procedure, and shall set forth the 
reasons therefor. Alternate methods or procedures shall not be employed 
until the application has been approved by the appropriate TTB officer. 
The manufacturer or proprietor shall, during the period of authorization 
of an alternate method or procedure, comply with the terms of the 
approved application. Authorization for any alternate method or 
procedure may be withdrawn whenever in the judgment of the appropriate 
TTB officer the revenue is jeopardized or the effective administration 
of this part is hindered. The manufacturer or proprietor shall retain, 
as part of his records, any authorization of the appropriate TTB officer 
under this section.

[T.D. 6871, 31 FR 49, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-480, 67 FR 30801, May 8, 2002]



Sec. 44.73  Emergency variations from requirements.

    The appropriate TTB officer may approve methods of operation other 
than as specified in this part, where he finds that an emergency exists 
and the proposed variations from the specified requirements are 
necessary, and the proposed variations--
    (a) Will afford the security and protection to the revenue intended 
by the prescribed specifications,
    (b) Will not hinder the effective administration of this part, and
    (c) Will not be contrary to any provision of law. Variations from 
requirements granted under this section are conditioned on compliance 
with the procedures, conditions, and limitations set forth in the 
approval of the application. Failure to comply in good faith with such 
procedures, conditions, and limitations shall automatically terminate 
the authority for such variations

[[Page 109]]

and the manufacturer, export warehouse proprietor, or customs warehouse 
proprietor, thereupon shall fully comply with the prescribed 
requirements of regulations from which the variations were authorized. 
Authority for any variations may be withdrawn whenever in the judgment 
of the appropriate TTB officer the revenue is jeopardized or the 
effective administration of this part is hindered by the continuation of 
such variation. Where a manufacturer or proprietor desires to employ 
such variation, he shall submit a written application to the appropriate 
TTB officer. The application shall describe the proposed variations and 
set forth the reasons therefor. Variations shall not be employed until 
the application has been approved. The manufacturer or proprietor shall 
retain, as part of his records, any authorization of the appropriate TTB 
officer under this section.

[T.D. 6871, 31 FR 50, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-480, 67 FR 30801, May 8, 2002]



  Subpart D_Qualification Requirements for Export Warehouse Proprietors

    Source: 25 FR 4716, May 28, 1960, unless otherwise noted. 
Redesignated at 40 FR 16835, Apr. 15, 1975.



Sec. 44.81  Persons required to qualify.

    Every person who intends to engage in business as an export 
warehouse proprietor, as defined in this part, shall qualify as such in 
accordance with the provisions of this part.

(72 Stat. 1421; 26 U.S.C. 5711, 5712, 5713)



Sec. 44.82  Application for permit.

    Every person, before commencing business as an export warehouse 
proprietor, must apply on TTB Form 2093 (5200.3) and obtain the permit 
provided for in Sec. 44.93. All documents required under this part to 
be furnished with such application shall be made a part thereof.

(72 Stat. 1421; 26 U.S.C. 5712)

[25 FR 4716, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30801, May 8, 2002]



Sec. 44.83  Corporate documents.

    Every corporation, before commencing business as an export warehouse 
proprietor, shall furnish with its application for permit required by 
Sec. 44.82, a true copy of the corporate charter or a certificate of 
corporate existence or incorporation, executed by the appropriate 
officer of the State in which incorporated. The corporation shall also 
furnish, in duplicate, evidence which will establish the authority of 
the officer or other person who executes the application for permit to 
execute the same; the authority of persons to sign other documents, 
required by this part, for the corporation; and the identity of the 
officers and directors, and each person who holds more than ten percent 
of the stock of such corporation. Where a corporation has previously 
filed such documents or evidence with the appropriate TTB officer, a 
written statement by the corporation, in duplicate, to that effect will 
be sufficient for the purpose of this section.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 44.84  Articles of partnership or association.

    Every partnership or association, before commencing business as an 
export warehouse proprietor, shall furnish with its application for 
permit, required by Sec. 44.82 a true copy of the articles of 
partnership or association, if any, or certificate of partnership or 
association where required to be filed by any State, county, or 
municipality. Where a partnership or association has previously filed 
such documents with the appropriate TTB officer, a written statement by 
the partnership or association, in duplicate, to that effect will be 
sufficient for the purpose of this section.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 44.85  Trade name certificate.

    Every person, before commencing business under a trade name as an 
export warehouse proprietor, shall furnish with his application for 
permit, required by Sec. 44.82, a true copy of the certificate or other 
document, if any, issued by a State, county, or municipal

[[Page 110]]

authority in connection with the transaction of business under such 
trade name. If no such certificate or other document is so required a 
written statement, in duplicate, to that effect by such person will be 
sufficient for the purpose of this section.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6961, 33 FR 9491, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 44.86  Bond.

    Every person, before commencing business as an export warehouse 
proprietor, shall file, in connection with his application for permit, a 
bond, Form 2103 (5220.5), in accordance with the applicable provisions 
of Sec. 44.88 and subpart F, conditioned upon compliance with the 
provisions of chapter 52, I.R.C., and regulations thereunder, including, 
but not limited to, the timely payment of taxes imposed by such chapter 
and penalties and interest in connection therewith for which he may 
become liable to the United States.

(72 Stat. 1421; 26 U.S.C. 5711)

[25 FR 4716, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30801, May 8, 2002]



Sec. 44.87  Power of attorney.

    If the application for permit or other qualifying documents are 
signed by an attorney in fact for an individual, partnership, 
association, company, or corporation, or by one of the partners for a 
partnership, or by an officer of an association or company, or, in the 
case of a corporation, by an officer or other person not authorized to 
sign by the corporate documents described in Sec. 44.83, power of 
attorney conferring authority upon the person signing the documents 
shall be manifested on Form 5000.8 in accordance with its instructions.

[25 FR 4716, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30802, May 8, 2002]



Sec. 44.88  Description and diagram of premises.

    The premises to be used by an export warehouse proprietor as his 
warehouse shall be described, in the application for permit required by 
Sec. 44.82, and bond required by Sec. 44.86, by number, street, and 
city, town, or village, and State. Such premises may consist of more 
than one building, which need not be contiguous: Provided, That such 
premises are located in the same city, town, or village and each located 
is described in the application for permit and the bond by number and 
street. Where such premises consist of less than an entire building, a 
diagram, in duplicate, shall also be furnished showing the particular 
floor or floors, or room or rooms, comprising the warehouse.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 44.89  Separation of premises.

    Where the export warehouse premises consist of less than an entire 
building, the premises shall be completely separated from adjoining 
portions of the building, which separation shall be constructed of 
materials generally used in the construction of buildings and may 
include any necessary doors or other openings.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 44.90  Restrictions relating to export warehouse premises.

    Export warehouse premises shall be used exclusively for the storage 
of tobacco products and cigarette papers and tubes, upon which the 
internal revenue tax has not been paid, for subsequent removal under 
this part: Provided, That smoking tobacco may also be stored in an 
export warehouse.

[T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986]



Sec. 44.91  Additional information.

    The appropriate TTB officer may require such additional information 
as may be deemed necessary to determine whether the applicant is 
entitled to a permit. The applicant shall, when required by the 
appropriate TTB officer, furnish as a part of his application for permit 
such additional information as may be necessary for the appropriate TTB 
officer to determine whether the applicant is entitled to a permit.

[[Page 111]]



Sec. 44.92  Investigation of applicant.

    The appropriate TTB officer shall promptly cause such inquiry or 
investigation to be made, as he deems necessary, to verify the 
information furnished in connection with an application for permit and 
to ascertain whether the applicant is, by reason of his business 
experience, financial standing, and trade connections, likely to 
maintain operations in compliance with 26 U.S.C. chapter 52, and 
regulations thereunder; whether such person has disclosed all material 
information required or made any material false statement in the 
application for such permit; and whether the premises on which it is 
proposed to establish the export warehouse are adequate to protect the 
revenue. If the appropriate TTB officer has reason to believe that the 
applicant is not entitled to a permit, he shall promptly give the 
applicant notice of the contemplated disapproval of his application and 
opportunity for hearing thereon in accordance with part 71 of this 
chapter, which part (including the provisions relating to the 
recommended decision and to appeals) is made applicable to such 
proceedings. If, after such notice and opportunity for hearing, the 
appropriate TTB officer finds that the applicant is not entitled to a 
permit, he shall, by order stating the findings on which his decision is 
based, deny the permit.

(72 Stat. 1421; 26 U.S.C. 5712)

[25 FR 4716, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55856, Sept. 28, 1979; T.D. ATF-463, 
66 FR 42734, Aug. 15, 2001]



Sec. 44.93  Issuance of permit.

    After the application for permit, bond, and supporting documents, as 
required under this part, has been approved, the appropriate TTB officer 
will issue a permit to the export warehouse proprietor. The proprietor 
must keep such permit at the export warehouse and make it available for 
inspection by an appropriate TTB officer.

[T.D. ATF-480, 67 FR 30802, May 8, 2002]



    Subpart E_Changes Subsequent to Original Qualification of Export 
                          Warehouse Proprietors

    Source: 25 FR 4717, May 28, 1960, unless otherwise noted. 
Redesignated at 40 FR 16835, Apr. 15, 1975.

                             Changes in Name



Sec. 44.101  Change in individual name.

    Where there is a change in the name of an individual operating as an 
export warehouse proprietor he shall, within 30 days of such change, 
make application on Form 2098 (5200.16) for an amended permit.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6961, 33 FR 9491, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 44.102  Change in trade name.

    Where there is a change in, or an addition or discontinuance of, a 
trade name used by an export warehouse proprietor in connection with 
operations authorized by his permit, the proprietor shall, within 30 
days of such change, addition, or discontinuance, make application on 
Form 2098 (5200.16) for an amended permit to reflect such change. The 
proprietor shall also furnish a true copy of any new trade name 
certificate or document issued to him, or statement in lieu thereof, 
required by Sec. 44.85.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6961, 33 FR 9491, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 44.103  Change in corporate name.

    Where there is a change in the name of a corporate export warehouse 
proprietor the proprietor shall, within 30 days of such change, make 
application on Form 2098 (5200.16) for an amended permit. The proprietor 
shall also furnish such documents as may be necessary to establish that 
the corporate name has been changed.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6961, 33 FR 9491, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975]

[[Page 112]]

                    Changes in Ownership and Control



Sec. 44.104  Fiduciary successor.

    If an administrator, executor, receiver, trustee, assignee, or other 
fiduciary, is to take over the business of an export warehouse 
proprietor, as a continuing operation, such fiduciary shall, before 
commencing operations, make application for permit and file bond as 
required by subpart D of this part, furnish certified copies, in 
duplicate, of the order of the court, or other pertinent documents, 
showing his appointment and qualification as such fiduciary, and make an 
opening inventory, in accordance with the provisions of Sec. 44.144; 
Provided, That where a diagram has been furnished by the predecessor, in 
accordance with the provisions of Sec. 44.88, the successor may adopt 
such diagram. However, where a fiduciary intends merely to liquidate the 
business, qualification as an export warehouse proprietor will not be 
required if he promptly files with the appropriate TTB officer a 
statement to that effect, together with an extension of coverage of the 
predecessor's bond, executed by the fiduciary, also by the surety on 
such bond, in accordance with the provisions of Sec. 44.126.

(72 Stat. 1421, 1422; 26 U.S.C. 5711, 5712, 5721)



Sec. 44.105  Transfer of ownership.

    If a transfer is to be made in ownership of the business of an 
export warehouse proprietor (including a change in the identity of the 
members of a partnership or association), such proprietor shall give 
notice, in writing, to the appropriate TTB officer, naming the proposed 
successor and the desired effective date of such transfer. The proposed 
successor shall, before commencing operations, qualify as a proprietor, 
in accordance with the applicable provisions of subpart D of this part: 
Provided, That where a diagram has been furnished by the proprietor in 
accordance with the provisions of Sec. 44.88, the proposed successor 
may adopt such diagram. The proprietor shall give such notice of 
transfer, and the proposed successor shall make application for permit 
and file bond, as required, in ample time for examination and approval 
thereof before the desired date of such change. The predecessor shall 
make a closing inventory and closing report, in accordance with the 
provisions of Sec. Sec. 44.146 and 44.151, respectively, and surrender, 
with such inventory and report, his permit, and the successor shall make 
an opening inventory, in accordance with the provisions of Sec. 44.144.

(72 Stat. 1421, 1422; 26 U.S.C. 5712, 5713, 5721, 5722)



Sec. 44.106  Change in officers or directors of a corporation.

    Where there is any change in the officers or directors of a 
corporation operating the business of an export warehouse proprietor, 
the proprietor shall furnish to the appropriate TTB officer notice, in 
writing, of the election of the new officers or directors within 30 days 
after such election.

(72 Stat. 1421; 26 U.S.C. 5712)



Sec. 44.107  Change in stockholders of a corporation.

    Where the issuance, sale, or transfer of the stock of a corporation, 
operating as an export warehouse proprietor, results in a change in the 
identity of the principal stockholders exercising actual or legal 
control of the operations of the corporation, the corporate proprietor 
shall, within 30 days after the change occurs, make application for a 
new permit; otherwise, the present permit shall be automatically 
terminated at the expiration of such 30-day period, and the proprietor 
shall dispose of all cigars, cigarettes, and cigarette papers and tubes 
on hand, in accordance with this part, make a closing inventory and 
closing report, in accordance with the provisions of Sec. Sec. 44.146 
and 44.151, respectively, and surrender his permit with such inventory 
and report. If the application for a new permit is timely made, the 
present permit shall continue in effect pending final action with 
respect to such application.

(72 Stat. 1421, 1422; 26 U.S.C. 5712, 5713, 5721, 5722)

[T.D. 6871, 31 FR 50, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975]

[[Page 113]]

                    Changes in Location and Premises



Sec. 44.108  Change in location.

    Whenever an export warehouse proprietor contemplates changing the 
location of his warehouse, the proprietor shall, before commencing 
operations at the new location, make an application, on Form 2098 
(5200.16) for an amended permit. The application shall be supported by 
an extension of coverage of the bond filed under this part, in 
accordance with the provisions of Sec. 44.126.

(72 Stat. 1421; 26 U.S.C. 5711, 5712)

[25 FR 4717, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30802, May 8, 2002]



Sec. 44.109  Change in address.

    Whenever any change occurs in the address, but not the location, of 
the warehouse of an export warehouse proprietor, as a result of action 
of local authorities, the proprietor shall, within 30 days of such 
change, make application on Form 2098 (5200.16) for an amended permit.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6961, 33 FR 9492, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 44.110  [Reserved]



Sec. 44.111  Change in export warehouse premises.

    Where an export warehouse is to be changed to an extent which will 
make inaccurate the description of the warehouse as set forth in the 
last application by the proprietor for permit, or the diagram, if any, 
furnished with such application, the proprietor shall first make 
application on Form 2098 (5200.16) for, and obtain, an amended permit. 
Such application shall describe the proposed change in the warehouse and 
shall be accompanied by a new diagram if required under Sec. 44.88.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6961 33 FR 9492, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 44.112  Emergency premises.

    In cases of emergency, the appropriate TTB officer may authorize, 
for a stated period, the temporary use of a place for the temporary 
storage of tobacco products, and cigarette papers and tubes, without 
making the application or furnishing the extension of coverage of bond 
required under Sec. Sec. 44.111 and 44.126, or the temporary separation 
of warehouse premises by means other than those specified in Sec. 
44.89, where such action will not hinder the effective administration of 
this part, is not contrary to law, and will not jeopardize the revenue.

[T.D. 6871, 31 FR 50, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



           Subpart F_Bonds and Extensions of Coverage of Bonds

    Source: 25 FR 4718, May 28, 1960, unless otherwise noted. 
Redesignated at 40 FR 16835, Apr. 15, 1975.



Sec. 44.121  Corporate surety.

    (a) Surety bonds required under the provisions of this part may be 
given only with corporate sureties holding certificates of authority 
from the Secretary of the Treasury as acceptable sureties on Federal 
bonds. Limitations concerning corporate sureties are prescribed by the 
Secretary in Treasury Department Circular No. 570, as revised (see 
paragraph (c) of this section). The surety shall have no interest 
whatever in the business covered by the bond.
    (b) Each bond and each extension of coverage of bond shall at the 
time of filing be accompanied by a power of attorney authorizing the 
agent or officer who executed the bond to so act on behalf of the 
surety. The appropriate TTB officer who is authorized to approve the 
bond may, whenever he deems it necessary, require additional evidence of 
the authority of the agent or officer to execute the bond or extension 
of coverage of bond. The power of attorney shall be prepared on a form 
provided by the surety company and executed under the corporate seal of 
the company. If the power of attorney submitted is other than a manually 
signed document, it shall be accompanied by a certificate of its 
validity.
    (c) Treasury Department Circular No. 570 (Companies Holding 
Certificates of Authority as Acceptable Sureties on

[[Page 114]]

Federal Bonds and as Acceptable Reinsuring Companies) is published in 
the Federal Register annually as of the first workday in July. As they 
occur, interim revisions of the circular are published in the Federal 
Register. Copies may be obtained from the Audit Staff, Bureau of 
Government Financial Operations, Department of the Treasury, Washington, 
DC 20226.

(July 30, 1947, ch. 390, 61 Stat. 648, as amended (6 U.S.C. 6, 7); sec. 
202, Pub. L. 85-859, 72 Stat. 1421, as amended (26 U.S.C. 5711))

[T.D. ATF-92, 46 FR 46923, Sept. 23, 1981]



Sec. 44.122  Deposits of bonds, notes, or obligations in lieu of corporate surety.

    Bonds or notes of the United States, or other obligations which are 
unconditionally guaranteed as to both interest and principal by the 
United States, may be pledged and deposited by the export warehouse 
proprietor as security in connection with bond to cover his operations, 
in lieu of the corporate surety, in accordance with the provisions of 
Treasury Department Circular No. 154, revised (31 CFR part 225). Such 
bonds or notes which are nontransferable, or the pledging of which will 
not be recognized by the Treasury Department, are not acceptable as 
security in lieu of corporate surety.

(72 Stat. 1421, 61 Stat. 650; 26 U.S.C. 5711, 6 U.S.C. 15)



Sec. 44.123  Amount of bond.

    The amount of the bond filed by the export warehouse proprietor, as 
required by Sec. 44.86, shall be not less than the estimated amount of 
tax which may at any time constitute a charge against the bond: 
Provided, That the amount of any such bond (or the total amount where 
original and strengthening bonds are filed) shall not exceed $200,000 
nor be less than $1,000. The charge against such bond shall be subject 
to increase upon receipt of tobacco products, and cigarette papers and 
tubes into the export warehouse and to decrease as satisfactory evidence 
of exportation, or satisfactory evidence of such other disposition as 
may be used as the lawful basis for crediting such bond, is received by 
the appropriate TTB officer with respect to such articles transferred or 
removed. When the limit of liability under a bond given in less than the 
maximum amount has been reached, no additional shipments shall be 
received into the warehouse until a strengthening or superseding bond is 
filed, as required by Sec. 44.124 or Sec. 44.125.

(72 Stat. 1421, as amended; 26 U.S.C. 5711)

[T.D. 6871, 31 FR 50, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.124  Strengthening bond.

    Where the appropriate TTB officer determines that the amount of the 
bond, under which an export warehouse proprietor is currently carrying 
on business, no longer adequately protects the revenue, and such bond is 
in an amount of less than $200,000, the appropriate TTB officer may 
require the proprietor to file a strengthening bond in an appropriate 
amount with the same surety as that on the bond already in effect, in 
lieu of a superseding bond to cover the full liability on the basis of 
Sec. 44.123. The appropriate TTB officer shall refuse to approve any 
strengthening bond where any notation is made thereon which is intended 
or which may be construed as a release of any former bond, or as 
limiting the amount of either bond to less than its full amount.

(72 Stat. 1421; 26 U.S.C. 5711)

[25 FR 4718, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30802, May 8, 2002.



Sec. 44.125  Superseding bond.

    An export warehouse proprietor shall file a new bond to supersede 
his current bond, immediately when (a) the corporate surety on the 
current bond becomes insolvent, (b) the appropriate TTB officer approves 
a request from the surety on the current bond to terminate his liability 
under the bond, (c) payment of any liability under a bond is made by the 
surety thereon, or (d) the appropriate TTB officer considers such a 
superseding bond necessary for the protection of the revenue.

(72 Stat. 1421; 26 U.S.C. 5711)

[[Page 115]]



Sec. 44.126  Extension of coverage of bond.

    An extension of the coverage of any bond filed under this part shall 
be manifested on Form 2105 (5000.7) by the export warehouse proprietor 
and by the surety on the bond with the same formality and proof of 
authority as required for the execution of the bond.

(72 Stat. 1421; 26 U.S.C. 5711)

[25 FR 4718, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30802, May 8, 2002.



Sec. 44.127  Approval of bond and extension of coverage of bond.

    No person shall commence operations under any bond, nor extend his 
operations, until he receives from the appropriate TTB officer notice of 
his approval of the bond or of an appropriate extension of coverage of 
the bond required under this part.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 44.128  Termination of liability of surety under bond.

    The liability of a surety on any bond required by this part shall be 
terminated only as to operations on and after the effective date of a 
superseding bond, or the date of approval of the discontinuance of 
operations by the export warehouse proprietor, or otherwise in 
accordance with the termination provisions of the bond. The surety shall 
remain bound in respect of any liability for unpaid taxes, penalties, 
and interest, not in excess of the amount of the bond, incurred by the 
proprietor while the bond is in force.

(72 Stat. 1421; 26 U.S.C. 5711)



Sec. 44.129  Release of bonds, notes, and obligations.

    (a) Bonds, notes, and other obligations of the United States, 
pledged and deposited as security in connection with bonds required by 
this part, shall be released only in accordance with the provisions of 
Treasury Department Circular No. 154 (31 CFR Part 225--Acceptance of 
Bonds, Notes or Other Obligations Issued or Guaranteed by the United 
States as Security in Lieu of Surety or Sureties on Penal Bonds). When 
the appropriate TTB officer is satisfied that it is no longer necessary 
to hold such security, he shall fix the date or dates on which a part or 
all of such security may be released. At any time prior to the release 
of such security, the appropriate TTB officer may, for proper cause, 
extend the date of release of such security for such additional length 
of time as in his judgment may be appropriate.
    (b) Treasury Department Circular No. 154 is periodically revised and 
contains the provisions of 31 CFR part 225 and the forms prescribed in 
31 CFR part 225. Copies of the circular may be obtained from the Audit 
Staff, Bureau of Government Financial Operations, Department of the 
Treasury, Washington, DC 20226.

(Sec. 202, Pub. L. 85-859, 72 Stat. 1421 (26 U.S.C. 5711); July 30, 
1947, ch. 390, 61 Stat. 650 (6 U.S.C. 15))

[T.D. ATF-92, 46 FR 46923, Sept. 23, 1981; 46 FR 48644, Oct. 2, 1981]



          Subpart G_Operations by Export Warehouse Proprietors

    Source: 25 FR 4719, May 28, 1960, unless otherwise noted. 
Redesignated at 40 FR 16835, Apr. 15, 1975.



Sec. 44.141  Sign.

    Every export warehouse proprietor shall place and keep, on the 
outside of the building in which his warehouse is located, or at the 
entrance of his warehouse, where it can be plainly seen, a sign, in 
plain and legible letters, exhibiting the name under which he operates 
and (a) the type of business (``Export Warehouse Proprietor'') or (b) 
the number of the permit issued to the export warehouse proprietor under 
this part.



Sec. 44.142  Records.

    Every export warehouse proprietor must keep in such warehouse 
complete and concise records, containing the:
    (a) Number of containers;
    (b) Unit type (e. g., cartons, cases);
    (c) Kind of articles (e. g., small cigarettes);
    (d) Name of manufacturer and brand; and,
    (e) Quantity of tobacco products, cigarette papers and tubes 
received, removed, transferred, destroyed, lost or

[[Page 116]]

returned to manufacturers or to customs warehouse proprietors. In 
addition to such records, the export warehouse proprietor shall retain a 
copy of each Form 5200.14 received from a manufacturer, another export 
warehouse proprietor, or customs warehouse proprietor, from whom tobacco 
products and cigarette papers and tubes are received and a copy of each 
Form 5200.14 covering the tobacco products, and cigarette papers and 
tubes removed from the warehouse. The entries for each day in the 
records maintained or kept under this section shall be made by the close 
of the business day following that on which the transactions occur. No 
particular form of records is prescribed, but the information required 
shall be readily ascertainable. The records and copies of Form 5200.14 
shall be retained for 3 years following the close of the calendar year 
in which the shipments were received or removed and shall be made 
available for inspection by any appropriate TTB officer upon request.

(Approved by the Office of Management and Budget under control number 
1512-0367)

(72 Stat. 1423, as amended; 26 U.S.C. 5741)

[T.D. ATF-421, 64 FR 71925, Dec. 22, 1999]

                               Inventories



Sec. 44.143  General.

    (a) Every export warehouse proprietor shall at the times specified 
in this subpart make a true and accurate inventory of products held on 
TTB Form 5220.3 (3373).
    (b) This inventory shall be subject to verification by an 
appropriate TTB officer. A copy of each inventory shall be retained by 
the export warehouse proprietor for 3 years following the close of the 
calendar year in which the inventory is made and shall be made available 
for inspection by any appropriate TTB officer upon request.

[T.D. ATF-289, 54 FR 48841, Nov. 27, 1989, as amended by T.D. ATF-421, 
64 FR 71925, Dec. 22, 1999; T.D. ATF-424, 64 FR 71933, Dec. 22, 1999; 
T.D. ATF-480, 67 FR 30802, May 8, 2002]



Sec. 44.144  Opening.

    An opening inventory shall be made by the export warehouse 
proprietor at the time of commencing business. The date of commencing 
business under this part shall be the effective date indicated on the 
permit issued under Sec. 44.93. A similar inventory shall be made by 
the export warehouse proprietor when he files a superseding bond. The 
date of such inventory shall be the effective date of such superseding 
bond.

(72 Stat. 1422; 26 U.S.C. 5721)

[25 FR 4719, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30802, May 8, 2002]



Sec. 44.145  Special.

    A special inventory shall be made by the export warehouse proprietor 
whenever required by any appropriate TTB officer.

(72 Stat. 1422; 26 U.S.C. 5721)



Sec. 44.146  Closing.

    A closing inventory shall be made by the export warehouse proprietor 
when he transfers ownership or concludes business. Where the proprietor 
transfers ownership the closing inventory shall be made as of the day 
preceding the date of the opening inventory of the successor.

(72 Stat. 1422; 26 U.S.C. 5721)

[25 FR 4719, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30802, May 8, 2002]

                                 Reports



Sec. 44.147  General.

    Every export warehouse proprietor shall make a report on Form 5220.4 
of all tobacco products, and cigarette papers and tubes on hand, 
received, removed, transferred, and lost or destroyed. Such report shall 
be made at the times specified in this subpart and shall be made whether 
or not any operations or transactions occurred during the period covered 
by the report. A copy of each report shall be retained by the export 
warehouse proprietor at his warehouse for 3 years following the close of 
the calendar year covered in

[[Page 117]]

such reports, and made available for inspection by any appropriate TTB 
officer upon his request.

(72 Stat. 1422; 26 U.S.C. 5722)

[T.D. 6871, 31 FR 51, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. ATF-243, 51 FR 
43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71925, Dec. 22, 1999; T.D. ATF-
424, 64 FR 71933, Dec. 22, 1999; T.D. ATF-480, 67 FR 30802, May 8, 2002]



Sec. 44.148  Opening.

    An opening report, covering the period from the date of the opening 
inventory, or inventory made in connection with a superseding bond, to 
the end of the month, shall be made on or before the 20th day following 
the end of the month in which the business was commenced.

(72 Stat. 1422; 26 U.S.C. 5722)



Sec. 44.149  Monthly.

    A report for each full month shall be made on or before the 20th day 
following the end of the month covered in the report.

(72 Stat. 1422; 26 U.S.C. 5722)



Sec. 44.150  Special.

    A special report, covering the unreported period to the day 
preceding the date of any special inventory required by an appropriate 
TTB officer, shall be made with such inventory. Another report, covering 
the period from the date of such inventory to the end of the month, 
shall be made on or before the 20th day following the end of the month 
in which the inventory was made.

(72 Stat. 1422; 26 U.S.C. 5722)



Sec. 44.151  Closing.

    A closing report, covering the period from the first of the month to 
the date of the closing inventory, or the day preceding the date of an 
inventory made in connection with a superseding bond, shall be made with 
such inventory.

(72 Stat. 1422; 26 U.S.C. 5722)

                                 Claims



Sec. 44.152  Claim for remission of tax liability.

    Remission of the tax liability on tobacco products, and cigarette 
papers and tubes may be extended to the export warehouse proprietor 
liable for the tax where such articles in bond are lost (otherwise than 
by theft) or destroyed, by fire, casualty, or act of God, while in the 
possession or ownership of such proprietor. Where articles are so lost 
or destroyed the proprietor shall report promptly such fact, and the 
circumstances, to the appropriate TTB officer. If the proprietor wishes 
to be relieved of the tax liability, the proprietor must prepare and 
file a claim on TTB Form 5620.8. The nature, date, place, and extent of 
the loss or destruction must be stated in such claim. The claim must be 
accompanied by such evidence as is necessary to establish to the 
satisfaction of the appropriate TTB officer that the claim is valid. 
When the appropriate TTB officer has acted on the claim, such officer 
will return a copy of TTB Form 5620.8 to the proprietor as notice of 
such action. The proprietor must keep the copy of TTB Form 5620.8 for 3 
years following the close of the calendar year in which the claim is 
filed.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6961, 33 FR 9492, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71925, Dec. 22, 
1999; T.D. ATF-480, 67 FR 30802, May 8, 2002]



Sec. 44.153  Claim for abatement of assessment.

    A claim for abatement of the unpaid portion of the assessment of any 
tax on tobacco products, and cigarette papers and tubes, or any 
liability in respect of such tax, alleged to be excessive in amount, 
assessed after the expiration of the period of limitation applicable 
thereto, or erroneously or illegally assessed, shall be filed on Form 
5620.8. Such claim shall set forth the reasons relied upon for the 
allowance of the claim and shall be supported by such evidence as is 
necessary to establish to

[[Page 118]]

the satisfaction of the appropriate TTB officer that the claim is valid.

(68A Stat. 792; 26 U.S.C. 6404)

[T.D. 6871, 31 FR 51, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19341, May 22, 
1987; T.D. ATF-421, 64 FR 71925, Dec. 22, 1999; T.D. ATF-480, 67 FR 
30802, May 8, 2002]



Sec. 44.154  Claim for refund of tax.

    The taxes paid on tobacco products, and cigarette papers and tubes 
may be refunded (without interest) to an export warehouse proprietor on 
proof satisfactory to the appropriate TTB officer that the claimant 
proprietor paid the tax on such articles which were after taxpayment 
lost (otherwise than by theft) or destroyed, by fire, casualty, or act 
of God, while in the possession or ownership of such export warehouse 
proprietor, or withdrawn by him from the market. Any claim for refund 
under this section shall be prepared on Form 5620.8, in duplicate, and 
shall include a statement that the tax imposed by 26 U.S.C. 7652 or 
chapter 52, was paid in respect to the articles covered by the claim, 
and that the articles were lost, destroyed, or withdrawn from the market 
within 6 months preceding the date the claim is filed. The claim must be 
filed on TTB Form 5620.8 and supported by such evidence as is necessary 
to establish to the satisfaction of the appropriate TTB officer that the 
claim is valid. The duplicate of the claim shall be retained by the 
export warehouse proprietor for 3 years following the close of the 
calendar year in which the claim is filed. Where an export warehouse 
proprietor has paid the tax on tobacco products, or cigarette papers or 
tubes, he may file claim for refund of an overpayment of tax under 
subpart A of part 46 of this chapter if, at the time the tax was paid, 
these articles had been exported, destroyed, or otherwise disposed of in 
such a manner that tax was not due and payable.

(68A Stat. 791, 72 Stat. 9, 1419, as amended; 26 U.S.C. 6402, 6423, 
5705)

[T.D. 6961, 33 FR 9492, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55856, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986; T.D. ATF-251, 52 FR 19341, May 22, 1987; T.D. ATF-421, 64 FR 
71925, Dec. 22, 1999; T.D. ATF-457, 66 FR 32220, June 14, 2001; T.D. 
ATF-480, 67 FR 30802, May 8, 2002]



          Subpart H_Suspension and Discontinuance of Operations



Sec. 44.161  Discontinuance of operations.

    Every export warehouse proprietor who desires to discontinue 
operations and close out his warehouse shall dispose of all cigars, 
cigarettes, and cigarette papers and tubes on hand, in accordance with 
this part, making a closing inventory and closing report, in accordance 
with the provisions of Sec. Sec. 44.146 and 44.151, respectively, and 
surrender, with such inventory and report, his permit to the appropriate 
TTB officer as notice of such discontinuance, in order that the 
appropriate TTB officer may terminate the liability of the surety on the 
bond of the export warehouse proprietor.

(72 Stat. 1422; 26 U.S.C. 5721, 5722)

[T.D. 6871, 31 FR 51, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975]



Sec. 44.162  Suspension and revocation of permit.

    Where the appropriate TTB officer has reason to believe that an 
export warehouse proprietor has not in good faith complied with the 
provisions of 26 U.S.C. chapter 52, and regulations thereunder, or with 
any other provision of 26 U.S.C. with intent to defraud, or has violated 
any condition of his permit, or has failed to disclose any material 
information required or made any material false statement in the 
application for permit, or has failed to maintain his premises, in such 
manner as to protect the revenue, the appropriate TTB officer shall 
issue an order, stating the facts charged, citing such export warehouse 
proprietor to show cause why his permit should not be

[[Page 119]]

suspended or revoked after hearing thereon in accordance with part 71 of 
this chapter, which part (including the provisions relating to appeals) 
is made applicable to such proceedings. If the hearing examiner, or the 
Administrator, on appeal, decides the permit should be suspended, for 
such time as to him seems proper, or be revoked, the appropriate TTB 
officer shall by order give effect to such decision.

(72 Stat. 1421; 26 U.S.C. 5713)

[25 FR 4720, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55856, Sept. 28, 1979; T.D. ATF-463, 
66 FR 42734, Aug. 15, 2001]

Subpart I [Reserved]



Subpart J_Removal of Shipments of Tobacco Products and Cigarette Papers 
       and Tubes by Manufacturers and Export Warehouse Proprietors

                         Packaging Requirements



Sec. 44.181  Packages.

    All tobacco products, and cigarette papers and tubes will, before 
removal or transfer under this subpart, be put up by the manufacturer in 
packages which shall bear the label or notice, tax classification, and 
mark, as required by this subpart. For purposes of this subpart, the 
package does not include the cellophane wrapping material.

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-421, 64 FR 71925, Dec. 22, 1999]



Sec. 44.182  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.

(72 Stat. 1422; 26 U.S.C. 5723, 18 U.S.C. 1301)

[T.D. 6871, 31 FR 51, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.183  Indecent or immoral material.

    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.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 51, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.184  Mark.

    Every package of tobacco products shall, before removal from the 
factory under this subpart, have adequately imprinted thereon, or on a 
label securely affixed thereto, a mark as specified in this section. The 
mark may consist of the name of the manufacturer removing the product 
and the location (by city and State) of the factory from which the 
products are to be so removed, or may consist of the permit number of 
the factory from which the products are to be so removed. Any trade name 
of the manufacturer approved as provided in Sec. 40.65 of this chapter 
may be used in the mark as the name of the manufacturer.) As an 
alternative, where tobacco products are both packaged and removed by the 
same manufacturer, either at the same or different factories, the mark 
may consist of the name of such manufacturer if the factory where 
package is identified on or in the package by a means approved by the 
appropriate TTB officer. Before using the alternative, the manufacturer 
shall notify the appropriate TTB officer in writing of the name to be 
used as the name of the manufacturer and the means to be used for 
identifying the factory where

[[Page 120]]

packaged. If approved by him the appropriate TTB officer shall return 
approved copies of the notice to the manufacturer. A copy of the 
approved notice shall be retained as part of the factory records at each 
of the factories operated by the manufacturer.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 51, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-460, 66 FR 39093, July 27, 
2001]



Sec. 44.185  Label or notice.

    Every package of tobacco products shall, before removal from the 
factory under this subpart, have adequately imprinted thereon, or on a 
label securely affixed thereto, the words ``Tax-exempt. For use outside 
U.S.'' or the words ``U.S. Tax-exempt. For use outside U.S.'' except 
where a stamp, sticker, or notice, required by a foreign country or a 
possession of the United States, which identifies such country or 
possession, is so imprinted or affixed.

(26 U.S.C. 5704, 5723)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-465, 66 FR 45618, Aug. 29, 
2001]



Sec. 44.186  Tax classification for cigars.

    Before removal from a factory under this subpart, every package of 
cigars shall have adequately imprinted on it, or on a label securely 
affixed to it--
    (a) The designation ``cigars'';
    (b) The quantity of cigars contained in the package; and
    (c) For small cigars, the classification of the product for tax 
purposes; (i.e., either ``small'' or ``little'').

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-80, 46 FR 18312, Mar. 24, 1981]



Sec. 44.187  Shipping containers.

    Each shipping case, crate, or other container in which tobacco 
products, or cigarette papers or tubes are to be shipped or removed, 
under this part, shall bear a distinguishing number, such number to be 
assigned by the manufacturer or export warehouse proprietor. Removals of 
tobacco products, and cigarette papers and tubes from an export 
warehouse shall be made, insofar as practicable, in the same containers 
in which they were received from the factory.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]

                         Consignment of Shipment



Sec. 44.188  General.

    Tobacco products, and cigarette papers and tubes transferred or 
removed from a factory or an export warehouse, under this part, without 
payment of tax, shall be consigned as required by this subpart.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.189  Transfers between factories and export warehouses.

    Where tobacco products, and cigarette papers and tubes are 
transferred, without payment of tax, from a factory to an export 
warehouse or between export warehouses, such articles shall be consigned 
to the export warehouse proprietor to whom such articles are to be 
delivered.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.190  Return of shipment to a manufacturer or customs warehouse 

proprietor.

    Where tobacco products, and cigarette papers and tubes are returned 
by an export warehouse proprietor to a manufacturer or where cigars are 
so returned to a customs warehouse proprietor, such articles shall be 
consigned to

[[Page 121]]

the manufacturer or customs warehouse proprietor to whom the shipment is 
to be returned.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.191  To officers of the armed forces for subsequent exportation.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse for delivery to officers of the 
armed forces of the United States in this country for subsequent 
shipment to, and use by, the armed forces outside the United States, the 
manufacturer or export warehouse proprietor shall consign such articles 
to the receiving officer at the armed forces base or installation, in 
this country, to which they are to be delivered.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.192  To vessels and aircraft for shipment to noncontiguous foreign 

countries and possessions of the United States.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse, for direct delivery to a vessel 
or aircraft for transportation to a noncontiguous foreign country, 
Puerto Rico, the Virgin Islands, or a possession of the United States, 
the manufacturer or export warehouse proprietor shall consign the 
shipment directly to the vessel or aircraft, or to his agent at the port 
for delivery to the vessel or aircraft.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.193  To a Federal department or agency.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse and are destined for ultimate 
delivery in a noncontiguous foreign country, Puerto Rico, the Virgin 
Islands, or a possession of the United States, but the shipment is to be 
delivered in the United States to a Federal department or agency, or to 
an authorized dispatch agent, transportation officer, or port director 
of such a department or agency for forwarding on to the place of 
destination of the shipment, the manufacturer or export warehouse 
proprietor shall consign the shipment to the Federal department or 
agency, or to the proper dispatch agent, transportation officer, or port 
director of such department or agency.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28088, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.194  To district director of customs for shipment to contiguous 

foreign countries.

    Where tobacco products, or cigarette papers or tubes are removed 
from a factory or an export warehouse for export to a contiguous foreign 
country, the manufacturer or export warehouse proprietor shall consign 
the shipment to the district director of customs at the border or other 
port of exit.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6961, 33 FR 9492, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.195  To Government vessels and aircraft for consumption as supplies.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse for delivery to a vessel or 
aircraft engaged in an activity for the Government of the United States 
or a foreign

[[Page 122]]

government, for consumption as supplies beyond the jurisdiction of the 
internal revenue laws of the United States, the manufacturer or export 
warehouse proprietor shall consign the shipment to the proper officer on 
board the vessel or aircraft to which the shipment is to be delivered.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 52, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.196  To district director of customs for consumption as supplies on 

commercial vessels and aircraft.

    Where tobacco products, or cigarette papers or tubes are removed 
from a factory or an export warehouse for consumption as supplies beyond 
the jurisdiction of the internal revenue laws of the United States, the 
manufacturer or export warehouse proprietor shall consign the shipment 
to the district director of customs at the port at which the shipment is 
to be laden.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6961, 33 FR 9493, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.196a  To a foreign-trade zone.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse for delivery to a foreign-trade 
zone, under zone restricted status for the purpose of exportation or 
storage, the manufacturer or export warehouse proprietor shall consign 
the shipment to the Zone Operator in care of the customs officer in 
charge of the zone.

(48 Stat. 999, as amended, 72 Stat. 1418, as amended; 19 U.S.C. 81c, 26 
U.S.C. 5704)

[T.D. 6871, 31 FR 53, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.197  For export by parcel post.

    Tobacco products, and cigarette papers and tubes removed from a 
factory or an export warehouse, for export by parcel post to a person in 
a foreign country, Puerto Rico, the Virgin Islands, or a possession of 
the United States, shall be addressed and consigned to such person when 
the articles are deposited in the mails. Waiver of his right to withdraw 
such articles from the mails shall be stamped or written on each 
shipping container and be signed by the manufacturer or export warehouse 
proprietor making the shipment.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 53, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]

                      Notice of Removal of Shipment



Sec. 44.198  Preparation.

    For each shipment of tobacco products, and cigarette papers and 
tubes transferred or removed from his factory, under bond and this part, 
the manufacturer shall prepare a notice of removal, Form 5200.14, and 
for each shipment of tobacco products, and cigarette papers and tubes 
transferred or removed from his export warehouse, under bond and this 
part, the export warehouse proprietor shall prepare a notice of removal, 
Form 5200.14. Each such notice shall be given a serial number by the 
manufacturer or export warehouse proprietor in a series beginning with 
number 1, with respect to the first shipment removed from the factory or 
export warehouse under this part and commencing again with number 1 on 
January 1 of each year thereafter.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 53, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71925, Dec. 22, 
1999]



Sec. 44.199  Disposition.

    After actual removal from his factory or export warehouse of the 
shipment described on the notice of removal, Form 5200.14, the 
manufacturer or export warehouse proprietor shall, except where the 
shipment is to be exported by parcel post, promptly forward one copy of 
the notice of removal

[[Page 123]]

to the appropriate TTB officer. A copy of each such notice shall be 
retained by the manufacturer or export warehouse proprietor as a part of 
his records, for 3 years following the close of the calendar year in 
which the shipment was removed and shall be made available for 
inspection by any appropriate TTB officer upon his request. The 
manufacturer or export warehouse proprietor shall dispose of the other 
copies of each notice of removal as required by this subpart.

(72 Stat. 1418; 26 U.S.C. 5704)

[25 FR 4722, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975; 
T.D. ATF-421, 64 FR 71926, Dec. 22, 1999; T.D. ATF-480, 67 FR 30802, May 
8, 2002]



Sec. 44.200  Transfers between factories and export warehouses.

    Where tobacco products, and cigarette papers and tubes are 
transferred from a factory to an export warehouse or between export 
warehouses, the manufacturer or export warehouse proprietor making the 
shipment shall forward three copies of the notice of removal, Form 
5200.14 to the export warehouse proprietor to whom the shipment is 
consigned. Immediately upon receipt of the shipment at his warehouse, 
the export warehouse proprietor shall properly execute the certificate 
of receipt on each copy of the notice of removal, noting thereon any 
discrepancy; return one copy to the manufacturer or export warehouse 
proprietor making the shipment for filing with the appropriate TTB 
officer; retain one copy at his warehouse as a part of his records; and 
file the remaining copy with his report, required by Sec. 44.147.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 53, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.201  Return to manufacturer or customs warehouse proprietor.

    Where tobacco products, and cigarette papers and tubes are removed 
from an export warehouse for return to the factory, or cigars are 
removed from such a warehouse for return to a customs warehouse, the 
export warehouse proprietor making the shipment shall forward two copies 
of the notice of removal, Form 5200.14, to the manufacturer or customs 
warehouse proprietor to whom the shipment is consigned. Immediately upon 
receipt of the shipment at his factory or warehouse, the manufacturer or 
customs warehouse proprietor shall properly execute the certificate of 
receipt on both copies of the notice of removal, noting thereon any 
discrepancy, and return one copy to the export warehouse proprietor 
making the shipment for filing with the appropriate TTB officer. The 
other copy of the notice of removal shall be retained by the 
manufacturer or customs warehouse proprietor, as a part of his records, 
for 3 years following the close of the calendar year in which the 
shipment was received and shall be made available for inspection by any 
appropriate TTB officer upon his request.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 53, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.202  To officers of the armed forces for subsequent exportation.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse for delivery to officers of the 
armed forces of the United States in this country for subsequent 
shipment to, and use by, the armed forces outside the United States, the 
manufacturer or export warehouse proprietor making the removal shall 
forward a copy of the notice of removal, Form 5200.14, to the officer at 
the base or installation authorized to receive the articles described on 
the notice of removal. Upon execution by the armed forces receiving 
officer of the certificate of receipt on the copy of the notice of 
removal,

[[Page 124]]

he shall return such copy to the manufacturer or export warehouse 
proprietor making the shipment for filing with the appropriate TTB 
officer.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 53, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.203  To noncontiguous foreign countries and possessions of the United 

States.

    Where tobacco products, or cigarette papers or tubes are removed 
from a factory or an export warehouse for direct delivery to a vessel or 
aircraft for transportation to a noncontiguous foreign country, Puerto 
Rico, the Virgin Islands, or a possession of the United States, the 
manufacturer or export warehouse proprietor making the shipment shall 
file two copies of the notice of removal, Form 5200.14, with the office 
of the district director of customs at the port where the shipment is to 
be laden. Such copies of the notice of removal should be filed with the 
related shipper's export declaration, Commerce Form 7525-V. In the event 
the copies of the notice of removal are not filed with the shipper's 
export declaration, when the copies of the notice are filed with the 
district director of customs they shall show all particulars necessary 
to enable that officer to associate the notice with the related 
shipper's export declaration and any other documents filed with his 
office in connection with the shipment. After the vessel or aircraft on 
which the shipment has been laden clears or departs from the port of 
lading the customs authority shall execute the certificate of 
exportation on both copies of the notice of removal, retain one copy for 
his records, and deliver or transmit the other copy to the manufacturer 
or export warehouse proprietor making the shipment for filing with the 
appropriate TTB officer.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6961, 33 FR 9493, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.204  To a Federal department or agency.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse and are destined for ultimate 
delivery in a noncontiguous foreign country, Puerto Rico, the Virgin 
Islands, or a possession of the United States, but the shipment is to be 
delivered to a Federal department or agency, or to an authorized 
dispatch agent, transportation officer, or port director of such a 
department or agency for forwarding on to the place of destination of 
the shipment, the manufacturer or export warehouse proprietor making the 
shipment shall furnish a copy of the notice of removal, Form 5200.14, to 
the Federal department or agency, or an officer thereof at the port, 
receiving the shipment for ultimate transmittal to the place of 
destination, in order that such department, agency, or officer can 
properly execute the certificate of receipt on such notice to evidence 
receipt of the shipment for transmittal to a place beyond the 
jurisdiction of the internal revenue laws of the United States. After 
completing such certificate, the Federal department, agency, or officer 
shall return the copy of the notice of removal, so executed, to the 
manufacturer or export warehouse proprietor making the shipment for 
filing with the appropriate TTB officer.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 53, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.205  To contiguous foreign countries.

    (a) Where tobacco products, or cigarette papers or tubes are removed 
from a factory or an export warehouse for export to a contiguous foreign 
country, the manufacturer or export warehouse proprietor making the 
shipment shall--
    (1) Furnish to the district director of Customs at the port of exit 
two copies of the notice of removal, Form 5200.14, together with the 
related shipper's export declaration, Commerce Form 7525-V (if 
required); and,
    (2) If copies of the notice of removal are not filed with the 
shippers export

[[Page 125]]

declaration, or if a shipment is for the armed forces of the United 
States in the contiguous foreign country and a shipper's export 
declaration is not required, show all the information on the notice of 
removal when it is filed so that the Customs officer is able to 
associate the notice with the related shipper's export declaration (if 
any) or other documents filed with Customs for the shipment.
    (b) When a shipment has been cleared by Customs from the United 
States, and when the Customs officer at the port of exit is satisfied 
that the products have departed from the United States, he shall--
    (1) Complete the certificate of exportation on both copies of the 
notice of removal;
    (2) Retain one copy of the notice of removal for his records; and,
    (3) Return the other copy to the manufacturer or export warehouse 
proprietor making the shipment for filing with the appropriate TTB 
officer.
    (c) The Customs officer may, when he considers it necessary to 
establish that the merchandise was actually exported, require a landing 
certificate before he completes the certificate of exportation specified 
in paragraph (b)(1) of this section. If practical, the Customs officer 
will give advance notice to the manufacturer or export warehouse 
proprietor of the type of transactions for which a landing certificate 
will be required. However, failure to notify the manufacturer or 
proprietor in advance will not prevent the Customs officer from 
requiring a landing certificate for specific exportations when he 
considers it necessary to protect the revenue. In any case, the Customs 
officer will advise the manufacturer or proprietor before departure of 
the shipment from the United States as to those exports for which a 
landing certificate will be required.
    (d) The provisions of this section relating to landing certificates 
also apply when a Form 5200.14 is not required for each transaction (for 
example: When multiple exportations, individually documented by 
commercial records, are consolidated on a single Form 5200.14 pursuant 
to an approved alternate procedure under Sec. 44.72). The provisions 
apply to each transaction, regardless of the manner in which it is 
documented, unless specifically provided otherwise in the alternate 
procedure.

(Sec. 202, Pub. L. 85-859, 72 Stat. 1418; (26 U.S.C. 5704); Sec. 622, 
Act of June 17, 1930, 49 Stat. 759 (19 U.S.C. 1622))

[T.D. ATF-52, 43 FR 59287, Dec. 19, 1978, as amended by T.D. ATF-232, 51 
FR 28089, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.206  To Government vessels and aircraft for consumption as supplies.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse for direct delivery to a vessel or 
aircraft, engaged in an activity for the Government of the United States 
or a foreign government, for consumption as supplies beyond the 
jurisdiction of the internal revenue laws of the United States, the 
manufacturer or export warehouse proprietor making the shipment shall 
forward a copy of the notice of removal, Form 5200.14, to the officer of 
the vessel or aircraft authorized to receive the shipment. Upon 
execution by the receiving officer of the vessel or aircraft of the 
certificate of receipt on the copy of the notice of removal, he shall 
return such copy to the manufacturer or export warehouse proprietor 
making the shipment for filing with the appropriate TTB officer.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 54, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.207  To commercial vessels and aircraft for consumption as supplies.

    Where tobacco products, or cigarette papers or tubes are removed 
from a factory or an export warehouse for delivery to a vessel or 
aircraft entitled to receive such articles for consumption as supplies 
beyond the jurisdiction of the internal revenue laws of the United 
States, the manufacturer or export warehouse proprietor making the 
shipment shall file two copies of the notice of removal, Form 5200.14, 
with the district director of customs at the port where the shipment is 
to be laden in

[[Page 126]]

sufficient time to permit delivery of the two copies of the notice of 
removal to the customs officer who will inspect the shipment and 
supervise its lading. After inspection and lading of the shipment the 
customs officer shall note on the copies of the notice of removal any 
discrepancy between the shipment inspected and laden under his 
supervision and that described on the notice of removal or any 
limitation on the quantity to be laden; complete and sign the 
certificate of inspection and lading; and return both copies of the 
notice of removal to the district director of customs. The district 
director of customs shall execute the certificate of clearance on both 
copies of the notice of removal, retain one copy for his records, and 
forward the other copy to the manufacturer or export warehouse 
proprietor making the shipment for filing with the appropriate TTB 
officer. Where the vessel or aircraft does not clear from the port at 
which the shipment is laden, the customs officer supervising the lading 
of the shipment shall require the person on board the vessel or aircraft 
authorized to receive the shipment to execute the certificate of receipt 
on both copies of the notice of removal to indicate the trade or 
activity in which the vessel or aircraft is engaged.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6961, 33 FR 9493, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.207a  To a foreign-trade zone.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse for delivery to a foreign-trade 
zone, under zone restricted status for the purpose of exportation or 
storage, the manufacturer or export warehouse proprietor making the 
shipment shall forward two copies of the notice of removal, Form 
5200.14, to the customs officer in charge of the zone. Upon receipt of 
the shipment, the customs officer shall execute the certificate of 
receipt on each copy of the form, noting thereon any discrepancy, retain 
one copy for his records, and forward the other copy to the manufacturer 
or export warehouse proprietor making the shipment for filing with the 
appropriate TTB officer.

(48 Stat. 999, as amended, 72 Stat. 1418, as amended; 19 U.S.C. 81c, 26 
U.S.C. 5704)

[T.D. 6871, 31 FR 54, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.208  For export by parcel post.

    Where tobacco products, and cigarette papers and tubes are removed 
from a factory or an export warehouse, for export by parcel post, the 
manufacturer or export warehouse proprietor shall present one copy of 
the notice of removal, Form 5200.14, together with the shipping 
containers, to the postal authorities with the request that the 
postmaster or his agent execute the certificate of mailing on the form. 
Where the manufacturer or export warehouse proprietor so desires, he may 
cover under one notice of removal all the merchandise removed under this 
part for export by parcel post which is delivered at one time to the 
postal service for that purpose. The manufacturer or export warehouse 
proprietor shall immediately file the receipted copy of the notice of 
removal with the appropriate TTB officer.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 54, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]

                        Miscellaneous Provisions



Sec. 44.209  Diversion of shipment to another consignee.

    If, after removal of a shipment from a factory or an export 
warehouse, the manufacturer or export warehouse proprietor desires to 
divert the shipment to another consignee, he shall so notify the 
appropriate TTB officer. The manufacturer or export warehouse proprietor 
shall describe the shipment, set forth the serial number and date of the 
notice of removal under which the shipment was removed from his factory 
or export warehouse, and furnish the name and address of the new 
consignee,

[[Page 127]]

who shall comply with all applicable provisions of this part.

(72 Stat. 1418; 26 U.S.C. 5704)

[25 FR 4723, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975]



Sec. 44.210  Return of shipment to factory or export warehouse.

    A manufacturer or export warehouse proprietor may return to his 
factory or export warehouse, without internal revenue supervision when 
so authorized by the appropriate TTB officer, tobacco products, and 
cigarette papers and tubes previously removed therefrom, under this 
part, but not yet exported. The manufacturer or export warehouse 
proprietor shall, prior to returning the articles to his factory or 
export warehouse, make application to the appropriate TTB officer for 
permission so to do, which application shall be accompanied by two 
copies of the notice of removal, Form 5200.14, under which the articles 
were originally removed. If less than the entire shipment is intended to 
be returned to the factory or export warehouse, the application shall 
set forth accurately the articles to be returned and shall show what 
disposition was made of the remainder of the original shipment and any 
other facts pertinent to such shipment. Where the appropriate TTB 
officer approves the application, he shall so indicate by endorsement to 
that effect on each of the copies of the notice of removal, set forth 
the articles for which return is approved, and return both copies of the 
notice of removal to the manufacturer or export warehouse proprietor 
concerned. Upon receipt of the copies of the notice of removal bearing 
the endorsement of the appropriate TTB officer, the manufacturer or 
export warehouse proprietor shall return the articles to his factory or 
export warehouse, properly modify and execute the certificate of receipt 
on each copy of the notice of removal, return one such copy to the 
appropriate TTB officer, and retain the other copy as a part of his 
records.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 54, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



Sec. 44.211  [Reserved]



Sec. 44.212  Delay in lading at port of exportation.

    If, on arrival of tobacco products, and cigarette papers and tubes 
at the port of exportation, the vessel or aircraft for which they are 
intended is not prepared to receive the articles, they may be properly 
stored at the port for not more than 30 days. In the event of any 
further delay, the facts shall be reported by the manufacturer or export 
warehouse proprietor to the appropriate TTB officer and unless such 
officer approves an extension of time in which to effect lading and 
clearance of the shipment it must be returned to the factory or export 
warehouse.

[T.D. 6871, 31 FR 55, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1987; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-480, 67 FR 30802, May 8, 
2002]



Sec. 44.213  Destruction of tobacco products, and cigarette papers and tubes.

    Where an export warehouse proprietor desires to destroy any of the 
tobacco products, or cigarette papers or tubes stored in his warehouse, 
he shall notify the appropriate TTB officer of the kind and quantity of 
such articles to be destroyed and the date on which he desires the 
destruction to take place in order that the appropriate TTB officer may 
assign an appropriate TTB officer to inspect the articles and supervise 
their destruction. The export warehouse proprietor shall prepare a 
notice of removal, Form 5200.14, describing the articles to be 
destroyed. After witnessing the destruction of the articles, the 
appropriate TTB officer shall certify to their destruction on two copies 
of the notice of removal and return them to the export warehouse 
proprietor, who shall retain one copy

[[Page 128]]

for his records and file the other copy with the appropriate TTB 
officer.

[T.D. 6871, 31 FR 55, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-421, 64 FR 71926, Dec. 22, 
1999]



                        Subpart K_Drawback of Tax



Sec. 44.221  Application of drawback of tax.

    Allowance of drawback of tax shall apply only to tobacco products, 
and cigarette papers and tubes, on which tax has been paid, when such 
articles are shipped to a foreign country, Puerto Rico, the Virgin 
Islands, or a possession of the United States. Such drawback shall be 
allowed only to the person who paid the tax on such articles and who 
files claim and otherwise complies with the provisions of this subpart.

(72 Stat. 1419, 68A Stat. 908; 26 U.S.C. 5706, 7653)

[T.D. 6871, 31 FR 55, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.222  Claim.

    Claim for allowance of drawback of tax, under this subpart, must be 
filed on Form 5620.7. Such claim must be filed in sufficient time to 
permit the appropriate TTB officer to detail an appropriate TTB officer 
to inspect the articles and supervise the affixture of a label or notice 
bearing the legend ``For Export With Drawback of Tax.'' Upon receipt of 
a claim supported by satisfactory bond, as required by this subpart, an 
appropriate TTB officer will proceed to the place where the articles 
involved are held and there perform the functions required in Sec. 
44.224.

[T.D. ATF-480, 67 FR 30803, May 8, 2002]



Sec. 44.223  Drawback bond.

    Each claim for allowance of drawback of tax, under this subpart, 
shall be accompanied by a bond, Form 2148 (5200.17), satisfactory to the 
appropriate TTB officer with whom the claim is filed. Such bond shall be 
in an amount not less than the amount of tax for which drawback is 
claimed, conditioned that the claimant shall furnish, within a 
reasonable time, evidence satisfactory to the appropriate TTB officer 
that the tobacco products, and cigarette papers and tubes have been 
landed at some port beyond the jurisdiction of the internal revenue laws 
of the United States, or that after clearance from the United States, 
the articles were lost (otherwise than by theft) or destroyed, by fire, 
casualty, or act of God, and have not been relanded within the limits of 
the United States. The provisions of Sec. Sec. 44.121 and 44.122 are 
applicable with respect to any drawback bond required under this 
section.

(72 Stat. 1419; 26 U.S.C. 5706)

[T.D. 6871, 31 FR 55, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-480, 67 FR 30803, May 8, 
2002]



Sec. 44.224  Inspection by an appropriate TTB officer.

    (a) Examination. An appropriate TTB officer will examine the tobacco 
products, and cigarette papers and tubes listed on TTB Form 5620.7. Such 
officer will verify the accuracy of the schedule of such articles on TTB 
Form 5620.7.
    (b) Label or notice. If the tax on such articles has been paid by 
return, the appropriate TTB officer must be satisfied that the articles 
have in fact been taxpaid and each package bears the label or notice 
required by Sec. 44.222.
    (c) Shipping containers. The appropriate officer will supervise the 
packing of such articles in shipping containers. Each container must be 
numbered and have affixed to it the notice:

    Drawback of tax claimed on contents.
    Sale, consumption, or use in U.S. prohibited.

    (d) Disposition of TTB Form 5620.7. After the appropriate TTB 
officer completes the report of inspection on TTB Form 5620.7, such 
officer will return two copies to the claimant and send a copy to the 
TTB office listed on the form.
    (e) Release. After executing the report of inspection on TTB Form 
5620.7, the appropriate TTB office will release the

[[Page 129]]

shipment to the claimant for delivery to the port of exportation.

[T.D. ATF-480, 67 FR 30803, May 8, 2002]



Sec. 44.225  Delivery of tobacco products, or cigarette papers or tubes for 

export other than by parcel post.

    The claimant, upon release of the tobacco products, or cigarette 
papers or tubes by the appropriate TTB officer for exportation with 
benefit of drawback of tax under this subpart, shall be responsible for 
delivery of such articles to the port of exportation for customs 
inspection, supervision of lading, and clearance of the articles. The 
claimant shall file with the district director of customs at the port of 
exportation the two copies of Form 5620.7 returned to the claimant by 
the appropriate TTB officer in accordance with Sec. 44.224. Such copies 
shall be filed in sufficient time prior to lading to permit customs 
inspection and supervision of lading of the tobacco products, or 
cigarette papers or tubes.

(72 Stat. 1419; 26 U.S.C. 5706)

[T.D. 6961, 33 FR 9493, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-424, 64 FR 71933, Dec. 22, 
1999]



Sec. 44.226  Delivery of tobacco products, and cigarette papers and tubes for 

export by parcel post.

    Where the tobacco products, and cigarette papers and tubes are to be 
shipped by parcel post to a destination in a foreign country, Puerto 
Rico, the Virgin Islands, or a possession of the United States, a waiver 
of his right to withdraw such articles from the mails shall be stamped 
or written on each shipping container and be signed by the claimant, 
after which the claimant shall present the shipment to the post office. 
The claimant shall request the postmaster or his agent to execute the 
certificate of mailing on the copy of the claim, Form 5620.7, returned 
to the claimant by the appropriate TTB officer in accordance with Sec. 
44.224. When so executed by the postal authorities, the Form 5620.7 
shall be transmitted at once to the appropriate TTB officer with whom 
the form was previously filed.

(72 Stat. 1419; 26 U.S.C. 5706)

[T.D. 6871, 31 FR 55, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-424, 64 FR 71933, Dec. 22, 
1999]



Sec. 44.227  Customs procedure.

    The customs officer shall satisfy himself that the tobacco products, 
and cigarette papers and tubes described on the Form 5620.7 and those 
inspected by him are the same and shall note on the form any 
discrepancy. After having inspected the articles and supervised the 
lading thereof on the export carrier, the customs officer shall complete 
and sign the certificate of inspection and lading on both copies of Form 
5620.7 and deliver or transmit such copies to the office of his district 
director of customs for further processing. After clearance from the 
port of the export carrier on which the articles are laden, the district 
director of customs shall execute the certificate of exportation on both 
copies of Form 5620.7. The district director of customs shall retain one 
copy of the form for his records and transmit the other copy to the 
appropriate TTB officer.

(72 Stat. 1419; 26 U.S.C. 5706)

[T.D. 6961, 33 FR 9493, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-424, 64 FR 71933, Dec. 22, 
1999; T.D. ATF-480, 67 FR 30803, May 8, 2002]



Sec. 44.228  Landing certificate.

    Each claimant for drawback under this subpart agrees in the bond 
filed by him that he will furnish, within a reasonable time, evidence 
satisfactory to the appropriate TTB officer that the tobacco products, 
and cigarette papers and tubes covered by his claim have been landed at 
some port beyond the jurisdiction of the internal revenue laws of the 
United States, or that after shipment from the United States the 
articles were lost, and have not been relanded within the limits of the 
United States. The landing certificate shall accurately describe the 
articles involved, so as to readily identify the

[[Page 130]]

drawback claim to which it relates. The landing certificate shall be 
signed by a revenue officer at the place of destination, unless it is 
shown that no such officer can furnish such landing certificate, in 
which case the certificate of landing shall be signed by the consignee, 
or by the vessel's agent at the place of landing, and shall be sworn to 
before a notary public or other officer authorized to administer oaths 
and having an official seal. The landing certificate shall be filed with 
the appropriate TTB officer, with whom the drawback claim was filed, 
within 6 months from the date of clearance of the tobacco products, and 
cigarette papers and tubes from the United States. A landing certificate 
prepared in a foreign language shall be accompanied by an accurate 
translation thereof in English.

(72 Stat. 1419; 26 U.S.C. 5706)

[T.D. 6871, 31 FR 56, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.229  Collateral evidence as to landing.

    In case of inability to furnish the prescribed evidence of landing, 
application for relief shall be promptly made by the claimant to the 
appropriate TTB officer. Such application shall set forth the facts 
connected with the alleged exportation, and indicate the date of 
shipment, the kind, quantity, and value of tobacco products and 
cigarette papers and tubes shipped, the name of the consignee, the name 
of the vessel, the port or place of destination to which the shipment 
was made, and the date and amount of the bond covering such shipment. 
The application shall also state in what particular the provisions of 
this subpart, respecting the proofs of landing, have not been complied 
with, and the cause of failure to furnish such proofs; that such failure 
was not occasioned by any lack of diligence on the part of the claimant, 
or that of his agents; and that he is unable to furnish any other or 
better evidence than that furnished with his application. Each such 
application shall be supported by the best collateral evidence the 
claimant may be able to submit. The evidence may consist of the original 
or verified copies of letters from the consignee advising the claimant 
of the arrival or sale of the tobacco products, and cigarette papers and 
tubes, with such other statements respecting the failure to furnish the 
prescribed evidence of landing as may be obtained from the consignee or 
other persons having knowledge thereof. Such letters and other documents 
in a foreign language shall be accompanied by accurate translations 
thereof in English, and, when the letters fail to identify sufficiently 
the tobacco products, and cigarette papers and tubes, the original sales 
account must be produced.

(72 Stat. 1419; 26 U.S.C. 5706)

[T.D. 6871, 31 FR 56, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-480, 67 FR 30803, May 8, 
2002]



Sec. 44.230  Proof of loss.

    When the claimant is unable to procure a certificate of landing, in 
accordance with the provisions of Sec. 44.228, in consequence of loss 
of the tobacco products, and cigarette papers and tubes, his application 
for relief shall set forth the extent of the loss and, if possible, the 
location and manner of shipwreck or other casualty and the time of its 
occurrence. When obtainable, affidavits of the vessel's owners should be 
furnished detailing the manner and extent of the loss and the time and 
location of the disaster. If the tobacco products, and cigarette papers 
and tubes were insured, the claimant shall furnish certificates by 
officers of the insurance companies that the insurance has been paid, 
and that, to the best of their knowledge and belief, the tobacco 
products, and cigarette papers and tubes were actually destroyed. The 
aforesaid proof shall be furnished to the appropriate TTB officer within 
6 months from the date of clearance of

[[Page 131]]

the tobacco products, and cigarette papers and tubes from the United 
States.

(72 Stat. 1419; 26 U.S.C. 5706)

[T.D. 6871, 31 FR 56, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 44.231  Extension of time.

    In case the claimant, from causes beyond his control, is unable to 
furnish the landing certificate or proof of loss, within the time 
prescribed therefor, he may make an application to the appropriate TTB 
officer for an extension of time in which to do so. Such application 
must state specifically the cause of failure to furnish the evidence. 
Two extensions of three months each may be granted by the appropriate 
TTB officer, provided the surety on the drawback bond of the claimant 
assents in writing thereto.

(72 Stat. 1419; 26 U.S.C. 5706)

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975]



Sec. 44.232  Allowance of claim.

    On receipt of the executed Form 5620.7 from the district director of 
customs, the appropriate TTB officer will allow or disallow the claim in 
accordance with existing law and regulations. If the claim is not 
allowed in full the appropriate TTB officer will notify the claimant, in 
writing, of the reasons for any disallowance.

(72 Stat. 1419; 26 U.S.C. 5706)

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-424, 64 FR 71933, Dec. 22, 1999]



         Subpart L_Withdrawal of Cigars From Customs Warehouses

    Source: 25 FR 4725, May 28, 1960, unless otherwise noted. 
Redesignated at 40 FR 16835, Apr. 15, 1975.



Sec. 44.241  Shipment restricted.

    Cigars produced in a customs warehouse in accordance with customs 
laws and regulations may be withdrawn under this subpart, without 
payment of tax, for export or for delivery for subsequent exportation. 
Duties paid on the tobacco used in the manufacture of such cigars may 
not be recovered on the exportation of the cigars under this subpart.



Sec. 44.242  Responsibility for tax on cigars.

    A customs warehouse proprietor who withdraws cigars for export under 
his bond, without payment of tax, in accordance with the provisions of 
this part, shall be responsible for payment of such tax until he is 
relieved of such responsibility by furnishing the appropriate TTB 
officer evidence satisfactory to the appropriate TTB officer of 
exportation or proper delivery, as required by this subpart, or 
satisfactory evidence of such other disposition as may be used as the 
lawful basis for such relief. Such evidence shall be furnished within 90 
days of the date of withdrawal of the cigars: Provided, That this period 
may be extended for good cause shown.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-480, 67 FR 30803, May 8, 2002]

                                  Bonds



Sec. 44.243  Bond required.

    Where the customs warehouse proprietor desires to withdraw cigars 
from his warehouse, without payment of tax, under this subpart, he 
shall, prior to making the first withdrawal, file a bond, Form 2104 
(5200.15), conditioned upon compliance with the provisions of 26 U.S.C. 
chapter 52, and regulations thereunder, including, but not limited to, 
the timely payment of taxes imposed by such chapter, for which he may be 
responsible to the United States, and penalties and interest in 
connection therewith. The provisions of Sec. Sec. 44.121 and 44.122 are 
applicable to the bond required under this section.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55856, Sept. 28, 1979; T.D. ATF-460, 
66 FR 39093, July 27, 2001; T.D. ATF-480, 67 FR 30803, May 8, 2002]



Sec. 44.244  Amount of bond.

    The amount of the bond filed by the customs warehouse proprietor, as 
required by Sec. 44.243, shall be not less than the estimated amount of 
tax which

[[Page 132]]

may at any time constitute a charge against the bond: Provided, That the 
amount of any such bond (or the total amount where original and 
strengthening bonds are filed) shall not exceed $25,000 nor be less than 
$1,000. The charges against such bond shall be subject to increase as 
withdrawals are made and decrease as required evidence of exportation is 
received by the appropriate TTB officer with respect to cigars 
withdrawn. When the limit of liability under a bond given in less than 
the maximum amount has been reached, further withdrawals shall not be 
made thereunder until a strengthening or superseding bond is filed as 
required by Sec. 44.245 or Sec. 44.246.



Sec. 44.245  Strengthening bond.

    Where the appropriate TTB officer determines that the amount of the 
bond, under which the customs warehouse proprietor is withdrawing cigars 
for shipment under this subpart, no longer adequately protects the 
revenue, and such bond is in an amount of less than $25,000, the 
appropriate TTB officer may require the proprietor to file a 
strengthening bond in an appropriate amount with the same surety as that 
on the bond already in effect, in lieu of a superseding bond to cover 
the full liability on the basis of Sec. 44.244. The appropriate TTB 
officer shall refuse to approve any strengthening bond where any 
notation is made thereon which is intended or which may be construed as 
a release of any former bond, or as limiting the amount of either bond 
to less than its full amount.



Sec. 44.246  Superseding bond.

    The customs warehouse proprietor shall file a new bond to supersede 
his current bond, immediately when (a) the corporate surety on the 
current bond becomes insolvent, (b) the appropriate TTB officer approves 
a request from the surety on the current bond to terminate his liability 
under the bond, (c) payment of any liability under a bond is made by the 
surety thereon, or (d) the appropriate TTB officer considers such a 
superseding bond necessary for the protection of the revenue.



Sec. 44.247  Termination of liability of surety under bond.

    The liability of a surety on any bond required by this subpart shall 
be terminated only as to operations on and after the effective date of a 
superseding bond, or the date of approval of the customs warehouse 
proprietor's request for termination, or otherwise, in accordance with 
the termination provisions of the bond. The surety shall remain bound in 
respect of any liability for unpaid taxes, penalties, and interest, not 
in excess of the amount of the bond, incurred by the proprietor while 
the bond is in force.

                         Packaging Requirements



Sec. 44.248  Packages.

    Cigars shall, before withdrawal under this part, be put up by the 
customs warehouse proprietor in packages which shall bear the label or 
notice, tax classification, and mark, as required by this subpart.

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-40, 42 FR 5009, Jan. 26, 1977]



Sec. 44.249  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 cigars withdrawn under 
this subpart.

(72 Stat. 1422; 26 U.S.C. 5723; 18 U.S.C. 1301)



Sec. 44.250  Indecent or immoral material.

    No indecent or immoral picture, print, or representation shall be 
contained in, attached to, or stamped, marked, written, or printed on 
any package of cigars withdrawn under this subpart.

(72 Stat. 1422; 26 U.S.C. 5723)



Sec. 44.251  Mark.

    Every package of cigars shall, before withdrawal from the customs 
warehouse under this subpart, have adequately imprinted thereon, or on a 
label securely affixed thereto, the

[[Page 133]]

name and location of the manufacturer. There shall also be adequately 
stated on each such package the number of cigars contained in the 
package.

(72 Stat. 1422; 26 U.S.C. 5723)



Sec. 44.252  Label or notice.

    Every package of cigars shall, before withdrawal from the customs 
warehouse under this subpart, have adequately imprinted thereon, or on a 
label securely affixed the words ``Tax-exempt. For use outside U.S.'' or 
the words ``U.S. Tax-exempt. For use outside U.S.'', except where a 
stamp, sticker, or notice, required by a foreign country or a possession 
of the United States, which identifies such country or possession, is so 
imprinted or affixed.

(72 Stat. 1422; 26 U.S.C. 5723)



Sec. 44.253  Tax classification for cigars.

    Before withdrawal of cigars from a customs warehouse under this 
subpart, every package of cigars shall have adequately imprinted on it, 
or on a label securely affixed to it--
    (a) The designation ``cigars'';
    (b) The quantity of cigars contained in the package; and
    (c) For small cigars, the classification of the product for tax 
purposes (i.e., either ``small'' or ``little'').

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-80, 46 FR 18312, Mar. 24, 1981]



Sec. 44.254  Shipping containers.

    Each shipping case, crate, or other container, in which cigars are 
to be withdrawn, under this subpart, shall bear a distinguishing number, 
such number to be assigned by the customs warehouse proprietor.

                         Consignment of Shipment



Sec. 44.255  Consignment of cigars.

    Cigars withdrawn from a customs warehouse, without payment of tax, 
under internal revenue bond and this part, shall be consigned in the 
same manner as provided by subpart J of this part with respect to the 
removal of tobacco products, and cigarette papers and tubes from a 
factory or an export warehouse.

[T.D. 6871, 31 FR 56, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28089, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]

                      Notice of Removal of Shipment



Sec. 44.256  Preparation.

    For each shipment to be withdrawn under this subpart, the customs 
warehouse proprietor shall prepare a notice of removal, Form 5200.14. 
Each such notice shall be given a serial number by the proprietor in a 
series beginning with number 1, with respect to the first shipment 
withdrawn under this subpart and commencing again with number 1 on 
January 1 of each year thereafter.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.257  Disposition.

    After actual withdrawal from his warehouse of the shipment described 
on the notice of removal, Form 5200.14, the customs warehouse proprietor 
shall, except where the shipment is to be exported by parcel post, 
promptly forward one copy of the notice of removal to the appropriate 
TTB officer. A copy of each such notice shall be retained by the customs 
warehouse proprietor as a part of his records, for 3 years following the 
close of the calendar year in which the shipment was withdrawn, and 
shall be made available for inspection by any appropriate TTB officer 
upon his request. The proprietor shall dispose of the other copies of 
each notice of removal as required by this subpart.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999; T.D. ATF-480, 67 
FR 30803, May 8, 2002]



Sec. 44.258  To officers of the armed forces for subsequent exportation.

    Where cigars are withdrawn from a customs warehouse for delivery to 
officers of the armed forces of the United States in this country for 
subsequent shipment to, and use by, the armed forces outside the United 
States, the customs warehouse proprietor making

[[Page 134]]

the shipment shall forward a copy of the notice of removal, Form 
5200.14, to the officer at the base or installation authorized to 
receive the cigars described on the notice of removal. Upon execution by 
the armed forces receiving officer of the certificate of receipt on the 
copy of the notice of removal, he shall return such copy to the customs 
warehouse proprietor making the shipment for filing with the appropriate 
TTB officer.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.259  To noncontiguous foreign countries and possessions of the United States.

    Where cigars are withdrawn from a customs warehouse for direct 
delivery to a vessel or aircraft for transportation to a noncontiguous 
foreign country, Puerto Rico, the Virgin Islands, or a possession of the 
United States, the customs warehouse proprietor making the withdrawal 
shall file two copies of the notice of removal, Form 5200.14, with the 
office of the district director of customs at the port where the 
shipment is to be laden. Such copies of the notice of removal should be 
filed with the related shipper's export declaration, Commerce Form 7525-
V. In the event the copies of the notice of removal are not filed with 
the shipper's export declaration, when the copies of the notice are 
filed with the district director of customs they shall show all 
particulars necessary to enable that officer to associate the notice 
with the related shipper's export declaration and any other documents 
filed with his office in connection with the shipment. After the vessel 
or aircraft on which the shipment has been laden clears or departs from 
the port of lading the customs authority shall execute the certificate 
of exportation on both copies of the notice of removal, retain one copy 
for his records, and deliver or transmit the other copy to the customs 
warehouse proprietor making the shipment for filing with the appropriate 
TTB officer.

[T.D. 6961, 33 FR 9494, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.260  To a Federal department or agency.

    Where cigars are withdrawn from a customs warehouse and are destined 
for ultimate delivery in a noncontiguous foreign country, Puerto Rico, 
the Virgin Islands, or a possession of the United States, but the 
shipment is to be delivered to a Federal department or agency, or to an 
authorized dispatch agent, transportation officer, or port director of 
such a department or agency for forwarding on to the place of 
destination of the shipment, the customs warehouse proprietor making the 
shipment shall furnish a copy of the notice of removal, Form 5200.14, to 
the Federal department or agency, or an officer thereof at the port, 
receiving the shipment for ultimate transmittal to the place of 
destination, in order that such department, agency, or officer, can 
properly execute the certificate of receipt on such notice to evidence 
receipt of the shipment for transmittal to a place beyond the 
jurisdiction of the internal revenue laws of the United States. After 
completing such certificate, the Federal department, agency, or officer, 
shall return the copy of the notice of removal, so executed, to the 
customs warehouse proprietor making the shipment for filing with the 
appropriate TTB officer.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.261  To contiguous foreign countries.

    Where cigars are withdrawn from a customs warehouse for export to a 
contiguous foreign country, the customs warehouse proprietor making the 
shipment shall furnish to the district director of customs at the border 
or other port of exit two copies of the notice of removal, Form 5200.14, 
together with the related shipper's export declaration, Commerce Form 
7525-V. In the event the copies of the notice of removal are not filed 
with the shipper's export declaration or, in the case of a shipment for 
the armed forces of the United States in the contiguous foreign country 
where no shipper's export declaration is required, the copies of the

[[Page 135]]

notice when filed with the district director of customs shall show all 
particulars necessary to enable that officer to associate the notice 
with the related shipper's export declaration, if any, and any other 
documents filed with his office in connection with the shipment. After 
the shipment has been cleared by customs from the United States, the 
customs authority at the port of exit shall complete the certificate of 
exportation on both copies of the notice of removal, retain one copy for 
his records, and transmit the other copy to the customs warehouse 
proprietor making the shipment for filing with the appropriate TTB 
officer.

[T.D. 6961, 33 FR 9494, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.262  To Government vessels and aircraft for consumption as supplies.

    Where cigars are withdrawn from a customs warehouse for direct 
delivery to a vessel or aircraft, engaged in an activity for the 
Government of the United States or a foreign government, for consumption 
as supplies beyond the jurisdiction of the internal revenue laws of the 
United States, the customs warehouse proprietor making the shipment 
shall forward a copy of the notice of removal, Form 5200.14, to the 
officer of the vessel or aircraft authorized to receive the shipment. 
Upon execution by the receiving officer of the vessel or aircraft of the 
certificate of receipt on the copy of the notice of removal, he shall 
return such copy to the customs warehouse proprietor making the shipment 
for filing with the appropriate TTB officer.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.263  To commercial vessels and aircraft for consumption as supplies.

    Where cigars are withdrawn from a customs warehouse for delivery to 
a vessel or aircraft entitled to receive such articles for consumption 
as supplies beyond the jurisdiction of the internal revenue laws of the 
United States, the customs warehouse proprietor making shipment shall 
file two copies of the notice of removal, Form 5200.14, with the 
district director of customs at the port where the shipment is to be 
laden in sufficient time to permit delivery of the two copies of the 
notice of removal to the customs officer who will inspect the shipment 
and supervise its lading. After inspection and lading of the shipment 
the customs officer shall note on the copies of the notice of removal 
any discrepancy between the shipment inspected and laden under his 
supervision and that described on the notice of removal or any 
limitation on the quantity to be laden; complete and sign the 
certificate of inspection and lading; and return both copies of the 
notice of removal to the district director of customs. The district 
director of customs shall execute the certificate of clearance on both 
copies of the notice of removal, retain one copy for his records, and 
forward the other copy to the customs warehouse proprietor making the 
shipment for filing with the appropriate TTB officer. Where the vessel 
or aircraft does not clear from the port at which the shipment is laden, 
the customs officer supervising the lading of the shipment shall require 
the person on board the vessel or aircraft authorized to receive the 
shipment to execute the certificate of receipt on both copies of the 
notice of removal to indicate the trade or activity in which the vessel 
or aircraft is engaged.

[T.D. 6961, 33 FR 9494, June 28, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.264  To export warehouses.

    Where cigars are withdrawn from a customs warehouse for delivery to 
an export warehouse, the proprietor of the customs warehouse shall 
forward to the proprietor of the export warehouse three copies of the 
notice of removal, Form 5200.14, covering the shipment, for execution 
and disposition in accordance with procedure similar to that set forth 
in Sec. 44.200 in connection with a shipment of tobacco products, and 
cigarette papers and tubes from a factory to an export warehouse. The 
executed copy of the notice of removal, Form

[[Page 136]]

5200.14, returned to the customs warehouse proprietor by the export 
warehouse proprietor shall be filed with the appropriate TTB officer.

[T.D. ATF-48, 44 FR 55856, Sept. 28, 1979, as amended by T.D. ATF-232, 
51 FR 28089, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. 
ATF-421, 64 FR 71926, Dec. 22, 1999; T.D. ATF-480, 67 FR 30803, May 8, 
2002]



Sec. 44.264a  To a foreign-trade zone.

    Where cigars are withdrawn from a customs warehouse for delivery to 
a foreign-trade zone, under zone restricted status for the purpose of 
exportation or storage, the customs warehouse proprietor making the 
shipment shall forward two copies of the notice of removal, Form 
5200.14, to the customs officer in charge of the zone. Upon receipt of 
the shipment, the customs officer shall execute the certificate of 
receipt on each copy of the form, noting thereon any discrepancy, retain 
one copy for his records, and forward the other copy to the customs 
warehouse proprietor making the shipment for filing with the appropriate 
TTB officer.

[T.D. 6564, 26 FR 4362, May 19, 1961. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



Sec. 44.265  For export by parcel post.

    Where cigars are withdrawn from a customs warehouse for export by 
parcel post, the customs warehouse proprietor shall present one copy of 
the notice of removal, Form 5200.14, together with the shipping 
containers, to the postal authorities with the request that the 
postmaster or his agent execute the certificate of mailing on the form. 
Where a customs warehouse proprietor so desires, he may cover under one 
notice of removal all the cigars removed under this part for export by 
parcel post which are delivered at one time to the postal service for 
that purpose. The customs warehouse proprietor shall immediately file 
the receipted copy of the notice of removal with the appropriate TTB 
officer.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]

                           Return of Shipment



Sec. 44.266  Return of cigars from export warehouses.

    Where cigars are returned to a customs warehouse from an export 
warehouse, the officer in charge of the customs warehouse shall execute 
the certificate of receipt on each of the copies of the related Form 
5200.14 received from the export warehouse proprietor, after checking 
the containers to determine whether all the cigars described on the 
notice have been received. Thereafter, both copies of the Form 5200.14 
shall be turned over to the proprietor of the customs warehouse who 
shall return one copy to the export warehouse proprietor for disposition 
as provided in Sec. 44.201. The customs warehouse proprietor shall 
retain the other copy of the notice of removal, as a part of his 
records, for 3 years following the close of the calendar year in which 
the shipment was received. Such copy shall be made available for 
inspection by any appropriate TTB officer upon his request.

[T.D. ATF-48, 44 FR 55856, Sept. 28, 1979, as amended by T.D. ATF-421, 
64 FR 71926, Dec. 22, 1999]



Sec. 44.267  Return of cigars from other sources.

    A customs warehouse proprietor may return to his warehouse cigars 
previously withdrawn therefrom, under this subpart, provided he promptly 
files with the appropriate TTB officer a copy of the Form 5200.14 under 
which the cigars were originally withdrawn, with the certificate of 
receipt properly modified and executed by the customs officer in charge 
of the warehouse to show return of the shipment. If less than the entire 
shipment is returned to the warehouse, the form shall state what 
disposition was made of the remainder of the original shipment and any 
other facts pertinent to such shipment. The customs warehouse proprietor 
shall retain a copy of such form as a part of his records for 3 years 
after the close of the calendar year in which the shipment was returned. 
Such copy shall be made available for inspection

[[Page 137]]

by any appropriate TTB officer upon request.

[25 FR 4725, May 28, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-421, 64 FR 71926, Dec. 22, 1999]



PART 45_REMOVAL OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES, WITHOUT 

PAYMENT OF TAX, FOR USE OF THE UNITED STATES--Table of Contents




                     Subpart A_Scope of Regulations

Sec.
45.1 Removal of tobacco products, and cigarette papers and tubes, 
          without payment of tax, for use of the United States.

                          Subpart B_Definitions

45.11 Meaning of terms.

                   Subpart C_Administrative Provisions

45.21 Alternate methods or procedures.
45.22 Emergency variations from requirements.
45.23 Authority of appropriate ATF officerAppropriate TTB officers to 
          enter premises.
45.24 Interference with administration.
45.25 Unlawful purchase, receipt, possession, or sale of tobacco 
          products, or cigarette papers or tubes, after removal.
45.26 Delegations of the Administrator.
45.27 Forms prescribed.

                           Subpart D_Removals

45.31 Restrictions.
45.32 Under manufacturer's bond.
45.33 Return of shipment to factory.
45.34 Loss or shortage in shipment.
45.35 Liability for tax.
45.36 Payment of tax.
45.37 Assessment.

                    Subpart E_Packaging Requirements

45.41 Packages.
45.42 Mark.
45.43 Notice for smokeless tobacco.
45.44 Notice for cigars.
45.45 Notice for cigarettes.
45.45a Notice for pipe tobacco.
45.45b Notice for roll-your-own tobacco.
45.45c Package use-up rule.
45.46 Tax-exempt label.

                            Subpart F_Records

45.51 Supporting records.

    Authority: 26 U.S.C. 5703, 5704, 5705, 5723, 5741, 5751, 5762, 5763, 
6313, 7212, 7342, 7606, 7805, 44 U.S.C. 3504(h).

    Source: Redesignated by T.D. ATF-469, 66 FR 56758, Nov. 13, 2001.

    Editorial Note: Nomenclature changes to part 45 appear by T.D. ATF-
460, 66 FR 39093, July 27, 2001.



                     Subpart A_Scope of Regulations



Sec. 45.1  Removal of tobacco products, and cigarette papers and tubes, 

without payment of tax, for use of the United States.

    This part contains the regulations relating to the removal of 
tobacco products, and cigarette papers and tubes, without payment of 
tax, for use of the United States.

[T.D. 6871, 31 FR 57, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



                          Subpart B_Definitions



Sec. 45.11  Meaning of terms.

    When used in this part and in forms prescribed under this part, the 
following terms shall have the meanings given in this section, unless 
the context clearly indicates otherwise. Words in the plural form shall 
include the singular, and vice versa, and words indicating the masculine 
gender shall include the feminine. The terms ``includes'' and 
``including'' do not exclude things not listed which are in the same 
general class.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury, Washington, DC.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.45, Delegation of the Administrator's Authorities in 27 CFR Part 
45, Removal of Tobacco Products and Cigarette Papers and Tubes, Without 
Payment of Tax, for Use of the United States.
    Armed forces. The Army, Navy (including the Marine Corps), Air 
Force, and Coast Guard.

[[Page 138]]

    Charge of the United States. A patient in a hospital or similar 
institution, or a Federal prisoner, if the hospital, institution, or 
prison is operated by a Federal agency and the support or care of such 
person results in a charge on, or an expense to, the United States 
Government.
    Chewing tobacco. Any leaf tobacco that is not intended to be smoked.
    Cigar. Any roll of tobacco wrapped in leaf tobacco or in any 
substance containing tobacco (other than any roll of tobacco which is a 
cigarette within the meaning of paragraph (2) of the definition for 
cigarette).
    Cigarette. (1) Any roll of tobacco wrapped in paper or in any 
substance not containing tobacco, and
    (2) Any roll of tobacco wrapped in any substance containing tobacco 
which, because of its appearance, the type of tobacco used in the 
filler, or its packaging and labeling, is likely to be offered to, or 
purchased by, consumers as a cigarette described in paragraph (1) of 
this definition.
    Cigarette paper. Paper, or any other material except tobacco, 
prepared for use as a cigarette wrapper.
    Cigarette tube. Cigarette paper made into a hollow cylinder for use 
in making cigarettes.
    District directorAdministrator. A district directorAdministrator of 
internal revenue.
    Factory. The premises of a manufacturer of tobacco products or 
cigarette papers and tubes in which he carries on such business.
    Federal agency. A department or agency of the United States 
Government, including the American National Red Cross, and the U.S. 
Soldiers Home, Washington, D.C.
    Large cigarettes. Cigarettes weighing more than three pounds per 
thousand.
    Large cigars. Cigars weighing more than three pounds per thousand.
    Manufacturer of cigarette papers and tubes. Any person who 
manufactures cigarette paper, or makes up cigarette paper into tubes, 
except for his own personal use or consumption.
    Manufacturer of tobacco products. Any person who manufactures 
cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own 
tobacco but does not include:
    (1) A person who produces tobacco products solely for that person's 
own consumption or use; or
    (2) A proprietor of a Customs bonded manufacturing warehouse with 
respect to the operation of such warehouse.
    Package. The container in which tobacco products or cigarette papers 
or tubes are put up by the manufacturer and offered for sale or delivery 
to the consumer.
    Person. An individual, partnership, association, company, 
corporation, estate, or trust.
    Pipe tobacco. Any tobacco which, because of its appearance, type, 
packaging, or labeling, is suitable for use and likely to be offered to, 
or purchased by, consumers as tobacco to be smoked in a pipe.
    Removal or remove. The removal of tobacco products or cigarette 
papers or tubes from the factory.
    Roll-your-own tobacco. Any tobacco which, because of its appearance, 
type, packaging, or labeling, is suitable for use and likely to be 
offered to, or purchased by, consumers as tobacco for making cigarettes.
    Sale price. The price for which large cigars are sold by the 
manufacturer or importer, determined in accordance with Sec. Sec. 40.22 
or 41.39 and used in computation of the tax.
    Small cigarettes. Cigarettes weighing not more than three pounds per 
thousand.
    Small cigars. Cigars weighing not more than three pounds per 
thousand.
    Smokeless tobacco. Any chewing tobacco or snuff.
    Snuff. Any finely cut, ground, or powdered tobacco that is not 
intended to be smoked.
    This chapter. Chapter I, title 26, Code of Federal Regulations.
    Tobacco products. Cigars, cigarettes, smokeless tobacco, pipe 
tobacco, and roll-your-own tobacco.
    United States. When used in a geographical sense shall include only 
the States and the District of Columbia.

[[Page 139]]

    U.S.C. The United States Code.

[T.D. ATF-48, 43 FR 13557, Mar. 31, 1978; 44 FR 55856, Sept. 28, 1979, 
as amended by T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. ATF-243, 51 
FR 43194, Dec. 1, 1986; T.D. ATF-289, 54 FR 48842, Nov. 27, 1989; T.D. 
ATF-424, 64 FR 71933, Dec. 22, 1999; T.D. ATF-420, 64 FR 71945, Dec. 22, 
1999; T.D. ATF-467, 66 FR 49532, Sept. 28, 2001; T.D. ATF-472, 67 FR 
8880, Feb. 27, 2002; T.D. TTB-16, 69 FR 52423, Aug. 26, 2004; T.D. TTB-
44, 71 FR 16954, Apr. 4, 2006]



                   Subpart C_Administrative Provisions



Sec. 45.21  Alternate methods or procedures.

    A manufacturer, on specific approval by the appropriate TTB officer 
as provided in this section, may use an alternate method or procedure in 
lieu of a method or procedure specifically prescribed in this part. The 
appropriate TTB officer may approve an alternate method or procedure, 
subject to stated conditions, when he finds that:
    (a) Good cause has been shown for the use of the alternate method or 
procedure.
    (b) The alternate method or procedure is within the purpose of, and 
consistent with the effect intended by, the specifically prescribed 
method or procedure, and affords equivalent security to the revenue, and
    (c) The alternate method or procedure will not be contrary to any 
provision of law, and will not result in an increase in cost to the 
Government or hinder the effective administration of this part.

No alternate method or procedure relating to the giving of any bond or 
to the assessment, payment, or collection of tax, shall be authorized 
under this section. Where a manufacturer desires to employ an alternate 
method or procedure, the manufacturer must submit a written application 
to the appropriate TTB officer. The application shall specifically 
describe the proposed alternate method or procedure, and shall set forth 
the reasons therefor. Alternate methods or procedures shall not be 
employed until the application has been approved by the appropriate TTB 
officer. The manufacturer shall, during the period of authorization of 
an alternate method or procedure, comply with the terms of the approved 
application. Authorization for any alternate method or procedure may be 
withdrawn whenever in the judgment of the appropriate TTB officer the 
revenue is jeopardized or the effective administration of this part is 
hindered. The manufacturer shall retain, as part of his records, any 
authorization of the appropriate TTB officer under this section for 
three years following the close of the calendar year in which the 
operation under such authorization is concluded.

[Redesignated by T.D. ATF-469, 66 FR 56758, Nov. 13, 2001, as amended by 
T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 45.22  Emergency variations from requirements.

    The appropriate TTB officer may approve methods of operation other 
than as specified in this part, where he finds that an emergency exists 
and the proposed variations from the specified requirements are 
necessary, and the proposed variations:
    (a) Will afford the security and protection to the revenue intended 
by the prescribed specifications.
    (b) Will not hinder the effective administration of this part, and
    (c) Will not be contrary to any provision of law.

Variations from requirements granted under this section are conditioned 
on compliance with the procedures, conditions, and limitations set forth 
in the approval of the application. Failure to comply in good faith with 
such procedures, conditions, and limitations shall automatically 
terminate the authority for such variations and the manufacturer 
thereupon shall fully comply with the prescribed requirements of 
regulations from which the variations were authorized. Authority for any 
variations may be withdrawn whenever in the judgment of the appropriate 
TTB officer the revenue is jeopardized or the effective administration 
of this part is hindered by the continuation of such variation. Where a 
manufacturer desires to employ such variation, the manufacturer must 
submit a written application to the appropriate TTB officer. The 
application shall describe the proposed variations and set forth the 
reasons therefor. Variations shall

[[Page 140]]

not be employed until the application has been approved. The 
manufacturer shall retain, as part of his records, any authorization of 
the appropriate TTB officer under this section for three years following 
the close of the calendar year in which the operation under such 
authorization is concluded.

[27 FR 4476, May 10, 1962. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 45.23  Authority of appropriate TTB officers to enter premises.

    Any appropriate TTB officer may enter in the daytime any premises 
where tobacco products, or cigarette papers or tubes removed under this 
part are kept, so far as it may be necessary for the purpose of 
examining such articles. When such premises are open at night, any 
appropriate TTB officer may enter them, while so open, in the 
performance of his official duties. The owner of such premises, or 
person having the superintendence of the same, who refuses to admit any 
appropriate TTB officer or permit him to examine the articles removed 
under this part shall be liable to the penalties prescribed by law for 
the offense.

(68A Stat. 872, 903; 26 U.S.C. 7342, 7606)

[T.D. 6871, 31 FR 57, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-472, 67 FR 8880, Feb. 27, 
2002]



Sec. 45.24  Interference with administration.

    Whoever, corruptly or by force or threats of force, endeavors to 
hinder or obstruct the administration of this part, or endeavors to 
intimidate or impede any appropriate TTB officer acting in his official 
capacity, or forcibly rescues or attempts to rescue or causes to be 
rescued any property, after it has been duly seized for forfeiture to 
the United States in connection with a violation of the internal revenue 
laws, shall be liable to the penalties prescribed by law.

(68A Stat. 855; 26 U.S.C. 7212)

[27 FR 4476, May 10, 1962. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 45.25  Unlawful purchase, receipt, possession, or sale of tobacco 

products, or cigarette papers or tubes, after removal.

    Any person who, with intent to defraud the United States, purchases, 
receives, possesses, offers for sale, or sells or otherwise disposes of 
tobacco products, or cigarette papers or tubes which, after removal 
under this part, without payment of tax, have been diverted from the 
purpose or use specified in this part, shall be subject to the criminal 
penalties and provisions for forfeiture prescribed by law.

(72 Stat. 1424, 1425, as amended, 1426; 26 U.S.C. 5751, 5762, 5763)

[T.D. 6871, 31 FR 57, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 45.26  Delegations of the Administrator.

    The regulatory authorities of the Administrator contained in this 
part are delegated to appropriate TTB officers. These TTB officers are 
specified in TTB Order 1135.45, Delegation of the Administrator's 
Authorities in 27 CFR Part 45, Removal of Tobacco Products and Cigarette 
Papers and Tubes, Without Payment of Tax, for Use of the United States. 
You may obtain a copy of this order by accessing the TTB Web site 
(http://www.ttb.gov) or by mailing a request to the Alcohol and Tobacco 
Tax and Trade Bureau, National Revenue Center, 550 Main Street, Room 
1516, Cincinnati, OH 45202.

[T.D. TTB-44, 71 FR 16955, Apr. 4, 2006]



Sec. 45.27  Forms prescribed.

    (a) The appropriate TTB officer is authorized to prescribe all forms 
required by this part. You must furnish all of the information required 
by each form as indicated by the headings on the form and the 
instructions for the form, and as required by this part. You must file 
each form in accordance with its instructions.
    (b) Forms prescribed by this part are available for printing through 
the TTB Web site (http://www.ttb.gov) or by mailing a request to the 
Alcohol and Tobacco Tax and Trade Bureau, National

[[Page 141]]

Revenue Center, 550 Main Street, Room 1516, Cincinnati, OH 45202.

[T.D. ATF-472, 67 FR 8880, Feb. 27, 2002, as amended by T.D. TTB-44, 71 
FR 16955, Apr. 4, 2006]



                           Subpart D_Removals

    Source: T.D. 6871, 31 FR 57, Jan. 14, 1966. Redesignated at 40 FR 
16835, Apr. 15, 1975.



Sec. 45.31  Removals for delivery to a Federal agency.

    (a) Removal of articles. A manufacturer may remove tobacco products 
or cigarette papers and tubes without payment of tax, in accordance with 
this part, for delivery to a Federal agency if:
    (1) The removed articles were purchased by the Federal agency with 
funds appropriated by the Congress of the United States and are for 
gratuitous distribution under the supervision of the Federal agency;
    (2) The removed articles were purchased by a donor from the 
manufacturer, or donated directly by the manufacturer, for gratuitous 
distribution under the supervision of the Federal agency to:
    (i) Charges of the United States; or
    (ii) Patients in a hospital or institution operated by the 
Government of a State or the District of Columbia where the Federal 
agency maintains a program for distribution to members or veterans of 
the armed forces of the United States in the hospital or institution; or
    (3) The removed articles are intended for use by the Federal agency 
in an investigation or other Federal law enforcement activity.
    (b) Sale prohibited. Except in the case of articles described in 
paragraph (a)(3) of this section where a sale is incident to the Federal 
law enforcement activity, tobacco products and cigarette papers and 
tubes removed under this section may not be sold after their removal.

[T.D. TTB-26, 70 FR 19890, Apr. 15, 2005]



Sec. 45.32  Under manufacturer's bond.

    Removals of tobacco products, and cigarette papers and tubes under 
this part shall be made under the bond filed by the manufacturer of such 
articles to cover the operations of his factory as required by section 
5711, I.R.C., and regulations issued thereunder.

(72 Stat. 1418, as amended, 1421, as amended; 26 U.S.C. 5704, 5711)

[T.D. 6871, 31 FR 57, as amended by T.D. ATF-243, 51 FR 28090, Aug. 5, 
1986; 51 FR 43194, Dec. 1, 1986]



Sec. 45.33  Return of shipment to factory.

    Tobacco products, and cigarette papers and tubes which have been 
removed, under this part, may be returned to the factory without 
internal revenue supervision.

(72 Stat. 1418, as amended; 26 U.S.C. 5704)

[T.D. 6871, 31 FR 57, as amended by T.D. ATF-243, 51 FR 28090, Aug. 5, 
1986; 51 FR 43194, Dec. 1, 1986]



Sec. 45.34  Loss or shortage in shipment.

    Immediately upon receipt of information of a loss of all or part of 
a shipment, or of a shortage therein, of tobacco products, or cigarette 
papers or tubes removed under this part, the manufacturer shall notify 
the appropriate TTB officer, furnish all pertinent details with respect 
to the loss or shortage, and either pay the tax due thereon in 
accordance with the provisions of Sec. 45.36, or file claim for 
remission of the tax liability under the provisions of part 40 of this 
chapter, as the case may be.

(72 Stat. 1417, 1419, as amended; 26 U.S.C. 5703, 5705)

[T.D. 6871, 31 FR 57, as amended by T.D. ATF-243, 51 FR 28090, Aug. 5, 
1986; 51 FR 43194, Dec. 1, 1986; T.D. ATF-384, 61 FR 54096, Oct. 17, 
1996; T.D. ATF-469, 66 FR 56758, Nov. 13, 2001; T.D. ATF-472, 67 FR 
8880, Feb. 27, 2002]



Sec. 45.35  Liability for tax.

    The manufacturer who removes tobacco products, or cigarette papers 
or tubes under this part shall be liable for the taxes imposed thereon 
by 26 U.S.C. 5701, until such tobacco products, or cigarette papers or 
tubes are received by the Federal agency. Any person who possesses 
tobacco products, or cigarette papers or tubes in violation of 26 U.S.C. 
5751(a)(1) or (2), shall be liable

[[Page 142]]

for a tax equal to the tax on such articles.

(72 Stat. 1417, 1424; 26 U.S.C. 5703, 5751)

[T.D. 6871, 31 FR 57, Jan. 14, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55856, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986]



Sec. 45.36  Payment of tax.

    Any tax which becomes due and payable on tobacco products, and 
cigarette papers and tubes removed under this part shall be paid to 
appropriate TTB officer, with sufficient information to identify the 
taxpayer, the nature and purpose of the payment, and the articles 
covered by the payment: Provided, That a manufacturer of tobacco 
products or cigarette papers or tubes may pay any tax for which he 
becomes liable under this part by an appropriate adjustment in his 
current tax return Form 5000.24. In paying the tax, a fractional part of 
a cent shall be disregarded unless it amounts to one-half cent or more, 
in which case it shall be increased to one cent.

[T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986, as amended by T.D. ATF-251, 52 FR 19341, May 22, 1987; 
T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 45.37  Assessment.

    Whenever any person required by law to pay tax on tobacco products, 
and cigarette papers and tubes fails to pay such tax, the tax shall be 
ascertained and assessed against such person, subject to the limitations 
prescribed in 26 U.S.C. 6501. 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 be made until and after 
notice has been afforded such person to show cause against assessment. 
The person will be allowed 45 days from the date of such notice to show 
cause, in writing, against such assessment.

(72 Stat. 1417; 26 U.S.C. 5703)

[T.D. 6871, 31 FR 57, Jan. 14, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55856, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986]



                    Subpart E_Packaging Requirements



Sec. 45.41  Packages.

    All tobacco products, and cigarette papers and tubes shall, before 
removal under this part, be put up by the manufacturer in packages which 
shall be of such construction as will securely contain the articles 
therein and maintain the mark, notice, and label thereon, as required by 
this subpart. No package of tobacco products, or cigarette papers or 
tubes shall have contained therein, attached thereto, or stamped, 
marked, written, or printed thereon (a) any 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, or (b) any 
indecent or immoral picture, print, or representation.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 58, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975 and amended by T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 45.42  Mark.

    Every package of tobacco products shall before removal from the 
factory under this part, have adequately imprinted thereon, or on a 
label securely affixed thereto, a mark as specified in this section. The 
mark may consist of the name of the manufacturer removing the product 
and the location (by city and State) of the factory from which the 
products are to be so removed, or may consist of the permit number of 
the factory from which the products are to be so removed. (Any trade 
name of the manufacturer approved as provided in Sec. 40.65 of this 
chapter may be used in the mark as the name of the manufacturer.) As an 
alternative, where tobacco products are both packaged and removed by the 
same manufacturer, either at the same

[[Page 143]]

or different factories, the mark may consist of the name of such 
manufacturer if the factory where packaged is identified on or in the 
package by a means approved by the appropriate TTB officer. Before using 
the alternative, the manufacturer shall notify the appropriate TTB 
officer in writing of the name to be used as the name of the 
manufacturer and the means to be used for identifying the factory where 
packaged. If approved by him the appropriate TTB officer shall return 
approved copies of the notice to the manufacturer. A copy of the 
approved notice shall be retained as part of the factory records at each 
of the factories operated by the manufacturer.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 58, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975 and amended by T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-472, 67 FR 8880, Feb. 27, 
2002]



Sec. 45.43  Notice for smokeless tobacco.

    (a) Product designation. Every package of chewing tobacco or snuff 
shall, before removal under this part, have adequately imprinted 
thereon, or on a label securely affixed thereto, the designation 
``chewing tobacco'' or ``snuff.'' As an alternative, packages of chewing 
tobacco may be designated ``Tax Class C,'' and packages of snuff may be 
designated ``Tax Class M.''
    (b) Product weight. Every package of chewing tobacco or snuff shall, 
before removal under this part, have adequately imprinted thereon, or on 
a label securely affixed thereto, a clear statement of the actual pounds 
and ounces of the product contained therein. As an alternative, the 
shipping cases containing packages of chewing tobacco or snuff may, 
before removal, have adequately imprinted thereon, or on a label 
securely affixed thereto, a clear statement, in pounds and ounces, of 
the total weight of the product, the tax class of the product, and the 
total number of the packages of product contained therein.

(Approved by the Office of Management and Budget under control number 
1512-0502)

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, 
Dec. 1, 1986; T.D. ATF-469, 66 FR 56758, Nov. 13, 2001]



Sec. 45.44  Notice for cigars.

    Before removal under this part, every package of cigars shall have 
adequately imprinted on it, or on a label securely affixed to it--
    (a) The designation ``cigars'';
    (b) The quantity of cigars contained in the package; and
    (c) For small cigars, the classification of the product for tax 
purposes (i.e., either ``small'' or ``little'').

(Sec. 202, Pub. L. 85-859, 72 Stat. 1422 (26 U.S.C. 5723))

[T.D. ATF-80, 46 FR 18312, Mar. 24, 1981]



Sec. 45.45  Notice for cigarettes.

    Every package of cigarettes shall, before removal under this part, 
have adequately imprinted thereon, or on a label securely affixed 
thereto, the designation ``cigarettes'', the quantity of such product 
contained therein, and the classification for tax purposes, i.e., for 
small cigarettes, either ``small'' or ``Class A'', and for large 
cigarettes, either ``large'' or ``Class B''.

(72 Stat. 1422; 26 U.S.C. 5723)

[27 FR 4478, May 10, 1962. Redesignated at 40 FR 16835, Apr. 15, 1975]



Sec. 45.45a  Notice for pipe tobacco.

    (a) Product designation. Every package of pipe tobacco shall, before 
removal subject to tax, have adequately imprinted thereon, or on a label 
securely affixed thereto, the designation ``pipe tobacco.'' As an 
alternative, packages of pipe tobacco may be designated ``Tax Class L.''
    (b) Product weight. Every package of pipe tobacco shall, before 
removal subject to tax, have adequately imprinted thereon, or on a label 
securely affixed thereto, a clear statement of the actual pounds and 
ounces of the product contained therein.

[T.D. ATF-289, 54 FR 48842, Nov. 27, 1989]

[[Page 144]]



Sec. 45.45b  Notice for roll-your-own tobacco.

    (a) Product designation. Before removal subject to tax, roll-your-
own tobacco must have adequately imprinted on, or on a label securely 
affixed to, the package, the designation roll-your-own tobacco'' or 
``cigarette tobacco'' or ``Tax Class J.''
    (b) Product weight. Before removal subject to tax, roll-your-own 
tobacco must have a clear statement of the actual weight in pounds and 
ounces of the product in the package. This statement must be adequately 
imprinted on, or on a label securely affixed to, the package.

(Approved by the Office of Management and Budget under control number 
1512-0502)

[T.D. ATF-429, 65 FR 57547, Sept. 25, 2000]



Sec. 45.45c  Package use-up rule.

    (a) A manufacturer must have used such packaging for roll-your-own 
tobacco before January 1, 2000.
    (b) A manufacturer of roll-your-own tobacco, may continue to place 
roll-your-own tobacco in packages that do not meet the marking 
requirements of Sec. Sec. 40.212 and 40.216b(b) until April 1, 2000.
    (c) A manufacturer of roll-your-own tobacco may continue to place 
roll-your-own tobacco in packages that do not meet the marking 
requirements of Sec. 40.216b(a) until October 1, 2000.

[T.D. ATF-427, 65 FR 40051, June 29, 2000]



Sec. 45.46  Tax-exempt label.

    Except in the case of articles described in Sec. 45.31(a)(3), every 
package of tobacco products, and cigarette papers and tubes removed 
under this part shall have the words ``Tax-Exempt. For Use of U.S. Not 
To Be Sold.'' adequately imprinted on the package or on a label securely 
affixed thereto.

(72 Stat. 1422; 26 U.S.C. 5723)

[T.D. 6871, 31 FR 58, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975; and amended by T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. TTB-26, 70 FR 19890, Apr. 15, 
2005]



                            Subpart F_Records



Sec. 45.51  Supporting records.

    (a) Records of removals. Every manufacturer who removes tobacco 
products, and cigarette papers and tubes under this part must, in 
addition to the records kept under part 40 of this chapter, keep a 
supporting record of such removals and must make appropriate entries 
therein at the time of removal. The supporting record for each removal 
must show:
    (1) The date of removal;
    (2) The name and address of the Federal agency to which shipped or 
delivered;
    (3) The kind and quantity and,
    (4) for large cigars, the sale price.
    (b) Records of returns. If any tobacco products, or cigarette papers 
or tubes removed under this part are returned to the factory, such 
returns must be noted in the supporting record.
    (c) Commercial records. Where the manufacturer keeps, at the 
factory, copies of invoices or other commercial records containing the 
information required as to each removal, in such manner that the 
information may be readily ascertained therefrom, such copies will be 
considered the supporting record required by this section.
    (d) Retention period. The manufacturer must retain the supporting 
record for 3 years following the close of the year covered therein. The 
record must be made available for inspection by any appropriate TTB 
officer upon request.

(Approved by the Office of Management and Budget under control number 
1512-0363)

(See 26 U.S.C. 5741)

[T.D. ATF-420, 64 FR 71945, Dec. 22, 1999, as amended by T.D. ATF-472, 
Feb. 27, 2002]



PART 46_MISCELLANEOUS REGULATIONS RELATING TO TOBACCO PRODUCTS AND CIGARETTE 

PAPERS AND TUBES--Table of Contents




Subpart A_Application of 26 U.S.C. 6423, as Amended, to Refund or Credit 
       of Tax on Tobacco Products, and Cigarette Papers and Tubes

                                 General

Sec.

[[Page 145]]

46.1 Scope of regulations in this subpart.
46.2 Meaning of terms.
46.3 Applicability to certain credits or refunds.
46.4 Ultimate burden.
46.5 Conditions to allowance of credit or refund.
46.6 Requirements for persons intending to file claim.

                             Claim Procedure

46.7 Execution and filing of claim.
46.8 Data to be shown in claim.
46.9 Time for filing claim.

                                  Bond

46.10 Bond, Form 2490.
46.11 Corporate surety.
46.12 Deposit of securities in lieu of corporate surety.
46.13 Authority to approve bonds.
46.14 Termination of liability.
46.15 Release of pledged securities.

                                Penalties

46.16 Penalties.

                   Subpart B_Administrative Provisions

46.21 Delegations of the Administrator.
46.22 Forms prescribed.

                     Subpart C_Disaster Loss Claims

46.71 Scope of subpart.

                               Definitions

46.72 Meaning of terms.

                                Payments

46.73 Circumstances under which payment may be made.

                            Claims Procedure

46.74 Execution of claims.
46.75 Required information for claim.
46.76 Supporting evidence.
46.77 Time and place of filing.
46.78 Action by appropriate ATF officerAppropriate TTB officer.

     Destruction of Tobacco Products, and Cigarette Papers and Tubes

46.79 Supervision.

                                Penalties

46.80 Penalties.

                        Administrative Provisions

46.81 [Reserved]

Subparts D-F [Reserved]

                  Subpart G_Dealers in Tobacco Products

46.161 Scope of subpart.
46.162 Territorial extent.
46.163 Meaning of terms.
46.164 Authority of ATF officerAppropriate TTB officers to enter 
          premises.
46.165 Interference with administration.
46.166 Dealing in tobacco products.
46.167 Liability to tax.
46.168 Liability to penalties and forfeitures.

Subpart H [Reserved]

  Subpart I_Floor Stocks Tax on Cigarettes Held for Sale on January 1, 
                       2000 and on January 1, 2002

                                 General

46.191 Purpose of this subpart.
46.192 Terms used in this subpart.
46.193 Floor stocks tax defined.
46.194 Persons liable for this tax.
46.195 Persons not liable for this tax.
46.196 Floor stocks requirements.

                               Inventories

46.201 Establish quantities of cigarettes.
46.202 Inventory for cigarettes with export markings.
46.203 How to identify cigarettes with export markings.
46.204 When to take inventory.
46.205 Physical inventory requirements.
46.206 Book or record inventory requirements.
46.207 Cigarettes in transit.
46.208 Guidelines to determine title of cigarettes in transit.
46.209 Cigarettes in a foreign trade zone.
46.210 Cigarettes held in bond.
46.211 Unmerchantable cigarettes.
46.212 Cigarettes in vending machines.
46.213 Cigarettes marked ``not for sale'' or ``complimentary''.

                          Compute Tax Liability

46.221 Determine amount of tax due.
46.222 Floor stocks tax rates.
46.223 Apply tax credit.

                           Filing Requirements

46.231 How to obtain a tax return.
46.232 Prepare tax return.
46.233 How to pay.
46.234 Tax return due dates.
46.235 Filing requirements for multiple locations.
46.236 Cigarettes in a warehouse.
46.237 Controlled group members.

                                 Records

46.241 Required records.
46.242 Period for maintaining records.
46.243 Cigarettes at multiple locations.
46.244 Where records must be maintained.
46.245 Errors in records.

[[Page 146]]

                                 Claims

46.251 Before filing a claim.
46.252 When to file a claim for errors on return.
46.253 How to file a claim for errors on return.
46.254 Destruction of cigarettes by a Presidentially-declared major 
          disaster.
46.255 Additional reasons for filing a claim.

                     Alternate Methods or Procedures

46.261 Purpose of an alternate method or procedure.
46.262 How to apply for approval.
46.263 Conditions for approval.
46.264 Withdrawal of an alternate method or procedure.

                             TTB Authorities

46.270 [Reserved]
46.271 Entry, examination and testimony.
46.272 Issuance of summons.
46.273 Refusing entry or examination.
46.274 Penalties for failure to comply.

    Authority: 18 U.S.C. 2341-2346, 26 U.S.C. 5704, 5708, 5751, 5754, 
5761-5763, 6001, 6601, 6621, 6622, 7212, 7342, 7602, 7606, 7805; 44 
U.S.C. 3504(h), 49 U.S.C. 782, unless otherwise noted.

    Source: Redesignated by T.D. ATF-457, 66 FR 32220, June 14, 2001.

    Editorial Note: Nomenclature changes to part 46 appear by T.D. ATF-
457, 66 FR 32220, 32221, June 14, 2001.

    Cross Reference: For exportation of tobacco materials, tobacco 
products, and cigarette papers and tubes, without payment of tax, or 
with drawback of tax, see part 44.



Subpart A_Application of 26 U.S.C. 6423, as Amended, to Refund or Credit 
       of Tax on Tobacco Products, and Cigarette Papers and Tubes

    Source: T.D. 6395, 24 FR 599, Jan. 28, 1959, unless otherwise noted. 
Redesignated at 40 FR 16835, Apr. 15, 1975.

                                 General



Sec. 46.1  Scope of regulations in this subpart.

    The regulations in this subpart relate to the limitations imposed by 
26 U.S.C. 6423, on the refund or credit of tax paid or collected in 
respect to any article of a kind subject to a tax imposed by 26 U.S.C. 
chapter 52.

[T.D. ATF-48, 44 FR 55857, Sept. 28, 1979]



Sec. 46.2  Meaning of terms.

    When used in this subpart, where not otherwise distinctly expressed 
or manifestly incompatible with the intent thereof, terms shall have the 
meaning ascribed in this section.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury, Washington, DC.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.46, Delegation of the Administrator's Authorities in 27 CFR Part 
46, Miscellaneous Regulations Relating to Tobacco Products and Cigarette 
Papers and Tubes.
    Article. The commodity in respect to which the amount claimed was 
paid or collected as a tax.
    Claimant. Any person who files a claim for a refund or credit of tax 
under this subpart.
    Owner. A person who, by reason of a proprietary interest in the 
article, furnished the amount claimed to the claimant for the purpose of 
paying the tax.
    Person. An individual, a trust, estate, partnership, association, 
company, or corporation.
    Tax. Any tax imposed by 26 U.S.C. chapter 52, or by any 
corresponding provision of prior internal revenue laws, and in the case 
of any commodity of a kind subject to a tax under such chapter, any tax 
equal to any such tax, any additional tax, or any floor stocks tax. The 
term includes an exaction denominated a ``tax'', and any penalty, 
addition to tax, additional amount, or interest applicable to any such 
tax.

[T.D. 6395, 24 FR 599, Jan. 28, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975]

    Editorial Note: For Federal Register citations affecting Sec. 46.2, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 46.3  Applicability to certain credits or refunds.

    The provisions of this subpart apply only where the credit or refund 
is claimed on the grounds that an amount

[[Page 147]]

of tax was assessed or collected erroneously, illegally, without 
authority, or in any manner wrongfully, or on the grounds that such 
amount was excessive. This subpart does not apply to:
    (a) Any claim for drawback,
    (b) Any claim made in accordance with any law expressly providing 
for credit or refund where an article is withdrawn from the market, 
returned to bond, lost, or destroyed, and
    (c) Any claim based solely on errors in computation of the quantity 
of an article subject to tax or on mathematical errors in computation of 
the amount of the tax due, or to any claim in respect of tax collected 
or paid on an article seized and forfeited, or destroyed, as contraband.

[T.D. 6395, 24 FR 599, Jan. 28, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-42, 42 FR 8372, Feb. 10, 1977]



Sec. 46.4  Ultimate burden.

    For the purposes of this subpart, the claimant, or owner, shall be 
treated as having borne the ultimate burden of an amount of tax only if:
    (a) He has not, directly or indirectly, been relieved of such burden 
or shifted such burden to any other person,
    (b) No understanding or agreement exists for any such relief or 
shifting, and
    (c) If he has neither sold nor contracted to sell the articles 
involved in such claim, he agrees that there will be no such relief or 
shifting, and furnishes bond as provided in Sec. 46.10.



Sec. 46.5  Conditions to allowance of credit or refund.

    No credit or refund to which this subpart is applicable shall be 
allowed or made, pursuant to a court decision or otherwise, of any 
amount paid or collected as a tax unless a claim therefor has been 
filed, as provided in this subpart, by the person who paid the tax and 
the claimant, in addition to establishing that he is otherwise legally 
entitled to credit or refund of the amount claimed, establishes:
    (a) That he bore the ultimate burden of the amount claimed, or
    (b) That he has unconditionally repaid the amount claimed to the 
person who bore the ultimate burden of such amount, or
    (c) That (1) the owner of the article furnished him the amount 
claimed for payment of the tax, (2) he has filed with the appropriate 
TTB officer the written consent of such owner to the allowance to the 
claimant of the credit or refund, and (3) such owner satisfies the 
requirements of paragraph (a) or (b) of this section.

[T.D. 6395, 24 FR 599, Jan. 28, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 46.6  Requirements for persons intending to file claim.

    Any person who, having paid the tax with respect to an article, 
desires to claim refund or credit of any amount of such tax to which the 
provisions of this subpart are applicable must:
    (a) File a claim, as provided in Sec. 46.7,
    (b) Comply with any other provisions of law or regulations which may 
apply to the claim, and
    (c) If, at the time of filing the claim, neither he nor the owner 
has sold or contracted to sell the articles involved in the claim, file 
a bond on TTB Form 5620.10, as provided by Sec. 46.10.

[T.D. 6395, 24 FR 599, Jan. 28, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]

                             Claim Procedure



Sec. 46.7  Execution and filing of claim.

    Claims to which this subpart is applicable must be executed on Form 
2635 (5620.8) in accordance with instructions for the form. (For 
provisions relating to hand-carried documents, see Sec. 70.304 of this 
chapter.) The claim shall set forth each ground upon which the claim is 
made in sufficient detail to apprise the appropriate TTB officer of the 
exact basis therefor. Allegations pertaining to the bearing of the 
ultimate burden relate to additional conditions which must be 
established for a claim to be allowed and are not in themselves legal 
grounds for allowance of a claim. There shall also be attached to the 
form and made a part of the claim the supporting data required by Sec. 
46.8. All evidence relied upon in support of such

[[Page 148]]

claim shall be clearly set forth and submitted with the claim.

[T.D. 7008, 34 FR 3672, Mar. 1, 1969. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55857, Sept. 28, 1979; T.D. 
ATF-251, 52 FR 19342, May 22, 1987; T.D. ATF-301, 55 FR 47658, Nov. 14, 
1990; T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 46.8  Data to be shown in claim.

    Claims to which this subpart is applicable, in addition to the 
requirements of Sec. 46.7, must set forth or contain the following:
    (a) A statement that the claimant paid the amount claimed as a 
``tax'' as defined in this subpart.
    (b) Full identification (by specific reference to the form number, 
the date of filing, the place of filing, and the amount paid on the 
basis of the particular form or return) of the tax forms or returns 
covering the payments for which refund or credit is claimed.
    (c) The written consent of the owner to allow the refund or credit 
to the claimant (where the owner of the article on which the tax was 
paid has furnished the claimant the amount claimed for the purpose of 
paying the tax).
    (d) If the claimant or the owner, as the case may be, has neither 
sold nor contracted to sell the articles involved in the claim, a 
statement that the claimant or the owner, as the case may be, agrees not 
to shift, directly or indirectly in any manner whatsoever, the burden of 
the tax to any other person.
    (e) If the claim is for refund of a floor stocks tax, or of an 
amount resulting from an increase in rate of tax applicable to an 
article, a statement as to whether the price of the article was 
increased on or following the effective date of such floor stocks tax or 
rate increase, and, if so, the date of the increase, together with full 
information as to the amount of such price increase.
    (f) Specific evidence (such as relevant records, invoices, or other 
documents, or affidavits of individuals having personal knowledge of 
pertinent facts) which will satisfactorily establish the conditions of 
allowance set forth in Sec. 46.5.

The appropriate TTB officer may require the claimant to furnish as a 
part of the claim such additional information as he may deem necessary.

[T.D. ATF-42, 42 FR 8372, Feb. 10, 1977, as amended by T.D. ATF-472a, 67 
FR 63544, Oct. 15, 2002]



Sec. 46.9  Time for filing claim.

    No credit or refund of any amount of tax to which the provisions of 
this subpart apply shall be made unless the claimant files a claim 
therefor within the time prescribed by law and in accordance with the 
provisions of this subpart.

[T.D. ATF-42, 42 FR 8373, Feb. 10, 1977]

                                  Bond



Sec. 46.10  Bond, Form 2490.

    Each claim for a refund or credit of tax on articles which the 
claimant or the owner, as the case may be, has neither sold nor 
contracted to sell at the time of filing of the claim must be 
accompanied by a bond on TTB Form 5620.10. The bond shall be executed by 
the claimant or the owner of the articles, as the case may be, in 
accordance with the provisions of this subpart and the instructions 
printed on the form. Such bond shall be conditioned that there will be 
no relief or shifting of the ultimate burden of the tax to any other 
person. The penal sum shall not be less than the amount of tax claimed 
on all articles which have not been sold or contracted for sale at the 
time of filing of the claim. Bonds required by this subpart shall be 
given with corporate surety or with collateral security. A separate bond 
must be filed for each claim.

[T.D. 6395, 24 FR 599, Jan. 28, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 46.11  Corporate surety.

    (a) Surety bonds required under the provisions of this subpart may 
be given only with corporate sureties holding certificates of authority 
from the Secretary of the Treasury as acceptable sureties on Federal 
bonds. Limitations concerning corporate sureties are prescribed by the 
Secretary in the current revision of the Treasury Department Circular 
No. 570 (refer to paragraph (c) of this section). The surety shall have

[[Page 149]]

no interest whatever in the business covered by the bond.
    (b) Each bond and each extension of coverage of bond shall at the 
time of filing be accompanied by a power of attorney authorizing the 
agent or officer who executed the bond to so act on behalf of the 
surety. The appropriate TTB officer who is authorized to approve the 
bond may, whenever he deems it necessary, require additional evidence of 
the authority of the agent or officer to execute the bond or extension 
of coverage of bond. The power of attorney shall be prepared on a form 
provided by the surety company and executed under the corporate seal of 
the company. If the power of attorney submitted is other than a manually 
signed document, it shall be accompanied by a certificate of its 
validity.
    (c) Treasury Department Circular No. 570 (Companies Holding 
Certificates of Authority as Acceptable Sureties on Federal Bonds and as 
Acceptable Reinsuring Companies) is published in the Federal Register 
annually as of the first workday in July. As they occur, interim 
revisions of the circular are published in the Federal Register. Copies 
may be obtained from the Audit Staff, Bureau of Government Financial 
Operations, Department of the Treasury, Washington, DC 20226.

(July 30, 1947, ch. 390, 61 Stat. 648, as amended (6 U.S.C. 6, 7); sec. 
202, Pub. L. 85-859, 72 Stat. 1421, as amended (26 U.S.C. 5711))

[T.D. ATF-92, 46 FR 46923, Sept. 23, 1981, as amended by T.D. ATF-472, 
67 FR 8880, Feb. 27, 2002]



Sec. 46.12  Deposit of securities in lieu of corporate surety.

    In lieu of corporate surety, the principal may pledge and deposit 
securities which are transferable and are guaranteed as to both interest 
and principal by the United States, in accordance with the provisions of 
31 CFR part 225.



Sec. 46.13  Authority to approve bonds.

    An appropriate TTB officer may approve all bonds required by this 
subpart.

[T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 46.14  Termination of liability.

    Bonds on TTB Form 5620.10 will be terminated by the appropriate TTB 
officer on receipt of satisfactory evidence that the person giving the 
bond has disposed of the articles covered by the bond and that he bore 
the ultimate burden of the amount claimed and that no understanding or 
agreement exists whereby he will be relieved of such burden or shift 
such burden to another person.

[T.D. 6395, 24 FR 599, Jan. 28, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]



Sec. 46.15  Release of pledged securities.

    Securities of the United States, pledged and deposited as provided 
by Sec. 46.12, shall be released only in accordance with the provisions 
of 31 CFR part 225. When the appropriate TTB officer is satisfied that 
they may be released, he shall fix the date or dates on which a part or 
all of such securities may be released. At any time prior to the release 
of such securities, the appropriate TTB officer may, for proper cause, 
extend the date of release for such additional length of time as he 
deems necessary.

[T.D. 6395, 24 FR 599, Jan. 28, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-472, 67 FR 8880, Feb. 27, 2002]

                                Penalties



Sec. 46.16  Penalties.

    It is an offense punishable by fine and imprisonment for anyone to 
make or cause to be made any false or fraudulent claim upon the United 
States, or to make any false or fraudulent statements, or 
representations, in support of any claim, or to falsely or fraudulently 
execute any documents required by the provisions of the internal revenue 
laws, or any regulations made in pursuance thereof.



                   Subpart B_Administrative Provisions

    Source: T.D. ATF-472, 67 FR 8880, Feb. 27, 2002, unless otherwise 
noted.

[[Page 150]]



Sec. 46.21  Delegations of the Administrator.

    The regulatory authorities of the Administrator contained in this 
part are delegated to appropriate TTB officers. These TTB officers are 
specified in TTB Order 1135.46, Delegation of the Administrator's 
Authorities in 27 CFR Part 46, Miscellaneous Regulations Relating to 
Tobacco Products and Cigarette Papers and Tubes. You may obtain a copy 
of this order by accessing the TTB Web site (http://www.ttb.gov) or by 
mailing a request to the Alcohol and Tobacco Tax and Trade Bureau, 
National Revenue Center, 550 Main Street, Room 1516, Cincinnati, OH 
45202.

[T.D. TTB-44, 71 FR 16955, Apr. 4, 2006]



Sec. 46.22  Forms prescribed.

    (a) The appropriate TTB officer is authorized to prescribe all forms 
required by this part. You must furnish all of the information required 
by each form as indicated by the headings on the form and the 
instructions for the form, and as required by this part. You must file 
each form in accordance with its instructions.
    (b) Forms prescribed by this part are available for printing through 
the TTB Web site (http://www.ttb.gov) or by mailing a request to the 
Alcohol and Tobacco Tax and Trade Bureau, National Revenue Center, 550 
Main Street, Room 1516, Cincinnati, OH 45202.

[T.D. ATF-472, 67 FR 8880, Feb. 27, 2002, as amended by T.D. TTB-44, 71 
FR 16955, Apr. 4, 2006]



                     Subpart C_Disaster Loss Claims



Sec. 46.71  Scope of subpart.

    This subpart prescribes the requirements necessary to implement 26 
U.S.C. 5708, concerning payments which may be made by the United States 
in respect to 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 a disaster occurring in the United 
States on or after September 3, 1958.

[T.D. 6871, 31 FR 59, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55857, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986]

                               Definitions



Sec. 46.72  Meaning of terms.

    When used in this subpart, the following terms shall have the 
meanings given in this section, unless the context clearly indicates 
otherwise. Words in the plural form shall include the singular, and vice 
versa, and words indicating the masculine gender shall include the 
feminine. The terms ``includes'' and ``including'' do not exclude things 
not listed which are in the same general class.
    Act. The Excise Tax Technical Changes Act of 1958 (Pub. L. 85-859, 
72 Stat. 1275), enacted September 2, 1958.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.46, Delegation of the Administrator's Authorities in 27 CFR Part 
46, Miscellaneous Regulations Relating to Tobacco Products and Cigarette 
Papers and Tubes.
    Claimant. The person who held the tobacco products or cigarette 
papers and tubes for sale at the time of the disaster and who files 
claim under this subpart.
    Commissioner of Customs. The Commissioner of Customs, U.S. Customs 
Service, The Department of the Treasury, Washington, DC.
    Disaster. A flood, fire, hurricane, earthquake, storm, or other 
catastrophe which has occurred in any part of the United States on and 
after the day following the date of enactment of the act and which the 
President of the United States has determined, under the Act of 
September 30, 1950 (64 Stat. 1109; 42 U.S.C. 1855), was a ``major 
disaster'' as defined in such Act.
    Duly authorized official. Any Federal, State, or local government 
official in whom has been vested authority to

[[Page 151]]

condemn tobacco products and cigarette papers and tubes made the subject 
of a claim under this subpart.
    Duty or duties. Any duty or duties paid under the customs laws of 
the United States.
    Removal or remove. The removal of tobacco products or cigarette 
papers or tubes from the factory, or release of such articles from 
Customs custody.
    Sale price. The price for which large cigars are sold by the 
manufacturer or importer, determined in accordance with Sec. Sec. 40.22 
or 41.39 and used in computation of the tax.
    Tax paid or determined. The internal revenue tax on tobacco products 
and cigarette papers and tubes which has acutally been paid, or which 
has been determined pursuant to 26 U.S.C. 5703(b), and regulations 
thereunder, at the time of their removal subject to tax payable on the 
basis of a return.
    Tobacco Products. Cigars, cigarettes, smokeless tobacco, pipe 
tobacco, and roll-your-own tobacco.
    United States. When used in a geographical sense, includes only the 
States, and the District of Columbia.

[T.D. 6392, 24 FR 5300, June 30, 1959]

    Editorial Note: For Federal Register citations affecting Sec. 
46.72, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.

                                Payments



Sec. 46.73  Circumstances under which payment may be made.

    An appropriate TTB officer shall allow payment (without interest) of 
an amount equal to the amount of tax paid or determined, and the 
Commissioner of Customs shall allow payment (without interest) of an 
amount equal to the amount of customs duty paid, on tobacco products, 
and cigarette papers and tubes removed, which are lost, rendered 
unmarketable, or condemned by a duly authorized official by reason of a 
disaster occurring in the United States on and after September 3, 1958. 
Such payments may be made only if, at the time of the disaster, such 
tobacco products, or cigarette papers or tubes were being held for sale 
by the claimant. No payment shall be made under this subpart with 
respect to any amount of tax or duty claimed or to be claimed under any 
other provision of law or regulations.

[T.D. 6871, 31 FR 59, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975 and amended by T.D. ATF-232, 51 FR 28090, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-472, 67 FR 8881, Feb. 27, 
2002]

                            Claims Procedure



Sec. 46.74  Execution of claims.

    Disaster loss claims for tobacco products or cigarette papers or 
tubes must be executed on TTB Form 2635 (5620.8), Claim--Alcohol, 
Tobacco and Firearms Taxes, in accordance with the instructions on the 
form. If a claim involves taxes on both domestic and imported products, 
the quantities of each must be shown separately in the claim. Prepare a 
separate claim in respect of customs duties.

[T.D. ATF-420, 64 FR 71945, Dec. 22, 1999]



Sec. 46.75  Required information for claim.

    The claim should contain the following information:
    (a) That the tax on such tobacco products, or cigarette papers or 
tubes has been paid or determined and customs duty has been paid;
    (b) That such tobacco products, or cigarette papers or tubes were 
lost, rendered unmarketable, or condemned by a duly authorized official, 
by reason of a disaster;
    (c) The type and date of occurrence of the disaster and the location 
of the tobacco products, or cigarette papers or tubes at that time;
    (d) That the claimant 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;
    (e) That no amount of internal revenue tax or customs duty claimed 
has been or will be otherwise claimed under any other provision of law 
or regulations,
    (f) That the claimant is entitled to payment under this subpart, and
    (g) The claim must set forth the quantity and kind of tobacco 
products and cigarette papers and tubes in sufficient detail to 
calculate the amount of tax and duty paid on these products,

[[Page 152]]

substantially as shown in the examples below:

                                         [Example using 1993-1999 Rates]
----------------------------------------------------------------------------------------------------------------
               Quantity                             Article                       Rate of tax            Amount
----------------------------------------------------------------------------------------------------------------
20,000................................  Small cigars..................  $1.125 per thousand...........    $22.50
1,000.................................  Large cigars--sale price $100/  12.75% of sale price..........     12.75
                                         thousand.
500...................................  Large cigars--sale price $236/  $30 per thousand..............     15.00
                                         thousand.
10,000................................  Small cigarettes..............  $12 per thousand..............    120.00
5,000.................................  Large cigarettes..............  $25.20 per thousand...........    126.00
2,000 sets............................  Cigarette papers--50 per set..  $0.0075 per set...............     15.00
1,000 sets............................  Cigarette papers--100 per set.  $0.015 per set................     15.00
1,000.................................  Cigarette tubes...............  $0.015 per 50 tubes...........      0.30
100 lbs...............................  Chewing tobacco...............  $0.12 per pound...............     12.00
200 lbs...............................  Snuff.........................  $0.36 per pound...............     72.00
100 lbs...............................  Pipe tobacco..................  $0.675 per pound..............     67.50
300 lbs...............................  Roll-your-own tobacco.........  $0 per pound..................  ........
    Total claimed.....................  ..............................  ..............................    478.05
----------------------------------------------------------------------------------------------------------------


                                         [Example using 2000-2001 Rates]
----------------------------------------------------------------------------------------------------------------
               Quantity                             Article                       Rate of tax            Amount
----------------------------------------------------------------------------------------------------------------
20,000................................  Small cigars..................  $1.594 per thousand...........    $31.88
1,000.................................  Large cigars--sale price $100/  18.063% of sale price.........     18.06
                                         thousand.
500...................................  Large cigars--sale price $236/  $42.50 per thousand...........     21.25
                                         thousand.
10,000................................  Small cigarettes..............  $17.00 per thousand...........    170.00
5,000.................................  Large cigarettes..............  $35.70 per thousand...........    178.50
199,975...............................  Cigarette papers..............  $0.0106 per 50 papers.........     42.40
1,000.................................  Cigarette tubes...............  $0.0213 per 50 tubes..........      0.43
100 lbs...............................  Chewing tobacco...............  $0.17 per pound...............     17.00
200 lbs...............................  Snuff.........................  $0.51 per pound...............    102.00
100 lbs...............................  Pipe tobacco..................  $0.9567 per pound.............     95.67
300 lbs...............................  Roll-your-own tobacco.........  $0.9567 per pound.............    287.01
    Total claimed.....................  ..............................  ..............................    964.20
----------------------------------------------------------------------------------------------------------------


                                    [Example using rates for 2002 and After]
----------------------------------------------------------------------------------------------------------------
               Quantity                             Article                       Rate of tax            Amount
----------------------------------------------------------------------------------------------------------------
20,000................................  Small cigars..................  $1.828 per thousand...........     36.56
1,000.................................  Large cigars--sale price $100/  20.719% of sale price.........     20.72
                                         thousand.
500...................................  Large cigars--sale price $236/  $48.75 per thousand...........     24.38
                                         thousand.
10,000................................  Small cigarettes..............  $19.50 per thousand...........    195.00
5,000.................................  Large cigarettes..............  $40.95 per thousand...........    204.75
199,975...............................  Cigarette papers..............  $0.0122 per 50 papers.........     48.80
1,000.................................  Cigarette tubes...............  $0.0244 per 50 tubes..........      0.49
100 lbs...............................  Chewing tobacco...............  $0.195 per pound..............     19.50
200 lbs...............................  Snuff.........................  $0.585 per pound..............    117.00
100 lbs...............................  Pipe tobacco..................  $1.0969 per pound.............    109.69
300 lbs...............................  Roll-your-own tobacco.........  $1.0969 per pound.............    329.07
    Total claimed.....................  ..............................  ..............................  1,105.96
----------------------------------------------------------------------------------------------------------------


[T.D. ATF-420, 64 FR 71945, Dec. 22, 1999]



Sec. 46.76  Supporting evidence.

    The claimant must support the claim with any available evidence 
(such as inventories, statements, invoices, bills, records, stamps, and 
labels), relating to the tobacco products or cigarette papers or tubes 
on hand at the time of the disaster and claimed to have been lost, 
rendered unmarketable, or condemned as a result thereof. If the claim is 
for refund of duty, the claimant

[[Page 153]]

must furnish, if practicable, the customs entry number, date of entry, 
and the name of the port of entry.

[T.D. ATF-420, 64 FR 71946, Dec. 22, 1999]



Sec. 46.77  Time and place of filing.

    Disaster loss claims must be filed within 6 months after the date on 
which the President makes the determination that the disaster has 
occurred. All forms, including claims for duty on imported products, 
must be filed with the appropriate TTB officer.

[T.D. ATF-420, 64 FR 71946, Dec. 22, 1999]



Sec. 46.78  Action by appropriate TTB officer.

    The appropriate TTB officer must act upon each claim for payment 
(without interest) of an amount equal to the tax paid or determined 
filed under this subpart and must notify the claimant. Claims and 
supporting data involving customs duties will be forwarded to the 
Commissioner of Customs with a summary statement of such officer's 
findings.

[T.D. ATF-472, 67 FR 8881, Feb. 27, 2002]

     Destruction of Tobacco Products, and Cigarette Papers and Tubes



Sec. 46.79  Supervision.

    Before payment is made under this subpart in respect of the tax, or 
tax and duty, on tobacco products, or cigarette papers or tubes rendered 
unmarketable or condemned by a duly authorized official, such tobacco 
products, or cigarette papers or tubes must be destroyed by suitable 
means under the supervision of an appropriate TTB officer who will be 
assigned for that purpose by another appropriate TTB officer. However, 
if the destruction of such tobacco products, or cigarette papers or 
tubes has already occurred, and if the appropriate TTB officer who acts 
on the claim is satisfied with the supervision of such destruction, TTB 
supervision will not be required.

[T.D. ATF-472, 67 FR 8881, Feb. 27, 2002]

                                Penalties



Sec. 46.80  Penalties.

    Penalties are provided in 26 U.S.C. 7206 and 7207 for the execution 
under the penalties of perjury of any false or fraudulent statement in 
support of any claim and for the filing of any false or fraudulent 
document under this subpart. 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 subpart, be applied in respect of the payments 
provided for in this subpart to the same extent as if such payments 
constituted refunds of such taxes.

[T.D. 6871, 31 FR 60, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55857, Sept. 28, 1979; T.D. 
ATF-232, 51 FR 28092, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 
1986]

                        Admimistrative Provisions



Sec. 46.81  [Reserved]

Subparts D-F [Reserved]



                  Subpart G_Dealers in Tobacco Products

    Source: T.D. 6573, 26 FR 8202, Aug. 31, 1961, unless otherwise 
noted. Redesignated at 40 FR 16835, Apr. 15, 1975.



Sec. 46.161  Scope of subpart.

    The regulations in this subpart relate to the purchase, receipt, 
possession, offering for sale, or sale or other disposition of tobacco 
products by dealers in such products.

[T.D. 6871, 81 FR 60, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975 and amended by T.D. ATF-232, 51 FR 28092, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986]



Sec. 46.162  Territorial extent.

    The provisions of the regulations in this subpart shall apply in the 
several States of the United States and the District of Columbia.



Sec. 46.163  Meaning of terms.

    When used in this subpart, where not otherwise distinctly expressed 
or manifestly incompatible with the intent thereof, each of the 
following terms shall have the meaning ascribed in this section. Words 
in the plural form shall include the singular, words in the singular 
form shall include the plural, and

[[Page 154]]

words importing the masculine gender shall include the feminine. The 
terms ``includes'' and ``including'' do not exclude things not 
enumerated which are in the same general class.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.46, Delegation of the Administrator's Authorities in 27 CFR Part 
46, Miscellaneous Regulations Relating to Tobacco Products and Cigarette 
Papers and Tubes.
    Dealer. Any person who sells, or offers for sale, at wholesale or 
retail levels, any cigars or cigarettes after removal.
    Manufacturer of tobacco products. Any person who manufactures 
cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own 
tobacco but does not include:
    (1) A person who produces tobacco products solely for that person's 
own consumption or use; or
    (2) A proprietor of a Customs bonded manufacturing warehouse with 
respect to the operation of such warehouse.
    Package. The container in which tobacco products are put up by the 
manufacturer or the importer and offered for delivery to the consumer.
    Person. An individual, partnership, association, company, 
corporation, estate, or trust.
    Removal or remove. The removal of tobacco products from the factory 
or release from Customs custody, including the smuggling or other 
unlawful importation of such articles into the United States.
    Tobacco Products. Cigars, cigarettes, smokeless tobacco, pipe 
tobacco, and roll-your-own tobacco.
    U.S.C. The United States Code.

[T.D. 6573, 26 FR 8202, Aug. 31, 1961, as amended by T.D. 6871, 31 FR 
60, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 15, 1975]

    Editorial Note: For Federal Register citations affecting Sec. 
46.163, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.



Sec. 46.164  Authority of TTB officers to enter premises.

    Any appropriate TTB officer may enter in the daytime any premises 
where tobacco products are kept or stored, so far as it may be necessary 
for the purpose of examining such products. When such premises are open 
at night, any appropriate TTB officer may enter them, while so open, in 
the performance of his official duties. The owner of such premises, or 
person having the superintendence of the same, who refuses to admit any 
appropriate TTB officer or permit him to examine such products shall be 
liable to the penalties prescribed by law for the offense. Operators of 
vending machines shall make the tobacco products in their machines 
available for inspection upon the request of any appropriate TTB 
officer.

(68A Stat. 872, 903; 26 U.S.C. 7342, 7606)

[T.D. 6871, 31 FR 60, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975 and amended by T.D. ATF-232, 51 FR 28092, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-472, 67 FR 8881, Feb. 27, 
2002]



Sec. 46.165  Interference with administration.

    Whoever, corruptly or by force or threats of force, endeavors to 
hinder or obstruct the administration of this subpart, or endeavors to 
intimidate or impede any appropriate TTB officer acting in his official 
capacity, or forcibly rescues or attempts to rescue or causes to be 
rescued any property, after it has been duly seized for forfeiture to 
the United States in connection with a violation of the internal revenue 
laws, shall be liable to the penalties prescribed by law.

(68A Stat. 855; 26 U.S.C. 7212)

[T.D. 6573, 26 FR 8202, Aug. 31, 1961. Redesignated at 40 FR 16835, Apr. 
15, 1975, as amended by T.D. ATF-472, Feb. 27, 2002]



Sec. 46.166  Dealing in tobacco products.

    (a) All tobacco products purchased, received, possessed, offered for 
sale, sold or otherwise disposed of, by any dealer must be in proper 
packages which bear the mark or notice as prescribed in parts 40 and 41 
of this chapter. Tobacco products may be sold, or offered for sale, at 
retail from such

[[Page 155]]

packages, provided the products remain in the packages until removed by 
the customer or in the presence of the customer. Where a vending machine 
is used, tobacco products must similarly be vended in proper packages or 
directly from such packages.
    (b) Tobacco products manufactured in the United States and labeled 
for exportation under chapter 52 of title 26, U.S.C. may not be sold or 
held for sale for domestic consumption in the United States unless such 
articles are removed from their export packaging and repackaged by the 
original manufacturer into new packaging that does not contain an export 
label. This applies to articles labeled for export even if the packaging 
or the appearance of such packaging to the consumer of such articles has 
been modified or altered by a person other than the original 
manufacturer so as to remove or conceal or attempt to remove or conceal 
(including by placement of a sticker over) the export label.
    (c) For penalty and forfeiture provisions applicable to the selling, 
relanding or receipt of articles which have been labeled or shipped for 
exportation, see Sec. 41.83 of this chapter.

[T.D. ATF-465, 66 FR 45618, Aug. 29, 2001, as amended by T.D. TTB-16, 69 
FR 52423, Aug. 26, 2004]



Sec. 46.167  Liability to tax.

    Any dealer who, with intent to defraud the United States, possesses 
tobacco products (a) upon which the tax has not been paid or determined 
in the manner and at the time prescribed in parts 40 and 41 of this 
chapter or (b) which, after removal without payment of tax pursuant to 
section 5704, I.R.C., and regulations issued thereunder, have been 
diverted from the applicable purpose or use specified in that section or 
(c) which are not put up in packages prescribed in parts 40 and 41 of 
this chapter or are put up in packages not bearing the marks and notices 
prescribed in such regulations shall be liable for a tax equal to the 
tax on such products.

(72 Stat. 1424; 26 U.S.C. 5751)

[T.D. 6871, 31 FR 60, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr. 
15, 1975 and amended by T.D. ATF-232, 51 FR 28092, Aug. 5, 1986; T.D. 
ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-460, 66 FR 390 93, July 27, 
2001; T.D. TTB-16, 69 FR 52423, Aug. 26, 2004]



Sec. 46.168  Liability to penalties and forfeitures.

    Any dealer who fails to comply with the provisions of this subpart 
becomes liable to the civil and criminal penalties, and forfeitures, 
provided by law.

(72 Stat. 1425, 1426; 26 U.S.C. 5761, 5762, and 5763)

Subpart H [Reserved]



  Subpart I_Floor Stocks Tax on Cigarettes Held for Sale on January 1, 
                       2000 and on January 1, 2002

    Authority: Section 9302, Pub.L. 105-33, 111 Stat. 251, unless 
otherwise noted.

    Source: T.D. ATF-423, 64 FR 71958, Dec. 22, 1999, unless otherwise 
noted.

                                 General



Sec. 46.191  Purpose of this subpart.

    The regulations in this subpart implement the floor stocks tax on 
cigarettes held for sale the first moment on January 1, 2000 and on 
January 1, 2002.



Sec. 46.192  Terms used in this subpart.

    (a) Appropriate TTB officer. An officer or employee of the Alcohol 
and Tobacco Tax and Trade Bureau (TTB) authorized to perform any 
functions relating to the administration or enforcement of this part by 
TTB Order 1135.46, Delegation of the Administrator's Authorities in 27 
CFR 46, Miscellaneous Regulations Relating to Tobacco Products and 
Cigarette Papers and Tubes.
    (b) Controlled group. Pursuant to 26 U.S.C. 5061(e)(3), the term 
``controlled group'' means a controlled group of corporations, as 
defined in 26 U.S.C. 1563, and implementing regulations in 26 CFR 
1.1563-1 through 1.1563-4, except that the words ``at least 80 percent''

[[Page 156]]

shall be replaced by the words ``more than 50 percent'' in each place 
they appear in subsection (a) of 26 U.S.C. 1563, as well as in the 
implementing regulations. Controlled groups of corporations include, but 
are not limited to:
    (1) Parent-subsidiary controlled groups as defined in 26 CFR 1.1563-
1 (a)(2).
    (2) Brother-sister controlled groups as defined in 26 CFR 1.1563-
1(a)(3).
    (3) Combined groups as defined in 26 CFR 1.1563-1(a)(4). Also, the 
rules for a controlled group of corporations apply in a similar fashion 
to groups which include partnerships and/or sole proprietorships. If one 
entity maintains more than 50% control over a group consisting of 
corporations and one, or more, partnerships and/or sole proprietorships, 
all are members of a controlled group.
    (c) Foreign trade zone. A foreign trade zone established and 
operated pursuant to the Act of June 18, 1934, as amended, 19 U.S.C. 
81a.
    (d) Large cigarettes. Cigarettes weighing more than three pounds per 
thousand.
    (e) Person. When the term ``person'' is used in this subpart, it 
refers to an individual, partnership, association, company, corporation, 
a trust, or an estate. It also includes any State or political 
subdivision.
    (f) Small cigarettes. Cigarettes weighing not more than three pounds 
per thousand.
    (g) Tax increase dates. For the purposes of this floor stocks tax, 
the tax increase dates are January 1, 2000 and January 1, 2002.

[T.D. ATF-423, 64 FR 71958, Dec. 22, 1999, as amended by ATF-457, 66 FR 
32220, June 14, 2001; T.D. ATF-472, 67 FR 8881, Feb. 27, 2002; T.D. TTB-
44, 71 FR 16956, Apr. 4, 2006]



Sec. 46.193  Floor stocks tax defined.

    Floor stocks tax is a tax imposed on all Federally taxpaid or tax 
determined cigarettes held for sale on the first moment a tax increase 
becomes effective. The tax is the difference between the previous excise 
tax rate and the new tax rate.



Sec. 46.194  Persons liable for this tax.

    You are liable for this tax if you hold for sale any taxpaid or 
taxdetermined cigarettes at the moment a tax increase is effective. You 
are liable for floor stocks tax on cigarettes that you own that may be 
in transit (refer to Sec. Sec. 46.207 and 46.208). You may also be 
liable if you hold cigarettes in a foreign trade zone (refer to Sec. 
46.209).



Sec. 46.195  Persons not liable for this tax.

    If you do not hold any taxpaid or taxdetermined cigarettes for sale 
at the moment a tax increase is effective, you are not liable for this 
tax.



Sec. 46.196  Floor stocks requirements.

    (a) Take an inventory. Establish the quantity of cigarettes subject 
to the floor stocks tax held for sale at the beginning of the tax 
increase dates (January 1, 2000 and January 1, 2002). You may take a 
physical inventory or you may use a book or record inventory, as 
specified in Sec. Sec. 46.205 and 46.206.
    (b) Compute tax amount. Compute the amount of tax for the cigarettes 
held for sale at the start of each of the tax increase dates. Refer to 
the table shown in Sec. 46.222. Apply the tax credit as provided by 
Sec. 46.223.
    (c) File tax return. After you have computed the floor stocks tax, 
you must file a return for each tax increase date if tax is due.
    (d) Maintain records. Maintain all records used to determine the 
quantity of cigarettes on hand at the start of each tax increase date. 
You must also maintain all computations used to determine the amount of 
tax owed. Refer to Sec. 46.241.

(Approved by the Office of Management and Budget under control number 
1512-0554)

                               Inventories



Sec. 46.201  Establish quantities of cigarettes.

    You must take an inventory to establish the quantity of cigarettes 
subject to the floor stocks tax. You may take a physical inventory or a 
book or record inventory.



Sec. 46.202  Inventory for cigarettes with export markings.

    Your inventory of cigarettes must count separately cigarettes that 
have been labeled for export from the United States.

[[Page 157]]



Sec. 46.203  How to identify cigarettes with export markings.

    Each package (the container in which cigarettes are put up by the 
manufacturer and delivered to the consumer) of cigarettes will have:
    (a) A mark or a label with the words ``Tax-exempt. For use outside 
U.S.'' or ``U.S. Tax Exempt. For use outside U.S.''; or
    (b) A stamp, sticker, or notice, required by a foreign country or 
possession of the United States, which identifies such country or 
possession.



Sec. 46.204  When to take inventory.

    You must take your physical inventory or book or record inventory 
during the periods noted in the table to this section.

------------------------------------------------------------------------
  Date of floor stocks tax      Not earlier than        No later than
------------------------------------------------------------------------
January 1, 2000.............  December 26, 1999...  January 10, 2000.
January 1, 2002.............  December 26, 2001...  January 10, 2002.
------------------------------------------------------------------------



Sec. 46.205  Physical inventory requirements.

    Your physical inventory must include a written record of:
    (a) Quantity and Type. You must record the quantity and type of 
cigarettes in sufficient detail to determine the tax rate as stated in 
Sec. 46.222 and whether the cigarettes have export markings as stated 
in Sec. 46.203. The following chart provides the type of cigarette and 
method to use to determine quantities:

------------------------------------------------------------------------
         Type or kind                       Inventory method
------------------------------------------------------------------------
Small cigarettes (Class A)...  Count the:
                                 Number of cigarettes
                                without export markings.
                                 Number of cigarettes
                                with export markings.
Large cigarettes (Class B)...  Count the:
                                 Number of large
                                cigarettes 6.5 or less in
                                length without export markings.
                                 Number of large
                                cigarettes 6.5 or less in
                                length with export markings.
                                 Number of each size
                                of large cigarettes more than 6.5 in length without export markings.
                                 Number of each size
                                of large cigarettes more than 6.5 in length with export markings.
------------------------------------------------------------------------

    (b) Date. Date(s) the inventory was taken.
    (c) Name. Name of individual(s) conducting the inventory and the 
name of the person for whom the inventory was taken.
    (d) Location. Record where the inventory was taken (street address, 
city and State).
    (e) Time. The physical inventory must be taken between the dates 
shown in Sec. 46.204. If you do not take the physical inventory as of 
the close of business on the last respective business days of 1999 and 
2001, the records must be reconciled. The inventory records must be 
reconciled to reflect the actual quantity of cigarettes held as of the 
first moment of January 1, 2000 and January 1, 2002, respectively. These 
records must include all supporting records of receipt and disposition.



Sec. 46.206  Book or record inventory requirements.

    You may use a book or record inventory if you have source records 
that show:
    (a) The quantity of receipts and dispositions of all cigarettes.
    (b) The actual type and quantities of cigarettes on hand as if a 
physical inventory had taken place the moment the tax increase became 
effective. Refer to Sec. 46.205(a).
    (c) The name and address of the consignor and consignee.
    (d) The date of receipt or disposition of the cigarettes.
    (e) The brand name of each product.

[[Page 158]]

    (f) If you do not take the inventory as of the close of business on 
the last respective business days of 1999 and 2001, the records must be 
reconciled as described in Sec. 46.205(e).



Sec. 46.207  Cigarettes in transit.

    Cigarettes in transit must be included in your inventory if you hold 
title to the cigarettes. If you have transferred the title, you must 
document the title transfer in writing. For example, you may mark the 
bill of lading with a written statement that indicates the time and 
place of the title transfer.



Sec. 46.208  Guidelines to determine title of cigarettes in transit.

    You may use the following guidelines to establish who holds title to 
cigarettes in transit.
    (a) If State law mandates the change in title, then no agreement or 
contract between seller and buyer can alter it.
    (b) In the absence of State law governing the change of title 
between seller and buyer, the Uniform Commercial Code allows the seller 
and buyer to agree when title passes.
    (c) If there is no State law or agreement between the seller and 
buyer, the Uniform Commercial Code states that title transfer depends on 
how the seller ships the cigarettes.
    (1) Freight on board (F.O.B.) destination. The title transfer occurs 
when the seller completes the performance of the physical delivery of 
the cigarettes.
    (2) Freight on board (F.O.B.) shipping point. The title transfer 
occurs when the seller transfers the title at the time and place of 
shipment, which is generally by common carrier.



Sec. 46.209  Cigarettes in a foreign trade zone.

    You are liable for the tax and must take an inventory when either of 
the following conditions apply:
    (a) Internal revenue taxes have been determined or Customs duties 
liquidated, with respect to cigarettes pursuant to the first proviso of 
section 3(a) of the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a), 
or
    (b) Cigarettes are held by a Customs officer pursuant to the second 
proviso of section 3(a) of the Act of June 18, 1934 (48 Stat. 998, 19 
U.S.C. 81a).



Sec. 46.210  Cigarettes held in bond.

    If you are a manufacturer or an export warehouse proprietor and hold 
cigarettes in TTB bond on the tax increase dates, the floor stocks tax 
does not apply to those cigarettes. Likewise, if you have cigarettes 
held in a Customs bonded warehouse, the floor stocks tax does not apply 
on those cigarettes.



Sec. 46.211  Unmerchantable cigarettes.

    Any cigarettes that you hold for return to a supplier because of 
some defect are not subject to the floor stocks tax. You must prepare a 
separate list of these items. You cannot include as unmerchantable any 
items that may be held because of poor market demand or to reduce your 
inventory.



Sec. 46.212  Cigarettes in vending machines.

    You do not have to inventory cigarettes held in a vending machine 
for retail sale, provided:
    (a) The vending machine holding the cigarettes is placed at a 
location where retail sales occur, and
    (b) The cigarettes are ready to be dispensed by a consumer.



Sec. 46.213  Cigarettes marked ``not for sale'' or ``complimentary''.

    Cigarettes marked ``not for sale'' or ``complimentary'' that are 
part of a sale (for example, buy two packs and get one pack free) are 
subject to the floor stocks tax and must be included in the book or 
record inventory as required by Sec. Sec. 46.205 and 46.206. Cigarettes 
that are marked ``not for sale'' or ``complimentary'' and are intended 
to be given away and not in conjunction with any sale are not subject to 
the floor stocks tax.

                          Compute Tax Liability



Sec. 46.221  Determine amount of tax due.

    After you have taken your inventory, apply the applicable tax rate 
for each type of cigarette using the table in Sec. 46.222. Multiply the 
amount of each type of cigarette by the applicable tax rate.

[[Page 159]]



Sec. 46.222  Floor stocks tax rates.

------------------------------------------------------------------------
          Type or kind              January 1, 2000     January 1, 2002
------------------------------------------------------------------------
Small Cigarettes (3 pounds or     $5 per 1,000 or 10  $2.50 per 1,000 or
 less per 1,000).                  cents per 20.       5 cents per 20
Large Cigarettes (more than 3     $10.50 per 1,000    $5.25 per 1,000 or
 pounds per 1,000).                or 21 cents per     10.5 cents per 20
                                   20.
------------------------------------------------------------------------
  Special rule: For large
   cigarettes over 6\1/2\ inches
   long determine the rate for
   each length. Multiply the
   rate prescribed for small
   cigarettes by the whole
   number that represents the
   addition of each 2\3/4\
   inches and any fraction of
   the length, as one (1)
------------------------------------------------------------------------



Sec. 46.223  Apply tax credit.

    You are allowed a credit against your floor stocks tax of up to 
$500. However, controlled groups are eligible for only one credit for 
the entire group. The credit may be divided equally among the members or 
apportioned in any other manner agreeable to the members.

                           Filing Requirements



Sec. 46.231  How to obtain a tax return.

    Form 5000.28T, Floor Stocks Tax Return for Cigarettes, is available 
for printing through the TTB Web site (http://www.ttb.gov) or by mailing 
a request to the Alcohol and Tobacco Tax and Trade Bureau, National 
Revenue Center, 550 Main Street, Room 1516, Cincinnati, OH 45202.

[T. D. TTB-44, 71 FR 16956, Apr. 4, 2006]



Sec. 46.232  Prepare tax return.

    If your tax liability is zero, you do not have to complete or file a 
tax return. Otherwise, complete and file the floor stocks tax return in 
accordance with the instructions for the form.



Sec. 46.233  How to pay.

    (a) Check or money order. Your payment must be in the form of a 
check or money order and sent with Form 5000.28T unless you are required 
to file by electronic fund transfer as described in paragraph (b) of 
this section.
    (b) Electronic fund transfer. If you pay any other excise taxes 
collected by TTB by electronic fund transfer, then you must also send 
your payment for this floor stocks tax by an electronic fund transfer. 
Publication 5000.10, Payment by Electronic Funds Transfer, specifies how 
to make an electronic fund transfer. Publication 5000.10 is available 
for printing through the TTB Web site (http://www.ttb.gov) or by mailing 
a request to the Alcohol and Tobacco Tax and Trade Bureau, National 
Revenue Center, 550 Main Street, Room 1516, Cincinnati, OH 45202.

[T. D. TTB-44, 71 FR 16956, Apr. 4, 2006]



Sec. 46.234  Tax return due dates.

------------------------------------------------------------------------
           Tax increase date              File tax return no later than:
------------------------------------------------------------------------
January 1, 2000........................  March 31, 2000 \1\
January 1, 2002........................  April 1, 2002
------------------------------------------------------------------------
\1\ Section 9302(j) of P.L. 105-33 states that the due date is April 1,
  2000. However, section 5703(b)(2)(E) of the Internal Revenue Code
  requires that when a due date falls on a Saturday, Sunday or a legal
  holiday, the preceding day that is not a Saturday, Sunday or legal
  holiday will be the due date. Therefore, the floor stocks tax for this
  period is due on March 31, 2000 since April 1, 2000, falls on a
  Saturday.



Sec. 46.235  Filing requirements for multiple locations.

    You may file a consolidated return if all locations or places of 
business have the same employer identification number. You also have the 
option of filing a separate return for each place of business or 
location.



Sec. 46.236  Cigarettes in a warehouse.

    (a) Cigarettes warehoused at one or more locations must be reported 
on the tax return representing the location where the cigarettes will be 
offered for sale.
    (b) Cigarettes offered for sale at several locations must be 
reported on a tax return filed by one or more of the locations. The 
cigarettes can be reported by a single location or apportioned among 
several locations.



Sec. 46.237  Controlled group members.

    If you are a member of a controlled group, you must file if the 
combined liability with other members is more

[[Page 160]]

than $500. If you have your own employer identification number, you must 
file a separate tax return. You may take the tax credit discussed in 
Sec. 46.223 if it is apportioned to you as a member of the controlled 
group.

                                 Records



Sec. 46.241  Required records.

    You must maintain:
    (a) Inventory records.
    (b) Tax computations.
    (c) Names, addresses and employer identification number of all 
controlled group members, if applicable.
    (d) Copy of tax return, if you filed one.
    (e) List of locations and warehouses covered by the tax return.
    (f) Any approved alternate method or procedure under 46.263.



Sec. 46.242  Period for maintaining records.

    An appropriate TTB officer may require, in writing, that you keep 
records and any tax returns for an additional period of not more than 3 
years. Keep your records in accordance with time frames shown in the 
table to this section.

------------------------------------------------------------------------
                                           Maintain your records for at
              If you have:                            least:
------------------------------------------------------------------------
Taken an inventory but are not required  3 years from the tax increase
 to file a tax return.                    date.
Filed a tax return on or before the due  3 years from the due date of
 date of the return.                      the tax return, as specified
                                          in Sec.  46.234.
Filed a tax return after the due date    3 years from the date of filing
 of the tax return.                       the tax return.
------------------------------------------------------------------------



Sec. 46.243  Cigarettes at multiple locations.

    You must maintain a list of each place where you hold cigarettes 
subject to the floor stocks tax. This list must include:
    (a) Address.
    (b) Name of the proprietor (if different).
    (c) The employer identification number (if different).
    (d) Quantity and classification of all cigarettes held at each 
location.



Sec. 46.244  Where records must be maintained.

    Keep your inventory records at your principal place of business. All 
records must be made available to an appropriate TTB officer upon 
demand.



Sec. 46.245  Errors in records.

    If your inventory records or tax computation records contain an 
error that resulted in an overpayment of tax, you can file a claim for 
refund. If your inventory or tax computation records contain an error 
that resulted in an underpayment of tax, you must file an additional tax 
return on which you show and pay the additional tax, interest and any 
applicable penalties.

                                 Claims



Sec. 46.251  Before filing a claim.

    Before you can file a claim for refund, you must have paid your 
floor stocks tax on TTB F 5200.28T and subsequently determined that you 
overpaid the tax.



Sec. 46.252  When to file a claim for errors on return.

    You must file the claim within 3 years from the due date of filing 
the tax return or 2 years from the time the tax was paid, whichever is 
later.



Sec. 46.253  How to file a claim for errors on return.

    Your claim must be filed on TTB Form 2635 (5620.8). The claim must 
include detailed and sufficient evidence to support why you believe the 
tax was overpaid. The claim and supporting documentation must be mailed 
or delivered to the address shown on the form.

(Approved by the Office of Management and Budget under control number 
1512-0554)



Sec. 46.254  Destruction of cigarettes by a Presidentially-declared major 

disaster.

    After you have paid the floor stocks tax, you may file a claim for 
refund of

[[Page 161]]

tax on cigarettes lost, rendered unmarketable, or condemned because of a 
Presidentially-declared major disaster. Refer to subpart C of this part 
for the time, evidence and procedures for filing a claim.



Sec. 46.255  Additional reasons for filing a claim.

    (a) Manufacturer. 27 CFR part 40, subparts I and K state the times, 
reasons and procedures for filing a claim for refund.
    (b) Export warehouse proprietor. 27 CFR part 44, subpart G, states 
the time, evidence and procedures for filing a claim for refund.
    (c) Exported taxpaid. If cigarettes are shipped from the United 
States, you may file a claim for drawback of taxes under subpart K of 27 
CFR part 44.
    (d) Importer. An importer may follow the procedures for filing a 
claim as described in 27 CFR part 41, subpart I.

[T.D. ATF-423, 64 FR 71958, Dec. 22, 1999, as amended by T.D. ATF-460, 
66 FR 39093, July 27, 2001; T.D. ATF-464, 66 FR 43479, Aug. 20, 2001; 
T.D. TTB-16, 69 FR 52423, Aug. 26, 2004]

                     Alternate Methods or Procedures



Sec. 46.261  Purpose of an alternate method or procedure.

    An alternate method or procedure is a different way of performing a 
requirement than is provided in this subpart of regulations. You would 
only make a request if you wanted to perform a requirement in a 
different way than is provided in this subpart.



Sec. 46.262  How to apply for approval.

    You must apply in writing to the National Revenue Center, 550 Main 
Street, Cincinnati, Ohio 45202-3263. You must describe the alternate 
method or procedure and reasons you wish to use it. You cannot use the 
alternate method until you receive written approval from the appropriate 
TTB officer.

(Approved by the Office of Management and Budget under control number 
1512-0554)



Sec. 46.263  Conditions for approval.

    The alternate method or procedure may be approved if it meets all of 
the following conditions:
    (a) There is good cause for its use.
    (b) It is consistent with the purpose and effect intended by the 
prescribed method or procedure.
    (c) It affords equivalent security to the revenue.
    (d) It is not contrary to any provision of law.
    (e) It will not result in an increase in cost to the Government.
    (f) It will not hinder the effective administration of this subpart 
such as delaying timely payment of taxes.
    (g) It is not a method or procedure that relates to the payment or 
collection of tax.



Sec. 46.264  Withdrawal of an alternate method or procedure.

    The approval will be withdrawn if revenue is jeopardized or 
administration of this subpart is hindered. The appropriate TTB officer 
will give you a written notice of the withdrawal.

                             TTB Authorities



Sec. 46.270  [Reserved]



Sec. 46.271  Entry, examination and testimony.

    Appropriate TTB officers, in performing official duties, may enter 
any premises to examine cigarettes subject to floor stocks tax. They may 
enter the premises during the day or may also enter at night if the 
premises are open. Appropriate TTB officers may audit and examine all 
cigarettes, inventory records, books, papers, or other resource data for 
the purpose of ascertaining, determining or collecting floor stocks tax. 
They may take testimony (under oath) of any person when inquiring as to 
proper payment of floor stocks taxes.



Sec. 46.272  Issuance of summons.

    Appropriate TTB officers can issue summonses when there is no 
Justice Department referral under the authority stated in 27 CFR 70.22. 
The summons will state a place and time for such items or person to 
appear. TTB will issue a summons to require:
    (a) Any books of account or other data pertaining to liability of 
floor stocks tax.
    (b) Any person liable for the floor stocks tax or having possession 
of books of account or other data.

[[Page 162]]

    (c) Any other appropriate person in connection with the books or tax 
liability.



Sec. 46.273  Refusing entry or examination.

    If you or another person in charge of the premises refuses to admit 
any appropriate TTB officer or prevents any appropriate TTB officer from 
examining the records or cigarettes, you may be liable for the penalties 
described in 26 U.S.C. 7342 and 7212, respectively.



Sec. 46.274  Penalties for failure to comply.

    If you fail to follow these regulations, TTB may apply applicable 
civil and criminal penalties under the Internal Revenue Code of 1986. 
For example, failure to file and failure to pay penalties may be 
assessed against you if you do not timely file your tax return or timely 
pay the taxes due. In addition, interest under 26 U.S.C. 6621 accrues 
for any underpayment of tax and on all assessed penalties until paid.

[[Page 163]]



                          SUBCHAPTER C_FIREARMS



PART 53_MANUFACTURERS EXCISE TAXES_FIREARMS AND AMMUNITION--Table of Contents




                         Subpart A_Introduction

Sec.
53.1 Introduction.
53.2 Attachment of tax.
53.3 Exemption certificates.

                          Subpart B_Definitions

53.11 Meaning of terms.

          Subpart C_Administrative and Miscellaneous Provisions

53.20 Delegations of the Administrator.
53.21 Forms prescribed.
53.22 Employer identification number.
53.23 Alternate methods or procedures.
53.24 Records.

Subparts D-F [Reserved]

                           Subpart G_Tax Rates

53.61 Imposition and rates of tax.
53.62 Exemptions.
53.63 Other tax-free sales.

Subparts H-I [Reserved]

     Subpart J_Special Provisions Applicable to Manufacturers Taxes

53.91 Charges to be included in sale price.
53.92 Exclusions from sale price.
53.93 Other items relating to tax on sale price.
53.94 Constructive sale price; scope and application.
53.95 Constructive sale price; basic rules.
53.96 Constructive sale price; special rule for arm's length sales.
53.97 Constructive sale price; affiliated corporations.
53.98 Computation of tax on leases and installment sales.
53.99 Sales of installment accounts.
53.100 Exclusion of local advertising charges from sale price.
53.101 Limitation on aggregate of exclusions and price readjustments.
53.102 No exclusion or readjustment for other advertising charges or 
          reimbursements.
53.103 Lease considered as sale.
53.104 Limitation on amount of tax applicable to certain leases.

             Use by Manufacturer or Importer Considered Sale

53.111 Tax on use by manufacturer, producer, or importer.
53.112 Business or personal use of articles.
53.113 Events subsequent to taxable use of article.
53.114 Use in further manufacture.
53.115 Computation of tax.

   Application of Tax in Case of Sales by Other Than Manufacturer or 
                                Importer

53.121 Sales of taxable articles by a person other than the 
          manufacturer, producer, or importer.

                Subpart K_Exemptions, Registration, Etc.

53.131 Tax-free sales; general rule.
53.132 Tax-free sale of articles to be used for, or resold for, further 
          manufacture.
53.133 Tax-free sale of articles for export, or for resale by the 
          purchaser to a second purchaser for export.
53.134 Tax-free sale of articles for use by the purchaser as supplies 
          for vessels or aircraft.
53.135 Tax-free sale of articles to State and local governments for 
          their exclusive use.
53.136 Tax-free sales of articles to nonprofit educational 
          organizations.
53.137-53.139 [Reserved]
53.140 Registration.
53.141 Exceptions to the requirement for registration.
53.142 Denial, revocation or suspension of registration.
53.143 Special rules relating to further manufacture.

    Subpart L_Refunds and Other Administrative Provisions of Special 
                   Application to Manufacturers Taxes

53.151 Returns.
53.152 Final returns.
53.153 Time for filing returns.
53.154 Manner of filing returns.
53.155 Extension of time for filing returns.
53.156 Extension of time for paying tax shown on return.
53.157 Deposit requirement for deposits made for calendar quarters prior 
          to July 1, 1995.
53.158 Payment of tax by electronic fund transfer.
53.159 Deposit requirement for deposits made for calendar quarters 
          beginning on or after July 1, 1995.
53.161 Authority to make credits or refunds.
53.162 Abatements.
53.163-53.170 [Reserved]

[[Page 164]]

53.171 Claims for credit or refund of overpayments of manufacturers 
          taxes.
53.172 Credit or refund of manufacturers tax under chapter 32.
53.173 Price readjustments causing overpayments of manufacturers tax.
53.174 Determination of price readjustments.
53.175 Readjustment for local advertising charges.
53.176 Supporting evidence required in case of price readjustments.
53.177 Certain exportations, uses, sales, or resales causing 
          overpayments of tax.
53.178 Exportations, uses, sales, and resales included.
53.179 Supporting evidence required in case of manufacturers tax 
          involving exportations, uses, sales, or resales.
53.180 Tax-paid articles used for further manufacture and causing 
          overpayments of tax.
53.181 Further manufacture included.
53.182 Supporting evidence required in case of tax-paid articles used 
          for further manufacture.
53.183 Return of installment accounts causing overpayments of tax.
53.184 Refund to exporter or shipper.
53.185 Credit on returns.
53.186 Accounting procedures for like articles.
53.187 OMB control numbers.

    Authority: 26 U.S.C. 4181, 4182, 4216-4219, 4221-4223, 4225, 6001, 
6011, 6020, 6021, 6061, 6071, 6081, 6091, 6101-6104, 6109, 6151, 6155, 
6161, 6301-6303, 6311, 6402, 6404, 6416, 7502.

    Source: T.D. ATF-308, 56 FR 303, Jan. 3, 1991, unless otherwise 
noted.

    Editorial Note: Nomenclature changes to part 53 appear by T.D. ATF-
447, 66 FR 19088, Apr. 13, 2001.



                         Subpart A_Introduction



Sec. 53.1  Introduction.

    The regulations in this part (part 53, subchapter C, chapter I, 
title 27, Code of Federal Regulations) are designated ``Manufacturers 
Excise Taxes--Firearms and Ammunition.'' The regulations relate to the 
tax on the sale of firearms and ammunition imposed by section 4181 of 
the Internal Revenue Code of 1986, and to certain related administrative 
provisions of chapter 32, subchapter F, of the Code. Chapter 32, 
subchapter D of the Code imposes taxes on the sale or use by the 
manufacturer, producer, or importer of certain recreational equipment 
specified in that chapter. References in the regulations in this part to 
the ``Internal Revenue Code'' or the ``Code'' are references to the 
Internal Revenue Code of 1986 (United States Code of 1986), as amended, 
unless otherwise indicated. References to a section or other provision 
of law are references to a section or other provision of the Internal 
Revenue Code of 1986, as amended, unless otherwise indicated.



Sec. 53.2  Attachment of tax.

    (a) For purposes of this part, the manufacturers excise tax 
generally attaches when the title to the article sold passes from the 
manufacturer to a purchaser.
    (b) When title passes is dependent upon the intention of the parties 
as gathered from the contract of sale and the attendant circumstances. 
In the absence of expressed intention, the legal rules of presumption 
followed in the jurisdiction where the sale is made govern in 
determining when title passes.
    (c) In the case of a sale on credit, the tax attaches whether or not 
the purchase price is actually collected.
    (d) Where a consignor (such as a manufacturer) consigns articles to 
a consignee (such as a dealer), retaining ownership in them until they 
are disposed of by the consignee, title does not pass, and the tax does 
not attach until sale by the consignee. Where the relationship between a 
manufacturer and a dealer is that of principal and agent, title does not 
pass, and the tax does not attach, until sale by the dealer.
    (e) In the case of a lease, an installment sale, a conditional sale, 
or a chattel mortgage arrangement or similar arrangement creating a 
security interest, a proportionate part of the tax attaches to each 
payment. See section 4217 and Sec. Sec. 53.103 and 53.104 for a 
limitation on the amount of tax payable on lease payments.
    (f) In the case of use by the manufacturer, the tax attaches at the 
time the use begins.

[[Page 165]]



Sec. 53.3  Exemption certificates.

    Several provisions of this part, relating to sales exempt from 
manufacturers excise tax, require the manufacturer to obtain an 
exemption certificate from the purchaser to substantiate the exempt 
character of the sale. Any form of exemption certificate will be 
acceptable if it includes all the information required by the provisions 
of this part. These certificates are available as preprinted documents, 
which may be ordered by mailing a request to the Alcohol and Tobacco Tax 
and Trade Bureau, National Revenue Center, 550 Main Street, Room 1516, 
Cincinnati, OH 45202. The preprinted certificates may be reproduced as 
needed.

[T.D. TTB-44, 71 FR 16957, Apr. 4, 2006]



                          Subpart B_Definitions



Sec. 53.11  Meaning of terms.

    When used in this part and in forms prescribed under this part, 
where not otherwise distinctly expressed or manifestly incompatible with 
the intent thereof, terms shall have the meanings ascribed in this 
section. Words in the plural form shall include the singular, and vice 
versa, and words importing the masculine gender shall include the 
feminine. The terms ``includes'' and ``including'' do not exclude other 
things not enumerated which are in the same general class or are 
otherwise within the scope thereof.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury, Washington, DC.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.53, Delegation of the Administrator's Authorities in 27 CFR Part 
53, Manufacturers Excise Taxes--Firearms and Ammunition.
    Calendar quarter. A period of 3 calendar months ending on March 31, 
June 30, September 30, or December 31.
    Calendar year. The period which begins January 1 and ends on the 
following December 31.
    Chapter 32. For purposes of this part chapter 32 means section 4181, 
chapter 32, of the Internal Revenue Code of 1986, as amended.
    Code. Internal Revenue Code of 1986, as amended.
    Electronic fund transfer (EFT). Any transfer of funds effected by a 
taxpayer's financial institution, either directly or through a 
correspondent banking relationship, via the Federal Reserve 
Communications System (FRCS) or Fedwire to the Treasury Account at the 
Federal Reserve Bank.
    Exportation. The severance of an article from the mass of things 
belonging within the United States with the intention of uniting it with 
the mass of things belonging within some foreign country or within a 
possession of the United States.
    Exporter. The person named as shipper or consignor in the export 
bill of lading.
    Financial institution. A bank or other financial institution, 
whether or not a member of the Federal Reserve System, which has access 
to the Federal Reserve Communications Systems (FRCS) or Fedwire. The 
``FRCS'' or ``Fedwire'' is a communications network that allows Federal 
Reserve System member financial institutions to effect a transfer of 
funds for their customers (or other financial institutions) to the 
Treasury Account at the Federal Reserve Bank.
    Firearms. Any portable weapons, such as rifles, carbines, machine 
guns, shotguns, or fowling pieces, from which a shot, bullet, or other 
projectile may be discharged by an explosive.
    Importer. Any person who brings a taxable article into the United 
States from a source outside the United States, or who withdraws such an 
article from a customs bonded warehouse for sale or use in the United 
States. If the nominal importer of a taxable article is not its 
beneficial owner (for example, the nominal importer is a customs broker 
engaged by the beneficial owner), the beneficial owner is the 
``importer'' of the article for purposes of chapter 32 of the Code and 
is liable for tax on his sale or use of the article in the United 
States. See section 4219 of the Code and 27 CFR 53.121 for the 
circumstances under which sales by

[[Page 166]]

persons other than the manufacturer or importer are subject to the 
manufacturers excise tax.
    Knockdown condition. A taxable article that is unassembled but 
complete as to all component parts.
    Manufacturer. Includes any person who produces a taxable article 
from scrap, salvage, or junk material, or from new or raw material, by 
processing, manipulating, or changing the form of an article or by 
combining or assembling two or more articles. The term also includes a 
``producer'' and an ``importer.'' Under certain circumstances, as where 
a person manufactures or produces a taxable article for another person 
who furnishes materials under an agreement whereby the person who 
furnished the materials retains title thereto and to the finished 
article, the person for whom the taxable article is manufactured or 
produced, and not the person who actually manufactures or produces it, 
will be considered the manufacturer.
    A manufacturer who sells a taxable article in a knockdown condition 
is liable for the tax as a manufacturer. Whether the person who buys 
such component parts or accessories and assembles a taxable article from 
them will be liable for tax as a manufacturer of a taxable article will 
depend on the relative amount of labor, material, and overhead required 
to assemble the completed article and on whether the article is 
assembled for business or personal use.
    Person. An individual, trust, estate, partnership, association, 
company, or corporation. When used in connection with penalties, 
seizures, and forfeitures, the term includes an officer or employee of a 
partnership, who as an officer, employee or member, is under a duty to 
perform the act in respect of which the violation occurs.
    Pistols. Small projectile firearms which have a short one-hand stock 
or butt at an angle to the line of bore and a short barrel or barrels, 
and which are designed, made, and intended to be aimed and fired from 
one hand. The term does not include gadget devices, guns altered or 
converted to resemble pistols, or small portable guns erroneously 
referred to as pistols, as, for example, Nazi belt buckle pistols, glove 
pistols, or one-hand stock guns firing fixed shotgun or fixed rifle 
ammunition.
    Possession of the United States. Includes Guam, the Midway Islands, 
Palmyra, the Panama Canal Zone, the Commonwealth of Puerto Rico, 
American Samoa, the Virgin Islands, and Wake Island.
    Purchaser. Includes a lessee where the lessor is also the 
manufacturer of the article.
    Revolvers. Small projectile firearms of the pistol type, having a 
breech-loading chambered cylinder so arranged that the cocking of the 
hammer or movement of the trigger rotates it and brings the next 
cartridge in line with the barrel for firing.
    Sale. An agreement whereby the seller transfers the property (that 
is, the title or the substantial incidents of ownership in goods) to the 
buyer for a consideration called the price, which may consist of money, 
services, or other things.
    Secretary. The Secretary of the Treasury or his delegate.
    Shells and cartridges. Include any article consisting of a 
projectile, explosive, and container that is designed, assembled, and 
ready for use without further manufacture in firearms, pistols or 
revolvers. A person who reloads used shell or cartridge casings is a 
manufacturer of shells or cartridges within the meaning of section 4181 
if such reloaded shells or cartridges are sold by the reloader. However, 
the reloader is not a manufacturer of shells or cartridges if, in return 
for a fee and expenses, he reloads casings of shells or cartridges 
submitted by a customer and returns the reloaded shells or cartridges 
with the identical casings provided by the customer to that customer. 
Under such circumstances, the customer would be the manufacturer of the 
shells or cartridges and may be liable for tax on the sale of articles. 
See section 4218 of the Code and Sec. 53.112.
    Taxable article. Any article taxable under section 4181 of the Code.
    Treasury Account. The Department of Treasury's General Account at 
the Federal Reserve Bank of New York.

[[Page 167]]

    Vendor. Includes a lessor where the lessor is also the manufacturer 
of the article.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31083, July 9, 1991; T.D. ATF-330, 57 FR 40325, Sept. 3, 1992; T.D. 
ATF-365, 60 FR 33670, June 28, 1995; T.D. ATF-404, 63 FR 52603, Oct. 1, 
1998; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001; T.D. TTB-44, 71 FR 
16957, Apr. 4, 2006]



          Subpart C_Administrative and Miscellaneous Provisions



Sec. 53.20  Delegations of the Administrator.

    The regulatory authorities of the Administrator contained in this 
part are delegated to appropriate TTB officers. These TTB officers are 
specified in TTB Order 1135.53, Delegation of the Administrator's 
Authorities in 27 CFR Part 53, Manufacturers Excise Taxes--Firearms and 
Ammunition. You may obtain a copy of this order by accessing the TTB Web 
site (http://www.ttb.gov) or by mailing a request to the Alcohol and 
Tobacco Tax and Trade Bureau, National Revenue Center, 550 Main Street, 
Room 1516, Cincinnati, OH 45202.

[T.D. TTB-44, 71 FR 16957, Apr. 4, 2006]



Sec. 53.21  Forms prescribed.

    (a) The appropriate TTB officer is authorized to prescribe all forms 
required by this part. All of the information called for in each form 
shall be furnished as indicated by the headings on the form and the 
instructions on or pertaining to the form. In addition, information 
called for in each form shall be furnished as required by this part. The 
form will be filed in accordance with the instructions on the form.
    (b) Forms prescribed by this part are available for printing through 
the TTB Web site (http://www.ttb.gov) or by mailing a request to the 
Alcohol and Tobacco Tax and Trade Bureau, National Revenue Center, 550 
Main Street, Room 1516, Cincinnati, OH 45202.
    (c) Signature authorization. An individual's signature on a return, 
statement, or other document made by or for a corporation or a 
partnership shall be prima facie evidence that the individual is 
authorized to sign the return, statement, or other document.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991. Redesignated in part by T.D. 
ATF-365, 60 FR 33670, June 28, 1995, as amended by T.D. 372, 61 FR 
20724, May 8, 1996; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001; T.D. TTB-
44, 71 FR 16957, Apr. 4, 2006]



Sec. 53.22  Employer identification number.

    (a) Requirement of application. (1) Except for one-time or 
occasional filers, every person who makes a sale or use of an article 
with respect to which a tax is imposed by section 4181 of the Code, and 
who has not earlier been assigned an employer identification number or 
has not applied for one, shall make an application on Form SS-4 for an 
employer identification number. The application and any supplementary 
statement accompanying it shall be prepared in accordance with the 
applicable form, instructions, and regulations and shall set forth fully 
and clearly the data therein called for. Form SS-4 may be obtained from 
any internal revenue district office or internal revenue service center. 
The application shall be filed with the internal revenue officer 
designated in the instructions applicable to Form SS-4. The application 
shall be signed by:
    (i) The individual if the person is an individual;
    (ii) The president, vice-president, or other principal officer, if 
the person is a corporation;
    (iii) A responsible and duly authorized member or officer having 
knowledge of its affairs, if the person is a partnership or other 
unincorporated organization; or
    (iv) The fiduciary, if the person is a trust or estate.
    An employer identification number will be assigned to the person in 
due course upon the basis of information reported on the application 
required under this section.
    (2) Time for filing Form SS-4. The application for an employer 
identification number shall be filed no later than the seventh day after 
the date of the first sale or use of an article with respect to which a 
tax is imposed by chapter 32 of the Code. However, the application 
should be filed far enough

[[Page 168]]

in advance of the first required use of such number to permit issuance 
of the number in time for compliance with such requirement.
    (3) One-time or occasional filers. A person who files a return under 
the provisions of section 53.151(a)(5) is not required to make 
application for an employer identification number. Such persons may use 
their social security number on any return, statement or other document 
submitted to TTB by that person in lieu of an employer identification 
number.
    (b) Use of employer identification number. The employer 
identification number assigned to a person liable for a tax imposed by 
chapter 32 of the Code shall be shown on any return, statement, or other 
document submitted to TTB by the person.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-365, 60 
FR 33670, June 28, 1995; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001]



Sec. 53.23  Alternate methods or procedures.

    (a) A taxpayer, on specific approval by the appropriate TTB officer 
as provided in this section, may use an alternate method or procedure in 
lieu of a method or procedure specifically prescribed in this part. The 
appropriate TTB officer may approve an alternate method or procedure, 
subject to stated conditions, when--
    (1) Good cause has been shown for the use of the alternate method or 
procedure;
    (2) The alternate method or procedure is within the purpose of, and 
consistent with the effect intended by, the specifically prescribed 
method or procedure, and affords equivalent security to the revenue; and
    (3) The alternate method or procedure will not be contrary to any 
provision of law and will not result in an increase in cost to the 
Government or hinder the effective administration of this part. No 
alternate method or procedure relating to the assessment, payment, or 
collection of tax shall be authorized under this paragraph.
    (b) Where the taxpayer desires to employ an alternate method or 
procedure, a written application to do so must be submitted. The 
application must specifically describe the proposed alternate method or 
procedure and must set forth the reasons therefor. Alternate methods or 
procedures must not be employed until the appropriate TTB officer has 
approved the application. The taxpayer must, during the period of 
authorization of an alternate method or procedure, comply with the terms 
of the approved application. Authorization for any alternate method or 
procedure may be withdrawn whenever, in the judgment of the appropriate 
TTB officer, the revenue is jeopardized or the effective administration 
of this part is hindered by the continuation of such authorization.

[T.D. ATF-365, 60 FR 33670, June 28, 1995, as amended by T.D. ATF-447, 
66 FR 19088, Apr. 13, 2001]



Sec. 53.24  Records.

    (a) In general--(1) Form of records. The records required by the 
regulations in this part shall be kept accurately, but no particular 
form is required for keeping the records. Such forms and systems of 
accounting shall be used as will enable appropriate TTB officers to 
ascertain whether liability for tax is incurred and, if so, the amount 
thereof.
    (2) [Reserved]
    (b) Copies of returns, schedules, and statements. Every person who 
is required, by the regulations in this part or by instructions 
applicable to any form prescribed thereunder, to keep any copy of any 
return, schedule, statement, or other document, shall keep such copy as 
a part of the records.
    (c) Records of claimants. Any person who, pursuant to the 
regulations in this part, claims a refund, credit, or abatement, shall 
keep a complete and detailed record with respect to the tax, interest, 
addition to the tax, additional amount, or assessable penalty to which 
the claim relates. Such record shall include any records required of the 
claimant by paragraph (b) of this section and subpart L of this part.
    (d) Place and period for keeping records. (1) All records required 
by this part shall be prepared and kept by the person required to keep 
them, at one or more convenient and safe locations accessible to 
appropriate TTB officers, and shall at all times be immediately

[[Page 169]]

available for inspection by such officers.
    (2) Except as otherwise provided in this subparagraph, every person 
required by the regulations in this part to keep records in respect of a 
tax shall maintain such records for at least three years after the due 
date of such tax for the return period to which the records relate, or 
the date such tax is paid, whichever is later. The records of claimants 
required by paragraph (c) of this section shall be maintained for a 
period of at least three years after the date the claim is filed.
    (e) Reproduction of original records. (1) General books of account, 
such as cash books, journals, voucher registers, ledgers, etc., shall be 
maintained and preserved in their original form. However, reproductions 
of supporting records of details, such as invoices, vouchers, production 
reports, sales records, certificates, proofs of exportation, etc., may 
be kept in lieu of the original records. Any process may be used which 
accurately and timely reproduces the original record, and which forms a 
durable medium for reproducing and preserving the original record.
    (2) Copies of records treated as original records. Whenever records 
are reproduced under this section, the reproduced records shall be 
preserved in conveniently accessible files, and provisions shall be made 
for examining, viewing, and using the reproduced records the same as if 
they were the original record. Such reproduced records shall be treated 
and considered for all purposes as though they were the original record. 
All provisions of law and regulations applicable to the original record 
are applicable to the reproduced record.

[T.D. ATF-365, 60 FR 33670, June 28, 1995, as amended by T.D. ATF-447, 
66 FR 19088, Apr. 13, 2001]

Subparts D-F [Reserved]



                           Subpart G_Tax Rates



Sec. 53.61  Imposition and rates of tax.

    (a) Imposition of tax. Section 4181 of the Code imposes a tax on the 
sale of the following articles by the manufacturer, producer, or 
importer thereof:
    (1) Pistols;
    (2) Revolvers;
    (3) Firearms (other than pistols and revolvers); and
    (4) Shells and cartridges.
    (b) Parts or accessories--(1) In general. No tax is imposed by 
section 4181 of the Code on the sale of parts or accessories of 
firearms, pistols, revolvers, shells, and cartridges when sold 
separately or when sold with a complete firearm for use as spare parts 
or accessories. The tax does attach, however, to sales of completed 
firearms, pistols, revolvers, shells, and cartridges, and to sale of 
such articles that, although in knockdown condition, are complete as to 
all component parts.
    (2) Component parts. Component parts are items that would ordinarily 
be attached to a firearm during use and, in the ordinary course of 
trade, are packaged with the firearm at the time of sale by the 
manufacturer or importer. All component parts for firearms are 
includible in the price for which the article is sold.
    (3) Nontaxable parts. Parts sold with firearms that duplicate 
component parts that are not includible in the price for which the 
article is sold.
    (4) Nontaxable accessories. Items that are not designed to be 
attached to a firearm during use or that are not, in the ordinary course 
of trade, provided with the firearm at the time of the sale by the 
manufacturer or importer are not includible in the price for which the 
article is sold.
    (5) Examples--(i) In general. The following examples are provided as 
guidelines and are not meant to be all inclusive.
    (ii) Component parts. Component parts include items such as a frame 
or receiver, breech mechanism, trigger mechanism, barrel, buttstock, 
forestock, handguard, grips, buttplate, fore end cap, trigger guard, 
sight or set of sights (iron or optical), sight mount or set of sight 
mounts, a choke, a flash hider, a muzzle brake, a magazine, a

[[Page 170]]

set of sling swivels, and/or an attachable ramrod for muzzle loading 
firearms when provided by the manufacturer or importer for use with the 
firearm in the ordinary course of commercial trade. Component parts also 
include any part provided with the firearm that would affect the tax 
status of the firearm, such as an attachable shoulder stock.
    (iii) Nontaxable parts. Nontaxable parts include items such as extra 
barrels, extra sights, optical sights and mounts (in addition to iron 
sights), spare magazines, spare cylinders, extra choke tubes, and spare 
pins.
    (iv) Nontaxable accessories. Nontaxable accessories include items 
such as cleaning equipment, slings, slip on recoil pads (in addition to 
standard buttplate), tools, gun cases for storage or transportation, 
separate items such as knives, belt buckles, or medallions. Nontaxable 
accessories also include optional items purchased by the customer at the 
time of retail sale that do not change the tax classification of the 
firearm, such as telescopic sights and mounts, recoil pads, slings, 
sling swivels, chokes, and flash hiders/muzzle brakes of a type not 
provided by the manufacturer or importer of the firearm in the ordinary 
course of commercial trade.
    (c) Rates of tax. Tax is imposed on the sale of the articles 
specified in section 4181 of the Code at the rates indicated below.

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
(1) Pistols..................................................         10
(2) Revolvers................................................         10
(3) Firearms (other than pistols and revolvers)..............         11
(4) Shells and cartridges....................................         11
------------------------------------------------------------------------

    (d) Computation of tax. The tax is computed by applying to the price 
for which the article is sold the applicable rate. For definition of the 
term ``price'' see section 4216 of the Code and the regulations 
contained in subpart J of this part.
    (e) Liability for tax. The tax imposed by section 4181 of the Code 
is payable by the manufacturer, producer, or importer making the sale.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-404, 63 
FR 52603, Oct. 1, 1998]



Sec. 53.62  Exemptions.

    (a) Firearms subject to the National Firearms Act. Section 4182(a) 
provides that the tax imposed by section 4181 of the Code shall not 
attach to the sale of any firearms on which the tax imposed by section 
5811 of the Code (relating to tax on the transfer of machine guns, 
short-barreled firearms, and other weapons) has been paid. Any 
manufacturer, producer, or importer claiming such an exemption from the 
tax imposed by section 4181 of the Code must maintain such records and 
be prepared to produce such evidence as will establish the right to the 
exemption.
    (b) Sales to Defense Department or to U.S. Coast Guard--(1) Military 
department. Section 4182(b) of the Code provides that the tax imposed by 
section 4181 of the Code shall not attach to the sale of firearms, 
pistols, revolvers, shells, or cartridges that are purchased with funds 
appropriated for a military department of the United States. For this 
purpose, the term ``military department'' means the Department of the 
Army, the Department of the Navy, and Department of the Air Force. 
Included in the Department of the Navy are naval aviation and the Marine 
Corps.
    (2) Coast Guard. Section 655, title 14, U.S.C., provides that no tax 
on the sale or transfer of firearms, pistols, revolvers, shells, or 
cartridges may be imposed on such articles when bought with funds 
appropriated for the United States Coast Guard.
    (3) Supporting evidence. Any manufacturer, producer, or importer 
claiming an exemption from the tax imposed by section 4181 of the Code 
by reason of section 4182(b) and section 655, title 14 of the Code must 
maintain such records and be prepared to produce such evidence as will 
establish the right to the exemption. Generally, clearly identified 
orders or contracts of a military department signed by an authorized 
officer of the military department will be sufficient to establish the 
right to the exemption. In the absence of such orders or contracts, a 
statement, signed by an authorized officer of a military department or 
the Coast Guard, that the prescribed articles were purchased with funds 
appropriated for that military department or

[[Page 171]]

the Coast Guard will constitute satisfactory evidence of the right to an 
exemption.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-344, 58 
FR 40354, July 28, 1993]



Sec. 53.63  Other tax-free sales.

    For provisions relating to tax-free sales of firearms and ammunition 
see:
    (a) Section 4221 and 27 CFR 53.131, ``Tax-free sales; general 
rule''.
    (b) Section 4223 and 27 CFR 53.132, ``Tax-free sale of articles to 
be used for, or resold for, further manufacture''.
    (c) Section 4222 and 27 CFR 53.140, ``Registration''.

Subparts H-I [Reserved]



     Subpart J_Special Provisions Applicable to Manufacturers Taxes



Sec. 53.91  Charges to be included in sale price.

    (a) In general. The ``price'' for which an article is sold includes 
the total consideration paid for the article, whether that consideration 
is in the form of money, services, or other things. However, for 
purposes of the taxes imposed under chapter 32 of the Code, certain 
collateral charges made in connection with the sale of a taxable article 
must be included in the taxable sale price, whereas others may be 
excluded. Any charge which is required by a manufacturer, producer, or 
importer to be paid as a condition of its sale of a taxable article and 
which is not attributable to an expense falling within one of the 
exclusions provided in section 4216 of the Code or the regulations 
thereunder is includable in the taxable sale price. It is immaterial for 
this purpose that the charge may be paid to a person other than the 
manufacturer, producer, or importer, or that it may be separately billed 
to the purchaser as a charge earmarked for expenses incurred or to be 
incurred in his behalf, such as charges for demonstration or display of 
the article, for sales promotion programs, or otherwise. With respect to 
the rules relating to exclusion of charges for local advertising of a 
manufacturer's products, see section 4216(e) of the Code and Sec. 
53.100. In the case of sales on credit, a carrying, finance, or service 
charge is excludable from the sale price if it is reasonably related to 
the costs of carrying the deferred portion of the sale price (such as 
interest on the deferred portion of the sale price, expenses of 
bookkeeping necessary to keep the records of such sales, and expenses of 
correspondence and other communication in connection with collection).
    (b) Tools and dies. Separate charges for tools and dies used in the 
manufacture or production of a taxable article are to be included, in 
whole or in part, in the sale price on which the tax is based. It is 
immaterial whether the charges for such items are billed in a lump sum 
or are amortized or allocated to each of the taxable articles. If, at 
the termination of a contract to manufacture taxable articles, the tools 
and dies used in production pass to the purchaser, only the amount of 
depreciation of the tools and dies incurred in production, computed on a 
``production output'' basis, should be included in the sale price. If 
the purchaser furnishes the tools and dies, the amount of the cost 
thereof, to the extent that such cost has been depreciated in the 
production of the taxable articles (computed on a ``production output'' 
basis), shall be included in determining the sale price of the articles 
for purposes of computing the tax.
    (c) Charges for warranty. A charge for a warranty of an article 
which the manufacturer, producer, or importer requires the purchaser to 
pay in order to obtain the article shall be included in the sale price 
of the article on which the tax is computed. On the other hand, a charge 
for a warranty of a taxable article paid at the purchaser's option shall 
not be included in the sale price for purposes of computing tax thereon.
    (d) Charges for coverings, containers, and packing. Any charge by 
the manufacturer, producer, or importer for coverings and containers of 
whatever nature used to pack an article for shipment shall be included 
as part of the sale price for the purpose of computing the tax, whether 
or not the charges are identified as such on the invoice or are billed 
separately. Even though there is

[[Page 172]]

an agreement that the manufacturer, producer, or importer will repay all 
or a portion of the charge for the coverings or containers upon the 
return thereof, the full charge nevertheless shall be included in the 
sale price. It is immaterial whether the charge made at the time of sale 
is more or less than the actual value of the covering or container. See 
Sec. 53.173(b)(4) for provisions relating to the claiming of a credit 
or refund in the case of a price readjustment due to the return or 
repossession of a covering or container. Packing charges are to be 
included in the sale price whether the charges cover normal packing or 
special packing services, such as for extra protection of the article or 
for odd-lot quantities. This rule shall apply whether the packing 
services are initiated by the manufacturer, producer, or importer or are 
furnished at the request of the purchaser and whether the packing is 
performed by the manufacturer, producer, or importer or by another 
person at his request. If the purchaser supplies packing materials, the 
fair market value of such materials must be included in the tax base 
when computing tax liability on the sale of the article.
    (e) Taxable and nontaxable articles sold as a unit. Where a taxable 
article and a nontaxable article are sold by the manufacturer as a unit, 
the tax attaches to that portion of the manufacturer's sale price of the 
unit which is properly allocable to the taxable article. Normally, the 
taxable portion of such a unit may be determined by applying to the 
manufacturer's sale price of the unit the ratio which the manufacturer's 
separate sale price of the taxable article bears to the sum of the sale 
prices of both the taxable and nontaxable articles, if such articles are 
sold separately by the manufacturer. Where the articles (or either one 
of them) are not sold separately by the manufacturer and do not have 
established sale prices, the taxable portion is to be determined from a 
comparison of the actual costs of the articles to the manufacturer. 
Thus, if the cost of the taxable article represents four-fifths of the 
total cost of the complete unit, the tax applies to four-fifths of the 
price charged by the manufacturer for the unit.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31083, July 9, 1991]



Sec. 53.92  Exclusions from sale price.

    (a) Tax--(1) Tax not part of taxable sale price. The tax imposed by 
chapter 32 of the Code on the sale of an article is not part of the 
taxable sale price of the article. Thus, if a manufacturer computes the 
tax on a sale price which is determined without regard to the tax, and 
it charges the proper tax as a separate item, the amount of tax so 
charged does not become a part of the taxable sale price and no tax is 
due on the tax so charged. Where no separate charge is made as tax, it 
will be presumed that the price charged to the purchaser for the article 
includes the proper tax, and the proper percentage of such price will be 
allocated to the tax.
    (2) Computation of tax. If an article subject to tax at the rate of 
10 percent is sold for $100 and an additional item of $10 is billed as 
tax, $100 is the taxable selling price and $10 is the amount of tax due 
thereon. However, if the article is sold for $100 with no separate 
billing or indication of the amount of the tax, it will be presumed that 
the tax is included in the $100, and a computation will be necessary to 
determine what portion of the total amount represents the sale price of 
the article and what portion represents the tax. The computation is as 
follows:
[GRAPHIC] [TIFF OMITTED] TR25SE06.035


Thus, if the tax rate is 10 percent and the sale price including tax is 
$100, the taxable sale price is $90.91 (that is, $100

[[Page 173]]

divided by (100+10)), and the tax is 10 percent of $90.91, or $9.09.
    (b) Transportation, delivery, insurance, or installation charges--
(1) Charges incurred pursuant to sale. Charges for transportation, 
delivery, insurance, installation, and other expenses actually incurred 
in connection with the delivery of an article to a purchaser pursuant to 
a bona fide sale shall be excluded from the sale price in computing the 
tax. Such charges include all items of transportation, delivery, 
insurance, installation, and similar expense incurred after shipment to 
a customer begins, in response to the customer's order, pursuant to a 
bona fide sale. However, costs of such nature incurred by a 
manufacturer, producer, or importer in transporting, in the normal 
course of business and for its benefit and convenience, articles from a 
factory or port of entry to a warehouse or other facility (regardless of 
the location of such warehouse or facility) are not considered as being 
incurred in connection with the delivery of an article to a purchaser 
pursuant to a bona fide sale, and charges therefor cannot be excluded 
from the sale price in computing tax liability. Similarly, an allowance 
granted by a manufacturer as reimbursement for expenses incurred by the 
purchaser in shipping used articles to the manufacturer for credit 
against the purchase price of taxable articles shall not be excluded 
from the sale price when computing tax due on the sale of the taxable 
articles. In any event, no charge may be excluded from the sale price 
unless the conditions set forth in paragraph (b)(2) of this section are 
complied with. Said conditions are prescribed under the authority 
granted the Secretary in section 4216(a) of the Code.
    (2) Only actual expenses to be excluded. Where a separate charge is 
made for transportation or other expenses incurred in connection with 
the delivery of an article to the purchaser pursuant to a bona fide 
sale, there shall be excluded in arriving at the sale price subject to 
tax only that portion of the charge which represents the actual expenses 
incurred for the transportation or other excludable expenses. Where a 
separate charge is less than the actual expense, the difference is 
presumed to be included in the billed price. Such difference, together 
with the separate charge, shall be excluded in arriving at the sale 
price on which the tax is computed. Similarly, where no separate charge 
is made but the manufacturer, producer, or importer incurs an expense of 
the type to which this paragraph has application, the amount of such 
expense actually incurred shall be excluded from the sale price on which 
the tax is computed. Where transportation expense is incurred in 
conjunction with a shipment composed of both taxable and nontaxable 
articles, only the portion of the expense allocable to the taxable 
articles shall be excludable. In general, unless the taxpayer 
establishes to the satisfaction of the appropriate TTB officer that 
another method reasonably apportions such freight expense between 
taxable and nontaxable articles, such expense should be apportioned on 
the basis of the relative weights (or, if available, the relative 
published tariff rates) applicable to the taxable and nontaxable 
articles. Where it is not feasible to apportion such expense on the 
basis of relative weights or tariff rates, the expense shall be 
apportioned on another reasonable basis; for example, in the case of a 
shipment including both taxable and nontaxable articles which are 
subject to the same tariff rate, it may be appropriate to apportion the 
transportation expense on the basis of the relative sale prices. A 
charge for insurance in connection with the delivery of an article to a 
purchaser is considered to represent an expense actually incurred only 
to the extent that an amount equivalent to such charge is paid or 
payable by the manufacturer to a person authorized to assume such 
insurance risk.
    (3) Transportation, delivery, or installation services performed by 
manufacturer. For purposes of computing the taxable sale price of 
articles, it is immaterial whether the transportation, delivery, or 
other services of the type to which this paragraph has application are 
performed by a common carrier or independent agency for or on behalf of 
the manufacturer, producer, or importer, or are performed by the 
manufacturer, producer, or importer with the use of its own vehicles or 
other facilities.

[[Page 174]]

Thus, where a manufacturer, producer, or importer performs the 
transportation, delivery, or other services with its equipment, tools, 
employees, etc., the cost of such services allocable to the sale of the 
taxable article shall be excluded. In determining whether an expense is 
an excludable transportation or delivery expense, only those expenses 
incurred by reason of the fact that the purchaser accepts delivery at 
some point other than the manufacturer's place of business shall be 
considered excludable transportation or delivery expenses. All expenses 
incurred in placing an article packed, ready for shipment on the loading 
dock at the manufacturer's factory are not excludable transportation or 
delivery expenses. An allowance granted by the manufacturer, producer, 
or importer to the purchaser for transportation, delivery, or other 
expenses incurred or to be incurred by the purchaser in connection with 
the sale shall be excluded in computing the taxable sale price, if 
charges for similar expenses would be excludable if incurred by the 
manufacturer.
    (4) Records in support of exclusion. Every manufacturer, producer, 
or importer making sales of taxable articles shall keep records which 
will disclose the amount of transportation, delivery, insurance, 
installation or other expense actually incurred by it in connection with 
the delivery of a taxable article to a purchaser pursuant to a bona fide 
sale.
    (c) Other charges. A charge or expense not within the scope of 
paragraph (a) or (b) of this section, whether or not separately stated, 
may not be excluded in computing the taxable sale price unless it can be 
shown by adequate records that the charge or expense is not properly 
included as a manufacturing or selling expense or is in no way 
incidental to placing the article in condition packed ready for 
shipment. Commissions to manufacturers' agents, or allowances, payments, 
or adjustments made to, and for the benefit of, persons other than the 
purchaser may not be excluded or deducted, under any condition, in 
computing the sale price upon which the tax is computed.



Sec. 53.93  Other items relating to tax on sale price.

    (a) Exchanges. If, in connection with the sale of an article subject 
to a tax imposed under chapter 32 of the Code on the price for which 
sold, a manufacturer receives from its vendee another article in 
exchange, the tax on the manufacturer's sale shall be computed on the 
basis of the amount allowed for the article received from the vendee, 
plus any additional amount charged the vendee.
    (b) Replacements under warranty. If an article, subject to a tax 
imposed under chapter 32 of the Code on the price for which sold, is 
returned to the manufacturer by reason of the failure of the article 
under a warranty as to its quality or service, and a new article is 
given by the manufacturer, free, or at a reduced price, the tax on the 
new article shall be computed on the actual amount, if any, to be paid 
to the manufacturer for the new article. See Sec. 53.174(b) for the 
circumstances under which the allowance made by the manufacturer, 
producer, or importer upon the return of the first article constitutes a 
price readjustment of the sale price of the first article and the 
extent, if any, to which a credit may be allowed, or refund made, of the 
tax paid by the manufacturer, producer, or importer on the sale of the 
first article.
    (c) Readjustments in sale price. Readjustment in sale price (such as 
allowable discounts, rebates, bonuses, etc.) cannot be anticipated. The 
tax must be based upon the original price unless the readjustments have 
actually been made prior to the close of the period for which the tax 
upon the sale is returned. However, if the price upon which the tax was 
computed is subsequently readjusted, credit may be taken against the tax 
due on a subsequent return or a claim for refund filed as provided by 
section 6416(b)(1) of the Code and Sec. Sec. 53.174-53.176.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-344, 58 
FR 40354, July 28, 1993]



Sec. 53.94  Constructive sale price; scope and application.

    (a) In general. Section 4216(b) of the Code pertains to those taxes 
imposed under chapter 32 of the Code that are

[[Page 175]]

based on the price for which an article is sold, and contains the 
provisions for constructing a tax base other than the actual sale price 
of the article, under certain defined conditions.
    (b) Specific applications. (1) Section 4216(b)(1) of the Code 
applies to:
    (i) Arm's-length sales at retail or on consignment, other than those 
sales at retail and to retailers to which section 4216(b)(2) of the Code 
and Sec. 53.96 apply; and
    (ii) Sales otherwise than at arm's length, and at less than fair 
market price.
    (2) Section 4216(b)(2) of the Code applies generally to arm's-length 
sales of an article at retail or to retailers, or both, where the 
manufacturer also sells the same article to wholesale distributors.
    (3) Section 4216(b)(3) of the Code provides a formula for 
determining a constructive sale price for sales of taxable articles 
between members of an affiliated group of corporations (as ``affiliated 
group'' is defined in section 1504(a) of the Code) in those instances 
where the purchasing corporation regularly resells to retailers but does 
not regularly resell to wholesale distributors, and except for 
situations where section 4216(b)(4) of the Code applies.
    (4) Section 4216(b)(4) of the Code provides a special method for 
computing a constructive sale price for sales of taxable articles 
between affiliated corporations where the purchasing corporation sells 
only to retailers, and the normal method of selling within the industry 
is for manufacturers to sell to wholesale distributors.
    (c) Definitions. For purposes of section 4216(b) of the Code and 
Sec. Sec. 53.94-53.97 and unless otherwise indicated:
    (1) Sale at retail. A ``sale at retail,'' or a ``retail sale'', is a 
sale of an article to a purchaser who intends to use or lease the 
article rather than resell it. The fact that articles are sold in 
wholesale lots, or at wholesale prices, will not change the character of 
such sales as ``sales at retail'' if the purchaser is not engaged in the 
business of reselling such articles, and acquires them for the purpose 
of using them rather than reselling them.
    (2) Retail dealers. A ``retail dealer'', or ``retailer'', is a 
person engaged in the business of selling articles at retail.
    (3) Wholesale distributor. The term ``wholesale distributor'' means 
a person engaged in the business of selling articles to persons engaged 
in the business of reselling such articles.



Sec. 53.95  Constructive sale price; basic rules.

    (a) In general. Section 4216(b)(1) of the Code sets forth the 
conditions that require the Secretary to construct a sale price on which 
to compute a tax imposed under chapter 32 of the Code on the price for 
which an article is sold. The section requires a constructive sale price 
to be established where a taxable article is:
    (1) Sold at retail;
    (2) Sold while on consignment; or,
    (3) Sold otherwise than through an arm's-length transaction at less 
than fair market price.
    (b) Sales at retail. Section 4216(b)(1)(A) of the Code relates to 
the determination of a constructive sale price for sales of taxable 
articles sold at arm's-length and at retail. In the case of such sales, 
the constructive sale price is the highest price for which such articles 
are sold to wholesale distributors, in the ordinary course of trade, by 
manufacturers or producers thereof, as determined by the Secretary. If 
the constructive sale price is less than the actual sale price, the 
constructive sale price shall be used as the tax base. If the 
constructive sale price is not less than the actual sale price, the 
actual sale price shall be considered as not less than fair market, and 
shall be used as the tax base. In determining the highest price for 
which articles are sold by manufacturers to wholesale distributors, 
there must be taken into consideration the normal industry practices 
with respect to inclusions and exclusions under section 4216(a) of the 
Code. However, once a constructive sale price has been determined by the 
Secretary, no further adjustment of such price shall be made. The 
provisions of section 4216(b)(1)(A) of the Code and this paragraph shall 
not apply in those instances where the provisions of section 4216(b)(2) 
of the Code and Sec. 53.96 apply.

[[Page 176]]

    (c) Sales on consignment. As in the case of sales at retail, the 
constructive sale price for sales on consignment shall be the price for 
which such articles are sold, in the ordinary course for trade, by 
manufacturers or producers thereof, as determined by the Secretary. For 
purposes of section 4216(b)(1)(B) of the Code and this paragraph, an 
article is considered to be sold on consignment if it is sold while it 
is on consignment to a person which has the right to sell, and does 
sell, such article in its own name, but never receives title to the 
article from the manufacturer. Ordinarily, the constructive sale price 
of an article sold on consignment is the net price received by the 
manufacturer from the consignee. The provisions of section 4216(b)(1)(B) 
of the Code and this paragraph shall not apply if the provisions of 
section 4216(b)(2) of the Code and Sec. 53.96 apply.
    (d) Sales not at arm's-length. For purposes of section 4216(b)(1)(C) 
of the Code and this paragraph, a sale is considered to be made under 
circumstances otherwise than at ``arm's-length'' if:
    (1) One of the parties is controlled (in law or in fact) by the 
other, or there is common control, whether or not such control is 
actually exercised to influence the sale price, or
    (2) The sale is made pursuant to special arrangements between a 
manufacturer and a purchaser.

In case of an article sold otherwise than at arm's-length, and at less 
than fair market price, the constructive sale price shall be the price 
for which such articles are sold, in the ordinary course of trade, by 
manufacturers or producers thereof, as determined by the Secretary. Once 
such a constructive sale price has been determined, no further 
adjustment of such price shall be made. See sections 4216(b) (3) and (4) 
of the Code, and Sec. 53.97, for specific methods for determining 
constructive sale prices for intercompany sales under certain defined 
conditions.



Sec. 53.96  Constructive sale price; special rule for arm's-length sales.

    (a) In general. Section 4216(b)(2) of the Code provides a special 
rule under which a manufacturer shall determine a constructive sale 
price for this sale of taxable articles at retail, and to retail 
dealers, under certain conditions. The rule is applicable where:
    (1) The manufacturer regularly sells such articles at retail, or to 
retailers, or both, as the case may be,
    (2) The manufacturer also regularly sells such articles to one or 
more wholesale distributors in arm's-length transactions, and the 
manufacturer establishes that its prices in such cases are determined 
without regard to any benefit to be derived under section 4216(b)(2) of 
the Code, and
    (3) The transactions are arm's-length transactions.
    (4) A manufacturer meeting the foregoing requirements shall base its 
tax liability for sales at retail and sales to retailers on the lower of 
its actual sale price or the highest price for which it sells the same 
articles under the same conditions to wholesale distributors.
    (b) Definitions. For purposes of section 4216(b)(2) of the Code and 
this section:
    (1) Actual sale price. ``Actual sale price'' means the actual 
selling price for an article determined in the same manner as sale price 
is determined for a taxable sale. Accordingly, such price must reflect 
the inclusions and exclusions set forth in section 4216(a) of the Code, 
and any price adjustments described in section 6416(b)(1) of the Code.
    (2) Highest price to wholesale distributors. The ``highest price'' 
charged wholesale distributors for an article by a manufacturer, 
producer, or importer thereof, is the highest price at which the 
manufacturer, producer, or importer sells the article to wholesale 
distributors, determined without regard to quantity. Such price shall be 
determined in the same manner as sale price is determined for a taxable 
sale with respect to the inclusions and exclusions under section 4216(a) 
of the Code; however, since the price is to be a ``highest'' price, no 
further adjustment may be made for price readjustments under section 
6416(b)(1) of the Code.
    (3) Regular sales. An article is considered to be sold ``regularly'' 
at retail or to retailers if sales are made at retail or to retailers 
periodically and recurringly as a regular part of the

[[Page 177]]

seller's business. If a seller makes only isolated or casual sales of an 
article at retail or to retailers, it is not considered to be selling 
``regularly'' at retail or to retailers. Similarly, a manufacturer is 
considered to be making regular sales of an article to one or more 
distributors if it sells the article to at least one distributor 
periodically and recurringly as a regular part of its business.
    (4) Normal method of sales in industry. In the absence of a showing 
to the appropriate TTB officer of a more appropriate manner of 
determining the normal method of sales within an industry which is 
practical in application, the normal method of sales within an industry 
shall be regarded as not being at retail or to retailers, or both, if 
the industry dollar volume of sales which are at retail or to retailers, 
or both, is less than half the total industry dollar volume of sales at 
all levels of distribution by manufacturers, producers, or importers, 
including sales to other manufacturers, producers, or importers.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31083, July 9, 1991]



Sec. 53.97  Constructive sale price; affiliated corporations.

    (a) In general. Sections 4216(b) (3) and (4) of the Code establish 
procedures for determining a constructive sale price under section 
4216(b)(1)(C) of the Code for sales between corporations that are 
members of the same ``affiliated group'', as that term is defined in 
section 1504(a) of the Code.
    (b) Sales to which section 4216(b)(3) of the Code applies. Section 
4216(b)(3) of the Code provides a procedure for determining a 
constructive sale price under section 4216(b)(1)(C) of the Code in those 
instances where:
    (1) A manufacturer, producer or importer regularly sells a taxable 
article to a wholesale distributor which is a member of the same 
affiliated group as the manufacturer, producers or importer, and
    (2) The wholesale distributor regularly sells such article to one or 
more independent retailers, but does not regularly sell to wholesale 
distributors. Under such circumstances the constructive sale price for 
the article shall be an amount equal to 90 percent of the lowest price 
for which the distributor regularly sells the article in arm's-length 
transactions to such independent retailers. Once the constructive sale 
price has been determined, no adjustment shall be made for inclusions or 
exclusions under section 4216(a) of the Code or price readjustments 
under section 6416(b)(1) of the Code. If both sections 4216(b)(3) and 
4216(b)(4) of the Code apply with respect to the sale of an article, the 
constructive sale price for such article shall be the lower of the 
prices computed under sections 4216(b)(3) and 4216(b)(4).
    (c) Sales to which section 4216(b)(4) of the Code applies. Section 
4216(b)(4) of the Code provides a procedure for determining a 
constructive sale price under section 4216(b)(1)(C) of the Code in those 
instance where:
    (1) A manufacturer, producer, or importer regularly sells (except 
for tax-free sales) a taxable article only to a wholesale distributor 
which is a member of the same affiliated group as the manufacturer, 
producer, or importer,
    (2) The distributor regularly sells (except for tax-free sales) such 
article only to retail dealers, and
    (3) The normal method of sales for such articles within the industry 
is to sell such articles in arm's-length transactions to wholesale 
distributors.
    (4) Under section 4216(b)(4) of the Code, the constructive sale 
price of such article shall be the median price at which the 
distributor, at the time of the sale by the manufacturer, resells the 
article to retail dealers, reduced by a percentage of such price equal 
to the percentage which:
    (i) The difference between the median price for which comparable 
articles are sold to wholesale distributors, in the ordinary course of 
trade, by manufacturers of producers thereof, and the median price at 
which such wholesale distributors in arm's-length transactions sell such 
comparable articles to retailers, is of
    (ii) The median price at which such wholesale distributors in arm's-
length transactions sell such comparable articles to retailers.

[[Page 178]]

    (iii) For purposes of this paragraph, the ``median price'' for which 
an article is sold at a particular level of distribution is the price 
midway between the highest and lowest prices charged vendees at the 
particular level of distribution. Where only one price is charged at a 
level of distribution, ``median price'' is equivalent to ``actual 
price''. All sale prices referred to in paragraphs (c) and (d) of this 
section are prices that must reflect the inclusions and exclusions set 
forth in section 4216(a) of the Code. However, once a constructive sale 
price has been determined under these paragraphs, no further adjustment 
of such price is allowed.
    (d) Application of section 4216(b)(4) of the Code. The application 
of section 4216(b)(4) of the Code and paragraph (c) of this section may 
be illustrated by the following example:

    Example. M, a corporation engaged in the manufacture of article X, 
sold 100 of such articles at $10.00 per article to a wholesale 
distributor N, a corporation engaged in the business of selling X 
articles to independent retail dealers. N is a member of the same 
affiliated group of corporations as M. M sells X articles only to N. The 
normal method of manufacturers' sales of X articles in the industry is 
to sell to independent wholesale distributors. N corporation sells X 
articles to retailers for $15.00 each. The price for which comparable X 
articles are sold to wholesale distributors in the ordinary course of 
trade by manufacturers thereof is $12.00 per article. Wholesale 
distributors sell X articles to retailers in the ordinary course of 
trade for $16.00 per article. Under the foregoing facts the constructive 
sale price determined under section 4216(b)(4) of the Code and this 
paragraph is $11.25, computed as follows:
[GRAPHIC] [TIFF OMITTED] TC05OC91.020

    (e) Determination of ``lowest price''. In addition to other 
considerations, in determining a ``lowest price'' for purposes of 
sections 4216(b) (1) and (3) of the Code and Sec. 53.97, such price 
shall be determined:
    (1) Without requiring that a given percentage of sales be made at 
that price (provided that the volume of sales made at that price is 
great enough to indicate that those sales have not been engaged in 
primarily to establish a lower tax base), and
    (2) Without including any charge for a fixed amount that the 
purchaser has an unconditional right to recover on the basis of a 
contractual arrangement existing at the time of sale.
    (f) Definitions. For purposes of this section and paragraphs (3) and 
(4) of section 4216(b) of the Code, the term ``regularly sells'' has the 
same meaning as that accorded the term ``regular sales'' in Sec. 
53.96(b)(3), and the term ``normal method of sales in the industry'' has 
the same meaning as accorded that term in Sec. 53.96(b)(4).

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31083, July 9, 1991]



Sec. 53.98  Computation of tax on leases and installment sales.

    (a) Leases. When a taxable article is leased by a manufacturer, 
producer, or importer, liability for tax is incurred, except as provided 
by section 4217(b) of the Code and Sec. 53.104, on each payment made 
with respect to such lease. Tax is payable on each lease payment as long 
as the article is leased by the manufacturer, producer, or importer. The 
tax payable with respect to each lease payment is a percentage of each 
payment based on the rate of tax, if any, in effect on the date the 
lease payment is due. If the article is subsequently sold by the 
manufacturer, producer, or importer, the tax applies also to such sale, 
without regard to the tax paid when the article was leased. For 
definition of the term ``lease'', see Sec. 53.103.
    (b) Installment sales. When a taxable article is sold under an 
installment payment contract with title reserved in the seller, or under 
a conditional sale contract, chattel mortgage arrangement or other 
arrangement creating a security interest with payments to be made in 
installments, tax shall be computed and paid on each payment made by the 
purchaser. The tax payable with each payment is a percentage of each 
payment based on the rate of tax, if any, in effect on the date the 
payment is due. The part of each payment that is subject to tax is that 
portion of the payment equal to the percentage of the total portion of 
the payment equal to the percentage of the total charge for the article 
that is subject to tax. For example, if the

[[Page 179]]

total charge for the article is $1,000, and of the total amount charged 
only 90 percent thereof, or $900, is subject to tax by reason of 
exclusions, then only 90 percent of the installment payment is subject 
to tax. If the tax base is a constructive sale price computed under 
section 4216(b) of the Code that is less than the actual sale price of 
the article, the portion of each payment subject to tax is the 
percentage of such payment equal to the percentage that the constructive 
sale price bears to the actual sale price. For example, if an article is 
sold at retail for $100, and the constructive sale price for such an 
article computed under the provisions of section 4216(b)(1)(A) of the 
Code is $75, the percentage which the constructive sale price bears to 
the actual sale price is 75 percent. Accordingly, only 75 percent of 
each installment payment is subject to tax.
    (c) Sales on credit. Where articles are sold on credit under 
conditions other than those specified in paragraph (b) of this section, 
the entire tax shall be reported and paid with the return covering the 
period in which the sale is made, even though the price may not be paid 
to the manufacturer, producer, or importer until a later date, or not 
paid at all.



Sec. 53.99  Sales of installment accounts.

    (a) In general. Except as provided in paragraph (d) of this section, 
in case of a sale or other disposition by a manufacturer, producer, or 
importer of an installment account of the type specified in section 
4216(c) of the Code, the tax shall not apply to subsequent installment 
payments on such account. Instead, there shall be paid an amount equal 
to the difference between the tax previously paid on such installment 
account and the total tax computed by applying:
    (1) To each installment due before the sale of the installment 
account, the rate of tax applicable at the time payment thereof was due, 
and
    (2) To each installment, the time for payment of which has not 
arrived, the rate of tax which, under the provisions of chapter 32 of 
the Code as in effect on the date of the sale of the installment 
account, is (or is to be) in effect on the date such installment is due. 
However, see paragraph (b) of this section if the sale is made in a 
bankruptcy or insolvency proceeding. The tax due under this paragraph 
shall be included in the return for the period in which the account is 
sold.
    (b) Sale in bankruptcy or insolvency proceeding. In the case of a 
sale of an installment account of a manufacturer, producer, or importer 
pursuant to the order of, or subject to the approval of, a court of 
competent jurisdiction in a bankruptcy or insolvency proceeding, the 
amount of tax due shall be computed and paid as provided in paragraph 
(a) of this section but shall not exceed the amount of tax computed by 
multiplying:
    (1) The proportionate share of the amount for which such accounts 
are sold which is allocable to each unpaid installment payment, by
    (2) The rate of tax which, under the provisions of chapter 32 of the 
Code as in effect on the date of the sale of the installment account, is 
(or is to be) in effect on the date such payment is due.
    (c) Collection of installment accounts on behalf of the 
manufacturer. Where a manufacturer, producer, or importer retains title 
to an installment account but turns it over to another person for 
collection on a fee basis, no sale of such account (or other disposition 
as contemplated in section 4216(d) of the Code) has been made. The tax 
shall continue to be paid as provided by section 4216(c) of the Code.
    (d) Returned installment accounts. Where an installment account 
which has been sold or otherwise disposed of is returned to the 
manufacturer, producer, or importer who sold it under an agreement under 
which the account was sold, and credit or refund has been allowed under 
section 6416(b)(5) of the Code and Sec. 53.183, the manufacturer, 
producer, or importer shall pay tax as provided by section 4216(c) of 
the Code and Sec. 53.98 on any subsequent payments made on such 
returned installment account until such time as there shall have been 
paid the total tax liability with respect to the account as computed 
under paragraph (a) of this section.
    (e) Limitation. The sum of the amounts payable under this section 
and Sec. 53.98 or an installment account

[[Page 180]]

shall not exceed the total amount of tax which would be payable if such 
installment account had not been sold or otherwise disposed of (computed 
as provided in subsection (c)).



Sec. 53.100  Exclusion of local advertising charges from sale price.

    (a) In general. Section 4216(e) of the Code deals with the treatment 
to be accorded charges made by a manufacturer for, and reimbursements by 
a manufacturer or expenditures in connection with the advertising of 
certain articles subject to excise tax under chapter 32 of the Code. 
Section 4216(e) of the Code provides an exclusion (which is in addition 
to the exclusions provided by section 4216(a) of the Code and Sec. 
53.92) in respect of charges for local advertising, as defined in 
paragraph (b) of this section, for purposes of determining the price for 
which an article is sold. See paragraph (c) of this section. The 
exclusion provided by section 4216(e) of the Code and paragraph (c) of 
this section has application only if the advertising is broadcast over a 
radio or television station, appears in a newspaper or magazine, or is 
displayed by means of an outdoor advertising sign or poster. Section 
4216(e) of the Code also provides an overall limitation in respect of 
the sum of the amount of the exclusions from price as charges for local 
advertising and the amount of the readjustments authorized under section 
6416(b)(1) of the Code (relating to credits or refunds for price 
readjustments) in respect of reimbursements by a manufacturer of 
expenditures for local advertising. See Sec. 53.101. For provisions 
prohibiting exclusion from price or readjustment of price in respect of 
charges for, and reimbursements of expenditures for, advertising other 
than local advertising, see Sec. 53.102.
    (b) Definition of local advertising--(1) In general. For purposes of 
the regulations under sections 4216(e) and 6416(b)(1) of the Code 
(Sec. Sec. 53.100-53.102 and 53.173-53.176), the term ``local 
advertising'' means advertising which relates to an article with respect 
to which tax is imposed under chapter 32 of the Code on the price for 
which sold and which:
    (i) Is initiated or obtained by the purchaser or any subsequent 
vendee,
    (ii) Names the article for which the price is determinable under 
section 4216 and states the location at which such article may be 
purchased at retail, and
    (iii) Is broadcast over a radio station or television station, 
appears in a newspaper or magazine, or is displayed by means of an 
outdoor advertising sign or poster.
    (2) Initiating or obtaining advertising. For purposes of paragraph 
(b)(1) of this section, the advertising must be initiated or obtained by 
one or more of the persons in the chain of distribution of the article 
(wholesale distributor, jobber, dealer, etc.) who purchased the article 
for resale. For purposes of this subparagraph, the manufacturer is not 
considered to be one of the persons in the chain of distribution of the 
article. In general, advertising of an article is considered to be 
initiated or obtained by one or more persons in the chain of 
distribution of the article if any such person:
    (i) Takes an active part in the actual planning and development, or 
in the arrangements or negotiations leading to the development, of the 
form and content of the advertising, or
    (ii) Contracts for the placement of the advertising.

The participation by the manufacturer of the article in the planning, 
development, or placement of the advertising is immaterial provided the 
advertising is in fact initiated or obtained by one or more persons in 
the chain of distribution of the article. Furthermore, it is immaterial 
whether or not the advertising is subject to the approval of the 
manufacturer of the article. However, if no person in the chain of 
distribution of the article takes an active part in the actual planning 
and development, or in the arrangements or negotiations leading to the 
development, of the form and content of the advertising, but, rather, 
all such planning, development, arrangements, and negotiations are 
accomplished by the manufacturer of the article, then such manufacturer 
is considered to have initiated the advertising, and if he also 
contracts for the placement of the advertising, such advertising does 
not qualify as ``local advertising''.

[[Page 181]]

    (3) Identification of article and sales location. To meet the 
requirements of paragraph (b)(1) of this section, the advertising must 
identify the article for which the price is determinable under section 
4216 of the Code and give the location or locations at which the article 
may be purchased at retail. All products taxable at the same rate under 
the same section of chapter 32 of the Code shall be considered to be an 
``article'' for purposes of the preceding sentence. No specific method 
or means of identification is prescribed. The identification of the 
article may be made through the use of the name of the manufacturer or 
the use of an established trade-mark, such as a seal, picture, letter or 
letters, etc., or a combination thereof. The advertising must identify 
the particular retail establishment or establishments at which the 
article may be purchased at retail but need not specify the location of 
any such establishment in terms of the number by which the premises are 
designated or the name of the street on which the retail premises are 
situated. However, the location of the retail premises must be described 
sufficiently, as, for example, by reference to a particular named 
shopping area or shopping center, to enable customers to find the retail 
establishment.
    (4) Determination of costs of local advertising. Where an 
advertisement identifies more than one article, and all such articles 
are not taxable, or are not taxable at the same rate under the same 
section of chapter 32 of the Code, a reasonable allocation of the cost 
of the advertisement must be made among:
    (i) Articles taxable at the same rate under the same section of the 
Code, and
    (ii) Articles which are not taxable under chapter 32 of the Code.

For example, in the case of a single page newspaper or magazine 
advertisement, an allocation of costs reflecting the lineage or space 
devoted to the specified categories will be considered to reflect a 
reasonable allocation of the cost of advertising the different articles. 
As a general rule, only the cost of the ``spot'' portion identifying the 
retail establishment is considered ``local advertising'' in the case of 
national television or radio programs.
    (5) Meaning of ``newspaper''. The term newspaper, as used in 
paragraph (b)(1) of this section, is limited to those publications which 
are commonly understood to be newspapers and which are printed and 
distributed periodically at daily, weekly, or other short intervals for 
the dissemination of news of a general character and of a general 
interest. The term does not include handbills, circulars, flyers, or the 
like, unless printed and distributed as a part of a publication which 
constitutes a newspaper within the meaning of this subparagraph. Neither 
does the term include any publication which is issued to supply 
information on certain subjects of interest to particular groups unless 
such publication otherwise qualifies as a newspaper within the meaning 
of this subparagraph. For purposes of this subparagraph, advertising is 
not considered to be news of a general character and of a general 
interest.
    (6) Meaning of ``magazine''. The term magazine, as used in paragraph 
(b)(1) of this section, is limited to those publications which are:
    (i) Commonly understood to be magazines,
    (ii) Printed and distributed periodically at least twice a year, and
    (iii) Published for the dissemination of information of a general 
nature or of special interest to particular groups.
    (iv) The term does not include handbills, circulars, flyers or the 
like, unless printed and distributed as a part of a publication which 
constitutes a magazine within the meaning of this subparagraph. For 
purposes of this subparagraph, advertising is not considered to be 
information of a general nature or information of special interest to 
particular groups within the contemplation of paragraph (b)(6)(iii) of 
this section.
    (7) Meaning of ``outdoor advertising sign or poster''. The term 
``outdoor advertising sign or poster'', as used in paragraph (b)(1) of 
this section, means a sign or poster displaying advertising matter, 
which is located outside of a roofed enclosure. This term includes both 
signs or posters on billboards, whether placed on or affixed to land,

[[Page 182]]

buildings, or other structures, and those which are displayed on or 
attached to moving objects, provided the signs or posters are located 
outside of a roofed enclosure. The term ``roofed enclosure'' means a 
roof structure which is enclosed on more than one-half of its sides by 
walls, fences, or other barriers.
    (c) Exclusion--(1) Conditions and limitations. A charge for local 
advertising which is required by a manufacturer to be paid as a 
condition to his sale of an article is not a part of the taxable price 
of the article, to the extent that such charge meets each of the 
following conditions and limitations:
    (i) Such charge does not exceed 5 percent of the difference between:
    (A) An amount which would constitute the taxable price of the 
article (computed at the time of the sale of the article) if no part of 
any charge for local advertising were excludable in computing taxable 
price, and
    (B) The amount of any separate charge for local advertising, 
whatever the amount of such charge may be,
    (ii) Such charge is specifically shown as a separate charge for 
local advertising on the invoice or statement covering the sale of the 
article.
    (iii) Such charge is billed by the manufacturer with the intention 
on his part of repaying the amount of the charge to the person 
purchasing the article from him, or to any person who subsequently 
purchases the article for resale, in reimbursement of costs incurred for 
local advertising of such article or some other article or articles 
taxable at the same rate under the same section of the Code. In the 
absence of evidence to the contrary, the fact of such intention will be 
assumed in all cases where the manufacturer and his vendees are parties 
to an advertising plan which calls for such repayments, or the 
manufacturer can otherwise establish that the vendees to whom he bills 
such charges understand and expect that such repayments will be made.
    (2) When exclusion ceases to apply. To the extent that charges for 
local advertising meet the conditions and limitations stated in 
paragraph (c)(1) of this section, such charge is excludable in computing 
the taxable price of the article in respect of which the charge was 
made. However, the exclusion will cease to apply in respect of any part 
of such charge which the manufacturer fails to repay before May 1 of the 
calendar year following the calendar year in which the article was sold, 
to the person who purchased the article from him, or to some other 
person who subsequently purchases the article for resale, in 
reimbursement of costs incurred for local advertising of such article or 
some other article or articles taxable at the same rate under the same 
section of the Code. If, before such May 1, any part of the charge so 
excluded has not been so repaid, the manufacturer becomes liable for tax 
on such May 1 in the same manner as if an article taxable under such 
section of the Code had been sold by him on such May 1 at a taxable 
price equivalent to that part of the charge not so repaid. However, see 
paragraph (b)(2) of Sec. 53.175, relating to price readjustments in 
cases where local advertising charges are not repaid before such May 1 
but are subsequently paid over by the manufacturer to his vendees in 
reimbursement of costs for local advertising. For provisions relating to 
the method of determining whether a payment by a manufacturer is or is 
not attributable to an excluded local advertising charge, see paragraph 
(b)(3) of Sec. 53.101. In any case where the payment is determined to 
be attributable to such a charge, the date of the sale in connection 
with which the charge was made shall be determined on a first-in-first-
out basis in respect of the vendee to whom the charge was billed by the 
manufacturer.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31083, July 9, 1991]



Sec. 53.101  Limitation on aggregate of exclusions and price readjustments.

    (a) In general. The sum of the amount excluded from taxable price in 
respect of charges for local advertising, as provided in section 
4216(e)(1) of the Code and Sec. 53.100, plus the amount of the 
readjustments for which credits or refunds may be claimed in respect of 
local advertising, as provided in section 6416(b)(1) of the Code and 
Sec. 53.175, is subject to an overall 5 percent limitation. This 
limitation applies to each

[[Page 183]]

manufacturer, as of the close of each calendar quarter, in respect of 
all articles taxable under the same section of chapter 32 of the Code 
which were sold by such manufacturer in such quarter (and the preceding 
quarter or quarters, if any, in the calendar year).
    (b) Computation of overall 5 percent limitation--(1) In general. The 
limitation prescribed by section 4216(e)(2) of the Code (the ``overall 5 
percent limitation'' referred to in paragraph (a) of this section) as to 
the total of the exclusions from price and readjustments of price which 
may be claimed for local advertising in respect of all articles taxable 
under the same section of Chapter 32 of the Code shall be computed as of 
the close of each calendar quarter of the calendar year. The overall 5 
percent limitation is 5 percent of the difference between:
    (i) The amount which would constitute the total taxable price 
(computed at the time of sale) of all articles taxable under the same 
section of chapter 32 of the Code sold by the manufacturer during the 
elapsed calendar quarters of the calendar year, if no part of any charge 
for local advertising were excludable in computing taxable price, and
    (ii) The total of all amounts billed as separate charges for local 
advertising of such articles (whatever the amount of any single charge 
of the total of all charges).
    (iii) In making the computations under paragraphs (b)(1) (i) and 
(ii) of this section, credits or refunds under section 6416(b) of the 
Code of tax paid on the sale of any such articles are to be disregarded 
and articles sold tax-free by the manufacturer are to be excluded. The 
amount by which the overall 5 percent limitation computed as of the 
close of a particular calendar quarter in respect of articles taxable 
under the same section of chapter 32 of the Code exceeds the sum of the 
charges for local advertising excluded in computing the taxable price 
and the amount of reimbursements for local advertising of such articles 
made during the elapsed calendar quarters of the calendar year, in 
respect of which credit or refund has been claimed, represents the 
unused portion of the overall 5 percent limitation. Such unused portion 
is the maximum amount of reimbursements for local advertising in respect 
of which credit or refund may be claimed at the close of the particular 
calendar quarter, subject to the applicable conditions and limitations 
governing the right to claim a credit or refund in respect of local 
advertising (see Sec. 53.175). The unused portion of the overall 5 
percent limitation as of the close of the fourth calendar quarter of a 
calendar year in respect of which credit or refund may not be claimed as 
of the close of such quarter must be disregarded in computing the 
overall 5 percent limitation for any subsequent calendar quarter. 
Moreover, the amount of any reimbursements for local advertising made by 
a manufacturer in a calendar year which is in excess of the amount of 
such reimbursements in respect of which credit or refund may be claimed, 
within the overall limitation, as of the close of the calendar year, may 
not subsequently serve as the basis for a credit or refund.
    (2) Alternative method of computation in certain cases. If during 
the portion of the calendar year ending with the date as of which the 
overall 5 percent limitation is being computed the amount of the local 
advertising charge separately billed by the manufacturer has not, in 
respect of any sale of any articles taxable under the same section of 
chapter 32 of the Code, exceeded the amount excludable pursuant to Sec. 
53.100 in computing taxable price, the overall 5 percent limitation as 
of the close of a particular calendar quarter in respect of articles 
taxable under such section is 5 percent of the total taxable price 
(computed at the time of the sale) of all such articles sold taxpaid 
during the calendar year.
    (3) Allocation of amounts paid in reimbursement of expenditures for 
local advertising. If a manufacturer makes contributions to a local 
advertising program in connection with which he makes excludable local 
advertising charges, it is necessary that reimbursements by the 
manufacturer for local advertising be attributed to the charges for 
local advertising, to the manufacturer's contributions, or allocated 
between them. Whether an

[[Page 184]]

amount paid by a manufacturer in reimbursement of expenses for local 
advertising is or is not a repayment of a local advertising charge which 
was excluded from taxable price under section 4216(e)(1) of the Code and 
Sec. 53.100, shall be determined on the basis of an allocation made 
under the agreement between the manufacturer and his vendee (or any 
subsequent vendee).
    (c) Examples. The application of paragraphs (a) and (b) of this 
section may be illustrated by the following examples:

    Example (1). During the first and second calendar quarters of the 
year, a manufacturer makes sales of articles taxable under section 4181 
to his distributors. The total charges for such sales, exclusive of the 
tax, transportation charges, delivery charges, or other charges which 
are excludable, pursuant to section 4216(a) of the Code, in computing 
taxable price, are as follows:

First Quarter:
  Articles taxable under Section 4181......................     $100,000
  Local advertising charges................................        3,000
                                                            ------------
      Total Charges........................................      103,000
 
Second Quarter:
  Articles taxable under Section 4181......................     $150,000
  Local advertising charges................................        4,000
                                                            ------------
      Total Charges........................................      154,000
 

    Assume further that the manufacturer contributes to the advertising 
plan and that the manufacturer pays $5,500 and $1,000 during the first 
and second calendar quarters of the year, respectively, to his 
distributors in reimbursement of expenses incurred by them for local 
advertising of the articles purchased from the manufacturer.

Computation as of close of first calendar quarter:
  1. Amount which would constitute total taxable price          $103,000
   (computed at time of sale) if no part of any charge for
   local advertising were excludable in computing taxable
   price...................................................
  2. Amounts billed as separate charges for local                 -3,000
   advertising.............................................
                                                            ------------
  3. Difference............................................      100,000
  4. Overall 5 percent limitation (5 percent of item 3)....       $5,000
  5. Amount excluded in computing taxable price............       -3,000
                                                            ------------
  6. Unused portion of limitation..........................        2,000
  7. Allocation, pursuant to agreement, of $5,500 paid to
   distributors:
    Charges for local advertising..........................       $3,000
    Contributions by manufacturer..........................       $2,500
 

    Readjustment may be claimed in respect of that portion of the total 
amount repaid to the distributors which is allocated to the 
manufacturer's contribution ($2,500) to the extent that such portion 
does not exceed the unused portion of the overall 5 percent limitation 
($2,000). Accordingly, as of the close of the first calendar quarter the 
manufacturer may claim credit or refund in respect of a readjustment of 
price in the amount of $2,000.

Computation as of close of second calendar quarter:
  1. Amount which would constitute total taxable price          $257,000
   (computed at time of sale) if no part of any charge for
   local advertising were excludable in computing taxable
   price ($103,000+$154,000)...............................
  2. Amounts billed as separate charges for local                 -7,000
   advertising ($3,000+$4,000).............................
                                                            ------------
  3. Difference............................................      250,000
  4. Overall 5 percent limitation (5 percent of item 3)....      $12,500
  5. Amount excluded in computing taxable price                   -9,000
   ($3,000+$4,000) plus readjustment claimed at end of
   first calendar quarter ($2,000).........................
                                                            ------------
  6. Unused portion of limitation..........................        3,500
  7. Allocation, pursuant to agreement, of $6,500
   ($5,500+$1,000) paid to distributors:
    Charges for local advertising..........................       $3,500
    Contributions by manufacturer..........................       $3,000
 

    Although the total reimbursements for local advertising expenses 
attributable to contributions by the manufacturer ($3,000) does not 
exceed the unused portion of the overall 5 percent limitation ($3,500), 
the manufacturer, having taken, at the close of the first calendar 
quarter, a price readjustment in the amount of $2,000 in respect to his 
contributions, is entitled at the close of the second calendar quarter 
to claim credit or refund in respect of a price readjustment in the 
amount of $1,000 ($3,000-$2,000).
    Example (2). During the first calendar quarter of the year, a 
manufacturer sold articles

[[Page 185]]

taxable under section 4181 to his distributors at a total charge of 
$106,000, exclusive of the tax, transportation charges, delivery 
charges, or other charges which are excludable, pursuant to section 
4216(a) of the Code, in computing taxable price. This total charge of 
$106,000 was billed as follows:

Total Charge:
  Articles taxable under Section 4181......................     $100,000
  Local advertising charges................................        6,000
                                                            ------------
      Total charges........................................      106,000
 

    Assume further that the manufacturer contributes to the advertising 
plan and that the manufacturer pays $3,000 during the first calendar 
quarter of the year to his distributors in reimbursement of expenses 
incurred by them for local advertising of the articles purchased from 
the manufacturer.

     Computation as of close of first calendar quarter:
  1. Amount which would constitute total taxable price          $106,000
   (computed at time of sale) if no part of any charge for
   local advertising were excludable in computing taxable
   price...................................................
  2. Amounts billed as separate charges for local                 -6,000
   advertising.............................................
                                                            ------------
  d. Difference............................................      100,000
  4. Overall 5 percent limitation (5 percent of item 3)....        5,000
  5. Amount excluded in computing taxable price (see              -5,000
   paragraph (c) of Sec.  53.100..........................
                                                            ------------
  6. Unused portion of limitation..........................            0
  7. Allocation, pursuant to agreement, of $3,000 paid to    ...........
   distributors:
    Charges for local advertising..........................        2,000
    Contributions by manufacturer..........................        1,000
 

    Credit or refund may not be claimed in respect of that portion of 
the total amount repaid to the distributors ($3,000) which is allocated 
to the manufacturer's contribution ($1,000) since the amount excluded in 
computing taxable price is equal to the overall 5 percent limitation.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]



Sec. 53.102  No exclusion or readjustment for other advertising charges or 

reimbursements.

    (a) Exclusions from price. No exclusion in computing the taxable 
price of any article sold by the manufacturer may be allowed in respect 
of any charge for advertising if, and to the extent that, such charge:
    (1) Is for advertising which does not qualify as local advertising 
within the meaning of section 4216(e)(4) of the Code and paragraphs (a) 
and (b) of Sec. 53.100, or
    (2) Does not satisfy all of the conditions and limitations stated in 
section 4216(e)(1) of the Code and paragraph (c) of Sec. 53.100.
    (b) Readjustments of price. No credit or refund under section 
6416(b)(1) of the Code may be allowed in respect of any amount which was 
included in the taxable price of an article sold by the manufacturer and 
which was later paid by him to his vendee in reimbursement of costs 
incurred for advertising, if, and to the extent that, the amount so 
paid:
    (1) Is for advertising which does not qualify as local advertising 
within the meaning of section 4216(e)(4) of the Code and paragraph (b) 
of Sec. 53.100, or
    (2) Is not within the limitation provided in section 4216(e)(2) of 
the Code, as computed in accordance with Sec. 53.101, as of the close 
of the calendar quarter in which the amount is so paid over or as of the 
close of any subsequent calendar quarter in the same calendar year. See, 
however, Sec. 53.175, relating to redetermination of price 
readjustments in cases where local advertising charges excluded from 
taxable price in one calendar year become taxable as of May 1 of the 
following calendar year.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]



Sec. 53.103  Lease considered as sale.

    For purposes of chapter 32 of the Code, the lease of an article by a 
manufacturer, producer, or importer shall be considered a sale of the 
article. The term lease means a contract or agreement, written or 
verbal, which gives the lessee an exclusive, continuous right to the 
possession or use of a particular article for a period of time. The

[[Page 186]]

term includes any renewal or extension of a lease or any subsequent 
lease of the article.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991; T.D. 372, 61 FR 20724, May 8, 1996]



Sec. 53.104  Limitation on amount of tax applicable to certain leases.

    (a) Conditions for eligibility. Section 4217(b) of the Code provides 
for a limitation on the amount of tax that shall apply to the lease, any 
renewal, or further lease, of an article which, if sold, would be 
subject to tax on the basis of sale price. Such limitation on the amount 
of the tax applies with respect to the lease of an article only if, at 
the time of making the lease, the lessor is engaged in the business of 
selling in arm's length transactions the same type and model of article. 
In case of a lease to which section 4217(b) of the Code does not apply, 
tax shall be computed and paid as provided in section 4216(c) of the 
Code and paragraph (a) of Sec. 53.98.
    (b) Lessor engaged in business of selling. The lessor will be 
regarded as being engaged in the business of selling in arm's length 
transactions the same type and model of an article as the one being 
leased if it periodically and recurringly makes bona fide offers for 
sale of such articles in the regular course of operation of its 
business, which offers if accepted would constitute sales at arm's 
length. Whether the offers are bona fide shall be determined on the 
basis of the facts in each case, such as sales actually made, the nature 
of the advertising, sales literature, and other means used to effectuate 
sales. It is not necessary that the offers for sale be made to the same 
class of purchasers as those to whom the article is being leased.
    (c) Same type and model of article. To qualify as the ``same type 
and model of article'', the article offered for sale must be an unused 
article essentially the same in size, design, and function as the 
article being leased. Slight differences in appearance or accessories 
will not render articles dissimilar which are identical in all other 
respects.
    (d) Basis for tax--(1) Tax payable until total tax in paid. In case 
of a lease of an article to which section 4217(b) of the Code applies, 
tax shall be paid on each lease payment in an amount computed by 
applying to such lease payment a percentage equal to the rate of tax in 
effect on the date of the lease payment. Such tax payments shall 
continue to be made under such lease, or any subsequent lease of the 
article, until the cumulative total of the tax payments equals the total 
tax. Lease payments made thereafter with respect to that article shall 
not be subject to tax. For definition of the term ``total tax,'' see 
paragraph (e) of this section.
    (2) Changes in tax rates. If the rate of tax is increased or 
decreased during a lease period, the new rate shall apply to the lease 
payments made on and after the date of the change, but the amount of the 
total tax shall remain the same.
    (e) Total tax. For purposes of this section, the term ``total tax'' 
means the amount of tax, computed at the rate in effect on the date of 
the first lease of the article to which section 4217(b) of the Code 
applies, which would be due on the constructive sale price of the 
article as determined under section 4216(b) of the Code and Sec. 53.95, 
as if the article had been sold by a manufacturer at retail on such 
date.
    (f) Sale of article before total tax becomes payable. If the lessor 
sells the article before the total tax has become payable, the tax 
payable on the sale shall be the lesser of the following amounts:
    (1) The difference between:
    (i) The total tax, and
    (ii) The aggregate tax applicable to lease payments already 
received; or
    (2) A tax computed, at the rate in effect on the date of the sale, 
on the price for which the article is sold. For purposes of (f)(2) of 
this section, the provisions of section 4216(b) of the Code for 
determining a constructive sale price shall not apply if the sale is at 
arm's length. If the sale is not at arm's length, the tax referred to in 
(f)(2) of this section shall be computed on a constructive sale price as 
provided in Sec. 53.95.
    (g) Sale of article after total tax has become payable. If the 
lessor sells an article after the total tax has become payable, the tax 
imposed under chapter 32

[[Page 187]]

of the Code shall not apply to such sale.

             Use by Manufacturer or Importer Considered Sale



Sec. 53.111  Tax on use by manufacturer, producer, or importer.

    (a) In general. Section 4218 of the Code imposes tax in respect of 
certain uses of articles by the actual manufacturer, producer, or 
importer thereof. This section also applies in respect of the use of 
articles by any other person who, pursuant to a provision of chapter 32 
of the Code, is considered to be, or is treated as, the manufacturer or 
producer of the articles. See, for example, section 4223 of the Code 
relating to articles purchased tax free for use in further manufacture.
    (b) Taxable articles in general--(1) Application of tax. If the 
manufacturer, producer, or importer of an article taxable under chapter 
32 of the Code uses the article for any purpose other than that 
indicated in paragraph (b) (3) of this section, he shall be liable for 
tax with respect to the use of such article in the same manner as if the 
article were sold by him.
    (2) Taxable use in manufacturer of nontaxable articles--(i) In 
general. In the case of an article to which paragraph (b)(1) of this 
section applies, tax attaches when the manufacturer, producer, or 
importer of the articles uses it as material in the manufacture or 
production of, or as a component part of, another article which is not 
taxable under chapter 32 of the Code, regardless of the disposition made 
of such other article. (See paragraph (c) of Sec. 53.115 for 
computation of tax on such use.)
    (ii) Types of use in manufacture of nontaxable articles. Taxable use 
may consist of the incorporation of a taxable article into a nontaxable 
article. Taxable use may also result from the combining of a taxable 
article (or the components thereof) with a nontaxable article (or the 
components of a nontaxable article) resulting in a combination end 
article which itself is not taxable. Although the taxable article may 
not be a completely separable unit, within the contemplation of the law 
a taxable article has been produced and incorporated in the combination 
end article.
    (3) Nontaxable use in manufacturer of taxable articles. The tax on 
the use of an article to which paragraph (b)(1) of this section has 
application shall not apply if the article is used by the manufacturer, 
producer, or importer thereof as material in the manufacturer or 
production of, or as a component part of, another article taxable under 
chapter 32 of the Code to be manfactured or produced by him. It is 
immaterial what disposition is made of such other article.
    (c) Use after lease. If the manufacturer, producer, or importer of a 
taxable article leases such article and thereafter uses the article, he 
incurs liability for tax on such use as provided in these regulations to 
the same extent as if the article were sold after being leased. See 
section 4217 of the Code and the regulations thereunder in this subpart 
for application and computation of tax in case of leased articles.
    (d) Time of application of tax. In the case of a taxable use of an 
article by the manufacturer, producer, or importer thereof, the tax 
attaches at the time such use begins. If tax applies by reason of the 
sale of an article by the manufacturer, producer, or importer thereof on 
or in connection with his sale of another article, the tax attaches at 
the time of the sale of such other article.
    (e) Exemptions because of other statutory provisions. Tax does not 
apply on the use of an article by the manufacturer, producer, or 
importer thereof if under the applicable provisions of the Code the sale 
of the article for a similar use would not be subject to tax. Also, tax 
need not be paid with respect to the use of an article by the 
manufacturer, producer, or importer thereof if such use would qualify, 
under the provisions of section 6416(b) of the Code, for credit or 
refund of the tax paid.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991]

    Editorial Note: At 56 FR 31084, July 9, 1991, Sec. 53.111 was 
amended by removing the word ``manufacturer'' and adding the word 
``manufacture'' in the heading of paragraph (a)(2), and removing the 
word ``manufacturer'' and adding the word ``manufacture''

[[Page 188]]

in the first sentence of paragraph (a)(3), effective July 9, 1991; 
however, these sub-paragraph designations are not included in Sec. 
53.111(a). The issuing agency will publish a correction in the Federal 
Register at a later date.



Sec. 53.112  Business or personal use of articles.

    (a) Business use. Section 4218 of the Code applies to the use by a 
person, in the operation of any business in which he is engaged, of a 
taxable article which has been manufactured, produced, or imported by 
him or his agent.
    (b) Personal use. The tax on use of a taxable article does not 
attach in cases where an individual incidentially manufacturers, 
produces, or imports a taxable article for his personal use or causes a 
taxable article to be manufactured, produced, or imported for his 
personal use.



Sec. 53.113  Events subsequent to taxable use of article.

    Liability for tax incurred on the use of an article is not 
extinguished or reduced because of any subsequent sale or lease of the 
article even if such sale or lease would have been exempt if the article 
had been so sold or leased prior to use. If a manufacturer, producer, or 
importer of an article incurs liability for tax on his use thereof, and 
thereafter sells or leases the article in a transaction which otherwise 
would be subject to tax, liability for tax is not incurred on such sale 
or lease.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]



Sec. 53.114  Use in further manufacture.

    For purposes of section 4218 and Sec. 53.111, an article is used as 
material in the manufacture or production of, or as a component part of, 
another article, if it is incorporated in, or is a part or accessory of, 
the other article. In addition, an article is considered to be used as 
material in the manufacturer of another article if it is partly or 
entirely consumed in testing such other article; for example, shells or 
cartridges used in testing new firearms. Similarly, if an article is 
partly or wholly consumed in quality testing a production run of like 
articles, such article is also considered to have been used as material 
in the manufacture of another article. However, if a taxable article 
that has been used tax free and only partly consumed in testing is later 
sold, or put to a taxable use by the manufacturer, tax attaches to such 
sale or use. An article that is consumed in the manufacturing process 
other than in testing, so that it is not a physical part of the 
manufactured article, is not used as material in the manufacture or 
production of or as a component part of, such other article.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]



Sec. 53.115  Computation of tax.

    (a) Tax based on price. Tax liability incurred on the use of an 
article shall be computed on the price at which such or similar articles 
are sold in the ordinary course of trade by manufacturers, producers, or 
importers thereof and in the absence of special arrangements. For 
additional provisions applicable in computing the tax in the case of the 
use of an article by a manufacturer and producer who purchased the 
article free of tax under section 4221(a)(1) of the Code for use by him 
in further manufacture, see section 4223(b) of the Code and the 
regulations thereunder (Sec. 53.143).
    (b) Articles regularly sold by manufacturer. If the manufacturer, 
producer, or importer of an article regularly sells such articles at 
wholesale in arm's length transactions, tax liability on his use of any 
such article shall be computed on his lowest established wholesale price 
for such articles in effect at the time of the taxable use. In 
establishing such price, there shall be included and excluded, as 
applicable, the charges and readjustments specified in sections 4216(a) 
and 6416(b)(1) of the Code, as in effect at the time tax liability on 
the use of the article is incurred, and the regulations thereunder 
contained in this subpart and subpart L (Sec. Sec. 53.91-53.94 and 
53.173-53.176). If the manufacturer, producer, or importer of an article 
does not regularly sell such articles at wholesale in arm's length 
transactions, a constructive price on which the use tax shall be 
computed will be determined by the appropriate

[[Page 189]]

TTB officer. This price will be established after considering the 
selling practices and price structures of manfacturers, producers, and 
importers of similar articles.
    (c) Articles governed by section 4218(a) used in manufacture of 
nontaxable combination articles. If the manufacturer, producer, or 
importer of an article to which section 4218(a) of the Code applies does 
not regularly sell such article separately but uses it as material in 
the manufacture or production of, or as a component part of, a 
nontaxable combination article consisting of a taxable and nontaxable 
article, liability for tax on his use shall be computed on the 
constructive price of the taxable article at the time of use. To 
determine the constructive price of the taxable article in such case, 
the combination article is considered to be composed of:
    (1) Parts used exclusively in the functioning of the taxable article 
in the combination;
    (2) Parts used exclusively in the functioning of the nontaxable 
article in the combination, and
    (3) Parts, called common parts, which serve a dual function in 
connection with the parts in both paragraphs (c) (1) and (2) of this 
section.

The ratio which the cost of the parts in paragraph (c)(1) of this 
section bears to the sum of the cost of such parts and the parts in 
paragraph (c)(2) of this section is applied to the lowest established 
wholesale price for which like combination articles are at the time of 
the taxable use being sold by the manufacturer or producer in the 
ordinary course of trade. The resulting amount is the constructive sale 
price for the taxable article on which tax is to be computed. The cost 
of the common parts is allocable to the parts in paragraphs (c) (1) and 
(2) of this section in the same ratio, and, therefore, need not be taken 
into account in the computation since the inclusion and allocation of 
the cost of such parts in the determination would not result in a 
different ratio. In determining the lowest establishment wholesale price 
for the combination article, there shall be included and excluded, as 
applicable, the charges and readjustments specified in sections 4216(a) 
and 6416(b)(1) of the Code, as in effect at the time tax liability on 
the use of the taxable article is incurred, and the regulations 
thereunder contained in this subpart and subpart L of this part 
(Sec. Sec. 53.91-53.94 and Sec. Sec. 53.173-53.176). The tax 
applicable to the use of the article for which a constructive sale price 
has been computed is not affected by any charges or readjustments of the 
price for which the nontaxable combination article is sold, whether by 
reason of the return or repossession of the nontaxable article or its 
covering or container, or by a bona fide discount, rebate, allowance, or 
other factor.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]

   Application of Tax in Case of Sales by Other Than Manufacturer or 
                                Importer



Sec. 53.121  Sales of taxable articles by a person other than the 

manufacturer, producer, or importer.

    (a) General rule. If the title to, or ownership of, an article 
taxable under chapter 32 of the Code is transferred from the 
manufacturer, producer, or importer thereof, and, under the law, no tax 
attaches to such transfer, the subsequent sale, lease, or use of such 
article by the transferee is subject to tax to the same extent and 
manner as if such transferee were the manufacturer, producer, or 
importer of the article. The following examples illustrate this rule:
    (1) The surviving spouse, child or children, executors or 
administrators, or other legal representatives, as the case may be, of a 
deceased manufacturer, producer, or importer of taxable articles, incur 
liability for tax on all such articles sold by them.
    (2) A receiver or trustee in bankruptcy who under a court order 
conducts or liquidates the business of a manufacturer, producer, or 
importer of taxable articles, incurs liability for tax on all taxable 
articles sold by him, regardless of whether the articles were 
manufactured, produced, or imported before or after he took charge of 
the business.
    (3) An assignee for the benefit of creditors of a manufacturer, 
producer, or importer incurs liability for tax

[[Page 190]]

with respect to all taxable articles sold by him as such assignee.
    (4) If one or more member of a partnership withdraw, or if new 
partners are admitted, the new partnership so constituted incurs 
liability for tax on all taxable articles sold by it regardless of when 
such articles were manufactured, produced, or imported.
    (5) A person who acquires title to taxable articles as a result of 
default of the manufacturer, producer, or importer pursuant to an 
agreement under the terms of which the articles were pledged as 
collateral incurs liability for tax with respect to his sale of the 
articles so acquired.
    (6) A person who succeeds to the business of a manufacturer, 
producer, or importer of taxable articles, such as:
    (i) A corporation which results from a consolidation, merger, or 
reorganization;
    (ii) A corporation which acquires the business of an individual or 
partnership; or
    (iii) A stockholder in a corporation who, after its dissolution, 
continues the business;

incurs liability for the tax on all taxable articles sold by such 
person. However, where a manufacturer, producer, or importer sells only 
his assets, rather than ownership of his business, he incurs liability 
for tax on the sale of any taxable articles included in such assets.
    (b) Transfer of title to damaged articles. If title to a damaged 
taxable article is transferred by the manufacturer, producer, or 
importer thereof to a carrier or insurance company in adjustment of a 
damage claim, such transfer is not considered a taxable sale of the 
article. If the article is usable, even though damaged, the carrier or 
insurance company incurs liability for tax on its sale, lease, or use of 
the article. Where the article has been damaged to the extent that its 
only value is as scrap, and it is not restored to usable condition, sale 
thereof by the carrier or insurance company is not subject to tax.



                Subpart K_Exemptions, Registration, Etc.



Sec. 53.131  Tax-free sales; general rule.

    (a) In general. Section 4221(a) of the Code sets forth the following 
exempt purposes for which an article subject to tax under chapter 32 of 
the Code may be sold tax-free by the manufacturer, producer, or 
importer:
    (1) For use by the purchaser for further manufacture, or for resale 
by the purchaser to a second purchaser for use by such second purchaser 
in further manufacture,
    (2) For export, or for resale by the purchaser to a second purchaser 
for export,
    (3) For use by the purchaser as supplies for vessels or aircraft,
    (4) To a State or local government for the exclusive use of a State 
or local government, and
    (5) To a nonprofit educational organization for its exclusive use.

Section 4221(a) of the Code applies only in those cases where the 
exportation or use referred to is to occur before any other use, and 
where the seller, first purchaser, and second purchaser, as may be 
appropriate, have registered as required under section 4222 of the Code 
and paragraph (a) of Sec. 53.140. See paragraph (c) of this section for 
provisions relating to evidence required in support of tax-free sales. 
See Sec. 53.141 for exceptions to the requirement for 
registration.Where tax is paid on the sale of an article, but the 
article is used or resold for use for an exempt purpose, a claim for 
credit or refund may be filed in accordance with and to the extent 
provided in sections 6402(a) and 6416 of the Code, and the regulations 
thereunder (Sec. Sec. 53.161 and 53.171-53.186).
    (b) Manufacturer relieved of liability in certain cases--(1) General 
rule. Under the provisions of section 4221(c) of the Code, if an article 
subject to tax under Chapter 32 of the Code is sold free of tax by the 
manufacturer of the article for an exempt purpose referred to in section 
4221(c) of the Code and paragraph (b)(2) of this section, the 
manufacturer shall be relieved of any tax liability under chapter 32 of 
the Code with respect to such sale if the manufacturer in good faith 
accepts a proper certification by the purchaser that the

[[Page 191]]

article or articles will be used by the purchaser in the stated exempt 
manner. See paragraph (b)(2) of this section for a list of the exempt 
purposes referred to in section 4221(c) of the Code.
    (2) Situations wherein section 4221(c) of the Code is applicable. 
The following are situations wherein section 4221(c) of the Code is 
applicable with respect to sales made tax free on the assumption that 
one of the following sections of the Code provides exemption for such 
sales:
    (i) Section 4221(a)(1) of the Code, to the extent that it relates to 
sales for further manufacture by a first purchaser (see Sec. 53.132),
    (ii) Section 4221(a)(3) of the Code, relating to supplies for 
vessels and aircraft (see Sec. 53.134),
    (iii) Section 4221(a)(4) of the Code, relating to sales to State or 
local governments (see Sec. 53.135),
    (iv) Section 4221(a)(5) of the Code, relating to sales to nonprofit 
educational organizations (see Sec. 53.136).
    (3) Situations wherein section 4221(c) of the Code is not 
applicable. The relief from liability for the payment of tax provided by 
section 4221(c) of the Code is not applicable with respect to sales made 
tax free on the assumption that one of the following sections of the 
Code provides exemption for such sales:
    (i) Section 4221(a)(1) of the Code, to the extent that it relates to 
sales for resale to a second purchaser for use by the second purchaser 
in further manufacture (see Sec. 53.132),
    (ii) Section 4221(a)(2) of the Code, relating to sales for export 
(see Sec. 53.133).
    (4) Duty of seller to ascertain validity of tax-free sale. If the 
manufacturer at the time of its sale has reason to believe that the 
article sold by it is not intended for the exempt purpose indicated by 
the purchaser, or that the purchaser has failed to register as required, 
the manufacturer is not considered to have accepted certification from 
the purchaser in good faith, and is not relieved from liability under 
the provisions of section 4221(c) of the Code.
    (5) Information to be furnished to purchaser. A manufacturer selling 
articles free of tax under this section shall indicate to the purchaser 
that:
    (i) Certain articles normally subject to tax are being sold tax 
free, and
    (ii) The purchaser is obtaining those articles tax free for an 
exempt purpose under an exemption certificate or its equivalent.
    (6) The manufacturer may transmit this information by any convenient 
means, such as coding of sales invoices, provided that the information 
is presented with sufficient particularity so that the purchaser is 
informed that he has obtained the articles tax free and:
    (i) The purchaser can compute and remit the tax due if an article 
sold tax free for further manufacture is diverted to a taxable use,
    (ii) The manufacturer can remit the tax due with respect to an 
article purchased tax free for resale for use in further manufacture or 
for export if, within the 6-month period described in Sec. 53.132(c) or 
Sec. 53.133(c), the manufacturer does not receive proof that the 
article has been exported or resold for use in further manufacturer, or
    (iii) The purchaser can notify the manufacturer if an article 
otherwise purchased tax free is diverted to a taxable use.
    (c) Evidence required in support of tax-free sales--(1) Purchasers 
required to be registered. Every purchaser who is required to be 
registered (see Sec. 53.140) shall furnish to the seller, as evidence 
in support of each tax-free sale made by the seller to such purchaser, 
the exempt purpose for which the article or articles are being purchased 
and the registration number of the purchaser. Such information must be 
in writing and may be noted on the purchase order or other document 
furnished by the purchaser to the seller in connection with each sale.
    (2) Purchasers not required to be registered. For the evidence which 
purchasers not required to register must furnish to the seller in 
support of each tax-free sale made by the seller to such purchasers, see 
paragraph (b) of Sec. 53.133 for sales or resales to a foreign 
purchaser for export, paragraph (d) of Sec. 53.134 for sales of 
supplies to vessels or aircraft, paragraph (c) of Sec. 53.135 for sales 
to State and local governments,

[[Page 192]]

and paragraph (c) of Sec. 53.141 for sales and purchases by the United 
States.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 
FR 37005, July 16, 1996]



Sec. 53.132  Tax-free sale of articles to be used for, or resold for, further 

manufacture.

    (a) Further manufacture--(1) In general. Under prescribed 
conditions, an article subject to tax under Chapter 32 of the Code may 
be sold tax free by the manufacturer, pursuant to section 4221(a)(1) of 
the Code, for use by the purchaser in further manufacture, or for resale 
by the purchaser to a second purchaser for use by the second purchaser 
in further manufacture. See section 4221(d) (6) of the Code and 
paragraph (b) of this section for the circumstances under which an 
article is considered to have been sold for use in further manufacture. 
See section 6416(b)(3) of the Code and Sec. 53.180 for the 
circumstances under which credit or refund is available when tax-paid 
articles are used in further manufacture.
    (2) Proof of resale for use in further manufacture. See section 
4221(b)(1) of the Code and paragraph (c) of this section for provisions 
under which the exemption provided in section 4221(a)(1) of the Code 
shall cease to apply in the case of an article sold by the manufacturer 
to a purchaser for resale to a second purchaser for use in further 
manufacture unless the manufacturer receives timely proof of resale for 
further manufacture.
    (b) Circumstances under which an article is considered to have been 
sold for use in further manufacture. (1) For purposes of the exemption 
from the manufacturers excise tax provided by section 4221(a)(1) of the 
Code, an article shall be treated as sold for use in further manufacture 
if the article is sold for use by the purchaser as material in the 
manufacture or production of, or as a component part of, another article 
taxable under chapter 32 of the Code;
    (2) An article is used as material in the manufacture or production 
of, or as a component of, another article if it is incorporated in, or 
is a part or accessory of, the other article when the other article is 
sold by the manufacturer. In addition, an article is considered to be 
used as material in the manufacture of another article if it is consumed 
in whole or in part in testing such other article; for example, shells 
or cartridges that are used by the manufacturer of firearms to test new 
firearms. However, an article that is consumed in the manufacturing 
process other than in testing, so that it is not a physical part of the 
manufactured article, is not considered to have been used as material in 
the manufacture of, or as a component part of, another article.
    (c) Proof of resale for further manufacture--(1) Cessation of 
exemption. The exemption provided in section 4221(a)(1) of the Code and 
described in paragraph (a) of this section in respect of an article sold 
by the manufacturer to a purchaser for resale to a second purchaser for 
use by the second purchaser in further manufacture shall cease to apply 
on the first day following the close of the 6-month period which begins 
on the date of the sale of such article by the manufacturer, or the date 
of shipment of the article by the manufacturer, whichever is earlier, 
unless, within such 6-month period, the manufacturer receives proof, in 
the form prescribed by paragraph (c)(2) of this section, that the 
article was actually resold by the purchaser to a second purchaser for 
such use. If, on the first day following the close of the 6-month 
period, such proof has not been received, the manufacturer shall become 
liable for tax at that time at the rate in effect when the sale was made 
but otherwise in the same manner as if the article had been sold by it 
on such first day at a taxable price equivalent to that at which the 
article was actually sold. If the manufacturer later obtains such proof, 
it may file a claim for refund or credit of this tax. The payment of 
this tax by the manufacturer is not considered an overpayment by the 
subsequent manufacturer or producer for which the subsequent 
manufacturer or producer is entitled to a credit or refund under section 
6416(b)(3) of the Code. See section 4221(d)(6) of the Code and paragraph 
(b) of this section for the circumstances under which an article is 
considered to have been sold for use in further manufacture.

[[Page 193]]

    (2) Proof of resale--(i) Certificate of purchaser. The proof of 
resale to be received by the manufacturer, as required under section 
4221(b)(1) of the Code, may consist of either a copy of the invoice of 
the manufacturer's vendee directed to his purchaser which discloses the 
certificate of registry number held by each party or a statement 
described in this paragraph. In the case of an invoice of manufacturer's 
vendee, it must appear from such invoice (or by statement attached 
thereto) that the article was in fact resold for use in further 
manufacture. In lieu of such an invoice, proof of resale may consist of 
a statement, executed and signed by the manufacturer's vendee which 
includes the following:
    (A) Date statement was executed.
    (B) Name and address of manufacturer's vendee (if other than the 
person executing statement).
    (C) Certificate of registry number held by vendee.
    (D) Specify article(s) purchased tax-free, by whom purchased, 
certificate of registry number of second purchaser, date of purchase(s), 
whether articles were purchased as material in the manufacture or 
production of, or as a component part or parts of, an article or 
articles taxable under Chapter 32 of the Code.
    (E) Statement that person executing statement or manufacturer's 
vendee possesses proof of tax-free resale of the article(s) in the form 
of purchase orders and sales invoices and identifying the person who 
will maintain custody of such proof for 3 years from the date of the 
statement and will make such proof available for inspection by TTB 
during such 3 year period.
    (F) Statement that a previous statement has not been executed in 
respect of such certificate of resale and that the person signing the 
statement is aware that fraudulent use of the statement may subject the 
person signing the statement and all parties making fraudulent use of 
the statement to all applicable criminal penalties under the Code.
    (G) Name, signature, and title of individual executing statement.
    (ii) Period covered. Any statement executed and signed by the 
manufacturer's vendee, as provided in paragraph (c)(2)(i) of this 
section, may be executed with respect to any one or more articles 
purchased tax free from a manufacturer and resold for use in further 
manufacture within the 6-month period prescribed in section 4221(a)(1) 
of the Code and paragraph (c)(1) of this section. Such statement (or 
other prescribed proof of resale) must be retained for inspection by the 
appropriate TTB officer as provided in section 6001 of the Code.
    (iii) TTB I 5600.37. A preprinted statement, TTB I 5600.37, 
Statement of Manufacturer's Vendee, which is available as provided in 
Sec. 53.21(b), when completed, contains all necessary information for a 
properly executed statement. Extra copies of TTB I 5600.37 may be 
reproduced as needed.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 
FR 37005, July 16, 1996]



Sec. 53.133  Tax-free sale of articles for export, or for resale by the 

purchaser to a second purchaser for export.

    (a) In general. (1) An article subject to tax under chapter 32 of 
the Code may be sold tax free by the manufacturer, pursuant to section 
4221(a)(2) of the Code and this section, for export, or for resale by 
the purchaser to a second purchaser for export. See Sec. 53.11 for the 
meaning of the term ``exportation''. An article may be sold tax free by 
the manufacturer under the provisions of this section only if the person 
to whom the manufacturer sells the article intends either to export the 
article or to resell it to a person who intends to export it. An article 
may not be sold tax free under the provisions of this section by a 
manufacturer to a purchaser for resale to a second purchaser which does 
not intend to export the article itself but plans to resell it to a 
third purchaser for export. See section 6416(b)(2)(A) of the Code and 
Sec. 53.177 for the circumstances under which credit or refund of tax 
is available where tax-paid articles are exported from the United 
States.
    (2) If an article, otherwise taxable under chapter 32 of the Code:
    (i) Is sold tax free by the manufacturer pursuant to section 
4221(a)(2) of the Code and this section, and

[[Page 194]]

    (ii) Is returned subsequently to the United States in an unused and 
undamaged condition,

then the importer is liable for the tax imposed by chapter 32 of the 
Code on the subsequent sale or use of the article in the United States. 
The provisions of this paragraph (a)(2) of this section may be 
illustrated by the following examples:

    Example (1). Q, a U.S. manufacturer of shells and cartridges, 
previously sold shells and cartridges to R, a company in Canada. The 
sale was tax free under section 4221(a)(2). Prior to use, R sold the 
shells and cartridges to S, who imports the articles into the United 
States and sells them. The sale of the shells and cartridges subjects S 
to an excise tax liability under section 4181.
    Example (2). X, a U.S. firearms manufacturer, sold a rifle to Y 
company in France. The sale was tax free under section 4221(a)(2). The 
rifle was sold by Y to W, an individual in the City of Nice, France. 
After initial use, W resold the rifle to X. X returned the rifle to the 
United States where it was resold. The resale of the rifle by X does not 
subject X to an excise tax liability under section 4181.

    (b) Sales or resales to a foreign purchaser for export. In the case 
of sales or resales to a foreign purchaser for export, if the first or 
the second purchaser is located in a foreign country or possession of 
the United States, such purchaser is not required to register as 
provided in section 4222(a) of the Code and Sec. 53.140. To establish 
the right to sell articles tax free for export to a purchaser who is not 
registered and who is located in a foreign country or a possession of 
the United States, the manufacturer must obtain from such purchaser at 
the time title to the article passes or at the time of shipment, 
whichever is earlier, either:
    (1) A written order or contract of sale showing that the 
manufacturer is to ship the article to a foreign destination; or
    (2) Where delivery by the manufacturer is to be made within the 
United States, a statement from the purchaser showing:
    (i) That the article is purchased either to fill existing or future 
orders for delivery to a foreign destination or for resale to another 
person engaged in the business of exporting who will export the article, 
and
    (ii) That such article will be transported to its foreign 
destination in due course prior to use or further manufacture and prior 
to any resale except for export. See section 4221(b) of the Code and 
paragraphs (c) and (d) of this section for requirements as to timely 
proof of exportation and cessation of the exemption for export unless 
the evidence to show actual exportation has been received by the 
manufacturer.
    (c) Cessation of exemption. The exemption provided in section 
4221(a)(2) of the Code and paragraph (a) of this section for an article 
sold by the manufacturer for export or for resale by the purchaser to a 
second purchaser for export shall cease to apply on the first day 
following the close of the 6-month period which begins on the date of 
the sale of the article by the manufacturer, or the date of shipment of 
the article by the manufacturer, whichever is earlier, unless within the 
6-month period the manufacturer receives proof, in the form prescribed 
by paragraph (d) of this section, that the article was actually 
exported. If, on the first day following the close of the 6-month 
period, the proof has not been received, the manufacturer shall become 
liable for tax at that time at the rate in effect when the sale was made 
but otherwise in the same manner as if the article had been sold by it 
on such first day at a taxable price equivalent to that at which the 
article was actually sold.
    (d) Proof of exportation. (1) Exportation may be evidenced by:
    (i) A copy of the export bill of lading issued by the delivering 
carrier,
    (ii) A certificate by the agent or representative of the export 
carrier showing actual exportation of the article,
    (iii) A certificate of landing signed by a customs officer of the 
foreign country to which the article is exported,
    (iv) Where the foreign country has no customs administration, a 
statement of the foreign consignee showing receipt of the article, or
    (v) Where a department or agency of the United States Government is 
unable to furnish any one of the foregoing four types of proof of 
exportation, a statement or certification on the department or agency 
stationery, executed by an authorized officer, that the

[[Page 195]]

listed or identified articles have, in fact, been exported.
    (2) In any case where the manufacturer is not the exporter, the 
manufacturer must have in its possession a statement from the vendee to 
whom the manufacturer sold the article stating the following:
    (i) Date statement was executed.
    (ii) Name and address of manufacturer's vendee (if other than the 
person executing statement).
    (iii) Certificate of registry number held by vendee.
    (iv) Specify article(s) purchased tax-free, by whom purchased, and 
date of purchase.
    (v) Statement that article(s) was either exported in due course by 
the vendee or was sold to another person who in due course exported the 
article(s).
    (vi) Name and address of vendee who will maintain possession of the 
proof of exportation documents, description of the documents, and 
statement that vendee will maintain documents for 3 years and make them 
available to TTB for inspection.
    (vii) Statement that a previous statement has not been executed in 
respect of the articles covered by this statement and that fraudulent 
use of this statement may subject person executing statement and all 
parties making fraudulent use of statement to all applicable criminal 
penalties under the Code.
    (viii) Name, signature, title, and address of individual executing 
certificate.
    (3) The statement executed and signed by the manufacturer's vendee, 
as provided in paragraph (d)(2) of this section, may be executed with 
respect to any one or more articles purchased tax free from a 
manufacturer and exported within the 6-month period prescribed in 
section 4221(b)(2) of the Code and paragraph (c) of this section. Such 
statement shall be kept for inspection by the appropriate TTB officer as 
provided in section 6001 of the Code.
    (4) TTB I 5600.36. A preprinted statement, TTB I 5600.36, Statement 
of Manufacturer's Vendee, which is available as provided in Sec. 
53.21(b), when completed, contains all necessary information for a 
properly executed statement. Extra copies of TTB I 5600.36 may be 
reproduced as needed.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-344, 58 
FR 40354, July 28, 1993; T.D. 372, 61 FR 20724, May 8, 1996; T.D. ATF-
380, 61 FR 37006, July 16, 1996]



Sec. 53.134  Tax-free sale of articles for use by the purchaser as supplies 

for vessels or aircraft.

    (a) Supplies for vessels or aircraft--(1) In general. An article 
subject to tax under chapter 32 of the Code may be sold tax free by the 
manufacturer, pursuant to section 4221(a)(3) of the Code and this 
section, for use by the purchaser as supplies for vessels or aircraft. 
See paragraph (b) of this section for the meaning of the term ``supplies 
for vessels or aircraft.'' An article may be sold tax free under the 
provisions of this section only in those cases where the sale of an 
article by the manufacturer is made directly to the owner, officer, 
charterer, or authorized agent of a vessel or aircraft for use as 
supplies for the vessel or aircraft. No sale may be made tax free to a 
dealer for resale for use as supplies for vessels or aircraft, even 
though it is known at the time of sale by the manufacturer that the 
article will be so resold. See section 6416(b)(2)(B) of the Code and 
paragraph (c) of Sec. 53.178 for circumstances under which credit or 
refund of tax is available where tax-paid articles are used, or sold for 
use, as supplies for vessels or aircraft. An article may not be sold tax 
free under the provisions of this section by the manufacturer to 
passengers or members of the crew of a vessel or aircraft.
    (2) Civil aircraft of foreign registry. In the case of any article 
sold by the manufacturer for use by the purchaser as supplies for civil 
aircraft of foreign registry employed in foreign trade or in trade 
between the United States and any of its possessions, the provisions of 
this paragraph apply only if the reciprocity requirements of section 
4221(e)(1) of the Code are met. See paragraph (c) of this section.
    (b) Meaning of terms--(1) Supplies for vessels or aircraft. The term 
``supplies for vessels or aircraft'' means fuel supplies, ships' stores, 
sea stores, or legitimate equipment on vessels of war of

[[Page 196]]

the United States or of any foreign nation, vessels employed in the 
fisheries or in the whaling business, or vessels actually engaged in 
foreign trade or trade between the Atlantic and Pacific ports of the 
United States or between the United States and any of its possessions.
    (2) Fuel supplies, ships' stores, and legitimate equipment. The 
terms ``fuel supplies'', ``ships' stores'', and ``legitimate equipment'' 
include all articles, materials, supplies, and equipment necessary for 
the navigation, propulsion, and upkeep of vessels of war of the United 
States or of any foreign nation, vessels employed in the fisheries or in 
the whaling business, or vessels actually engaged in foreign trade or in 
trade between the Atlantic and Pacific ports of the United States or 
between the United States and any of its possessions, even though such 
vessels may make intermediate stops in the United States. The term does 
not include supplies for vessels engaged in trade:
    (i) Between domestic ports in the Atlantic Ocean and the Gulf of 
Mexico,
    (ii) Between domestic ports on the Pacific Ocean,
    (iii) Between domestic ports on the Great Lakes, or
    (iv) On the inland waterways of the United States.
    (3) Sea stores. The term sea stores includes any article purchased 
for use or consumption by the passengers or crew, or both, of a vessel 
during its voyage.
    (4) Vessel. The term vessel includes:
    (i) Every description of watercraft or other contrivance used, or 
capable of being used, as a means of transportation on water,
    (ii) Civil aircraft registered in the United States and employed in 
foreign trade or in trade between the United States and any of its 
possessions, and
    (iii) Civil aircraft registered in a foreign country and employed in 
foreign trade or trade between the U.S. and its possessions.
    (5) Vessels of war of the United States or of any foreign nation. 
The term vessels of war of the United States or of any foreign nation 
includes:
    (i) Every description of watercraft or other contrivance used, or 
capable of being used, as a means of transportation on water and 
constituting equipment of the armed forces (including the U.S. Coast 
Guard and U.S. National Guard) of the United States or of a foreign 
nation, and
    (ii) Aircraft owned by the United States or by any foreign nation 
and constituting equipment of the armed forces thereof.
    (iii) For purposes of this section, vessels or aircraft owned by 
armed forces are not considered to be equipment of such armed forces 
while on lease or loan to an organization that is not part of the armed 
forces.
    (6) Vessels used in fisheries or whaling business. The exemption 
provided by section 4221(a)(3) of the Code and paragraph (a) of this 
section in the case of articles sold for the prescribed use on vessels 
employed in the fisheries or whaling business is limited to articles 
sold by the manufacturer for such use on vessels while employed, and to 
the extent employed, exclusively in the fisheries or in the whaling 
business. For purposes of this section, vessels engaged in sport fishing 
are not considered to be employed in the fisheries business.
    (7) Civil aircraft. The exemption provided by section 4221(a)(3) of 
the Code and paragraph (a) of this section relating to supplies for 
vessels or aircraft, with respect to civil aircraft, extends only to 
civil aircraft when employed in foreign trade, or in trade between the 
United States and any of its possessions. Sales of supplies to civil 
aircraft when engaged in trade between the Atlantic and the Pacific 
ports of the United States are not exempt from the tax imposed under 
chapter 32 of the Code. See section 4221(e)(1) of the Code and paragraph 
(c) of this section for requirement of reciprocal exemption in the case 
of a civil aircraft registered in a foreign country.
    (8) Trade. The term ``trade'' includes the transportation of persons 
or property for hire and the making of the necessary preparations for 
such transportation. The term ``trade'' also includes the transportation 
of property on a vessel or aircraft owned or chartered by the owner of 
the property in connection with the purchase, sale, or

[[Page 197]]

exchange of the property in a commercial business operation. However, a 
vessel owned or chartered by a company and used in the transportation of 
personnel or property of such company to or from its business properties 
located in a foreign country, or in a possession of the United States, 
is not engaged in ``trade''.
    (c) Reciprocity required in the case of civil aircraft. The 
exemption provided by section 4221(a)(3) of the Code and paragraph (a) 
of this section with respect to the sales of supplies for civil aircraft 
registered in a foreign country is further limited in that the privilege 
of exemption may be granted only if the Secretary of Commerce advises 
the Secretary of the Treasury that the foreign country allows, or will 
allow, substantially the same reciprocal privileges. If a foreign 
country discontinues the allowance of such substantially reciprocal 
exemption, the exemption allowed by the United States will not apply 
after the Secretary of the Treasury is notified by the Secretary of 
Commerce of the discontinuance of the exemption allowed by the foreign 
country.
    (d) Evidence required to establish--(1) In general. The exemption 
provided in section 4221(a)(3) of the Code and paragraph (a) of this 
section for articles sold for use by the purchaser as supplies for 
vessels or aircraft applies only:
    (i) If both the manufacturer and purchaser are registered under the 
provisions of section 4222 of the Code, or
    (ii) The purchaser or both the manufacturer and the purchaser are 
not registered but have satisfied the provisions of paragraph (d)(2) of 
this section.

See paragraph (c) of Sec. 53.131 for the evidence required to establish 
exemption where the purchaser is registered pursuant to section 4222 of 
the Code and Sec. 53.140.
    (2) Exemption certificates for use in support of tax-free sales of 
supplies for vessels and aircraft. (i) In order to establish exemption 
from tax under section 4221(a)(3) of the Code in those instances where 
the purchaser or both the manufacturer and purchaser are not registered 
under section 4222 of the Code, the manufacturer must obtain (prior to 
or at the time of the sale) from the owner, charterer, or authorized 
agent of the vessel or aircraft and retain in the manufacturer's 
possession a properly executed exemption certificate in the form 
prescribed by paragraph (d)(2)(iii) of this section. If articles are 
sold tax-free for use as supplies for civil aircraft employed in foreign 
trade or in trade between the United States and any of its possessions, 
the exemption certificate must show the name of the country in which the 
aircraft is registered.
    (ii) Where only occasional sales of articles are made to a purchaser 
for use as supplies for vessels or aircraft, a separate exemption 
certificate shall be furnished for each order. However, where sales are 
regularly or frequently made to a purchaser for such exempt use, a 
certificate covering all orders for a specified period not to exceed 12 
calendar quarters will be acceptable. Such certificates and proper 
records of invoices, orders, etc., relative to tax-free sales must be 
kept for inspection by the appropriate TTB officer as provided in 
section 6001 of the Code.
    (iii) Acceptable form of exemption certificate. A certificate of 
exemption to support tax-free sales under this section must include the 
following:
    (A) Name of owner, charterer, or authorized agent.
    (B) Name of company and vessel.
    (C) List article(s) covered by the certificate or beginning and 
ending dates during which orders will be placed (not to exceed 12 
calendar quarters).
    (D) Statement that articles will be used only for fuel supplies, 
ships' stores, sea stores, or legitimate equipment on a vessel belonging 
to one of the class of vessels to which section 4221 of the Code 
applies. Identify class of vessel certificate covers (see paragraphs (a) 
and (b) of this section).
    (E) If articles are purchased for use on civil aircraft engaged in 
foreign trade or trade between the United States and any of its 
possessions, state the country in which the aircraft is registered.
    (F) Statement that it is understood that if any articles are used 
for any purpose other than as stated in the certificate, or are resold 
or otherwise disposed of, the person executing the certificate must 
notify the manufacturer.

[[Page 198]]

    (G) Statement that the certificate shall not be used to purchase 
tax-free articles for use as supplies, etc. on pleasure vessels or any 
type of aircraft except:
    (1) Civil aircraft employed in foreign trade or trade between the 
United States and any of its possessions;
    (2) Aircraft owned by the United States or any foreign country and 
constituting a part of the armed forces thereof.
    (H) Statement that it is understood that any fraudulent use of the 
certificate may subject person executing certificate and all parties 
making fraudulent use of the certificate to all applicable criminal 
penalties under the Code.
    (I) Statement that person executing certificate is prepared to 
establish by satisfactory evidence the purpose for which the article(s) 
was used.
    (J) Date, name, signature, and address of person executing the 
certificate.
    (iv) TTB I 5600.34. A preprinted certificate, TTB I 5600.34, 
Exemption Certificate, which is available as provided in Sec. 53.21(b), 
when completed, contains all necessary information for a properly 
executed certificate. Extra copies of TTB I 5600.34 may be reproduced as 
needed.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 
FR 37006, July 16, 1996; T.D. TTB-44, 71 FR 16957, Apr. 4, 2006]



Sec. 53.135  Tax-free sale of articles to State and local governments for 

their exclusive use.

    (a) In general. An article subject to tax under Chapter 32 of the 
Code may be sold tax free by the manufacturer, pursuant to section 
4221(a)(4) of the code and this section, to a State or local government 
for the exclusive use of such State or local government. See paragraph 
(b) of this section for the meaning of the term ``State or local 
government''. An article may be sold tax free by the manufacturer under 
this paragraph only in those cases where the sale is made directly to a 
State or local government for its exclusive use. Accordingly, no sale 
may be made tax free to a dealer for resale to a State or local 
government for its exclusive use, even though it is known at the time of 
sale by the manufacturer that the article will be so resold. A sale of 
an article to a State or local government for resale is not considered 
to be a sale for the ``exclusive use'' of the State or local government, 
within the meaning of section 4221(a)(4) of the Code, and, therefore, 
such sales may not be made tax free. Such sales are not exempt 
regardless of whether the resales are made to government employees, or 
the fact that the article is an item of equipment the employee is 
required to possess in carrying out his duties. For example, pistols or 
revolvers may not be sold tax free to a State or local government for 
resale to its police officers. See section 6416(b)(2)(C) of the Code, 
and paragraph (d) of Sec. 53.178, for the circumstances under which 
credit or refund of tax is available where tax-paid articles are sold 
for the exclusive use of a State or local government.
    (b) State or local government. The term State or local government 
includes any State, the District of Columbia, and any political 
subdivision of any of the foregoing. See, section 7871(a)(2)(B) of the 
Code and 26 CFR 305.7701-1 et seq., which provide that an Indian tribal 
government shall be treated as a State for purposes of exemption from an 
excise tax imposed by chapter 32. Section 7871(b) of the Code provides 
that the exemption from tax applies only if the transaction involves the 
exercise of an essential governmental function of the Indian tribal 
government.
    (c) Evidence required in support of tax-free sales to State or local 
governments. (1) In the case of a State or local government which is 
registered (see Sec. 53.141 for provisions under which a State or local 
government may register if it so desires), the provisions of paragraph 
(c) of Sec. 53.131 have application as to the evidence required in 
support of tax-free sales. If a State or local government is not 
registered, the evidence required in support of a tax-free sale to the 
State or local government shall, except as provided in paragraph (c)(2) 
of this section, consist of a certificate, executed and signed by an 
officer or employee

[[Page 199]]

authorized by the State or local government to execute and sign the 
certificate. If it is impracticable to furnish a separate certificate 
for each order or contract because of frequency of purchases, a 
certificate covering all orders between given dates (such period not to 
exceed 12 calendar quarters) will be acceptable. The certificates and 
proper records of invoices, orders, etc., relative to tax-free sales 
must be retained by the manufacturer as provided in Sec. 53.24(d). A 
certificate of exemption to support tax-free sales under this section 
must contain the following:
    (i) Title of official executing certificate, branch of government, 
date executed, and statement that official is authorized to execute 
certificate.
    (ii) List articles covered by the certificate or beginning and 
ending dates during which orders will be placed by the purchaser (period 
not to exceed 12 calendar quarters).
    (iii) Name of manufacturer from which articles purchased.
    (iv) Governmental unit purchasing articles.
    (v) Statement that is understood that articles purchased under this 
certificate of exemption are limited to use exclusively by the 
purchasing governmental entity.
    (vi) Statement that is understood that any fraudulent use of this 
certificate may subject the person executing the certificate and all 
parties making fraudulent use of the certificate to all applicable 
criminal penalties under the Code.
    (vii) Name, address, and signature of person executing the 
certificate.
    (2) A purchase order, provided that all of the information required 
by paragraph (c)(1) of this section is included therein, is acceptable 
in lieu of a separate exemption certificate.
    (3) TTB I 5600.35. A preprinted certificate, TTB I 5600.35, 
Exemption Certificate, which is available as provided in Sec. 53.21(b), 
when completed, contains all necessary information for a properly 
executed certificate. Extra copies of TTB I 5600.35 may be reproduced as 
needed.
    (d) Resale of articles purchased tax free by a State or local 
government. If articles purchased tax free for the exclusive use of a 
State or local government (whether on the basis of a registration number 
or an exemption certificate) are, prior to use by the State or local 
government, resold under circumstances that do not amount to an 
exclusive use by the State or local government (such as pistols or 
revolvers that are resold by a police department to its police 
officers), the parties responsible in the State or local government are 
required to inform the manufacturer, producer, or importer from whom the 
articles were purchased that they were disposed of in a manner that did 
not amount to an exclusive use by the State or local government. A 
willful failure to supply the manufacturer, producer, or importer with 
the information required by this subparagraph will subject responsible 
parties to the penalties provided by section 7203 of the Code.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 
FR 37006, July 16, 1996]



Sec. 53.136  Tax-free sales of articles to nonprofit educational 

organizations.

    (a) In general. An article subject to tax under chapter 32 of the 
Code may be sold tax free by the manufacturer, pursuant to section 
4221(a)(5) of the Code and this section, to a nonprofit educational 
organization for its exclusive use. See paragraph (b) of this section 
for the meaning of the term ``nonprofit educational organization''. An 
article may be sold tax free by the manufacturer under this paragraph 
only in those cases where the sale of an article by the manufacturer is 
made directly to a nonprofit educational organization for its exclusive 
use. Accordingly, no sale may be made tax free to a dealer for resale to 
a nonprofit educational organization for its exclusive use even though 
it is known at the time of sale by the manufacturer that the article 
will be so resold. See section 6416(b)(2)(D) of the Code, and paragraph 
(e) of Sec. 53.178, for the circumstances under which credit or refund 
of tax is available where tax-paid articles are sold for the exclusive 
use of a nonprofit educational organization.

[[Page 200]]

    (b) Nonprofit educational organization. The term ``nonprofit 
educational organization'' means an organization described in section 
170(b)(1)(A)(ii) of the Code that is exempt from income tax under 
section 501(a) of the Code. Section 170(b)(1)(A)(ii) describes an 
``educational organization'' as one that normally maintains a regular 
faculty and curriculum and normally has a regularly enrolled body of 
pupils or students in attendance at the place where its educational 
activities are regularly carried on. The term also includes a school 
operated as an activity of an organization described in section 
501(c)(3) of the Code which is exempt from income tax under section 
501(a) of the Code, provided the primary function of such school is the 
presentation of formal instruction and provided such school normally 
maintains a regular faculty and curriculum and normally has a regularly 
enrolled body of pupils or students in attendance at the place where its 
educational activities are regularly carried on.
    (c) Evidence required in support of tax-free sales to nonprofit 
educational organizations. Every nonprofit educational organization 
purchasing tax free under section 4221(a)(5) of the Code must furnish 
the following information to the seller:
    (1) The tax exempt purpose for which the article or articles are 
being purchased, and
    (2) Its registration number. Such information must be in writing and 
may be noted on the purchase order or other document furnished by the 
purchaser to the seller in connection with each sale ``except that a 
single notification containing the information described in this 
paragraph may cover all sales by the seller to the purchaser made during 
a designated period not to exceed 12 successive calendar quarters.''. 
See paragraph (c) of Sec. 53.131 for the evidence required to establish 
exemption.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-447, 66 
FR 19088, Apr. 13, 2001]



Sec. Sec. 53.137-53.139  [Reserved]



Sec. 53.140  Registration.

    (a) General rule. Except as provided in Sec. 53.141, tax-free sales 
under section 4221 of the Code may be made only if the manufacturer, 
first purchaser, and second purchaser, as the case may be, have 
registered as required by this section. To secure a Certificate of 
Registry, the applicant must furnish the information required in 
paragraph (b) of this section.
    (b) Information to be submitted. Except as provided in Sec. 53.141, 
any person who is eligible to sell or purchase articles free of a tax 
imposed by section 4181 of the Code and who has not registered with the 
Commissioner of the Internal Revenue Service prior to January 1, 1991 or 
with TTB in accordance with the provisions of this section shall, prior 
to making a tax-free sale or purchase, file TTB Form 5300.28, in 
duplicate, executed in accordance with the instructions contained on the 
reverse of TTB Form 5300.28. The person who receives an approved 
Certificate of Registry shall be considered to be registered for 
purposes of selling or purchasing articles tax free as provided in this 
section. In the case of a nonprofit educational organization, 
information shall be furnished showing that the organization is an 
educational organization described in section 170(b)(1)(A)(ii) of the 
Code that is exempt from income tax under section 501(a) of the Code, or 
is a school operated as an activity of an organization described in 
section 501(c)(3) that is exempt from income tax under section 501(a).
    (c) Evidence required in support of tax-free sales. See Sec. 
53.131(c)(1) for evidence required in support of tax-free sales to 
purchasers who are required to be registered.
    (d) Failure to register. If either the seller or purchaser is not 
registered as required by this section of the regulations, tax-free 
sales may not be made, except as indicated in Sec. 53.141.
    (e) Cross references. (1) For exceptions to the requirement for 
registration, see section 4222(b) of the Code and Sec. 53.141.
    (2) For revocation or suspension of registration, see Sec. 53.142.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by ATF-447, 66 FR 
19088, Apr. 13, 2001]

[[Page 201]]



Sec. 53.141  Exceptions to the requirement for registration.

    (a) State and local governments. (1) A State or local government 
purchasing articles direct from the manufacturer for its exclusive use 
may, but is not required to, register as provided in Sec. 53.140. To 
establish the right to sell articles tax free to a State or local 
government that is not registered, the manufacturer must obtain from an 
authorized official of the State or local government and retain in the 
manufacturer's possession either a properly executed exemption 
certificate, or a purchase order that contains the same information 
required to be furnished in an exemption certificate. See Sec. 
53.135(c) for the information necessary to substantiate a tax-free sale 
under such circumstances.
    (2) Each State requesting registration will be assigned one 
Certificate of Registry. The registration number shown on this 
certificate may be used by all agencies, boards, and commissions of the 
State that are authorized by the State to make purchases for the 
exclusive use of the State. However, the registration number assigned to 
a State may not be used by any political subdivision of that State, such 
as a county or municipality. Each political subdivision of a State 
desiring to obtain a Certificate of Registry must obtain a separate 
registration number.
    (b) Sales or resales to foreign purchasers for export. Persons whose 
principal place of business is not within the United States may, but are 
not required to, register in order to purchase articles tax free for 
export. To establish the right to sell articles tax free for export to a 
purchaser who is not registered and who is located in a foreign country 
or a possession of the United States, the manufacturer must obtain the 
evidence required by Sec. 53.133(b).
    (c) United States. The registration requirements of the regulations 
in this part do not apply to purchases and sales by the United States or 
any of its agencies or instrumentalities. The evidence required in 
support of such tax-free purchases and sales is a notation on the 
purchase order or other document furnished to the seller clearly 
indicating that the article or articles are being purchased tax free as 
authorized by chapter 32 of the Code.
    (d) Supplies for vessels and aircraft. An article subject to an 
excise tax imposed by chapter 32 of the Code may be sold tax free by the 
manufacturer under the provisions of Sec. 53.134 for use by the 
purchaser as supplies for a vessel or aircraft if both the manufacturer 
and the purchaser are registered under the provisions of Sec. 53.140. 
The article also may be sold tax free for such use even though neither 
the manufacturer nor the purchaser is so registered if the provisions of 
paragraph (d) of Sec. 53.134 are satisfied.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]



Sec. 53.142  Denial, revocation or suspension of registration.

    (a) The appropriate TTB officer is authorized to deny, revoke or 
temporarily suspend, upon written notice, the registration of any person 
and the right of such person to sell or purchase articles tax free under 
section 4221 of the Code in any case in which he finds that:
    (1) The registrant is not a bona fide manufacturer, or a purchaser 
reselling direct to manufacturers or exporters;
    (2) The registrant is for some other reason not eligible under these 
regulations to retain a Certificate of Registry; or
    (3) The registrant has used his registration to avoid payment of the 
tax imposed by section 4181 of the Code, or to postpone or interfere in 
any manner with the collection of such tax;
    (4) Such denial, revocation, or suspension is necessary to protect 
the revenue; or
    (5) The registrant failed to comply with the requirements of 
paragraph (c) of Sec. 53.140, relating to the evidence required to 
support a tax-free sale.
    (b) The denial, revocation, or suspension of registration is in 
addition to any other penalty that may apply under the law for any act 
or failure to act.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-365, 60 
FR 33671, June 28, 1995]

[[Page 202]]



Sec. 53.143  Special rules relating to further manufacture.

    (a) Purchasing manufacturer to be treated as the manufacturer. For 
purposes of Chapter 32 of the Code, a manufacturer or producer to whom 
an article is sold or resold tax free under section 4221(a)(1) of the 
Code for use by it in further manufacture shall be treated as the 
manufacturer or producer of such article. If a manufacturer who 
purchases an article tax free for further manufacture does not use the 
article for further manufacture, the sale of the article by it, or its 
use of the article other than in further manufacture, shall, for 
purposes of the taxes imposed by chapter 32 of the Code, be treated as a 
sale or use of the article by the manufacturer thereof. See paragraphs 
(b) and (c) of this section for determination of taxable sale price 
where an article purchased tax free for further manufacture is resold, 
or used other than in further manufacture.
    (b) Computation of tax. Except as provided in paragraph (c) of this 
section, the tax liability referred to in paragraph (a) of this section 
shall be based on the price for which the article was sold by the 
purchasing manufacturer, or, where the manufacturer uses the article for 
a purpose other than that for which it was purchased, the tax shall be 
based on the price at which such or similar articles are sold, in the 
ordinary course of trade, by manufacturers, producers, or importers 
thereof. See section 4218(e) of the Code and Sec. 53.115.
    (c) Election. (1) Instead of computing the tax as described under 
paragraph (b) of this section, the purchasing manufacturer who has 
incurred liability for tax on its sale or use of an article as provided 
by paragraph (a) of this section may compute the tax incurred under 
chapter 32 of the Code by using as the tax base either the price for 
which the article was sold to it by the first purchaser, if any, or the 
price for which such article was sold by the actual manufacturer, 
producer, or importer of such article. The purchasing manufacturer must 
have in its possession information upon which to substantiate such basis 
for tax. For purposes of this paragraph, the price for which the article 
was sold by the actual manufacturer or by the first purchaser shall be 
determined as provided in section 4216 of the Code and Sec. Sec. 53.91-
53.102. However, such price shall not be adjusted for any discount, 
rebate, allowance, return, or repossession of a container or covering, 
or otherwise.
    (2) The election under this paragraph shall be in the form of a 
statement attached to the return reporting the tax applicable to the 
sale or use of the article which gave rise to such tax liability. Such 
election, once made, may not be revoked.



    Subpart L_Refunds and Other Administrative Provisions of Special 
                   Application to Manufacturers Taxes



Sec. 53.151  Returns.

    (a) In general. (1) Liability for tax imposed under chapter 32 of 
the Code shall be reported on TTB Form 5300.26, Federal Firearms and 
Ammunition Excise Tax Return. Except as provided in paragraphs (a)(2) 
and (b) of this section, a return on Form 5300.26 shall be filed for a 
period of one calendar quarter.
    (2) Return periods after September 30, 1992. For return periods 
after September 30, 1992, every person required to make a return on TTB 
Form 5300.26 who does not incur any firearms and ammunition excise tax 
liability in a given calandar quarter shall not be required to file a 
return on TTB Form 5300.26 for that calandar quarter. Except as provided 
in paragraph (a)(5) of this section, every person required to make a 
return on TTB Form 5300.26 who does not incur any firearms and 
ammunition excise tax liability for the entire calendar year and who has 
not filed a final return in accordance with Sec. 53.152 shall file an 
annual return on TTB Form 5300.26.
    (3) Return periods prior to October 1, 1992. For return periods 
prior to October 1, 1992, every person required to make a return on TTB 
Form 5300.26 shall make a return for each calendar quarter (whether or 
not liability was incurred for any tax reportable on the return for the 
return period) until the person has filed a final return in accordance 
with Sec. 53.152.

[[Page 203]]

    (4) Forms, etc. Each return required under the regulations in this 
part, together with any prescribed copies, records, or supporting data, 
shall be completed in accordance with the applicable forms, 
instructions, and regulations.
    (5) Special rule for one-time or occasional filings for return 
periods on or after July 1, 1995. One-time or occasional filers are not 
required to file quarterly or annual returns pursuant to paragraph 
(a)(2) of this section if the person reporting tax does not engage in 
any activity with respect to which tax is reportable on the return in 
the course of a trade or business. Such persons shall file and pay tax 
for periods only when liability is incurred. See Sec. 53.159(b)(2), 
providing that a deposit of taxes is not required for a one-time or 
occasional filing.
    (b) Monthly and semimonthly returns--(1) Requirement. If the 
appropriate TTB officer determines that any taxpayer who is required to 
deposit taxes under the provision of Sec. Sec. 53.157 or 53.159 has 
failed to make deposits of those taxes, the taxpayer shall be required, 
if so notified in writing by the appropriate TTB officer, to file a 
monthly or semimonthly return on TTB Form 5300.26. Every person so 
notified by the appropriate TTB officer shall file a return for the 
calendar month or semimonthly period in which the notice is received and 
for each calendar month or semimonthly period thereafter until the 
person has filed a final return in accordance with Sec. 53.152 or is 
required to file returns on the basis of a different return period 
pursuant to notification as provided in paragraph (b)(2) of this 
section.
    (2) Change of requirement. The appropriate TTB officer may require 
the taxpayer, by notice in writing, to file a quarterly or monthly 
return, if the taxpayer has been filing returns for a semimonthly 
period, or may require the taxpayer to file a quarterly or semimonthly 
return, if the taxpayer has been filing monthly returns.
    (3) Return for period change takes effect. (i) If a taxpayer who has 
been filing quarterly returns receives notice to file a monthly or 
semimonthly return, or a taxpayer who has been filing monthly returns 
receives notice to file a semimonthly return, the first return required 
pursuant to the notice shall be filed for the month or semimonthly 
period in which the notice is received and all months or semimonthly 
periods which are not includable in an earlier period for which the 
taxpayer is required to file a return.
    (ii) If a taxpayer who has been filing monthly or semimonthly 
returns receives notice to file a quarterly return, the last month or 
semimonthly period for which a return shall be filed is the last month 
or semimonthly period of the calendar quarter in which the notice is 
received.
    (iii) If a taxpayer who has been filing semimonthly returns receives 
notice to file a monthly return, the last semimonthly period for which a 
return shall be made is the last semimonthly period of the month in 
which the notice is received.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-330, 57 
FR 40325, Sept. 3, 1992; T.D. ATF-365, 60 FR 33671, June 28, 1995]



Sec. 53.152  Final returns.

    (a) In general. Any person who is required to make a return on TTB 
Form 5300.26 pursuant to Sec. 53.151 and who in any return period 
ceases operations in respect of which the person is required to make a 
return on the form, shall make the return for that return period as a 
final return. A return made as a final return shall be marked ``Final 
Return'' by the person filing the return. A taxpayer who has only 
temporarily ceased to incur liability for tax required to be reported on 
TTB Form 5300.26 because of temporary or seasonal suspension of business 
or for other reasons, shall not make a final return until such 
operations are permanently ceased.
    (b) Statement to accompany final return. Each final return shall 
have attached a statement showing the address at which the records 
required by the regulations in this part will be kept, the name of the 
person keeping the records, and, if the business of the taxpayer has 
been sold or otherwise transferred to another person, the name and 
address of that person and the date on which the sale or transfer

[[Page 204]]

took place. If no sale or transfer occurred or if the taxpayer does not 
know the name of the person to whom the business was sold or 
transferred, that fact should be included in the statement.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-330, 57 
FR 40325, Sept. 3, 1992. Redesignated in part by T.D. ATF-365, 60 FR 
33670, June 28, 1995]



Sec. 53.153  Time for filing returns.

    (a) Quarterly returns. Each return required to be made under Sec. 
53.151(a) for a return period of one calendar quarter shall be filed on 
or before the last day of the first calendar month following the close 
of the period for which it is made. However, a return may be filed on or 
before the 10th day of the second calendar month following the close of 
the period if timely deposits under section 6302(c) of the Code and 
Sec. 53.157 have been made in full payment of the taxes due for the 
period. For purposes of the preceding sentence, a deposit which is not 
required by regulations in respect of the return period may be made on 
or before the last day of the first calendar month following the close 
of the period.
    (b) Monthly, semimonthly and annual returns--(1) Monthly returns. 
Each return required to be made under Sec. 53.151(b) for a monthly 
period shall be filed not later than the 15th day of the month following 
the close of the period for which it is made.
    (2) Semimonthly returns. Each return required to be made under Sec. 
53.151(b) for a semimonthly period shall be filed not later than the 
10th day of the semimonthly period following the close of the period for 
which it is made.
    (3) Annual returns. Each return filed under the provisions of Sec. 
53.151(a) for a return period of one calendar year shall be filed not 
later than the 31st day following the close of the calendar year.
    (c) Last day for filing. If the due date falls on a Saturday, 
Sunday, or legal holiday, the return and remittance shall be due on the 
next succeeding day which is not a Saturday, Sunday, or legal holiday. 
For purposes of this section, ``legal holiday'' is defined by section 
7503 of the Code and 26 CFR 301.7503(b).
    (d) Late filing. The taxpayer is subject to a penalty for failure to 
file a return or to pay tax within the prescribed time as imposed by 
section 6651 of the Code, if the return and remittance are not filed 
before the close of business on the prescribed last day of filing. For 
additions to the tax in the case of failure to file a return within the 
prescribed time, see 27 CFR 70.96.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-330, 57 
FR 40325, Sept. 3, 1992]



Sec. 53.154  Manner of filing returns.

    (a) Each return on TTB Form 5300.26 shall be filed with TTB, in 
accordance with the instructions on the form.
    (b) When the taxpayer sends the return on TTB Form 5300.26 by U.S. 
Mail, the official postmark of the U.S. Postal Service stamped on the 
cover in which the return was mailed shall be considered the date of 
delivery of the return. When the postmark on the cover is illegible, the 
burden of proving when the postmark was made will be on the taxpayer. 
When the taxpayer sends the return with or without remittance by 
registered mail or by certified mail, the date of registry or the date 
of the postmark on the sender's receipt of certified mail, as the case 
may be, shall be treated as the date of delivery of the return and, if 
accompanied, of the remittance.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-330, 57 
FR 40325, Sept. 3, 1992]



Sec. 53.155  Extension of time for filing returns.

    (a) In general. Ordinarily, no extension of time will be granted for 
filing any return statement or other document required with respect to 
the taxes impose by chapter 32, because the information required for the 
filing of those documents is under normal circumstances readily 
available. However, if because of temporary conditions beyond the 
taxpayer's control, a taxpayer believes an extension of time for filing 
is justified, the taxpayer may apply to the appropriate TTB officer for 
an extension. An extension of time for filing a return does not operate 
to extend the time for payment of the tax or any part of the tax unless 
so specified in

[[Page 205]]

the extension. For extensions of time for payment of the tax, see Sec. 
53.156.
    (b) Application for extension of time. The application for an 
extension of time for filing the return shall be addressed to the 
appropriate TTB officer with whom the return is to be filed and must 
contain a full recital of the causes for the delay. It should be made on 
or before the due date of the return, and failure to do so many indicate 
negligence and constitute sufficient cause for denial. It should, where 
possible, be made sufficiently early to permit consideration of the 
matter and reply before what otherwise would be the due date of the 
return.
    (c) Filing the return. If an extension of time for filing the return 
is granted, a return shall be filed before the expiration of the period 
of extension.



Sec. 53.156  Extension of time for paying tax shown on return.

    (a) In general. (1) Ordinarily, no extensions of time will be 
granted for payment of any tax imposed by Chapter 32 of the Code, and 
shown or required to be shown on any return. However, if because of 
temporary conditions beyond the taxpayer's control a taxpayer believes 
an extension of time for payment is justified, the taxpayer may apply 
for an extension filing TTB Form 5600.38. The period of an extension 
shall not be in excess of 6 months from the date fixed for payment of 
the tax, except that if the taxpayer is abroad the period of the 
extension may be in excess of 6 months.
    (2) The granting of an extension of time for filing a return does 
not operate to extend the time for the payment of the tax or any part of 
the tax unless so specified in the extension. See Sec. 53.155.
    (b) Undue hardship required for extension. An extension of the time 
for payment shall be granted only upon a satisfactory showing that 
payment on the due date of the amount with respect to which the 
extension is desired will result in an undue hardship. The extension 
will not be granted upon a general statement of hardship. The term 
``undue hardship'' means more than an inconvenience to the taxpayer. It 
must appear that substantial financial loss, for example, loss due to 
the sale of property at a sacrifice price, will result to the taxpayer 
from making payment on the due date of the amount with respect to which 
the extension is desired. If a market exists, the sale of property at 
the current market price is not ordinarily considered as resulting in an 
undue hardship.
    (c) Application for extension. An application for an extension of 
time for payment of the tax shown or required to be shown on any return 
shall be made on TTB Form 5600.38, Application for Extension of Time for 
Payment of Tax, and shall be accompanied by evidence showing the undue 
hardship that would result to the taxpayer if the extension were 
refused. The application shall also be accompanied by a statement of the 
assets and liabilities of the taxpayer and an itemized statement showing 
all receipts and disbursements for each of the 3 months immediately 
preceding the due date of the amount to which the application relates. 
The application, with supporting documents, must be filed on or before 
the date prescribed for payment of the amount with respect to which the 
extension is desired. The application will be examined, and within 30 
days, if possible, will be denied, granted, or tentatively granted 
subject to certain conditions of which the taxpayer will be notified. If 
an additional extension is desired, the request for it must be made on 
or before the expiration of the period for which the prior extension is 
granted.
    (d) Payment pursuant to extension. If an extension of time for 
payment is granted, the payment shall be made on or before the 
expiration of the period of the extension without the necessity of 
notice and demand. The granting of an extension of time for payment of 
the tax does not relieve the taxpayer from liability for the payment of 
interest on the tax during the period of the extension. See section 6601 
of the Code and 26 CFR 301.6601-1.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001]

[[Page 206]]



Sec. 53.157  Deposit requirement for deposits made for calendar quarters 

prior to July 1, 1995.

    Note: For deposit requirement for deposits made for calendar 
quarters beginning on or after July 1, 1995, see Sec. 53.159.
    (a) Monthly deposits. Except as provided in paragraph (b) of this 
section, if for any calendar month (other than the last month of a 
calendar quarter) any person required to file a quarterly excise tax 
return on TTB Form 5300.26 has a total liability under this part of more 
than $100 for all excise taxes reportable on that form, the amount of 
liability for taxes shall be deposited by the person in accordance with 
the instructions on TTB Form 5300.27 on or before the last day of the 
month following the calendar month.
    (b) Semimonthly deposits. (1) If any person required to file an 
excise tax return on TTB Form 5300.26 for any calendar quarter has a 
total liability under this part of more than $2,000 for all excise taxes 
reportable on that form for any calendar month in the preceding calendar 
quarter, the amount of that liability for taxes under this part for any 
semimonthly period (as defined in paragraph (d)(1) of this section) in 
the succeeding calendar quarter shall be deposited by the person in 
accordance with the instructions on TTB Form 5300.27 on or before the 
depositary date (as defined in paragraph (d)(2) of this section) 
applicable to the semimonthly period.
    (2) A person will be considered to have complied with the 
requirements of paragraph (b)(1) of this section for a semimonthly 
period if--
    (i)(A) The person's deposit for the semimonthly period is not less 
than 90 percent of the total amount of the excise taxes reportable by 
the person on TTB Form 5300.26 for the period, and
    (B) If the semimonthly period occurs in a calendar month other than 
the last month in a calendar quarter, the person deposits any 
underpayment for the month by the 9th day of the second month following 
the calendar month; or
    (ii)(A) The person's deposit for each semimonthly period in the 
calendar month is not less than 45 percent of the total amount of the 
excise taxes reportable by the person on TTB Form 5300.26 for the month, 
and
    (B) If such month is other than the last month in a calendar 
quarter, the person deposits any underpayment for such month by the 9th 
day of the second month following the calendar month; or
    (iii)(A) The person's deposit for each semimonthly period in the 
calendar month is not less than 50 percent of the total amount of the 
excise taxes reportable by the person on TTB Form 5300.26 for the second 
preceding calendar month, and
    (B) If such month is other than the last month in a calendar 
quarter, the person deposits any underpayment for such month by the 9th 
day of the second month following the calendar month; or
    (iv)(A) The requirements of paragraph (b)(2) (i)(A), (ii)(A), or 
(iii)(A) of this section are satisfied for the first semimonthly period 
of a calendar month after December 1990,
    (B) If the person's deposit for the second semimonthly period of the 
calendar month is, when added to the deposit for the first semimonthly 
period, not less than 90 percent of the total amount of the excise taxes 
reportable by the person on TTB Form 5300.26 for the calendar month, and
    (C) If the semimonthly periods occur in a calendar month other than 
the last month in a calendar quarter, the person deposits any 
underpayment for the month by the 9th day of the second month following 
the calendar month.
    (3)(i) Paragraph (b)(2) (ii) and (iii) of this section shall not 
apply to any person who normally incurs in the first semimonthly period 
in each calendar month more than 75 percent of the person's total excise 
tax liability under this part for the month.
    (ii) Persons who make their deposits in accordance with paragraph 
(b)(2) (ii), (iii), or (iv) of this section will find it unnecessary to 
keep their books and records on a semimonthly basis.
    (c) Deposit of certain excess undeposited amounts. Notwithstanding 
paragraphs (a) and (b) of this section, if any person required to file 
an excise tax return on TTB Form 5300.26 for any calendar quarter 
beginning after December 31, 1990, has a total liability under this

[[Page 207]]

part for all excise taxes reportable on the form for the calendar 
quarter which exceeds by more than $100 the total amount of taxes 
deposited by the person pursuant to paragraph (a) or (b) of this section 
for the calendar quarter, the person shall, on or before the last day of 
the calendar month following the calendar quarter for which the return 
is required to be filed, deposit in accordance with the instructions on 
TTB Form 5300.27 the full amount by which the person's liability for all 
excise taxes reportable on the return for that calendar quarter exceeds 
the amount of excise taxes previously deposited by the person for that 
calendar quarter.
    (d) Definitions--(1) Semimonthly period. The term semimonthly period 
means the first 15 days of a calendar month or the portion of a calendar 
month following the 15th day of that month.
    (2) Depositary date. The term depositary date means, in the case of 
deposits for semimonthly periods beginning after December 31, 1990, the 
9th day of the semimonthly period following the semimonthly period for 
which the taxes are reportable.
    (3) Lockbox financial institution. The term lockbox financial 
institution means the financial institution designated as a depository 
for the payment of excise taxes on TTB Form 5300.27, Federal Firearms 
and Ammunition Excise Tax Deposit form.
    (e) Depositary forms and procedures--(1) In general. Each remittance 
of amounts required to be deposited for periods beginning after December 
31, 1990 shall be accompanied by an TTB Form 5300.27, Federal Firearms 
and Ammunition Excise Tax Deposit form, or TTB Form 5300.26, Federal 
Firearms and Ammunition Excise Tax Return, which shall be prepared in 
accordance with the applicable instructions. Taxpayers electing to remit 
deposits by EFT pursuant to Sec. 53.158 shall prepare and submit TTB 
Form 5300.26 or TTB Form 5300.27 in accordance with the instructions on 
the form. The timeliness of the deposit will be determined by the date 
it is received (or is deemed received under section 7502(e) and 26 CFR 
301.7502-1) by the lockbox financial institution, or the TTB officer 
designated on TTB Form 5300.27 or TTB Form 5300.26 accompanying the 
deposit, or when made by electronic fund transfer, the Treasury Account. 
Amounts deposited pursuant to this paragraph shall be considered to be 
paid on the last day prescribed for filing the return in respect of the 
tax (determined without regard to any extension of time for filing the 
returns), or at the time deposited, whichever is later.
    (2) Number of remittances. A person required by this section to make 
deposits may make one or more remittances with respect to the amount 
required to be deposited. An amount of tax which is not otherwise 
required by this section to be deposited may, nevertheless, be deposited 
if the person liable for the tax so desires.
    (3) Information required. Each person making deposits pursuant to 
this section shall report on the return for the period with respect to 
which the deposits are made information regarding the deposits in 
accordance with the instructions applicable to the return and pay (or 
deposits by the due date of the return) the balance, if any, of the 
taxes due for the period.
    (4) Procurement of prescribed forms. Copies of the Federal Firearms 
and Ammunition Excise Tax Deposit form will be furnished, so far as 
possible, to persons required to make deposits under this section. Such 
a person will not be excused from making a deposit, however, by the fact 
that no form has been furnished. A person not supplied with the form is 
required to apply for it in ample time to make the required deposits 
within the time prescribed, supplying with the application the person's 
name, employer identification number, address, and the taxable period to 
which the deposits will relate. Copies of the Federal Firearms and 
Ammunition Excise Tax Deposit form are available as provided in Sec. 
53.21(b).
    (f) Nonapplication to certain taxes. This section does not apply to 
taxes for:
    (1) Any month or semimonthly period in which the taxpayer receives 
notice pursuant to Sec. 53.151(b) to file TTB Form 5300.26 or

[[Page 208]]

    (2) Any subsequent month or semimonthly period for which a return on 
TTB Form 5300.26 is required.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991; T.D. ATF-330, 57 FR 40325, Sept. 3, 1992; T.D. 
ATF-365, 60 FR 33671, June 28, 1995; T.D. ATF-447, 66 FR 19088, Apr. 13, 
2001; T.D. TTB-44, 71 FR 16958, Apr. 4, 2006]



Sec. 53.158  Payment of tax by electronic fund transfer.

    (a) In general. For return periods after September 30, 1992, any 
taxpayer liable for firearms and ammunition excise taxes incurred under 
this part may elect to remit payments and deposits of the taxes 
(taxpayments) by electronic fund transfer (EFT). A taxpayer who elects 
to make remittance by EFT must use that method of remitting excise taxes 
on firearms and ammunition for a minimum of four consecutive calendar 
quarters. A taxpayer who makes remittance by EFT for a calendar quarter 
may not use any other method of remitting and ammunition excise taxes 
for that quarter.
    (b) Requirements. (1) On or before the 10th day of the calendar 
quarter preceding the calendar quarter in which the taxpayer will begin 
remitting taxes by EFT, each taxpayer who elects to make remittances by 
EFT of firearms and ammunition excise taxes incurred under this part 
shall give written notice to the appropriate TTB officer, indicating 
that remittances will be paid by EFT. Taxpayers who gave written 
notification in a previous calendar quarter electing to make remittances 
of tax by EFT are not required to give additional written notifications 
to continue remitting tax by EFT for succeeding calendar quarters.
    (2) For each deposit made or return filed in accordance with this 
subpart, the taxpayer shall direct the taxpayer's financial institution 
to make an EFT in the amount of the taxpayment to the Treasury Account 
as provided in paragraph (e) of this section. The request will be made 
to the financial institution early enough for the transfer of funds to 
be made to the Treasury Account no later than the close of business on 
the last day for making the deposit or filing the return as prescribed 
in Sec. Sec. 53.157 or 53.159, and 53.153. The request will take into 
account any time limit established by the financial institution.
    (3) Taxpayers who elect to discontinue making remittances by EFT of 
firearms and ammunition excise taxes may make such election at any time 
following four consecutive calendar quarters in which tax is remitted by 
EFT. Taxpayers electing to discontinue making remittances by EFT shall 
remit the tax with the next deposit or return as prescribed in 
Sec. Sec. 53.157 or 53.159, and 53.151 for remittances not made by EFT 
and notify the appropriate TTB officer by attaching a written 
notification to the tax deposit form or return stating that remittance 
of firearms and ammunition excise taxes will no longer be made by EFT.
    (c) Remittance. (1) Taxpayers who elect to make firearms and 
ammunition excise taxpayments by EFT shall file the deposit form and/or 
return with TTB in accordance with the applicable instructions on the 
forms.
    (2) Remittances will be considered as made when the taxpayment by 
EFT is received by the Treasury Account when it is paid to a Federal 
Reserve Bank.
    (3) When the taxpayer directs the financial institution to effect an 
electronic fund transfer message as required by paragraph (b)(2) of this 
section, the transfer data record furnished to the taxpayer through 
normal banking procedures will serve as the record of payment and will 
be retained as part of the required records.
    (d) Failure to make a taxpayment by EFT. The taxpayer is subject to 
penalties imposed by 26 U.S.C. 6651 and 6656, as applicable, for failure 
to make a payment or deposit of tax by EFT on or before the close of 
business on the prescribed last day for making such payment or deposit.
    (e) Procedure. Upon the notification required under paragraph (b)(1) 
of this section, the appropriate TTB officer will issue to the taxpayer 
an TTB Procedure entitled Payment of Tax by Electronic Fund Transfer. 
This publication outlines the procedure a taxpayer follows when 
preparing deposits,

[[Page 209]]

returns and EFT remittances in accordance with this subpart.

[T.D. ATF-330, 57 FR 40326, Sept. 3, 1992, as amended by T.D. ATF-365, 
60 FR 33671, June 28, 1995; T.D. ATF-447, 66 FR 19088, Apr. 13, 2001]



Sec. 53.159  Deposit requirement for deposits made for calendar quarters 

beginning on or after July 1, 1995.

    (a) Definitions--(1) Definition of tax liability. For purposes of 
this section, the term ``tax liability'' means the total tax liability 
for the specified period plus or minus any allowable adjustments made in 
accordance with the instructions applicable to the form on which the 
return is made.
    (2) Semimonthly period. Except as provided in paragraph (c)(4)(ii) 
of this section, the term ``semimonthly period'' means the first 15 days 
of a calendar month or the remaining portion of a calendar month 
following the 15th day of that month.
    (b) In general--(1) Semimonthly deposits. Except as provided in 
paragraphs (b)(2), (c)(2), and (j) of this section, any person required 
to file a quarterly excise tax return on TTB Form 5300.26 must make a 
deposit of tax for each semimonthly period as prescribed in paragraph 
(c) of this section.
    (2) One-time or occasional filings. No deposit is required in the 
case of any taxes reportable on a one-time or occasional filing (as 
defined in Sec. 53.151(a)(5)).
    (c) Amount of deposit--(1) In general. Except as provided in 
paragraphs (c)(2), (c)(3) and (c)(6) of this section, the deposit of tax 
for each semimonthly period must be equal to the amount of tax liability 
incurred during that semimonthly period. Except as provided in paragraph 
(c)(3) of this section, no deposit is required for any semimonthly 
period in which no tax liability is incurred.
    (2) De minimis exception. Except as provided in paragraph (c)(3) of 
this section, any person who has a tax liability for the current 
calendar quarter of $2,000 or less is not required to make deposits for 
that quarter. However, semimonthly deposits of tax are required 
beginning with the semimonthly period in which unpaid tax liability 
exceeds $2,000 and for every semimonthly period thereafter in which tax 
liability is incurred. The first deposit for the current quarter shall 
be equal to the unpaid tax liability; thereafter, deposits shall be 
equal to the amount of tax liability incurred during that semimonthly 
period.
    (3) Amount of deposit; safe harbor rule based on look-back quarter 
liability; In general. Except as provided in paragraph (c)(6) of this 
section, any person who made a return of tax on TTB Form 5300.26 
reporting taxes for the second preceding calendar quarter (the ``look-
back quarter''), or who did not file a return for the look-back quarter 
because of the provisions of Sec. 53.151(a)(2), is considered to have 
complied with the requirement for deposit of taxes for the current 
calendar quarter if--
    (i) The deposit of taxes for each semimonthly period in the current 
calendar quarter is an amount equal to not less than 1/6 (16.67 percent) 
of the total tax liability incurred for the look-back quarter;
    (ii) Each deposit is made on time; and
    (iii) The amount of any underpayment of taxes for the current 
calendar quarter is paid by the due date of the return.
    (4) Modification for third calendar quarter. The safe harbor rule in 
paragraph (c)(3) of this section does not apply for the third calendar 
quarter unless--
    (i) The deposit of taxes for the semimonthly period July 1-September 
15 meets the requirements of paragraph (c)(3) of this section; and
    (ii) Each deposit of taxes for the periods September 16-25 and 
September 26-30 is not less than 1/12th (8.34 percent) of the total tax 
liability incurred for the look-back quarter.
    (5) Modification for tax rate increase--(i) Application. The safe 
harbor rule as prescribed in paragraph (c)(3) is modified for the first 
and second calendar quarters beginning on or after the effective date of 
an increase in the rate of any tax prescribed by 26 U.S.C. 4181 to which 
this part 53 applies.
    (ii) Modification. The amount of deposit for calendar quarters 
referred to in paragraph (c)(3) of this section must be adjusted so that 
the deposit of taxes for each semimonthly period in the calendar quarter 
is not less than 1/6 (16.67 percent) of the tax liability the person

[[Page 210]]

would have had with respect to the tax for the look-back quarter if the 
increased rate of tax had been in effect for that look-back quarter.
    (6) First time filers. Any person who did not file a return of tax 
on TTB Form 5300.26 for the first and second preceding calendar quarters 
because they were not engaged in any activity with respect to which tax 
is reportable on the return in the course of a trade or business, is 
considered to have complied with the requirement for deposit of taxes 
for the current calendar quarter if--
    (i) The deposit of taxes for each semimonthly period in the calendar 
quarter is not less than 95 percent of the tax liability incurred with 
respect to those taxes during the semimonthly period;
    (ii) Each deposit is made on time; and
    (iii) The amount of any underpayment of taxes for the current 
calendar quarter is paid by the due date of the return.
    (d) Failure to comply with deposit requirements. (1) If a person 
fails to make deposits as required under this part, the appropriate TTB 
officer may withdraw the person's right to use the safe harbor rule 
provided by paragraph (c)(3) of this section.
    (2) Cross reference. The appropriate TTB officer may also require a 
taxpayer who fails to make deposits of tax to file a monthly or 
semimonthly return, see Sec. 53.151(b)(1).
    (e) Time for making deposit. Except for deposits for the period 
September 16-25, each deposit required to be made by this section shall 
be made not later than the 9th day of the semimonthly period following 
the close of the period for which it is made. The deposit for the period 
September 16-25 shall be made not later than September 28. The deposit 
for the period September 26-30, is due not later than October 9.
    (f) Last day for filing. (1) Except as provided by paragraph (f)(2) 
of this section, if the due date of the deposit falls on a Saturday, 
Sunday, or legal holiday, the deposit and remittance shall be due on the 
next succeeding day which is not a Saturday, Sunday, or legal holiday. 
For purposes of this section, ``legal holiday'' is defined by section 
7503 of the Code and 27 CFR 70.306(b) of this chapter.
    (2) If the required due date of the deposit for the period September 
16-25 falls on a Saturday, the deposit and remittance shall be due on 
the preceding day. If such required due date falls on a Sunday, the 
return and remittance shall be due on the following day.
    (g) Forms and procedures. Each remittance of amounts required to be 
deposited shall be accompanied by Form 5300.27, Federal Firearms and 
Ammunition Excise Tax Deposit form, or Form 5300.26, Federal Firearms 
and Ammunition Excise Tax Return, which shall be prepared in accordance 
with the applicable instructions. Taxpayers electing to remit deposits 
by EFT pursuant to Sec. 53.158 shall prepare and submit Form 5300.26 or 
Form 5300.27 in accordance with the instructions contained in Procedure 
92-1, Publication 5000.11. The timeliness of the deposit will be 
determined by the date it is received by the lockbox financial 
institution, or the TTB officer designated on the form accompanying the 
deposit, or the Treasury Account, when made by EFT. In order for 
deposits of less than $20,000 made by U.S. Mail to be considered 
received timely, the date of mailing must be on or before the second day 
preceding the due date of the deposit as evidenced by the official 
postmark of the U.S. Postal Service stamped on the cover in which the 
deposit was mailed. When the postmark on the cover is illegible, the 
burden of proving when the postmark was made will be on the taxpayer. 
When the taxpayer sends the deposit by registered mail or by certified 
mail, the date of registry or the date of the postmark on the sender's 
receipt of certified mail, as the case may be, shall be treated as the 
date of delivery of the deposit. Any deposit of $20,000 or more must be 
received by the last day prescribed for making such deposit, regardless 
of when mailed. Amounts deposited pursuant to this paragraph shall be 
considered to be paid on the last day prescribed for filing the return 
in respect of the tax (determined without regard to any extension of 
time for filing the returns), or at the time deposited, whichever is 
later.
    (h) Number of remittances. A person required by this section to make 
deposits shall make one deposit for a semimonthly period.

[[Page 211]]

    (i) Procurement of prescribed forms. Copies of the Federal Firearms 
and Ammunition Excise Tax Deposit form will be furnished, so far as 
possible, to persons required to make deposits under this section. Such 
a person will not be excused from making a deposit however, by the fact 
that no form has been furnished. A person not supplied with the form is 
required to obtain the form in ample time to make the required deposits 
within the time prescribed. Copies of the Federal Firearms and 
Ammunition Excise Tax Deposit form are available as provided in Sec. 
53.21(b).
    (j) Taxpayers required to file monthly or semimonthly returns. This 
section does not apply to taxes for:
    (1) Any month or semimonthly period in which the taxpayer receives 
notice pursuant to section 53.151(b) to file TTB Form 5300.26; or
    (2) Any subsequent month or semimonthly period for which a return on 
TTB Form 5300.26 is required.
    (3) Taxpayers required to file monthly returns shall make 
semimonthly deposits of 100 percent of the liability incurred during 
each semimonthly period by the 9th day of the month following the last 
day of the semimonthly period. Taxpayers required to file semimonthly 
returns shall pay any tax due for the semimonthly period with each 
return.
    (k) Examples.

    Example 1. One-time filing or occasional filing--(1) Facts. On 
October 18, 1995, A, an individual who lives in the United States 
purchases a custom made rifle outside the United States and imports it 
into the United States. A uses the rifle on October 20, 1995. A is 
liable for the firearms excise tax imposed by sections 4181 and 4218(a). 
Since A does not regularly sell rifles in arm's length transactions, a 
constructive sale price of $20,000 is determined (Sec. 53.115(b)). The 
amount of A's tax liability is $2200, 11 percent of the constructive 
sale price of the rifle. The liability is incurred during the fourth 
calendar quarter of 1995, the quarter during which the rifle is used 
(Sec. 53.111(d)). A did not import the rifle in the course of its trade 
or business and does not engage in any activities with respect to which 
tax is reportable on TTB Form 5300.26 in the course of a trade or 
business.
    (2) Filing requirement. A must file a return on Form 5300.26 (Sec. 
53.151(a)) for the fourth calendar quarter of 1995 reporting A's $2200 
firearms excise tax liability. The Form 5300.26 is due by January 31, 
1996, the last day of the first month following the calendar quarter 
(Sec. 53.153(a)). Because A did not import the firearm in the course of 
its trade or business and does not engage in any activities with respect 
to which tax is reportable in the course of a trade or business, the 
return is a one-time filing or occasional filing.
    (3) Payment requirement. Because A's Form 5300.26 is a one-time 
filing, A is not required to make deposits of tax (Sec. 53.159(b)(2)). 
Instead, A pays the $2200 of tax with the return.
    Example 2. Deposit requirement; based on look-back quarter 
liability--(1) Facts. B is a manufacturer of firearms. B sells 75 
pistols which have a taxable sale price of $500 each during the second 
calendar quarter of 1996. B sold 50 of the pistols in the first 
semimonthly period of May, 1996, and the other 25 pistols in the second 
semimonthly period of April, 1996. B did not incur tax liability in any 
other semimonthly period in the second quarter. The amount of B's tax 
liability for the second calendar quarter is $3,750, 10 percent of the 
taxable sale price of the pistols. B filed Form 5300.26 for the second 
preceding calendar quarter, the look-back quarter, on January 31, 1996 
reporting tax liability in the amount of $2,700.
    (2) Deposit requirement. B is required to make deposits of tax for 
each semimonthly period in the calendar quarter because B has incurred 
more than $2,000 in liability for the current quarter. B may use the 
safe harbor rule based on look-back quarter liability to determine the 
amount of the required deposits (Sec. 53.159(c)(3)). Under this safe 
harbor rule, B's deposit for each semimonthly period must equal at least 
$450.00, 1/6 (16.67 percent) of the tax liability incurred for the look-
back quarter. B's deposit must be timely and B must pay the amount of 
any underpayment by the due date of the return. Accordingly, B meets the 
deposit requirement if B makes the following deposits:

------------------------------------------------------------------------
                                                               Amount of
         Semimonthly period                Deposit due by       deposit
------------------------------------------------------------------------
April 1-15..........................  April 24, 1996.........    $450.00
April 16-31.........................  May 9, 1996............     450.00
May 1-15............................  May 24, 1996...........     450.00
May 16-30...........................  June 10, 1996..........     450.00
June 1-15...........................  June 24, 1996..........     450.00
June 16-30..........................  July 9, 1996...........     450.00
------------------------------------------------------------------------

    The deposit due on June 10, 1996, would ordinarily be due on June 9, 
1996. However, because June 9, 1996 is a Sunday, under section 7503, B 
has an additional day to make the required deposit.
    (3) Filing requirement. B must file a return on Form 5300.26 for the 
second calendar quarter of 1996 reporting B's $3750 tax liability (Sec. 
53.151(a)). The form 5300.26 is due by July

[[Page 212]]

31, 1996, the last day of the first month following the calendar quarter 
(Sec. 53.153(a)). B must also pay $1050.00, the underpayment amount by 
which the total tax liability for the second calendar quarter exceeds 
the total tax liability for the look-back quarter, by the due date of 
the return.
    Example 3. Deposit amount; no liability in look-back quarter--(1) 
Facts. C, a manufacturer of ammunition, filed returns for the first, 
second and third quarters of 1995 reporting C's tax liability. During 
the fourth quarter of 1995, C did not make any taxable sales of shells 
or cartridges, thereby incurring no tax liability for that return 
period. C did not file Form 5300.26 for the fourth calendar quarter 
since no tax liability was incurred (Sec. 53.151(a)(2)). C made taxable 
sales in the second quarter of 1996 amounting to $25,500.00, incurring a 
tax liability of $2805.
    (2) Deposit requirement. Ordinarily, C would be required to make 
deposits of tax for each semimonthly period in the calendar quarter 
because C's total liability for the current calendar quarter exceeds 
$2,000. However, since C incurred a tax liability of $0 in the second 
preceding calendar quarter (the look-back quarter) (Sec. 53.159(c)(3)), 
under the safe harbor rule, C is not required to make deposits of tax.
    (3) Filing requirement. C is required to file a return on Form 
5300.26 reporting C's $2805 ammunition excise tax liability. The form 
5300.26 is due by July 31, 1996.
    (4) Payment requirement. C must pay the $2805 tax with the return.
    Example 4. Deposit requirement; First time Filer--(1) Facts. D, a 
manufacturer of firearms, began business on 2/16/96. D sold 300 shotguns 
which had a taxable sales price of $210 each during the first quarter of 
1996. D sold 70 shotguns in the second semimonthly period of February, 
1996, 130 shotguns in the first semimonthly period of March, 1996 and 
100 shotguns in the second semimonthly period of March, 1996. The amount 
of D's tax liability for the first quarter of 1996 is $6,930, 11 percent 
of the taxable sale price of the shotguns.
    (2) Deposit requirement. D is required to make a deposit of tax when 
D's tax liability exceeds $2,000 (Sec. 53.159(c)(2)). Therefore, D must 
make a deposit of tax beginning with the first semimonthly period in 
March, the semimonthly period in which D's unpaid tax liability exceeded 
$2,000. Because D, a first time filer, does not have an established 
look-back quarter, D's deposit of tax must be at least 95 percent of the 
incurred tax liability. D is required to make deposits of at least 95 
percent of incurred tax liability for every semimonthly period in the 
quarter thereafter. D's deposits must be timely and any underpayment of 
tax must be paid by the due date of the return. Accordingly, D meets the 
deposit requirement if D makes the following deposits:

------------------------------------------------------------------------
                                                               Amount of
         Semimonthly period                Deposit due by       deposit
------------------------------------------------------------------------
Feb. 16-29..........................  March 11, 1996.........         $0
March 1-15..........................  March 25, 1996.........      4,389
March 16-31.........................  April 9, 1996..........   2,194.50
------------------------------------------------------------------------

    The deposits due on March 11, 1996, and March 25, 1996, would 
ordinarily be due on March 9, 1996, and March 24, 1996, respectively. 
However, because March 9, 1996, is a Saturday, and March 24, 1996, is a 
Sunday, under section 7503, D has until March 11, 1996, to make the 
deposit due on March 9, 1996, and until March 25, 1996, to make the 
deposit due on March 24, 1996.
    (3) Filing requirement. D must file a return on Form 5300.26 for the 
first calendar quarter of 1996 reporting D's $6,930 tax liability (Sec. 
53.151(a)). The form 5300.26 is due by April 30, 1996, the last day of 
the first month following the calendar quarter (Sec. 53.153(a)). D must 
also pay $346.50, the amount by which the tax liability for the quarter 
was underpaid, by the due date of the return.
    Example 5. Deposit amount; third calendar quarter--(1) Facts. E, a 
manufacturer of firearms, is a semimonthly depositor who makes deposits 
of tax using the safe harbor rule based on the look-back quarter to 
determine the amount of tax required to be deposited for the third 
calendar quarter of 1995. E incurred a tax liability amounting to 
$38,000 for the third quarter. E filed Form 5300.26 for the second 
preceding calendar quarter, the look-back quarter on May 1, 1995, 
reporting tax liability in the amount of $30,000.
    (2) Deposit requirement. Because E has incurred more than $2,000 in 
liability and has chosen to make deposits of tax based on the look-back 
quarter, E is required to make deposits of tax equal to $5,000, 1/6 
(16.67 percent) of the tax liability incurred in the look-back quarter, 
for each semimonthly period in the calendar quarter. However, because of 
the special rule which modifies the safe harbor rule for deposits of tax 
for the month of September (Sec. 53.159(c)(4)), E must make deposits 
equal to $2500.00 each, 1/12th (8.34 percent) of the tax liability 
incurred in the look-back quarter for the periods September 16-25 and 
September 26-30. E's deposits must be timely and E must pay the amount 
of any underpayment by the due date of the return. Accordingly, E meets 
the deposit requirement if E makes the following deposits:

------------------------------------------------------------------------
                                                               Amount of
         Semimonthly period                Deposit due by       deposit
------------------------------------------------------------------------
July 1-15...........................  July 24, 1995..........   $5000.00
July 16-31..........................  August 9, 1995.........    5000.00
Aug. 1-15...........................  August 24, 1995........    5000.00
Aug. 16-31..........................  Sept. 11, 1995.........    5000.00
Sept. 1-15..........................  Sept. 25, 1995.........    5000.00
Sept. 16-25.........................  Sept. 28, 1995.........    2500.00
Sept. 26-30.........................  October 9, 1995........    2500.00
------------------------------------------------------------------------


[[Page 213]]

    The deposits due on September 11, 1995, and September 25, 1995, 
would ordinarily be due on September 9, 1995, and September 24, 1995, 
respectively. However, because September 9, 1995, is a Saturday, and 
September 24, 1995, is a Sunday, under section 7503, D has until 
September 11, 1995, to make the deposit due on September 9, 1995, and 
until September 25, 1995, to make the deposit due on September 24, 1995.
    (3) Filing requirement. E must file a return on Form 5300.26 for the 
third calendar quarter of 1995 reporting E's $38,000 tax liability 
(Sec. 53.153(a)). E must also pay $8,000, the underpayment amount by 
which the total tax liability for the third calendar quarter exceeds the 
total tax liability for the look-back quarter, by the due date of the 
return.

[T.D. ATF-365, 60 FR 33671, June 28, 1995, as amended by T.D. ATF-447, 
66 FR 19089, Apr. 13, 2001; T.D. TTB-44, 71 FR 16958, Apr. 4, 2006]



Sec. 53.161  Authority to make credits or refunds.

    For provisions relating to credits and refunds of certain taxes on 
sales and services see section 6416 of the Code and Sec. Sec. 53.171-
53.186. For regulations under section 6402 of the Code of general 
application in respect of credits or refunds, see 27 CFR 70.122, 70.123, 
and 70.124 (Procedure and Administration).



Sec. 53.162  Abatements.

    For regulations under section 6404 of the Code of general 
application in respect of abatements of assessments to tax, see 27 CFR 
70.125 (Procedure and Administration).



Sec. Sec. 53.163-53.170  [Reserved]



Sec. 53.171  Claims for credit or refund of overpayments of manufacturers 

taxes.

    Any claims for credit or refund of an overpayment of a tax imposed 
by chapter 32 of the Code shall be made in accordance with the 
applicable provisions of this subpart and the applicable provisions of 
27 CFR 70.123 (Procedure and Administration). A claim on TTB Form 2635 
(5620.8) is not required in the case of a claim for credit, but the 
amount of the credit shall be claimed by entering that amount as a 
credit on a return of tax under this subpart filed by the person making 
the claim. In this regard, see Sec. 53.185.



Sec. 53.172  Credit or refund of manufacturers tax under chapter 32.

    (a) Overpayment not described in section 6416(b)(2) of the Code--(1) 
Claims included. This paragraph applies only to claims for credit or 
refund of an overpayment of manufacturers tax imposed by Chapter 32. It 
does not apply, however, to a claim for credit or refund on any 
overpayment described in paragraph (b) of this section which arises by 
reason of the application of section 6416(b)(2) of the Code.
    (2) Supporting evidence required. No credit or refund of any 
overpayment to which this paragraph (a) applies shall be allowed unless 
the person who paid the tax submits with the claim a written consent of 
the ultimate purchaser to the allowance of the credit or refund, or 
submits with the claim a statement, supported by sufficient available 
evidence, asserting that:
    (i) The person has neither included the tax in the price of the 
article with respect to which it was imposed nor collected the amount of 
the tax from a vendee, and identifying the nature of the evidence 
available to establish these facts, or
    (ii) The person has repaid the amount of the tax to the ultimate 
purchaser of the article.
    (3) Ultimate purchaser--(i) General rule. The term ``ultimate 
purchaser'', as used in paragraph (a)(2) of this section, means the 
person who purchased the article for consumption, or for use in the 
manufacture of other articles and not for resale in the form in which 
purchased.
    (ii) Special rule under section 6416(a)(3)--(A) Conditions to be 
met. If tax under chapter 32 of the Code is paid in respect of an 
article and the appropriate TTB officer determines that the article is 
not subject to tax under chapter 32, the term ``ultimate purchaser'', as 
used in paragraph (a)(2) of this section, includes any wholesaler, 
jobber, distributor, or retailer who, on the 15th day after the date of 
the determination holds for sale any such article with respect to which 
tax has been paid, if the claim for credit or refund of the overpayment 
in respect of the articles held for sale by wholesaler, jobber, 
distributor, or retailer is filed on or before the date on which the 
person who

[[Page 214]]

paid the tax is required to file a return for the period ending with the 
first calendar quarter which begins more than 60 days after the date of 
the determination by the appropriate TTB officer.
    (B) Supporting statement. A claim for credit or refund of an 
overpayment of tax in respect of an article as to which a wholesaler, 
jobber, distributor, or retailer is the ultimate purchaser, as provided 
in this paragraph (a)(3)(ii), must be supported by a statement that the 
person filing the claim has a statement, by each wholesaler, jobber, 
distributor, or retailer whose articles are covered by the claim, 
showing total inventory, by model number and quantity, of all such 
articles purchased tax-paid and held for sale as of 12:01 a.m. of the 
15th day after the date of the determination by the appropriate TTB 
officer that the article is not subject to tax under chapter 32 of the 
Code.
    (C) Inventory requirement. The inventory shall not include any such 
article, title to which, or possession of which, has previously been 
transferred to any person for purposes of consumption unless the entire 
purchase price was repaid to the person or credited to the person's 
account and the sale was rescinded or any such article purchased by the 
wholesaler, jobber, distributor, or retailer as a component part of, or 
on or in connection with, another article. An article in transit at the 
first moment of the 15th day after the date of the determination is 
regarded as being held by the person to whom it was shipped, except that 
if title to the article does not pass until delivered to the person the 
article is deemed to be held by the shipper.
    (b) Overpayments described in section 6416(b)(2) of the Code--(1) 
Claims included. This paragraph applies only to claims for credit or 
refund of amounts paid as tax under chapter 32 of the Code that are 
determined to be overpayments by reason of section 6416(b)(2) of the 
Code (relating to tax payments in respect of certain uses, sales, or 
resales of a taxable article).
    (2) Supporting evidence required. No credit or refund of an 
overpayment to which this paragraph (b) applies shall be allowed unless 
the person who paid the tax submits with the claim a statement, 
supported by sufficient available evidence, asserting that:
    (i) The person neither included the tax in the price of the article 
with respect to which it was imposed nor collected the amount of the tax 
from a vendee, and identifying the nature of the evidence available to 
establish these facts, or
    (ii) The person repaid, or agreed to repay, the amount of the tax to 
the ultimate vendor of the article, or
    (iii) The person has secured, and will submit upon request of the 
appropriate TTB officer, the written consent of the ultimate vendor to 
the allowance of the credit or refund.
    (3) Ultimate vendor--General rule. The term ultimate vendor, as used 
in paragraph (b)(2) of this section, means the seller making the sale 
which gives rise to the overpayment or which last precedes the 
exportation or use which has given rise to the overpayment.
    (c) Overpayments not included. This section does not apply to any 
overpayment determined under section 6416(b)(1) of the Code (relating to 
price readjustments), section 6416(b)(3)(A) of the Code (relating to 
certain cases in which refund or credit is allowable to the manufacturer 
who uses, in the further manufacture of a second article, a taxable 
article purchased by the manufacturer taxpaid), or section 6416(b)(5) of 
the Code (relating to the return to the seller of certain installment 
accounts which the seller had previously sold). In this regard, see 
Sec. Sec. 53.173, 53.180, and 53.183.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]



Sec. 53.173  Price readjustments causing overpayments of manufacturers tax.

    In the case of any payment of tax under chapter 32 of the Code that 
is determined to be an overpayment by reason of a price readjustment 
within the meaning of section 6416(b)(1) of the Code and Sec. 53.174 or 
Sec. 53.175, the person who paid the tax may file a claim for refund of 
the overpayment or may claim credit for the overpayment on any return of 
tax under this subpart which the person subsequently files. Price 
readjustments may not be anticipated. However, if the readjustment

[[Page 215]]

has actually been made before the return is filed for the period in 
which the sale was made, the tax to be reported in respect of the sale 
may, at the election of the taxpayer, be based either:
    (a) On the price as so readjusted, or
    (b) On the original sale price and a credit or refund claimed in 
respect of the price readjustment.

A price readjustment will be deemed to have been made at the time when 
the amount of the readjustment has been refunded to the vendor or the 
vendor has been informed that the vendor's account has been credited 
with the amount. No interest shall be paid on any credit or refund 
allowed under this section. For provisions relating to the evidence 
required in support of a claim for credit or refund, see 27 CFR 70.123 
(Procedure and Administration), Sec. 53.172(a)(2) and Sec. 53.176. For 
provisions authorizing the taking of a credit in lieu of filing a claim 
for refund, see section 6416(d) of the Code and Sec. 53.185.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]



Sec. 53.174  Determination of price readjustments.

    (a) In general--(1) Rules of usual application--(i) Amount treated 
as overpayment. If the tax imposed by chapter 32 of the Code has been 
paid and thereafter the price of the article on which the tax was based 
is readjusted, that part of the tax which is proportionate to the part 
of the price which is repaid or credited to the purchaser is considered 
to be an overpayment. A readjustment of price to the purchaser may occur 
by reason of:
    (A) The return of the article,
    (B) The repossession of the article,
    (C) The return or repossession of the covering or container of the 
article, or
    (D) A bona fide discount, rebate, or allowance against the price at 
which the article was sold.
    (ii) Requirements of price readjustment. A price readjustment will 
not be deemed to have been made unless the person who paid the tax 
either:
    (A) Repays part or all of the purchase price in cash to the vendee,
    (B) Credits the vendee's account for part or all of the purchase 
price, or
    (C) Directly or indirectly reimburses a third party for part or all 
of the purchase price for the direct benefit of the vendee.

In addition, to be deemed a price readjustment, the payment or credit 
must be contractually or economically related to the taxable sale that 
the payment or credit purports to adjust. Thus, commissions or bonuses 
paid to a manufacturer's own agents or salesperson for selling the 
manufacturer's taxable products are not price readjustments for purposes 
of this section, since those commissions or bonuses are not paid or 
credited either to the manufacturer's vendee or to a third party for the 
vendee's benefit. On the other hand, a bonus paid by the manufacturer to 
a dealer's salesperson for negotiating the sale of a taxable article 
previously sold to the dealer by the manufacturer is considered to be a 
readjustment of the price on the original sale of the taxable article, 
regardless of whether the payment to the salesperson is made directly by 
the manufacturer or to the salesperson through the dealer. In such a 
case, the payment is related to the sale of a taxable article and is 
made for the benefit of the dealer because it is made to the dealer's 
salesperson to encourage the sale of a product owned by the dealer. 
Similarly, payments or credits made by a manufacturer to a vendee as 
reimbursement of interest expense incurred by the vendee in connection 
with a so-called ``free flooring'' arrangement for the purchase of 
taxable articles is a price readjustment, regardless of whether the 
payment or credit is made directly to the vendee or to the vendee's 
creditor on behalf of the vendee.
    (iii) Limitation on credit or refund. The credit or refund allowable 
by reason of a price readjustment in respect of the sale of a taxable 
article may not exceed an amount which bears the same ratio to the total 
tax originally due and payable on the article as the amount of the tax-
included readjustment bears to the original tax-included sale price of 
the article.
    (2) Rules of special application--(i) Constructive sale price. If, 
in the case of a taxable sale, the tax imposed by chapter 32 of the Code 
is based on a constructive sale price determined

[[Page 216]]

under any paragraph of section 4216(b) of the Code and Sec. Sec. 53.94-
53.97, as determined without reference to section 4218 of the Code, then 
any price readjustment made with respect to the sale may be taken into 
account under this section only to the extent that the price 
readjustment reduces the actual sale price of the article below the 
constructive sale price.

    Examples: (A) A manufacturer sells a taxable article at retail for 
$110 tax included. Under section 4216(b)(1) of the Code the constructive 
sale price (tax included) of the article is determined to be $93. 
Thereafter, the manufacturer grants an allowance of $10 to the 
purchaser, which reduces the actual selling price (tax included) to 
$100. Since the readjustment price exceeds the amount of the 
constructive sale price, this readjustment is not recognized as a price 
readjustment under this section.
    (B) Subsequently, the manufacturer extends to the purchaser an 
additional price allowance of $10, thereby reducing the actual sale 
price to $90. Since the actual sale price is now $3 less than the 
constructive sale price of $93, the manufacturer has overpaid by the 
amount of tax attributable to the $3. Assuming the tax rate involved is 
10 percent, and the prices involved are tax-included, the overpayment of 
tax would be $0.27, determined as follows:
[GRAPHIC] [TIFF OMITTED] TC05OC91.021

    (ii) Price determined under section 4223(b)(2) of the Code. If a 
manufacturer (within the meaning of section 4223(a) of the Code) to whom 
an article is sold or resold free of tax in accordance with the 
provisions of section 4221(a)(1) of the Code for use in further 
manufacture diverts the article to a taxable use or sells it in a 
taxable sale, and pursuant to the provisions of section 4223(b)(2) of 
the Code computes the tax liability in respect of the use or sale on the 
price for which the article was sold to the manufacturer or on the price 
at which the article was sold by the actual manufacturer, a reduction of 
the price on which the tax was based does not result in an overpayment 
within the meaning of section 6416(b)(1) of the Code of this section. 
Moreover, if a manufacturer purchases an article tax free and computes 
the tax in respect of a subsequent sale of the article pursuant to the 
provisions of section 4223(b)(2) of the Code, an overpayment does not 
arise by reason of readjustment of the price for which the article was 
sold by the manufacturer except where the readjustment results from the 
return or repossession of the article by the manufacturer, and all of 
the purchase price is refunded by the manufacturer. See, however, 
paragraph (b)(4) of this section as to repurchased articles.
    (b) Return of an article--(1) Price readjustment. If a taxable 
article is returned to the manufacturer who paid the tax imposed by 
Chapter 32 of the Code on the sale of the article, a price readjustment 
giving rise to an overpayment results:
    (i) If the article is returned before use, and all of the purchase 
price is repaid to the vendee or credited to the vendee's account, or
    (ii) If the article is returned under an express or implied warranty 
as to quality or service, and all or a part of the purchase price is 
repaid to the vendee or credited to the vendee's account, or
    (iii) If title is still in the seller, as, for example, in the case 
of certain installment sales contracts, and all or a part of the 
purchase price is repaid to the vendee or credited to the vendee's 
account.
    (2) Return of purchase price. For purposes of paragraph (b)(1) of 
this section, if all of the purchase price of an article has been 
returned to the vendee, except for an amount retained by the 
manufacturer pursuant to contract as reimbursement of expense incurred 
in connection with the sale (such as a handling or restocking charge), 
all of the purchase price is considered to have been returned to the 
vendee.

[[Page 217]]

    (3) Taxability of subsequent sale or use. If, under any of the 
conditions described in paragraph (b)(1) of this section, an article is 
returned to the manufacturer who paid the tax and all of the purchase 
price is returned to the vendee, the sale is considered to have been 
rescinded. Any subsequent sale or use of the article by the manufacturer 
will be considered to be an original sale or use of the article by the 
manufacturer which is subject to tax under Chapter 32 of the Code unless 
otherwise exempt. If under any such condition an article is returned to 
the manufacturer who paid the tax and only part of the purchase price is 
returned to the vendee, a subsequent sale of the article by the 
manufacturer will be subject to tax to the extent that the sale price 
exceeds the adjusted sale price of the first taxable sale.
    (4) Treatment of other transactions as repurchases. Except as 
provided in paragraph (b)(1) of this section, a price readjustment will 
not result when a taxable article is returned to the manufacturer who 
paid the tax on the sale of the article, even though all or a part of 
the purchase price is repaid to the vendee or credited to the vendee's 
account, since such a transaction will be considered to be a repurchase 
of the article by the manufacturer.
    (c) Repossession of an article. If a taxable article is repossessed 
by the manufacturer who paid the tax imposed by chapter 32 of the Code 
on the sale of the article, and all or a part of the purchase price is 
repaid to the vendee or credited to the vendee's account, a price 
readjustment giving rise to an overpayment will result. However, if the 
manufacturer later resells the repossessed article for a price in excess 
of the original adjusted sale price, the manufacturer will be liable for 
tax under chapter 32 of the Code to the extent that the resale price 
exceeds the original adjusted sale price.
    (d) Return or repossession of covering or container. If the covering 
or container of a taxable article is returned to, or repossessed by the 
manufacturer who paid the tax imposed by chapter 32 of the Code on the 
sale of the article, and all or a portion of the purchase price is 
repaid to the vendee or credited to the vendee's account by reason of 
the return or repossession of the covering or container, a price 
adjustment giving rise to an overpayment will result. If a taxable 
article is considered to have been repurchased, as provided in paragraph 
(b)(4) of this section, and the covering or container accompanies the 
taxable article as part of the transaction, the covering or container 
will also be considered to have been repurchased.
    (e) Bona fide discounts, rebates, or allowances--(1) In general. 
Except as provided in Sec. 53.175 (relating to readjustments in respect 
of local advertising), the basic consideration in determining, for 
purposes of this section, whether a bona fide discount, rebate, or 
allowance has been made is whether the price actually by, or charged 
against, the purchaser has in fact been reduced by subsequent 
transactions between the parties. Generally, the price will be 
considered to have been readjusted by reason of a bona fide discount, 
rebate, or allowance, only if the manufacturer who made the taxable sale 
repays a part of the purchase price in cash to the vendee, or credits 
the vendee's account, or directly or indirectly reimburses a third party 
for part or all of the purchase price for the direct benefit of the 
vendee, in consideration of factors which, if taken into account at the 
time of the original transaction, would have resulted at that time in a 
lower sale price. For example, a price readjustment will be considered 
to have been made when a bona fide discount, rebate, or allowance is 
given in consideration of such factors as prompt payment, quantity 
buying over a specified period, the vendee's inventory of an article 
when new models are introduced, or a general price reduction affecting 
articles held in stock by the vendee as of a certain date. On the other 
hand, repayments made to the vendee do not effectuate price 
readjustments if given in consideration of circumstances under which the 
vendee has incurred, or is required to incur, an expense which, if 
treated as a separate item in the original transaction, would have been 
incudable in the price of the article for purposes of computing the tax.

[[Page 218]]

    Examples. The provisions of paragraph (e)(1) of this section may be 
illustrated by the following examples:

    Example (1). B, a manufacturer of shotguns, bills its distributors 
in a specified amount per shotgun purchased by them. Thereafter, B 
issues to each distributor a credit memorandum in the amount of X 
dollars for each demonstration by the distributor of the shotguns at a 
sporting goods exhibition. The credit which B allows the distributor for 
demonstration of B's product does not effect a readjustment of price.
    Example (2). C, a manufacturer of firearms, bills its dealers in a 
specified amount per firearm purchased by them. Thereafter, C remits to 
the dealer X dollars of the original sale price for each firearm sold by 
the dealer. An additional amount of Y dollars is paid to the dealer upon 
a showing by the dealer that the dealer has paid Y dollars to the 
salesperson who made the sale. In this case, the X dollars paid to the 
dealer by C constitutes a bona fide discount, rebate, or allowance since 
payment of such amount is in the nature of a price reduction. In 
addition, the Y dollars paid to the dealer in reimbursement for the 
amount paid by the dealer to the salesperson who made the sale, also 
constitutes a bona fide discount, rebate, or allowance.

    (2) Inability to collect price. A charge-off of an amount 
outstanding in an open account, due to inability to collect, is not a 
bona fide discount, rebate, or allowance and does not, in and of itself, 
give rise to a price readjustment within the meaning of this section.
    (3) Loss or damage in transit. If title to an article has passed to 
the vendee, the subsequent loss, damage, or destruction of the article 
while in the possession of a carrier for delivery to the vendee does 
not, in and of itself, affect the price at which the article was sold. 
However, if the article was sold under a contract providing that, if the 
article was lost, damaged, or destroyed in transit, title would revert 
to the vendor and the vendor would reimburse the vendee in full for the 
sale price, then the original sale is considered to have been rescinded. 
The vendor is entitled to credit or refund of the tax paid upon 
reimbursement of the full tax-included sale price to the vendee.



Sec. 53.175  Readjustment for local advertising charges.

    (a) In general. If a manufacturer has paid the tax imposed by 
chapter 32 of the Code on the price of any article sold by the 
manufacturer and thereafter has repaid a portion of the price to the 
purchaser or any subsequent vendee in reimbursement of expenses for 
local advertising of the article or any other article sold by the 
manufacturer which is taxable at the same rate under the same section of 
chapter 32 of the Code, the reimbursement will be considered a price 
readjustment constituting an overpayment which the manufacturer may 
claim as a credit or refund. The amount of the reimbursement may not, 
however, exceed the limitation provided by section 4216(e)(2) of the 
Code and Sec. 53.101, determined as of the close of the calendar 
quarter in which the reimbursement is made or as of the close of any 
subsequent calendar quarter of the same calendar year in which it is 
made. The term ``local advertising,'' as used in this section, has the 
same meaning as prescribed by section 4216(e)(4) of the Code and 
includes generally, advertising which is broadcast over a radio station 
or television station, or appears in a newspaper or magazine, or is 
displayed by means of an outdoor advertising sign or poster.
    (b) Local advertising charges excluded from taxable price in one 
year but repaid in following year--(1) Determination of price 
readjustments for year in which charge is repaid. If the tax imposed by 
chapter 32 of the Code was paid with respect to local advertising 
charges that were excluded in computing the taxable price of an article 
sold in any calendar year but are not repaid to the manufacturer's 
purchaser or any subsequent vendee before May 1 of the following 
calendar year, the subsequent repayment of those charges by the 
manufacturer in reimbursement of expenses for local advertising will be 
considered a price readjustment constituting an overpayment which the 
manufacturer may claim as a credit or refund. The amount of the 
reimbursement may not, however, exceed the limitation provided by 
section 4216(e)(2) of the Code and Sec. 53.101, determined as of the 
close of the calendar quarter in which the reimbursement is made or as 
of the close of any subsequent calendar quarter of the same calendar 
year in which it is made.

[[Page 219]]

    (2) Redetermination of price readjustments for year in which charge 
was made. If the tax imposed by chapter 32 of the Code was paid with 
respect to local advertising charges that were excluded in computing the 
taxable price of an article sold in any calendar year but are not repaid 
to the manufacturer's purchaser or any subsequent vendor before May 1 of 
the following calendar year, the manufacturer may make a 
redetermination, in respect of the calendar year in which the charge was 
made, of the price readjustments constituting an overpayment which the 
manufacturer may claim as a credit or refund. This redetermination may 
be made by excluding the local advertising charges made in the calendar 
year that became taxable as of May 1 of the following calendar year.



Sec. 53.176  Supporting evidence required in case of price readjustments.

    No credit or refund of an overpayment arising by reason of a price 
readjustment described in Sec. 53.174 or Sec. 53.175 shall be allowed 
unless the manufacturer who paid the tax submits a statement, supported 
by sufficient available evidence:
    (a) Describing the circumstances which gave rise to the price 
readjustment,
    (b) Identifying the article in respect of which the price 
readjustment was allowed,
    (c) Showing the price at which the article was sold, the amount of 
tax paid in respect of the article, and the date on which the tax was 
paid,
    (d) Giving the name and address of the purchaser to whom the article 
was sold, and
    (e) Showing the amount repaid to the purchaser or credited to the 
purchaser's account.



Sec. 53.177  Certain exportations, uses, sales, or resales causing 

overpayments of tax.

    In the case of any payment of tax under chapter 32 of the Code that 
is determined to be an overpayment by reason of certain exportations, 
uses, sales, or resales described in section 6416(b)(2) of the Code and 
Sec. 53.178, the person who paid the tax may file a claim for refund of 
the overpayment or, in the case of overpayments under chapter 32 of the 
Code, may claim credit for the overpayment on any return of tax under 
this subpart which the person subsequently files. However, under the 
circumstances described in section 6416(c) of the Code and Sec. 53.184, 
the overpayments under chapter 32 may be refunded to an exporter or 
shipper. No interest shall be paid on any credit or refund allowed under 
this section. For provisions relating to the evidence required in 
support of a claim for credit or refund under this section, see 27 CFR 
70.123 (Procedure and Administration) and 53.179. For provisions 
authorizing the taking of a credit in lieu of filing a claim for refund, 
see section 6416(d) of the Code and Sec. 53.185.



Sec. 53.178  Exportations, uses, sales, and resales included.

    (a) In general. The payment of tax imposed by chapter 32 of the Code 
on the sale of any article, will be considered to be an overpayment by 
reason of any exportation, use, sale, or resale described in any one of 
paragraphs (b) to (e), inclusive, of this section. This section applies 
only in those cases where the exportation, use, sale, or resale (or any 
combination thereof) referred to in any one or more of these paragraphs 
occurs before any other use. If any article is sold or resold for a use 
described in any one of these paragraphs and is not in fact so used, the 
paragraph is treated in all respects as inapplicable.
    (b) Exportation of tax-paid articles. A payment of tax under chapter 
32 of the Code on the sale of any article will be considered to be an 
overpayment under section 6416(b)(2)(A) of the Code if the article is by 
any person exported to a foreign country or shipped to a possession of 
the United States. It is immaterial for purposes of this paragraph, 
whether the person who made the taxable sale had knowledge at the time 
of the sale that the article was being purchased for export to a foreign 
country or shipment to a possession of the United States. See Sec. 
53.184 for the circumstances under which a claim for refund by reason of 
the exportation of an article may be claimed by the exporter or shipper, 
rather than by the person who paid the tax. For definition of the

[[Page 220]]

term ``possession of the United States'', see Sec. 53.11.
    (c) Supplies for vessels or aircraft. A payment of tax under chapter 
32 of the Code on the sale of any article, will be considered to be an 
overpayment under section 6416(b)(2)(B) of the Code if the article is 
used by any person, or is sold by any person for use by the purchaser, 
as supplies for vessels or aircraft. The term ``supplies for vessels or 
aircraft'', as used in this paragraph, has the same meaning as when used 
in sections 4221(a)(3), 4221(d)(3), and 4221(e)(1) of the Code, and the 
regulations thereunder (Sec. 53.134(b)(1)).
    (d) Use by State or local government. A payment of tax under chapter 
32 of the Code on the sale of any article will be considered to be an 
overpayment under section 6416(b)(2)(C) of the Code if the article is 
sold by any person to a State, any political subdivision thereof, or the 
District of Columbia for the exclusive use of a State, any political 
subdivision thereof, or the District of Columbia. For provisions 
relating to tax-free sales to a State, any political subdivision 
thereof, or the District of Columbia, see section 4221(a)(4) of the Code 
and Sec. 53.131.
    (e) Use by nonprofit educational organization. A payment of tax 
under chapter 32 of the Code on the sale of any article will be 
considered to be an overpayment under section 6416(b)(2)(D) of the Code 
if the article is sold by any person to a nonprofit educational 
organization for its exclusive use. The term ``nonprofit educational 
organization'', as used in this paragraph (e), has the same meaning as 
when used in section 4221 (a)(5) or (d)(5) of the Code, whichever 
applies, and the regulations under Sec. 53.136.



Sec. 53.179  Supporting evidence required in case of manufacturers tax 

involving exportations, uses, sales, or resales.

    (a) Evidence to be submitted by claimant. No claim for credit or 
refund of an overpayment, within the meaning of section 6416(b)(2) of 
the Code and Sec. 53.178, of tax under chapter 32 of the Code shall be 
allowed unless the person who paid the tax submits with the claim the 
evidence required by Sec. 53.172(b)(2) and a statement, supported by 
sufficient available evidence:
    (1) Showing the amount claimed in respect of each category of 
exportations, uses, sales, or resales on which the claim is based and 
which give rise to a right of credit or refund under section 6416(b)(2) 
of the Code and Sec. 53.177,
    (2) Identifying the article, both as to nature and quantity, in 
respect of which credit or refund is claimed,
    (3) Showing the amount of tax paid in respect of the article or 
articles and the dates of payment, and
    (4) Indicating that the person claiming a credit or refund possesses 
evidence (as set forth in paragraph (b)(1) of this section) that the 
article has been exported, or has been used, sold, or resold in a manner 
or for a purpose which gives rise to an overpayment within the meaning 
of section 6416(b)(2) of the Code and Sec. 53.178.
    (b) Evidence required to be in possession of claimant--(1) Evidence 
required under paragraph (a)(4)--(i) In general. The evidence required 
to be retained by the person who paid the tax, as provided in paragraph 
(a)(4) of this section, must, in the case of an article exported, 
consist of proof of exportation in the form prescribed in Sec. 53.133 
or must, in the case of other articles sold tax-paid by that person, 
consist of a certificate, executed and signed by the ultimate purchaser 
of the article, in the form prescribed in paragraph (b)(1)(ii) of this 
section. However, if the article to which the claim relates has passed 
through a chain of sales from the person who paid the tax to the 
ultimate purchaser, the evidence required to be retained by the person 
who paid the tax may consist of a certificate, executed and signed by 
the ultimate vendor of the article, in the form provided in paragraph 
(b)(1)(iii) of this section, rather than the proof of exportation itself 
or the certificate of the ultimate purchaser.
    (ii) Certificate of ultimate purchaser. (A) The certificate executed 
and signed by the ultimate purchaser of the article to which the claim 
relates must identify the article, both as to nature and quantity; show 
the address of the ultimate purchaser of the article, and the name and 
address of the ultimate vendor of the article; and describe the

[[Page 221]]

use actually made of the article in sufficient detail to establish that 
credit or refund is due, except that the use to be made of the article 
must be described in lieu of actual use if the claim is made by reason 
of the sale or resale of an article for a specified use which gives rise 
to the overpayment.
    (B) If the certificate sets forth the use to be made of any article, 
rather than its actual use, it must show that the ultimate purchaser has 
agreed to notify the claimant if the article is not in fact used as 
specified in the certificate.
    (C) The certificate must also contain a statement that the ultimate 
purchaser understands that the ultimate purchaser and any other party 
may, for fraudulent use of the certificate, be subject to all applicable 
criminal penalties under the Internal Revenue Code.
    (D) A purchase order will be acceptable in lieu of a separate 
certificate of the ultimate purchaser if it contains all the information 
required by this paragraph.
    (iii) Certificate of ultimate vendor. Any certificate executed and 
signed by an ultimate vendor as evidence to be retained by the person 
who paid the tax as provided in paragraph (a)(4) of this section may be 
executed with respect to any one or more overpayments by the person 
which arose under section 6416(b)(2) and Sec. 53.178 by reason of 
exportations, uses, sales or resales, occurring within any period of not 
more than 12 consecutive calendar quarters, the beginning and ending 
dates of which are specified in the certificate. A certificate 
supporting a claim for credit or refund under this section shall contain 
the following:
    (A) Name of ultimate vendor if other than person executing the 
certificate.
    (B) Statement that article(s) was purchased by the ultimate vendor 
tax-paid and was thereafter exported, used, sold, or resold.
    (C) Description of proof which supports exportation or certificate 
as to use executed by ultimate purchaser.
    (D) Statement that ultimate vendor retains such proof for 3 years 
from the date of the statement and will, upon request, supply such proof 
at any time within such 3 year period to the taxpayer to establish that 
credit or refund is due in respect of the article.
    (E) Statement that to the best knowledge and belief of the person 
executing the certificate, no statement in respect of the proof of 
exportation or certificate has previously been executed and that the 
person executing the certificate understands that any fraudulent use of 
the certificate may subject the person executing the certificate or any 
other party to all applicable criminal penalties under the Code.
    (F) Name, title, address and signature of person executing 
certificate and date signed.
    (G) Description of all articles covered by the certificate, with the 
corresponding vendor's invoice number, date of resale of article, 
quantity, whether articles were exported or used and the use made of 
article or to be made of article.
    (iv) TTB I 5600.33. TTB I 5600.33, Statement of Ultimate Vendor, 
which is available as provided in Sec. 53.21(b), when completed, 
contains all necessary information for a properly executed certificate. 
Additional copies may be reproduced as needed.
    (2) Repayment or consent of ultimate vendor. If the person claiming 
credit or refund or an overpayment to which this section applies has 
repaid, or agreed to repay, the amount of the overpayment to the 
ultimate vendor or if the ultimate vendor consents to the allowance of 
the credit or refund, a statement to that effect, signed by the ultimate 
vendor, must be shown on, or made a part of, the supporting evidence 
required under this section to be retained by the person claiming the 
credit or refund. In this regard, see Sec. 53.172(b)(2).

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-380, 61 
FR 37007, July 16, 1996; T.D. TTB-44, 71 FR 16958, Apr. 4, 2006]



Sec. 53.180  Tax-paid articles used for further manufacture and causing 

overpayments of tax.

    In the case of any payment of tax under chapter 32 of the Code that 
is determined to be an overpayment under section 6416(b)(3) of the Code 
and

[[Page 222]]

Sec. 53.181 by reason of the sale of an article, directly or 
indirectly, by the manufacturer of the article to a subsequent 
manufacturer who uses the article in further manufacture of a second 
article or who sells the article with, or as a part of, the second 
article manufactured or produced by the subsequent manufacturer, the 
subsequent manufacturer may file claim for refund of the overpayment or 
may claim credit for the overpayment on any return of tax under this 
subpart subsequently filed. No interest shall be paid on any credit or 
refund allowed under this section. For provisions relating to the 
evidence required in support of a claim for credit or refund, see 27 CFR 
Sec. 70.123 (Procedure and Administration), 53.172 and 53.182. For 
provisions authorizing the taking of a credit in lieu of filing a claim 
for refund, see section 6416(d) of the Code and Sec. 53.185.



Sec. 53.181  Further manufacture included.

    (a) In general. The payment of tax imposed by chapter 32 of the Code 
on the sale of any article by a manufacturer of the article will be 
considered to be an overpayment by reason of any use in further 
manufacture, or sale as part of a second manufactured article, described 
in paragraph (b) of this section. This section applies in those cases 
where the exportation, use, or sale (or any combination of those 
activities) referred to in this paragraph occurs before any other use.
    (b) Use of tax-paid articles in further manufacture described in 
section 6416(b)(3)(A) of the Code. A payment of tax under chapter 32 of 
the Code on the sale of any article, directly or indirectly, by the 
manufacturer of the article to a subsequent manufacturer will be 
considered to be an overpayment under section 6416(b)(3)(A) of the Code 
if the article is used by the subsequent manufacturer as material in the 
manufacture or production of, or as a component part of, a second 
article manufactured or produced by the subsequent manufacturer which is 
taxable under chapter 32 of the Code. For this purpose it is immaterial 
whether the second article is sold or otherwise disposed of, or if sold, 
whether the sale is a taxable sale. Any article to which this paragraph 
applies which would have been used in the manufacture or production of a 
second article, except for the fact that it was broken or rendered 
useless in the process of manufacturing or producing the second article, 
will be considered to have been used as a component part of the second 
article.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31084, July 9, 1991]



Sec. 53.182  Supporting evidence required in case of tax-paid articles used 

for further manufacture.

    (a) Evidence to be submitted by claimant. No claim for credit or 
refund of an overpayment, within the meaning of section 6416(b)(3) of 
the Code and Sec. 53.181 shall be allowed unless the subsequent 
manufacturer submits with the claim the evidence required by Sec. 
53.132 and a statement, supported by sufficient available evidence:
    (1) Showing the amount claimed in respect of each category of 
exportations, uses, or sales on which the claim is based and which give 
rise to a right of credit or refund under section 6416(b)(3) of the Code 
and Sec. 53.180,
    (2) Showing the name and address of the manufacturer, producer, or 
importer of the article in respect of which credit or refund is claimed,
    (3) Identifying the article, both as to nature and quantity, in 
respect of which credit or refund is claimed,
    (4) Showing the amount of tax paid in respect of the article by the 
manufacturer or producer of the article and the date of payment.
    (5) Indicating that the article was used by the claimant as material 
in the manufacture or production of, or as a component part of, a second 
article manufactured or produced by the manufacturer or was sold on or 
in connection with, or with the sale of, a second article manufactured 
or produced by the manufacturer, and
    (6) Identifying the second article, both as to nature and quantity.
    (b) Evidence required to be in possession of claimant--(1) 
Certificate of ultimate purchaser of second article. The certificate 
executed and signed by the ultimate purchaser of the second article must 
contain the same information as that required in Sec. 53.179(b)(1)(ii), 
except

[[Page 223]]

that the information must be furnished in respect of the second article, 
rather than the article to which the claim relates.
    (2) Certificate of ultimate vendor of second article. Any 
certificate executed and signed by an ultimate vendor as evidence to be 
retained by the person claiming credit or refund must be executed in the 
same form and manner as that provided in Sec. 53.179(b)(2)(iii).
    (3) Repayment or consent of ultimate vendor. If the person claiming 
credit or refund of an overpayment to which this section applies has 
repaid, or agreed to repay, the amount of the overpayment to the 
ultimate vendor or if the ultimate vendor consents to the allowance of 
the credit or refund, a statement to that effect, signed by the ultimate 
vendor, must be shown on, or made a part of, the evidence required to be 
retained by the person claiming the credit or refund. In this regard, 
see Sec. 53.172(b)(2).

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991, as amended by T.D. ATF-312, 56 
FR 31085, July 9, 1991]



Sec. 53.183  Return of installment accounts causing overpayments of tax.

    (a) In general. In the case of any payment of tax under section 
4216(d)(1) of the Code in respect of the sale of any installment account 
that is determined to be an overpayment under section 6416(b)(5) of the 
Code and paragraph (b) of this section upon return of the installment 
account, the person who paid the tax may file a claim for refund of the 
overpayment or may claim credit for the overpayment on any return of tax 
under this subpart which that person subsequently files. No interest 
shall be paid on any credit or refund allowed under this section. For 
provisions relating to the evidence required in support of a claim for 
credit or refund under this section, see 27 CFR 70.123 (Procedure and 
Administration) and paragraph (c) of this section. For provisions 
authorizing the taking of a credit in lieu of filing a claim for refund, 
see section 6416(d) of the Code and Sec. 53.185.
    (b) Overpayment of tax allocable to repaid consideration. The 
payment of tax imposed by section 4216(d)(1) of the Code on the sale of 
an installment account by the manufacturer will be considered to be an 
overpayment under section 6416(b)(5) of the Code to the extent of the 
tax allocable to any consideration repaid or credited to the purchaser 
of the installment account upon the return of the account to the 
manufacturer pursuant to the agreement under which the account 
originally was sold, if the readjustment of the consideration occurs 
pursuant to the provisions of the agreement. The tax allocable to the 
repaid or credited consideration is the amount which bears the same 
ratio to the total tax paid under section 4216(d)(1) of the Code with 
respect to the installment account as the amount of consideration repaid 
or credited to the purchaser bears to the total consideration for which 
the account was sold. This paragraph (b) does not apply where an 
installment account is originally sold pursuant to the order of, or 
subject to the approval of, a court of competent jurisdiction in a 
bankruptcy or insolvency proceeding.
    (c) Evidence to be submitted by claimant. No claim for credit or 
refund of an overpayment, within the meaning of section 6416(b)(5) of 
the Code and paragraph (b) of this section, of tax under section 
4216(d)(1) of the Code shall be allowed unless the person who paid the 
tax submits with the claim a statement, supported by sufficient 
available evidence, indicating:
    (1) The name and address of the person to whom the installment 
account was sold,
    (2) The amount of tax due under section 4216(d)(1) of the Code by 
reason of the sale of the installment account, the amount of the tax 
paid under section 4216(d)(1) with respect to the sale, and the date of 
payment,
    (3) The amount for which the installment account was sold,
    (4) The amount which was repaid or credited to the purchaser of the 
account by reason of the return of the account to the person claiming 
the credit or refund, and
    (5)(i) The fact that the amount repaid or credited to the purchaser 
of the account was so repaid or credited pursuant to the agreement under 
which the account was sold, and

[[Page 224]]

    (ii) The fact that the account was returned to the manufacturer 
pursuant to that agreement.



Sec. 53.184  Refund to exporter or shipper.

    (a) In general. Any payment of tax imposed by chapter 32 of the Code 
that is determined to be an overpayment within the meaning of section 
6416(b)(2)(A) of the Code and Sec. Sec. 53.178 and 53.179, by reason of 
the exportation of any article may be refunded to the exporter or 
shipper of the article pursuant to section 6416(c) of the Code, if:
    (1) The exporter or shipper files a claim for refund of the 
overpayment, and
    (2) The person who paid the tax waives the right to claim credit or 
refund of the tax.

No interest shall be paid on any refund allowed under this section. For 
provisions relating to the evidence required in support of a claim under 
this paragraph, see 27 CFR 70.123 (Procedure and Administration) and 
paragraph (b) of this section.
    (b) Supporting evidence required. No claim for refund of any 
overpayment of tax to which this section applies shall be allowed unless 
the exporter or shipper submits with that claim proof of exportation in 
the form prescribed by Sec. 53.133, and a statement, signed by the 
person who paid the tax, showing:
    (1) That the person who paid the tax waives the right to claim 
credit or refund of the tax, and
    (2) The amount of tax paid on the sale of the article and the date 
of payment.



Sec. 53.185  Credit on returns.

    Any person entitled to claim refund of any overpayment of tax 
imposed by chapter 32 of the Code may, in lieu of claiming refund of the 
overpayment, claim credit for the overpayment on any return of tax under 
this subpart subsequently filed. Any such credit claimed on a return 
must be supported by the evidence prescribed in the applicable 
regulations in this subpart and 27 CFR 70.123 (Procedure and 
Administration).



Sec. 53.186  Accounting procedures for like articles.

    (a) Identification of manufacturer. In applying section 6416 of the 
Code and the regulations thereunder, a person who has purchased like 
articles from various manufacturers may determine the particular 
manufacturer from whom that person purchased any one of those articles 
by a first-in, first-out (FIFO) method, by a last-in, first-out (LIFO) 
method, or by any other consistent method approved by the appropriate 
TTB officer. For the first year for which a person makes a determination 
under this section, the person may adopt any one of the following 
methods without securing prior approval by the appropriate TTB officer.
    (1) FIFO method.
    (2) LIFO method.
    (3) Any method by which the actual manufacturer of the article is in 
fact identified.
    (4) Any other method of determining the manufacturer of a particular 
article must be approved by the appropriate TTB officer before its 
adoption. After any method for identifying the manufacturer has been 
properly adopted, it may not be changed without first securing the 
consent of the appropriate TTB officer.
    (b) Determining amount of tax paid. In applying section 6416 and 
Sec. Sec. 53.171-53.186, if the identity of the manufacturer of any 
article has been determined by a person pursuant to a method prescribed 
in paragraph (a) of this section, that manufacturer of the article must 
determine the tax paid under Chapter 32 of the Code with respect to that 
article consistently with the method used in identifying the 
manufacturer.



Sec. 53.187  OMB control numbers.

    (a) Purpose. This section collects and displays the control numbers 
assigned to collections of information in this part by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1980. 
TTB intends that this section comply with the requirements of Sec. Sec. 
1320.12, 1320.13, and 1320.14 of 5 CFR part 1320 (OMB regulations 
implementing the Paperwork Reduction Act), for the display of control

[[Page 225]]

numbers assigned by OMB to collections of information in the regulations 
in this part.
    (b) Display.

------------------------------------------------------------------------
    27 CFR part 53 section number            OMB control number(s)
------------------------------------------------------------------------
Sec.  53.1.........................  1545-0723
Sec.  53.3.........................  1545-0685
Sec.  53.11........................  1545-0723
Sec.  53.92........................  1545-0023
Sec.  53.93........................  1545-0023
Sec.  53.99........................  1545-0023
Sec.  53.131.......................  1545-0023
Sec.  53.132.......................  1545-0023
Sec.  53.133.......................  1545-0023
Sec.  53.134.......................  1545-0023
Sec.  53.136.......................  1545-0023
Sec.  53.140.......................  1545-0023
Sec.  53.141.......................  1545-0023
Sec.  53.142.......................  1545-0023
Sec.  53.143.......................  1545-0023
Sec.  53.151.......................  1545-0023, 1545-0723
Sec.  53.152.......................  1545-0723
Sec.  53.153.......................  1545-0257, 1545-0723
Sec.  53.155.......................  1545-0723
Sec.  53.157.......................  1545-0257
Sec.  53.171.......................  1545-0023, 1545-0723
Sec.  53.172.......................  1545-0723
Sec.  53.173.......................  1545-0723
Sec.  53.174.......................  1545-0723
Sec.  53.175.......................  1545-0723
Sec.  53.176.......................  1545-0723
Sec.  53.177.......................  1545-0723
Sec.  53.178.......................  1545-0723
Sec.  53.179.......................  1545-0723
Sec.  53.180.......................  1545-0723
Sec.  53.181.......................  1545-0723
Sec.  53.182.......................  1545-0723
Sec.  53.183.......................  1545-0723
Sec.  53.184.......................  1545-0023, 1545-0723
Sec.  53.185.......................  1545-0023, 1545-0723
Sec.  53.186.......................  1545-0723
------------------------------------------------------------------------



                       SUBCHAPTERS D-E [RESERVED]

[[Page 226]]



                  SUBCHAPTER F_PROCEDURES AND PRACTICES



PART 70_PROCEDURE AND ADMINISTRATION--Table of Contents




                             Subpart A_Scope

Sec.
70.1 General.
70.2 Forms prescribed.
70.3 Delegations of the Administrator.

                          Subpart B_Definitions

70.11 Meaning of terms.

        Subpart C_Discovery of Liability and Enforcement of Laws

                       Examination and Inspection

70.21 Canvass of regions for taxable persons and objects.
70.22 Examination of books and witnesses.
70.23 Service of summonses.
70.24 Enforcement of summonses.
70.25 Special procedures for third-party summonses.
70.26 Third-party recordkeepers.
70.27 Right to intervene; right to institute a proceeding to quash.
70.28 Summonses excepted from 26 U.S.C. 7609 procedures.
70.29 Suspension of statutes of limitation.
70.30 Time and place of examination.
70.31 Entry of premises for examination of taxable objects.
70.32 Examination of records and objects.
70.33 Authority of enforcement officers of the Bureau.
70.34 Listing by appropriate TTB officers of taxable objects owned by 
          nonresidents.

                        General Powers and Duties

70.40 Authority to administer oaths and certify.
70.41 Rewards for information relating to violations of tax laws 
          administered by the Bureau.
70.42 Returns prepared or executed by appropriate TTB officers.

      Subpart D_Collection of Excise and Special (Occupational) Tax

                     Collection--General Provisions

70.51 Collection authority.
70.52 Signature presumed authentic.

                           Receipt of Payment

70.61 Payment by check or money order.
70.62 Fractional parts of a cent.
70.63 Computations on returns or other documents.
70.64 Receipt for taxes.
70.65 Use of commercial banks.

                               Assessment

70.71 Assessment authority.
70.72 Method of assessment.
70.73 Supplemental assessments.
70.74 Request for prompt assessment.
70.75 Jeopardy assessment of alcohol, tobacco, and firearms taxes.
70.76 Stay of collection of jeopardy assessment; bond to stay 
          collection.
70.77 Collection of jeopardy assessment; stay of sale of seized property 
          pending court decision.

                            Notice and Demand

70.81 Notice and demand for tax.
70.82 Payment on notice and demand.

                                Interest

70.90 Interest on underpayments.
70.91 Interest on erroneous refund recoverable by suit.
70.92 Interest on overpayments.
70.93 Interest rate.
70.94 Interest compounded daily.

   Additions to the Tax, Additional Amounts, and Assessable Penalties

               Additions to the Tax and Additional Amounts

70.95 Scope.
70.96 Failure to file tax return or to pay tax.
70.97 Failure to pay tax.
70.98 Penalty for underpayment of deposits.
70.100 Penalty for fraudulently claiming drawback.
70.101 Bad checks.
70.102 Coordination with title 11.
70.103 Failure to pay tax.

                          Assessable Penalties

70.111 Rules for application of assessable penalties.
70.112 Failure to collect and pay over tax, or attempt to evade or 
          defeat tax.
70.113 Penalty for failure to supply taxpayer identification number.
70.114 Penalties for aiding and abetting understatement of tax 
          liability.

                     Abatements, Credits and Refunds

                          Procedure in General

70.121 Amounts treated as overpayments.
70.122 Authority to make credits or refunds.
70.123 Claims for credit or refund.
70.124 Payments in excess of amounts shown on return.
70.125 Abatements.

[[Page 227]]

70.126 Date of allowance of refund or credit.
70.127 Overpayment of installment.

                       Rule of Special Application

70.131 Conditions to allowance.

                             Lien for Taxes

70.141 Lien for taxes.
70.142 Scope of definitions.
70.143 Definitions.
70.144 Special rules.
70.145 Purchasers, holders of security interests, mechanic's lienors, 
          and judgment lien creditors.
70.146 45-day period for making disbursements.
70.147 Priority of interest and expenses.
70.148 Place for filing notice; form.
70.149 Refiling of notice of tax lien.
70.150 Release of lien or discharge of property.
70.151 Administrative appeal of the erroneous filing of notice of 
          Federal tax lien.

               Seizure of Property for Collection of Taxes

70.161 Levy and distraint.
70.162 Levy and distraint on salary and wages.
70.163 Surrender of property subject to levy.
70.164 Surrender of property subject to levy in the case of life 
          insurance and endowment contracts.
70.165 Production of books.
70.167 Authority to release levy and return property.
70.168 Redemption of property.
70.169 Expense of levy and sale.
70.170 Application of proceeds of levy.

                         Disposition of Property

70.181 Disposition of seized property.
70.182 Disposition of personal property acquired by the United States.
70.183 Administration and disposition of real estate acquired by the 
          United States.
70.184 Disposition of perishable goods.
70.185 Certificate of sale; deed of real property.
70.186 Legal effect of certificate of sale of personal property and deed 
          of real property.
70.187 Records of sale.
70.188 Expense of levy and sale.

                          Judicial Proceedings

                    Civil Action by the United States

70.191 Authorization.
70.192 Action to enforce lien or to subject property to payment of tax.
70.193 Disposition of judgments and moneys recovered.

               Proceedings by Taxpayers and Third Parties

70.202 Intervention.
70.203 Discharge of liens; scope and application; judicial proceedings.
70.204 Discharge of liens; nonjudicial sales.
70.205 Discharge of liens; special rules.
70.206 Discharge of liens; redemption by United States.
70.207 Civil actions by persons other than taxpayers.
70.208 Review of jeopardy assessment or jeopardy levy procedures; 
          information to taxpayer.
70.209 Review of jeopardy assessment or levy procedures; administrative 
          review.
70.210 Review of jeopardy assessment or levy procedures; judicial 
          action.
70.213 Repayments to officers or employees.

                               Limitations

                Limitations on Assessment and Collection

70.221 Period of limitations upon assessment.
70.222 Time return deemed filed for purposes of determining limitations.
70.223 Exceptions to general period of limitations on assessment and 
          collection.
70.224 Collection after assessment.
70.225 Suspension of running of period of limitation; assets of taxpayer 
          in control or custody of court.
70.226 Suspension of running of period of limitation; taxpayer outside 
          of United States.
70.227 Suspension of running of period of limitation; wrongful seizure 
          of property of third party.

                          Limitations on Liens

70.231 Protection for certain interests even though notice filed.
70.232 Protection for commercial transactions financing agreements.
70.233 Protection for real property construction or improvement 
          financing agreements.
70.234 Protection for obligatory disbursement agreements.

                          Limitations on Levies

70.241 Property exempt from levy.
70.242 Wages, salary and other income.
70.243 Exempt amount.
70.244 Payroll period.
70.245 Computation of exempt amount and payment of amounts not exempt 
          from levy to the appropriate TTB officer.

              Periods of Limitation in Judicial Proceedings

70.251 Periods of limitation on suits by taxpayers.
70.252 Periods of limitation on suits by the United States.
70.253 Periods of limitation on suits by persons other than taxpayers.

[[Page 228]]

                     Limitations on Credit or Refund

70.261 Period of limitation on filing claim.
70.262 Limitations on allowance of credits and refunds.
70.263 Special rules applicable in case of extension of time by 
          agreement.
70.264 Time return deemed filed and tax considered paid.
70.265 Credits or refunds after period of limitation.
70.266 Credit against barred liability.

                               Transferees

70.271 Procedure in the case of transferred assets.

                                  Bonds

70.281 Form of bond and security required.
70.282 Single bond in lieu of multiple bonds.

                        Miscellaneous Provisions

70.301 Reproduction of returns and other documents.
70.302 Fees and costs for witnesses.
70.303 Rules and regulations.
70.304 Place for filing documents other than returns.
70.305 Timely mailing treated as timely filing.
70.306 Time for performance of acts other than payment of tax or filing 
          of any return where last day falls on Saturday, Sunday, or 
          legal holiday.

         General Provisions Relating to Stamps, Marks or Labels

70.311 Authority for establishment, alteration and distribution of 
          stamps, marks, or labels.

                              Registration

70.321 Registration of persons paying a special tax.

                 Crimes, Other Offenses, and Forfeitures

70.331 Fraudulent returns, statements, or other documents.
70.332 Unauthorized use or sale of stamps.
70.333 Offenses by officers and employees of the United States.

 Subpart E_Procedural Rules Relating to Alcohol, Tobacco, Firearms, and 
                               Explosives

        Provisions Relating to Distilled Spirits, Wines, and Beer

70.411 Imposition of taxes, qualification requirements, and regulations.
70.412 Excise taxes.
70.413 Claims.
70.414 Preparation and filing of claims.
70.415 Offers in compromise.
70.416 Application for approval of interlocking directors and officers 
          under section 8 of the Federal Alcohol Administration Act.
70.417 Rulings.
70.418 Conferences.
70.419 Representatives.
70.420 Forms.

 Provisions Relating to Tobacco Products, and Cigarette Papers and Tubes

70.431 Imposition of taxes; regulations.
70.432 Qualification and bonding requirements.
70.433 Collection of taxes.
70.434 Assessments.
70.435 Claims.
70.436 Offers in compromise.
70.437 Rulings.
70.438 Forms.

 Provisions Relating to Firearms, Shells and Cartridges, and Explosives

70.441 Applicable laws.
70.442 Taxes relating to machine guns, destructive devices, and certain 
          other firearms.
70.443 Firearms and ammunition.
70.444 Importation of arms, ammunition, and implements of war.
70.445 Commerce in explosives.
70.446 Rulings.
70.447 Assessments.
70.448 Claims.
70.449 Offers in compromise.

                             Seized Property

70.450 Seizure and forfeiture of personal property.

                               Possessions

70.461 Shipments to the United States.
70.462 Shipments from the United States.

                                 Rulings

70.471 Rulings.

                         Administrative Remedies

70.481 Agreements for payment of liability in installments.
70.482 Offers in compromise of liabilities (other than forfeiture) under 
          26 U.S.C.
70.483 Offers in compromise of violations of Federal Alcohol 
          Administration Act.
70.484 Offers in compromise of forfeiture liabilities.
70.485 Closing agreements.

[[Page 229]]

70.486 Managerial review.

Subpart F_Application of Section 6423, Internal Revenue Code of 1954, as 
  Amended, to Refund or Credit of Tax on Distilled Spirits, Wines, and 
                                  Beer

                                 General

70.501 Meaning of terms.
70.502 Applicability to certain credits or refunds.
70.503 Ultimate burden.
70.504 Conditions to allowance of credit or refund.
70.505 Requirements on persons intending to file claim.

                             Claim Procedure

70.506 Execution and filing of claim.
70.507 Data to be shown in claim.
70.508 Time for filing claim.

                                Penalties

70.509 Penalties.

   Subpart G_Losses Resulting From Disaster, Vandalism, or Malicious 
                                Mischief

                               Definitions

70.601 Meaning of terms.

                                Payments

70.602 Circumstances under which payment may be made.

                            Claims Procedures

70.603 Execution and filing of claims.
70.604 Record of inventory to support claims.
70.605 Claims relating to imported, domestic, and Virgin Islands 
          liquors.
70.606 Claimant to furnish proof.
70.607 Supporting evidence.
70.608 Action on claims.

                         Destruction of Liquors

70.609 Supervision.

                                Penalties

70.610 Penalties.

                 Subpart H_Rules, Regulations and Forms

70.701 Rules and regulations.
70.702 Forms and instructions.

                          Subpart I_Disclosure

70.801 Publicity of information.
70.802 Rules for disclosure of certain specified matters.
70.803 Requests or demands for disclosure in testimony and in related 
          matters.

    Authority: 5 U.S.C. 301 and 552; 26 U.S.C. 4181, 4182, 5146, 5203, 
5207, 5275, 5367, 5415, 5504, 5555, 5684(a), 5741, 5761(b), 5802, 6020, 
6021, 6064, 6102, 6155, 6159, 6201, 6203, 6204, 6301, 6303, 6311, 6313, 
6314, 6321, 6323, 6325, 6326, 6331-6343, 6401-6404, 6407, 6416, 6423, 
6501-6503, 6511, 6513, 6514, 6532, 6601, 6602, 6611, 6621, 6622, 6651, 
6653, 6656-6658, 6665, 6671, 6672, 6701, 6723, 6801, 6862, 6863, 6901, 
7011, 7101, 7102, 7121, 7122, 7207, 7209, 7214, 7304, 7401, 7403, 7406, 
7423, 7424, 7425, 7426, 7429, 7430, 7432, 7502, 7503, 7505, 7506, 7513, 
7601-7606, 7608-7610, 7622, 7623, 7653, 7805.

    Source: T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, unless otherwise 
noted.

    Editorial Note: Nomenclature changes to part 70 appear by T.D. ATF-
450, 66 FR 29022-29030, May 29, 2001.



                             Subpart A_Scope



Sec. 70.1  General.

    (a) The regulations in Subparts C, D, and E of this part set forth 
the procedural and administrative rules of the Alcohol and Tobacco Tax 
and Trade Bureau for:
    (1) The issuance and enforcement of summonses, examination of books 
of account and witnesses, administration of oaths, entry of premises for 
examination of taxable objects, granting of rewards for information, 
canvass of regions for taxable objects and persons, and authority of TTB 
officers.
    (2) The use of commercial banks for payment of excise taxes imposed 
by 26 U.S.C. Subtitles E and F.
    (3) The preparing or executing of returns; deposits; payment on 
notice and demand; assessment; abatements, credits and refunds; 
limitations on assessment; limitations on credit or refund; periods of 
limitation in judicial proceedings; interest; additions to tax, 
additional amounts, and assessable penalties; enforced collection 
activities; authority for establishment, alteration, and distribution of 
stamps, marks, or labels; jeopardy assessment of alcohol, tobacco, and 
firearms taxes, and registration of persons paying a special tax.
    (4) Distilled spirits, wines, beer, tobacco products, cigarette 
papers and tubes, firearms, ammunition, and explosives.
    (b) The regulations in Subpart F of this part relate to the 
limitations imposed by 26 U.S.C. 6423, on the refund or

[[Page 230]]

credit of tax paid or collected in respect to any article of a kind 
subject to a tax imposed by Part I, Subchapter A of Chapter 51, I.R.C., 
or by any corresponding provision of prior internal revenue laws.
    (c) The regulations in Subpart G of this part implement 26 U.S.C. 
5064, which permits payments to be made by the United States for amounts 
equal to the internal revenue taxes paid or determined and customs 
duties paid on distilled spirits, wines, and beer, previously withdrawn, 
that were lost, made unmarketable, or condemned by a duly authorized 
official as a result of disaster, vandalism, or malicious mischief. This 
subpart applies to disasters or other specified causes of loss, 
occurring on or after February 1, 1979. This subpart does not apply to 
distilled spirits, wines, and beer manufactured in Puerto Rico and 
brought into the United States.

[T.D. ATF-376, 61 FR 31031, June 19, 1996, as amended by T.D. TTB-44, 71 
FR 16958, Apr. 4, 2006]



Sec. 70.2  Forms prescribed.

    (a) The appropriate TTB officer is authorized to prescribe all forms 
required by this part. All of the information called for in each form 
shall be furnished as indicated by the headings on the form and the 
instructions on or pertaining to the form. In addition, information 
called for in each form shall be furnished as required by this part. The 
form will be filed in accordance with the instructions for the form.
    (b) Forms prescribed by this part are available for printing through 
the TTB Web site (http://www.ttb.gov) or by mailing a request to the 
Alcohol and Tobacco Tax and Trade Bureau, National Revenue Center, 550 
Main Street, Room 1516, Cincinnati, OH 45202.

[T.D. ATF-376, 61 FR 31031, June 19, 1996, as amended by T.D. ATF-450, 
66 FR 29022, May 29, 2001; T.D. TTB-44, 71 FR 16959, Apr. 4, 2006]



Sec. 70.3  Delegations of the Administrator.

    Most of the regulatory authorities of the Administrator contained in 
this part are delegated to appropriate TTB officers. These TTB officers 
are specified in TTB Order 1135.70, Delegation of the Administrator's 
Authorities in 27 CFR Part 70, Procedure and Administration. You may 
obtain a copy of this order by accessing the TTB Web site ( http://
www.ttb.gov) or by mailing a request to the Alcohol and Tobacco Tax and 
Trade Bureau, National Revenue Center, 550 Main Street, Room 1516, 
Cincinnati, OH 45202.

[T.D. TTB-44, 71 FR 16959, Apr. 4, 2006]



                          Subpart B_Definitions



Sec. 70.11  Meaning of terms.

    When used in this part and in forms prescribed under this part, 
where not otherwise distinctly expressed or manifestly incompatible with 
the intent thereof, terms shall have the meaning ascribed in this 
section. Words in the plural form shall include the singular, and vice 
versa, and words imparting the masculine gender shall include the 
feminine. The terms ``includes'' and ``including'' do not exclude things 
not enumerated which are in the same general class.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury, Washington, DC.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.70, Delegation of the Administrator's Authorities in 27 CFR Part 
70, Procedure and Administration.
    Bureau. The Alcohol and Tobacco Tax and Trade Bureau, Department of 
the Treasury, Washington, DC.
    CFR. The Code of Federal Regulations.
    Commercial bank. A bank, whether or not a member of the Federal 
Reserve System, which has access to the Federal Reserve Communications 
System (FRCS) or Fedwire. The ``FRCS'' or ``Fedwire'' is a 
communications network that allows Federal Reserve System member banks 
to effect a transfer of funds for their customers (or other commercial 
banks) to the Treasury Account at the Federal Reserve Bank of New York.

[[Page 231]]

    Electronic fund transfer or EFT. Any transfer of funds effected by a 
taxpayer's commercial bank, either directly or through a correspondent 
banking relationship, via the Federal Reserve Communications System 
(FRCS) or Fedwire to the Treasury Account at the Federal Reserve Bank of 
New York.
    Enforced collection. Collection of taxes when a taxpayer neglects or 
refuses to pay voluntarily. Includes such administrative measures as 
liens and levies.
    Levy. The taking of property by seizure and sale or by collection of 
money due to the debtor, such as wages.
    Lien. A charge upon real or personal property for the satisfaction 
of some debt or performance of an obligation.
    Person. An individual, a trust, estate, partnership, association or 
other unincorporated organization, fiduciary, company, or corporation, 
or the District of Columbia, a State, or a political subdivision thereof 
(including a city, county, or other municipality).
    Provisions of 26 U.S.C. enforced and administered by the Bureau. 
Sections 4181 and 4182 of the Internal Revenue Code of 1986 (the Code), 
as amended; subchapters F and G of chapter 32 of the Code, insofar as 
they relate to activities administered and enforced with respect to 
sections 4181 and 4182 of the Code; subtitle E of the Code; and subtitle 
F of the Code as it relates to any of the foregoing.
    Secretary. The Secretary of the Treasury or designated delegate.
    Seizure. The act of taking possession of property to satisfy a tax 
liability or by virtue of an execution.
    Treasury Account. The Department of the Treasury's General Account 
at the Federal Reserve Bank of New York.
    U.S.C. The United States Code.

(Aug. 16, 1954, Ch. 736, 68A Stat. 775 (26 U.S.C. 6301); June 29, 1956, 
Ch. 462, 70 Stat. 391 (26 U.S.C. 6301))

[T.D. ATF-48, 43 FR 13535, Mar. 31, 1978; 44 FR 55841, Sept. 28,979, as 
amended by T.D. ATF-77, 46 FR 3002, Jan. 13, 1981; T.D. ATF-301, 55 FR 
47608, Nov. 14, 1990; T.D. ATF-331, 57 FR 40327, Sept. 3, 1992; T.D. 
ATF-378, 61 FR 29955, June 13, 1996; T.D. ATF-450, 66 FR 29022, May 29, 
2001; T.D. TTB-44, 71 FR 16959, Apr. 4, 2006]



        Subpart C_Discovery of Liability and Enforcement of Laws

                       Examination and Inspection



Sec. 70.21  Canvass of regions for taxable persons and objects.

    Each appropriate TTB officer shall, to the extent deemed 
practicable, cause officers or employees under the appropriate TTB 
officer's supervision and control to proceed, from time to time, and 
inquire after and concerning all persons therein who may be liable to 
pay any tax, imposed under provisions of 26 U.S.C. enforced and 
administered by the Bureau, and all persons owning or having the care 
and management of any objects with respect to which such tax is imposed.

[T.D. ATF-331, 57 FR 40327, Sept. 3, 1992, as amended by T.D. ATF-450, 
66 FR 29023, May 29, 2001]



Sec. 70.22  Examination of books and witnesses.

    (a) In general. For the purpose of ascertaining the correctness of 
any return, making a return where none has been made, determining the 
liability of any person for any tax imposed under provisions of 26 
U.S.C. enforced and administered by the Bureau (including any interest, 
additional amount, addition to the tax, or civil penalty) or the 
liability at law or in equity of any transferee or fiduciary of any 
person in respect of any such tax, or collecting any such liability, any 
appropriate TTB officer may examine any books, papers, records or other 
data which may be relevant or material to such inquiry; and take such 
testimony of the person concerned, under oath, as may be relevant to 
such inquiry.
    (b) Summonses. For the purposes described in paragraph (a) of this 
section the appropriate TTB officersare authorized to summon the person 
liable for tax or required to perform the act, or any officer or 
employee of such person, or any person having possession, custody, or 
care of books of accounts containing entries relating to the business of 
the person liable for tax or required to perform the act, or any person 
deemed proper, to appear before a designated officer or employee of the 
Bureau at a time and place named in

[[Page 232]]

the summons and to produce such books, papers, records, or other data, 
and to give such testimony, under oath, as may be relevant or material 
to such inquiry; and take such testimony of the person concerned, under 
oath, as may be relevant or material to such inquiry. Such TTB officer 
may designate an appropriate TTB officer as the individual before whom a 
person summoned pursuant to 26 U.S.C. 7602 shall appear. Any such 
officer, when so designated in a summons, is authorized to take 
testimony under oath of the person summoned and to receive and examine 
books, papers, records, or other data produced in compliance with the 
summons. The authority to issue a summons may not be redelegated. See 
Sec. 70.302 of this part for rules concerning payments to certain 
persons who are summoned to give information to the Bureau under 26 
U.S.C. 7602 and this section.

(Aug. 16, 1954, Chapter 736, 68A Stat. 901; (26 U.S.C. 7602))

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-42, 42 
FR 8367, Feb. 10, 1977; T.D. ATF-301, 55 FR 47608, Nov. 14, 1990; T.D. 
ATF-331, 57 FR 40328, Sept. 3, 1992; T.D. ATF-450, 66 FR 29023, May 29, 
2001]



Sec. 70.23  Service of summonses.

    (a) In general. A summons issued under 26 U.S.C. 7602 shall be 
served by an attested copy delivered in hand to the person to whom it is 
directed, or left at his last and usual place of abode. The certificate 
of service signed by the person serving the summons shall be evidence of 
the facts it states on the hearing of an application for the enforcement 
of the summons. When the summons requires the production of books, 
papers, records, or other data, it shall be sufficient if such books, 
papers, records, or other data are described with reasonable certainty.
    (b) Persons who may serve summonses. Any appropriate TTB officer may 
serve a summons issued under 26 U.S.C. 7602.

(68A Stat. 902, as amended (26 U.S.C. 7603); 26 U.S.C. 7805 (68A Stat. 
917), 27 U.S.C. 205 (49 Stat. 981 as amended), 18 U.S.C. 926 (82 Stat. 
959), and sec. 38, Arms Export Control Act (22 U.S.C. 2778, 90 Stat. 
744), 27 U.S.C. 205, 22 U.S.C. 2778, 26 U.S.C. 7602, and 5 U.S.C. 301)

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-48, 43 
FR 13531, Mar. 31, 1978; T.D. ATF-201, 50 FR 12533, Mar. 29, 1985; T.D. 
ATF-249, 52 FR 5961, Feb. 27, 1987; T.D. ATF-301, 55 FR 47608, Nov. 14, 
1990; T.D. ATF-450, 66 FR 29023, May 29, 2001]



Sec. 70.24  Enforcement of summonses.

    (a) In general. Whenever any person summoned under 26 U.S.C. 7602 
neglects or refuses to obey such summons, or to produce books, papers, 
records, or other data, or to give testimony, as required, application 
may be made to the judge of the district court or to a U.S. magistrate 
for the district within which the person so summoned resides or is found 
for an attachment against him as for a contempt.
    (b) Persons who may apply for an attachment. Appropriate TTB 
officers are authorized to apply for an attachment as provided in 
paragraph (a) of this section. The authority to apply for an attachment 
for the enforcement of a summons may not be redelegated.

(68A Stat. 902, as amended (26 U.S.C. 7604))

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973; 38 FR 33767, Dec. 7, 1973, as 
amended by T.D. ATF-450, 66 FR 29023, May 29, 2001]



Sec. 70.25  Special procedures for third-party summonses.

    (a) When the Bureau summons the records of persons defined by 26 
U.S.C. 7609(a)(3) as ``third-party recordkeepers'', the person about 
whom information is being gathered must be notified in advance, except 
when:
    (1) The summons is served on the person about whom information is 
being gathered, or any officer or employee of such person, or
    (2) The summons is served to determine whether or not records of the 
business transactions or affairs of an identified person have been made 
or kept, or

[[Page 233]]

    (3) The summons does not identify the person with respect to whose 
liability the summons is issued (a ``John Doe'' summons issued under the 
provisions of 26 U.S.C. 7609(f)), or
    (4) The appropriate TTB officer petitions, and the court determines, 
on the basis of the facts and circumstances alleged, that there is 
reasonable cause to believe the giving of notice may lead to attempts to 
conceal, destroy, or alter records relevant to the examination, to 
prevent the communication of information from other persons through 
intimidation, bribery, or collusion, or to flee to avoid prosecution, 
testifying or production of records.
    (b) Within 3 days of the day on which the summons was served, the 
notice required by paragraph (a) of this section shall be served upon 
the person entitled to notice, or mailed by certified or registered mail 
to the last known address of such person, or, in the absence of a last 
known address, left with the person summoned. No examination of any 
records required to be produced under a summons as to which notice is 
required under paragraph (a) of this section may be made:
    (1) Before the close of the 23rd day after the day notice with 
respect to the summons is given in the manner provided in this 
paragraph, or
    (2) Where a proceeding under paragraph (c) of this section was begun 
within the 20-day period referred to in that paragraph and the 
requirements of paragraph (c) of this section have been met, expect in 
accordance with an order of the court having jurisdiction of such 
proceeding or with the consent of the person beginning the proceeding to 
quash.
    (c) If the person about whom information is being gathered has been 
given notice, that person has the right to institute, until and 
including the 20th day following the day such notice was served on or 
mailed, by certified or registered mail, to such notified person, a 
proceeding to quash the summons. During the time the validity of the 
summons is being litigated, the statutes of limitation are suspended 
under 26 U.S.C. 7609(e). Title 26 U.S.C. 7609 does not restrict the 
authority under 26 U.S.C. 7602 (or under any other provision of law) to 
examine records and witnesses without serving a summons and without 
giving notice of an examination.

(26 U.S.C. 7609)

[T.D. ATF-301, 55 FR 47608, Nov. 14, 1990]



Sec. 70.26  Third-party recordkeepers.

    (a) Definitions--(1) Accountant. A person is an ``accountant'' under 
26 U.S.C. 7609(a)(3)(F) for purposes of determining whether that person 
is a third-party recordkeeper if the person is registered, licensed, or 
certified under State law as an accountant.
    (2) Attorney. A person is an ``attorney'' under 26 U.S.C. 
7609(a)(3)(E) for purposes of determining whether that person is a 
third-party recordkeeper if the person is admitted to the bar of a State 
or the District of Columbia.
    (3) Credit cards--(i) Person extending credit through credit cards. 
The term ``person extending credit through credit cards or similar 
devices'' under 26 U.S.C. 7609(a)(3)(C) generally includes any person 
who issues a credit card. It does not include a seller of goods or 
services that honors credit cards issued by other parties but does not 
extend credit on the basis of credit cards or similar devices issued by 
itself.
    (ii) [Reserved]
    (iii) Similar devices to credit cards. An object is a ``similar 
device'' to a credit card under 26 U.S.C. 7609(a)(3)(C) only if it is 
physical in nature, such as a coupon book, a charge plate, or a letter 
of credit. Thus, a person who extends credit by requiring credit 
customers to sign sales slips without requiring use of physical objects 
issued by that person is not a third-party recordkeeper under 26 U.S.C. 
7609(a)(3)(C).
    (b) When third-party recordkeeper status arises. A person is a 
``third-party recordkeeper'' with respect to a given set of records only 
if the person made or kept the records in the person's capacity as a 
third-party recordkeeper. Thus, for instance, an accountant is not a 
third-party recordkeeper (by reason of being an accountant) with respect 
to the accountant's records of a sale of property by the accountant to 
another person. Similarly, a credit card issuer is not a third-party 
recordkeeper (by reason of being a person extending credit through the 
use of credit

[[Page 234]]

cards or similar devices) with respect to:
    (1) Records relating to noncredit card transactions, such as a cash 
sale by the issuer to a holder of the issuer's credit card; or
    (2) Records relating to transactions involving the use of another 
issuer's credit card.
    (c) Duty of third-party recordkeeper--(1) In General. Upon receipt 
of a summons, the third-party recordkeeper (``recordkeeper'') must begin 
to assemble the summoned records. The recordkeeper must be prepared to 
produce the summoned records on the date which the summons states the 
records are to be examined regardless of the institution or anticipated 
institution of a proceeding to quash or the recordkeeper's intervention 
(as allowed under 26 U.S.C. 7609(a)(3)(C)) into a proceeding to quash.
    (2) Disclosing recordkeepers not liable-- (i) In general. A 
recordkeeper, or an agent or employee thereof, who makes a disclosure of 
records as required by this section, in good faith reliance on the 
``Certificate of the Secretary'' (as defined in paragraph (c)(2)(ii) of 
this section) or an order of a court requiring production of records, 
will not be liable for such disclosure to any customer, or to any party 
with respect to whose tax liability the summons was issued, or to any 
other person.
    (ii) Certificate of the Secretary. The appropriate TTB officer may 
issue to the recordkeeper a ``Certificate of the Secretary'' stating 
both:
    (A) That the 20-day period, within which a notified person may 
institute a proceeding to quash the summons has expired; and
    (B) That no proceeding has been properly instituted within that 
period.

The appropriate TTB officer may also issue a ``Certificate of the 
Secretary'' to the recordkeeper if the taxpayer, with respect to whose 
tax liability the summons was issued, expressly consents to the 
examination of the records summoned.
    (3) Reimbursement of costs. Recordkeepers may be entitled to 
reimbursement of their costs of assembling and preparing to produce 
summoned records, to the extent allowed by 26 U.S.C. 7610, even if the 
summons ultimately is not enforced.

(26 U.S.C. 7609)

[T.D. ATF-301, 55 FR 47608, Nov. 14, 1990]



Sec. 70.27  Right to intervene; right to institute a proceeding to quash.

    (a) Notified person. Under 26 U.S.C. 7609(a), the Bureau must give a 
notice of summons to any person, other than the person summoned, who is 
identified in the description of the books and records contained in the 
summons in order that such person may contest the right of the Bureau to 
examine the summoned records by instituting a proceeding to quash the 
summons. Thus, if the Bureau issues a summons to a bank requesting 
checking account records of more than one person all of whom are 
identified in the description of the records contained in the summons, 
then all such persons are notified persons entitled to notice under 26 
U.S.C. 7609(a). Therefore, if the Bureau requests the records of a joint 
bank account of A and B, both of whom are named in the summons, then 
both A and B are notified persons entitled to notice under 26 U.S.C. 
7609(a).
    (b) Right to institute a proceeding to quash--(1) In general. Title 
26 U.S.C. 7609(b) grants a notified person the right to institute a 
proceeding to quash the summons in the United States district court for 
the district within which the person summoned resides or is found. 
Jurisdiction of the court is based on 26 U.S.C. 7609(b). The act of 
filing a petition in district court does not in and of itself institute 
a proceeding to quash under 26 U.S.C. 7609(b)(2). Rather, the filing of 
the petition must be coupled with notice as required by 26 U.S.C. 
7609(b)(2)(B).
    (2) Elements of institution of a proceeding to quash. In order to 
institute a proceeding to quash a summons, the notified person (or the 
notified person's agent, nominee, or other person acting under the 
direction or control of the notified person) must, not later than the 
20th day following the day the notice of the summons was served on or 
mailed to such notified person:
    (i) File a petition to quash in the name of the notified person in a 
district court having jurisdiction.

[[Page 235]]

    (ii) Notify the Bureau by sending a copy of that petition by 
registered or certified mail to the Bureau employee and office 
designated to receive the copy in the notice of summons that was given 
to the notified person, and
    (iii) Notify the recordkeeper by sending to that recordkeeper by 
registered or certified mail a copy of the petition.

Failure to give timely notice to either the summoned party or the Bureau 
in the manner described in this paragraph means that the notified person 
has failed to institute a proceeding to quash and the district court has 
no jurisdiction to hear the proceeding. Thus, for example, if the 
notified person mails a copy of the petition to the summoned person but 
not to the designated Bureau employee and office, the notified person 
has failed to institute a proceeding to quash. Similarly, if the 
notified person mails a copy of such petition to the summoned person, 
but instead of sending a copy of the petition by registered or certified 
mail to the designated employee and office, the notified person gives 
the designated employee and office the petition by some other means, the 
notified person has failed to institute a proceeding to quash.
    (3) Failure to institute a proceeding to quash. If the notified 
person fails to institute a proceeding to quash within 20 days following 
the day the notice was served on or mailed to such notified person, the 
Bureau may examine the summoned records following the 23rd day after 
notice of the summons was served on or mailed to the notified person 
(see 26 U.S.C. 7609(d)(1)).
    (c) Presumption no notice has been mailed. Title 26 U.S.C. 
7609(b)(2)(B) permits a notified person to institute a proceeding to 
quash by filing a petition in district court and notifying both the 
Bureau and the summoned person. Unless the notified person has notified 
both the Bureau and the summoned person in the appropriate manner, the 
notified person has failed to institute a proceeding to quash. If the 
copy of the petition has not been delivered to the summoned person or 
the person and office designated to receive the notice on behalf of the 
Bureau within 3 days from the close of the 20-day period allowed to 
institute a proceeding to quash, it is presumed that the notification 
has not been timely mailed.

(26 U.S.C. 7609)

[T.D. ATF-301, 55 FR 47609, Nov. 14, 1990]



Sec. 70.28  Summonses excepted from 26 U.S.C. 7609 procedures.

    (a) In aid of the collection of certain liabilities--(1) In general. 
Title 26 U.S.C. 7609(c)(2)(B) contains an exception to the general 
notice requirement when a summons is issued to a third-party 
recordkeeper. That section excepts summonses issued in aid of the 
collection of the liability of any person against whom an assessment has 
been made or judgment rendered or the liability at law or in equity of 
any transferee of such a person.
    (2) Examples. Examples of summonses referred to in paragraph (a)(1) 
of this section are:
    (i) Summonses issued to determine the amount held in a bank in the 
name of a person against whom an assessment has been made or judgment 
rendered;
    (ii) Summonses issued to enforce transferee liability for a tax 
which has been assessed.
    (b) Numbered account (or similar arrangement). Under 26 U.S.C. 
7609(c)(2), a summons issued solely to determine the identity of a 
person having a numbered account (or similar arrangement) with a bank or 
other institution is excepted from the requirements of 26 U.S.C. 7609. A 
``numbered account (or similar arrangement)'' under 26 U.S.C. 7609(c)(2) 
is an account through which a person may authorize transactions solely 
through the use of a number, symbol, code name, or other device not 
involving the disclosure of the person's identity. A ``person having a 
numbered account (or similar arrangement)'' includes the person who 
opened the account and any person authorized to use the account or to 
receive records or statements concerning it.

(26 U.S.C. 7609)

[T.D. ATF-301, 55 FR 47610, Nov. 14, 1990]



Sec. 70.29  Suspension of statutes of limitations.

    (a) Suspension while a proceeding under 26 U.S.C. 7609(b) is 
pending. Under

[[Page 236]]

26 U.S.C. 7609(e)(1), the statutes of limitations of 26 U.S.C. 6501 and 
6531 are suspended if a notified person with respect to whose liability 
a summons is issued, or the notified person's agent, nominee, or other 
person acting under the direction or control of the notified person, 
takes any action as provided in 26 U.S.C. 7609(b).
    (1) Agent, nominee, etc. A person is a notified person's agent, 
nominee, or other person acting under the direction or control of a 
notified person for purposes of 26 U.S.C. 7609(e) if the person with 
respect to whose liability the summons is issued has the ability in fact 
or at law to cause the agent, etc., to take the actions permitted under 
26 U.S.C. 7609(b). Thus, in the case of a corporation, direction or 
control by the notified person may exist even though less than 50 
percent of the voting power of the corporation is held by the notified 
person.
    (2) Period during which a proceeding, etc., is pending. Under 26 
U.S.C. 7609(e), the statute of limitations shall be suspended for the 
period during which a proceeding and any appeals regarding the 
enforcement of such summons is pending. This period begins on the date 
the petition to quash the summons is filed in district court. The period 
continues until all appeals are disposed of, or until the expiration of 
the period in which an appeal may be taken or a request for a rehearing 
may be made. Full compliance, partial compliance, and noncompliance have 
no effect on the suspension provisions. The periods of limitations which 
are suspended under 26 U.S.C. 7609(e) are those which apply to the 
taxable periods to which the summons relates.
    (3) Taking of action as provided in 26 U.S.C. 7609(b). Title 26 
U.S.C. 7609(b) allows intervention by a notified person as a matter of 
right upon compliance with the Federal Rules of Civil Procedure. The 
phrase ``takes any action as provided in subsection (b)'', found in 26 
U.S.C. 7609(e), includes any intervention whether or not 26 U.S.C. 
7609(b) is specifically mentioned in the order of the court allowing 
intervention. The phrase also includes the fulfilling of only part of 
the requirements of 26 U.S.C. 7609(b)(2), relating to the right of a 
person to institute a proceeding to quash. Thus, for instance, if a 
notified person notifies a person who has been summoned by sending a 
copy of the petition by registered or certified mail but does not mail a 
copy of that notice to the appropriate person and office under 26 U.S.C. 
7609(b)(2)(B), the notified person has taken an action under 26 U.S.C. 
7609(e).
    (b) Suspension after 6 months of service of summons. In the absence 
of the resolution of the third-party recordkeeper's response to the 
summons described in 26 U.S.C. 7609(c) or the summoned party's response 
to a summons described in 26 U.S.C. 7609(f) the running of any period of 
limitations under 26 U.S.C. 6501 or under 26 U.S.C. 6531 with respect to 
any person with respect to whose liability the summons is issued (other 
than a person taking action as provided in 26 U.S.C. 7609(b)) shall be 
suspended for the period:
    (1) Beginning on the date which is 6 months after the service of 
such summons, and
    (2) Ending with the final resolution of such response.

(26 U.S.C. 7609)

[T.D. ATF-301, 55 FR 47610, Nov. 14, 1990]



Sec. 70.30  Time and place of examination.

    (a) Time and place. The time and place of examination pursuant to 
the provisions of 26 U.S.C. 7602 must be such time and place as may be 
fixed by an appropriate TTB officer and as are reasonable under the 
circumstances. The date fixed for appearance shall not be less than 10 
days from the date of the summons.
    (b) Restrictions on examination of taxpayer. No taxpayer is to be 
subjected to unnecessary examination or investigations, and only one 
inspection of a taxpayer's books of account shall be made for each 
taxable year unless the taxpayer requests otherwise or unless an 
authorized internal revenue or an appropriate TTB officer, after 
investigation, notifies the taxpayer in writing that an additional 
inspection is necessary.

(68A Stat. 902, as amended (26 U.S.C. 7605))

[T.D. ATF-450, 66 FR 29023, May 29, 2001]

[[Page 237]]



Sec. 70.31  Entry of premises for examination of taxable objects.

    (a) General. An appropriate TTB officer may, in the performance of 
his or her duty, enter in the daytime any building or place where any 
articles or objects subject to tax are made, produced, or kept, so far 
as it may be necessary for the purpose of examining said articles or 
objects and also enter at night any such building or place, while open, 
for a similar purpose.
    (b) Distilled spirits plants. Any appropriate TTB officer may, at 
all times, as well by night as by day, enter any plant or any other 
premises where distilled spirits are produced or rectified, or structure 
or place used in connection therewith for storage or other purposes; to 
make examination of the materials, equipment and facilities thereon; and 
make such gauges and inventories as such officer deems necessary. 
Whenever any appropriate TTB officer, having demanded admittance, and 
having declared his or her name and office, is not admitted to such 
premises by the proprietor or other person having charge thereof, such 
officer may at all times, use such force as is necessary for such 
officer to gain entry to such premises.
    (c) Authority to break up grounds. An appropriate TTB officer, and 
any person acting in his or her aid, may break up the ground on any part 
of a distilled spirits plant, or any other premises where spirits are 
produced or rectified, or any ground adjoining or near to such plant or 
premises, or any wall or partition thereof, or belonging thereto, or 
other place, to search for any pipe, cock, private conveyance, or 
utensil; and, upon finding any such pipe or conveyance leading therefrom 
or thereto, to break up any ground, house, wall, or other place through 
or into which such pipe or other conveyance leads, and to break or cut 
away such pipe or other conveyance, and turn any cock, or to determine 
whether such pipe or other conveyance conveys or conceals any spirits, 
mash, wort, or beer, or other liquor, from the sight or view of the 
appropriate TTB officer, so as to prevent or hinder such officer from 
taking a true account thereof.

(68A Stat. 903, 72 Stat. 1357 (26 U.S.C. 7606, 5203))

[T.D. ATF-450, 66 FR 29023, May 29, 2001]



Sec. 70.32  Examination of records and objects.

    Any appropriate TTB officer may enter, during business hours, the 
premises of any regulated establishment for the purpose of inspecting 
and examining any records, articles, or other objects required to be 
kept by such establishment under 18 U.S.C. chapter 40 or 44, or 
provisions of 26 U.S.C. enforced and administered by the Bureau, or 
regulations issued pursuant thereto.

(68A Stat. 715, as amended, 903, 72 Stat. 1348, 1361, 1373, 1381, 1390, 
1391, 1395, 82 Stat. 231, as amended, 84 Stat. 955; (26 U.S.C. 5741, 
7606, 5146, 5207, 5275, 5367, 5415, 5504, 5555, 18 U.S.C. 923, 843))

[T.D. ATF-331, 57 FR 40328, Sept. 3, 1992, as amended by T.D. ATF-450, 
66 FR 29023, May 29, 2001]



Sec. 70.33  Authority of enforcement officers of the Bureau.

    Appropriate TTB officers may perform the following functions:
    (a) Carry firearms;
    (b) Execute and serve search warrants and arrest warrants, and serve 
subpoenas and summonses issued under authority of the United States;
    (c) In respect to the performance of such duty, make arrests without 
warrant for any offense against the United States committed in his 
presence, or for any felony cognizable under the laws of the United 
States if he has reasonable grounds to believe that the person to be 
arrested has committed, or is committing, such felony; and
    (d) In respect to the performance of such duty, make seizures of 
property

[[Page 238]]

subject to forfeiture to the United States.

(53 Stat. 1291, 62 Stat. 840, 68 Stat. 848, as amended, 72 Stat. 1429, 
as amended, 82 Stat. 233, as amended, 84 Stat. 956 (49 U.S.C. 782, 18 
U.S.C. 3615, 22 U.S.C. 1934, 26 U.S.C. 7608, 18 U.S.C. 924, 844); 26 
U.S.C. 7805 (68A Stat. 917), 27 U.S.C. 205 (49 Stat. 981 as amended), 18 
U.S.C. 926 (82 Stat. 959), and sec. 38, Arms Export Control Act (22 
U.S.C. 2778, 90 Stat. 744))

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-48, 43 
FR 13531, Mar. 31, 1978. Redesignated by T.D. ATF-301, 55 FR 47606, Nov. 
14, 1990; T.D. ATF-450, 66 FR 29023, May 29, 2001]



Sec. 70.34  Listing by appropriate TTB officers of taxable objects owned by 

nonresidents.

    Whenever there are any articles in any internal revenue district 
subject to tax, which are not owned or possessed by, or under the care 
or control of, any person within such district, and of which no list has 
been transmitted to the appropriate TTB officer, as required by law or 
by regulations prescribed pursuant to law, an appropriate TTB officer 
shall enter the premises where such articles are situated, make such 
inspection of the articles as may be necessary, and make lists of the 
same according to the forms prescribed. Such lists, being subscribed by 
the appropriate TTB officer, are sufficient lists of such articles for 
all purposes.

[T.D. ATF-450, 66 FR 29023, May 29, 2001]

                        General Powers and Duties



Sec. 70.40  Authority to administer oaths and certify.

    Appropriate TTB officers are authorized to administer such oaths or 
affirmations and to certify to such papers as may be necessary under the 
tax laws administered by the Bureau, the Federal Alcohol Administration 
Act, or regulations issued thereunder, except that the authority to 
certify must not be construed as applying to those papers or documents 
the certification of which is authorized by separate order or directive.

(68A Stat. 904 (26 U.S.C. 7622))

[T.D. ATF-450, 66 FR 29023, May 29, 2001]



Sec. 70.41  Rewards for information relating to violations of tax laws 

administered by the Bureau.

    (a) In general. An appropriate TTB officer may approve such reward 
as he or she deems suitable for information that leads to the detection 
and punishment of any person guilty of violating any tax law 
administered by the Bureau or conniving at the same. The rewards 
provided for by 26 U.S.C. 7623 are limited in their aggregate to the sum 
appropriated therefor and shall be paid only in cases not otherwise 
provided for by law.
    (b) Eligibility to file claim for reward--(1) In general. Any 
person, other than certain present or former federal employees (see 
paragraph (b)(2) of this section), who submits, in the manner set forth 
in paragraph (d) of this section, information relating to the violation 
of tax laws administered and enforced by the Bureau, is eligible to file 
a claim for reward under 26 U.S.C. 7623.
    (2) Federal employees. No person who was an officer or employee of 
the Department of the Treasury at the time he came into possession of 
information relating to violations of tax laws administered by the 
Bureau, or at the time he divulged such information, shall be eligible 
for reward under 26 U.S.C. 7623 and this section. Any other federal 
employee, or former federal employee, is eligible to file a claim for 
reward if the information submitted came to his knowledge other than in 
the course of his official duties.
    (3) Deceased informants. A claim for reward may be filed by an 
executor, administrator, or other legal representative on behalf of a 
deceased informant if, prior to his death, the informant was eligible to 
file a claim for such reward under 26 U.S.C. 7623 and this section. 
Certified copies of the letters testamentary, letters of administration, 
or other similar evidence must be annexed to such a claim for reward on 
behalf of a deceased informant in order to show the authority of the 
legal representative to file the claim for reward.
    (c) Amount and payment of reward. All relevant factors, including 
the value of the information furnished in relation to the facts 
developed by the investigation of the violation, must be taken

[[Page 239]]

into account in determining whether a reward must be paid, and, if so, 
the amount thereof. The amount of a reward shall represent what the 
appropriate TTB officer deems to be adequate compensation in the 
particular case, normally not to exceed 10 percent of the additional 
taxes, penalties, and fines which are recovered as a result of the 
information. No reward, however, shall be paid with respect to any 
additional interest that may be collected. Payment of a reward will be 
made as promptly as the circumstances of the case permit, but generally 
not until the taxes, penalties, or fines involved have been collected. 
However, the informant may waive any claim for reward with respect to an 
uncollected portion of the taxes, penalties, or fines involved, in which 
case the claim may be immediately processed. No person is authorized 
under these regulations to make any offer, or promise, or otherwise to 
bind the appropriate TTB officer with respect to the payment of any 
reward or the amount thereof.
    (d) Submission of information. Persons desiring to claim rewards 
under the provisions of 26 U.S.C. 7623 and this section may submit 
information relating to violations of tax laws administered by the 
Bureau to an appropriate TTB officer. If the information is submitted in 
person, either orally or in writing, the name and official title of the 
person to whom it is submitted and the date on which it is submitted 
must be included in the formal claim for reward.
    (e) Anonymity. No unauthorized person shall be advised of the 
identity of an informant.
    (f) Filing claim for reward. An informant who intends to claim a 
reward under 26 U.S.C. 7623 should notify the person to whom he submits 
his information of such intention, and must file a formal claim, signed 
with his true name, as soon after submission of the information as 
practicable. If other than the informant's true name was used in 
furnishing the information, the claimant must include with his claim 
satisfactory proof of his identity as that of the informant. Claim for 
reward under the provisions of 26 U.S.C. 7623 must be made on TTB Form 
3200.13. TTB Form 3200.13 should be obtained from the office where the 
information is filed.

(68A Stat. 904 (26 U.S.C. 7623); 26 U.S.C. 7805 (68A Stat. 917), 27 
U.S.C. 205 (49 Stat. 981 as amended), 18 U.S.C. 926 (82 Stat. 959), and 
sec. 38, Arms Export Control Act (22 U.S.C. 2778, 90 Stat. 744))

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-48, 43 
FR 13531, Mar. 31, 1978; 44 FR 55841, Sept. 28, 1979. Redesignated by 
T.D. ATF-301, 55 FR 47606, Nov. 14, 1990; T.D. ATF-312, 56 FR 31085, 
July 9, 1991; T.D. ATF-450, 66 FR 29024, May 29, 2001]



Sec. 70.42  Returns prepared or executed by appropriate TTB officers.

    (a) Preparation of returns--(1) General. If any person, required by 
provisions of 26 U.S.C. enforced and administered by the Bureau or by 
the regulations prescribed thereunder to make a return, fails to make 
such return, it may be prepared by an appropriate TTB officer provided 
the person required to make the return consents to disclose all 
information necessary for the preparation of such return. The return 
upon being signed by the person required to make it must be received by 
the appropriate TTB officer, as the return of such person.
    (2) Responsibility of person for whom return is prepared. A person 
for whom a return is prepared in accordance with paragraph (a)(1) of 
this section shall for all legal purposes remain responsible for the 
correctness of the return to the same extent as if the return had been 
prepared by such person.
    (b) Execution of returns--(1) General. If any person, required by 
provisions of 26 U.S.C. enforced and administered by the Bureau or by 
the regulations prescribed thereunder to make a return, fails to make a 
return at the time prescribed therefor, or makes, willfully or 
otherwise, a false or fraudulent return, the appropriate TTB officer 
must make such return from such officer's own knowledge and from such 
information as the officer can obtain through testimony or otherwise.
    (2) Status of returns. Any return made in accordance with paragraph 
(b)(1) of this section and subscribed by the appropriate TTB officer is 
prima facie good and sufficient for all legal purposes.

[[Page 240]]

    (c) Cross references. (1) For provisions that the return executed by 
an appropriate TTB officer will not start the running of the period of 
limitations on assessment and collection, see 26 U.S.C. 6501(b)(3) and 
Sec. 70.222(b) of this part.
    (2) For additions to the tax and additional amounts for failure to 
file returns, see section 6651 of the Internal Revenue Code.
    (3) For additions to the tax for failure to pay tax, see sections 
5684, 5761, and 6653 of the Internal Revenue Code.
    (4) For failure to make deposit of taxes or overstatement of deposit 
claims, see section 6656 of the Internal Revenue Code.
    (5) For an additional penalty for tendering a bad check or money 
order, see section 6657 of the Internal Revenue Code.
    (6) For certain failures to pay tax with respect to cases pending 
under Title 11 of the United States Code, see section 6658 of the 
Internal Revenue Code.
    (7) For failure to supply identifying numbers, see section 6676 of 
the Internal Revenue Code.
    (8) For penalties for aiding and abetting understatement of tax 
liability, see section 6701 of the Internal Revenue Code.
    (9) For criminal penalties for willful failure to make returns, see 
sections 7201, 7202, and 7203 of the Internal Revenue Code.
    (10) For criminal penalties for willfully making false or fraudulent 
returns, see sections 7206 and 7207 of the Internal Revenue Code.
    (11) For authority to examine books and witnesses, see section 7602 
of the Internal Revenue Code and Sec. 70.22.

(26 U.S.C. 6020)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606 and 47610, Nov. 14, 1990; T.D. ATF-450, 66 FR 
29024, May 29, 2001]



      Subpart D_Collection of Excise and Special (Occupational) Tax

                     Collection--General Provisions



Sec. 70.51  Collection authority.

    The taxes imposed by provisions of 26 U.S.C. enforced and 
administered by the Bureau must be collected by appropriate TTB 
officers.

(26 U.S.C. 6301)

[T.D. ATF-450, 66 FR 29024, May 29, 2001]



Sec. 70.52  Signature presumed authentic.

    An individual's name signed to a return, statement, or other 
document shall be prima facie evidence for all purposes that the return, 
statement or other document was actually signed by that individual.

(26 U.S.C. 6064)

[T.D. ATF-301, 55 FR 47611, Nov. 14, 1990]

                           Receipt of Payment



Sec. 70.61  Payment by check or money order.

    (a) Authority to Receive--(1) General. (i) The appropriate TTB 
officer may accept checks drawn on any bank or trust company 
incorporated under the laws of the United States or under the laws of 
any State, Territory, or possession of the United States, or money 
orders in payment for internal revenue taxes, provided such checks or 
money orders are collectible in U.S. currency at par, and subject to the 
further provisions contained in this section. The appropriate TTB 
officer may accept such checks or money orders in payment for internal 
revenue stamps (authorized under Subtitle E of the Internal Revenue Code 
or any provision of Subtitle F which relates to Subtitle E) to the 
extent and under the conditions prescribed in paragraph (a)(2) of this 
section. A check or money order in payment for internal revenue taxes or 
internal revenue stamps should be made payable to the Alcohol and 
Tobacco Tax and Trade Bureau. A check or money order is payable at par 
only if the full amount thereof is payable without any deduction for 
exchange or other charges. As used in this section, the term ``money 
order'' means:
    (A) U.S. postal, bank, express, or telegraph money order; and
    (B) Money order issued by a domestic building and loan association 
(as defined in section 7701(a)(19) of the Internal Revenue Code) or by a 
similar association incorporated under the laws of a possession of the 
United States;

[[Page 241]]

    (C) A money order issued by such other organization as the 
appropriate TTB officer may designate; and
    (D) A money order described in paragraph (a)(1)(ii) of this section 
in cases therein described. However, the appropriate TTB officers may 
refuse to accept any personal check whenever there is good reason to 
believe that such check will not be honored upon presentment.
    (ii) An American citizen residing in a country with which the United 
States maintains direct exchange of money orders on a domestic basis may 
pay his/her tax by postal money order of such country. For a list of 
such countries, see section 171.27 of the Postal Manual of the United 
States.
    (iii) If one check or money order is remitted to cover two or more 
persons' taxes, the remittance should be accompanied by a letter of 
transmittal clearly identifying--
    (A) Each person whose tax is to be paid by the remittance;
    (B) The amount of the payment on account of each such person; and
    (C) The kind of tax paid.
    (2) Payment for internal revenue stamps--In general. The appropriate 
TTB officer may accept checks and money orders described in paragraph 
(a)(1) of this section, in payment for internal revenue stamps 
authorized under Subtitle E of the Internal Revenue Code or under any 
provision of Subtitle F which relates to Subtitle E. However, the 
appropriate TTB officer may refuse to accept any personal check whenever 
there is good reason to believe that the check will not be honored upon 
presentment.
    (3) Payment of tax on distilled spirits, wine, beer, tobacco 
products, pistols, revolvers, firearms (other than pistols and 
revolvers), shells and cartridges; proprietor in default. Where a check 
or money order tendered in payment for taxes on distilled spirits, wine 
or beer products (imposed under Chapter 51 of the Internal Revenue 
Code), or tobacco products (imposed under chapter 52 of the Internal 
Revenue Code), or pistols, revolvers, firearms (other than pistols and 
revolvers), shells and cartridges (imposed under chapter 32 of the 
Internal Revenue Code) is not paid on presentment, or where a taxpayer 
is otherwise in default in payment of such taxes, any remittance for 
such taxes made during the period of such default, and until the 
appropriate TTB officers finds that the revenue will not be jeopardized 
by the acceptance of personal checks, shall be in cash, or shall be in 
the form of a certified, cashier's, or treasurer's check, drawn on any 
bank or trust company incorporated under the laws of the United States, 
or under the laws of any State or possession of the United States, or a 
money order as described in paragraph (a)(1) of this section.
    (b) Checks or money orders not paid--(1) Ultimate liability. The 
person who tenders any check (whether certified or uncertified, 
cashier's, treasurer's, or other form of check) or money order in 
payment for taxes is not released from liability until the check or 
money order is paid; and, if the check or money order is not duly paid, 
the person shall also be liable for all legal penalties and additions, 
to the same extent as if such check or money order had not been 
tendered. For the penalty in case a check or money order is not duly 
paid, see section 6657 of the Internal Revenue Code. For assessment of 
the amount of a check or money order not duly paid see section 
6201(a)(2)(B) of the Internal Revenue Code.
    (2) Liability of banks and others. If any certified, treasurer's, or 
cashier's check (or other guaranteed draft) or money order is not duly 
paid, the United States shall have a lien for the amount of such check 
upon all assets of the bank or trust company on which drawn or for the 
amount of such money order upon the assets of the issuer thereof. The 
unpaid amount shall be paid out of such assets in preference to any 
other claims against such bank or issuer except the necessary costs and 
expenses of administration and the reimbursement of the United States 
for the amount expended in the redemption of the circulating notes of 
such bank. In addition, the Government has

[[Page 242]]

the right to exact payment from the person required to make the payment.

(26 U.S.C. 6311)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990; T.D. ATF-331, 57 FR 40328, Sept. 3, 1992; 
T.D. ATF-353, 59 FR 2522, Jan. 18, 1994]



Sec. 70.62  Fractional parts of a cent.

    In the payment of any tax, a fractional part of a cent shall be 
disregarded unless it amounts to one-half cent or more, in which case it 
shall be increased to one cent. Fractional parts of a cent shall not be 
disregarded in the computation of taxes.

(26 U.S.C. 6313)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.63  Computations on returns or other documents.

    (a) Amounts shown on forms. To the extent permitted by any TTB form 
or instructions prescribed for use with respect to any TTB return, 
declaration, statement, or other document, or supporting schedules, any 
amount required to be reported in such form may be entered at the 
nearest whole dollar amount. The extent to which, and the conditions 
under which, such whole dollar amounts may be entered on any form will 
be set forth in the instructions issued with respect to such form. For 
the purpose of the computation to the nearest dollar, a fractional part 
of a dollar shall be disregarded unless it amounts to one-half dollar or 
more, in which case the amount (determined without regard to the 
fractional part of a dollar) shall be increased by $1. The following 
illustrates the application of this paragraph:

------------------------------------------------------------------------
                                                                To be
                        Exact amount                         reported as
------------------------------------------------------------------------
$18.49.....................................................          $18
$18.50.....................................................           19
$18.51.....................................................           19
------------------------------------------------------------------------

    (b) Election not to use whole dollar amounts--(1) Method of 
election. Where any TTB form, or the instructions issued with respect to 
such form, provide that whole dollar amounts shall be reported, any 
person making a return, declaration, statement, or other document on 
such form may elect not to use whole dollar amounts by reporting thereon 
all amounts in full, including cents.
    (2) Time of election. The election not to use whole dollar amounts 
must be made at the time of filing the return, declaration, statement, 
or other document. Such election may not be revoked after the time 
prescribed for filing such return, declaration, statement, or other 
document, including extensions of time granted for such filing. Such 
election may be made on any return, declaration, statement, or other 
document which is filed after the time prescribed for filing (including 
extensions of time), and such an election is irrevocable.
    (3) Effect of election. The taxpayer's election shall be binding 
only on the return, declaration, statement, or other document filed for 
a taxable year or period, and a new election may be made on the return, 
declaration, statement, or other document filed for a subsequent taxable 
year or period.
    (4) Fractional part of a cent. For treatment of the fractional part 
of a cent in the payment of taxes, see 26 U.S.C. 6313 and Sec. 70.62 of 
this part.
    (c) Inapplicability to computation of amount. The provisions of 
paragraph (a) of this section apply only to amounts required to be 
reported on a return, declaration, statement, or other document. They do 
not apply to items which must be taken into account in making the 
computations necessary to determine such amounts. For example, each item 
of liability must be taken into account at its exact amount, including 
cents, in computing the amount of total liability required to be 
reported on a tax return or supporting schedule. It is the amount of 
total liability, so computed, which is to be reported at the nearest 
whole dollar on the return or supporting schedule.

(26 U.S.C. 6102)

[T.D. ATF-301, 55 FR 47611, Nov. 14, 1990]



Sec. 70.64  Receipt for taxes.

    The appropriate TTB officer must, upon request, issue a receipt for 
each tax payment made (other than a payment for stamps sold or 
delivered). In

[[Page 243]]

addition, an appropriate TTB officer or employee must issue a receipt 
for each payment of 1 dollar or more made in cash, whether or not 
requested. In the case of payments made by check, the canceled check is 
usually a sufficient receipt. No receipt shall be issued in lieu of a 
stamp representing a tax, whether the payment is in cash or otherwise.

(26 U.S.C. 6314)

[T.D. ATF-301, 55 FR 47611, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29024, May 29, 2001]



Sec. 70.65  Use of commercial banks.

    For provisions relating to the use of commercial banks and 
electronic fund transfer of taxpayment to the Treasury Account, see the 
regulations relating to the particular tax.

(Aug. 16, 1954, ch. 736, 68A Stat. 775 (26 U.S.C. 6301); June 29, 1956, 
ch. 462, 70 Stat. 391 (26 U.S.C. 6301))

[T.D. ATF-77, 46 FR 3002, Jan. 13, 1981. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]

                               Assessment



Sec. 70.71  Assessment authority.

    The appropriate TTB officers are authorized and required to make all 
inquiries necessary to the determination and assessment of all taxes 
imposed under the provisions of 26 U.S.C. enforced and administered by 
the Bureau. The appropriate TTB officers are further authorized and 
required to make the determinations and the assessments of such taxes. 
The term ``taxes'' includes interest, additional amounts, additions to 
the taxes, and assessable penalties. The authority of the appropriate 
TTB officers to make assessment includes the following:
    (a) Taxes shown on return. The appropriate TTB officer shall assess 
all taxes determined by the taxpayer or by the appropriate TTB officer 
and disclosed on a return or list.
    (b) Unpaid taxes payable by stamp. (1) If without use of the proper 
stamp:
    (i) Any article upon which a tax is required to be paid by means of 
a stamp is sold or removed for sale or use by the manufacturer thereof, 
or
    (ii) Any transaction or act upon which a tax is required to be paid 
by means of a stamp occurs, the appropriate TTB officer, upon such 
information as can be obtained, must estimate the amount of the tax 
which has not been paid and the appropriate TTB officer must make 
assessment therefor upon the person the appropriate TTB officer 
determines to be liable for the tax. However, the appropriate TTB 
officer may not assess any tax which is payable by stamp unless the 
taxpayer fails to pay such tax at the time and in the manner provided by 
law or regulations.
    (2) If a taxpayer gives a check or money order as a payment for 
stamps but the check or money order is not paid upon presentment, then 
the appropriate TTB officer shall assess the amount of the check or 
money order against the taxpayer as if it were a tax due at the time the 
check or money order was received by appropriate TTB officer.

(26 U.S.C. 6201)

[T.D. ATF-301, 55 FR 47611, Nov. 14, 1990]



Sec. 70.72  Method of assessment.

    The assessment shall be made by an appropriate TTB officer signing 
the summary record of assessment. The summary record, through supporting 
records, shall provide identification of the taxpayer, the character of 
the liability assessed, the taxable period, if applicable, and the 
amount of the assessment. The amount of the assessment shall, in the 
case of tax shown on a return by the taxpayer, be the amount so shown, 
and in all other cases the amount of the assessment shall be the amount 
shown on the supporting list or record. The date of the assessment is 
the date the summary record is signed by an appropriate TTB officer. If 
the taxpayer requests a copy of the record of assessment, the taxpayer 
shall be furnished a copy of the pertinent parts of the assessment which 
set forth the name of the taxpayer, the date of assessment, the 
character of the liability assessed, the

[[Page 244]]

taxable period, if applicable, and the amounts assessed.

(26 U.S.C. 6203)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606 and 47612, Nov. 14, 1990; T.D. ATF-450, 66 FR 
29025, May 29, 2001]



Sec. 70.73  Supplemental assessments.

    If any assessment is incomplete or incorrect in any material 
respect, the appropriate TTB officer, subject to the applicable period 
of limitation, may make a supplemental assessment for the purpose of 
correcting or completing the original assessment.

(26 U.S.C. 6204)

[T.D. ATF-301, 55 FR 47612, Nov. 14, 1990]



Sec. 70.74  Request for prompt assessment.

    (a) Except as otherwise provided in Sec. 70.223 of this part, any 
tax for which a return is required and for which:
    (1) A decedent or an estate of a decedent may be liable, or
    (2) A corporation which is contemplating dissolution, is in the 
process of dissolution, or has been dissolved, may be liable, shall be 
assessed, or a proceeding in court without assessment for the collection 
of such tax shall be begun, within 18 months after the receipt of a 
written request for prompt assessment thereof.
    (b) The executor, administrator, or other fiduciary representing the 
estate of the decedent, or the corporation, or the fiduciary 
representing the dissolved corporation, as the case may be, shall, after 
the return in question has been filed, file the request for prompt 
assessment in writing with the appropriate TTB officer. The request, in 
order to be effective, must be transmitted separately from any other 
document, must set forth the classes of tax and the taxable periods for 
which the prompt assessment is requested, and must clearly indicate that 
it is a request for prompt assessment under the provisions of 26 U.S.C. 
6501(d). The effect of such a request is to limit the time in which an 
assessment of tax may be made, or a proceeding in court without 
assessment for collection of tax may be begun, to a period of 18 months 
from the date the request is filed with the appropriate TTB officer. The 
request does not extend the time within which an assessment may be made, 
or a proceeding in court without assessment shall be begun, after the 
expiration of 3 years from the date the return was filed. This special 
period of limitations will not apply to any return filed after a request 
for prompt assessment has been made unless an additional request is 
filed in the manner provided herein.
    (c) In the case of a corporation the 18-month period shall not apply 
unless:
    (1) The written request notifies the appropriate TTB officer that 
the corporation contemplates dissolution at or before the expirationof 
such 18-month period; the dissolution is in good faith begun before the 
expiration of such 18-month period; and the dissolution so begun is 
completed either before or after the expiration of such 18-month period; 
or
    (2) The written request notifies the appropriate TTB officer that a 
dissolution has in good faith begun, and the dissolution is completed 
either before or after the expiration of such 18-month period; or
    (3) A dissolution has been completed at the time the written request 
is made.

(26 U.S.C. 6501(d))

[T.D. ATF-301, 55 FR 47612, Nov. 14, 1990, as amended by T.D. ATF-353, 
59 FR 2522, Jan. 18, 1994]



Sec. 70.75  Jeopardy assessment of alcohol, tobacco, and firearms taxes.

    (a) If the appropriate TTB officer believes that the collection of 
any tax imposed under provisions of 26 U.S.C. enforced and administered 
by the Bureau will be jeopardized by delay, the appropriate TTB officer 
must, whether or not the time otherwise prescribed by law for filing the 
return or paying such tax has expired, immediately assess such tax, 
together with all interest, additional amounts and additions to the tax 
provided by law. An appropriate TTB officer will make an assessment 
under this section if collection is determined to be in jeopardy because 
at least one of the following conditions exists.
    (1) The taxpayer is or appears to be designing quickly to depart 
from the

[[Page 245]]

United States or to conceal himself or herself.
    (2) The taxpayer is or appears to be designing quickly to place the 
taxpayer's property beyond the reach of the Government either by 
removing it from the United States, by concealing it, or by dissipating 
it, or by transferring it to other persons.
    (3) The taxpayer's financial solvency is or appears to be 
threatened.
    (b) The tax, interest, additional amounts, and additions to the tax 
will, upon assessment, become immediately due and payable, and the 
appropriate TTB officer shall, without delay, issue a notice and demand 
for payment thereof in full.
    (c) See 26 U.S.C. 7429 with respect to requesting the appropriate 
TTB officer to review the making of the jeopardy assessment.
    (d) For provisions relating to stay of collection of jeopardy 
assessments, see Sec. 70.76 of this part.

(26 U.S.C. 6862 and 6863)

[T.D. ATF-301, 55 FR 47612, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29025, May 29, 2001]



Sec. 70.76  Stay of collection of jeopardy assessment; bond to stay 

collection.

    (a) The collection of taxes assessed under 26 U.S.C. 6862 (referred 
to as a ``jeopardy assessment'' for purposes of this section) of any tax 
may be stayed by filing with the appropriate TTB officer a bond on the 
form to be furnished by TTB upon request.
    (b) The bond may be filed:
    (1) At any time before the time collection by levy is authorized 
under 26 U.S.C. 6331(a), or
    (2) After collection by levy is authorized and before levy is made 
on any property or rights to property, or
    (3) In the discretion of the appropriate TTB officer, after any such 
levy has been made and before the expiration of the period of 
limitations on collection.
    (c) The bond must be in an amount equal to the portion (including 
interest thereon to the date of payment as calculated by the appropriate 
TTB officer) of the jeopardy assessment collection of which is sought to 
be stayed. See 26 U.S.C. 7101 and Sec. 70.281, relating to the form of 
bond and the sureties thereon. The bond shall be conditioned upon the 
payment of the amount (together with interest thereon), for which the 
collection is stayed, at the time at which, but for the making of the 
jeopardy assessment, such amount would be due.
    (d) Upon the filing of a bond in accordance with this section, the 
collection of so much of the assessment as is covered by the bond will 
be stayed. The taxpayer may at any time waive the stay of collection of 
the whole or of any part of the amount covered by the bond. If as a 
result of such waiver any part of the amount covered by the bond is 
paid, or if any portion of the jeopardy assessment is abated by the 
appropriate TTB officer, then the bond shall (at the request of the 
taxpayer) be proportionately reduced.

(26 U.S.C. 6863)

[T.D. ATF-301, 55 FR 47613, Nov. 14, 1990]



Sec. 70.77  Collection of jeopardy assessment; stay of sale of seized 

property pending court decision.

    (a) General rule. In the case of an assessment under 26 U.S.C. 6862, 
and property seized for the collection of such assessment shall not 
(except as provided in paragraph (b) of this section) be sold until the 
latest of the following occurs:
    (1) The period provided in 26 U.S.C. 7429(a)(2) to request the 
appropriate TTB officer to review the action taken expires.
    (2) The period provided in 26 U.S.C. 7429(b)(1) to file an action in 
U.S. District Court expires if a request for redetermination is made to 
the appropriate TTB officer.
    (3) The U.S. District Court judgment in such action becomes final, 
if a civil action is begun in accordance with 26 U.S.C. 7429(b).
    (b) Exceptions. Notwithstanding the provisions of paragraph (a) of 
this section, any property seized may be sold:
    (1) If the taxpayer files with the appropriate TTB officer a written 
consent to the sale, or
    (2) If the appropriate TTB officer determines that the expenses of 
conservation and maintenance of the property will greatly reduce the net 
proceeds from the sale of such property, or

[[Page 246]]

    (3) If the property is of a type to which 26 U.S.C. 6336 (relating 
to sale of perishable goods) is applicable.

(26 U.S.C. 6863)

[T.D. ATF-301, 55 FR 47613, Nov. 14, 1990, as amended by T.D. ATF-353, 
59 FR 2522, Jan. 18, 1994]

                            Notice and Demand



Sec. 70.81  Notice and demand for tax.

    (a) General rule. Where it is not otherwise provided by provisions 
of 26 U.S.C. enforced and administered by the Bureau, the appropriate 
TTB officer shall, after the making of an assessment of a tax pursuant 
to Sec. 70.71 of this part, give notice to each person liable for the 
unpaid tax, stating the basis for the tax due, the amount of tax, 
interest, additional amounts, additions to the tax and assessable 
penalties, and demanding payment thereof. Such notice shall be given as 
soon as possible and within 60 days. However, the failure to give notice 
within 60 days does not invalidate the notice. Such notice shall be left 
at the dwelling or usual place of business of such person, or shall be 
sent by mail to such person's last known address.
    (b) Assessment prior to last date for payment. If any tax is 
assessed prior to the last date prescribed for payment of such tax, 
demand that such tax be paid will not be made before such last date, 
except where it is believed collection would be jeopardized by delay.

(26 U.S.C. 6303 and 7521)

[T.D. ATF-301, 55 FR 47613, Nov. 14, 1990]



Sec. 70.82  Payment on notice and demand.

    Upon receipt of notice and demand from the appropriate TTB officer, 
there shall be paid at the place and time stated in such notice the 
amount of any tax (including any interest, additional amounts, additions 
to the tax, and assessable penalties) stated in such notice and demand.

(26 U.S.C. 6155)

[T.D. ATF-301, 55 FR 47613, Nov. 14, 1990]

                                Interest



Sec. 70.90  Interest on underpayments.

    (a) General rule. Interest at the underpayment rate referred to in 
Sec. 70.93 of this part shall be paid on any unpaid amount of tax from 
the last date prescribed for payment of the tax (determined without 
regard to any extension of time for payment) to the date on which 
payment is received.
    (b) Interest on penalties, additional amounts, or additions to the 
tax-- (1) General. Interest shall be imposed on any assessable penalty, 
additional amount, or addition to the tax (other than an addition to tax 
imposed under section 6651(a)(1) of the Internal Revenue Code) only if 
such assessable penalty, additional amount, or addition to the tax is 
not paid within 10 days from the date of notice and demand therefor, and 
in such case interest shall be imposed only for the period from the date 
of the notice and demand to the date of payment.
    (2) Interest on certain additions to tax. Interest shall be imposed 
under this section on any addition to tax imposed by section 6651(a)(1) 
of the Internal Revenue Code for the period which (i) begins on the date 
on which the return of the tax with respect to which such addition to 
tax is imposed is required to be filed (including any extensions), and 
(ii) ends on the date of payment of such addition to tax.
    (c) Payments made within 10 days after notice and demand. If notice 
and demand is made for payment of any amount, and if such amount is paid 
within 10 days after the date of such notice and demand, interest under 
this section on the amount so paid shall not be imposed for the period 
after the date of such notice and demand.
    (d) Satisfaction by credits. If any portion of a tax is satisfied by 
credit of an overpayment, then no interest shall be imposed under 
section 6601 of the Internal Revenue Code on the portion of the tax so 
satisfied for any period during which, if the credit had not been made, 
interest would have been allowable with respect to such overpayment.
    (e) Last date prescribed for payment. (1) In determining the last 
date prescribed for payment, any extension of time

[[Page 247]]

granted for payment of tax shall be disregarded. The granting of an 
extension of time for the payment of tax does not relieve the taxpayer 
from liability for the payment of interest thereon during the period of 
the extension. Thus, except as provided in paragraph (d) of this 
section, interest at the underpayment rate referred to in Sec. 70.93 of 
this part is payable on any unpaid portion of the tax for the period 
during which such portion remains unpaid by reason of an extension of 
time for the payment thereof.
    (2) In the case of taxes payable by stamp and in all other cases 
where the last date for payment of the tax is not otherwise prescribed, 
such last date for the purpose of the interest computation shall be 
deemed to be the date on which the liability for the tax arose. However, 
such last date shall in no event be later than the date of issuance of a 
notice and demand for the tax.

(26 U.S.C. 6601)

[T.D. ATF-251, 52 FR 19314, May 22, 1987, as amended by T.D. ATF-301, 55 
FR 47613, Nov. 14, 1990]



Sec. 70.91  Interest on erroneous refund recoverable by suit.

    Any portion of an internal revenue tax (or any interest, assessable 
penalty, additional amount, or addition to tax) which has been 
erroneously refunded, and which is recoverable by a civil action 
pursuant to 26 U.S.C. 7405, shall bear interest at the underpayment rate 
referred to in Sec. 70.93 of this part.

(26 U.S.C. 6602)

[T.D. ATF-301, 55 FR 47614, Nov. 14, 1990]



Sec. 70.92  Interest on overpayments.

    (a) General rule. Except as otherwise provided, interest shall be 
allowed on any overpayment of any tax at the overpayment rate referred 
to in Sec. 70.93 of this part from the date of overpayment of the tax.
    (b) Date of overpayment. Except as provided in section 6401(a) of 
the Internal Revenue Code, relating to assessment and collection after 
the expiration of the applicable period of limitation, there can be no 
overpayment of tax until the entire tax liability has been satisfied. 
Therefore, the dates of overpayment of any tax are the date of payment 
of the first amount which (when added to previous payments) is in excess 
of the tax liability (including any interest, addition to the tax, or 
additional amount) and the dates of payment of all amounts subsequently 
paid with respect to such tax liability.
    (c) Period for which interest is allowable in case of refunds. If an 
overpayment of tax is refunded, interest shall be allowed from the date 
of the overpayment to a date determined by the appropriate TTB officer 
which shall not be more than 30 days prior to the date of the refund 
check. The acceptance of a refund check shall not deprive the taxpayer 
of the right to make a claim for any additional overpayment and interest 
thereon, provided the claim is made within the applicable period of 
limitation. However, if a taxpayer does not accept a refund check, no 
additional interest on the amount of the overpayment included in such 
check shall be allowed.
    (d) Period for which interest allowable in case of credits--(1) 
General rule. If an overpayment of tax is credited, interest shall be 
allowed from the date of overpayment to the due date (as determined 
under paragraph (d)(2) of this section of the amount against which such 
overpayment is credited.
    (2) Determination of due date--(i) General. The term due date, as 
used in this section, means the last day fixed by law or regulations for 
the payment of the tax (determined without regard to any extension of 
time), and not the date on which the appropriate TTB officer makes 
demand for the payment of the tax. Therefore, the due date of the tax is 
the date fixed for the payment of the tax;
    (ii) Tax not due yet. If a taxpayer agrees to the crediting of an 
overpayment against tax and the schedule of allowance is signed prior to 
the date on which such tax would otherwise become due, then the due date 
of such tax shall be the date on which such schedule is signed;
    (iii) Interest. In the case of a credit against interest that 
accrues for any period ending prior to January 1, 1983, the due date is 
the earlier of the date of assessment of such interest or December 31, 
1982. In the case of a credit

[[Page 248]]

against interest that accrues from any period beginning on or after 
December 31, 1982, such interest is due as it economically accrues on a 
daily basis, rather than when it is assessed.
    (iv) Additional amount, addition to the tax, or assessable penalty. 
In the case of a credit against an additional amount, addition to the 
tax, or assessable penalty, the due date is the earlier of the date of 
assessment or the date from which such amount would bear interest if not 
satisfied by payment or credit.

(26 U.S.C. 6611)

[T.D. ATF-251, 52 FR 19314, May 22, 1987, as amended by T.D. ATF-301, 55 
FR 47614, Nov. 14, 1990; T.D. ATF-358, 59 FR 29367, June 7, 1994]



Sec. 70.93  Interest rate.

    (a) In general. The interest rate established under 26 U.S.C. 
6621(a)(2) shall be:
    (1) On amounts outstanding before July 1, 1975, 6 percent per annum.
    (2) On amounts outstanding:

------------------------------------------------------------------------
                                                                Rate per
                After                        And before          annum
                                                               (percent)
------------------------------------------------------------------------
June 30, 1975.......................  Feb. 1, 1976...........          9
Jan. 31, 1976.......................  Feb. 1, 1978...........          7
Jan. 31, 1978.......................  Feb. 1, 1980...........          6
Jan. 31, 1980.......................  Feb. 1, 1982...........         12
Jan. 31, 1982.......................  Jan. 1, 1983...........         20
------------------------------------------------------------------------

    (3) On amounts outstanding after December 31, 1982, the adjusted 
rates for overpayment and underpayment established by the Commissioner 
of Internal Revenue under 26 U.S.C. 6621. These adjusted rates shall be 
published by the Commissioner in a Revenue Ruling. See Sec. 70.94 of 
this part for application of daily compounding in determining interest 
accruing after December 31, 1982. Because interest accruing after 
December 31, 1982, accrues at the prescribed rate per annum compounded 
daily, the effective annual percentage rate of interest will exceed the 
prescribed rate of interest.
    (b) Applicability of interest rates--(1) Computation. Interest and 
additions to tax on any amount outstanding on a specific day shall be 
computed at the annual rate applicable on such day.
    (2) Additions to tax. Additions to tax under any section of the 
Internal Revenue Code that refers to the annual rate established under 
26 U.S.C. 6621, shall be computed at the same rate per annum as the 
interest rate set forth under paragraph (a) of this section.
    (3) Interest. Interest provided for under any section of the 
Internal Revenue Code that refers to the annual rate established under 
this section, including 26 U.S.C. 6332(d)(1), 6343(c), 6601(a), 6602, 
6611(a), 7426(g), and 28 U.S.C. 1961(c)(1) or 2411, shall be computed at 
the rate per annum set forth under paragraph (a) of this section.

[T.D. ATF-301, 55 FR 47614, Nov. 14, 1990]



Sec. 70.94  Interest compounded daily.

    (a) General rule. Effective for interest accruing after December 31, 
1982, in computing the amount of any interest required to be paid under 
any provision of 26 U.S.C. or under 28 U.S.C. 1961(c)(1) or 2411, by the 
appropriate TTB officer or by the taxpayer, or in computing any other 
amount determined by reference to such amount of interest, or by 
reference to the interest rate established under 26 U.S.C. 6621, such 
interest or such other amount shall be compounded daily by dividing such 
rate of interest by 365 (366 in a leap year) and compounding such daily 
interest rate each day.
    (b) Applicability to unpaid amounts on December 31, 1982. The unpaid 
interest (or other amount) that shall be compounded daily includes the 
interest (or other amount) accrued but unpaid on December 31, 1982.

(26 U.S.C. 6622)

[T.D. ATF-301, 55 FR 47614, Nov. 14, 1990]

   Additions to the Tax, Additional Amounts, and Assessable Penalties

               Additions to the Tax and Additional Amounts



Sec. 70.95  Scope.

    For purposes of the administration of excise taxes by the Alcohol 
and Tobacco Tax and Trade Bureau in accordance with Title 26 of the 
United States Code, the penalties prescribed in Sec. Sec. 70.96 through 
70.107 shall apply.

[T.D. ATF-251, 52 FR 19314, May 22, 1987, as amended by T.D. ATF-301, 55 
FR 47614, Nov. 14, 1990]

[[Page 249]]



Sec. 70.96  Failure to file tax return or to pay tax.

    (a) Addition to the tax--(1) Failure to file tax return. In the case 
of failure to file a return required under authority of:
    (i) Title 26 U.S.C. 61, relating to returns and records;
    (ii) Title 26 U.S.C. 51, relating to distilled spirits, wines and 
beer;
    (iii) Title 26 U.S.C. 52, relating to tobacco products, and 
cigarette papers and tubes; or
    (iv) Title 26 U.S.C. 53, relating to machine guns, destructive 
devices, and certain other firearms; and the regulations thereunder, on 
or before the date prescribed for filing (determined with regard to any 
extension of time for such filing), there shall be added to the tax 
required to be shown on the return the amount specified below unless the 
failure to file the return within the prescribed time is shown to the 
satisfaction of the appropriate TTB officer to be due to reasonable 
cause and not to willful neglect. The amount to be added to the tax is 5 
percent therof if the failure is not for more than one month, with an 
additional 5 percent for each additional month or fraction thereof 
during which the failure continues, but not to exceed 25 percent in the 
aggregate. The amount of any addition under paragraph (a)(1) of this 
section shall be reduced by the amount of the addition under paragraph 
(a)(2) of this section for any month to which an addition to tax applies 
under both paragraphs (a)(1) and (a)(2) of this section.
    (2) Failure to pay tax shown on return. In case of failure to pay 
the amount shown as tax on any return required to be filed after 
December 31, 1969 (without regard to any extension of time for filing 
thereof), specified in paragraph (a)(1) of this section, on or before 
the date prescribed for payment of such tax (determined with regard to 
any extension of time for payment), there shall be added to the tax 
shown on the return the amount specified below unless the failure to pay 
the tax within the prescribed time is shown to the satisfaction of the 
appropriate TTB officer to be due to reasonable cause and not to willful 
neglect. The amount to be added to the tax is 0.5 percent of the amount 
of tax shown on the return if the failure is for not more than 1 month, 
with an additional 0.5 percent for each additional month or fraction 
thereof during which the failure continues, but not to exceed 25 percent 
in the aggregate.
    (3) Failure to pay tax not shown on return. In case of failure to 
pay any amount in respect of any tax required to be shown on a return 
specified in paragraph (a)(1) of this section, which is not so shown 
(including an assessment made pursuant to 26 U.S.C. 6213(b)) within 10 
days from the date of the notice and demand therefor, there shall be 
added to the amount shown in the notice and demand the amount specified 
below unless the failure to pay the tax within the prescribed time is 
shown to the satisfaction of the appropriate TTB officer to be due to 
reasonable cause and not to willful neglect. The amount to be added to 
the tax is 0.5 percent of the amount stated in the notice and demand if 
the failure is for not more than one month, with an additional 0.5 
percent for each additional month or fraction thereof during which the 
failure continues, but not to exceed 25 percent in the aggregate. The 
maximum amount of the addition permitted under this subparagraph shall 
be reduced by the amount of the addition under paragraph (a)(1) of this 
section, which is attributable to the tax for which the notice and 
demand is made and which is not paid within 10 days from the date of 
notice and demand. The preceding sentence applies to amounts assessed on 
or before December 31, 1986.
    (4) Increases in penalties in certain cases. For increases in 
penalties for failure to file a return or pay tax in certain cases, see 
26 U.S.C. 6651(d) or (f).
    (b) Month defined. (1) If the date prescribed for filing the return 
or paying tax is the last day of a calendar month, each succeeding 
calendar month or fraction thereof during which the failure to file or 
pay tax continues shall constitute a month for purposes of section 6651.
    (2) If the date prescribed for filing the return or paying tax is a 
date other than the last day of a calendar month, the period which 
terminates with the

[[Page 250]]

date numerically corresponding thereto in the succeeding calendar month 
and each such successive period shall constitute a month for purposes of 
section 6651. If, in the month of February, there is no date 
corresponding to the date prescribed for filing the return or paying 
tax, the period from such date in January through the last day of 
February shall constitute a month for purposes of section 6651. Thus, if 
a return is due on January 30, the first month shall end on February 28 
(or 29 if a leap year), and the succeeding months shall end on March 30, 
April 30, etc.
    (3) If a return is not timely filed or tax is not timely paid, the 
fact that the date prescribed for filing the return or paying tax, or 
the corresponding date in any succeeding calendar month, falls on a 
Saturday, Sunday, or legal holiday is immaterial in determining the 
number of months for which the addition to the tax under section 6651 
applies.
    (c) Showing of reasonable cause. A taxpayer who wishes to avoid the 
addition to the tax for failure to file a tax return or pay tax must 
make an affirmative showing of all facts alleged as a reasonable cause 
for the taxpayers failure to file such return or pay such tax on time in 
the form of a written statement containing a declaration that it is made 
under penalties of perjury. Such statement should be filed with the 
appropriate TTB officer. In addition, where special tax returns of 
liquor dealers are delivered to an appropriate TTB officer, such 
statement may be delivered with the return. If the appropriate TTB 
officer determines that the delinquency was due to a reasonable cause 
and not to willful neglect, the addition to the tax will not be 
assessed. If the taxpayer exercised ordinary business care and prudence 
and was nevertheless unable to file the return within the prescribed 
time, then the delay is due to a reasonable cause. A failure to pay will 
be considered to be due to reasonable cause to the extent that the 
taxpayer has made a satisfactory showing that the taxpayer exercised 
ordinary business care and prudence in providing for payment of the tax 
liability and was nevertheless either unable to pay the tax or would 
suffer an undue hardship (as described in 26 CFR 1.6161-1(b)) if paid on 
the due date. In determining whether the taxpayer was unable to pay the 
tax in spite of the exercise of ordinary business care and prudence in 
providing for payment of a tax liability, consideration will be given to 
all the facts and circumstances of the taxpayer's financial situation, 
including the amount and nature of the taxpayer's expenditures in light 
of the income (or other amounts) the taxpayer could, at the time of such 
expenditures, reasonably expect to receive prior to the date prescribed 
for the payment of the tax. Thus, for example, a taxpayer who incurs 
lavish or extravagant living expenses in an amount such that the 
remainder of assets and anticipated income will be insufficient to pay 
the tax, has not exercised ordinary business care and prudence in 
providing for the payment of a tax liability. Further, a taxpayer who 
invests funds in speculative or illiquid assets has not exercised 
ordinary business care and prudence in providing for the payment of a 
tax liability unless, at the time of the investment, the remainder of 
the taxpayer's assets and estimated income will be sufficient to pay the 
tax or it can be reasonably foreseen that the speculative or illiquid 
investment made by the taxpayer can be utilized (by sale or as security 
for a loan) to realize sufficient funds to satisfy the tax liability. A 
taxpayer will be considered to have exercised ordinary business care and 
prudence if such taxpayer made reasonable efforts to conserve sufficient 
assets in marketable form to satisfy a tax liability and nevertheless 
was unable to pay all or a portion of the tax when it became due.
    (d) Penalty imposed on net amount due--(1) Credits against the tax. 
The amount of tax required to be shown on the return for purposes of 
section 6651(a)(1) and the amount shown as tax on the return for 
purposes of section 6651(a)(2) shall be reduced by the amount of any 
part of the tax which is paid on or before the date prescribed for 
payment of the tax and by the amount of any credit against the tax which 
may be claimed on the return.
    (2) Partial payments. (i) The amount of tax required to be shown on 
the return for purposes of section 6651(a)(2) of

[[Page 251]]

the Internal Revenue Code shall, for the purpose of computing the 
addition for any month, be reduced by the amount of any part of the tax 
which is paid after the date prescribed for payment and on or before the 
first day of such month, and
    (ii) The amount of tax stated in the notice and demand for purposes 
of section 6651(a)(3) of the Internal Revenue Code shall, for the 
purpose of computing the addition for any month, be reduced by the 
amount of any part of the tax which is paid before the first day of such 
month.
    (e) No addition to tax if fraud penalty assessed. No addition to the 
tax under section 6651 of the Internal Revenue Code shall be assessed 
with respect to an underpayment of tax if an addition to the tax for 
fraud is assessed with respect to the same underpayment under section 
6653(b). See section 6653(d) of the Internal Revenue Code.

(26 U.S.C. 6651)

[T.D. ATF-251, 52 FR 19314, May 22, 1987, as amended by T.D ATF-301, 55 
FR 47614, Nov. 14, 1990; T.D. ATF-353, 59 FR 2522, Jan. 18, 1994; T.D. 
ATF-450, 66 FR 29025, May 29, 2001]



Sec. 70.97  Failure to pay tax.

    (a) Negligence--(1) General. If any part of any underpayment (as 
defined in paragraph (d) of this section) is due to negligence or 
disregard of rules or regulations, there shall be added to the tax an 
amount equal to the sum of 5 percent of the underpayment, and an amount 
equal to 50 percent of the interest payable under section 6601 of the 
Internal Revenue Code with respect to the portion of such underpayment 
which is attributable to negligence 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 (or if earlier, the date or the payment of the 
tax).
    (2) Underpayment taken into account reduced by a portion 
attributable to fraud. There shall not be taken into account under 
paragraph (a) of this section any portion of an underpayment 
attributable to fraud with respect to which a penalty is imposed under 
paragraph (b) of this section.
    (3) Negligence. For purposes of paragraph (a) of this section, the 
term ``negligence'' includes any failure to make a reasonable attempt to 
comply with the provisions of the Internal Revenue Code, and the term 
``disregard'' includes any careless, reckless, or intentional disregard.
    (4) The provisions of paragraph (a) apply to returns the due date 
for which (determined without regard to extensions) is after December 
31, 1986.
    (b) Fraud--(1) General. If any part of any underpayment (as defined 
in paragraph (d) of this section) of tax required to be shown on a 
return is due to fraud, there shall be added to the tax an amount equal 
to 50 percent of the portion of the underpayment which is attributable 
to fraud and an amount equal to 50 percent of the interest payable under 
section 6601 of the Internal Revenue Code with respect to such portion 
for the period beginning on the last day 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 or, if earlier, the date 
of the payment of the tax.
    (2) The provisions of paragraph (b) of this section, apply to 
returns the due date for which (determined without regard to extensions) 
is on or before December 31, 1986.
    (c) Fraud--(1) General. If any part of any underpayment (as defined 
in paragraph (d) of this section) of tax required to be shown on a 
return is due to fraud, there shall be added to the tax an amount equal 
to the sum of 75 percent of the portion of the underpayment which is 
attributable to fraud and an amount equal to 50 percent of the interest 
payable under section 6601 of the Internal Revenue Code with respect to 
such portion for the period beginning on the last day 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 or, if 
earlier, the date of the payment of the tax.
    (2) Determination of portion attributable to fraud. If the 
appropriate TTB officer establishes that any portion of an underpayment 
is attributable to fraud, the entire underpayment shall

[[Page 252]]

be treated as attributable to fraud, except with respect to any portion 
of the underpayment which the taxpayer establishes is not attributable 
to fraud.
    (3) The provisions of this paragraph (c) apply to returns the due 
date for which (determined without regard to extensions) is after 
December 31, 1986.
    (d) Definition of underpayment. For purposes of this section, the 
term underpayment means the amount by which such tax imposed by the 
Internal Revenue Code exceeds the excess of--
    (1) The sum of,
    (i) The amount shown as the tax by the taxpayer upon the taxpayers 
return (determined without regard to any credit for an overpayment for 
any prior period, and without regard to any adjustment under authority 
of sections 6205(a) and 6413(a) of the Internal Revenue Code), if a 
return was made by the taxpayer within the time prescribed for filing 
such return (determined with regard to any extension of time for such 
filing) and an amount was shown as the tax by the taxpayer thereon, 
plus;
    (ii) Any amount, not shown on the return, paid in respect of such 
tax, over--
    (2) The amount of rebates made. For purposes of paragraph (d) of 
this section, the term rebate means so much of an abatement, credit, 
refund, or other repayment, as was made on the ground that the tax 
imposed was less than the excess of the amount specified in paragraph 
(d)(1) of this section over the rebates previously made.
    (e) No delinquency penalty if fraud assessed. If any penalty is 
assessed under paragraph (b) or (c) of this section (relating to fraud) 
for an underpayment of tax which is required to be shown on a return, no 
penalty under section 6651 of the Internal Revenue Code (relating to 
failure to file such return or pay tax) shall be assessed with respect 
to the portion of the underpayment which is attributable to fraud.
    (f) Failure to pay stamp tax. Any person who willfully fails to pay 
any tax which is payable by stamp or willfully attempts in any manner to 
evade or defeat any such tax or payment thereof, shall, in addition to 
other penalties provided by law, be liable to a penalty of 50 percent of 
the total amount of the underpayment of the tax.
    (g) Additional penalty. For additional penalty for failure to pay 
certain liquor and tobacco taxes, see 27 CFR 70.102.

(26 U.S.C. 6653)

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-353, 59 
FR 2522, Jan. 18, 1994]



Sec. 70.98  Penalty for underpayment of deposits.

    (a) General rule. If any person is required by the provisions of 26 
U.S.C. enforced and administered by the Bureau or regulations prescribed 
thereunder to deposit any tax in a government depository that is 
authorized under 26 U.S.C. 6302(c) to receive the deposit, and fails to 
deposit the tax within the time prescribed therefor, a penalty shall be 
imposed on such person unless the failure is shown to be due to 
reasonable cause and not due to willful neglect. The penalty shall be:
    (1) For penalties assessed before October 22, 1986, 5 percent of the 
amount of the underpayment without regard to the period during which the 
underpayment continues.
    (2) For penalties assessed after October 21, 1986, on deposits of 
taxes required to be made before January 1, 1990, 10 percent of the 
amount of the underpayment without regard to the period during which the 
underpayment continues.
    (3) For deposits of taxes required to be made after December 31, 
1989.
    (i) 2 percent of the amount of the underpayment if the failure is 
for not more than 5 days,
    (ii) 5 percent of the amount of the underpayment if the failure is 
for more than 5 days but not more than 15 days,
    (iii) 10 percent of the amount of the underpayment if the failure is 
for more than 15 days,
    (iv) 15 percent of the amount of the underpayment if the tax is not 
deposited before the earlier of:
    (A) The day 10 days after the date of the first delinquency notice 
to the taxpayer under section 6303, or
    (B) The day on which notice and demand for immediate payment is 
given under 26 U.S.C. 6862 or the last sentence of 26 U.S.C. 6331(a).

For purposes of this section, the term ``underpayment'' means the amount 
of

[[Page 253]]

tax required to be deposited less the amount, if any, that was deposited 
on or before the date prescribed therefor. Section 7502(e) of the 
Internal Revenue Code applies in determining the date a deposit is made.
    (b) Assertion of reasonable cause. To show that the underpayment was 
due to reasonable cause and not due to willful neglect, a taxpayer must 
make an affirmative showing of all facts alleged as a reasonable cause 
in a written statement containing a declaration that it is made under 
the penalties of perjury. The statement must be filed with the 
appropriate TTB officer. If the appropriate TTB officer determines that 
the underpayment was due to reasonable cause and not due to willful 
neglect, the penalty will not be imposed.

(26 U.S.C. 6656)

[T.D. ATF-251, 52 FR 19314, May 22, 1987, as amended by T.D. ATF-301, 55 
FR 47615, Nov. 14, 1990; T.D. ATF-353, 59 FR 2523, Jan. 18, 1994]



Sec. 70.100  Penalty for fraudulently claiming drawback.

    Whenever any person fraudulently claims or seeks to obtain an 
allowance of drawback on goods, wares, or merchandise on which no 
internal revenue tax shall have been paid, or fraudulently claims any 
greater allowance of drawback than the tax actually paid, that person 
shall forfeit triple the amount wrongfully or fraudulently claimed or 
sought to be obtained, or the sum of $500, at the election of the 
appropriate TTB officer.

(26 U.S.C. 7304)

[T.D. ATF-301, 55 FR 47615, Nov. 14, 1990]



Sec. 70.101  Bad checks.

    If any check or money order in payment of any amount receivable 
under Title 26 of the United States Code is not duly paid, in addition 
to any other penalties provided by law, there shall be paid as a penalty 
by the person who tendered such check, upon notice and demand, in the 
same manner as tax, an amount equal to 1 percent of the amount of such 
check, except that if the amount of such check is less than $500, the 
penalty under this section shall be $5 or the amount of such check, 
whichever is the lesser. This section shall not apply if the person 
establishes to the satisfaction of the appropriate TTB officer that such 
check was tendered in good faith and that such person had reasonable 
cause to believe that such check would be duly paid.

(26 U.S.C. 6657)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47615, Nov. 14, 1990]



Sec. 70.102  Coordination with title 11.

    (a) Certain failures to pay tax. No addition to the tax shall be 
made under section 6651 of the Internal Revenue Code for failure to make 
timely payment of tax with respect to a period during which a case is 
pending under Title 11 of the United States Code--
    (1) If such tax was incurred by the estate and the failure occurred 
pursuant to an order of the court finding probable insufficiency of 
funds of the estate to pay administrative expenses, or
    (2) If such tax was incurred by the debtor before the earlier of the 
order for relief or (in the involuntary case) the appointment of a 
trustee and
    (i) The petition was filed before the due date prescribed by law 
(including extensions) for filing a return of such tax, or
    (ii) The date for making the addition to the tax occurs on or after 
the day on which the petition was filed.
    (b) Exception for collected taxes. Paragraph (a) of this section 
shall not apply to any liability for an addition to the tax which arises 
from the failure to pay or deposit a tax withheld or collected from 
others and required to be paid to the United States.

(26 U.S.C. 6658)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.103  Failure to pay tax.

    Whoever fails to pay any tax imposed by Part I of Subchapter A of 
Chapter 51 of the Internal Revenue Code (liquor taxes) or by Chapter 52 
(tobacco taxes) at the time prescribed shall, in addition to any other 
penalty provided in the Internal Revenue Code, be liable to a penalty of 
5 percent of the tax due

[[Page 254]]

but unpaid. For additional penalties for failure to pay tax, see 27 CFR 
70.97.

(26 U.S.C. 5684(a) and 5761(b))

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]

                          Assessable Penalties



Sec. 70.111  Rules for application of assessable penalties.

    (a) Penalty assessed as tax. The penalties and liabilities provided 
by Subchapter B, Chapter 68, of the Internal Revenue Code shall be 
assessed and collected in the same manner as taxes. Except as otherwise 
provided, any reference in the Internal Revenue Code to ``tax'' imposed 
thereunder shall also be deemed to refer to the penalties and 
liabilities provided by Subchapter B of Chapter 68.
    (b) Person defined. For purposes of Subchapter B of Chapter 68 of 
the Internal Revenue Code, the term ``person'' includes an officer or 
employee of a corporation, or a member or employee of a partnership, who 
as such officer, employee, or member is under a duty to perform the act 
in respect of which the violation occurs.

(26 U.S.C. 6671)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.112  Failure to collect and pay over tax, or attempt to evade or 

defeat tax.

    Any person required to collect, truthfully account for, and pay over 
any tax imposed by the Internal Revenue Code who willfully fails to 
collect such tax, or truthfully account for and pay over such tax, or 
willfully attempts in any manner to evade or defeat any such tax or the 
payment thereof, shall, in addition to other penalties, be liable to a 
penalty equal to the total amount of the tax evaded, or not collected, 
or not accounted for and paid over. The penalty imposed by section 6672 
of the Internal Revenue Code applies only to the collection, accounting 
for, or payment over of taxes imposed on a person other than the person 
who is required to collect, account for, and pay over such taxes. No 
penalty under section 6653 of the Internal Revenue Code, relating to 
failure to pay tax, shall be imposed for any offense to which this 
section is applicable.

(26 U.S.C. 6672)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.113  Penalty for failure to supply taxpayer identification number.

    (a) In general. Except as provided in paragraph (b) of this section, 
any person who is required by the regulations under section 6109 of the 
Internal Revenue Code to include the taxpayer identification number in 
any return, statement, or other document, fails to comply with such 
requirement at the time prescribed by such regulations, such person 
shall pay a penalty of $50 for each such failure, except that the total 
amount imposed on such person for all such failures during any calendar 
year shall not exceed $100,000. For returns having a due date 
(determined without regard to extensions) after December 31, 1986, the 
total amount imposed on such person for all such failures during any 
calendar year shall not exceed $100,000. Such penalty shall be paid in 
the same manner as tax upon the issuance of a notice and demand 
therefor.
    (b) Reasonable cause. If any person who is required by the 
regulations under section 6109 of the Internal Revenue Code to supply a 
taxpayer identification number fails to comply with such requirement at 
the time prescribed by such regulations, but establishes to the 
satisfaction of the appropriate TTB officer that such failure was due to 
reasonable cause, the penalty set forth in paragraph (a) of this section 
shall not apply.
    (c) Persons required to supply taxpayer identification numbers. For 
regulations under section 6109 of the Internal Revenue Code relating to 
persons required to supply an identifying number, see the regulations 
relating to the particular tax.

(26 U.S.C. 6723)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47615, Nov. 14, 1990]

[[Page 255]]



Sec. 70.114  Penalties for aiding and abetting understatement of tax 

liability.

    (a) Imposition of penalty. Any person--(1) Who aids or assists in, 
procures, or advises with respect to, the preparation or presentation of 
any portion of a return, affidavit, claim, or other document in 
connection with any matter arising under the internal revenue laws,
    (2) Who knows that such portion will be used in connection with any 
material matter arising under the internal revenue laws, and
    (3) Who knows that such portion (if so used) will result in an 
understatement of the liability for tax of another person, shall pay a 
penalty with respect to each such document in the amount determined 
under paragraph (b).
    (b) Amount of penalty--(1) General. Except as provided in paragraph 
(b)(2) of this section, the amount of the penalty imposed by paragraph 
(a) of this section shall be $1,000.
    (2) Corporations. If the return, affidavit, claim, or other document 
relates to the tax liability of a corporation, the amount of the penalty 
imposed by paragraph (a) of this section shall be $10,000.
    (3) Only one penalty per person per period. If any person is subject 
to a penalty under paragraph (a) of this section with respect to any 
document relating to any taxpayer for any taxable period (or where there 
is no taxable period, any taxable event), such person shall not be 
subject to a penalty under paragraph (a) of this section with respect to 
any other document relating to such taxpayer for such taxable period (or 
event).
    (c) Activities of subordinates--(1) General. For purpose of 
paragraph (a) of this section, the term ``procures'' includes,
    (i) Ordering (or otherwise causing) a subordinate to do an act, and
    (ii) Knowing of, and not attempting to prevent, participation by a 
subordinate in an act.
    (2) For purposes of paragraph (c)(1) of this section, the term 
``subordinate'' means any other person (whether or not a director, 
officer, employee, or agent of the taxpayer involved) over whose 
activities the person has direction, supervision, or control.
    (d) Taxpayer not required to have knowledge. Paragraph (a) shall 
apply whether or not the understatement is with the knowledge or consent 
of the persons authorized or required to present the return, affidavit, 
claim, or other document.
    (e) Certain actions not treated as aid or assistance. For purposes 
of paragraph (a)(1) of this section, a person furnishing typing, 
reproducing, or other mechanical assistance with respect to a document 
shall not be treated as having aided or assisted in the preparation of 
such document by reason of such assistance.
    (f) Penalty in addition to other penalties. The penalty imposed by 
this section shall be in addition to any other penalty provided by law.

(26 U.S.C. 6701)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]

                     Abatements, Credits and Refunds

                          Procedure in General



Sec. 70.121  Amounts treated as overpayments.

    (a) The term overpayment includes any payment of any internal 
revenue tax which is assessed or collected after the expiration of the 
period of limitation applicable thereto.
    (b) An amount paid as tax shall not be considered not to constitute 
an overpayment solely by reason of the fact that there was no tax 
liability in respect of which such amount was paid.

(26 U.S.C. 6401)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.122  Authority to make credits or refunds.

    The appropriate TTB officer, within the applicable period of 
limitations, may credit any overpayment of tax, including interest 
thereon, against any outstanding liability for any tax (or for any 
interest, additional amount, addition to the tax, or assessable penalty) 
owed by the person making the overpayment and the balance, if any, shall

[[Page 256]]

be refunded, subject to 26 U.S.C. 6402 (c) and (d) and the regulations 
thereunder, to such person by the appropriate TTB officer.

(26 U.S.C. 6402)

[T.D. ATF-301, 55 FR 47615, Nov. 14, 1990]



Sec. 70.123  Claims for credit or refund.

    (a) Requirement that claim be filed. (1) Credits or refunds of 
overpayments may not be allowed or made after the expiration of the 
statutory period of limitation properly applicable unless, before the 
expiration of such period, a claim therefor has been filed by the 
taxpayer. Furthermore, under section 7422 of the Internal Revenue Code, 
a civil action for refund may not be instituted unless a claim has been 
filed within the properly applicable period of limitation.
    (2) All claims relating to provisions of 26 U.S.C. enforced and 
administered by the Bureau, together with appropriate supporting 
evidence, shall be filed with the appropriate TTB officer. As to 
interest in the case of credits or refunds, see section 6611 of the 
Internal Revenue Code. See section 7502 for provisions treating timely 
mailing as timely filing and section 7503 for time for filing claim when 
the last day falls on a Saturday, Sunday, or legal holiday.
    (b) Grounds set forth in claim. (1) No refund or credit will be 
allowed after the expiration of the statutory period of limitation 
applicable to the filing of a claim therefor except upon one or more of 
the grounds set forth in a claim filed before the expiration of such 
period. The claim must set forth in detail each ground upon which credit 
or refund is claimed and facts sufficient to apprise the appropriate TTB 
officer of the exact basis thereof. The statement of the grounds and 
facts must be verified by a written declaration that it is made under 
the penalties of perjury. A claim which does not comply with this 
paragraph will not be considered for any purpose as a claim for the 
refund or credit.
    (2) The appropriate TTB officers do not have authority to refund on 
equitable grounds penalties or other amounts legally collected.
    (c) Form for filing claim. All claims by taxpayers for the refunding 
of taxes, interest, penalties, and additions to tax shall be made on 
Form 2635 (5620.8).
    (d) Proof of representative capacity. If a return is filed by an 
individual and, after the individuals death, a refund claim is filed by 
a legal representative, certified copies of the letters testamentary, 
letters of administration, or other similar evidence must be annexed to 
the claim, to show the authority of the legal representative to file the 
claim. If an executor, administrator, guardian, trustee, receiver, or 
other fiduciary files a return and thereafter a refund claim is filed by 
the same fiduciary, documentary evidence to establish the legal 
authority of the fiduciary need not accompany the claim, provided a 
statement is made in the claim showing that the return was filed by the 
fiduciary and that the latter is still acting. In such cases, if a 
refund is to be paid, letters testamentary, letters of administration, 
or other evidence may be required, but should be submitted only upon the 
receipt of a specific request therefor. If a claim is filed by a 
fiduciary other than the one by whom the return was filed, the necessary 
documentary evidence should accompany the claim. A claim may be executed 
by an agent of the person assessed, but in such case a power of attorney 
must accompany the claim.
    (e) Mailing of refund check. (1) Checks in payment of claims allowed 
will be drawn in the names of the persons entitled to the money and, 
except as provided in paragraph (e)(2) of this section, the checks may 
be sent direct to the claimant or to such person in care of an attorney 
or agent who has filed a power of attorney specifically authorizing the 
attorney or agent to receive such checks.
    (2) Checks in payment of claims which have either been reduced to 
judgment or settled in the course or as a result of litigation will be 
drawn in the name of the person or persons entitled to the money and 
will be sent to the Assistant Attorney General, Tax Division, Department 
of Justice, for delivery to the taxpayer or the counsel of record in the 
court proceeding.

[[Page 257]]

    (3) For restrictions on the assignment of claims, see 31 U.S.C. 
3727.

(26 U.S.C. 6402)

(Approved by the Office of Management and Budget under control number 
1512-0141)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47615, Nov. 14, 1990; T.D. ATF-450, 66 FR 
29025, May 29, 2001]



Sec. 70.124  Payments in excess of amounts shown on return.

    In certain cases, the taxpayer's payments in respect of a tax 
liability, made before the filing of the taxpayer's return, may exceed 
the amount of tax shown on the return. In any case in which the 
appropriate TTB officer determines that the payments by the taxpayer 
(made within the period prescribed for payment and before the filing of 
the return) are in excess of the amount of tax shown on the return, the 
appropriate TTB officer may make credit or refund of such overpayment 
without awaiting examination of the completed return and without 
awaiting filing of a claim for refund. However, the provisions of Sec. 
70.123 of this part are applicable to such overpayment, and taxpayers 
should submit claims for refund to protect themselves in the event the 
appropriate TTB officer fails to make such determination and credit or 
refund.

(26 U.S.C. 6402)

(Approved by the Office of Management and Budget under control number 
1512-0141)

[T.D. ATF-301, 55 FR 47616, Nov. 14, 1990]



Sec. 70.125  Abatements.

    (a) The appropriate TTB officer may abate the unpaid portion of any 
assessment or liability, if the assessment is in excess of the correct 
tax liability, if the assessment is made subsequent to the expiration of 
the period of limitation applicable thereto, or if the assessment has 
been erroneously or illegally made.
    (b) If more than the correct amount of tax, interest, additional 
amount, addition to the tax, or assessable penalty is assessed but not 
paid to TTB, the person against whom the assessment is made may file a 
claim for abatement of such overassessment. Each claim for abatement 
under this section shall be made on Form 2635 (5020.8), Claim--Alcohol, 
Tobacco and Firearms Taxes, in accordance with the instructions on the 
form. All such claims must be filed with the appropriate TTB officer who 
made demand for the amount assessed.
    (c) The appropriate TTB officer may issue uniform instructions to 
abate amounts the collection of which is not warranted because of the 
administration and collection costs.

(26 U.S.C. 6404)

(Approved by the Office of Management and Budget under control number 
1512-0141)

[T.D. ATF-301, 55 FR 47616, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29025, May 29, 2001]



Sec. 70.126  Date of allowance of refund or credit.

    The date on which the appropriate TTB officer, first certifies the 
allowance of an overassessment in respect of any internal revenue tax 
imposed by the provisions of 26 U.S.C. enforced and administered by the 
Bureau shall be considered as the date of allowance of refund or credit 
in respect of such tax.

(26 U.S.C. 6407)

[T.D. ATF-301, 55 FR 47616, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29025, May 29, 2001]



Sec. 70.127  Overpayment of installment.

    If any installment of tax is overpaid, the overpayment shall first 
be applied against any outstanding installments of such tax. If the 
overpayment exceeds the correct amount of tax due, the overpayment shall 
be credited or refunded as provided in Sec. Sec. 70.122 to 70.124 of 
this part, inclusive.

(26 U.S.C. 6403)

[T.D. ATF-301, 55 FR 47616, Nov. 14, 1990]

                       Rule of Special Application



Sec. 70.131  Conditions to allowance.

    (a) For regulations under section 6416 of the Internal Revenue Code, 
see part 53 of this chapter, relating to manufacturers excise taxes on 
firearms and ammunition.
    (b) For regulations under section 6423 of the Internal Revenue Code, 
see part 29 of this chapter, relating to distilled

[[Page 258]]

spirits, wine, and beer; and part 46 of this chapter, relating to 
tobacco products, and cigarette papers and tubes.

(26 U.S.C. 6416 and 6423)

[T.D. ATF-331, 57 FR 40328, Sept. 3, 1992, as amended by T.D. ATF-457, 
66 FR 32219, June 14, 2001; T.D. ATF-462, 66 FR 42737, Aug. 15, 2001]

                             Lien for Taxes

    Source: Sections 70.141 through 70.151 added by T.D. ATF-301, 55 FR 
47616, Nov. 14, 1990, unless otherwise noted.



Sec. 70.141  Lien for taxes.

    If any person liable to pay any tax under provisions of 26 U.S.C. 
enforced and administered by the Bureau neglects or refuses to pay the 
same after demand, the amount (including any interest, additional 
amount, addition to tax, or assessable penalty, together with any costs 
that may accrue in addition thereto) shall be a lien in favor of the 
United States upon all property and rights to property, whether real or 
personal, tangible or intangible, belonging to such person. The lien 
attaches to all property and rights to property belonging to such person 
at any time during the period of the lien, including any property or 
rights to property acquired by such person after the lien arises. Solely 
for purposes of this section and Sec. Sec. 70.161 and 70.162 of this 
part, any interest in restricted land held in trust by the United States 
for an individual noncompetent Indian (and not for a tribe) shall not be 
deemed to be property, or a right to property, belonging to such Indian.

(26 U.S.C. 6321)



Sec. 70.142  Scope of definitions.

    Except as otherwise provided by Sec. 70.143 of this part, the 
definitions provided by Sec. Sec. 70.143 apply for purposes of Sec. 
70.142 through 70.149 and Sec. Sec. 70.231 through 70.234 of this part.



Sec. 70.143  Definitions.

    (a) Security interest--(1) In general. The term security interest 
means any interest in property acquired by contract for the purpose of 
securing payment or performance of an obligation or indemnifying against 
loss or liability. A security interest exists ay any time:
    (i) If, at such time, the property is in existence and the interest 
has become protected under local law against a subsequent judgment lien 
(as provided in paragraph (a)(2) of this section) arising out of an 
unsecured obligation; and
    (ii) To the extent that, at such time, the holder has parted with 
money or money's worth (as defined in paragraph (a)(3) of this section). 
For purposes of paragraph (a)(1) of this section, a contract right (as 
defined in Sec. 70.232(c)(2)(i) of this part) is in existence when the 
contract is made. An account receivable (as defined in Sec. 
70.232(c)(2)(ii) of this part) is in existence when, and to the extent, 
a right to payment is earned by performance. A security interest must be 
in existence, within the meaning of paragraph (a) of this section, at 
the time as of which its priority against a tax lien is determined. For 
example, to be afforded priority under the provisions of Sec. 70.145(a) 
of this part, a security interest must be in existence within the 
meaning of paragraph (a) of this section before a notice of lien is 
filed.
    (2) Protection against a subsequent judgment lien. For purposes of 
paragraph (a) of this section, a security interest is deemed to be 
protected against a subsequent judgment lien on:
    (i) The date on which all actions required under local law to 
establish the priority of a security interest against a judgment lien 
have been taken, or
    (ii) If later, the date on which all required actions are deemed 
effective, under local law, to establish the priority of the security 
interest against a judgment lien.

For purposes of paragraph (a)(2) of this section, the dates described in 
paragraphs (a)(2) (i) and (ii) of this section shall be determined 
without regard to any rule or principle of local law which permits the 
relation back or the making of any requisite action retroactive to a 
date earlier than the date on which the action is actually performed. 
For purposes of paragraph (a) of this section, a judgment lien is a lien 
held by a judgment lien creditor as defined in paragraph (g) of this 
section.
    (3) Money or money's worth. For purposes of paragraph (a) of this 
section,

[[Page 259]]

the term ``money or money's worth'' includes money, a security (as 
defined in paragraph (d) of this section), tangible or intangible 
property, services, and other consideration reducible to a money value. 
Money or money's worth also includes any consideration which otherwise 
would constitute money or money's worth under the preceding sentence 
which was parted with before the security interest would otherwise exist 
if, under local law, past consideration is sufficient to support an 
agreement giving rise to a security interest. A relinquishing or 
promised relinquishment of dower, curtesy, or of a statutory estate 
created in lieu of dower or curtesy, or of other marital rights is not a 
consideration in money or money's worth. Nor is love and affection, 
promise of marriage, or any other consideration not reducible to a money 
value a consideration in money or money's worth.
    (4) Holder of a security interest. For purposes of paragraph (a) of 
this section, the holder of a security interest is the person in whose 
favor there is a security interest. For provisions relating to the 
treatment of a purchaser of commercial financing security as a holder of 
a security interest, see Sec. 70.232(e) of this part.
    (b) Mechanic's lienor. The term mechanic's lienor means any person 
who under local law has a lien on real property (or on the proceeds of a 
contract relating to real property) for services, labor, or materials 
furnished in connection with the construction or improvement (including 
demolition) of the property. A mechanic's lienor is treated as having a 
lien on the later of:
    (1) The date on which the mechanic's lien first becomes valid under 
local law against subsequent purchasers of the real property without 
actual notice, or
    (2) The date on which the mechanic's lienor begins to furnish the 
services, labor, or materials.
    (c) Motor vehicle. (1) The term motor vehicle means a self-propelled 
vehicle which is registered for highway use under the laws of any State, 
the District of Columbia, or a foreign country.
    (2) A motor vehicle is ``registered for highway use'' at the time of 
a sale if immediately prior to the sale it is so registered under the 
laws of any State, the District of Columbia, or a foreign country. Where 
immediately prior to the sale of a motor vehicle by a dealer, the dealer 
is permitted under local law to operate it under a dealer's tag, 
license, or permit issued to the dealer, the motor vehicle is considered 
to be registered for highway use in the name of the dealer at the time 
of the sale.
    (d) Security. The term security means any bond, debenture, note, or 
certificate or other evidence of indebtedness, issued by a corporation 
or a government or political subdivision thereof, with interest coupons 
or in registered form, share of stock, voting trust certificate, or any 
certificate of interest or participation in, certificate of deposit or 
receipt for, temporary or interim certificate for, or warrant or right 
to subscribe to or purchase, any of the foregoing; negotiable 
instrument; or money.
    (e) Tax lien filing. The term tax lien filing means the filing of 
notice of the lien imposed by 26 U.S.C. 6321 in accordance with Sec. 
70.148 of this part.
    (f) Purchaser--(1) In general. The term purchaser means a person 
who, for adequate and full consideration in money or money's worth (as 
defined in paragraph (f)(3) of this section), acquires an interest 
(other than a lien or security interest) in property which is valid 
under local law against subsequent purchasers without actual notice.
    (2) Interest in property. For purposes of paragraph (f) of this 
section, each of the following interests is treated as an interest in 
property, if it is not a lien or security interest:
    (i) A lease of property,
    (ii) A written executory contract to purchase or lease property,
    (iii) An option to purchase or lease property and any interest 
therein, or
    (iv) An option to renew or extend a lease of property.
    (3) Adequate and full consideration in money or money's worth. For 
purposes of paragraph (f) of this section, the term ``adequate and full 
consideration in money or money's worth'' means a consideration in money 
or money's worth having a reasonable relationship to the true value of 
the interest in property acquired. See paragraph (a)(3) of this section 
for definition of the term ``money or money's worth.'' Adequate

[[Page 260]]

and full consideration in money or money's worth may include the 
consideration in a bona fide bargain purchase. The term also includes 
the consideration in a transaction in which the purchaser has not 
completed performance of an obligation, such as the consideration in an 
installment purchase contract where the purchaser has not completed the 
installment payments.
    (g) Judgment lien creditor. The term judgment lien creditor means a 
person who has obtained a valid judgment, in a court of record and of 
competent jurisdiction, for the recovery of specifically designated 
property or for a certain sum of money. In the case of a judgment for 
the recovery of a certain sum of money, a judgment lien creditor is a 
person who has perfected a lien under the judgment on the property 
involved. A judgment lien is not perfected until the identity of the 
lienor, the property subject to the lien, and the amount of the lien are 
established. Accordingly, a judgment lien does not include an attachment 
or garnishment lien until the lien has ripened into judgment, even 
though under local law the lien of the judgment relates back to an 
earlier date. If recording or docketing is necessary under local law 
before a judgment becomes effective against third parties acquiring 
liens on real property, a judgment lien under such local law is not 
perfected with respect to real property until the time of such 
recordation or docketing. If, under local law, levy or seizure is 
necessary before a judgment lien becomes effective against third parties 
acquiring liens on personal property, then a judgment lien under such 
local law is not perfected until levy or seizure of the personal 
property involved. The term ``judgment'' does not include the 
determination of a quasi-judicial body or of an individual acting in a 
quasi-judicial capacity such as the action of State taxing authorities.

(26 U.S.C. 6323)



Sec. 70.144  Special rules.

    (a) Actual notice or knowledge. For purposes of 26 U.S.C. 6321 
through 6327, an organization is deemed, in any transaction, to have 
actual notice or knowledge of any fact from the time the fact is brought 
to the attention of the individual conducting the transaction, and in 
any event from the time the fact would have been brought to the 
individual's attention if the organization had exercised due diligence. 
An organization exercises due diligence if it maintains reasonable 
routines for communicating significant information to the person 
conducting the transaction and there is reasonable compliance with the 
routines. Due diligence does not require an individual acting for the 
organization to communicate information unless such communication is 
part of the individual's regular duties or unless the individual has 
reason to know of the transaction and that the transaction would be 
materially affected by the information.
    (b) Subrogation: Where, under local law, one person is subrogated to 
the rights of another with respect to a lien or interest, such person 
shall be subrogated to such rights for purposes of any lien imposed by 
26 U.S.C. 6321 or 6324. Thus, if a tax lien imposed by 26 U.S.C. 6321 or 
6324 is not valid with respect to a particular interest as against the 
holder of that interest, then the tax lien also is not valid with 
respect to that interest as against any person who, under local law, is 
a successor in interest to the holder of that interest.
    (c) Disclosure of amount of outstanding lien. If a notice of lien 
has been filed (see Sec. 70.148 of this part), the amount of the 
outstanding obligation secured by the lien is authorized to be disclosed 
as a matter of public record on TTB Form 5651.2 ``Notice of Federal Tax 
Lien Under Internal Revenue Laws.'' The amount of the outstanding 
obligation secured by the lien remaining unpaid at the time of an 
inquiry is authorized to be disclosed to any person who has a proper 
interest in determining this amount. Any person who has a right in the 
property or intends to obtain a right in the property by purchase or 
otherwise will, upon presentation of satisfactory evidence, be 
considered to have a proper interest. Any person desiring this 
information may make a request to the office of the Bureau named on the 
notice of lien with respect to which the request is made. The request 
should clearly describe the property

[[Page 261]]

subject to the lien, identify the applicable lien, and give the reasons 
for requesting the information.

(26 U.S.C. 6323)



Sec. 70.145  Purchasers, holders of security interests, mechanic's lienors, 

and judgment lien creditors.

    (a) Invalidity of lien without notice. The lien imposed by 26 U.S.C. 
6321 is not valid against any purchaser (as defined in Sec. 70.143(f) 
of this part), holder of a security interest (as defined in Sec. 
70.143(a) of this part), mechanic's lienor (as defined in Sec. 
70.143(b) of this part), or judgment lien creditor (as defined in Sec. 
70.143(g) of this part) until a notice of lien is filed in accordance 
with Sec. 70.148 of this part. Except as provided by 26 U.S.C. 6323, if 
a person becomes a purchaser, holder of a security interest, mechanic's 
lienor, or judgment lien creditor after a notice of lien is filed in 
accordance with Sec. 70.148 of this part, the interest acquired by such 
person is subject to the lien imposed by 26 U.S.C. 6321.
    (b) Cross references. For provisions relating to the protection 
afforded a security interest arising after tax lien filing, which 
interest is covered by a commercial transactions financing agreement, 
real property construction or improvement financing agreement, or an 
obligatory disbursement agreement, see Sec. Sec. 70.232, 70.233, and 
70.234 of this part, respectively. For provisions relating to the 
protection afforded to a security interest coming into existence by 
virtue of disbursements, made before the 46th day after the date of tax 
lien filing, see Sec. 70.146 of this part. For provisions relating to 
priority afforded to interest and certain other expenses with respect to 
a lien or security interest having priority over the lien imposed by 26 
U.S.C. 6321, see Sec. 70.147 of this part. For provisions relating to 
certain other interests arising after tax lien filing, see Sec. 70.231 
of this part.

(26 U.S.C. 6323)



Sec. 70.146  45-day period for making disbursements.

    Even though a notice of a lien imposed by 26 U.S.C. 6321 is filed in 
accordance with Sec. 70.149 of this part, the lien is not valid with 
respect to a security interest which comes into existence, after tax 
lien filing, by reason of disbursements made before the 46th day after 
the date of tax lien filing, or if earlier, before the person making the 
disbursements has actual notice or knowledge of the tax lien filing, but 
only if the security interest is:
    (a) In property which is subject, at the time of tax lien filing, to 
the lien imposed by 26 U.S.C. 6321 and which is covered by the terms of 
a written agreement entered into before tax lien filing, and
    (b) Protected under local law against a judgment lien arising, as of 
the time of tax lien filing, out of an unsecured obligation.

For purposes of paragraph (a) of this section, a contract right (as 
defined in Sec. 70.232(c)(2)(i) of this part) is subject, at the time 
of tax lien filing, to the lien imposed by 26 U.S.C. 6321 if the 
contract has been made by such time. An account receivable (as defined 
in Sec. 70.232(c)(2)(ii) of this part) is subject, at the time of tax 
lien filing, to the lien imposed by 26 U.S.C. 6321 if, and to the 
extent, a right to payment has been earned by performance at such time. 
For purposes of paragraph (b) of this section, a judgment lien is a lien 
held by a judgment lien creditor as defined in Sec. 70.143(g) of this 
part. For purposes of this section, it is immaterial that the written 
agreement provides that the disbursements are to be made at the option 
of the person making the disbursements. See Sec. 70.143 (a) and (e) of 
this part for definitions of the terms ``security interest'' and ``tax 
lien filing,'' respectively. See Sec. 70.144(a) of this part for 
certain circumstances under which a person is deemed to have actual 
notice or knowledge of a fact.

(26 U.S.C. 6323)



Sec. 70.147  Priority of interest and expenses.

    (a) In general. If the lien imposed by 26 U.S.C. 6321 is not valid 
as against another lien or security interest, the priority of the other 
lien or security interest also extends to each of the following items to 
the extent that under local law the item has the same priority as the 
lien or security interest to which it relates:

[[Page 262]]

    (1) Any interest or carrying charges (including finance, service, 
and similar charges) upon the obligation secured,
    (2) The reasonable charges and expenses of an indenture trustee 
(including, for example, the trustee under a deed of trust) or agent 
holding the security interest for the benefit of the holder of the 
security interest,
    (3) The reasonable expenses, including reasonable compensation for 
attorneys, actually incurred in collecting or enforcing the obligation 
secured,
    (4) The reasonable costs of insuring, preserving, or repairing the 
property to which the lien or security interest relates,
    (5) The reasonable costs of insuring payment of the obligation 
secured (including amounts paid by the holder of the security interest 
for mortgage insurance, such as that issued by the Federal Housing 
Administration), and
    (6) Amounts paid to satisfy any lien on the property to which the 
lien or security interest relates, but only if the lien so satisfied is 
entitled to priority over the lien imposed by 26 U.S.C. 6321.
    (b) Collection expenses. The reasonable expenses described in 
paragraph (a)(3) of this section include expenditures incurred by the 
protected holder of the lien or security interest to establish the 
priority of the holder's interest or to collect, by foreclosure or 
otherwise, the amount due the holder from the property subject to the 
protected holder's lien. Accordingly, the amount of the encumbrance 
which is protected is increased by the amounts so expended by the holder 
of the security interest.
    (c) Costs of insuring, preserving, etc. The reasonable costs of 
insuring, preserving, or repairing described in paragraph (a)(4) of this 
section include expenditures by the holder of a security interest for 
fire and casualty insurance on the property subject to the security 
interest and amounts paid by the holder of the lien or security interest 
to repair the property. Such reasonable costs also include the amounts 
paid by the holder of the lien or security interest in a leasehold to 
the lessor of the leasehold to preserve the leasehold subject to the 
lien or security interest. Accordingly, the amount of the lien or 
security interest which is protected is increased by the amounts so 
expended by the holder of the lien or security interest.
    (d) Satisfaction of liens. The amounts described in paragraph (a)(6) 
of this section include expenditures incurred by the protected holder of 
a lien or security interest to discharge a statutory lien for State 
sales taxes on the property subject to the lien or security interest if 
both the lien or security interest and the sales tax lien have priority 
over a Federal tax lien. Accordingly, the amount of the lien or security 
interest is increased by the amounts so expended by the holder of the 
lien or security interest even though under local law the holder of the 
lien or security interest is not subrogated to the rights of the holder 
of the State sales tax lien. However, if the holder of the lien or 
security interest is subrogated, within the meaning of Sec. 70.144(b) 
of this part, to the rights of the holder of the sales tax lien, the 
holder of the lien or security interest will also be entitled to any 
additional protection afforded by 26 U.S.C. 6323(i)(2)

(26 U.S.C. 6323).



Sec. 70.148  Place for filing notice; form.

    (a) Place for filing. The notice of lien referred to in Sec. 70.145 
of this part shall be filed as follows:
    (1) Under State laws--(i) Real property. In the case of real 
property, notice shall be filed in one office within the State (or the 
county or other governmental subdivision), as designated by the laws of 
the State, in which the property subject to the lien is deemed situated 
under the provisions of paragraph (b)(1) of this section.
    (ii) Personal property. In the case of personal property, whether 
tangible or intangible, the notice shall be filed in one office within 
the State (or the county or other governmental subdivision), as 
designated by the laws of the State, in which the property subject to 
the lien is deemed situated under the provision of paragraph (b)(2) of 
this section, except that State law merely conforming to or reenacting 
Federal law establishing a national filing system does not constitute a 
second office for filing as designated by the laws of such State.
    (2) With the clerk of the United States district court. Whenever a 
State has not

[[Page 263]]

by law designated one office which meets the requirements of paragraph 
(a)(1) (i) or (ii) of this section, the notice shall be filed in the 
office of the clerk of the U.S. district court for the judicial district 
in which the property subject to the lien is deemed situated under the 
provisions of paragraph (b) of this section. For example, a State has 
not by law designated one office meeting the requirements of paragraph 
(a)(1)(i) of this section, if more than one office is designated within 
the State, county, or other governmental subdivision for filing notices 
with respect to all property located in such State, county or other 
governmental subdivision. A State has not by law designated one office 
meeting the requirements of paragraph (a)(1)(ii) of this section, if 
more than one office is designated in the State, county, or other 
governmental subdivision for filing notices with respect to all of the 
personal property of a particular taxpayer.
    (3) With the Recorder of Deeds of the District of Columbia. If the 
property subject to the lien imposed by 26 U.S.C. 6321 is deemed 
situated, under the provision of paragraph (b) of this section, in the 
District of Columbia, the notice shall be filed in the office of the 
Recorder of Deeds of the District of Columbia.
    (b) Situs of property subject to lien. For purposes of paragraph (a) 
of this section, property is deemed situated as follows:
    (1) Real property. Real property is deemed situated at its physical 
location.
    (2) Personal property. Personal property, whether tangible or 
intangible, is deemed situated at the residence of the taxpayer at the 
time the notice of lien is filed.

For purposes of paragraph (b)(2) of this section, the residence of a 
corporation or partnership is deemed to be the place at which the 
principal executive office of the business is located, and the residence 
of a taxpayer whose residence is not within the United States is deemed 
to be in the District of Columbia.
    (c) Form--(1) In general. The notice referred to in Sec. 70.145 of 
this part shall be filed on TTB Form 5651.2, ``Notice of Federal Tax 
Lien under Internal Revenue Laws''. Such notice is valid notwithstanding 
any other provision of law regarding the form or content of a notice of 
lien. For example, omission from the notice of lien of a description of 
the property subject to the lien does not affect the validity thereof 
even though State law may require that the notices contain a description 
of the property subject to the lien.
    (2) TTB Form 5651.2 defined. The term ``TTB Form 5651.2'' generally 
means a paper form. However, if a State in which a notice referred to in 
Sec. 70.145 of this part is filed permits a notice of Federal tax lien 
to be filed by the use of an electronic or magnetic medium the term 
``TTB Form 5651.2'' includes an TTB Form 5651.2 filed by the use of any 
electronic or magnetic medium permitted by that State. An TTB Form 
5651.2 must identify the taxpayer, the tax liability giving rise to the 
lien, and the date the assessment arose regardless of the method used to 
file the notice of Federal tax lien.

(26 U.S.C. 6323)



Sec. 70.149  Refiling of notice of tax lien.

    (a) In general--(1) Requirement to refile. In order to continue the 
effect of a notice of lien, the notice must be refiled in the place 
described in paragraph (b) of this section during the required refiling 
period (described in paragraph (c) of this section). In the event that 
two or more notices of lien are filed with respect to a particular tax 
assessment, the failure to comply with the provision of paragraphs 
(b)(1) (i) and (c) of this section in respect of one of the notices of 
lien does not affect the effectiveness of the refiling of any other 
notice of lien. Except for the filing of a notice of lien required by 
paragraph (b)(1)(ii) of this section (relating to a change of 
residence), the validity of any refiling of a notice of lien is not 
affected by the refiling or nonrefiling of any other notice of lien.
    (2) Effect of refiling. A timely refiled notice of lien is effective 
as of the date on which the notice of lien to which it relates was 
effective.
    (3) Effect of failure to refile. Except as provided below, if the 
appropriate TTB officer fails to refile a notice of lien in the manner 
described in paragraphs (b)

[[Page 264]]

and (c) of this section, the notice of lien is not effective, after the 
expiration of the required refiling period, as against any person 
without regard to when the interest of the person in the property 
subject to the lien was acquired. However, the failure of the 
appropriate TTB officer to refile a notice of lien during the required 
refiling period will not, following the expiration of the refiling 
period, affect the effectiveness of the notice with respect to:
    (i) Property which is the subject matter of a suit, to which the 
United States is a party, commenced prior to the expiration of the 
required refiling period, or
    (ii) Property which has been levied upon by the United States prior 
to the expiration of the refiling period. However, if a suit or levy 
referred to in the preceding sentence is dismissed or released, 
respectively, and property is subject to the lien at such time, a notice 
of lien with respect to the property is not effective after the suit or 
levy is dismissed or released unless refiled during the required 
refiling period. Failure to refile a notice of lien does not affect the 
existence of the lien.
    (4) Filing of new notice. If a notice of lien is not refiled, and if 
the lien remains in existence, the Bureau may nevertheless file a new 
lien either on the prescribed form for the filing of a notice of lien or 
on the form prescribed for refiling a notice of lien. This new filing 
must meet the requirements of 26 U.S.C. 6323(f) and Sec. 70.148 of this 
part and is effective from the date on which such filing is made.
    (b) Place for refiling notice of lien--(1) In general. A notice of 
lien refiled during the required refiling period (described in paragraph 
(c) of this section) shall be effective only:
    (i) If the notice of lien is refiled in the office in which the 
prior notice of lien (including a refiled notice) was filed under the 
provisions of 26 U.S.C. 6323; and
    (ii) In any case in which 90 days or more prior to the date the 
refiling of the notice of lien under paragraph (a)(1)(i) of this section 
is completed, the Bureau receives written information (in the manner 
described in paragraph (b)(2) of this section) concerning a change in 
the taxpayer's residence, if a notice of such lien is also filed in 
accordance with 26 U.S.C. 6323(f)(1)(A)(ii) in the State in which such 
new residence is located (or, if such new residence is located in the 
District of Columbia or outside the United States, in the District of 
Columbia).

A notice of lien is considered as refiled in the office in which the 
prior notice or refiled notice was filed under the provisions of 26 
U.S.C. 6323 if it is refiled in the office which, pursuant to a change 
in the applicable local law, assumed the functions of the office in 
which the prior notice or refiled notice was filed. If on or before the 
90th day referred to in paragraph (b)(1)(ii) of this section, more than 
one written notice is received concerning a change in the taxpayer's 
residence, a notice of lien is required by this subdivision to be filed 
only with respect to the residence shown on the written notice received 
on the most recent date. Paragraph (b)(1)(ii) of this section is 
applicable regardless of whether the taxpayer resides at the new 
residence on the date the refiling of notice of lien under paragraph 
(b)(l)(i) of this section is completed.
    (2) Notice of change of taxpayer's residence--(i) In general. For 
purposes of this section, a notice of change of a taxpayer's residence 
will be effective only if it:
    (A) Is received, in writing, from the taxpayer or the taxpayer's 
representative by the appropriate TTB officer who filed the original 
notice of lien.
    (B) Relates to an unpaid tax liability of the taxpayer, and
    (C) States the taxpayer's name and the address of the taxpayer's new 
residence.

Although it is not necessary that a written notice contain the 
taxpayer's identifying number authorized by section 6109, it is 
preferable that it include such number. A return or amended return filed 
by the taxpayer with the Bureau which on its face indicates that there 
is a change in the taxpayer's address and correctly states the 
taxpayer's name, the address of the taxpayer's new residence, and the 
taxpayer's identifying number required by 26 U.S.C. 6109 is sufficient 
notice under this paragraph.

[[Page 265]]

    (ii) Other rules applicable. Except as provided in paragraph 
(b)(2)(i) of this section, no communication (either written or oral) to 
the Bureau will be considered effective as notice of a change of a 
taxpayer's residence under this section, whether or not the Bureau has 
actual notice or knowledge of the taxpayer's new residence. For the 
purpose of determining the date on which a notice of change of a 
taxpayer's residence is received under this section, the notice shall be 
treated as received on the date it is actually received by the Bureau 
without reference to the provisions of 26 U.S.C. 7502.
    (c) Required refiling period. For the purpose of this section, the 
term ``required refiling period'' means:
    (1) The 1-year period ending 30 days after the expiration of 6 years 
after the date of the assessment of the tax, and
    (2) The 1-year period ending with the expiration of 6 years after 
the close of the preceding required refiling period for such notice of 
lien.

(26 U.S.C. 6323)



Sec. 70.150  Release of lien or discharge of property.

    (a) Release of lien. An appropriate TTB officer is charged with 
releasing liens or discharging property from liens. The appropriate TTB 
officer must issue a certificate of release of a lien imposed with 
respect to any tax imposed by a provision of 26 U.S.C. enforced and 
administered by the Bureau, not later than 30 days after the day on 
which either:
    (1) The appropriate TTB officer finds that the entire liability for 
the tax has been satisfied or has become unenforceable as a matter of 
law (and not merely uncollectible or unenforceable as a matter of fact). 
Tax liabilities frequently are unenforceable in fact for the time being, 
due to the temporary nonpossession by the taxpayer of discoverable 
property or property rights. In all cases the liability for the payment 
of the tax continues until satisfaction of the tax in full or until the 
expiration of the statutory period for collection, including such 
extension of the period for collection as may be agreed upon in writing 
by the taxpayer and the appropriate TTB officer.
    (2) The appropriate TTB officer is furnished and accepts a bond that 
is conditioned upon the payment of the amount assessed (together with 
all interest in respect thereof and any expenses to which the Government 
has been put in the matter), within the time agreed upon in the bond, 
but not later than 6 months before the expiration of the statutory 
period for collection, including any period for collection agreed upon 
in writing by the appropriate TTB officer and the taxpayer. For 
provisions relating to bonds, see 26 U.S.C. 7101 and 7102 and Sec. Sec. 
70.281 and 70.282 of this part.
    (b) Discharge of specific property from the lien--(1) Property 
double the amount of the liability. The appropriate TTB officer may, in 
that officer's discretion, issue a certificate of discharge of any part 
of the property subject to a lien imposed under 26 U.S.C. 64 if the 
Bureau determines that the fair market value of that part of the 
property remaining subject to the lien is at least double the sum of the 
amount of the unsatisfied liability secured by the lien and of the 
amount of all other liens upon the property which have priority over the 
lien. In general, fair market value is that amount which one ready and 
willing but not compelled to buy would pay to another ready and willing 
but not compelled to sell the property.
    (2) Part payment; interest of United States valueless--(i) Part 
payment. The appropriate TTB officer may, in that officer's discretion, 
issue a certificate of discharge of any part of the property subject to 
a lien imposed under 26 U.S.C. 64 if there is paid over to the Bureau in 
partial satisfaction of the liability secured by the lien an amount 
determined by the Bureau to be not less than the value of the interest 
of the United States in the property to be so discharged. In determining 
the amount to be paid, the appropriate TTB officer will take into 
consideration all the facts and circumstances of the case, including the 
expenses to which the Government has been put in the matter. In no case 
shall the amount to be paid be less than the value of the interest of 
the United States in the property with respect to which the certificate 
of discharge is to be issued.

[[Page 266]]

    (ii) Interest of the United States valueless. The appropriate TTB 
officer may, in that official's discretion, issue a certificate of 
discharge of any part of the property subject to the lien if the Bureau 
determines that the interest of the United States in the property to be 
so discharged has no value.
    (iii) Valuation of interest of United States. For purposes of this 
paragraph (b)(2), in determining the value of the interest of the United 
States in the property, or any part thereof, with respect to which the 
certificate of discharge is to be issued, the appropriate TTB officer 
shall give consideration to the value of the property and the amount of 
all liens and encumbrances thereon having priority over the Federal tax 
lien. In determining the value of the property, the appropriate TTB 
officer may, in that official's discretion, give consideration to the 
forced sale value of the property in appropriate cases.
    (3) Discharge of property by substitution of proceeds of sale. The 
appropriate TTB officer may, in that officer's discretion, issue a 
certificate of discharge of any part of the property subject to a lien 
imposed under 26 U.S.C. 64 if such part of the property is sold and, 
pursuant to a written agreement with the appropriate TTB officer, the 
proceeds of the sale are held, as a fund subject to the liens and claims 
of the United States, in the same manner and with the same priority as 
the lien or claim had with respect to the discharged property. This 
subparagraph does not apply unless the sale divests the taxpayer of all 
right, title, and interest in the property sought to be discharged. Any 
reasonable and necessary expenses incurred in connection with the sale 
of the property and the administration of the sale proceeds shall be 
paid by the applicant or from the proceeds of the sale before 
satisfaction of any lien or claim of the United States.
    (4) Application for certificate of discharge. Any person desiring a 
certificate of discharge under this paragraph shall submit an 
application in writing to the appropriate TTB officer. The application 
shall contain such information as the appropriate TTB officer may 
require.
    (c) Subordination of lien--(1) By payment of the amount 
subordinated. The appropriate TTB officer may, in that officer's 
discretion, issue a certificate of subordination of a lien imposed under 
26 U.S.C. 64 upon any part of the property subject to the lien if there 
is paid over to the appropriate TTB officer an amount equal to the 
amount of the lien or interest to which the certificate subordinates the 
lien of the United States. For this purpose, the tax lien may be 
subordinated to another lien or interest on a dollar-for-dollar basis. 
For example, if a notice of a Federal tax lien is filed and a delinquent 
taxpayer secures a mortgage loan on a part of the property subject to 
the tax lien and pays over the proceeds of the loan to the appropriate 
TTB officer after an application for a certificate of subordination is 
approved, the appropriate TTB officer will issue a certificate of 
subordination. This certificate will have the effect of subordinating 
the tax lien to the mortgage.
    (2) To facilitate tax collection. The appropriate TTB officer may, 
in that officer's discretion, issue a certificate of subordination of a 
lien imposed under 26 U.S.C. 64 upon any part of the property subject to 
the lien if the appropriate TTB officer believes that the subordination 
of the lien will ultimately result in an increase in the amount realized 
by the United States from the property subject to lien and will 
facilitate the ultimate collection of the tax liability.
    (3) Application for certificate of subordination. Any person 
desiring a certificate of subordination under this paragraph shall 
submit an application therefor in writing to the appropriate TTB 
officer. The application shall contain such information as the 
appropriate TTB officer may require.
    (d) Nonattachment of lien. If the appropriate TTB officer determines 
that, because of confusion of names or otherwise, any person (other than 
the person against whom the tax was assessed) is or may be injured by 
the appearance that a notice of lien filed in accordance with Sec. 
70.148 of this part refers to such person, the appropriate TTB officer 
may issue a certificate of nonattachment. Such certificate shall state 
that

[[Page 267]]

the lien, notice of which has been filed, does not attach to the 
property of such person. Any person desiring a certificate of 
nonattachment under this paragraph shall submit an application therefor 
in writing to the appropriate TTB officer. The application shall contain 
such information as the appropriate TTB officer may require.
    (e) Effect of certificate--(1) Conclusiveness. Except as provided in 
paragraphs (e) (2) and (3) of this section, if a certificate is issued 
under 26 U.S.C. 6325 by the appropriate TTB officer and the certificate 
is filed in the same office as the notice of lien to which it relates 
(if the notice of lien has been filed), the certificate shall have the 
following effect:
    (i) In the case of a certificate of release issued under paragraph 
(a) of this section, the certificate shall be conclusive that the tax 
lien referred to in the certificate is extinguished;
    (ii) In the case of a certificate of discharge issued under 
paragraph (b) of this section, the certificate shall be conclusive that 
the property covered by the certificate is discharged from the tax lien;
    (iii) In the case of a certificate of subordination issued under 
paragraph (c) of this section, the certificate shall be conclusive that 
the lien or interest to which the Federal tax lien is subordinated is 
superior to the tax lien; and
    (iv) In the case of a certificate of nonattachment issued under 
paragraph (d) of this section, the certificate shall be conclusive that 
the lien of the United States does not attach to the property of the 
person referred to in the certificate.
    (2) Revocation of certificate of release or nonattachment--(i) In 
general. If the appropriate TTB officer determines that either:
    (A) A certificate of release or a certificate of nonattachment of 
the general tax lien imposed by 26 U.S.C. 6321 was issued erroneously or 
improvidently, or
    (B) A certificate of release of such lien was issued in connection 
with a compromise agreement under 26 U.S.C. 7122 which has been 
breached,and if the period of limitation on collection after assessment 
of the tax liability has not expired, the appropriate TTB officer may 
revoke the certificate and reinstate the tax lien.
    (ii) Method of revocation and reinstatement. The revocation and 
reinstatement described in paragraph (e)(2)(i) of this section is 
accomplished by:
    (A) Mailing notice of the revocation to the taxpayer at the 
taxpayer's last known address, and
    (B) Filing notice of the revocation of the certificate in the same 
office in which the notice of lien to which it relates was filed (if the 
notice of lien has been filed).
    (iii) Effect of reinstatement--(A) Effective date. A tax lien 
reinstated in accordance with the provisions of this paragraph (e)(2) is 
effective on and after the date the notice of revocation is mailed to 
the taxpayer in accordance with the provisions of paragraph 
(e)(2)(ii)(A) of this section, but the reinstated lien is not effective 
before the filing of notice of revocation, in accordance with the 
provisions of paragraph (e)(2)(ii)(B) of this section, if the filing is 
required by reason of the fact that a notice of the lien had been filed.
    (B) Treatment of reinstated lien. As of the effective date of 
reinstatement, a reinstated lien has the same force and effect as a 
general tax lien imposed by 26 U.S.C. 6321 which arises upon assessment 
of a tax liability. The reinstated lien continues in existence until the 
liability is satisfied or until the expiration of the period of 
limitation on collection after assessment of the tax liability to which 
it relates. The reinstatement of the lien does not retroactively 
reinstate a previously filed notice of lien. The reinstated lien is not 
valid against any holder of a lien or interest described in Sec. 70.145 
of this part until notice of the reinstated lien has been filed in 
accordance with the provisions of Sec. 70.148 of this part subsequent 
to or concurrent with the time the reinstated lien became effective.
    (3) Certificates void under certain conditions. Notwithstanding any 
other provisions of 26 U.S.C. subtitle F, any lien for Federal taxes 
attaches to any property with respect to which a certificate of 
discharge has been issued if the person liable for the tax reacquires 
the property after the certificate has been issued. Thus, if property 
subject to a

[[Page 268]]

Federal tax lien is discharged therefrom and is later reacquired by the 
delinquent taxpayer at a time when the lien is still in existence, the 
tax lien attaches to the reacquired property and is enforceable against 
it as in the case of after-acquired property generally.
    (f) Filing of certificates and notices. If a certificate or notice 
described in this section may not be filed in the office designated by 
State law in which the notice of lien imposed by 26 U.S.C. 6321 (to 
which the certificate or notice relates) is filed, the certificate or 
notice is effective if filed in the office of the clerk of the United 
States district court for the judicial district in which the State 
office where the notice of lien is filed is situated.

(26 U.S.C. 6325)

[T.D. ATF-301, 55 FR 47616, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29025, May 29, 2001]



Sec. 70.151  Administrative appeal of the erroneous filing of notice of 

Federal tax lien.

    (a) In general. Any person may appeal to the officer who filed the 
Federal tax lien on the property or rights to property of such person 
for a release of lien alleging an error in the filing of notice of lien. 
Such appeal may be used only for the purpose of correcting the erroneous 
filing of a notice of lien, not to challenge the underlying tax 
liability that led to the imposition of a lien.
    (b) Certificate of Release. If the officer who filed the lien 
determines that the filing of the notice of any lien was erroneous that 
officer shall expeditiously, and to the extent practicable, within 14 
days after such determination, issue a certificate of release of lien. 
The certificate of release of such lien shall include a statement that 
the filing of notice of lien was erroneous.
    (c) Appeal alleging an error in the filing of notice of lien. For 
purposes of paragraph (a) of this section, an appeal of the filing of 
notice of Federal tax lien must be based on any one of the following 
allegations:
    (1) The tax liability that gave rise to the lien, plus any interest 
and additions to tax associated with said liability, was satisfied prior 
to the filing of notice of lien;
    (2) The tax liability that gave rise to the lien was assessed in 
violation of title 11 of the United States Code (the Bankruptcy Code); 
or
    (3) The statutory period for collection of the tax liability that 
gave rise to the lien expired prior to the filing of notice of Federal 
tax lien.
    (d) Notice of Federal tax lien that lists multiple liabilities. When 
a notice of Federal tax lien lists multiple liabilities, a person may 
appeal the filing of notice of lien with respect to one or more of the 
liabilities listed in the notice, if the notice was erroneously filed 
with respect to such liabilities. If a notice of Federal tax lien was 
erroneously filed with respect to one or more liabilities listed in the 
notice, the officer who filed the Federal tax lien shall issue a 
certificate of release with respect to such liabilities.
    (e) Procedures for appeal--(1) Manner. An appeal of the filing of 
notice of Federal tax lien shall be made in writing to the officer who 
filed the lien.
    (2) Form. The appeal shall include the following information and 
documents:
    (i) Name, current address, and taxpayer identification number of the 
person appealing the filing of notice of Federal tax lien;
    (ii) A copy of the notice of Federal tax lien affecting the 
property, if available; and
    (iii) The grounds upon which the filing of notice of Federal tax 
lien is being appealed.
    (A) If the ground upon which the filing of notice is being appealed 
is that the tax liability in question was satisfied prior to the filing, 
proof of full payment as defined in paragraph (f) of this section must 
be provided.
    (B) If the ground upon which the filing of notice is being appealed 
is that the tax liability that gave rise to the lien was assessed in 
violation of title 11 of the United States Code (the Bankruptcy Code), 
the appealing party must provide the identity of the court, the district 
in which the bankruptcy petition was filed, a docket number and the date 
of filing of the bankruptcy petition.
    (3) Time. An administrative appeal of the erroneous filing of notice 
of Federal tax lien shall be made within 1

[[Page 269]]

year after the taxpayer becomes aware of the erroneously filed tax lien.
    (f) Proof of full payment. As used in paragraph (e)(2)(iii)(A) of 
this section, the term ``proof of full payment'' means:
    (1) An Alcohol and Tobacco Tax and Trade Bureau, receipt reflecting 
full payment of the tax liability in question prior to the date the 
Federal tax lien was filed;
    (2) A cancelled check payable to the Alcohol and Tobacco Tax and 
Trade Bureau in an amount which was sufficient to satisfy the tax 
liability for which release is being sought; or
    (3) Any other manner of proof acceptable to the officer who filed 
the lien.
    (g) Exception. Whenever necessary to protect the interests of the 
government, an appropriate TTB officer other than the officer who filed 
the lien, may receive and act on an administrative appeal of a lien in 
accordance with this section.
    (h) Exclusive remedy. The appeal established by section 6326 of the 
Internal Revenue Code and by this section shall be the exclusive 
administrative remedy with respect to the erroneous filing of a notice 
of Federal tax lien.

[T.D. ATF-316, 56 FR 55079, Oct. 24, 1991]

               Seizure of Property for Collection of Taxes



Sec. 70.161  Levy and distraint.

    (a) Authority to levy--(1) In general. If any person liable to pay 
any tax neglects or refuses to pay the tax within 10 days after notice 
and demand, the appropriate TTB officer who initiated the assessment may 
proceed to collect the tax by levy, provided the taxpayer has been 
furnished the notice described in Sec. 70.162(a) of this part. The 
appropriate TTB officer may levy upon any property, or rights to 
property, whether real or personal, tangible or intangible, belonging to 
the taxpayer. The appropriate TTB officer may also levy upon property 
with respect to which there is a lien provided by 26 U.S.C. 6321 for the 
payment of the tax. For exemption of certain property from levy, see 26 
U.S.C. 6334 and Sec. Sec. 70.241 through 70.245 of this part. For 
exemption of certain property from levy, see 26 U.S.C. 6334 and 
Sec. Sec. 70.241 through 70.245 of this part. As used in 26 U.S.C. 6331 
and this section, the term ``tax'' includes any interest, additional 
amount, addition to tax, or assessable penalty, together with costs and 
expenses. Property subject to a Federal tax lien which has been sold or 
otherwise transferred by the taxpayer may be seized while in the hands 
of the transferee or any subsequent transferee. However, see 26 U.S.C. 
6323(i)(2) and Sec. 70.144 of this part concerning the subrogation 
rights of certain transferees. Levy may be made by serving a Notice of 
Levy on any person in possession of, or obligated with respect to, 
property or rights to property subject to levy, including receivables, 
bank accounts, evidences of debt, securities, and salaries, wages, 
commissions, or other compensation. Except as provided in Sec. 
70.162(c) of this part with regard to a levy on salary or wages, a levy 
extends only to property possessed and obligations which exist at the 
time of the levy. Obligations exist when the liability of the obligor is 
fixed and determinable although the right to receive payment thereof may 
be deferred until a later date. For example, if on the first day of the 
month a delinquent taxpayer sold personal property subject to an 
agreement that the buyer remit the purchase price on the last day of the 
month, a levy made on the buyer on the 10th day of the month would reach 
the amount due on the sale, although the buyer need not satisfy the levy 
by paying over the amount to the appropriate TTB officer until the last 
day of the month. Similarly, a levy only reaches property in the 
possession of the person levied upon at the time the levy is made. For 
example, a levy made on a bank with respect to the account of a 
delinquent taxpayer is satisfied if the bank surrenders the amount of 
the taxpayer's balance at the time the levy is made, including interest 
thereon to the date of surrender. The levy has no effect upon any 
subsequent deposit made in the bank by the taxpayer. Subsequent deposits 
may be reached only by a subsequent levy on the bank.
    (2) Jeopardy cases. If the appropriate TTB officer finds that the 
collection of any tax is in jeopardy, that officer may make notice and 
demand for immediate payment of such tax and, upon

[[Page 270]]

failure or refusal to pay such tax, collection thereof by levy shall be 
lawful without regard to the 10-day period provided in 26 U.S.C. 6331(a) 
or the 30-day period provided in 26 U.S.C. 6331(d).
    (3) Bankruptcy or receivership cases. During a bankruptcy proceeding 
or a receivership proceeding in either a Federal or a State court, the 
assets of the taxpayer are in general under the control of the court in 
which such proceeding is pending. Taxes cannot be collected by levy upon 
assets in the custody of a court, whether or not such custody is 
incident to a bankruptcy or receivership proceeding, except where the 
proceeding has progressed to such a point that the levy would not 
interfere with the work of the court or where the court grants 
permission to levy. Any assets which under applicable provisions of law 
are not under the control of the court may be levied upon, for example, 
property exempt from court custody under State law or the bankrupt's 
earnings and property acquired after the date of bankruptcy. However, 
levy upon such property is not mandatory and the Government may rely 
upon payment of taxes in the proceeding.
    (4) Certain types of compensation--(i) Federal employees. Levy may 
be made upon the salary or wages of any officer or employee (including 
members of the Armed Forces), or elected or appointed official, of the 
United States, the District of Columbia, or any agency or 
instrumentality of either, by serving a notice of levy on the employer 
of the delinquent taxpayer. As used in this paragraph, the term 
``employer'' means:
    (A) The officer or employee of the United States, the District of 
Columbia, or of the agency or instrumentality of the United States or 
the District of Columbia, who has control of the payment of the wages, 
or
    (B) Any other officer or employee designated by the head of the 
branch, department, or agency, or instrumentality of the United States 
or of the District of Columbia as the party upon whom service of the 
notice of levy may be made.

If the head of such branch, department, agency or instrumentality 
designates an officer or employee other than one who has control of the 
payment of the wages, as the party upon whom service of the notice of 
levy may be made, such head shall promptly notify the appropriate TTB 
officer of the name and address of each officer or employee so 
designated and the scope or extent of the authority of such designee.
    (ii) State and municipal employees. Salaries, wages, or other 
compensation of any officer, employee, or elected or appointed official 
of a State or Territory, or of any agency, instrumentality, or political 
subdivision thereof, are also subject to levy to enforce collection of 
any Federal tax.
    (iii) Seamen. Notwithstanding the provisions of section 12 of the 
Seamen's Act of 1915 (46 U.S.C. 601), wages of seamen, apprentice 
seamen, or fishermen employed on fishing vessels are subject to levy. 
See 26 U.S.C. 6334(c).
    (5) Noncompetent Indians. Solely for purposes of 26 U.S.C. 6321 and 
6331, any interest in restricted land held in trust by the United States 
for an individual noncompetent Indian (and not for a tribe) shall not be 
deemed to be property, or a right to property, belonging to such Indian.
    (b) Successive seizures. Whenever any property or rights to property 
upon which a levy has been made are not sufficient to satisfy the claim 
of the United States for which the levy is made, the appropriate TTB 
officer may thereafter, and as often as may be necessary, proceed to 
levy in like manner upon any other property or rights to property 
subject to levy of the person against whom such claim exists or on which 
there is a lien imposed by 26 U.S.C. 6321 (or the corresponding 
provision of prior law) for the payment of such claim until the amount 
due from such person, together with all costs and expenses, is fully 
paid.
    (c) Service of notice of levy by mail. A notice of levy may be 
served by mailing the notice to the person upon whom the service of a 
notice of levy is authorized under paragraph (a)(1) of this section. In 
such a case the date and time the notice is delivered to the person to 
be served is the date and time the levy is made. If the notice is sent 
by certified or registered mail, return receipt requested, the date of 
delivery on the receipt is treated as the

[[Page 271]]

date the levy is made. If, after receipt of a notice of levy, an officer 
or other person authorized to act on behalf of the person served signs 
and notes the date and time of receipt on the notice of levy, the date 
and time so noted will be presumed to be, in the absence of proof to the 
contrary, the date and time of delivery. Any person may upon written 
notice to the appropriate TTB officer, have all notices of levy by mail 
sent to one designated ofice. After such a notice is received by the 
appropriate TTB officer, notices of levy by mail will sent to the 
designated office until a written notice withdrawing the request or a 
written notice designating a difference office is received by the 
appropriate TTB officer.

(26 U.S.C. 6331 and 6332)

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973,as amended by T.D. ATF-450, 66 
FR 29026, May 29, 2001]



Sec. 70.162  Levy and distraint on salary and wages.

    (a) Notice of intent to levy. Levy may be made for any unpaid tax 
only after the appropriate TTB officer has notified the taxpayer in 
writing of the intent to levy. The notice must be given in person, left 
at the dwelling or usual place of business of the taxpayer, or be sent 
by certified or registered mail to the taxpayer's last known address, no 
less than 30 days before the day of levy. The notice of intent to levy 
is in addition to, and may be given at the same time as, the notice and 
demand described in Sec. 70.161 of this part.
    (b) Jeopardy. Paragraph (a) of this section does not apply to a levy 
if the appropriate TTB officer has made a finding under Sec. 
70.161(a)(2) of this part that the collection of tax is in jeopardy.
    (c) Continuing effect of levy on salary or wages. A levy on salary 
or wages is continuous from the time of the levy until the liability out 
of which the levy arose is released under 26 U.S.C. 6343 and Sec. 
70.167 of this part. For this purpose, the term ``salary or 
wages''includes compensation for services paid in the form of fees, 
commissions, bonuses, and similar items. The levy attaches to both 
salary or wages earned but not yet paid at the time of the levy, and 
salary or wages earned and becoming payable (or paid in the form of an 
advance) subsequent to the date of the levy, until the levy is released 
pursuant to paragraph (d) of this section. In general, salaries or wages 
that are the subject of a continuing levy, if not exempt from levy under 
26 U.S.C. 6334(a) (8) or (9), become payable to the officer who made the 
levy as the payor would otherwise be obligated to pay over the money to 
the taxpayer. For example, if the wage earner is paid on the Wednesday 
following the close of each workweek, a levy made upon the taxpayer's 
employer on any Monday would reach both the wages due for the prior 
workweek and the wages for succeeding workweeks as such wages become 
payable. In such a case the levy would be satisfied if the employer, on 
the first Wednesday after the levy and on each Wednesday thereafter, 
pays over to the officer who made the levy wages which would otherwise 
be paid to the employee on such Wednesday, until the employer receives a 
notice of release from levy described in paragraph (d) of this section. 
See, however, Sec. 70.245(d) of this part for rules which permit a 
delayed payment to the officer who made the levy in certain cases where 
amounts payable to the taxpayer are exempt from levy under 26 U.S.C. 
6334 (a)(9) and (d).
    (d) Release and notice of release from levy. The officer who made 
the levy will promptly release a continuing levy on salary or wages when 
the conditions of 26 U.S.C. 6343 are met. The officer who made the levy 
will also promptly notify the person upon whom the levy was made that it 
has been released.

(26 U.S.C. 6331)



Sec. 70.163  Surrender of property subject to levy.

    (a) Requirement--(1) In general. Except as otherwise provided in 26 
U.S.C. 6332, relating to levy in the case of banks or life insurance and 
endowment contracts, any person in possession of (or obligated with 
respect to) property or rights to property subject to levy and upon 
which a levy has been made shall, upon demand of the officer who made 
the levy, surrender the property or rights (or discharge the obligation) 
to the officer who made the levy, except that part of the property or 
rights (or

[[Page 272]]

obligation) which, at the time of the demand, is actually or 
constructively under the jurisdiction of a court because of an 
attachment or execution under any judicial process.
    (2) Property held by banks. (i) Any bank shall surrender any 
deposits (including interest thereon) in such bank only after 21 days 
after service of levy.
    (ii) Notwithstanding paragraph (a)(1) of this section, if a levy has 
been made upon property or rights to property subject to levy which a 
bank engaged in the banking business in the United States or a 
possession of the United States is in possession of (or obligated with 
respect to), an appropriate TTB officer shall not enforce the levy with 
respect to any deposits held in an office of the bank outside the United 
States or a possession of the United States, unless the notice of levy 
specifies that such officer intends to reach such deposits. The notice 
of levy must not specify that such officer intends to reach such 
deposits unless that officer making such levy believes:
    (A) That the taxpayer is within the jurisdiction of a U.S. court at 
the time the levy is made and that the bank is in possession of (or 
obligated with respect to) deposits of the taxpayer in an office of the 
bank outside the United States or a possession of the United States; or
    (B) That the taxpayer is not within the jurisdiction of a U.S. court 
a the time the levy is made, that the bank is in possession of (or 
obligated with respect to) deposits of the taxpayer in an office outside 
the United States or a possession of the United States, and that such 
deposits consist, in whole or in part, of funds transferred from the 
United States or a possession of the United States in order to hinder or 
delay the collection of a tax imposed by provisions of 26 U.S.C. 
enforced and administered by the Bureau.
    (b) Enforcement of levy--(1) Extent of personal liability. Any 
person who, upon demand of the appropriate TTB officer, fails or refuses 
to surrender any property or right to property subject to levy is liable 
in his/her own person and estate in a sum equal to the value of the 
property or rights not so surrendered, together with costs and 
interests. The liability, however, may not exceed the amount of the 
taxes for the collection of which the levy was made. Interest is to be 
computed at the annual rate referred to in regulations under 26 U.S.C. 
6221 from the date of the levy, or, in the case of a continuing levy on 
salary or wages (see 26 U.S.C. 6331(e)), from the date the person would 
otherwise have been obligated to pay over the wages or salary to the 
taxpayer. Any amount recovered, other than cost, will be credited 
against the tax liability for the collection of which the levy was made.
    (2) Penalty for violation. In addition to the personal liability 
described in paragraph (b)(1) of this section, any person who is 
required to surrender property or rights to property and who fails or 
refuses to surrender them without reasonable cause is liable for a 
penalty equal to 50 percent of the amount recoverable under 26 U.S.C. 
6332(d)(2). No part of the penalty described in this subparagraph shall 
be credited against the tax liability for the collection of which the 
levy was made. The penalty described in this subparagraph is not 
applicable in cases where a bona fide dispute exists concerning the 
amount of the property to be surrendered pursuant to a levy or 
concerning the legal effectiveness of the levy. However, if a court in a 
later enforcement suit sustains the levy, then reasonable cause would 
usually not exist to refuse to honor a later levy made under similar 
circumstances.
    (c) Effect of honoring levy. Any person in possession of, or 
obligated with respect to, property or rights to property subject to 
levy and upon which a levy has been made who, upon demand by the 
appropriate TTB officer, surrenders the property or rights to property, 
or discharges the obligation, to that officer, or who pays a liability 
described in paragraph (b)(1) of this section, is discharged from any 
obligation or liability to the delinquent taxpayer with respect to the 
property or rights to property arising from the surrender or payment. If 
an insuring organization satisfies a levy with respect to a life 
insurance or endowment contract in accordance with Sec. 70.164 of this 
part, the insuring organization is discharged from any obligation or 
liability to any beneficiaries of the contract arising from

[[Page 273]]

the surrender or payment. Also, it is discharged from any obligation or 
liability to the insured or other owner. Any person who mistakenly 
surrenders to the United States property or rights to property not 
properly subject to levy is not relieved from liability to a third party 
who owns the property. The owners of mistakenly surrendered property 
may, however, secure from the United States the administrative relief 
provided for in 26 U.S.C. 6343(b) or may bring suit to recover the 
property under 26 U.S.C. 7426.
    (d) Person defined. In addition to the definition given in Sec. 
70.11 of this part, the term ``person,'' as used in 26 U.S.C.A 6332(a) 
and this section, includes an officer or employee of a corporation or a 
member or employee of a partnership, who is under a duty to surrender 
the property or rights to property or to discharge the obligation. In 
the case of a levy upon the salary or wages of an officer, employee, or 
elected or appointed official of the United States, the District of 
Columbia, or any agency or instrumentality of either, the term 
``person'' includes the officer or employee of the United States, of the 
District of Columbia, or of such agency or instrumentality who is under 
a duty to discharge the obligation. As to the officer or employee who is 
under such duty, see Sec. 70.161(a)(4)(i) of this part.

(26 U.S.C. 6332)

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-450, 66 
FR 29026, May 29, 2001]



Sec. 70.164  Surrender of property subject to levy in the case of life 

insurance and endowment contracts.

    (a) In general. This section provides special rules relating to the 
surrender of property subject to levy in the case of life insurance and 
endowment contracts. The provisions of Sec. 70.163 of this part which 
relate generally to the surrender of property subject to levy apply, to 
the extent not inconsistent with the special rules set forth in this 
section, to a levy in the case of life insurance and endowment 
contracts.
    (b) Effect of service of notice of levy--(1) In general. A notice of 
levy served by an appropriate TTB officer on an insuring organization 
with respect to a life insurance or endowment contract issued by the 
organization shall constitute:
    (i) A demand by the officer who made the levy for the payment of the 
cash loan value of the contract adjusted in accordance with paragraph 
(c) of this section, and
    (ii) The exercise of the right of the person against whom the tax is 
assessed to the advance of such cash loan value.

It is unnecessary for the official who made the levy to surrender the 
contract document to the insuring organization upon which the levy is 
made. However, the notice of levy will include a certification by the 
official who made the levy that a copy of the notice of levy has been 
mailed to the person against whom the tax is assessed at that person's 
last known address. At the time of service of the notice of levy, the 
levy is effective with respect to the cash loan value of the insurance 
contract, subject to the condition that if the levy is not satisfied or 
released before the 90th day after the date of service, the levy can be 
satisfied only by payment of the amount described in paragraph (c) of 
this section. Other than satisfaction or release of the levy, no event 
during the 90-day period subsequent to the date of service of the notice 
of levy shall release the cash loan value from the effect of the levy. 
For example, the termination of the policy by the taxpayer or by the 
death of the insured during such 90-day period shall not release the 
levy. For the rules relating to the time when the insuring organization 
is to pay over the required amount, see paragraph (c) of this section.
    (2) Notification of amount subject to levy--(i) Full payment before 
the 90th day. In the event that the unpaid liability to which the levy 
relates is satisfied at any time during the 90-day period subsequent to 
the date of service of the notice of levy, the officer who filed the 
notice of levy will promptly give the insuring organization written 
notification that the levy is released.
    (ii) Notification after the 90th day. In the event that notification 
is not given under paragraph (b)(2)(i) of this section, the officer who 
filed the notice of levy will, promptly following the 90th

[[Page 274]]

day after service of the notice of levy, give the insuring organization 
written notification of the current status of all accounts listed on the 
notice of levy, and of the total payments received since service of the 
notice of levy. This notification will be given to the insuring 
organization whether or not there has been any change in the status of 
the accounts.
    (c) Satisfaction of levy. The levy described in paragraph (b) of 
this section with respect to a life insurance or endowment contract 
shall be deemed to be satisfied if the insuring organization pays over 
to the officer who made the levy the amount which the person against 
whom the tax is assessed could have had advanced by the organization on 
the 90th day after service of the notice of levy on the organization. 
However, this amount is increased by the amount of any advance 
(including contractual interest thereon), generally called a policy 
loan, made to the person on or after the date the orginzation has actual 
notice or knowledge, within the meaning of 26 U.S.C. 6323(i)(1), of the 
existence of the tax lien with respect to which the levy is made. The 
insuring organization may, nevertheless, make an advance (including 
contractual interest thereon), generally called an automatic premium 
loan, made automatically to maintain the contract in force under an 
agreement entered into before the organization has such actual notice or 
knowledge. In any event, the amount paid to the appropriate TTB officer 
by the insuring organization is not to exceed the amount of the unpaid 
liability shown on the notification described in paragraph (b)(2) of 
this section. The amount determined in accordance with the provisions of 
this section, subject to the levy, shall be paid to the appropriate TTB 
officer by the insuring organization promptly after receipt of the 
notification described in paragraph (b)(2) of this section. The 
satisfaction of a levy with respect to a life insurance or endowment 
contract will not discharge the contract from the tax lien. However, see 
26 U.S.C. 6323(b)(9)(C) and Sec. 70.231(i) of this part concerning the 
liability of an insurance company after satisfaction of a levy with 
respect to a life insurance or endowment contract. If the person against 
whom the tax is assessed so directs, the insuring organization, on a 
date before the 90th day after service of the notice of levy, may 
satisfy the levy by paying over an amount computed in accordance with 
the provisions of this subparagraph substituting such date for the 90th 
day. In the event of termination of the policy by the taxpayer or by the 
death of the insured on a date before the 90th day after service of the 
notice of levy, the amount to be paid over to the appropriate TTB 
officer by the insuring organization in satisfaction of the levy shall 
be an amount computed in accordance with the provisions of this 
subparagraph substituting the date of termination of the policy or the 
date of death for the 90th day.
    (d) Other enforcement proceedings. The satisfaction of the levy 
described in paragraph (b) of this section by an insuring organization 
shall be without prejudice to any civil action for the enforcement of 
any Federal tax lien with respect to a life insurance or endowment 
contract. Thus, this levy procedure is not the exclusive means of 
subjecting the life insurance and endowment contracts of the person 
against whom a tax is assessed to the collection of the person's unpaid 
assessment. The United States may choose to foreclose the tax lien in 
any case where it is appropriate, as, for example, to reach the cash 
surrender value (as distinguished from cash loan value) of a life 
insurance or endowment contract.
    (e) Cross references. (1) For provisions relating to priority of 
certain advances with respect to a life insurance or endowment contract 
after satisfaction of a levy pursuant to 26 U.S.C. 6332(b), see 26 
U.S.C. 6323(b)(9) and Sec. 70.231(i) of this part.
    (2) For provisions relating to the issuance of a certificate of 
discharge of a life insurance or endowment contract subject to a tax 
lien, see 26 U.S.C. 6325(b) and Sec. 70.150(b) of this part.

(26 U.S.C. 6332)



Sec. 70.165  Production of books.

    If a levy has been made or is about to be made on any property or 
rights to property, any person, having custody

[[Page 275]]

or control of any books or records containing evidence or statements 
relating to the property or rights to property subject to levy, shall, 
upon demand of the appropriate TTB officer who has made or is about to 
make the levy, exhibit such books or records to such officer.

(26 U.S.C. 6333)



Sec. 70.167  Authority to release levy and return property.

    (a) Release of levy--(1) Authority. An appropriate TTB officer may 
release the levy upon all or part of the property or rights to property 
levied upon as provided in paragraphs (a)(2), (3) and (4) of this 
section. A levy may be released under paragraph (a)(3) of this section 
only if the delinquent taxpayer complies with such of the conditions 
thereunder as an appropriate TTB officer may require and if the 
appropriate TTB officer determines that such action will facilitate the 
collection of the liability.
    (2) Conditions for mandatory release. (i) An appropriate TTB officer 
shall release the levy as authorized under paragraph (a)(1) of this 
section, if any of the following conditions exist:
    (A) The liability for which such levy was made is satisfied or 
becomes unenforceable by reason of lapse of time,
    (B) Release of such levy will facilitate the collection of such 
liability,
    (C) The taxpayer has entered into an agreement under 26 U.S.C. 6159 
to satisfy such liability by means of installment payments, unless such 
agreement provides otherwise (an appropriate TTB officer is not required 
to release the levy in this case if release of such levy would 
jeopardize the secured creditor status of the United States).
    (D) An appropriate TTB officer has determined that such levy is 
creating an economic hardship due to the financial condition of the 
taxpayer, or
    (E) The fair market value of the property exceeds such liability and 
release of the levy on a part of such property could be made without 
hindering the collection of such liability.
    (ii) In the case of any tangible personal property essential in 
carrying on the trade or business of the taxpayer, the appropriate TTB 
officer shall provide for an expedited determination under paragraph 
(a)(2)(i) if levy on such tangible personal property would prevent the 
taxpayer from carrying on such trade or business.
    (3) Conditions for discretionary release. An appropriate TTB officer 
may release the levy as authorized under paragraph (a)(1) of this 
section, if:
    (i) Escrow arrangement. The delinquent taxpayer offers a 
satisfactory arrangement, which is accepted by an appropriate TTB 
officer, for placing property in escrow to secure the payment of the 
liability (including the expenses of levy) which is the basis of the 
levy.
    (ii) Bond. The delinquent taxpayer delivers an acceptable bond to an 
appropriate TTB officer conditioned upon the payment of the liability 
(including the expenses of levy) which is the basis of the levy. Such 
bond shall be in the form provided in 26 U.S.C. 7101 and Sec. 70.281 of 
this part.
    (iii) Payment of amount of U.S. interest in the property. There is 
paid to an appropriate TTB officer an amount determined by TTB to be 
equal to the interest of the United States in the seized property or the 
part of the seized property to be released.
    (iv) Assignment of salaries and wages. The delinquent taxpayer 
executes an agreement directing the taxpayer's employer to pay to an 
appropriate TTB officer amounts deducted from the employee's wages on a 
regular, continuing, or periodic basis, in such manner and in such 
amount as is agreed upon with an appropriate TTB officer, until the full 
amount of the liability is satisfied, and such agreement is accepted by 
the employer.
    (v) Extension of statute of limitations. The delinquent taxpayer 
executes an agreement to extend the statute of limitations in accordance 
with 26 U.S.C. 6502(a)(2) and Sec. 70.224 of this part.
    (4) Release where value of interest of United States is insufficient 
to meet expenses of sale. An appropriate TTB officer may release the 
levy as authorized under paragraph (a)(1) of this section if that 
officer determines that the value of the interest of the United States 
in the seized property, or in the part of the seized property to be 
released is insufficient to cover the expenses of the sale of such 
property.

[[Page 276]]

    (b) Return of property--(1) General rule. If an appropriate TTB 
officer determines that property has been wrongfully levied upon, the 
appropriate TTB officer may return:
    (i) The specific property levied upon,
    (ii) An amount of money equal to the amount of money levied upon 
(together with interest thereon at the overpayment rate from the date 
TTB receives the money to a date not more than 30 days before the date 
of return), or
    (iii) An amount of money equal to the amount of money received by 
the United States from a sale of the property (together with interest 
thereon at the overpayment rate from the date of the sale of the 
property to a date not more than 30 days before the date of return).

If the United States is in possession of specific property, the property 
may be returned at any time. An amount equal to the amount of money 
levied upon or received from a sale of the property may be returned at 
any time before the expiration of 9 months from the date of the levy. 
When a request described in paragraph (b)(2) of this section is filed 
for the return of property before the expiration of 9 months from the 
date of levy, an amount of money may be returned after a reasonable 
period of time subsequent to the expiration of the 9-month period if 
necessary for the investigation and processing of such request. In cases 
where money is specifically identifiable, as in the case of a coin 
collection which may be worth substantially more than its face value, 
the money will be treated as specific property and, whenever possible, 
this specific property will be returned. For purposes of paragraph 
(b)(1)(iii) of this section, if property is declared purchased by the 
United States at a sale pursuant to 26 U.S.C. 6335(e), the United States 
is treated as having received an amount of money equal to the minimum 
price determined by the appropriate TTB officer before the sale or, if 
larger, the amount received by the United States from the resale of the 
property.
    (2) Request for return of property. A written request for the return 
of property wrongfully levied upon shall be addressed to the officer who 
authorized the levy. The written request shall contain the following 
information:
    (i) The name and address of the person submitting the request,
    (ii) A detailed description of the property levied upon,
    (iii) A description of the claimant's basis for claiming an interest 
in the property levied upon, and
    (iv) The name and address of the taxpayer, the originating TTB 
office, and the date of lien or levy as shown on the Notice of Tax Lien, 
Notice of Levy, or, in lieu thereof, a statement of the reasons why such 
information cannot be furnished.
    (3) Inadequate request. A request shall not be considered adequate 
unless it is a written request containing the information required by 
paragraph (b)(2) of this section. However, unless a notification is 
mailed by the officer who received the request to the claimant within 30 
days of receipt of the request to inform the claimant of the 
inadequacies, any written request shall be considered adequate. If the 
officer who received the request timely notifies the claimant of the 
inadequacies of the request, the claimant shall have 30 days from the 
receipt of the notification of inadequacy to supply in writing any 
omitted information. Where the omitted information is so supplied within 
the 30-day period, the request shall be considered to be adequate from 
the time the original request was made for purposes of determining the 
applicable period of limitation upon suit under 26 U.S.C. 6532(c).

(26 U.S.C. 6343)

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-450, 66 
FR 29026, May 29, 2001]



Sec. 70.168  Redemption of property.

    (a) Before sale. Any person whose property has been levied upon 
shall have the right to pay the amount due, together with costs and 
expenses of the proceeding, if any, to the appropriate TTB officer at 
any time prior to the sale of the property. Upon such payment the 
appropriate TTB officer shall restore such property to the owner and all 
further proceedings in connection with the levy on such property shall 
cease from the time of such payment.

[[Page 277]]

    (b) Redemption of real estate after sale--(1) Period. The owner of 
any real estate sold as provided in 26 U.S.C. 6335, the owner's heirs, 
executors, or administrators, or any person having any interest therein, 
or a lien thereon, or any person in their behalf, shall be permitted to 
redeem the property sold, or any particular tract of such property, at 
any time within 180 days after the sale thereof.
    (2) Price. Such property or tract of property may be redeemed upon 
payment to the purchaser, or in case the purchaser cannot be found in 
the county in which the property to be redeemed is situated, then to the 
appropriate TTB officer, for the use of the purchaser, the purchaser's 
heirs, or assigns, the amount paid by such purchaser and interest 
thereon at the rate of 20 percent per annum. In case real and personal 
property (or several tracts of real property) are purchased in the 
aggregate, the redemption price of the real property (or of each of the 
several tracts) shall be determined on the basis of the ratio, as of the 
time of sale, of the value of the real property (or tract) to the value 
of the total property purchased. For this purpose the minimum price or 
the highest bid price, whichever is higher, offered for the property 
separately or in groups shall be treated as the value.
    (c) Record. When any real property is redeemed, the appropriate TTB 
officer must cause entry of the fact to be made upon the record of sale 
kept in accordance with 26 U.S.C. 6340 and Sec. 70.187 of this part, 
and such entry is evidence of such redemption. The party who redeems the 
property must notify the appropriate TTB officer of the date of such 
redemption and of the transfer of the certificate of sale, the amount of 
the redemption price, and the name of the party to whom such redemption 
price was paid.

(26 U.S.C. 6337)

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-450, 66 
FR 29026, May 29, 2001]



Sec. 70.169  Expense of levy and sale.

    The appropriate TTB officer shall determine the expenses to be 
allowed in all cases of levy and sale. Such expenses shall include the 
expenses of protection and preservation of the property during the 
period subsequent to the levy, as well as the actual expenses incurred 
in connection with the sale thereof. In case real and personal property 
(or several tracts of real property) are sold in the aggregate, the 
appropriate TTB officer shall properly apportion the expenses to the 
real property (or to each tract).

(26 U.S.C. 6341)



Sec. 70.170  Application of proceeds of levy.

    (a) Collection of liability. Any money realized by proceedings under 
26 U.S.C. 6331 through 6344, or by sale of property redeemed by the 
United States (if the interest of the United States in the property was 
a lien arising under the provisions of 26 U.S.C. enforced and 
administered by the Bureau), is applied in the manner specified in 
paragraphs (a)(1), (2), and (3) of this section. Money realized by 
proceedings under 26 U.S.C. 6331 through 6344, includes money realized 
by seizure, by sale of seized property, or by surrender under 26 U.S.C. 
6332 except money realized by the imposition of a 50 percent penalty 
pursuant to 26 U.S.C. 6332(d)(2)).
    (1) Expense of levy and sale. First, against the expenses of the 
proceedings or sale, including expenses allowable under 26 U.S.C. 6341 
and amounts paid by the United States to redeem property.
    (2) Specific tax liability on seized property. If the property 
seized and sold is subject to a tax imposed by any provision of 26 
U.S.C. which has not been paid, the amount remaining after applying 
paragraph (a)(1) of this section, shall then be applied against such tax 
liability (and, if such tax was not previously assessed, it shall then 
be assessed):
    (3) Liability of delinquent taxpayer. The amount, if any, remaining 
after applying paragraphs (a)(1) and (2) of this section, shall then be 
applied against the liability in respect of which the levy was made or 
the sale of redeemed property was conducted.
    (b) Surplus proceeds. Any surplus proceeds remaining after the 
application of paragraph (a) of this section shall, upon application and 
satisfactory proof

[[Page 278]]

in support thereof, be credited or refunded by the appropriate TTB 
officer to the person or persons legally entitled thereto. The 
delinquent taxpayer is the person entitled to the surplus proceeds 
unless another person establishes a superior claim thereto.

(26 U.S.C. 6342)

                         Disposition of Property

    Source: Sections 70.181 through 70.188 added by T.D. ATF-301, 55 FR 
47627, Nov. 14, 1990, unless otherwise noted.



Sec. 70.181  Disposition of seized property.

    (a) Notice of seizure. As soon as practicable after seizure of 
property, the appropriate TTB officer seizing the property shall give 
notice in writing to the owner of the property (or, in the case of 
personal property, to the possessor thereof). The written notice shall 
be delivered to the owner (or to the possessor, in the case of personal 
property) or left at the owner's usual place of abode or business, if 
located within the TTB region where the seizure is made. If the owner 
cannot be readily located, or has no dwelling or place of business 
within such region, the notice may be mailed to the owner's last known 
address. Such notice shall specify the sum demanded and shall contain, 
in the case of personal property, a list sufficient to identify the 
property seized and, in the case of real property, a description with 
reasonable certainty of the property seized.
    (b) Notice of sale. (1) As soon as practicable after seizure of the 
property, the appropriate TTB officer shall give notice of sale in 
writing to the owner. Such notice shall be delivered to the owner or 
left at the owner's usual place of abode or business if located. If the 
owner cannot be readily located, or has no dwelling or place of 
business, the notice may be mailed to the owner's last known address. 
The notice shall specify the property to be sold, and the time, place, 
manner, and conditions of the sale thereof, and shall expressly state 
that only the right, title, and interest of the delinquent taxpayer in 
and to such property is to be offered for sale. The notice shall also be 
published in some newspaper published in the county wherein the seizure 
is made or in a newspaper generally circulated in that county. For 
example, if a newspaper of general circulation in a county but not 
published in that county will reach more potential bidders for the 
property to be sold than a newspaper published within the county, or if 
there is a newspaper of general circulation within the county but no 
newspaper published within the county, the appropriate TTB officer may 
cause public notice of the sale to be given in the newspaper of general 
circulation within the county. If there is no newspaper published or 
generally circulated in the county, the notice shall be posted at the 
post office nearest the place where the seizure is made, and in not less 
than two other public places.
    (2) The appropriate TTB officer may use other methods of giving 
notice of sale and of advertising seized property in addition to those 
referred to in paragraph (b)(1) of this section, when the appropriate 
TTB officer believes that the nature of the property to be sold is such 
that a wider or more specialized advertising coverage will enhance the 
possibility of obtaining a higher price for the property.
    (3) Whenever levy is made without regard to the 10-day period 
provided in 26 U.S.C. 6331(a) (relating to cases in which collection is 
in jeopardy), a public notice of sale of the property seized shall not 
be made within such 10-day period unless 26 U.S.C. 6336 (relating to 
perishable goods) is applicable.
    (c) Time, place, manner, and conditions of sale. The time, place, 
manner, and conditions of sale of property seized by levy shall be as 
follows:
    (1) Time and place of sale--(i) In general. The time of sale shall 
not be less than 10 days nor more than 40 days from the time of giving 
public notice under 26 U.S.C. 6335(b) (see paragraph (b) of this 
section). The place of sale shall be within the county in which the 
property is seized, except that if it appears to the appropriate TTB 
officer under whose supervision the seizure was made that substantially 
higher bids may be obtained for the property if the sale is held at a 
place outside such county, the appropriate TTB officer may order that 
the sale be held in

[[Page 279]]

such other place. The sale shall be held at the time and place stated in 
the notice of sale.
    (ii) Right to request sale of seized property within 60 days. The 
owner of any property seized by levy may request that the appropriate 
TTB officer sell such property within 60 days after such request (or 
within such longer period as may be specified by the owner). The 
appropriate TTB officer shall comply with such request unless it is 
determined (and the owner is notified within such period) that such 
compliance would not be in the best interests of the United States.
    (2) Adjournment of sale. When it appears to the appropriate TTB 
officer that an adjournment of the sale will best serve the interest of 
the United States or that of the taxpayer, the appropriate TTB officer 
may adjourn the sale from time to time, but the date of the sale shall 
not be later than one month after the date fixed in the original notice 
of sale.
    (3) Minimum price. (i) Before the sale of property seized by levy, 
the appropriate TTB officer shall determine:
    (A) A minimum price, taking into account the expenses of levy and 
sale, for which the property shall be sold, and
    (B) Whether the purchase of such property by the United States at 
such minimum price would be in the best interest of the United States.

If, at the sale, one or more persons offer to purchase such property for 
not less than the amount of the minimum price, the property shall be 
declared to be sold to the highest bidder. If no person offers for such 
property at the sale the amount of the minimum price and the appropriate 
TTB officer has determined that the purchase of such property by the 
United States would be in the best interest of the United States, the 
property shall be declared to be sold to the United States at such 
minimum price. If, at the sale, the property is not declared sold to the 
highest bidder or the United States, the property shall be released to 
the owner thereof and the expense of the levy and sale shall be added to 
the amount of tax for the collection of which the levy was made. Any 
property released to the owner under these circumstances shall remain 
subject to any lien imposed by 26 U.S.C. chapter 64, subchapter C.
    (ii) The appropriate TTB officer conducting the sale shall either 
announce the minimum price before the sale begins or defer announcement 
of the minimum price until after the receipt of the highest bid, and, if 
the highest bid is greater than the minimum price, no announcement of 
the minimum price shall be made.
    (4) Offering of property--(i) Sale of indivisible property. If any 
property levied upon is not divisible, so as to enable the appropriate 
TTB officer by sale of a part thereof to raise the whole amount of the 
tax and expenses of levy and sale, the whole of such property shall be 
sold. For application of surplus proceeds of sale, see 26 U.S.C. 
6342(b).
    (ii) Separately, in groups, or in the aggregate. The seized property 
may be offered for sale:
    (A) As separate items, or
    (B) As groups of items, or
    (C) In the aggregate, or
    (D) Both as separate items (or in groups) and in the aggregate. In 
such cases, the property shall be sold under the method which produces 
the highest aggregate amount.

The appropriate TTB officer shall select whichever of the foregoing 
methods of offering the property for sale as is most feasible under all 
the facts and circumstances of the case, except that if the property to 
be sold includes both real and personal property, only the personal 
property may be grouped for the purpose of offering such property for 
sale. However, real and personal property may be offered for sale in the 
aggregate, provided the real property, as separate items, and the 
personal as a group, or as groups, or as separate items, are first 
offered separately.
    (iii) Condition of title and of property. Only the right, title, and 
interest of the delinquent taxpayer in and to the property seized shall 
be offered for sale, and such interest shall be offered subject to any 
prior outstanding mortgages, encumbrances, or other liens in favor of 
third parties which are valid as against the delinquent taxpayer and are 
superior to the lien of the United States. All seized property shall be 
offered for sale ``as is'' and ``where is'' and without recourse against 
the

[[Page 280]]

United States. No guaranty or warranty, express or implied, shall be 
made by the appropriate TTB officer offering the property for sale, as 
to the validity of the title, quality, quantity, weight, size, or 
condition of any of the property, or its fitness for any use or purpose. 
No claim shall be considered for allowance or adjustment or for 
rescission of the sale based upon failure of the property to conform 
with any representation, express or implied.
    (iv) Terms of payment. The property shall be offered for sale upon 
whichever of the following terms is fixed by the appropriate TTB officer 
in the public notice of sale:
    (A) Payment in full upon acceptance of the highest bid, without 
regard to the amount of such bid, or
    (B) If the aggregate price of all property purchased by a successful 
bidder at the sale is more than $200, an initial payment of $200 or 20 
percent of the purchase price, whichever is the greater, and payment of 
the balance (including all costs incurred for the protection or 
preservation of the property subsequent to the sale and prior to final 
payment) within a specified period, not to exceed 1 month from the date 
of the sale.
    (5) Method of sale. The appropriate TTB officer shall sell the 
property either:
    (i) At public auction, at which open competitive bids shall be 
received, or
    (ii) At public sale under sealed bids. The following rules, in 
addition to the other rules provided in this paragraph, shall be 
applicable to public sale under sealed bids:
    (A) Invitation to bidders. Bids shall be solicited through a public 
notice of sale.
    (B) Form for use by bidders. A bid shall be submitted on a form 
which will be furnished by the appropriate TTB officer upon request. The 
form shall be completed in accordance with the instructions thereon.
    (C) Remittance with bid. If the total bid is $200 or less, the full 
amount of the bid shall be submitted therewith. If the total bid is more 
than $200, 20 percent of such bid or $200, whichever is greater, shall 
be submitted therewith. (In the case of alternative bids submitted by 
the same bidder for items of property offered separately, or groups, or 
in the aggregate, the bidder shall remit the full amount of the highest 
alternative bid submitted, if the bid is $200 or less. If the highest 
alternative bid submitted is more than $200, the bidder shall remit 20 
percent of the highest alternative bid or $200, whichever is greater.) 
Such remittance shall be by a certified, cashier's, or treasurer's check 
drawn on any bank or trust company incorporated under the laws of the 
United States or under the laws of any State, Territory, or possession 
of the United States, or by a U.S. postal, bank, express, or telegraph 
money order.
    (D) Time for receiving and opening bids. Each bid shall be submitted 
in a securely sealed envelope. The bidder shall indicate in the upper 
left hand corner of the envelope the bidder's name and address and the 
time and place of sale as announced in the public notice of sale. A bid 
will not be considered unless it is received by the officer conducting 
the sale prior to the opening of the bids. The bids will be opened at 
the time and place stated in the notice or sale, or at the time fixed in 
the announcement of the adjournment of the sale.
    (E) Consideration of bids. The public notice of sale shall specify 
whether the property is to be sold separately, by groups, or in the 
aggregate or by a combination of these methods, as provided in paragraph 
(c)(4)(ii) of this section. If the notice specifies an alternative 
method, bidders may submit bids under one or more of the alternatives. 
In case of error in the extension of prices in any bid, the unit price 
will govern. The officer conducting the sale shall have the right to 
waive any technical defects in a bid. In the event two or more highest 
bids are equal in amount, the officer conducting the sale shall 
determine the successful bidder by drawing lots. After the opening, 
examination, and consideration of all bids, the officer conducting the 
sale shall announce the amount of the highest bid or bids and the name 
of the successful bidder or bidders. Any remittance submitted in 
connection with an unsuccessful bid shall be returned at the conclusion 
of the sale.

[[Page 281]]

    (F) Withdrawal of bids. A bid may be withdrawn on written or 
telegraphic request received from the bidder prior to the time fixed for 
opening the bids. A technical defect in a bid confers no right on the 
bidder for the withdrawal of his bid after it has been opened.
    (6) Payment of bid price. All payments for property sold under this 
section shall be made by cash or by a certified, cashier's, or 
treasurer's check drawn on any bank or trust company incorporated under 
the laws of the United States, or under the laws of any State, 
Territory, or possession of the United States, or by a U.S. postal, 
bank, express, or telegraph money order. If payment in full is required 
upon acceptance of the highest bid, the payment shall be made at such 
time. If deferred payment is permitted, the initial payment shall be 
made upon acceptance of the bid, and the balance shall be paid on or 
before the date fixed for payment thereof. Any remittance submitted with 
a successful sealed bid shall be applied toward the purchase price.
    (7) Delivery and removal of personal property. Responsibility of the 
United States for the protection or preservation of seized personal 
property shall cease immediately upon acceptance of the highest bid. The 
risk of loss is on the purchaser of personal property upon acceptance of 
his bid. Possession of any personal property shall not be delivered to 
the purchaser until the purchase price has been paid in full. If payment 
of part of the purchase price for personal property is deferred, the 
United States will retain possession of such property as security for 
the payment of the balance of the purchase price and, as agent for the 
purchaser, will cause the property to be cared for until the purchase 
price has been paid in full or the sale is declared null and void for 
failure to make full payment of the purchase price. In such case, all 
charges and expenses incurred in caring for the property after the 
acceptance of the bid shall be borne by the purchaser.
    (8) Default in payment. If payment in full is required upon 
acceptance of the bid and is not then and there paid, the officer 
conducting the sale shall forthwith proceed again to sell the property 
in the manner provided in 26 U.S.C. 6335(e) and this section. If the 
conditions of the sale permit part of the payment to be deferred, and if 
such part is not paid within the prescribed period, suit may be 
instituted against the purchaser for the purchase price or such part 
thereof as has not been paid, together with interest at the rate of 6 
percent per annum from the date of the sale; or, in the discretion of 
the appropriate TTB officer, the sale may be declared by the appropriate 
TTB officer to be null and void for failure to make full payment of the 
purchase price and the property may again be advertised and sold as 
provided in 26 U.S.C. 6335(b), (c), and (e) and this section. In the 
event of such readvertisement and sale, any new purchaser shall receive 
such property or rights to property free and clear of any claim or right 
of the former defaulting purchaser, of any nature whatsover, and the 
amount paid upon the bid price by such defaulting purchaser shall be 
forfeited to the United States.

(26 U.S.C. 6335)

[T.D. ATF-301, 55 FR 47627, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29025, May 29, 2001]



Sec. 70.182  Disposition of personal property acquired by the United States.

    (a) Sale--(1) In general. Any personal property (except bonds, 
notes, checks, and other securities) acquired by the United States in 
payment of or as security for debts arising under the internal revenue 
laws may be sold by the appropriate TTB officer who acquired such 
property for the United States. United States saving bonds shall not be 
sold by the appropriate TTB officer, but shall be transferred to the 
appropriate office of the Treasury Department for redemption. Other 
bonds, notes, checks, and other securities shall be disposed of in 
accordance with instructions issued by the appropriate TTB officer.
    (2) Time, place, manner and terms of sale. The time, place, manner 
and terms of sale of personal property acquired for the United States 
shall be as follows:
    (i) Time, notice, and place of sale. The property may be sold at any 
time after it has been acquired by the United States. A public notice of 
sale shall be

[[Page 282]]

posted at the post office nearest the place of sale and in at least two 
other public places. The notice shall specify the property to be sold 
and the time, place, manner, and conditions of sale. In addition, the 
appropriate TTB officer may use such other methods of advertising as 
such officer believes will result in obtaining the highest price for the 
property. Generally, the place of sale will be within the area where the 
property was originally acquired by the United States. However, if the 
appropriate TTB officer believes that a substantially higher price may 
be obtained, the sale may be held outside such area.
    (ii) Rejection of bids and adjournment of sale. The officer 
conducting the sale reserves the right to reject any and all bids and 
withdraw the property from the sale. When it appears to the officer 
conducting the sale that an adjournment of the sale will best serve the 
interest of the United States, that officer may order the sale adjourned 
from time to time. If the sale is adjourned for more than 30 days in the 
aggregate, public notice of the sale must again be given in accordance 
with paragraph (a)(2)(i) of this section.
    (iii) Liquidated damages. The notice shall state whether, in the 
case of default in payment of the bid price, any amount deposited with 
the United States will be retained as liquidated damages. In case 
liquidated damages are provided, the amount thereof shall not exceed 
$200.
    (3) Agreement to bid. The appropriate TTB officer may, before giving 
notice of sale, solicit offers from prospective bidders and enter into 
agreements with such persons that they will bid at least a specified 
amount in case the property is offered for sale. In such cases, the 
appropriate TTB officer may also require such persons to make deposits 
to secure the performance of their agreements. Any such deposit, but not 
more than $200, shall be retained as liquidated damages in case such 
person fails to bid the specified amount and the property is not sold 
for as much as the amount specified in such agreement.
    (4) Terms of payment. The property shall be offered for sale upon 
whichever of the following terms is fixed by the appropriate TTB officer 
in the public notice of sale:
    (i) Payment in full upon acceptance of the highest bid, without 
regard to the amount of such bid, or
    (ii) If the aggregate price of all property purchased by a 
successful bidder at the sale is more than $200, an initial payment of 
$200 or 20 percent of the purchase price, whichever is the greater, and 
payment of the balance (including all costs incurred for the protection 
or preservation of the property subsequent to the sale and prior to 
final payment) within a specified period, not to exceed one month from 
the date of the sale.
    (5) Method of sale. The property may be sold either:
    (i) At public auction, at which open competitive bids shall be 
received, or
    (ii) At public sale under sealed bids.
    (6) Sales under sealed bids. The following rules, in addition to the 
other rules provided in this paragraph, shall be applicable to public 
sales under sealed bids.
    (i) Invitation to bidders. Bids shall be solicited through a public 
notice of sale.
    (ii) Form for use by bidders. A bid shall be submitted on a form 
which will be furnished by the appropriate TTB officer upon request. The 
form shall be completed in accordance with the instructions thereon.
    (iii) Remittance with bid. If the total bid is $200 or less, the 
full amount of the bid shall be submitted therewith. If the total bid is 
more than $200, 20 percent of such bid or $200, whichever is greater, 
shall be submitted therewith. Such remittance shall be by a certified, 
cashier's, or treasurer's check drawn on any bank or trust company 
incorporated under the laws of the United States or under the laws of 
any State, Territory, or possession of the United States, or by a U.S. 
postal, bank, express, or telegraph money order.
    (iv) Time for receiving and opening bids. Each bid shall be 
submitted in a securely sealed envelope. The bidder shall indicate in 
the upper left hand corner of the envelope the bidder's name and address 
and the time and place of sale as announced in the public notice of 
sale. A bid will not be considered unless it is received by the officer

[[Page 283]]

conducting the sale prior to the opening of the bids. The bids will be 
opened at the time and place stated in the notice of sale, or at the 
time fixed in the announcement of the adjournment of the sale.
    (v) Consideration of bids. The officer conducting the sale shall 
have the right to waive any technical defects in a bid. After the 
opening, examination, and consideration of all bids, the officer 
conducting the sale shall announce the amount of the highest bid or bids 
and the name of the successful bidder or bidders, unless in the opinion 
of the officer a higher price can be obtained for the property than has 
been bid. In the event the highest bids are equal in amount (and unless 
in the opinion of the officer conducting the sale a higher price can be 
obtained for the property than has been bid), the officer shall 
determine the successful bidder by drawing lots. Any remittance 
submitted in connection with an unsuccessful bid shall be returned to 
the bidder at the conclusion of the sale.
    (vi) Withdrawal of bids. A bid may be withdrawn on written or 
telegraphic request received from the bidder prior to the time fixed for 
opening the bids. A technical defect in a bid confers no right on the 
bidder for the withdrawal of the bid after it has been opened.
    (7) Payment of bid price. All payments for property sold pursuant to 
this section shall be made by cash or by a certified, cashier's or 
treasurer's check drawn on any bank or trust company incorporated under 
the laws of the United States or under the laws of any State, Territory, 
or possession of the United States, or by a U.S. postal, bank, express, 
or telegraph money order. If payment in full is required upon acceptance 
of the highest bid, the payment shall be made at such time. If payment 
in full is not made at such time, the officer conducting the sale may 
forthwith proceed again to sell the property in the manner provided in 
paragraph (a)(5) of this section. If deferred payment is permitted, the 
initial payment shall be made upon acceptance of the bid, and the 
balance shall be paid on or before the date fixed for payment thereof. 
Any remittance submitted with a successful sealed bid shall be applied 
toward the purchase price.
    (8) Delivery and removal of personal property. The risk of loss is 
on the purchaser of the property upon acceptance of the purchaser's bid. 
Possession of any property shall not be delivered to the purchaser until 
the purchase price has been paid in full. If payment of part of the 
purchase price for the property is deferred, the United States will 
retain possession of such property as security for the payment of the 
balance of the purchase price and, as agent for the purchaser, will 
cause the property to be cared for until the purchase price has been 
paid is full or the sale in declared null and void for failure to make 
full payment of the purchase price. In such case, all charges and 
expenses incurred in caring for the property after acceptance of the bid 
shall be borne by the purchaser.
    (9) Certificate of sale. The officer conducting the sale shall issue 
a certificate of sale to the purchaser upon payment in full of the 
purchase price.
    (b) Accounting. In case of the resale of such property, the proceeds 
of the sale shall be paid into the Treasury as internal revenue 
collections and there shall be rendered by the appropriate TTB officer a 
distinct account of all charges incurred in such sale. For additional 
accounting rules, see 26 U.S.C. 7809.

(26 U.S.C. 7505)

[T.D. ATF-301, 55 FR 47627, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29027, May 29, 2001]



Sec. 70.183  Administration and disposition of real estate acquired by the 

United States.

    (a) Persons charged with. The appropriate TTB officer shall have 
charge of all real estate which has been or shall be assigned, set off, 
or otherwise conveyed by purchase or otherwise to the United States in 
payment of debts or penalties arising under provisions of 26 U.S.C. 
enforced and administered by the Bureau or which has been or shall be 
vested in the United States by mortgage, or other security for payment 
of such debts, or which has been redeemed by the United States, or which 
has been or shall be acquired by the United States for payment of or as 
security for

[[Page 284]]

debts arising under provisions of 26 U.S.C. enforced and administered by 
the Bureau, and of all trusts created for the use of the United States 
in payment of such debts due the United States.
    (b) Sale. The appropriate TTB officer may sell any real estate owned 
or held by the United States as aforesaid, subject to the following 
rules:
    (1) Property purchased at sale under levy. If the property was 
acquired as a result of being declared purchased for the United States 
at a sale under 26 U.S.C. 6335, relating to sale of seized property, the 
property shall not be sold until after the expiration of 180 days after 
such sale under levy.
    (2) Notice of sale. A notice of sale shall be published in some 
newspaper published or generally circulated within the county where the 
property is situated, or a notice shall be posted at the post office 
nearest the place where the property is situated and in at least two 
other public places. The notice shall specify the property to be sold 
and the time, place, manner and conditions of sale. In addition, the 
appropriate TTB officer may use other methods of advertising and of 
giving notice of the sale if the appropriate TTB officer believes such 
methods will enhance the possibility of obtaining a higher price for the 
property.
    (3) Time and place of sale. The time of the sale shall be not less 
than 20 days from the date of giving public notice of sale under 
paragraph (b)(2) of this section. The place of sale shall be within the 
county where the property is situated. However, if the appropriate TTB 
officer believes a substantially better price may be obtained, the sale 
may be held outside such county.
    (4) Rejection of bids and adjournment of sale. The officer 
conducting the sale reserves the right to reject any and all bids and 
withdraw the property from the sale. When it appears to the officer 
conducting the sale that an adjournment of the sale will best serve the 
interest of the United States, that officer may order the sale adjourned 
from time to time. If the sale is adjourned for more than 30 days in the 
aggregate, public notice of the sale must be given again in accordance 
with paragraph (b)(2) of this section.
    (5) Liquidated damages. The notice shall state whether, in the cae 
of default in payment of the bid price, any amount deposited with the 
United States will be retained as liquidated damages. In case liquidated 
damages are provided, the amount thereof shall not exceed $200.
    (6) Agreement to bid. The appropriate TTB officer may, before giving 
notice of sale, solicit offers from prospective bidders and enter into 
agreements with such persons that they will bid at least a specified 
amount in case the property is offered for sale. In such cases, the 
appropriate TTB officer may also require such persons to make deposits 
to secure the performance of their agreements. Any such deposit, but not 
more than $200, shall be retained as liquidated damages in case such 
person fails to bid the specified amount and the property is not sold 
for as much as the amount specified in such agreement.
    (7) Terms. The property shall be offered for sale upon whichever of 
the following terms is fixed by the appropriate TTB officer in the 
public notice of sale:
    (i) Payments in full upon acceptance of the highest bid, or
    (ii) If the price of the property purchased by a successful bidder 
at the sale is more than $200, an initial payment of $200 or 20 percent 
of the purchase price, whichever is the greater, and payment of the 
balance within a specified period, not to exceed one month from the date 
of the sale.
    (8) Method of sale. The property may be sold either:
    (i) At public auction, at which open competitive bids shall be 
received, or
    (ii) At public sale under sealed bids.
    (9) Sales under sealed bids. The following rules, in addition to the 
other rules provided in this paragraph (b), shall be applicable to 
public sales under sealed bids.
    (i) Invitation to bidders. Bids shall be solicited through a public 
notice of sale.
    (ii) Form for use by bidders. A bid shall be submitted on a form 
which will be furnished by the appropriate TTB officer upon request. The 
form shall be completed in accordance with the instructions thereon.

[[Page 285]]

    (iii) Remittance with bid. If the total bid is $200 or less, the 
full amount of the bid shall be submitted therewith. If the total bid is 
more than $200, 20 percent of such bid or $200, whichever is greater, 
shall be submitted therewith. Such remittance shall be by a certified, 
cashier's, or treasurer's check drawn on any bank or trust company 
incorporated under the laws of the United States or under the laws of 
any State, Territory, or possession of the United States, or by a U.S. 
postal, bank, express, or telegraph money order.
    (iv) Time for receiving and opening bids. Each bid shall be 
submitted in a securely sealed envelope. The bidder shall indicate in 
the upper left hand corner of the envelope the bidder's name and address 
and the time and place of sale as announced in the public notice of 
sale. A bid shall not be considered unless it is received by the officer 
conducting the sale prior to the opening of the bids. The bids will be 
opened at the time and place stated in the notice of sale, or at the 
time fixed in the announcement of the adjournment of the sale.
    (v) Consideration of bids. The officer conducting the sale shall 
have the right to waive any technical defects in a bid. After the 
opening, examination, and consideration of all bids, the officer 
conducting the sale shall announce the amount of the highest bid or bids 
and the name of the successful bidder or bidders, unless in the opinion 
of the officer a higher price can be obtained for the property than has 
been bid. In the event the highest bids are equal in amount (and unless 
in the opinion of the officer conducting the sale a higher price can be 
obtained for the property than has been bid), the officer shall 
determine the successful bidder by drawing lots. Any remittance 
submitted in connection with an unsuccessful bid shall be returned to 
the bidder at the conclusion of the sale.
    (vi) Withdrawal of bid. A bid may be withdrawn on written or 
telegraphic request received from the bidder prior to the time fixed for 
opening the bids. A technical defect in a bid confers no right on the 
bidder for the withdrawal of the bid after it has been opened.
    (10) Payment of bid price. All payments for property sold pursuant 
to this section shall be made by cash or by a certified cashier's or 
treasurer's check drawn on any bank or trust company incorporated under 
the laws of the United States or under the laws of any State, Territory, 
or possession of the United States, or by a U.S. postal, bank, express, 
or telegraph money order. If payment in full is required upon acceptance 
of the highest bid, the payment shall be made at such time. If payment 
in full is not made at such time, the officer conducting the sale may 
forthwith proceed again to sell the property in the manner provided in 
paragraph (b)(8) of this section. If deferred payment is permitted, the 
initial payment shall be made upon acceptance of the bid, and the 
balance shall be paid on or before the date fixed for payment thereof. 
Any remittance submitted with a successful sealed bid shall be applied 
toward the purchase price.
    (11) Deed. Upon payment in full of the purchase price, the 
appropriate TTB officer shall execute a quitclaim deed to the purchaser.
    (c) Lease. Until real estate is sold, the appropriate TTB officer 
may lease such property.
    (d) Release to debtor. In cases where real estate has or may become 
the property of the United States by conveyance or otherwise, in payment 
of or as security for a debt arising under the laws relating to internal 
revenue, and such debt shall have been paid, together with the interest 
thereon (at the rate of 1 percent per month), to the United States 
within 2 years from the date of the acquisition of such real estate, the 
appropriate TTB officer may release by deed or otherwise convey such 
real estate to the debtor from whom it was taken, or to the debtor's 
heirs or other legal representatives. If property is declared purchased 
by the United States under 26 U.S.C. 6335, then, for the purpose of this 
paragraph, the date of such declaration shall be deemed to be the date 
of acquisition of such real estate.
    (e) Accounting. The appropriate TTB officer shall, in accordance 
with 26 U.S.C. 7809, account for the proceeds of all sales or leases of 
the property and all expenses connected with the maintenance, sale, or 
lease of the property.

[[Page 286]]

    (f) Authority of appropriate TTB officer. Notwithstanding the other 
paragraphs of this section, the appropriate TTB officer may, when such 
officer deems it advisable, take charge of, and assume responsibility 
for, any real estate to which this section is applicable. In such case, 
such officer will notify in writing the appropriate TTB officer from 
whom he or she is taking charge and assuming responsibility. Also, in 
any case where a single parcel of real estate is situated in an area in 
which more than one officer has jurisdiction, the appropriate TTB 
officer may designate in writing one officer who is to be in charge of, 
and responsible for, the entire property.

(26 U.S.C. 7506)

[T.D. ATF-301, 55 FR 47627, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29027, May 29, 2001]



Sec. 70.184  Disposition of perishable goods.

    (a) Appraisal of certain seized property. If the appropriate TTB 
officer determines that any property seized by levy is liable to perish 
or become greatly reduced in price or value by keeping, or that such 
property cannot be kept without great expense, the appropriate TTB 
officer shall appraise the value of such property and return it to the 
owner if the owner complies with the conditions prescribed in paragraph 
(b) of this section or, if the owner does not comply with such 
conditions, dispose of the property in accordance with paragraph (c) of 
this section.
    (b) Return to owner. If the owner of the property can be readily 
found, the appropriate TTB officer shall give the owner written notice 
of the appropriate TTB officer's determination of the appraised value of 
the property. However, if the appropriate TTB officer determines that 
the circumstances require immediate action, the appropriate TTB officer 
may give the owner an oral notice of the determination of the appraised 
value of the property, which notice shall be confirmed in writing prior 
to sale. The property shall be returned to the owner if, within the time 
specified in the notice, the owner:
    (1) Pays to the appropriate TTB officer an amount equal to the 
appraised value, or
    (2) Gives an acceptable bond as prescribed by 26 U.S.C. 7101 and 
Sec. 70.281 of this part. Such bond shall be in an amount not less than 
the appraised value of the property and shall be conditioned upon the 
payment of such amount at such time as the appropriate TTB officer 
determines to be appropriate in the circumstances.
    (c) Immediate sale. If the owner does not pay the amount of the 
appraised value of the seized property within the time specified in the 
notice, or furnish bond as provided in paragraph (b) of this section 
within such time, the appropriate TTB officer shall as soon as 
practicable make public sale of the property in accordance with the 
following terms and conditions:
    (1) Notice of sale. If the owner can readily be found, a notice 
shall be given to the owner. A notice of sale also shall be posted in 
two public places in the county which the property is to be sold. The 
notice shall specify the time and place of sale, the property to be 
sold, and the manner and conditions of sale. The appropriate TTB officer 
may give such other notice and in such other manner as the appropriate 
TTB officer deems advisable under the circumstances.
    (2) Sale. The property shall be sold at public auction to the higher 
bidder.
    (3) Terms. The purchase price shall be paid in full upon acceptance 
of the highest bid. The payment shall be made by cash, or by a 
certified, cashier's or treasurer's check drawn on any bank or trust 
company incorporated under the laws of the United States or under the 
laws of any State, Territory, or possession of the United States, or by 
a U.S. postal, bank, express, or telegraph money order.

(26 U.S.C. 6336)



Sec. 70.185  Certificate of sale; deed of real property.

    (a) Certificate of sale. In the case of property sold as provided in 
26 U.S.C. 6335 (relating to sale of seized property), the appropriate 
TTB officer shall give to the puchaser's a certificate of sale upon 
payment in full of the purchase price. A certificate of sale of real 
property shall set forth the real property purchased, for whose taxes 
the

[[Page 287]]

same was sold, the name of the purchaser, and the price paid therefor.
    (b) Deed to real property. In case of any real property sold as 
provided in 26 U.S.C. 6335 and not redeemed in the manner and within the 
time prescribed in 26 U.S.C. 6337, the appropriate TTB officer shall 
execute (in accordance with the laws of the State in which the real 
property is situated pertaining to sales of real property under 
execution) to the purchaser of such real property at the sale or his 
assigns, upon surrender of the certificate of sale, a deed of the real 
property so purchased, reciting the facts set forth in the certificate.
    (c) Deed to real property purchased by the United States. If real 
property is declared purchased by the United States at a sale pursuant 
to 26 U.S.C. 6335, the appropriate TTB officer shall at the proper time 
execute a deed therefor and shall, without delay, cause the deed to be 
duly recorded in the proper registry of deeds.

(26 U.S.C. 6338)



Sec. 70.186  Legal effect of certificate of sale of personal property and 

deed of real property.

    (a) Certificate of sale of property other than real property. In all 
cases of sale pursuant to 26 U.S.C. 6335 of property (other than real 
property), the certificate of such sale.
    (1) As evidence. Shall be prima facie evidence of the right of the 
officer to make such sale, and conclusive evidence of the regularity of 
the officer's proceedings in making the sale; and
    (2) As conveyance. Shall transfer to the purchaser all right, title, 
and interest of the party delinquent in and to the property sold; and
    (3) As authority for transfer of corporate stock. If such property 
consists of corporate stocks, shall be notice, when received, to any 
corporation, company, or association of such transfer, and shall be 
authority to such corporation, company, or association to record the 
transfer on its books and records in the same manner as if the stocks 
were transferred or assigned by the party holding the stock certificate, 
in lieu of any original or prior certificate, which shall be void, 
whether canceled or not; and
    (4) As receipts. If the subject of sale is securities or other 
evidence of debt, shall be a good and valid receipt to the person 
holding the certificate of sale as against any person holding or 
claiming to hold possession of such securities or other evidences of 
debt; and
    (5) As authority for transfer of title to motor vehicle. If such 
property consists of a motor vehicle, shall be notice, when received, to 
any public officer charged with the registration of title to motor 
vehicles, of such tranfer and shall be authority to such officer to 
record the transfer on his books and records in the same manner as if 
the certificate of title to such motor vehicle were transferred or 
assigned by the party holding the certificate of title, in lieu of any 
original or prior certificate, which shall be null and void, whether 
canceled or not.
    (b) Deed to real property. In the case of the sale of real property 
pursuant to 26 U.S.C. 6335:
    (1) Deed as evidence. The deed of sale given pursuant to 26 U.S.C. 
6338 shall be prima facie evidence of the facts therein stated; and
    (2) Deed as conveyance of title. If the proceedings of the 
appropriate TTB officer as set forth have been substantially in 
accordance with the provisions of law, such deed shall be considered and 
operate as a conveyance of all the right, title, and interest the party 
delinquent had in and to the real property thus sold at the time the 
lien of the United States attached thereto.
    (c) Effect of junior encumbrances. A certificate of sale of personal 
property given or a deed to real property executed pursuant to 26 U.S.C. 
6338 discharges the property from all liens, encumbrances, and titles 
over which the lien of the United States, with respect to which the levy 
was made, has priority. For example, a mortgage on real property 
executed after a notice of a Federal tax lien has been filed is 
extinguished when the appropriate TTB officer executes a deed to the 
real property to a purhcaser thereof at a sale pursuant to 26 U.S.C. 
6335 following the seizure of the property by the United States. The 
proceeds of such a sale are distributed in accordance with priority of 
the liens, encumbrances, or titles. See 26 U.S.C. 6342(b) and 7426(a)(2) 
and

[[Page 288]]

Sec. Sec. 70.170 and 70.207(a)(2) of this part with respect to surplus 
proceeds.

(26 U.S.C. 6339)



Sec. 70.187  Records of sale.

    (a) Requirement. Each appropriate TTB officer shall make a record of 
all sales under 26 U.S.C. 6335 of real property situated within his or 
her jurisdiction and of redemptions of such property. The records shall 
set forth the tax for which any such sale was made, the dates of 
seizures and sale, the name of the party assessed and all proceedings in 
making such sale, the amount of expenses, the names of the purchasers, 
and the date of the deed. In the case of redemption of the property, the 
records shall additionally set forth the date of such redemption and of 
the transfer of the certificate of sale, the amount of the redemption 
price, and the name of the party to whom such redemption price was paid. 
The orginal record shall be retained by the appropriate TTB officer.
    (b) Copy as evidence. A copy of such record, or any part thereof, 
certified by the appropriate TTB officer shall be evidence in any court 
of the truth of the facts therein stated.

(26 U.S.C. 6340)

[T.D. ATF-301, 55 FR 47627, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29027, May 29, 2001]



Sec. 70.188  Expense of levy and sale.

    The appropriate TTB officer shall determine the expenses to be 
allowed in all cases of levy and sale. Such expenses shall include the 
expenses of protection and preservation of the property during the 
period subsequent to the levy, as well as the actual expenses incurred 
in connection with the sale thereof. In case real and personal property 
(or several tracts of real property) are sold in the aggregate, the 
appropriate TTB officer shall properly apportion the expenses to the 
real property (or to each tract).

(26 U.S.C. 6341)

                          Judicial Proceedings

                    Civil Action by the United States

    Source: Sections 70.191 through 70.193 added by T.D. ATF-301, 55 FR 
47633, Nov. 14, 1990.



Sec. 70.191  Authorization.

    (a) In general. A civil action for the collection or recovery of 
taxes, or of any fine, penalty, or forfeiture (with respect to the 
provisions of 26 U.S.C. enforced and administered by the Bureau) will be 
commenced when the appropriate TTB officer, directs that the action be 
commenced.
    (b) Property held by banks. The appropriate TTB officer shall not 
authorize or sanction any civil action for the collection or recovery of 
taxes, or of any fine, penalty, or forfeiture, from any deposits held in 
a foreign office of a bank engaged in the banking business in the United 
States or a possession of the United States unless the appropriate TTB 
officer believes:
    (1) That the taxpayer is within the jurisdiction of a U.S. court at 
the time the civil action is authorized or sanctioned and that the bank 
is in possession of (or obligated with respect to) deposits of the 
taxpayer in an office of the bank outside the United States or a 
possession of the United States; or
    (2) That the taxpayer is not within the jurisdiction of a U.S. court 
at the time the civil action is authorized or sanctioned, that the bank 
is in possession of (or obligated with respect to) deposits of the 
taxpayer in an office of the bank outside the United States or a 
possession of the United States, and that such deposits consist, in 
whole or in part, of funds transferred from the United States or a 
possession of the United States in order to hinder or delay the 
collection of a tax imposed by the provisions of 26 U.S.C. enforced and 
administered by the Bureau.

(26 U.S.C. 7401)

[T.D. ATF-301, 55 FR 47633, Nov. 14, 1990, as amended by 66 FR 29027, 
May 29, 2001]



Sec. 70.192  Action to enforce lien or to subject property to payment of tax.

    (a) Civil actions. In any case where there has been a refusal or 
neglect to

[[Page 289]]

pay any tax (with respect to the provisions of 26 U.S.C. enforced and 
administered by the Bureau) or to discharge any liability in respect 
thereof, whether or not levy has been made, the Attorney General or 
designated delegate at the request of the appropriate TTB officer, may 
direct a civil action to be filed in any court of the United States to 
enforce the lien of the United States under the Internal Revenue Code 
with respect to such tax or liability or to subject any property, of 
whatever nature, of the delinquent, or in which the delinquent has any 
right, title or interest, to the payment of such tax or liability. In 
any such proceeding, at the instance of the United States, the court may 
appoint a receiver to enforce the lien, or, upon certification by the 
appropriate TTB officer during the pendency of such proceedings that it 
is in the public interest, may appoint a receiver with all the powers of 
a receiver in equity.
    (b) Bid by the United States. If property is sold to satisfy a first 
lien held by the United States, the United States may bid at the sale a 
sum which does not exceed the amount of its lien and the expenses of the 
sale. See also 31 U.S.C. 3715.

(26 U.S.C. 7403)

[T.D. ATF-301, 55 FR 47633, Nov. 14, 1990, as amended by 66 FR 29027, 
May 29, 2001]



Sec. 70.193  Disposition of judgments and moneys recovered.

    All judgments and moneys recovered or received for taxes, costs, 
forfeitures, and penalties (with respect to the provisions of 26 U.S.C. 
enforced and administered by the Bureau) shall be paid to the Bureau as 
collections of taxes imposed under the provisions of 26 U.S.C. enforced 
and administered by the Bureau.

(26 U.S.C. 7406)

               Proceedings by Taxpayers and Third Parties

    Source: Sections 70.202 through 70.213 added by T.D. ATF-301, 55 FR 
47634, Nov. 14, 1990, unless otherwise noted.



Sec. 70.202  Intervention.

    If the United States is not a party to a civil action or suit, the 
United States may intervene in such action or suit to assert any lien 
arising under provisions of 26 U.S.C. enforced and administered by the 
Bureau on the property which is the subject of such action or suit. The 
provisions of 28 U.S.C. 2410 (except subsection (b)) and of 28 U.S.C. 
1444 shall apply in any case in which the United States intervenes as if 
the United States had originally been named a defendant in such action 
or suit. If the application of the United States to intervene is denied, 
the adjudication in such civil action or suit shall have no effect upon 
such lien.

(26 U.S.C. 7424)



Sec. 70.203  Discharge of liens; scope and application; judicial proceedings.

    (a) In general. A tax lien of the United States, or a title derived 
from the enforcement of a tax lien of the United States, may be 
discharged or divested under local law only in the manner prescribed in 
28 U.S.C. 2410 or in the manner prescribed in 26 U.S.C. 7425. Title 26 
U.S.C. 7425(a) contains provisions relating to the discharge of a lien 
when the United States is not joined as a party in the judicial 
proceedings described in subsection (a) of 28 U.S.C. 2410. These 
judicial proceedings are plenary in nature and proceed on formal 
pleadings. Title 26 U.S.C. 7425(b) contains provisions relating to the 
discharge of a lien or a title derived from the enforcement of a lien in 
the event of a nonjudicial sale with respect to the property involved. 
Title 26 U.S.C. 7425(c) contains special rules relating to the notice of 
sale requirements contained in 26 U.S.C. 7425(b).
    (b) Judicial proceedings--(1) In general. Title 26 U.S.C. 7425(a) 
provides rules, where the United States is not joined as a party, to 
determine the effect of a judgment in any civil action or suit described 
in subsection (a) of 28 U.S.C. 2410 (relating to joinder of the United 
States in certain proceedings), or a judicial sale pursuant to such a 
judgment, with respect to property on which the United States has or 
claims a lien under the provisions of 26 U.S.C. If the United States is 
improperly

[[Page 290]]

named as a party to a judicial proceeding, the effect is the same as if 
the United States were not joined.
    (2) Notice of lien filed when the proceeding is commenced. Where the 
United States is not properly joined as a party in the court proceeding 
and a notice of lien has been filed in accordance with 26 U.S.C. 6323(f) 
or (g) in the place provided by law for such filing at the time the 
action or suit is commenced, a judgment or judicial sale pursuant to 
such a judgment shall be made subject to and without disturbing the lien 
of the United States.
    (3) Notice of lien not filed when the proceeding is commenced. Where 
the United States is not joined as a party in the court proceeding and 
either a notice of lien has not been filed in accordance with 26 U.S.C. 
6323(f) or (g) in the palce provided by law for such filing at the time 
the action or suit is commenced, or the law makes no provision for that 
filing, a judgment or judicial sale pursuant to such a judgment shall 
have the same effect with respect to the discharge or divestment of the 
lien of the United States as may be provided with respect to these 
matters by the local law of the place where the property is situated.
    (4) Proceeds of a judicial sale. If a judicial sale of property 
pursuant to a judgment in any civil action or suit to which the United 
States is not a party discharges a lien of the United States arising 
under the provisions of 26 U.S.C., the United States may claim the 
proceeds of the sale (exclusive of costs) prior to the time that 
distribution of the proceeds is ordered. The claim of the United States 
in such a case is treated as having the same priority with respect to 
the proceeds as the lien had with respect to the property which was 
discharged from the lien by the judicial sale.

(26 U.S.C. 7425(a))



Sec. 70.204  Discharge of liens; nonjudicial sales.

    (a) In general. Title 26 U.S.C. 7425(b) contains provisions with 
respect to the effect on the interest of the United States in property 
in which the United States has or claims a lien, or a title derived from 
the enforcement of a lien, of a sale made pursuant to:
    (1) An instrument creating a lien on the property sold.
    (2) A confession of judgment on the obligation secured by an 
instrument creating a lien on the property sold, or
    (3) A statutory lien on the property sold.
    For purposes of this section, such a sale is referred to as a 
``nonjudicial sale.'' The term ``nonjudicial sale'' includes, but is not 
limited to, the divestment of the taxpayer's interest in property which 
occurs by operation of law, by public or private sale, by forfeiture, or 
by termination under provisions contained in a contract for a deed or a 
conditional sales contract. Under 26 U.S.C. 7425(b)(1), if a notice of 
lien is filed in accordance with 26 U.S.C. 6323(f) or (g), or the title 
derived from the enforcement of a lien is recorded as provided by local 
law, more than 30 days before the date of sale and the appropriate TTB 
officer is not given notice of the sale (in the manner prescribed in 
Sec. 70.205 of this part), the sale shall be made subject to and 
without disturbing the lien or title of the United States. Under 26 
U.S.C. 7425(b)(2)(C), in any case in which notice of the sale is given 
to the appropriate TTB officer not less than 25 days prior to the date 
of sale (in the manner prescribed in 26 U.S.C. 7425(c)(1)), the sale 
shall have the same effect with respect to the discharge or divestment 
of the lien or title as may be provided by local law with respect to 
other junior liens or other titles derived from the enforcement of 
junior liens. A nonjudicial sale pursuant to a lien which is junior to a 
tax lien does not divest the tax lien, even though notice of the 
nonjudicial sale is given to the appropriate TTB officer. However, under 
the provisions of 26 U.S.C. 6325(b) and Sec. 70.150 of this part, 
designated officers may discharge the property from a tax lien, 
including a tax lien which is senior to another lien upon the property.
    (b) Date of sale. In the case of a nonjudicial sale subject to the 
provisions of 26 U.S.C. 7425(b), in order to compute any period of time 
determined with reference to the date of sale, the date of sale shall be 
determined in accordance with the following rules:
    (1) In the case of divestment of junior liens on property resulting 
directly

[[Page 291]]

from a public sale, the date of sale is deemed to be the date the public 
sale is held, regardless of the date under local law on which junior 
liens on the property are divested or the title to the property is 
transferred.
    (2) In the case of divestment of junior liens on property resulting 
directly from a private sale, the date of sale is deemed to be the date 
title to the property is transferred, regardless of the date junior 
liens on the property are divested under local law, and
    (3) In the case of divestment of junior liens on property not 
resulting directly from a public or private sale, the date of sale is 
deemed to be the date on which junior liens on the property are divested 
under local law. For provisions relating to the right of redemption of 
the United States, see 26 U.S.C. 7425(d) and Sec. 70.206 of this part.

(26 U.S.C. 7425(b))



Sec. 70.205  Discharge of liens; special rules.

    (a) Notice of sale requirements--(1) In general. Except in the case 
of the sale of perishable goods described in paragraph (c) of this 
section, a notice (as described in paragraph (d) of this section) of a 
nonjudicial sale shall be given, in writing by registered or certified 
mail or by personal service, not less than 25 days prior to the date of 
sale (determined under the provisions of Sec. 70.204(b) of this part), 
to the appropriate TTB officer. The provisions of 26 U.S.C. 7502 
(relating to timely mailing treated as timely filing) and 7503 (relating 
to time for performance of acts where the last day falls on Saturday, 
Sunday, or legal holiday) apply in the case of notices required to be 
made under this paragraph.
    (2) Postponement of scheduled sale--(i) Where notice of sale is 
given. In the event that notice of a sale is given in accordance with 
paragraph (a)(1) of this section, with respect to a scheduled sale which 
is postponed to a later time or date, the seller of the property is 
required to give notice of the postponement to the appropriate TTB 
officer, in the same manner as is required under local law with respect 
to other secured creditors. For example, assume that in State M local 
law requires that in the event of a postponement of a scheduled 
forclosure sale of real property, an oral announcement of the 
postponement at the place and time of the scheduled sale constitutes 
sufficient notice to secured creditors of the postponement. Accordingly, 
if at the place and time of a scheduled sale in State M an oral 
announcement of the postponement is made, the Bureau is considered to 
have notice of the postponement for the purpose of this paragraph 
(a)(2).
    (ii) Where noitce of sale is not given. In the event that:
    (A) Notice of a nonjudicial sale would not be required under 
paragraph (a)(1) of this section, if the sale were held on the 
originally scheduled date,
    (B) Because of a postponement of the scheduled sale, more than 30 
days elapse between the originally scheduled date of the sale and the 
date of the sale, and
    (C) A notice of lien with respect to the property to be sold is 
filed more than 30 days before the date of the sale, notice of the sale 
is required to be given to the appropriate TTB officer in accordance 
with the provisions of paragraph (a)(1) of this section. In any case in 
which notice of sale is required to be given with respect to a scheduled 
sale, and notice of the sale is not given, any postponement of the 
scheduled sale does not affect the rights of the United States under 26 
U.S.C. 7425(b).
    (b) Consent to sale--(1) In general. Notwithstanding the notice of 
sale provisions of paragraph (a) of this section a nonjudicial sale of 
property shall discharge or divest the property of the lien or title of 
the United States if the appropriate TTB officer consents to the sale of 
the property free of the lien or title. Pursuant to 26 U.S.C. 
7425(c)(2), where adequate protection is afforded the lien or title of 
the United States, the appropriate TTB officer may, in that officer's 
discretion, consent with respect to the sale of property in appropriate 
cases. Such consent shall be effective only if given in writing and 
shall be subject to such limitations and conditions as the appropriate 
TTB officer may require. However, the appropriate TTB officer may not 
consent to a sale of property under this section after the date of sale, 
as determined

[[Page 292]]

under Sec. 70.204(b) of this part. For provisions relating to releasing 
a lien or discharging property subject to a tax lien, see 26 U.S.C. 6325 
and Sec. 70.150 of this part.
    (2) Application for consent. Any person desiring the appropriate TTB 
officer's consent to sell property free of a tax lien or a title derived 
from the enforcement of a tax lien of the United States in the property 
shall submit to the appropriate TTB officer a written application, in 
triplicate, declaring that it is made under penalties of perjury, and 
requesting that such consent be given. The application shall contain the 
information required in the case of a noitice of sale, as set forth in 
paragraph (d)(1) of this section, and, in addition, shall contain a 
statement of the reasons why the consent is desired.
    (c) Sale of perishable goods--(1) In general. A notice (as described 
in paragraph (d) of this section) of a nonjudicial sale of perishable 
goods (as defined in paragraph (c)(2) of this section) shall be given in 
writing, by registered or certified mail or delivered by personal 
service, at any time before the sale, to the appropriate TTB officer. If 
a notice of a nonjudicial sale is timely given in the manner described 
in this paragraph the nonjudicial sale shall discharge or divest the tax 
lien, or a title derived from the enforcement of a tax lien, of the 
United States in the property. The provisions of 26 U.S.C. 7502 
(relating to timely mailing treated as timely filing) and 7503 (relating 
to time for performance of acts where the last days falls on Saturday, 
Sunday, or a legal holiday) apply in the case of notices required to be 
made under this paragraph. The seller of the perishable goods shall hold 
the proceeds (exclusive of costs) of the sale as a fund, for not less 
than 30 days after the date of the sale, subject to the liens and claims 
of the United States, in the same manner and with the same priority as 
the liens and claims of the United States had with respect to the 
property sold. If the seller fails to hold the proceeds of the sale in 
accordance with the provisions of this paragraph and if the appropriate 
TTB officer asserts a claim to the proceeds within 30 days after the 
date of sale, the seller shall be personally liable to the United States 
for an amount equal to the value of the interest of the United States in 
the fund. However, even if the proceeds of the sale are not so held by 
the seller, but all the other provisions of this paragraph are 
satisfied, the buyer of the property at the sale takes the property free 
of the liens and claims of the United States. In the event of a 
postponement of the scheduled sale of perishable goods, the seller is 
not required to notify the appropriate TTB officer of the postponement. 
For provisions relating to releasing a lien or discharging property 
subject to a tax lien, see 26 U.S.C. 6325 and Sec. 70.150 of this part.
    (2) Definition of perishable goods. For the purpose of this 
paragraph, the term ``perishable goods'' means any tangible personal 
property which, in the reasonable view of the person selling the 
property, is liable to perish or become greatly reduced in price or 
value by keeping, or cannot be kept without great expense.
    (d) Forfeiture of land sales contract. For purposes of paragraph (a) 
of this section, a nonjudicial sale of property includes any forfeiture 
of a land sales contract.
    (e) Content of notice of sale--(1) In general. With respect to a 
noitice of sale described in paragraph (a) or (c) of this section, the 
notice will be considered adequate if it contains the information 
described in paragraph (d)(1) (i), (ii), (iii), and (iv) of this 
section.
    (i) The name and address of the person submitting the notice of 
sale;
    (ii) A copy of each Notice of Federal Tax Lien (TTB Form 5651.2) 
affecting the property to be sold, or the following information as shown 
on each such Notice of Federal Tax Lien:
    (A) The initiating office named thereon,
    (B) The name and address of the taxpayer, and
    (C) The date and place of filing of the notice;
    (iii) With respect to the property to be sold the following 
information:
    (A) A detailed description, including location of the property 
affected by the notice (in the case of real property, the street 
address, city, and State and the legal description contained in the 
title or deed to the property and, if available, a copy of the abstract 
of title),

[[Page 293]]

    (B) The date, time, place, and terms of proposed sale of the 
property, and
    (C) In case of a sale of perishable property described in paragraph 
(c) of this section, a statement of the reasons why the property is 
believed to be perishable; and
    (iv) The approximate amount of the principal obligation, including 
interest, secured by the lien sought to be enforced and a description of 
the other expenses (such as legal expenses, selling costs, etc.) which 
may be charged against the sale proceeds.
    (2) Inadequate notice. Except as otherwise provided in this 
subparagraph, a notice of sale described in paragraph (a) of this 
section which does not contain the information described in paragraph 
(d)(1) of this section shall be considered inadequate by the appropriate 
TTB officer. If the appropriate TTB officer determines that the notice 
is inadequate, that officer will give written notification of the items 
of information which are inadequate to the person who submitted the 
notice. A notice of sale which does not contain the name and address of 
the person submitting such notice shall be considered to be inadequate 
for all purposes without notification of any specific inadequacy. In any 
case where a notice of sale, does not contain the information required 
under paragraph (d)(1)(ii) of this section with respect to a Notice of 
Federal Tax Lien, the appropriate TTB officer may give written 
notification of such omission without specification of any other 
inadequacy and such notice of sale shall be considered inadequate for 
all purposes. In the event the appropriate TTB officer gives 
notification that the notice of sale is inadequate, a notice complying 
with the provisions of this section (including the requirement that the 
notice be given not less than 25 days prior to the sale in the case of a 
notice described in paragraph (a) of this section) must be given. 
However, in accordance with the provisions of paragraph (b)(1) of this 
section, in such a case the appropriate TTB officer may, in that 
officer's discretion, consent to the sale of the property free of the 
lien or title of the United States even though notice of the sale is 
given less than 25 days prior to the sale. In any case where the person 
who submitted a timely notice which indicates the person's name and 
address does not receive, more than 5 days prior to the date of the 
sale, written notification from the appropriate TTB officer that the 
notice is inadequate, the notice shall be considered adequate for 
purposes of this section.
    (3) Acknowledgment of notice. If a notice of sale described in 
paragraph (a) or (c) of this section is submitted in duplicate to the 
appropriate TTB officer with a written request that receipt of the 
notice be acknowledged and returned to the person giving the notice, 
this request will be honored by the appropriate TTB officer. The 
acknowledgment by the appropriate TTB officer will indicate the date and 
time of the receipt of the notice.
    (4) Disclosure of adequacy of notice. The appropriate TTB officer is 
authorized to disclose, to any person who has a proper interest, whether 
an adequate notice of sale was given under paragraph (d)(1) of tis 
section insofar as disclosure is authorized under 26 U.S.C. 6103. Any 
person desiring this information should submit to the appropriate TTB 
officer a written request which clearly describes the property sold or 
to be sold, identifies the applicable notice of lien, gives the reasons 
for requesting the information, and states the name and address of the 
person making the request.

(26 U.S.C. 7425(c))

[T.D. ATF-301, 55 FR 47634, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29027, May 29, 2001]



Sec. 70.206  Discharge of liens; redemption by United States.

    (a) Right to redeem--(1) In general. In the case of a nonjudicial 
sale of real property to satisfy a lien prior to the tax lien or a title 
derived from the enforcement of a tax lien, the appropriate TTB officer 
may redeem the property within the redemption period (as described in 
paragraph (a)(2) of this section). The right of redemption of the United 
States exists under 26 U.S.C. 7425(d) even though a consent to the sale 
has been made under 26 U.S.C. 7425(c)(2) and Sec. 70.205(b) of this 
part. For purposes of this section, the term ``nonjudicial sale'' shall 
have the same

[[Page 294]]

meaning as used in Sec. 70.204(a) of this part.
    (2) Redemption period. For purposes of this section, the redemption 
period shall be:
    (i) The period beginning with the date of the sale (as determined 
under Sec. 70.204(b)) and ending with the 120th day after such date, or
    (ii) The period for redemption of real property allowable with 
respect to other secured creditors, under the local law of the place 
where the real property is located, whichever expires later.

Which ever period is applicable, 26 U.S.C. 7425 and this section shall 
govern the amount to be paid and the procedure to be followed.
    (3) Limitations. In the event a sale does not ultimately discharge 
the property from tax lien (whether by reason of local law or the 
provisions of 26 U.S.C. 7425(b)), the provisions of this section do not 
apply because the tax lien will continue to attach to the property after 
the sale. In a case in which the Bureau is not entitled to a notice of 
sale under 26 U.S.C. 7425(b) and Sec. 70.205 of this part, the United 
States does not have a right of redemption under 26 U.S.C. 7425(d). 
However, in such a case, if a tax lien has attached to the property at 
the time of sale, the United States has the same right of redemption, if 
any, which is afforded similar creditors under the local law of the 
place in which the property is situated.
    (b) Amount to be paid--(1) In general. In any case in which an 
appropriate TTB officer exercises the right to redeem real property 
under 26 U.S.C. 7425(d), the amount to be paid is the sum of the 
following amounts:
    (i) The actual amount paid for the property (as determined under 
paragraph (b)(2) of this section) being redeemed (which, in the case of 
a purchaser who is the holder of the lien being foreclosed, shall 
include the amount of the obligation secured by such lien to the extent 
legally satisfied by reason of the sale);
    (ii) Interest on the amount paid (described in paragraph (b)(1)(i) 
of this section) at the sale by the purchaser of the real property 
computed at the rate of 6 percent per annum for the period from the date 
of the sale (as determined under Sec. 70.204(b) of this part) to the 
date of redemption;
    (iii) The amount, if any, equal to the excess of the expenses 
necessarily incurred to maintain such property (as determined under 
paragraph (b)(3) of this section) by the purchaser (and the purchaser's 
successor in interest, if any) over the income from such property 
realized by the purchaser (and the purchaser's successor in interest, if 
any) plus a reasonable rental value of such property (to the extent the 
property is used by or with the consent of the purchaser or the 
purchaser's successor in interest or is rented at less than its 
reasonable rental value); and
    (iv) The amounts, if any, of a payment made by the purchaser or the 
purchaser's successor in interest after the foreclosure sale to a holder 
of a senior lien (to the extent provided under paragraph (b)(4) of this 
section).
    (2) Actual amount paid. (i) The actual amount paid for property by a 
purchaser, other than holder of the lien being foreclosed, is the amount 
paid by the purchaser at the sale. For purposes of this paragraph, the 
amount paid by the purchaser at the sale includes deferred payments upon 
the bid price. The actual amount paid does not include costs and 
expenses incurred prior to the foreclosure sale by the purchaser except 
to the extent such expenses are included in the amount bid and paid for 
the property. For example, the actual amount paid does not normally 
include the expenses of the purchaser such as title searches, 
professional fees, or interest on debt incurred to obtain funds to 
purchase the property.
    (ii) In the case of a purchaser who is the holder of the lien being 
foreclosed, the actual amount paid is the sum of:
    (A) The amount of the obligation secured by such lien to the extent 
legally satisfied by reason of the sale and
    (B) Any additional amount bid and paid at the sale.

For purposes of this section, a purchaser who acquires title as a result 
of a nonjudicial foreclosure sale is treated as the holder of the lien 
being foreclosed if a lien (or any interest reserved, created, or 
conveyed as security for the payment of a debt or fulfillment of other 
obligation) held by

[[Page 295]]

the purchaser is partially or fully satisfied by reason of the 
foreclosure sale. For example, a person whose title is derived from a 
tax deed issued under local law shall be treated as a purchaser who is 
the holder of the lien foreclosed in a case where a tax certificate, 
evidencing a lien on the property arising from the payment of property 
taxes, ripens into title. The amount paid by a purchaser at the sale 
includes deferred payments upon any portion of the bid price which is in 
excess of the amount of the lien being foreclosed. The actual amount 
paid does not include costs and expenses incurred prior to the 
foreclosure sale by the purchaser except to the extent such expenses are 
included in the amount of the lien being foreclosed which is legally 
satisfied by reason of the sale or in the amount bid and paid at the 
sale. Where the lien being foreclosed attaches to other property not 
subject to the foreclosure sale, the amount legally satisfied by reason 
of the sale does not include the amount of such lien that attaches to 
the other property. However, for purposes of the preceding sentences, 
the amount of the lien that attaches to the other property shall be 
considered to be equal to the amount by which the value of the other 
property exceeds the amount of any other senior lien on that property. 
Where, after the sale, the holder of the lien being foreclosed has the 
right to the unpaid balance of the amount due the holder, the amount 
legally satisfied by reason of the sale does not include the amount of 
such lien to the extent a deficiency judgment may be obtained therefor. 
However, for purposes of the preceding sentence, an amount, with respect 
to which the holder of the lien being foreclosed would otherwise have a 
right to a deficiency judgment, shall be considered to be legally 
satisfied by reason of the foreclosure sale to the extent that the 
holder has waived the holder's right to a deficiency judgment prior to 
the foreclosure sale. For this purpose, the waiver must be in writing 
and legally binding upon the foreclosing lienholder as of the time the 
sale is concluded. If, prior to the foreclosure, payments have been made 
by the foreclosing lienholder to a holder of a superior lien, the 
payments are included in the actual amount paid to the extent they give 
rise to an interest which is legally satisfied by reason of the 
foreclosure sale.
    (3) Excess expenses incurred by purchaser. (i) Expenses necessarily 
incurred in connection with the property after the foreclosure sale and 
before redemption by the United States are taken into account in 
determining if there are excess expenses payable under paragraph 
(b)(1)(iii) of this section. Expenses incurred by the purchaser prior to 
the foreclosure sale are not considered under paragraph (b)(3) of this 
section. (See paragraph (b)(2)(ii) of this section for circumstances 
under which such expenses may be included in the amount to be paid.) 
Expenses necessarily incurred in connection with the property include, 
for example, rental agent commissions, repair and maintenance expenses, 
utilities expenses, legal fees incurred after the foreclosure sale and 
prior to redemption in defending the title acquired through the 
foreclosure sale, and a proportionate amount of casualty insurance 
premiums and ad valorem taxes. Improvements made to the property are not 
considered as an expense unless the amounts incurred for such 
improvements are necessarily incurred to maintain the property.
    (ii) At any time prior to the expiration of the redemption period 
applicable under paragraph (a)(2) of this section, the appropriate TTB 
officer may, by certified or registered mail or hand delivery, request a 
written itemized statement of the amount claimed by the purchaser or the 
purchaser's successor in interest to be payable under paragraph 
(b)(1)(iii) of this section. Unless the purchaser or the purchaser's 
successor in interest furnishes the written itemized statement within 15 
days after the request is made by the appropriate TTB officer, it shall 
be presumed that no amount is payable for expenses in excess of income 
and the Bureau shall tender only the amount otherwise payable under 
paragraph (b)(1) of this section. If a purchaser or the purchaser's 
successor in interest has failed to furnish the written itemized 
statement within 15 days after the request therefor is made by the 
appropriate TTB officer, or there is

[[Page 296]]

a disagreement as to the amount properly payable under paragraph 
(b)(1)(iii) of this section, a payment for excess expenses shall be made 
after the redemption within a reasonable time following the verification 
by the appropriate TTB officer of a written itemized statement submitted 
by the purchaser or the purchaser's successor in interest or the 
resolution of the disagreement as to the amount properly payable for 
excess expenses.
    (4) Payments made by purchaser or the purchaser's successor in 
interest to a senior lienor. (i) The amount to be paid upon a redemption 
by the United States shall include the amount of a payment made by the 
purchaser or the purchaser's successor in interest to a holder of a 
senior lien to the extent a request for the reimbursement thereof (made 
in accordance with paragraph (b)(4)(ii) of this section) is approved as 
provided under paragraph (b)(4)(iii) of this section. This paragraph 
applies only to a payment made after the foreclosure sale and before the 
redemption to a holder of a lien that was, immediately prior to the 
foreclosure sale, superior to the lien foreclosed. A payment of 
principal or interest to a senior lienor shall be taken into account. 
Generally, the portion, if any, of a payment which is to be held in 
escrow for the payment of an expense, such as hazard insurance or real 
property taxes, is not considered under this paragraph. However, a 
payment by the escrow agent of a real property tax or special assessment 
lien, which was senior to the lien foreclosed, shall be considered to be 
a payment made by the purchaser or the purchaser's successor in interest 
for purposes of this paragraph. With respect to real property taxes 
assessed after the foreclosure sale, see paragraph (b)(3)(i) of this 
section, relating to excess expenses incurred by the purchaser.
    (ii) Before the expiration of the redemption period applicable under 
paragraph (a)(2) of this section, the appropriate TTB officer shall, in 
any case where a redemption is contemplated, send notice to the 
purchaser (or the purchaser's successor in interest of record) by 
certified or registered mail or hand delivery of the right under 
paragraph (b)(4) of this section to request reimbursement (payable in 
the event the right to redeem under 26 U.S.C. 7425(d) is exercised) for 
a payment made to a senior lienor. No later than 15 days after the 
notice from the appropriate TTB officer is sent, the request for 
reimbursement shall be mailed or delivered to the office specified in 
such notice and shall consist of:
    (A) A written itemized statement, signed by the claimant, of the 
amount claimed with respect to a payment made to a senior lienor, 
together with the supporting evidence requested in the notice from the 
appropriate TTB officer, and
    (B) A waiver or other document that will be effective upon 
redemption by the United States to discharge the property from, or 
transfer to the United States, any interest in or lien on the property 
that may arise under local law with respect to the payment made to a 
senior lienor.

Upon a showing of reasonable cause, an appropriate TTB officer may, in 
that official's discretion and at any time before the expiration of the 
applicable period for redemption, grant an extension for a reasonable 
period of time to submit, amend, or supplement a request for 
reimbursement. Unless a request for reimbursement is timely submitted 
(determined with regard to any extension of time granted), no amount 
shall be payable to the purchaser or the purchaser's successor in 
interest on account of a payment made to a senior lienor if the right to 
redeem under 26 U.S.C. 7425(d) is exercised. A waiver or other document 
submitted pursuant to paragraph (b)(4)(ii) of this section shall be 
treated as effective only to the extent of the amount included in the 
redemption price under this paragraph. If the right to redeem is not 
exercised or a request for reimbursement is withdrawn, the appropriate 
TTB officer shall, by certified or registered mail or hand delivery, 
return to the purchaser or the purchaser's successor any waiver or other 
document submitted pursuant to paragraph (b)(4)(ii) of this section as 
soon as is practicable.
    (iii) A request for reimbursement submitted in accordance with 
paragraph (b)(4)(ii) of this section shall be considered to be approved 
for the total amount claimed by the purchaser, and

[[Page 297]]

payable in the event the right to redeem is exercised, unless the 
appropriate TTB officer sends notice to the claimant, by certified or 
registered mail or hand delivery, of the denial of the amount claimed 
within 30 days after receipt of the request of 15 days before expiration 
of the applicable period for redemption, whichever is later. The 
notification of denial shall state the grounds for denial. If such 
notice of denial is given, the request for reimbursement for a payment 
made to a senior lienor shall be treated as having been withdrawn by the 
purchaser or the purchaser's successor and the Bureau shall tender only 
the amount otherwise payable under paragraph (b)(1) of this section. If 
a request for reimbursement is treated as having been withdrawn under 
the preceding sentence, payment for amounts described in paragraph 
(b)(4) of this section may, in the discretion of the appropriate TTB 
officer, be made after the redemption upon the resolution of the 
disagreement as to the amount properly payable under paragraph 
(b)(1)(iv) of this section.
    (c) Certificate of redemption--(1) In general. If an appropriate TTB 
officer exercises the right of redemption of the United States described 
in paragraph (a) of this section, the appropriate TTB officer shall 
apply to the officer designated by local law, if any, for the documents 
necessary to evidence the fact of redemption and to record title to the 
redeemed property in the name of the United States. If no such officer 
has been designated by local law, or if the officer designated by local 
law fails to issue the necessary documents, the appropriate TTB officer 
is authorized to issue a certificate of redemption for the property 
redeemed by the United States.
    (2) Filing. The appropriate TTB officer shall, without delay, cause 
either the documents issued by the local officer or the certificate of 
redemption executed by the appropriate TTB officer to be filed with the 
local office where certificates of redemption are generally filed. If a 
certificate of redemption is issued by the appropriate TTB officer and 
if the State in which the real property redeemed by the United States is 
situated has no office with which certificates of redemption may be 
filed, the appropriate TTB officer shall file the certificate of 
redemption in the office of the clerk of the United States district 
court for the judicial district in which the redeemed property is 
situated.
    (3) Effect of certificate of redemption. A certificate of redemption 
executed pursuant to paragraph (c)(1) of this section, shall constitute 
prima facie evidence of the regularity of the redemption. When a 
certificate of redemption is recorded, it shall transfer to the United 
States all the rights, title, and interest in and to the redeemed 
property acquired by the person, from whom the appropriate TTB officer 
redeemed the property, by virtue of the sale of the property. Therefore, 
if under local law the purchaser takes title free of liens junior to the 
lien of the foreclosing lienholder, the United States takes the title 
free of such junior liens upon redemption of the property. If a 
certificate of redemption has been erroneously prepared and filed 
because the redemption was not effective, the appropriate TTB officer 
shall issue a document revoking such certificate of redemption and such 
document shall be conclusively binding upon the United States against a 
purchaser of the property or a holder of a lien upon the property.
    (4) Application for release of right of redemption. Upon application 
of a party with a proper interest in the real property sold in a 
nonjudicial sale described in 26 U.S.C. 7425(b) and Sec. 70.204 of this 
part, which real property is subject to the right of redemption of the 
United States described in this section, the appropriate TTB officer 
may, in that officer's discretion, release the right of redemption with 
respect to the property. The application for the release must be 
submitted in writing to an appropriate TTB officer and must contain such 
information as the appropriate TTB officer may require. If the 
appropriate TTB officer determines that the right of redemption of the 
United States is without value, no amount shall be required to be paid

[[Page 298]]

with respect to the release of the right of redemption.

(26 U.S.C. 7425(d))

[T.D. ATF-301, 55 FR 47634, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29027, May 29, 2001]



Sec. 70.207  Civil actions by persons other than taxpayers.

    (a) Actions permitted--(1) Wrongful levy. If a levy has been made on 
property, or property has been sold pursuant to a levy, any person 
(other than the person against whom is assessed the tax out of which 
such levy arose) may bring a civil action against the United States in a 
district court of the United States based upon such person's claim:
    (i) That the person has an interest in, or a lien on, such property 
which is senior to the interest of the United States; and
    (ii) That such property was wrongfully levied upon.

No action is permitted under 26 U.S.C. 7426(a)(1) unless there has been 
a levy upon the property claimed.
    (2) Surplus proceeds. If property has been sold pursuant to levy, 
any person (other than the person against whom is assessed the tax out 
of which such levy arose) may bring a civil action against the United 
States in a district court of the United States based upon the claim 
that the person:
    (i) Has an interest in or lien on such property junior to that of 
the United States; and
    (ii) Is entitled to the surplus proceeds of such sale.
    (3) Substituted sale proceeds. Any person who claims to be legally 
entitled to all or any part of the amount which is held as a fund from 
the sale of property pursuant to an agreement described in 26 U.S.C. 
6325(b)(3) may bring a civil action against the United States in a 
district court of the United States to obtain the relief provided by 26 
U.S.C. 7426(b)(4). It is not necessary that the claimant be a party to 
the agreement which provides for the substitution of the sale proceeds 
for the property subject to the lien.
    (b) Adjudication--(1) Wrongful levy. If the court determines that 
property has been wrongfully levied upon, the court may:
    (i) Grant an injunction to prohibit the enforcement of such levy or 
to prohibit a sale of such property if such sale would irreparably 
injure rights in the property which are superior to the rights of the 
United States in such property; or
    (ii) Order the return of specific property if the United States is 
in possession of such property; or
    (iii) Grant a judgment for the amount of money levied upon, with 
interest thereon at the overpayment rate established under 26 U.S.C. 
6621 from the date that the officer who made the levy receives the money 
wrongfully levied upon to the date of payment of such judgment, or
    (iv) Grant a judgment for an amount not exceeding the amount 
received by the United States from the sale of such property (which, in 
the case of property declared purchased by the United States at a sale, 
shall be the greater of the minimum amount determined pursuant to 26 
U.S.C. 6335(e) or the amount received by the United States from the 
resale of such property), or the fair market value of such property 
immediately before the levy, with interest thereon at the overpayment 
rate established under 26 U.S.C. 6621 from the date of the sale of the 
property to the date of payment of such judgment.

For purposes of paragraph (b)(1) of this section, a levy is wrongful 
against a person (other than the taxpayer against whom the assessment 
giving rise to the levy is made), if the levy is upon property exempt 
from levy under 26 U.S.C. 6334, or the levy is upon property in which 
the taxpayer had no interest at the time the lien arose or thereafter, 
or the levy is upon property with respect to which such person is a 
purchaser against whom the lien is invalid under 26 U.S.C. 6323 or 
6324(a)(2) or (b), or the levy or sale pursuant to levy will or does 
effectively destroy or otherwise irreparably injure such person's 
interest in the property which is senior to the Federal tax lien. A levy 
may be wrongful against a holder of a

[[Page 299]]

senior lien upon the taxpayer's property under certain circumstances 
although legal rights to enforce the holder's interest survive the levy 
procedure. For example, the levy may be wrongful against such a person 
if the property is an obligation which is collected pursuant to the levy 
rather than sold and nothing thereafter remains for the senior 
lienholder, or the property levied upon is of such a nature that when it 
is sold at a public sale the property subject to the senior lien is not 
available for the senior lienholder as a realistic source for the 
enforcement of the holder's interest. Some of the factors which should 
be taken into account in determining whether property remains or will 
remain a realistic source from which the senior lienholder may realize 
collection are: The nature of the property, the number of purchasers, 
the value of each unit sold or to be sold, whether, as a direct result 
of the distraint sale, the costs of realizing collection from the 
security have or will be so substantially increased as to render the 
security substantially valueless as a source of collection, and whether 
the property subject to the distraint sale constitutes substantially all 
of the property available as security for the payment of the 
indebtedness to the senior lienholder.
    (2) Surplus proceeds. If the court determines that the interest or 
lien of any party to an action under 26 U.S.C. 7426 was transferred to 
the proceeds of a sale of the property, the court may grant a judgment 
in an amount equal to all or any part of the amount of the surplus 
proceeds of such sale. The term ``surplus proceeds'' means property 
remaining after application of the provisions of 26 U.S.C. 6342(a).
    (3) Substituted sale proceeds. If the court determines that a party 
has an interest in or lien on the amount held as a fund pursuant to an 
agreement described in 26 U.S.C. 6325(b)(3), the court may grant a 
judgment in an amount equal to all or any part of the amount of such 
fund.

(26 U.S.C. 7426)



Sec. 70.208  Review of jeopardy assessment or jeopardy levy procedures; 

information to taxpayer.

    Not later than 5 days after the day on which an assessment is made 
under 26 U.S.C. 6862 or when a levy is made less than 30 days after the 
notice and demand described in 26 U.S.C 6331(a), the officer who 
authorized the assessment or levy shall provide the taxpayer a written 
statement setting forth the information upon which that official relies 
in authorizing such assessment or levy.

(26 U.S.C. 7429(a)(1))



Sec. 70.209  Review of jeopardy assessment or levy procedures; administrative 

review.

    (a) Request for administrative review. Any request for the review of 
a jeopardy assessment or levy provided for by 26 U.S.C. 7429(a)(2) shall 
be filed with the officer who authorized the assessment or levy, within 
30 days after the statement described in Sec. 70.208 of this part is 
given to the taxpayer. However, if no statement is given within the 5-
day period described in Sec. 70.208, any request for review of the 
jeopardy assessment shall be filed within 35 days after the date the 
assessment is made. Such request shall be in writing, shall state fully 
the reasons for the request, and shall be supported by such evidence as 
will enable the reviewing officer to make the redetermination described 
in 26 U.S.C. 7429(a)(3).
    (b) Administrative review. In determining whether the assessment or 
levy is reasonable and the amount assessed appropriate, the reviewing 
officer shall take into account not only information available at the 
time the assessment is made but also information which subsequenbtly 
becomes available.

(26 U.S.C. 7429(a)(2))



Sec. 70.210  Review of jeopardy assessment or levy procedures; judicial action.

    (a) Time for bringing judicial action. An action for judicial review 
described in 26 U.S.C. 7429(b) may be instituted by the taxpayer during 
the period beginning on the earlier of:

[[Page 300]]

    (1) The date of the reviewing officer notifies the taxpayer of the 
determination described in 26 U.S.C. 7429(a)(3); or
    (2) The 16th day after the request described in 26 U.S.C. 7429(a)(2) 
was made by the taxpayer; and ending on the 90th day thereafter.
    (b) Extension of the period for judicial review. The U.S. Government 
may not seek an extension of the 20-day period described in 26 U.S.C. 
7429(b)(2), but it may join with the taxpayer in seeking such an 
extension.

(26 U.S.C. 7429)



Sec. 70.213  Repayments to officers or employees.

    The appropriate TTB officer is authorized to repay to any officer or 
employee of the Bureau the full amount of such sums of money as may be 
recovered against such officer or employee in any court for any taxes 
imposed under provisions of 26 U.S.C. enforced and administered by the 
Bureau collected by such officer or employee with the cost and expense 
of suit, and all damages and costs recovered against any officer or 
employee of the Bureau in any suit brought against such officer or 
employee by reason of anything done in the official performance of 
duties under the provisions of 26 U.S.C. enforced and administered by 
the Bureau.

(26 U.S.C. 7423)

                               Limitations

                Limitations on Assessment and Collection



Sec. 70.221  Period of limitations upon assessment.

    (a) The amount of any tax imposed by the Internal Revenue Code 
(other than a tax collected by means of stamps) shall be assessed within 
3 years after the return was filed. For rules applicable in cases where 
the return is filed prior to the due date thereof, see section 6501(b) 
of the Internal Revenue Code. In the case of taxes payable by stamps, 
assessment shall be made at any time after the tax becomes due and 
before the expiration of 3 years after the date on which any part of the 
tax was paid. For exceptions and additional rules, see subsections (b) 
and (c) of section 6501 of the Internal Revenue Code.
    (b) No proceeding in court without assessment for the collection of 
any tax shall be begun after the expiration of the applicable period for 
the assessment of such tax.

(26 U.S.C. 6501)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.222  Time return deemed filed for purposes of determining 

limitations.

    (a) Early Return. Any return filed prior to the last day prescribed 
by law or regulations for the filing thereof (determined without regard 
to any extension of time for filing) shall be considered as filed on 
such last day.
    (b) Returns executed by appropriate TTB officers. The execution of a 
return by an appropriate TTB officer under the authority of section 
6020(b) of the Internal Revenue Code does not start the running of the 
statutory period of limitations on assessment and collection.

(26 U.S.C. 6501)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990; T.D. ATF-450, 66 FR 29028, May 29, 2001]



Sec. 70.223  Exceptions to general period of limitations on assessment and 

collection.

    (a) False return. In the case of a false or fraudulent return with 
intent to evade any tax, the tax may be assessed, or a proceeding in 
court for the collection of such tax may be begun without assessment, at 
any time after such false or fraudulent return is filed.
    (b) Willful attempt to evade tax. In the case of a willful attempt 
in any manner to defeat or evade any tax imposed by provisions of 26 
U.S.C. enforced and administered by the Bureau, the tax may be assessed, 
or a proceeding in court for the collection of such tax may be begun 
without assessment, at any time.
    (c) No return. In the case of a failure to file a return, the tax 
may be assessed, or a proceeding in court for the collection of such tax 
may be begun

[[Page 301]]

without assessment, at any time after the date prescribed for filing the 
return.
    (d) Extension by agreement. The time prescribed by 26 U.S.C. 6501 
for the assessment of any tax imposed by provisions of 26 U.S.C. 
enforced and administered by the Bureau may, prior to the expiration of 
such time, be extended for any period of time agreed upon in writing by 
the taxpayer and the appropriate TTB officer. The extension shall become 
effective when the agreement has been executed by both parties. The 
period agreed upon may be extended by subsequent agreements in writing 
made before the expiration of the period previously agreed upon.

(26 U.S.C. 6501)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47641, Nov. 14, 1990; T.D. ATF-331, 57 FR 
40328, Sept. 3, 1992]



Sec. 70.224  Collection after assessment.

    (a) Length of period--(1) General rule. In any case in which a tax 
has been assessed within the statutory period of limitation properly 
applicable thereto, a proceeding in court to collect such tax may be 
begun, or levy for the collection of such tax may be made, within 10 
years after the assessment thereof.
    (2) Extension by agreement. (i) The 10-year period of limitation on 
collection after assessment of any tax may, prior to the expiration 
thereof, be extended for any period of time agreed upon in writing by 
the taxpayer and the appropriate TTB officer. Whenever necessary to 
protect the revenue, such officer may also execute a written agreement 
with the taxpayer to extend the period of limitation. The extension 
becomes effective upon execution of the agreement by both the taxpayer 
and such officer.
    (ii) The period of limitation on collection after assessment of any 
tax (including any extension of such period) may be extended after the 
expiration thereof if there has been a levy on any part of the 
taxpayer's property prior to such expiration and if the extension is 
agreed upon in writing prior to a release of the levy under the 
provisions of 26 U.S.C. 6343. An extension under this paragraph has the 
same effect as an agreement made prior to the expiration of the period 
of limitation on collection after assessment, and during the period of 
the extension collection may be enforced as to all property or rights to 
property owned by the taxpayer whether or not seized under the levy 
which was released.
    (iii) Any period agreed upon under the provisions of paragraph 
(a)(1) of this section may be extended by subsequent agreements in 
writing made before the expiration of the period previously agreed upon.
    (3) If a timely proceeding in court for the collection of a tax is 
commenced, the period during which such tax may be collected by levy 
shall be extended and shall not expire until the liability for the tax 
(or a judgment against the taxpayer arising from such liability) is 
satisfied or becomes unenforceable.
    (b) Date when levy is considered made. The date on which a levy on 
property or rights to property is made is the date on which the notice 
of seizure provided in 26 U.S.C. 6335(a) is given.

(26 U.S.C. 6502)

[T.D. ATF-301, 55 FR 47641, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29028, May 29, 2001]



Sec. 70.225  Suspension of running of period of limitation; assets of 

taxpayer in control or custody of court.

    Where all or substantially all of the assets of a taxpayer are in 
the control or custody of the court in any proceeding before any court 
of the United States, or any State of the United States, or the District 
of Columbia, the period of limitations on collection after assessment 
prescribed in 26 U.S.C. 6502 is suspended with respect to the 
outstanding amount due on the assessment for the period such assets are 
in the control or custody of the court, and for 6 months thereafter.

(26 U.S.C. 6503)

[T.D. ATF-301, 55 FR 47642, Nov. 14, 1990]



Sec. 70.226  Suspension of running of period of limitation; taxpayer outside 

of United States.

    The running of the period of limitations on collection after 
assessment prescribed in 26 U.S.C. 6502 (relating to

[[Page 302]]

collection after assessment) is suspended for the period during which 
the taxpayer is absent from the United States if such period is a 
continuous period of absence from the United States extending for 6 
months or more. In a case where the running of the period of limitations 
has been suspended under the first sentence of this paragraph and at the 
time of the taxpayer's return to the United States the period of 
limitations would expire before the expiration of 6 months from the date 
of the taxpayer's return, the period of limitations shall not expire 
until after 6 months from the date of the taxpayer's return. The 
taxpayer will be deemed to be absent from the United States for purposes 
of this section if the taxpayer is generally and substantially absent 
from the United States, even though the taxpayer makes casual temporary 
visits during the period.

(26 U.S.C. 6503)

[T.D. ATF-301, 55 FR 47642, Nov. 14, 1990]



Sec. 70.227  Suspension of running of period of limitation; wrongful seizure 

of property of third party.

    The running of the period of limitations on collection after 
assessment prescribed in 26 U.S.C. 6502 (relating to collection after 
assessment) shall be suspended for a period equal to a period beginning 
on the date property (including money) is wrongfully seized or received 
by an appropriate TTB officer and ending on the date 30 days after the 
date on which the appropriate TTB officer returns the property pursuant 
to 26 U.S.C. 6343(b) (relating to authority to return property) or the 
date 30 days after the date on which a judgment secured pursuant to 26 
U.S.C. 7426 (relating to civil actions by persons other than taxpayers) 
with respect to such property becomes final. The running of the period 
of limitations on collection after assessment shall be suspended under 
this section only with respect to the amount of such assessment which is 
equal to the amount of money or the value of specific property returned.

(26 U.S.C. 6503)

[T.D. ATF-301, 55 FR 47642, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29028, May 29, 2001]

                          Limitations on Liens

    Source: Sections 70.231 through 70.234 added by T.D. ATF-301, 55 FR 
47642, Nov. 14, 1990, unless otherwise noted.



Sec. 70.231  Protection for certain interests even though notice filed.

    (a) Securities. Even though a notice of a lien imposed by 26 U.S.C. 
6321 is filed in accordance with Sec. 70.148 of this part, the lien is 
not valid with respect to a security (as defined in Sec. 70.143(d) of 
this part) against:
    (1) A purchaser (as defined in Sec. 70.143(f) of this part) of the 
security who at the time of purchase did not have actual notice or 
knowledge (as defined in Sec. 70.144(a) of this part) of the existence 
of the lien;
    (2) A holder of a security interest (as defined in Sec. 70.143(a) 
of this part) in the security who did not have actual notice or 
knowledge (as defined in Sec. 70.144(a) of this part) of the existence 
of the lien at the time the security interest came into existence or at 
the time such security interest was acquired from a previous holder for 
a consideration in money or money's worth (as defined in Sec. 70.143(a) 
of this part); or
    (3) A transferee of an interest protected under paragraph (a) (1) or 
(2) of this section to the same extent the lien is invalid against the 
transferor to the transferee. For purposes of this paragraph, no person 
can improve that person's position with respect to the lien by 
reacquiring the interest from an intervening purchaser or holder of a 
security interest against whom the lien is invalid.
    (b) Motor vehicles--(1) In general. Even though a notice of a lien 
imposed by 26 U.S.C. 6321 is filed in accordance with Sec. 70.148 of 
this part, the lien is not valid against a purchaser (as defined in 
Sec. 70.143(f) of this part) of a motor vehicle (as defined in Sec. 
70.143(c) of this part) if:
    (i) At the time of purchase, the purchaser did not have actual 
notice or knowledge (as defined in Sec. 70.144(a) of this part) of the 
existence of the lien, and
    (ii) Before the purchaser obtains such notice or knowledge, the 
purchaser has acquired actual possession of the motor

[[Page 303]]

vehicle and has not thereafter relinquished actual possession to the 
seller or seller's agent.
    (2) Cross reference. For provisions relating to additional 
circumstances in which the lien imposed by 26 U.S.C. 6321 may not be 
valid against the purchaser of tangible personal property (including a 
motor vehicle) purchased at retail, see paragraph (c) of this section.
    (c) Personal property purchased at retail--(1) In general. Even 
though a notice of a lien imposed by 26 U.S.C. 6321 is filed (with 
respect to any tax imposed under the provisions of 26 U.S.C. enforced 
and administered by the Bureau) in accordance with Sec. 70.148 of this 
part, the lien is not valid against a purchaser (as defined in Sec. 
70.143(f) of this part) of tangible personal property purchased at a 
retail sale (as defined in paragraph (c)(2) of this section) unless at 
the time of purchase the purchaser intends the purchase to (or knows 
that the purchase will) hinder, evade, or defeat the collection of any 
tax imposed by the provisions of 26 U.S.C. enforced and administered by 
the Bureau.
    (2) Definition of retail sale. For purposes of paragraph (c) of this 
section, the term ``retail sale'' means a sale, made in the ordinary 
course of the seller's trade or business, of tangible personal property 
of which the seller is the owner. Such term includes a sale in customary 
retail quantities by a seller who is going out of business, but does not 
include a bulk sale or an auction sale in which goods are offered in 
quantities substantially greater than are customary in the ordinary 
course of the seller's trade or business or an auction sale of goods the 
owner of which is not in the business of selling such goods.
    (d) Personal property purchased in casual sale--(1) In general. Even 
though a notice of a lien imposed by 26 U.S.C. 6321 is filed in 
accordance with Sec. 70.148 of this part, the lien is not valid against 
a purchaser (as defined in Sec. 70.143(f) of this part) of household 
goods, personal effects, or other tangible personal property of a type 
described in Sec. 70.241 of this part (which includes wearing apparel, 
school books, fuel, provisions, furniture, arms for personal use, 
livestock, and poultry (whether or not the seller is the head of a 
family); and books and tools of a trade, business, or profession 
(whether or not the trade, business, or profession of the seller)), 
purchased, other than for resale, in a casual sale for less than $250 
(excluding interest and expenses described in Sec. 70.147 of this 
part). For purposes of this paragraph, a casual sale is a sale not made 
in the ordinary course of the seller's trade or business.
    (2) Limitation. This paragraph applies only if the purchaser does 
not have actual notice or knowledge (as defined in Sec. 70.144(a) of 
this part):
    (i) Of the existence of the tax lien, or
    (ii) That the sale is one of a series of sales.

For purposes of paragraph (d)(2)(ii) of this section, a sale is one of a 
series of sales if the seller plans to dispose of, in separate 
transactions, substantially all of the seller's household goods, 
personal effects, and other tangible personal property described in 
Sec. 70.241 of this part.
    (e) Personal property subject to possessory liens. Even though a 
notice of a lien imposed by 26 U.S.C. 6321 is filed in accordance with 
Sec. 70.148 of this part, the lien is not valid against a holder of a 
lien on tangible personal property which under local law secures the 
reasonable price of the repair or improvement of the property if the 
property is, and has been, continuously in the possession of the holder 
of the lien from the time the possessory lien arose. For example, if 
local law gives an automobile mechanic the right to retain possession of 
an automobile the mechanic has repaired as security for payment of the 
repair bill and the mechanic retains continuous possession of the 
automobile until such lien is satisfied, a tax lien filed in accordance 
with 26 U.S.C 6323(f)(1) which has attached to the automobile will not 
be valid to the extent of the reasonable price of the repairs. It is 
immaterial that the notice of tax lien was filed before the mechanic 
undertook the work or that the mechanic knew of the lien before 
undertaking the work.
    (f) Real property tax and special assessment liens. Even though a 
notice of a lien imposed by 26 U.S.C. 6321 is filed in accordance with 
Sec. 70.148 of this part, the lien is not valid against the holder

[[Page 304]]

of another lien upon the real property (regardless of when such other 
lien arises), if such other lien is entitled under local law to priority 
over security interests in real property which are prior in time and if 
such other lien on real property secures payment of:
    (1) A tax of general application levied by any taxing authority 
based upon the value of the property, or
    (2) A special assessment imposed directly upon the property by any 
taxing authority, if the assessment is imposed for the purpose of 
defraying the cost of any public improvement; or
    (3) Charges for utilities or public services furnished to the 
property by the United States, a State or political subdivision thereof, 
or an instrumentality of any one or more of the foregoing.
    (g) Residential property subject to a mechanic's lien for certain 
repairs and improvements. Even though a notice of lien imposed by 26 
U.S.C. 6321 is filed in accordance with Sec. 70.148 of this part, the 
lien is not valid against a mechanic's lienor (as defined in Sec. 
70.143(b) of this part) who holds a lien for the repair or improvement 
of a personal residence if:
    (1) The residence is occupied by the owner and contains no more than 
four dwelling units, and
    (2) The contract price on the prime contract with the owner for the 
repair or improvement (excluding interest and expenses described in 
Sec. 70.147 of this part) is not more than $1,000. For purposes of this 
paragraph, the amounts of subcontracts under the prime contract with the 
owner are not to be taken into consideration for purposes of computing 
the $1,000 prime contract price. It is immaterial that the notice of tax 
lien was filed before the contractor undertakes the work or that the 
contractor knew of the lien before undertaking the work.
    (h) Attorney's liens--(1) In general. Even though notice of a lien 
imposed by 26 U.S.C. 6321 is filed in accordance with Sec. 70.148 of 
this part, the lien is not valid against an attorney who, under local 
law, holds a lien upon, or a contract enforceable against, a judgment or 
other amount in settlement of a claim or of a cause of action. The 
priority afforded an attorney's lien under this paragraph shall not 
exceed the amount of the attorney's reasonable compensation for 
obtaining the judgment or procuring the settlement. For purposes of this 
paragraph, reasonable compensation means the amount customarily allowed 
under local law for an attorney's service for litigating or settling a 
similar case or administrative claim. However, reasonable compensation 
shall be determined on the basis of the facts and circumstances of each 
individual case. It is immaterial that the notice of tax lien is filed 
before the attorney undertakes the work or that the attorney knows of 
the tax lien before undertaking the work. This paragraph does not apply 
to an attorney's lien which may arise from the defense of a claim or 
cause of action against a taxpayer except to the extent such lien is 
held upon a judgment or other amount arising from the adjudication or 
settlement of a counterclaim in favor of the taxpayer. In case of suits 
against the taxpayer, see Sec. 70.150(d)(2) of this part for rules 
relating to the subordination of the tax lien to facilitate tax 
collection.
    (2) Claim or cause of action against the United States. Paragraph 
(h)(1) of this section does not apply to an attorney's lien with respect 
to:
    (i) Any judgment or other fund resulting from the successful 
litigation or settlement of an administrative claim or cause of action 
against the United States to the extent that the United States, under 
any legal or equitable right, offsets its liability under the judgment 
or settlement against any liability of the taxpayer to the United 
States, or
    (ii) Any amount credited against any liability of the taxpayer in 
accordance with 26 U.S.C. 6402.
    (i) Certain insurance contracts. Even though a notice of a lien 
imposed by 26 U.S.C. 6321 (with respect to any tax imposed under the 
provisions of 26 U.S.C. enforced and administered by the Bureau) is 
filed in accordance with Sec. 70.148 of this part, the lien is not 
valid with respect to a life insurance, endowment, or annuity contract, 
against an organization which is the insurer under the contract, at any 
time:

[[Page 305]]

    (1) Before the insuring organization has actual notice or knowledge 
(as defined in Sec. 70.144(a) of this part) of the existence of the tax 
lien.
    (2) After the insuring organization has actual notice or knowledge 
of the lien (as defined in Sec. 70.144(a) of this part) with respect to 
advances (including contractual interest thereon as provided in Sec. 
70.147(a) of this part) required to be made automatically to maintain 
the contract in force under an agreement entered into before the 
insuring organization had such actual notice or knowledge, or
    (3) After the satisfaction of a levy pursuant to 26 U.S.C. 6332(b), 
unless and until the appropriate TTB officer delivers to the insuring 
organization a notice (for example, another notice of levy, a letter, 
etc.), executed after the date of such satisfaction, that the lien 
exists.

Delivery of the notice described in paragraph (i)(3) of this section may 
be made by any means, including regular mail, and delivery of the notice 
shall be effective only from the time of actual receipt of the 
notification by the insuring organization. The provisions of this 
paragraph are applicable to matured as well as unmatured insurance 
contracts.
    (j) Passbook loans--(1) In general. Even though a notice of a lien 
imposed by 26 U.S.C. 6321 is filed in accordance with Sec. 70.148 of 
this part, the lien is not valid against an institution described in 26 
U.S.C. 581 or 591 to the extent of any loan made by the institution 
which is secured by a savings deposit, share, or other account evidenced 
by a passbook (as defined in paragraph (j)(2) of this section) if the 
institution has been continuously in possession of the passbook from the 
time the loan is made. This paragraph applies only to a loan made 
without actual notice or knowledge (as defined in Sec. 70.144(a) of 
this part) of the existence of the lien. Even though an original 
passbook loan is made without actual notice or knowledge of the 
existence of the lien, this paragraph does not apply to any additional 
loan made after knowledge of the lien is acquired by the institution 
even if it continues to retain the passbook from the time the original 
passbook loan is made.
    (2) Definition of passbook. For purposes of paragraph (j) of this 
section, the term ``passbook'' includes:
    (i) Any tangible evidence of a savings deposit, share, or other 
account which, when in the possession of the bank or other savings 
institution, will prevent a withdrawal from the account to the extent of 
the loan balance, and
    (ii) Any procedure or system, such as an automatic data processing 
system, the use of which by the bank or other savings institution will 
prevent a withdrawal from the account to the extent of the loan balance.

(26 U.S.C. 6323)



Sec. 70.232  Protection for commercial transactions financing agreements.

    (a) In general. Even though a notice of a lien imposed by 26 U.S.C. 
6321 is filed in accordance with Sec. 70.148 of this part, the lien is 
not valid with respect to a security interest which:
    (1) Comes into existence after the tax lien filing.
    (2) Is in qualified property covered by the terms of a commercial 
transactions financing agreement entered into before the tax lien 
filing, and
    (3) Is protected under local law against a judgment lien arising, as 
of the time of the tax lien filing, out of an unsecured obligation.

See Sec. 70.143 (a) and (e) of this part for definitions of the terms 
``security interest'' and ``tax lien filing,'' respectively. For 
purposes of this section, a judgment lien is a lien held by a judgment 
lien creditor as defined in Sec. 70.143(g) of this part.
    (b) Commercial transactions financing agreement. For purposes of 
this section, the term ``commercial transactions financing agreement'' 
means a written agreement entered into by a person in the course of such 
person's trade or business:
    (1) To make loans to the taxpayer (whether or not at the option of 
the person agreeing to make such loans) to be secured by commercial 
financing security acquired by the taxpayer in the ordinary course of 
the taxpayer's trade or business, or
    (2) To purchase commercial financing security, other than inventory, 
acquired by the taxpayer in the ordinary

[[Page 306]]

course of the taxpayer's trade or business.

Such an agreement qualifies as a commercial transactions financing 
agreement only with respect to loans or purchases made under the 
agreement before the 46th day after the date of tax lien filing or the 
time when the lender or purchaser has actual notice or knowledge (as 
defined in Sec. 70.144(a) of this part) of the tax lien filing, if 
earlier. For purposes of this paragraph, a loan or purchase is 
considered to have been made in the course of the lender's or 
purchaser's trade or business if such person is in the business of 
financing commercial transactions (such as a bank or commercial factor) 
or if the agreement is incidental to the conduct of such person's trade 
or business. For example, if a manufacturer finances the accounts 
receivable of one of its customers, the manufacturer is considered to 
engage in such financing in the course of its trade or business. The 
extent of the priority of the lender or purchaser over the tax lien is 
the amount of the disbursement made before the 46th day after the date 
the notice of tax lien is filed, or made before the day (before such 
46th day) on which the lender or purchaser has actual notice or 
knowledge of the filing of the notice of the tax lien.
    (c) Commercial financing security--(1) In general. The term 
``commercial financing security'' means:
    (i) Paper of a kind ordinarily arising in commercial transactions,
    (ii) Accounts receivable (as defined in paragraph (c)(2) of this 
section),
    (iii) Mortgages on real property, and
    (iv) Inventory.
    For purposes of this subparagraph, the term ``paper of a kind 
ordinarily arising in commercial transactions'' in general includes any 
written document customarily used in commercial transactions. For 
example, such written documents include paper giving contract rights (as 
defined in paragraph (c)(2) of this section), chattel paper, documents 
of title to personal property, and negotiable instruments or securities. 
The term ``commercial financing security'' does not include general 
intangibles such as patents or copyrights. A mortgage on real estate 
(including a deed of trust, contract for sale, and similar instrument) 
may be commercial financing security if the taxpayer has an interest in 
the mortgage as a mortgagee or assignee. The term ``commercial financing 
security'' does not include a mortgage when the taxpayer is the 
mortgagor of realty owned by the taxpayer. For purposes of this 
subparagraph, the term ``inventory'' includes raw materials and goods in 
process as well as property held by the taxpayer primarily for sale to 
customers in the ordinary course of the taxpayer's trade or business.
    (2) Definitions. For purposes of Sec. Sec. 70.143 and 70.146 of 
this part, and this section:
    (i) A contract right is any right to payment under a contract not 
yet earned by performance and not evidenced by an instrument or chattel 
paper, and
    (ii) An account receivable is any right to payment for goods sold or 
leased or for services rendered which is not evidenced by an instrument 
or chattel paper.
    (d) Qualified property. For purposes of paragraph (a) of this 
section, qualified property consists solely of commercial financing 
security acquired by the taxpayer-debtor before the 46th day after the 
date of tax lien filing. Commercial financing security acquired before 
such day may be qualified property even though it is acquired by the 
taxpayer after the lender received actual notice or knowledge of the 
filing of the tax lien. For example, although the receipt of actual 
notice or knowledge of the filing of the notice of the tax lien has the 
effect of ending the period within which protected disbursements may be 
made to the taxpayer, property which is acquired by the taxpayer after 
the lender receives actual notice or knowledge of such filing and before 
such 46th day, which otherwise qualifies as commercial financing 
security, becomes commercial financing security to which the priority of 
the lender extends for loans made before the lender received the actual 
notice or knowledge. An account receivable (as defined in paragraph 
(c)(2)(ii) of this section) is acquired by a taxpayer at the time, and 
to the extent, a right to payment is earned by performance. Chattel 
paper,

[[Page 307]]

documents of title, negotiable instruments, securities, and mortgages on 
real estate are acquired by a taxpayer when the taxpayer obtains rights 
in the paper or mortgage. Inventory is acquired by the taxpayer when 
title passes to the taxpayer. A contract right (as defined in paragraph 
(c)(2)(i) of this section) is acquired by a taxpayer when the contract 
is made. Indentifiable proceeds, which arise from the collection or 
disposition of qualified property by the taxpayer, are considered to be 
acquired at the time such qualified property is acquired if the secured 
party has a continuously perfected security interest in the proceeds 
under local law. The term ``proceeds'' includes whatever is received 
when collateral is sold, exchanged, or collected. For purposes of this 
paragraph, the term ``identifiable proceeds'' does not include money, 
checks and the like which have been commingled with other cash proceeds. 
Property acquired by the taxpayer after the 45th day following tax lien 
filing, by the expenditure of proceeds, is not qualified property.
    (e) Purchaser treated as acquiring security interest. A person who 
purchases commercial financing security, other than inventory, pursuant 
to a commercial transactions financing agreement is treated, for 
purposes of this section, as having acquired a security interest in the 
commercial financing security. In the case of a bona fide purchase at a 
discount, a purchaser of commercial financing security who satisfies the 
requirements of this section has priority over the tax lien to the full 
extent of the security.

(26 U.S.C. 6323)



Sec. 70.233  Protection for real property construction or improvement 

financing agreements.

    (a) In general. Even though a notice of a lien imposed by 26 U.S.C. 
6321 is filed in accordance with Sec. 70.148 of this part, the lien is 
not valid with respect to a security interest which:
    (1) Comes into existence after the tax lien filing,
    (2) Is on qualified property covered by the terms of a real property 
construction or improvement financing agreement entered into before the 
tax lien filing, and
    (3) Is protected under local law against a judgment lien arising, as 
of the time of tax lien filing, out of an unsecured obligation.

For purposes of this section, it is immaterial that the holder of the 
security interest had actual notice or knowledge of the lien at the time 
disbursements are made pursuant to such an agreement. See Sec. 70.143 
(a) and (e) of this part for general definitions of the terms ``security 
interest'' and ``tax lien filing.'' For purposes of this section, a 
judgment lien is a lien held by a judgment lien creditor as defined in 
Sec. 70.143(g) of this part.
    (b) Real property construction or improvement financing agreement. 
For purposes of this section, the term ``real property construction or 
improvement financing agreement'' means any written agreement to make 
cash disbursements (whether or not at the option of the party agreeing 
to make such disbursements):
    (1) To finance the construction, improvement, or demolition of real 
property if the agreement provides for a security interest in the real 
property with respect to which the construction, improvement, or 
demolition has been or is to be made;
    (2) To finance a contract to construct or improve, or demolish real 
property if the agreement provides for a security interest in the 
proceeds of the contract; or
    (3) To finance the raising or harvesting of a farm crop or the 
raising of livestock or other animals if the agreement provides for a 
security interest in any property subject to the lien imposed by 26 
U.S.C. 6321 at the time of tax lien filing, in the crop raised or 
harvested, or in the livestock or other animals raised.

For purposes of paragraphs (b) (1) and (2) of this section, construction 
or improvement may include demolition. For purposes of any agreement 
described in paragraph (b)(3) of this section, the furnishing of goods 
and services is treated as the disbursement of cash.
    (c) Qualified property. For purposes of this section, the term 
``qualified property'' includes only:

[[Page 308]]

    (1) In the case of an agreement described in paragraph (b)(1) of 
this section, the real property with respect to which the construction 
or improvement has been or is to be made;
    (2) In the case of an agreement described in paragraph (b)(2) of 
this section, the proceeds of the contract to construct or improve real 
property; or
    (3) In the case of an agreement described in paragraph (b)(3) of 
this section, property subject to the lien imposed by 26 U.S.C. 6321 at 
the time of tax lien filing, the farm crop raised or harvested, or the 
livestock or other animals raised.

(26 U.S.C. 6323)



Sec. 70.234  Protection for obligatory disbursement agreements.

    (a) In general. Even though a notice of a lien imposed by 26 U.S.C. 
6321 is filed in accordance with Sec. 70.148 of this part, the lien is 
not valid with respect to security interest which:
    (1) Comes into existence after the tax lien filing,
    (2) Is in qualified property covered by the terms of an obligatory 
disbursement agreement entered into before the tax lien filing, and
    (3) Is protected under local law against a judgment lien arising, as 
of the time of tax lien filing, out of an unsecured obligation.

See Sec. 70.143 (a) and (e) of this part for definitions of the terms 
``security interest'' and ``tax lien filing.'' For purposes of this 
section, a judgment lien creditor as defined in Sec. 70.143(g) of this 
part.
    (b) Obligatory disbursement agreement. For purposes of this section, 
the term ``obligatory disbursement agreement'' means a written 
agreement, entered into by a person in the course of the person's trade 
or business, to make disbursements. An agreement is treated as an 
obligatory disbursement agreement only with respect to disbursements 
which are required to be made by reason of the intervention of the 
rights of a person other than the taxpayer. The obligation to pay must 
be conditioned upon an event beyond the control of the obligor. For 
example, the provisions of this section are applicable where an issuing 
bank obligates itself to honor drafts or other demands for payment on a 
letter of credit and a bank, in good faith, relies upon that letter of 
credit in making advances. The provisions of this section are also 
applicable, for example, where a bonding company obligates itself to 
make payments to indemnify against loss or liability and, under the 
terms of the bond, makes a payment with respect to a loss. The priority 
described in this section is not applicable, for example, in the case of 
an accommodation endorsement by an endorser who assumes the obligation 
other than in the course of the endorser's trade or business.
    (c) Qualified property. Except as provided under paragraph (d) of 
this section, the term ``qualified property,'' for purposes of this 
section, means property subject to the lien imposed by 26 U.S.C. 6321 at 
the time of tax lien filing and, to the extent that the acquisition is 
directly traceable to the obligatory disbursement, property acquired by 
the taxpayer after tax lien filing.
    (d) Special rule for surety agreements. Where the obligatory 
disbursement agreement is an agreement insuring the performance of a 
contract of the taxpayer and another person, the term ``qualified 
property'' shall be treated as also including:
    (1) The proceeds of the contract the performance of which was 
insured, and
    (2) If the contract the performance of which was insured is a 
contract to construct or improve real property, to produce goods, or to 
furnish services, any tangible personal property used by the taxpayer in 
the performance of the insured contract.

For example, a surety company which holds a security interest, arising 
from cash disbursements made after tax lien filing under a payment or 
performance bond on a real estate construction project, has priority 
over the tax lien with respect to the proceeds of the construction 
contract and, in addition, with respect to any tangible personal 
property used by the taxpayer in the construction project if its 
security interest in the tangible personal property is protected under 
local law against a judgment lien arising, as of the time the tax lien 
was filed, out of an unsecured obligation.

(26 U.S.C. 6323)

[[Page 309]]

                          Limitations on Levies

    Source: Sections 70.241 through 70.245 added by T.D. ATF-301, 55 FR 
47646, Nov. 14, 1990, unless otherwise noted.



Sec. 70.241  Property exempt from levy.

    (a) Enumeration. There shall be exempt from levy:
    (1) Wearing apparel and school books. Such items of wearing apparel 
and such school books as are necessary for the taxpayer or for members 
of the taxpayer's family. Expensive items of wearing apparel, such as 
furs, which are luxuries and are not necessary for the taxpayer or for 
members of the taxpayer's family, are not exempt from levy.
    (2) Fuel, provisions, furniture, and personal effects. If the 
taxpayer is the head of a family, so much of the fuel, provisions, 
furniture, and personal effects in the taxpayer's household, and of the 
arms for personal use, livestock, and poultry of the taxpayer, as does 
not exceed $1,650 in value. For purposes of this provision, an 
individual who is the only remaining member of a family and who lives 
alone is not the head of a family.
    (3) Books and tools of a trade, business or profession. So many of 
the books and tools necessary for the trade, business, or profession of 
an individual taxpayer as do not exceed in the aggregate $1,100 in 
value.
    (4) Unemployment benefits. Any amount payable to an individual with 
respect to that individual's unemployment (including any portion thereof 
payable with respect to dependents) under an unemployment compensation 
law of the United States, of any State, or of the District of Columbia 
or of the Commonwealth of Puerto Rico.
    (5) Undelivered mail. Mail, addressed to any person, which has not 
been delivered to the addressee.
    (6) Certain annuity and pension payments. Annuity or pension 
payments under the Railroad Retirement Act (45 U.S.C. chapter 9), 
benefits under the Railroad Unemployment Insurance Act (45 U.S.C. 
chapter 11), special pension payments received by a person whose name 
has been entered on the Army, Navy, Air Force, and Coast Guard Medal of 
Honor roll (38 U.S.C. 562), and annuities based on retired or retainer 
pay under 10 U.S.C. chapter 73.
    (7) Workmen's compensation. Any amount payable to an individual as 
workmen's compensation (including any portion thereof payable with 
respect to dependents) under a workmen's compensation law of the United 
States, any State, the District of Columbia, or the Commonwealth of 
Puerto Rico.
    (8) Judgments for support of minor children. If the taxpayer is 
required under any type of order or decree (including an interlocutory 
decree or a decree of support pendente lite) of a court of competent 
jurisdiction, entered prior to the day of levy, to contribute to the 
support of such taxpayer's minor children, so much of the taxpayer's 
salary, wages, or other income as is necessary to comply with such order 
or decree. The taxpayer must establish the amount necessary to comply 
with the order or decree. The appropriate TTB officer is not required to 
release a levy until such time as that officer is satisfied that the 
amount to be released from levy will actually be applied in satisfaction 
of the support obligation. The appropriate TTB officer may make 
arrangements with a delinquent taxpayer to establish a specific amount 
of such taxpayer's salary, wage, or other income for each pay period 
which shall be exempt from levy. Any request for such an arrangement 
shall be directed to the appropriate TTB officer. Where the taxpayer has 
more than one source of income sufficient to satisfy the support 
obligation imposed by the order or decree, the amount exempt from levy 
may at the discretion of the appropriate TTB officer be allocated 
entirely to one salary, wage, or source of other income or be 
apportioned between the several salaries, wages, or other sources of 
income.
    (9) Minimum exemption for wages, salary, and other income. Amounts 
payable to or received by the taxpayer as wages or salary for personal 
services, or as other income, to the extent provided in Sec. Sec. 
70.242 through 70.245 of this part.
    (10) Certain service-connected disability payments. Any amount 
payable to an individual as a service-connected (within the meaning of 
38 U.S.C. 101(16)) disability benefit under:

[[Page 310]]

    (i) 38 U.S.C. chapter 11, subchapter II, III, IV, V, or VI, or
    (ii) 38 U.S.C. chapter 13, 21, 23, 31, 32, 34, 35, 37, or 39 shall 
be exempt from levy.
    (11) Certain public assistance payments. Any amount payable to an 
individual as a recipient of public assistance under:
    (i) Title 42 U.S.C. subchapter IV (relating to aid to families with 
dependent children) or 42 U.S.C. subchapter XVI (relating to 
supplemental security income for the aged, blind, and disabled), or
    (ii) State or local government public assistance or public welfare 
programs for which eligibility is determined by a needs or income test 
shall be exempt from levy.
    (12) Assistance under job training partnership act. Any amount 
payable to a participant under the Job Training Partnership Act (29 
U.S.C. 1501 et seq.) from funds appropriated pursuant to such Act shall 
be exempt from levy.
    (13) Principal residence exempt in absence of certain approval or 
jeopardy. Except to the extent provided in Sec. 70.166 of this part, 
the principal residence of the taxpayer (within the meaning of 26 U.S.C. 
1034) is exempt from levy.
    (b) Appraisal. The TTB officer seizing property of the type 
described in 26 U.S.C. 6334(a) shall appraise and set aside to the owner 
the amount of such property declared to be exempt. If the taxpayer 
objects at the time of the seizure to the valuation fixed by the officer 
making the seizure, such officer shall summon three disinterested 
individuals who shall make the valuation.
    (c) Other property. No other property or rights to property are 
exempt from levy except the property specifically exempted by 26 U.S.C. 
6334(a). No provisions of a State law may exempt property or rights to 
property from levy for the collection of any Federal tax. Thus, property 
exempt from execution under State personal or homestead exemption laws 
is, nevertheless, subject to levy by the United States for collection of 
its taxes.

(26 U.S.C. 6334)



Sec. 70.242  Wages, salary and other income.

    (a) In general. Under 26 U.S.C. 6334(a)(9) and (d) certain amounts 
payable to or received by a taxpayer as wages, salary or other income 
are exempt from levy. This section described the income of a taxpayer 
that is eligible for the exemption from levy (paragraph (b) of this 
section) and how exempt amounts are to be paid to the taxpayer 
(paragraph (c) of this section). Section 70.243 of this part describes 
the sum which will be exempt from levy for each of the taxpayer's 
payroll periods. Payroll periods are described in Sec. 70.244 of this 
part. Amounts exempt from levy are determined in part by the number of 
persons claimed by the taxpayer as dependents. Section 70.245 of this 
part describes the manner in which the taxpayer is to claim any 
dependent exemptions and the manner in which the employer is to compute 
the exempt amount and pay the balance to the appropriate TTB officer.
    (b) Eligible taxpayer income. Only wages, salary or other income 
payable to the taxpayer after the levy is made on the payor may be 
exempt from levy under 26 U.S.C. 6334 (a)(9). No amount of wages, salary 
or other income which is paid to the taxpayer before levy is made on the 
payor will be so exempt from levy.
    (c) Payment of exempt amounts to taxpayer--(1) From wages, salary or 
other income not subject to levy. In the case of a taxpayer who has more 
than one source of wages, salary or other income, the appropriate TTB 
officer may elect to levy on only one or more such source while leaving 
other sources of salary or other income free from levy. If those wages, 
salary or other income which the appropriate TTB officer leaves free 
from levy equal or exceed the amount to which the taxpayer is entitled 
as an exemption from levy under 26 U.S.C. 6334(a)(9) and (d) and Sec. 
70.243 of this part (and ar not otherwise exempt), then no amount of the 
taxpayer's wages, salary or other income on which the appropriate TTB 
officer elects to levy is exempt from levy. The appropriate TTB officer 
shall notify the employer or other person subject to levy that no amount 
of the taxpayer's wages, salary or other income is exempt from levy.

[[Page 311]]

    (2) From wages, salary or other income subject to levy. If the 
taxpayer's income upon which the appropriate TTB officer does not levy 
is less than that amount to which the taxpayer is entitled as an 
exemption, then an amount determined pursuant to Sec. 70.243 of this 
part is to be paid to the taxpayer from those wages, salary or other 
income which are subject to levy. The appropriate TTB officer will 
designate those wages, salary or other income subject to levy from which 
such amount will be paid to the taxpayer. The appropriate TTB officer 
will generally make this designation by delivering to the employer, or 
other person levied upon, the form upon which the taxpayer is to claim 
any dependent exemption. The form will acompany the notice of levy. The 
person receiving the form from the appropriate TTB officer must promptly 
deliver it to the taxpayer. In the case of some employers having a large 
number of employees, however, the appropriate TTB officer will send the 
form upon which an employee is to claim any dependent exemption diretly 
to the employee. In such a case, the notice of levy will indicate that 
the form for claiming dependent exemptions has been sent to the 
taxpayer. If a notice of levy is not accompanied by the form for 
claiming dependent exemptions and does not indicate that the form was 
sent directly to the taxpayer, then the person levied upon must make 
payment to the appropriate TTB officer without regard to amounts 
prescribed by Sec. 70.243 of this part as exempt from levy. If a notice 
of levy is accompanied by the form for claiming dependent exemptions or 
indicates that the form was sent directly to the taxpayer, then the 
person levied upon is to pay over to the taxpayer, amounts determined to 
be exempt from levy pursuant to Sec. 70.243 and Sec. 70.245 (b) and 
(c) of this part (relating to the requirement that the taxpayer submit a 
claim for any dependent exemption). Amounts not exempt from levy are to 
be paid to the appropriate TTB officer in accordance with the terms of 
the levy.

(26 U.S.C. 6334)



Sec. 70.243  Exempt amount.

    Amount payable to the taxpayer as wages, salary, or other income for 
each payroll period described in Sec. 70.244 of this part are exempt 
from levy as follows:
    (a) If the payroll period is weekly, an amount equal to:
    (1) The sum of:
    (i) The standard deduction, and
    (ii) The aggregate amount of the deductions for personal exemption 
allowed the taxpayer under 26 U.S.C. 151 in the taxable year in which 
such levy occurs, divided by
    (2) 52.
    (b) If the payroll period is not weekly, the amount exempt from levy 
shall be an amount which as nearly as possible will result in the same 
total exemption from levy for such individual over a period of time as 
such individual would have under paragraph (a) of this section if 
(during such period of time) the individual were paid or received such 
wages, salary or other income on a regular weekly basis.

(26 U.S.C. 6334)



Sec. 70.244  Payroll period.

    For purpose of determining the amount of wages, salary or other 
income exempt from levy under 26 U.S.C. 6334(a)(9):
    (a) Regularly used calendar periods. In the case of wages, salary or 
other income paid to the taxpayer on the basis of an established 
calendar period regularly used by the employer or other person levied 
upon for payroll or payment purpose (e.g., daily, weekly, biweekly, 
semimonthly, or monthly), that period is the taxpayer's payroll period.
    (b) Amounts paid on recurrent but irregular basis. In the case of 
wages, salary, or other income paid to the taxpayer on a recurrent but 
irregular basis, the first day of the taxpayer's payroll period is that 
day following the day upon which the wages, salary, or other income were 
last paid to the taxpayer. The last day of the payroll period is that 
day upon which the current payment becomes payable to him or her. 
However, in any case in which:
    (1) Amounts are paid to the taxpayer on a recurrent but irregular 
basis, and
    (2) the last payment was paid to the taxpayer more than 60 days 
before the current payment becomes payable, the current payment will be 
deemed a one-

[[Page 312]]

time payment (see paragraph (c) of this section).
    (c) Nonrecurrent payments. In the case of wages, salary or other 
income paid to the taxpayer on a one-time basis, the taxpayer's payroll 
period is deemed to be weekly (i.e., the 1-week period ending on the day 
of payment).

(26 U.S.C. 6334)



Sec. 70.245  Computation of exempt amount and payment of amounts not exempt 

from levy to the appropriate TTB officer.

    (a) General. Unless advised by the appropriate TTB officer that no 
part of the money due to the taxpayer is exempt from levy, the employer 
or other person levied upon will compute the exempt amount, using the 
formula in Sec. 70.243 of this part and the taxpayer's statement of 
exemptions and filing status described in paragraph (b) of this section.
    (b) Statement of exemptions and filing status. Unless the taxpayer 
submits a statement of exemptions and filing status to the employer or 
other person levied upon, the exempt amount will be applied as if the 
taxpayer were a married individual filing a separate return with only 1 
personal exemption. A statement of exemptions and filing status shall be 
made by either:
    (1) Completion of the form provided for this purpose by the Bureau, 
or
    (2) A written statement that:
    (i) Gives the taxpayer's filing status for income tax purposes,
    (ii) Shows any additional standard deduction if the taxpayer or the 
taxpayer's spouse is at least 65 and/or blind,
    (iii) Identified by name and by relationship to the taxpayer each 
person for whom a dependent exemption is claimed,
    (iv) Is signed by the taxpayer, and
    (v) Contains a declaration that it is made under the penalties of 
perjury.
    (c) Time for submission of statement. The taxpayer must submit the 
statement of exemptions and filing status to the employer or other 
person levied upon no later than the later of:
    (1) The third day before the last day of the payroll period for 
which the exemption is claimed (that is, the third day before payday), 
or
    (2) If the appropriate TTB officer delivers the forms for the 
statement of exemption and filing status to the employer or other person 
levied upon (see Sec. 70.242(c)(2) of this part), the second day after 
the date the taxpayer receives the form.

For purposes of paragraphs (c) (1) and (2) of this section, the term 
``day'' does not include Saturdays, Sunday or a legal holiday within the 
meaning of 26 U.S.C. 7503. Failure on the part of the taxpayer to submit 
a timely statement of exemptions and filing status will result in the 
computation of the exempt amount as if the taxpayer were a married 
individual filing a separate return with only 1 personal exemption for 
the applicable pay period, except that the employer or other person 
levied upon may accept a statement of exemptions and filing status not 
timely submitted in accordance with this paragraph, and may prepare a 
disbursement to the taxpayer based upon the information properly 
verified therein, if payment to the appropriate TTB officer in 
accordance with the levy is not thereby delayed.
    (d) Payment of amounts not exempt form levy to the appropriate TTB 
officer--(1) In General. Wages, Salary, or other income the subject of a 
levy are payable to the appropriate TTB officer on the date the payor is 
otherwise obligated to pay the taxpayer (see Sec. 70.242(c) of this 
part).
    (2) Delayed payment in certain cases. If, however, as described in 
paragraph (c)(2) of this section, the taxpayer may submit a statement of 
exemptions and filing status after the third day before payday, amounts 
payable to the taxpayer on that payday, to the extent not exempt from 
levy, are payable to the appropriate TTB officer on the third day 
following the date on which the taxpayer may timely submit the statement 
of exemptions and filing status under paragraph (c)(2) of this section. 
For purposes of this rule, the term ``day'' does not include Saturday, 
Sunday or a legal holiday within the meaning of 26 U.S.C. 7503.

(26 U.S.C. 6334)

[[Page 313]]

              Periods of Limitation in Judicial Proceedings



Sec. 70.251  Periods of limitation on suits by taxpayers.

    (a) No suit or proceeding under section 7422(a) of the Internal 
Revenue Code for the recovery of any internal revenue tax, penalty, or 
other sum shall be begun until whichever of the following first occurs:
    (1) The expiration of 6 months from the date of the filing of the 
claim for credit or refund, or
    (2) A decision is rendered on such claim prior to the expiration of 
6 months after the filing thereof. Except as provided in paragraph (b) 
of this section, no suit or proceeding for the recovery of any tax, 
penalty, or other sum imposed under the provision of 26 U.S.C. enforced 
and administered by the Bureau may be brought after the expiration of 2 
years from the date of mailing, by either registered or certified mail, 
by an appropriate TTB officer, to a taxpayer of a statutory notice of 
disallowance of the part of the claim to which the suit or proceeding 
relates.
    (b) The 2-year period described in paragraph (a) of this section may 
be extended if an agreement to extend the running of the period of 
limitations is executed. The agreement must be signed by the taxpayer or 
by an attorney, agent, trustee, or other fiduciary on behalf of the 
taxpayer. If the agreement is signed by a person other than the 
taxpayer, it shall be accompanied by an authenticated copy of the power 
of attorney or other legal evidence of the authority of such person to 
act on behalf of the taxpayer. If the taxpayer is a corporation, the 
agreement should be signed with the corporate name followed by the 
signature of a duly authorized officer of the corporation. The agreement 
will not be effective until signed by an appropriate officer.
    (c) The taxpayer may sign a waiver of the requirement that the 
taxpayer be mailed a notice of disallowance. Such waiver is irrevocable 
and will commence the running of the 2-year period described in 
paragraph (a) of this section on the date the waiver is filed. The 
waiver shall set forth:
    (1) The type of tax and the taxable period covered by the taxpayer's 
claim for refund;
    (2) The amount of the claim;
    (3) The amount of the claim disallowed;
    (4) A statement that the taxpayer agrees the filing of the waiver 
will commence the running of the 2-year period provided for in section 
6532(a)(1) as if a notice of disallowance had been sent the taxpayer by 
either registered or certified mail.

The filing of such a waiver prior to the expiration of 6 monthes from 
the date the claim was filed does not permit the filing of a suit for 
refund prior to the time specified in section 6532(a)(1) and paragraph 
(a) of this section.
    (d) Any consideration, reconsideration, or other action with respect 
to a claim after the mailing, by either registered or certified mail, of 
a notice of disallowance or after the execution of a waiver referred to 
in paragraph (c) of this section, shall not extend the period for 
bringing suit or other proceeding under section 7422(a) of the Internal 
Revenue Code.

(26 U.S.C. 6532)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47648, Nov. 14, 1990]



Sec. 70.252  Periods of limitaion on suits by the United States.

    The United States may not recover any erroneous refund by civil 
action under section 7405 of the Internal Revenue Code unless such 
action is begun within 2 years after the making of such refund. However, 
if any part of the refund was induced by fraud or misrepresentation of a 
material fact, the action to recover the erroneous refund may be brought 
at any time within 5 years from the date the refund was made.

(26 U.S.C. 6532)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.253  Periods of limitation on suits by persons other than taxpayers.

    (a) General rule. No suit or proceeding, except as otherwise 
provided in 26 U.S.C. 6532(c)(2) and paragraph (b) of this section, 
under 26 U.S.C. 7426 and

[[Page 314]]

Sec. 70.207 of this part relating to civil actions by persons other 
than taxpayers, shall be begun after the expiration of 9 months from the 
date of levy or agreement under 26 U.S.C. 6325(b)(3) giving rise to such 
action.
    (b) Period when claim is filed. The 9-month period described in 26 
U.S.C. 6532(c)(1) and paragraph (a) of this section shall be extended to 
the shorter of
    (1) 12 months from the date of filing by a third party of a written 
request under Sec. 70.167(b)(2) of this part for the return of property 
wrongfully levied upon, or
    (2) 6 months from the date of mailing by registered or certified 
mail by the appropriate TTB officer to the party claimant of a notice of 
disallowance of the part of the request to which the action relates. A 
request which, under Sec. 70.167(b)(3) of this part, is not considered 
adequate does not extend the 9-month period described in paragraph (a) 
of this section.

(26 U.S.C. 6532)

[T.D. ATF-301, 55 FR 47648, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29028, May 29, 2001]

                     Limitations on Credit or Refund



Sec. 70.261  Period of limitation on filing claim.

    (a) In the case of any tax (other than a tax payable by stamp):
    (1) If a return is filed, a claim for credit or refund of an 
overpayment must be filed by the taxpayer within 3 years from the time 
the return was filed or within 2 years from the time the tax was paid, 
whichever of such periods expires the later.
    (2) If no return is filed, the claim for credit or refund of an 
overpayment must be filed by the taxpayer within 2 years from the time 
the tax was paid.
    (b) In the case of any tax payable by means of a stamp, a claim for 
credit or refund of an overpayment of such tax must be filed by the 
taxpayer within 3 years from the time the tax was paid. For provisions 
relating to redemption of unused stamps, see section 6805 of the 
Internal Revenue Code.
    (c) For limitations on allowance of credit or refund, special rules, 
and exceptions, see subsections (b) and (c) of section 6511 of the 
Internal Revenue Code. For rules as to time return is deemed filed and 
tax considered paid, see section 6513 of the Internal Revenue Code.

(26 U.S.C. 6511)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.262  Limitations on allowance of credits and refunds.

    (a) Effect of filing claim. Unless a claim for credit or refund of 
an overpayment is filed within the period of limitation prescribed in 
section 6511(a), no credit or refund shall be allowed or made after the 
expiration of such period.
    (b) Limit on amount to be credited or refunded. In the case of any 
tax (other than a tax payable by stamp):
    (1) If a return was filed, and a claim is filed within 3 years from 
the time the return was filed, the amount of the credit or refund shall 
not exceed the portion of the tax paid within the period, immediately 
preceding the filing of the claim, equal to 3 years plus the period of 
any extension of time for filing the return.
    (2) If a return was filed, and a claim is filed after the 3 year 
period described in paragraph (b)(1) of this section, but within 2 years 
from the time the tax was paid, the amount of the credit or refund shall 
not exceed the portion of the tax paid within the 2 years immediately 
preceding the filing of the claim.
    (3) If no return was filed, but a claim is filed, the amount of the 
credit or refund shall not exceed the portion of the tax paid within the 
2 years immediately preceding the filing of the claim.
    (4) If no claim is filed, the amount of the credit or refund allowed 
or made shall not exceed the amount that would have been allowable under 
the preceding subparagraphs if a claim had been filed on the date the 
credit or refund is allowed.
    (c) In the case of a tax payable by stamp. (1) If a claim is filed, 
the amount of the credit or refund shall not exceed the portion of the 
tax paid within the 3 years immediately preceding the filing of the 
claim.

[[Page 315]]

    (2) If no claim is filed, the amount of the credit or refund allowed 
or made shall not exceed the portion of the tax paid within the 3 years 
immediately preceding the allowance of the credit or refund. For 
provisions relating to redemption of unused stamps, see section 6805 of 
the Internal Revenue Code.

(26 U.S.C. 6511)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47648, Nov. 14, 1990; T.D. ATF-450, 66 FR 
29028, May 29, 2001]



Sec. 70.263  Special rules applicable in case of extension of time by 

agreement.

    (a) Scope. If, within the period prescribed in section 6511(a) of 
the Internal Revenue Code for the filing of a claim for credit or 
refund, an agreement extending the period for assessment of a tax has 
been made in accordance with the provisions of section 6501(c)(4) of the 
Internal Revenue Code, the special rules provided in this section become 
applicable. This section shall not apply to any claim filed, or credit 
or refund allowed if no claim is filed, either (1) prior to the 
execution of an agreement extending the period in which assessment may 
be made, or (2) more than 6 months after the expiration of the period 
within which an assessment may be made pursuant to the agreement or any 
extension thereof.
    (b) Period in which claim may be filed. Claim for credit or refund 
of an overpayment may be filed, or credit or refund may be allowed if no 
claim is filed, at any time within which an assessment may be made 
pursuant to an agreement, or any extension thereof, under section 
6501(c)(4), and for 6 months thereafter.
    (c) Limit on amount to be credited or refunded. (1) If a claim is 
filed within the time prescribed in paragraph (b) of this section, the 
amount of the credit or refund allowed or made shall not exceed the 
portion of the tax paid after the execution of the agreement and before 
the filing of the claim, plus the amount that could have been properly 
credited or refunded under the provisions of section 6511(b)(2) if a 
claim had been filed on the date of the execution of the agreement.
    (2) If no claim is filed, the amount of credit or refund allowed or 
made within the time prescribed in paragraph (b) of this section shall 
not exceed the portion of the tax paid after the execution of the 
agreement and before the making of the credit or refund, plus the amount 
that could have been properly credited or refunded under the provisions 
of section 6511(b)(2) if a claim had been filed on the date of the 
execution of the agreement.
    (d) Effective date of agreement. The agreement referred to in this 
section shall become effective when signed by the taxpayer and the 
appropriate TTB officer.

(26 U.S.C. 6511)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.264  Time return deemed filed and tax considered paid.

    For purposes of section 6511 of the Internal Revenue Code, a return 
filed before the last day prescribed by law or regulations for the 
filing thereof shall be considered as filed on such last day. For 
purposes of section 6511(b) (2) and (c), payment of any portion of the 
tax made before the last day prescribed for payment shall be considered 
made on such last day. An extension of time for filing a return or for 
paying any tax shall not be given any effect in determining under this 
section the last day prescribed for filing a return or paying any tax.

(26 U.S.C. 6513)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.265  Credits or refunds after period of limitation.

    (a) A refund of any portion of any internal revenue tax (or any 
interest, additional amount, addition to the tax, or assessable penalty) 
shall be considered erroneous and a credit of any such portion shall be 
considered void:
    (1) If made after the expiration of the period of limitation 
prescribed by section 6511 of the Internal Revenue Code for filing claim 
therefor, unless prior to the expiration of such period claim was filed, 
or

[[Page 316]]

    (2) In the case of a timely claim, if the credit or refund was made 
after the expiration of the period of limitation prescribed by section 
6532(a) for the filing of suit, unless prior to the expiration of such 
period, suit was begun.
    (b) For procedure by the United States to recover erroneous refunds, 
see sections 6532(b) and 7405 of the Internal Revenue Code.

(26 U.S.C. 6514)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.266  Credit against barred liability.

    Any credit against a liability in respect of any taxable year shall 
be void if the collection of such liability would be barred by the 
applicable statute of limitations at the time such credit is made.

(26 U.S.C. 6514)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]

                               Transferees



Sec. 70.271  Procedure in the case of transferred assets.

    (a) Method of collection. (1) The liability, at law or in equity, of 
a transferee of property of any person liable in respect of any tax 
imposed under provisions of 26 U.S.C. enforced and administered by the 
Bureau, in any case where the liability of the transferee arises on the 
liquidation of a corporation or partnership, or a corporate 
reorganization within the meaning of 26 U.S.C. 368(a), shall be assessed 
against such transferee and paid and collected in the same manner and 
subject to the same provisions and limitations as in the case of the tax 
with respect to which such liability is incurred, except as hereinafter 
provided.
    (2) Applicable provisions. The provisions of 26 U.S.C. made 
applicable by 26 U.S.C. 6901(a) to the liability of a transferee 
referred to in paragraph (a)(1) of this section, include the provisions 
relating to:
    (i) Delinquency in payment after notice and demand and the amount of 
interest attaching because of such delinquency;
    (ii) The authorization of distraint and proceedings in court for 
collection; and
    (iii) The prohibition of claims and suits for refund.

For detailed provisions relating to assessments, collections, and 
refunds, see 26 U.S.C. chapters 63, 64, and 65, respectively.
    (b) Definition of transferee. As used in this section, the term 
``transferee'' includes the shareholder of a dissolved corporation, the 
assignee or donee of an insolvent person, the successor of a 
corporation, a party to a reorganization as defined in 26 U.S.C. 368, 
and all other classes of distributees.
    (c) Period of limitations on assessment. The period of limitations 
for assessment of the liability of a transferee is as follows:
    (1) Initial transferee. In the case of the liability of an initial 
transferee, 1 year after the expiration of the period of limitations for 
assessment against the transferor.
    (2) Transferee of transferee. In the case of the liability of a 
transferee of a transferee, 1 year after the expiration of the period of 
limitations for assessment against the preceding transferee, or 3 years 
after the expiration of the period of limitations for assessment against 
the taxpayer, whichever of such periods first expires.
    (3) Court proceeding against taxpayer or last preceding transferee. 
If, before the expiration of the period specified in paragraph (c)(1) or 
(2) of this section, (whichever is applicable), a court proceeding 
against the taxpayer or last preceding transferee for the collection of 
the tax or liability in respect thereof, respectively, has been begun 
within the period of limitation for the commencement of such proceeding, 
then within 1 year after the return of execution in such proceeding.
    (d) Extension by agreement--(1) Extension of time for assessment. 
The time prescribed by 26 U.S.C. 6901 for the assessment of the 
liability of a transferee may, prior to the expiration of such time, be 
extended for any period of time agreed upon in writing by the transferee 
and the appropriate TTB officer. The extension shall become effective 
when the agreement has been executed by both parties. The period

[[Page 317]]

agreed upon may be extended by subsequent agreements in writing made 
before the expiration of the period previously agreed upon.
    (2) Extension of times for credit or refund. (i) For the purposes of 
determining the period of limitations on credit or refund to the 
transferee of overpayments made by such transferee or overpayments made 
by the taxpayer to which such transferee may be legally entitled to 
credit or refund, an agreement and any extension thereof referred to in 
paragraph (d)(1) of this section, shall be deemed an agreement and 
extension thereof for purposes of 26 U.S.C. 6511(c) (relating to 
limitations on credit or refund in case of extension of time by 
agreement).
    (ii) For the purpose of determining the limit specified in 26 U.S.C. 
6511(c)(2) on the amount of the credit or refund, if the agreement is 
executed after the expiration of the period of limitations for 
assessment against the taxpayer with reference to whom the liability of 
such transferee arises, the periods specified in 26 U.S.C. 6511(b)(2) 
shall be increased by the period from the date of such expiration to the 
date the agreement is executed.
    (e) Period of assessment against taxpayer. For the purpose of 
determining the period of limitations for assessment against a 
transferee, if the taxpayer is deceased, or, in the case of a 
corporation, has terminated its existence, the period of limitations for 
assessment against the taxpayer shall be the period that would be in 
effect had the termination of existence not occurred.

(26 U.S.C. 6901)

[T.D. ATF-301, 55 FR 47648, Nov. 14, 1990]

                                  Bonds



Sec. 70.281  Form of bond and security required.

    (a) In general. Any person required to furnish a bond under the 
provisions of this part shall execute such bond:
    (1) On the appropriate form prescribed by the Bureau and
    (2) With satisfactory surety.
    For provisions as to what will be considered ``satisfactory 
surety'', see paragraph (b) of this section. The bonds referred to in 
this paragraph shall be drawn in favor of the United States.
    (b) Satisfactory surety--(1) Approved surety company or bonds or 
notes of the United States. For purposes of paragraph (a) of this 
section, a bond shall be considered executed with satisfactory surety 
if:
    (i) It is executed by a surety company holding a certificate of 
authority from the Secretary as an acceptable surety on Federal bonds; 
or
    (ii) It is secured by bonds or notes of the United States as 
provided in by 31 U.S.C. 9303.
    (2) Other surety. Unless otherwise expressly provided in 26 U.S.C. 
or this part, a bond may, in the discretion of the appropriate TTB 
officer, be considered executed with satisfactory surety if, in lieu of 
being executed or secured as provided in paragraph (b)(1) of this 
section, it is:
    (i) Executed by a corporate surety (other than a surety company) 
provided such corporate surety establishes that it is within its 
corporate powers to act as surety for another corporation or an 
individual;
    (ii) Executed by two or more individual sureties, provided such 
individual sureties meet the conditions contained in paragraph (b)(3) of 
this section;
    (iii) Secured by a mortgage on real or personal property;
    (iv) Secured by a certified, cashier's, or treasurer's check drawn 
on any bank or trust company incorporated under the laws of the United 
States or any State, Territory, or possession of the United States, or 
by a U.S. postal, bank, express or telegraph money order;
    (v) Secured by corporate bonds or stocks, or by bonds issued by a 
State or political subdivision thereof, of recognized stability; or
    (vi) Secured by any other acceptable collateral. Collateral shall be 
deposited with the appropriate TTB officer or, in that officer's 
discretion, with a responsible financial institution acting as escrow 
agent.
    (3) Conditions to be met by individual sureties. If a bond is 
executed by two or more individual sureties, the following conditions 
must be met by each such individual surety:

[[Page 318]]

    (i) The surety must reside within the State in which the principal 
place of business or legal residence of the primary obligor is located;
    (ii) The surety must have property subject to execution of a current 
market value, above all encumbrances, equal to at least the penalty of 
the bond;
    (iii) All real property which the surety offers as security must be 
located in the State in which the principal place of business or legal 
residence of the primary obligor is located;
    (iv) The surety must agree not to mortgage, or otherwise encumber, 
any property offered as security while the bond continues in effect 
without first securing the permission of the officer with whom the bond 
is filed; and
    (v) The surety must file with the bond, and annually thereafter so 
long as the bond continues in effect, an affidavit as to the adequacy of 
the security, executed on the appropriate form furnished by the 
appropriate TTB officer.

Partners may not act as sureties upon bonds of their partnership. 
Stockholders of a corporate principal may be accepted as sureties 
provided their qualifications as such are independent of their holdings 
of the stock of the corporation.
    (4) Adequacy of surety. No surety or security shall be accepted if 
it does not adequately protect the interest of the United States.

(26 U.S.C. 7101)

[T.D. ATF-301, 55 FR 47649, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29028, May 29, 2001]



Sec. 70.282  Single bond in lieu of multiple bonds.

    In the case of bonds required under this part, a single bond will 
not be accepted in lieu of two or more bonds.

(26 U.S.C. 7102)

[T.D. ATF-301, 55 FR 47650, Nov. 14, 1990]

                        Miscellaneous Provisions

    Source: Sections 70.301 through 70.306 added by T.D. ATF-301, 55 FR 
47650, Nov. 14, 1990, unless otherwise noted.



Sec. 70.301  Reproduction of returns and other documents.

    (a) In general. The appropriate TTB officer may contract with any 
Federal agency or any person to have such agency or person process films 
and other photoimpressions of any return, statement, document, or of any 
card, record, or other matter required under the provisions of 26 U.S.C. 
enforced and administered by the Bureau, and make reproductions from 
such films and photoimpressions.
    (b) Safeguards--(1) By private contractor. Any person entering into 
a contract with the Bureau for the performance of any of the services 
described in paragraph (a) of this section shall agree to comply, and to 
assume responsibility for compliance by that person's employees, with 
the following requirements:
    (i) The films or photoimpressions, and reproductions made therefrom, 
shall be used only for the purpose of carrying out the provisions of the 
contract, and information contained in such material shall be treated as 
confidential and shall not be divulged or made known in any manner to 
any person except as may be necessary in the performance of the 
contract;
    (ii) All the services shall be performed under the supervision of 
the person with whom the contract is made or that person's responsible 
employees;
    (iii) All material received for processing and all processed and 
reproduced material shall be kept in a locked and fireproof compartment 
in a secure place when not being worked upon;
    (iv) All spoilage of reproductions made from the film or 
photoimpressions supplied to the contractor shall be destroyed, and a 
statement under the penalties of perjury shall be submitted to the 
Bureau that such destruction has been accomplished; and
    (v) All film, photoimpressions, and reproductions made therefrom, 
shall be transmitted to the Bureau by personal delivery, first-class 
mail, parcel post, or express.
    (2) By Federal agency. Any Federal agency entering into a contract 
with the Bureau for the performance of any services described in 
paragraph (a) of this section, shall treat as confidential

[[Page 319]]

all material processed or reproduced pursuant to such contract.
    (3) Inspection. The Bureau shall have the right to send its officers 
and employees into the office and plants of Federal agencies and other 
contractors for inspection of the facilities and operations provided for 
the performance of any work contracted or to be contracted for under 
this section.
    (4) Criminal sanctions. For penalty provisions relating to the 
unauthorized use and disclosure of information in violation of the 
provisions of this section, see 26 U.S.C. 7213(c).

(26 U.S.C. 7513)



Sec. 70.302  Fees and costs for witnesses.

    (a) Introduction. Title 26 U.S.C. 7610 provides that the Bureau may 
make payments to certain persons who are summoned to give information to 
the Bureau under 26 U.S.C. 7602 and Sec. 70.22 of this part. Under 26 
U.S.C. 7610 witnesses generally will not be reimbursed for actual 
expenses incurred but instead will be paid in accordance with the 
payment rates established by regulations. Paragraph (b) of this section 
contains elaborations of certain terms found in 26 U.S.C. 7610 and 
definitions of other terms used in the regulations under 26 U.S.C. 7610 
(a) and (b); and paragraphs (c) and (d) of this section contain rules 
and rates applicable to payments under 26 U.S.C. 7610.
    (b) Definitions--(1) Directly incurred costs. Directly incurred 
costs are costs incurred solely, immediately, and necessarily as a 
consequence of searching for, reproducing, or transporting records in 
order to comply with a summons. They do not include a proportionate 
allocation of fixed costs, such as overhead, equipment depreciation, 
etc. However, where a third party's records are stored at an independent 
storage facility that charges the third party a search fee to search 
for, reproduce, or transport particular records requested, these fees 
are considered to be directly incurred by the summoned third party.
    (2) Reproduction cost. Reproduction costs are costs incurred in 
making copies or duplicates of summoned documents, transcripts, and 
other similar material.
    (3) Search costs. Search costs include only the total cost of 
personnel time directly incurred in searching for records or information 
and the cost of retrieving information stored by computer. Salaries of 
persons locating and retrieving summoned material are not included in 
search costs. Also, search costs do not include salaries, fees, or 
similar expenditures for analysis of material or for managerial or legal 
advice, expertise, or research, or time spent for these activities.
    (4) Third party. A third party is any person served with a summons, 
other than a person with respect to whose liability a summons is issued, 
or an officer, employee, agent, accountant, or attorney of that person.
    (5) Third party records. Third party records are books, papers, 
records, or other data in which the person with respect to whose 
liability a summons is issued does not have a proprietary interest at 
the time the summons is served.
    (6) Transportation costs. Transportation costs include only costs 
incurred to transport personnel to search for records or information 
requested and costs incurred solely by the need to transport the 
summoned material to the place of examination. These costs do not 
include the cost of transporting the summoned witness for appearance at 
the place of examination. See paragraph (c)(2) of this section for 
payment of travel expenses.
    (c) Conditions and rates of payments--(1) Basis for payment. Payment 
for search, reproduction, and transportation costs will be made only to 
third parties served with a summons to produce third party records or 
information and only for material requested by the summons. Payment will 
be made only for those costs both directly incurred and reasonably 
necessary. No payment will be made until the third party has 
satisfactorily complied with the summons and has submitted an itemized 
bill or invoice showing specific details concerning the costs to the 
Bureau employee before whom the third party was summoned. If a third 
party charges any other person for any cost for which the third party is 
seeking payment from the Bureau, the amount charged to the other person

[[Page 320]]

must be subtracted from the amount the Bureau must pay.
    (2) Payment rates. The following rates are established.
    (i) Search costs. (A) For the total amount of personnel time 
required to locate records or information, $8.50 per person hour.
    (B) For retrieval of information stored by computer in the format in 
which it is normally produced, actual costs, based on computer time and 
necessary supplies, except that personnel time for computer search is 
payable only under paragraph (c)(2)(i)(A) of this section.
    (ii) Reproduction costs. (A) For copies of documents $.20 per page.
    (B) For photographers, films and other materials, actual cost, 
except that personnel time is payable only under paragraph (a)(2)(i)(A) 
of this section.
    (iii) Transportation costs. For transportation costs, actual cost, 
except that personnel time is payable only under paragraph (c)(2)(i)(A) 
of this section.
    (d) Appearance fees and allowances--(1) In general. Under 26 U.S.C. 
7610(a)(1) and this paragraph, the Bureau shall pay a summoned person 
certain fees and allowances. No payments will be made until after the 
party summoned appears and has submitted any necessary receipts or other 
evidence of costs to the Bureau employee before whom the person was 
summoned.
    (2) Attendance fees. A summoned person shall be paid an attendance 
fee for each day's attendance. A summoned person shall also be paid the 
attendance fee for the time necessarily occupied in going to and 
returning from the place of attendance at the beginning and end of the 
attendance or at any time during the attendance. The attendance fee is 
the higher of $30 per day or the amount paid under 28 U.S.C. 1821(b) to 
witnesses in attendance at courts of the United States at the time of 
the summoned person's appearance.
    (3) Travel allowances. A summoned person who travels by common 
carrier shall be paid for the actual expenses of travel on the basis of 
the means of transportation reasonably utilized and the distance 
necessarily traveled to and from the summoned person's residence by the 
shortest practical route in going to and returning from the place of 
attendance. Such a summoned person shall utilize a common carrier at the 
most economical rate reasonably available. A receipt or other evidence 
of actual cost shall be furnished. A travel allowance equal to the 
mileage allowance which the Administrator of General Services has 
prescribed, under 5 U.S.C. 5704, for official travel of employees of the 
Federal Government shall be paid to each summoned person who travels by 
privately owned vehicle. Computation of mileage under this paragraph 
shall be made on the basis of a uniform table of distances adopted by 
the Administrator of General Services. Toll charges for toll roads, 
bridges, tunnels and ferries, taxicab fares between places of lodging 
and carrier terminals, and parking fees (upon presentation of a valid 
parking receipt) shall be paid in full to a summoned person incurring 
those expenses.
    (4) Subsistence allowances. A subsistence allowance shall be paid to 
a summoned person (other than a summoned person who is incarcerated) 
when an overnight stay is required at the place of attendance because 
the place is so far removed from the residence of the summoned person as 
to prohibit return thereto from day to day. A subsistence allowance for 
a summoned person shall be paid in an amount not to exceed the maximum 
allowance prescribed by the Administrator of General Services, under 5 
U.S.C. 5702(a), for official travel in the area of attendance by 
employees of the Federal Government. An alien who has been paroled into 
the United States by the Attorney General, under 8 U.S.C. 1182(d)(5)(A), 
or an alien who either has admitted belonging to a class of aliens who 
are deportable or has been determined under 8 U.S.C. 1252(b) to be 
deportable, shall be ineligible to receive the fees or allowances 
provided for under 26 U.S.C. 7610(a)(1).

(26 U.S.C. 7610)



Sec. 70.303  Rules and regulations.

    (a) Issuance. The Administrator, with the approval of the Secretary, 
shall prescribe all needful rules and regulations for the enforcement of 
provisions of 26 U.S.C. enforced and administered

[[Page 321]]

by the Bureau (except where this authority is expressly given by 26 
U.S.C. to any other person other than an officer or employee of the 
Treasury Department), including all rules and regulations as may be 
necessary by reason of any alteration of law in relation to taxes within 
the Administrator's jurisdiction.
    (b) Retroactivity. The Administrator, with the approval of the 
Secretary, may prescribe the extent, if any, to which any regulation or 
Treasury decision relating to the laws within the Administrator's 
jurisdiction shall be applied without retroactive effect. The 
Administrator may prescribe the extent, if any, to which any ruling 
relating to the laws within the Administrator's jurisdiction, issued by 
or pursuant to authorization from the Administrator, shall be applied 
without retroactive effect.
    (c) Preparation and distribution of regulations, forms, stamps, and 
other matters. The Administrator, under the direction of the Secretary, 
shall prepare and distribute all the instructions, regulations, 
directions, forms, blanks, stamps, and other matters pertaining to the 
assessment and collection of taxes within the Administrator's 
jurisdiction.

(26 U.S.C. 7805)



Sec. 70.304  Place for filing documents other than returns.

    (a) If a document, other than a return, is required to be filed with 
a TTB office, such document may be hand delivered to such office.
    (b) For purposes of this section, a return or document will be 
considered to be hand carried if it is brought to a TTB supervisor of 
the TTB office by the person required to file the return or other 
document, or by the person's agent. Examples of persons who will be 
considered to be agents, for purposes of the preceding sentence, are: 
Members of the taxpayer's family, an employee of the taxpayer, the 
taxpayer's attorney, accountant, or tax advisor, and messengers employed 
by the taxpayer. A return or document will not be considered to be hand 
carried if it is sent to the Bureau through the U.S. Mail.

(26 U.S.C. 6091)

[T.D. ATF-305, 55 FR 47650, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29028, May 29, 2001]



Sec. 70.305  Timely mailing treated as timely filing.

    (a) General rule. Title 26 U.S.C. 7502 provides that, if the 
requirements of such section are met, a document shall be deemed to be 
filed on the date of the postmark stamped on the cover in which such 
document was mailed. Thus, if the cover containing such document bears a 
timely postmark, the document will be considered filed timely although 
it is received after the last date, or the last day of the period, 
prescribed for filing such document. Title 26 U.S.C. 7502 is applicable 
only to those documents which come within the definition of such term 
provided by paragraph (b) of this section and only if the document is 
mailed in accordance with paragraph (c) of this section and is delivered 
in accordance with paragraph (d) of this section.
    (b) Document defined. The term document, as used in this section, 
means any return, claim, statement, or other document required to be 
filed within a prescribed period or on or before a prescribed date under 
authority of any provisions of 26 U.S.C. enforced and administered by 
the Bureau.
    (c) Mailing requirements. (1) Title 26 U.S.C. 7502 is not applicable 
unless the document is mailed in accordance with the following 
requirements:
    (i) The document must be contained in an envelope or other 
appropriate wrapper, properly addressed to the agency, officer, or 
office with which the document is required to be filed.
    (ii) The document must be deposited within the prescribed time in 
the mail in the United States with sufficient postage prepaid. For this 
purpose, a document is deposited in the mail in the United States when 
it is deposited with the domestic mail service of the U.S. Postal 
Service, as defined by the postal regulations (39 CFR Part 2). Title 26 
U.S.C. 7502 does not apply to any document which is deposited with the 
mail service of any other country.

[[Page 322]]

    (iii)(A) If the postmark on the envelope or wrapper is made by the 
U.S. Postal Service, such postmark must bear a date on or before the 
last date, or the last day of the period, prescribed for filing the 
document. If the postmark does not bear a date on or before the last 
date, or the last day of the period, prescribed for filing the document, 
the document will be considered not to be filed timely, regardless of 
when the document is deposited in the mail. Accordingly, the sender who 
relies upon the applicability of 26 U.S.C. 7502 assumes the risk that 
the postmark will bear a date on or before the last date, or the last 
day of the period, prescribed for filing the document, but see paragraph 
(c)(2) of this section, with respect to the use of registered mail or 
certified mail to avoid this risk. If the postmark on the envelope or 
wrapper is not legible, the person who is required to file the document 
has the burden of proving the time when the postmark was made. 
Furthermore, in case the cover containing a document bearing a timely 
postmark made by the U.S. Postal Service is received after the time when 
a document postmarked and mailed at such time would ordinarily be 
received, the sender may be required to prove that it was timely mailed.
    (B) If the postmark on the envelope or wrapper is made other than by 
the U.S. Postal Service, the postmark so made must bear a date on or 
before the last date, or the last day of the period, prescribed for 
filing the document, and the document must be received by the agency, 
officer, or office with which it is required to be filed not later than 
the time when a document contained in an envelope or other appropriate 
wrapper which is properly addressed and mailed and sent by the same 
class of mail would ordinarily be received if it were postmarked at the 
same point of origin by the U.S. Postal Service on the last date, or the 
last day of the period, prescribed for filing the document. However, in 
case the document is received after the time when a document so mailed 
and so postmarked by the U.S. Postal Service would ordinarily be 
received, such document will be treated as having been received at the 
time when a document so mailed and so postmarked would ordinarily be 
received, if the person who is required to file the document establishes 
that it was actually deposited in the mail before the last collection of 
the mail from the place of deposit which was postmarked (except for the 
metered mail) by the U.S. Postal Service on or before the last date, or 
the last day of the period, prescribed for filing the document, that the 
delay in receiving the document was due to a delay in the transmission 
of the mail, and the cause of such delay. If the envelope has a postmark 
made by the U.S. Postal Service in addition to the postmark not so made, 
the postmark which was not made by the U.S. Postal Service shall be 
disregarded, and whether the envelope was mailed in accordance with this 
section shall be determined solely by applying the rules of paragraph 
(c)(1)(iii)(A) of this section.
    (2) If the document is sent by U.S. registered mail, the date of 
registration of the document shall be treated as the postmark date. If 
the document is sent by U.S. certified mail and the sender's receipt is 
postmarked by the postal employee to whom such document is presented, 
the date of the U.S. postmark on such receipt shall be treated as the 
postmark date of the document. Accordingly, the risk that the document 
will not be postmarked on the day that it is deposited in the mail may 
be overcome by the use of registered mail or certified mail.
    (3) As used in this section, the term ``the last date, or the last 
day of the period, prescribed for filing the document'' includes any 
extension of time granted for such filing. Except as provided in 26 
U.S.C. 5061 for the filing of returns and payment of a tax under 26 
U.S.C. subtitle E, when the last date, or the last day of the period, 
prescribed for filing the document falls on a Saturday, Sunday, or legal 
holiday, 26 U.S.C. 7503 is also applicable, so that, in applying the 
rules of this paragraph, the next succeeding day which is not a 
Saturday, Sunday, or legal holiday, shall be treated as the last date, 
or the last day of the period, prescribed for filing the document.
    (d) Delivery. (1) Title 26 U.S.C. 7502 is not applicable unless the 
document is delivered by U.S. mail to the agency,

[[Page 323]]

officer, or office with which it is required to be filed. However, if 
the document is sent by registered mail or certified mail, proof that 
the document was properly registered or that a postmarked certified mail 
sender's receipt was properly issued therefor, and that the envelope or 
wrapper was properly addressed to such agency, officer or office shall 
constitute prima facie evidence that the document was delivered to such 
agency, officer or office.
    (2) Title 26 U.S.C. 7502 is applicable only when the document is 
delivered after the last date, or the last day of the period, prescribed 
for filing the document.
    (e) Exceptions. This section shall not apply with respect to:
    (1) The filing of a document in, or the making of a payment to, any 
court,
    (2) Currency or other medium of payment unless actually received and 
accounted for, or
    (3) Returns, claims, statements, or other documents, or payments, 
which are required under any provision of 26 U.S.C. enforced and 
administered by the Bureau or the regulations thereunder to be delivered 
by any method other than by mailing.

(26 U.S.C. 5061 and 7503)



Sec. 70.306  Time for performance of acts other than payment of tax or filing 

of any return where last day falls on Saturday, Sunday, or legal holiday.

    (a) In general. Title 26 U.S.C. 7503 provides that when the last day 
prescribed under provisions of 26 U.S.C. enforced and administered by 
the Bureau, for the performance of any act falls on a Saturday, Sunday, 
or legal holiday, such act shall be considered performed timely if 
performed on the next succeeding day which is not a Saturday, Sunday, or 
legal holiday. For this purpose, any authorized extension of time shall 
be included in the determining of the last day for performance of any 
act. Title 26 U.S.C. 7503 is not applicable to the filing of returns and 
payment of tax under 26 U.S.C. subtitle E. Title 26 U.S.C. 7503 is 
applicable only in case an act is required under authority of any 
provisions of 26 U.S.C. enforced and administered by the Bureau to be 
performed on or before a prescribed date or within a prescribed period. 
Title 26 U.S.C. 7503 applies to acts to be performed by the taxpayer 
(such as the filing of a claim for credit or refund of tax) and acts to 
be performed by the appropriate TTB officer, (such as, the giving of any 
notice with respect to, or making any demand for the payment of, any 
tax; the assessment or collection of any tax). For rules concerning the 
payment of any tax or filing of any return required under the authority 
of 26 U.S.C. subtitle E relating to alcohol, tobacco, and certain other 
excise taxes, see 26 U.S.C. Sec. Sec. 5061 and 6302 and the regulations 
covering the specific commodity.
    (b) Legal holidays. (1) For the purpose of 26 U.S.C. 7503, the term 
``legal holiday'' includes the legal holidays in the District of 
Columbia. Such legal holidays found in 5 U.S.C. 6103(a), as enacted and 
made effective by the Act of November 2, 1983 (97 Stat. 917), are:
    (i) January 1, New Year's Day,
    (ii) Third Monday in January, Birthday of Martin Luther King, Jr.,
    (iii) January 20, when such day is Inauguration Day,
    (iv) Third Monday in February, Washington's Birthday,
    (v) Last Monday in May, Memorial Day,
    (vi) July 4, Independence Day,
    (vii) First Monday in September, Labor Day,
    (viii) Second Monday in October, Columbus Day,
    (ix) November 11, Veterans' Day,
    (x) Fourth Thursday in November, Thanksgiving Day, and
    (xi) December 25, Christmas Day.

When a legal holiday in the District of Columbia falls on a Sunday, the 
next day is a legal holiday in the District of Columbia. For the purpose 
of 26 U.S.C. 7503, when a legal holiday in the District of Columbia 
(other than Inauguration Day) falls on a Saturday it shall be treated as 
falling on the preceding Friday.
    (2) In the case of any statement or other document required to be 
filed, or any other act required under the authority of provisions of 26 
U.S.C. enforced and administered by the Bureau to be performed at any 
office of the Bureau or any other office or agency of the United States, 
located outside the

[[Page 324]]

District of Columbia, but within a TTB region, the term ``legal 
holiday'' includes, in addition to the legal holidays enumerated in 
paragraph (b)(1) of this section, any statewide legal holiday of the 
State where the act is required to be performed. If the act is performed 
in accordance with law at an office of the Bureau or any other office or 
agency of the United States located in a Territory or possession of the 
United States, the term ``legal holiday'' includes, in addition to the 
legal holidays described in paragraph (b)(1) of this section, any legal 
holiday which is recognized throughout the Territory or possession in 
which the office is located.

(26 U.S.C. 5061 and 7503)

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-365, 60 
FR 33674, June 28, 1995; T.D. ATF-450, 66 FR 29028, May 29, 2001]

         General Provisions Relating to Stamps, Marks or Labels



Sec. 70.311  Authority for establishment, alteration, and distribution of 

stamps, marks, or labels.

    The appropriate TTB officer may establish, and from time to time 
alter, renew, replace, or change the form, style, character, material, 
and device of any stamp, mark, or label under any provision of the law 
relating to Subtitle E of the Internal Revenue Code (or to any provision 
of Subtitle F which relates to Subtitle E).

(26 U.S.C. 6801)

[T.D. ATF-251, 52 FR 19314, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]

                              Registration



Sec. 70.321  Registration of persons paying a special tax.

    (a) Persons required to register. Every person engaged in a trade or 
business in respect of which a special tax is imposed by one of the 
following sections of the Internal Revenue Code is required to register 
with the Alcohol and Tobacco Tax and Trade Bureau.
    (1) Section 5081 (relating to special tax on proprietors of 
distilled spirits plants, bonded wine cellars, bonded wine warehouses, 
and taxpaid wine bottling houses);
    (2) Section 5091 (relating to special tax on brewers);
    (3) Section 5111 (relating to special tax on wholesale dealers in 
liquors and wholesale dealers in beer);
    (4) Section 5121 (relating to special tax on retail dealers in 
liquors and retail dealers in beer);
    (5) Section 5276 (relating to special tax on persons holding permits 
to procure or use tax-free spirits, to procure, deal in, or use 
specially denatured spirits, or to recover specially or completely 
denatured spirits);
    (6) Section 5731 (relating to special tax on manufacturers of 
tobacco products, manufacturers of cigarette papers and tubes, and 
export warehouse proprietors); or
    (7) Section 5802 (relating to importers, manufacturers and dealers 
of National Firearms Act weapons).

For provisions with respect to the registration of persons subject to 
the special tax imposed by section 5131, relating to the tax on persons 
claiming drawback on distilled spirits used in the manufacture of 
certain nonbeverage products, see section 5132 of the Internal Revenue 
Code and 27 CFR part 17 Drawback on Taxpaid Distilled Spirits Used in 
Manufacturing Nonbeverage Products).
    (b) Procedure for registration. The registration required of a 
person by reason of the person being engaged in a trade or business, in 
respect of which one of the special taxes listed in paragraph (a) of 
this section is imposed, shall be accomplished by timely executing and 
filing, in accordance with the instructions relating thereto, TTB Form 
5630.5, Special Tax Registration and Return.

(Approved by the Office of Management and Budget under control number 
1512-0472)

(26 U.S.C. 5802, 7011)

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-271, 53 
FR 17549, May 17, 1988. Redesignated and amended by T.D. ATF-301, 55 FR 
47606, 47653, Nov. 14, 1990; T.D. ATF-379, 61 FR 31426, June 20, 1996]]

                 Crimes, Other Offenses and Forfeitures

    Source: Sections 70.331 through 70.333 added by T.D. ATF-301, 55 FR 
47653, Nov. 14, 1990, unless otherwise noted.

[[Page 325]]



Sec. 70.331  Fraudulent returns, statements, or other documents.

    Any person who willfully delivers or discloses to any officer or 
employee of the Bureau any list, return, account, statement, or other 
document, known by him to be fraudulent or to be false as to any 
material matter, shall be fined not more than $10,000 ($50,000 in the 
case of a corporation) or imprisoned not more than 1 year, or both.

(26 U.S.C. 7207)



Sec. 70.332  Unauthorized use or sale of stamps.

    Any person who buys, sells, offers for sale, uses, transfers, takes 
or gives in exchange, or pledges or gives in pledge, except as 
authorized in the Internal Revenue Code or in regulations made pursuant 
thereto, any stamp, coupon, ticket, book, or other device prescribed by 
the Administrator under provisions of 26 U.S.C. enforced and 
administered by the Bureau for the collection or payment of any tax 
imposed thereunder, shall, upon conviction thereof, be fined not more 
than $1,000, or imprisoned not more than 6 months, or both.

(26 U.S.C. 7209)



Sec. 70.333  Offenses by officers and employees of the United States.

    Any officer or employee of the United States acting in connection 
with any provisions of 26 U.S.C. enforced and administered by the Bureau 
required to make a written report under the provisions of 26 U.S.C. 
7214(a)(8) shall submit such report to the appropriate TTB officer.

(26 U.S.C. 7214)

[T.D. ATF-301, 55 FR 47653, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29028, May 29, 2001]



 Subpart E_Procedural Rules Relating to Alcohol, Tobacco, Firearms, and 
                               Explosives

    Source: T.D. ATF-251, 52 FR 19325, May 22, 1987, unless otherwise 
noted. Redesignated by T.D. ATF-301, 55 FR 47653, Nov. 14, 1990.

        Provisions Relating to Distilled Spirits, Wines, and Beer



Sec. 70.411  Imposition of taxes, qualification requirements, and 

regulations.

    (a) Imposition of taxes. Subchapter A of Chapter 51 of the Internal 
Revenue Code of 1954 imposes taxes on distilled spirits (including 
alcohol), wine and beer. Occupational taxes are imposed upon brewers, 
dealers in liquors, and proprietors of distilled spirits plants, bonded 
wine cellars, bonded wine warehouses, and taxpaid wine bottling houses; 
on industrial users of tax-free distilled spirits; on dealers, users, 
and recoverers of specially denatured spirits; and as a prerequisite for 
drawback under section 5134 of the Internal Revenue Code, upon 
manufacturers of nonbeverage products.
    (b) Qualification requirements. Distillers, winemakers, brewers, 
warehousemen, rectifiers, bottlers, dealers in specially denatured 
alcohol, users of tax-free and specially denatured alcohol, and 
wholesalers and importers of liquors, are required to qualify with TTB 
usually by filing notice or application and bond with, and procuring 
permit from, the appropriate TTB officer. Detailed information 
respecting such qualification, including the forms to be used and the 
procedure to be followed, is contained in the respective regulations 
described in paragraph (c) of this section.
    (c) Regulations. The procedural requirements with respect to matters 
relating to distilled spirits, wines, and beer which are within the 
jurisdiction of TTB are published in the regulations described in this 
paragraph. These regulations contain full information as to the general 
course and method by which the functions concerning liquors are 
channeled and determined, including the nature and requirements of 
formal and informal procedures, the forms, records, reports, and other 
documents required, and the contents of applications, notices, 
registrations, permits, bonds, and other documents. Forms prescribed by 
this part are available as provided in Sec. 70.2(b). The following is a 
brief description of the several regulations arranged according to the 
principal subjects and operations concerned:

[[Page 326]]

    (1) Establishment and operation of distilled spirits plants. Part 19 
of title 27 CFR contains the regulations relating to the location, 
qualification, construction, arrangement, equipment, and operations 
(including activities incident thereto) of distilled spirits plants for 
the production and/or warehousing (including denaturation), and bottling 
(including bottling in bond) of distilled spirits. Part 19 also contains 
the regulations relating to distilled spirits for fuel use and the 
production of vinegar by the vaporizing process.
    (2) Miscellaneous liquor transactions. Part 29 of 27 CFR contains 
miscellaneous regulations relative to the manufacture, removal, and use 
of stills and condensers, and to the notice, registration, and 
recordkeeping requirements therefor.
    (3) [Reserved]
    (4) Gauging of distilled spirits. Part 30 of title 27 CFR contains 
the regulations that. prescribe the gauging instruments, and methods or 
techniques to be used in measuring distilled spirits (including 
denatured spirits). Tables are provided for use in making the necessary 
computation from gauge data.
    (5) Rules of practice in permit proceedings. Part 71 of title 27 CFR 
contains the rules governing the procedure and practice in connection 
with the disapproval of applications for basic permits, and for the 
issuance of citations for the suspension, revocation, and annulment of 
such permits under sections 3 and 4 of the Federal Alcohol 
Administration Act (27 U.S.C. 201 et seq.), and disapproval, suspension, 
and revocation of industrial use, operating, withdrawal, and tobacco 
permits under the Internal Revenue Code. Such rules also govern, insofar 
as applicable, any adversary proceeding involving adjudication required 
by statute to oe determined on the record, after opportunity for 
hearing, under laws administered by the Alcohol and Tobacco Tax and 
Trade Bureau.
    (6) Basic permit requirements under the Federal Alcohol 
Administration Act. 27 CFR part 1, issued pursuant to the Federal 
Alcohol Administration Act, as amended, contains the requirements 
relative to the issuance under the Act of basic permits to producers, 
rectifiers, blenders, bottlers, warehousemen, importers, and wholesalers 
of distilled spirits, wine, or beer, and the amendment, duration, 
revocation, suspension, or annulment of such permits.
    (7) Bulk sales and bottling of distilled spirits. 27 CFR part 3, 
issued under the Federal Alcohol Administration Act, as amended, 
contains the requirements relative to bulk sales and bottling of 
distilled spirits under the Federal Alcohol Administration Act, 
including the terms of warehouse receipts for distilled spirits in bulk.
    (8) Labeling and advertising of distilled spirits. 27 CFR part 5, 
issued under the Federal Alcohol Administration Act, as amended, 
contains the requirements relative to the labeling and advertising of 
distilled spirits under the Federal Alcohol Administration Act, 
including standards of identity for distilled spirits, standards of fill 
for bottles of distilled spirits, withdrawal of bottled imported 
distilled spirits from customs custody, and the issuance of certificates 
of label approval and certificates of exemption from label approval.
    (9) American viticultural areas. Part 9 of title 27 CFR contains the 
regulations that relate to American viticultural areas. The viticultural 
areas described in these regulations are approved for use as 
appellations of origin in accordance with 27 CFR part 4.
    (10) Production and removal of wine. Part 24 of title 27 CFR 
contains the regulations relative to the establishment and operation of 
bonded wine cellars, including bonded wineries, for the production, 
cellar treatment, and storage of wines, including amelioration, 
sweetening, addition of volatile fruit flavor concentrates, addition of 
wine spirits (including distillates containing aldehydes), blending, and 
other cellar treatment; removals; taxpayment; return of unmerchantable 
taxpaid wine; use of wine for distilling material and manufacture of 
vinegar; and record and report requirements.
    (11) Bottling or Packaging of taxpaid wine. Part 24 of title 27 CFR 
contains the regulations relative to the establishment, qualification, 
and operations of taxpaid wine bottling houses on premises other than 
those of a plant operated under part 19 of title 27 CFR, and to the 
bottling and packaging of

[[Page 327]]

taxpaid United States and foreign wines at such premises.
    (12) Nonindustrial use of distilled spirits and wine. 27 CFR part 2, 
issued under the Federal Alcohol Administration Act, as amended, 
specifies what uses of distilled spirits and wine are considered 
``nonindustrial,'' as that term is used in section 17 of the Federal 
Alcohol Administration Act.
    (13) Labeling and advertising of wine. 27 CFR part 4, issued under 
the Federal Alcohol Administration Act, as amended, contains the 
requirements relative to the labeling and advertising of wine under the 
Federal Alcohol Administration Act, including standards of identity for 
wine, standards of fill for containers of wine, the withdrawal of 
imported wine from customs custody, and the issuance of certificates of 
label approval and certificates of exemption from label approval.
    (14) Establishment and operations of breweries and experimental 
breweries. Part 25 of title 27 CFR contains the regulations relating to 
the production (including concentration and reconstitution incident 
thereto) and removal of beer and cereal beverages. The regulations cover 
the location, construction, equipment, and operations of breweries; and 
the qualification of such establishments, including the ownership, 
control, and management thereof, and the establishment and operations of 
experimental breweries.
    (15) Labeling and advertising of malt beverages. 27 CFR part 7, 
issued under the Federal Alcohol Administration Act, as amended, 
contains the requirements relative to the labeling and advertising of 
malt beverages (beer) under the Federal Alcohol Administration Act, 
including withdrawal of imported malt beverages from customs custody, 
and the issuance of certificates of label approval.
    (16) Liquor dealers. Part 31 of title 27 CFR contains the 
regulations relative to the special (occupational) taxes imposed on 
wholesale and retail dealers in liquors, wholesale and retail dealers in 
beer, and limited retail dealers; restrictions on purchases of distilled 
spirits; reuse or refilling of liquor bottles; sale or possession of 
refilled or used liquor bottles; repackaging of alcohol for industrial 
use; recordkeeping and reporting requirements; and provisions relating 
to entry of premises and inspection of records.
    (17) Drawback of tax on spirits used in nonbeverage products. Part 
17 of title 27 CFR contains the regulations which relate to obtaining 
drawback of internal revenue tax on distilled spirits used in the 
manufacture or production of medicines, medicinal preparations, food 
products, flavors, or flavoring extracts, which are unfit for beverage 
purposes.
    (18) Production of volatile fruit-flavor concentrates. Part 18 of 
title 27 CFR contains the regulations relating to the manufacture, 
removal, sale, storage, transfer in bond, transportation, recordkeeping 
and reporting requirements, and use of volatile fruit flavor 
concentrates. It includes provisions regarding the location, 
qualification, use, and operations of concentrate plants.
    (19) Tied-House. 27 CFR part 6, issued under the Federal Alcohol 
Administration Act, as amended, specifies practices which are prohibited 
by subsection (b) of section 5 of the Act and provides the exception to 
these prohibitions. This part applies only to transactions between 
industry members and retailers.
    (20) Exclusive outlets. 27 CFR part 8, issued under the Federal 
Alcohol Administration Act, as amended, specifies practices which are 
prohibited by subsection (a) of section 5 of the Act. This part applies 
only to transactions between industry members and retailers.
    (21) Commercial bribery. 27 CFR part 10, issued under the Federal 
Alcohol Administration Act, as amended, specifies practices which are 
prohibited by subsection (c) of section 5 of the Act. This part applies 
to transactions between industry members and employees, officers, or 
representatives of trade buyers.
    (22) Consignment sales. 27 CFR part 11, issued under the Federal 
Alcohol Administration Act, as amended, specifies sales arrangements 
prohibited by subsection (d) of section 5 of the Act and contains 
guidelines concerning the return of distilled spirits, wines, and malt 
beverages from a trade buyer. The regulations in this part apply to 
transactions between industry members and trade buyers.

[[Page 328]]

    (23) Distribution and use of denatured alcohol and rum. Part 20 of 
title 27 CFR contains the regulations relating to the procurement, use, 
disposition, and recovery of denatured alcohol, specially denatured rum, 
and articles containing denatured spirits; and includes requirements in 
respect to industrial use and withdrawal permits; and the packaging, 
labeling, sales, rebottling, and reprocessing of articles containing 
specially denatured spirits.
    (24) Formulas for denatured alcohol and rum. Part 21 of title 27 CFR 
contains the regulations relating to the formulation of completely 
denatured alcohol, specially denatured alcohol, and specially denatured 
rum; to the use of specially denatured spirits; and to the 
specifications for denaturants. The procedural requirements relative to 
the production of denatured alcohol and specially denatured rum are 
prescribed in part 19 of title 27 CFR, and those relative to the 
distribution and use of denatured alcohol and specially denatured rum 
are prescribed in part 20 of title 27 CFR.
    (25) Distribution and use of tax-free alcohol. Part 22 of title 27 
CFR contains the regulations relating to tax-free alcohol and covers the 
procurement, storage, use, and recovery of such alcohol; and included 
requirements in respect to industrial use and withdrawal permits.
    (26) Liquors and articles from Puerto Rico and the Virgin Islands. 
Part 26 of title 27 CFR contains the regulations relating to the 
production, bonded warehousing, and withdrawal of distilled spirits, and 
denatured spirits, and the manufacture of articles in Puerto Rico and 
the Virgin Islands to be brought into the United States free of tax and 
the collection of internal revenue taxes on taxable alcoholic products 
coming into the United States from Puerto Rico and the Virgin Islands. 
Regulations respecting spirits produced in Puerto Rico or the Virgin 
Islands and brought into the United States and transferred from customs 
custody to internal revenue bond are also contained in this part.
    (27) Importation of liquors. Part 27 of title 27 CFR contains the 
substantive and procedural requirements relative to the importation of 
distilled spirits, wines, and beer into the United States from foreign 
countries including special (occupational) and commodity taxes, permits, 
marking, branding, and labeling of containers and packages.
    (28) Exportation of liquors. Part 28 of title 27 CFR contains the 
regulations relating to exportation including, where applicable, lading 
for use on vessels and aircraft, transfer to a foreign-trade zone, or 
transfer to a manufacturing bonded warehouse, Class 6, of distilled 
spirits (including specially denatured spirits), beer (including beer 
concentrate), and wine, and transfer of distilled spirits and wine for 
deposit in a customs bonded warehouse, whether without payment of tax, 
free of tax, or with benefit of drawback. It includes requirements with 
respect to removal, shipment, lading, deposit, evidence of exportation, 
losses, claims, and bonds.

(Approved by the Office of Management and Budget under control number 
1512-0472)

[T.D. ATF-251, 52 FR 19325, May 22, 1987, as amended by T.D. ATF-271, 53 
FR 17549, May 17, 1988; T.D. ATF-299, 55 FR 24989, June 19, 1990. 
Redesignated and amended by T.D. ATF-301, 55 FR 47606, 47653, Nov. 14, 
1990; T.D. ATF-376, 61 FR 31031, June 19, 1996; T.D. ATF-379, 61 FR 
31426, June 20, 1996; T.D. ATF-432, 65 FR 69253, Nov. 16, 2000; T.D. 
ATF-450, 66 FR 29028, May 29, 2001; T.D. ATF-459, 66 FR 38550, July 25, 
2001; T.D. ATF-463, 66 FR 42734, Aug. 15, 2001; T.D. ATF-462, 66 FR 
42737, Aug. 15, 2001; T.D. ATF-479, 67 FR 30799, May 8, 2002; T.D. TTB-
8, 69 FR 3830, Jan. 27, 2004; T.D. TTB-25, 70 FR 19883, Apr. 15, 2005]



Sec. 70.412  Excise taxes.

    (a) Collection. Taxes on distilled spirits, wines, and beer are paid 
by returns. If the person responsible for paying the taxes has filed a 
proper bond to defer payment, such person may be eligible to file 
semimonthly or quarterly returns, with proper remittances, to cover the 
taxes incurred on distilled spirits, wines, and beer during the 
semimonthly or quarterly period. Payment must accompany the return 
unless required to be made by electronic fund transfer (EFT). If the 
taxpayer is not qualified to defer taxpayment, or has been placed on a 
prepayment basis, the taxpayer must prepay the tax on the distilled 
spirits, wines, or beer. Distilled spirits, wines, and beer tax returns 
are filed in accordance with the

[[Page 329]]

instruction on the return forms, which are furnished to industry members 
by TTB. Special tax stamps are issued to denote the payment of special 
(occupational) taxes by liquor dealers, brewers, manufacturers of 
nonbeverage products, and industrial users of tax-free distilled 
spirits; by dealers, users, and recoverers of specially denatured 
spirits; and by proprietors of distilled spirits plants, bonded wine 
cellars, bonded wine warehouses, and taxpaid wine bottling houses. 
Detailed information respecting the payment of tax on liquors and the 
payment of occupational taxes, including the forms to be used and 
procedures to be followed, is contained in the respective regulations 
described in Sec. 70.411(c).
    (b) Assessment. If additional or delinquent tax liability is 
disclosed by an investigation, or by an examination of records, of a 
qualified plant or permittee, a notice (except where delay may 
jeopardize collection of the tax, or where the amount involved is 
nominal or the result of an evident mathematical error) is sent to the 
taxpayer advising of the basis and amount of the liability and affording 
the taxpayer an opportunity to submit a protest, with supporting facts, 
or to request a conference.

(Approved by the Office of Management and Budget under control number 
1512-0472)

[T.D. ATF-251, 52 FR 19325, May 22, 1987, as amended by T.D. ATF-271, 53 
FR 17549, May 17, 1988. Redesignated and amended by T.D. ATF-301, 55 FR 
47606, 47653, Nov. 14, 1990; T.D. ATF-450, 66 FR 29028, May 29, 2001; 
T.D. TTB-41, 71 FR 5605, Feb. 2, 2006]



Sec. 70.413  Claims.

    (a) Claims for remission. When distilled spirits (including 
distilling material and denatured spirits), wine, or beer on which the 
tax has not been paid or determined is lost, and the person liable for 
payment of the tax thereon desires to be relieved from such liability, 
such person may file claim on Form 5620.8 for remission of tax on the 
quantity that was lost. The appropriate TTB officer may, in any event, 
require such a claim to be filed, and will require it if circumstances 
indicate that the loss was caused by theft or, in the case of distilled 
spirits (including distilling material), unauthorized voluntary 
destruction. On receipt of a claim the appropriate TTB officer makes a 
factual determination, and notifies the claimant of allowance or 
rejection of the claim. If the claim is rejected, and circumstances so 
warrant, the appropriate TTB officer will take appropriate steps to 
collect the tax.
    (b) Claims for abatement. When the tax on distilled spirits, wines, 
or beer is assessed and the taxpayer thinks that the tax is not due 
under the law, such taxpayer may file a claim for abatement of the tax 
on TTB Form 5620.8 with the officer who made demand for the tax. Such 
officer may call upon the taxpayer to file a bond in double the amount 
of the tax in order to insure collection of the tax if the claim is 
rejected. When the claim is acted upon, the taxpayer is notified of the 
allowance or rejection of the claim. If the claim is rejected, such 
officer, will initiate action to collect the tax.
    (c) Claims for refund--(1) Taxes illegally, erroneously, or 
excessively collected. A claim for refund of taxes illegally, 
erroneously, or excessively collected may be filed by the taxpayer with 
the officer who collected the tax. Such claim must be filed within three 
years (two years under certain circumstances) after the date of payment 
of the tax. If the claim is rejected, the taxpayer is notified of the 
rejection by registered or certified mail, and the taxpayer may then 
bring suit in the U.S. District Court or the Court of Claims for 
recovery of the tax. Such suits must be filed generally within two years 
from the date of mailing of the rejection notice. If the claim is 
allowed, a check for the amount of the refund and allowable interest is 
forwarded to the taxpayer; however, if there are other unpaid taxes 
outstanding against the taxpayer, the overpayment may be applied to the 
outstanding taxes and the balance, if any, refunded.
    (2) Taxes on liquors lost, destroyed, returned to bond, or taken as 
samples by the United States. A taxpayer may, subject to the conditions 
in the appropriate regulations, file claim on Form 5620.8 for refund of 
tax paid on:
    (i) Spirits returned to bonded premises, lost by accident or 
disaster, or

[[Page 330]]

taken as samples by the United States, or
    (ii) Wine returned to bond as unmerchantable, or lost by disaster, 
or
    (iii) Beer returned to a brewery or voluntarily destroyed, or lost, 
whether by theft or otherwise, or destroyed or otherwise rendered 
unmerchantable by fire, casualty, or act of God. If the claim is 
allowed, a check for the amount of the refund is forwarded to the 
claimant; except, that where there are any unpaid taxes outstanding 
against the claimant, the refund may be applied to the outstanding taxes 
and a check for the balance, if any, forwarded to the claimant. If the 
claim is rejected, a copy of the claim giving the reasons for rejection 
is forwarded to the claimant.
    (d) Claims for allowance, credit, or relief. A qualified permittee, 
manufacturer, or proprietor may, subject to the conditions in the 
appropriate regulations, file claim on Form 5620.8 for allowance of 
loss, credit of tax, or relief from tax liability, as applicable, on
    (1) Spirits returned to bonded premises, lost or destroyed on bonded 
premises, or in transit thereto, or lost by accident or disaster;
    (2) Wine lost or destroyed on bonded premises or in transit thereto 
and unmerchantable domestic wine returned to bond;
    (3) Beer returned to a brewery or voluntarily destroyed, or lost, 
whether by theft or otherwise, or destroyed or otherwise rendered 
unmerchantable by fire, casualty, or act of God;
    (4) Denatured spirits lost or destroyed in bond, or lost on the 
premises of a qualified dealer or user or in transit to such premises; 
and
    (5) Tax-free spirits lost on the premises of a qualified user or in 
transit to such premises.
    (e) Claims for payment-disaster losses. When distilled spirits, 
wines, rectified products, or beer held or intended for sale is lost, 
rendered unmarketable, or condemned by a duly authorized official by 
reason of a ``major disaster'' as determined by the President of the 
United States, the person holding such product for sale at that time 
may, subject to the conditions in the appropriate regulations, file 
claim on Form 5620.8 of the region in which the product was lost, 
rendered unmarketable, or condemned, for payment of an amount equal to 
the internal revenue taxes paid or determined and any customs duties 
paid thereon. Claims must be filed within 6 months from the date on 
which the President makes the determination that the disaster has 
occurred. The determination date is construed to mean the date the 
Director, Office of Emergency Preparedness, identifies the specific 
disaster area.

(Approved by the Office of Management and Budget under control number 
1512-0141)

[T.D. ATF-251, 52 FR 19325, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47653, Nov. 14, 1990; T.D. ATF-450, 66 FR 
29028, May 29, 2001]



Sec. 70.414  Preparation and filing of claims.

    (a) Distilled spirits at distilled spirits plants. Procedural 
instructions in respect of claims for remission, abatement, credit, or 
refund of tax on spirits (including denatured spirits) lost or destroyed 
on or lost in transit to, or on spirits returned to, the premises of a 
distilled spirits plant are contained in Part 19 of Title 27 CFR. It is 
not necessary to file a claim for credit of tax on taxpaid samples taken 
by appropriate TTB officers from distilled spirits plants, as the 
appropriate TTB officer will allow credit, without claim, for tax on 
such samples.
    (b) Specially denatured spirits. Procedural instructions in respect 
of claims for allowance of loss on specially denatured spirits lost on 
the premises of a bonded dealer or user, or while in transit to such 
premises, are contained in part 20 of title 27 CFR.
    (c) Tax-free alcohol. Procedural instructions in respect of claims 
for allowance of loss on tax-free alcohol lost on the premises of a 
qualified user, or while in transit to such premises, are contained in 
part 22 of title 27 CFR.
    (d) Wine spirits and wine at bonded wine cellar. Procedural 
instructions in respect of claims for:
    (1) Remission of tax on wine spirits lost on the premises of a 
bonded wine cellar or in transit thereto,
    (2) Allowance of losses of wine in bond, and

[[Page 331]]

    (3) Credit or refund of tax paid on unmerchantable domestic wine 
returned to bond are contained in part 24 of title 27 CFR.
    (e) Beer. Procedural instructions in respect of claims for refund or 
credit of tax which has been paid (or allowance, credit, or relief of 
tax liability if the tax has not been paid) on domestic beer returned to 
a brewery or voluntarily destroyed; or lost, whether by theft or 
otherwise, or destroyed or otherwise rendered unmerchantable by fire, 
casualty, or act of God are contained in part 25 of title 27 CFR.
    (f) Distilled spirits, wines, or beer for export. Procedural 
instructions in respect of claims for:
    (1) Drawback of internal revenue tax on distilled spirits, wines, or 
beer for export, use as supplies on certain vessels or aircraft, or 
deposit in a foreign-trade zone, or deposit of distilled spirits or wine 
in a customs bonded warehouse, and
    (2) Remission of tax on distilled spirits, specially denatured 
spirits, wines, or beer, withdrawn without payment or free of tax and 
lost during transportation to the port of export, customs bonded 
warehouse (distilled spirits and wine only), manufacturing bonded 
warehouse, vessel or aircraft, or foreign-trade zone, as applicable, are 
contained in part 28 of title 27 CFR. Procedural instructions as to 
claims respecting export with benefit of drawback of tax on domestic 
distilled spirits products containing spirits from Puerto Rico or the 
Virgin Islands are contained in parts 19 and 28 of title 27 CFR.
    (g) Miscellaneous. Procedural instructions are contained in 27 CFR 
Part 70, subparts F and G in respect of claims for--
    (1) Refund or credit of tax on distilled spirits, wines or beer 
where such refund or credit is claimed on the grounds that tax was 
assessed or collected erroneously, illegally, without authority, or in 
any manner wrongfully, or on the grounds that such amount was excessive, 
and where such refund or credit is subject to the limitations imposed by 
section 6423 of the Internal Revenue Code.
    (2) Payment of an amount equal to the internal revenue tax paid or 
determined and customs duties paid on distilled spirits, wines, 
rectified products, and beer previously withdrawn, which were lost, 
rendered unmarketable, or condemned by a duly authorized official by 
reason of a major disaster occurring in the United States after June 30, 
1959.
    (h) Special taxes. Procedural instructions in respect of claims for 
abatement of assessments or refund of overpayments of liquor dealers 
occupational taxes and penalties are contained in part 31 of title 27 
CFR. When claim is filed for refund of an occupational tax for which a 
stamp was issued, the stamp (or a Certificate in Lieu of Lost or 
Destroyed Special Tax Stamp, accompanied by affidavits attesting to loss 
or destruction of the stamp) must be surrendered with the claim. Such 
claims must be submitted within 3 years from the date of payment of the 
tax.
    (i) Low wines at vinegar plants. Procedural instructions in respect 
of claims for remission of tax on low wines (distilled spirits) lost at 
vinegar plants producing vinegar by the vaporizing process are contained 
in part 19 of title 27 CFR.
    (j) Distilled spirits used in nonbeverage products. Procedural 
instructions in respect of claims for drawback of excise tax and claims 
for refund of special (occupational) tax, submitted by persons using 
distilled spirits in the manufacture of medicines, medicinal 
preparations, food products, flavors, flavoring extracts, or perfume, 
which are unfit for beverage purposes, are contained in part 17 of title 
27 CFR.
    (k) Reopening claims. A claimant who wishes to have a rejected claim 
reopened must, within the applicable statutory period of limitations, 
submit a written application to the officer who originally rejected the 
claim for reconsideration of the claim. Such application must show that 
the additional evidence to be presented is new and material, and that 
such evidence was unknown to the claimant, or unobtainable by the 
claimant, when the claim was previously under consideration.
    (l) Claimant's rights under law and regulations. Before final action 
has been taken on a claim, a claimant who, by

[[Page 332]]

reason of an oversight, misunderstanding of law and regulations, 
miscalculation, or other cause, did not claim the full amount of 
abatement, refund, credit, or drawback, as the case may be, of tax to 
which the claimant is legitimately entitled, may amend a valid claim, 
and statements filed in support thereof, in instances where such a claim 
is deficient in establishing the claimants eligibility to the rights 
extended to such claimant under law and regulations.

(Approved by the Office of Management and Budget under control number 
1512-0141)

[T.D. ATF-251, 52 FR 19325, May 22, 1987, as amended by T.D. ATF-299, 55 
FR 24989, June 19, 1990. Redesignated and amended by T.D. ATF-301, 55 FR 
47606, 47654, Nov. 14, 1990; T.D. ATF-376, 61 FR 31031, June 19, 1996; 
T.D. ATF-379, 61 FR 31426, June 20, 1996; T.D. ATF-450, 66 FR 29028, May 
29, 2001; T.D. TTB-8, 69 FR 3830, Jan. 27, 2004; T.D. TTB-25, 70 FR 
19883, Apr. 15, 2005]



Sec. 70.415  Offers in compromise.

    Procedure in the case of offers in compromise of liabilities under 
26 U.S.C. chapter 51 and of penalties for violation of the Federal 
Alcohol Administration Act, is set forth in Sec. Sec. 70.482 through 
70.484.

[T.D. ATF-301, 55 FR 47654, Nov. 14, 1990]



Sec. 70.416  Application for approval of interlocking directors and officers 

under section 8 of the Federal Alcohol Administration Act.

    Any person who is an officer or director of a corporation now 
engaged in business as a distiller, rectifier, or blender of distilled 
spirits, or of an affiliate thereof, who desires to take office in other 
companies similarly engaged, must obtain permission to do so from the 
appropriate TTB officer. Applications for such permission to take office 
must be prepared and filed in accordance with instructions available 
from the appropriate TTB officer.

[T.D. ATF-450, 66 FR 29029, May 29, 2001]



Sec. 70.417  Rulings.

    The procedure for rulings in alcohol tax matters is set forth in 
Sec. 70.471.

[T.D. ATF-301, 55 FR 47654, Nov. 14, 1990]



Sec. 70.418  Conferences.

    Any person desiring a conference with TTB, relative to any matter 
arising in connection with such person's operations, will be accorded 
such a conference upon request. No formal requirements are prescribed 
for such conference.

[T.D. ATF-450, 66 FR 29029, May 29, 2001]



Sec. 70.419  Representatives.

    Title 31 CFR part 8 is applicable to all representatives of the 
taxpayer, for any conference with TTB.

[T.D. ATF-450, 66 FR 29029, May 29, 2001]



Sec. 70.420  Forms.

    For forms to be used, see Sec. 70.411(c).

[T.D. ATF-301, 55 FR 47654, Nov. 14, 1990]

 Provisions Relating to Tobacco Products, and Cigarette Papers and Tubes



Sec. 70.431  Imposition of taxes; regulations.

    (a) Taxes. Subchapter A of chapter 52 of the Internal Revenue Code 
of 1954, as amended, imposes taxes on tobacco products, and cigarette 
papers and tubes manufactured in or imported into the United States. 
Occupational taxes are imposed by manufacturers of tobacco products, 
manufacturers of cigarette papers and tubes, and export warehouse 
proprietors. Subchapter D of chapter 78 of the Internal Revenue Code 
imposes a tax (equal to the internal revenue tax imposed in the United 
States upon the like articles of merchandise of domestic manufacture) on 
tobacco products, and cigarette papers and tubes of Puerto Rican and 
Virgin Islands manufacture brought into the United States and withdrawn 
for consumption or sale.
    (b) Regulations. The procedural requirements with respect to matters 
relating to tobacco products, and cigarette papers and tubes are 
contained in the regulations listed below:
    (1) Part 71 of title 27 CFR relates to the procedure and practice in 
connection with the disapproval of applications for permits, and the 
suspension and revocation of permits, under chapter 52 of the Internal 
Revenue Code.

[[Page 333]]

    (2) Part 40 of title 27 CFR relates to the manufacture of tobacco 
products, the payment by manufacturers of tobacco products of internal 
revenue taxes imposed by chapter 52 of the Internal Revenue Code, and 
the qualification of and operations by manufacturers of tobacco 
products.
    (3) Part 41 of title 27 CFR relates to tobacco products, and 
cigarette papers and tubes imported into the United States from a 
foreign country or brought into the United States from Puerto Rico, the 
Virgin Islands, or a possession of the United States; the removal of 
cigars from a customs bonded manufacturing warehouse, Class 6; and the 
release of such articles from customs custody, without payment of 
internal revenue tax or customs duty attributable to the internal 
revenue tax.
    (4) Part 285 of title 27 CFR relates to the manufacture of cigarette 
papers and tubes, the payment by manufacturers of cigarette papers and 
tubes of internal revenue taxes imposed by chapter 52 of the Internal 
Revenue Code, and the qualification of and operations by manufacturers 
of such articles.
    (5) Part 44 of title 27 CFR relates to the exportation (including 
supplies for vessels and aircraft and transfers to a foreign-trade zone) 
of tobacco products, and cigarette papers and tubes, without payment of 
tax, or with benefit of drawback of tax, and the qualification of and 
operations by export warehouse proprietors.
    (6) Part 45 of title 27 CFR relates to the removal of tobacco 
products, and cigarette papers and tubes, without payment of tax, for 
use of the United States.
    (7) Part 46 of title 27 CFR relates to the provisions of a 
miscellaneous nature or not of continuing application. Included are 
regulations relating to:
    (i) Limitations imposed by section 6423 of the Internal Revenue Code 
on the refund or credit of tax paid or collected on tobacco products, 
and cigarette papers and tubes;
    (ii) Losses of tobacco products, and cigarette papers and tubes 
caused by disasters occurring in the United States on or after September 
3, 1958; and
    (iii) Purchase, receipt, possession, offering for sale, or sale or 
other disposition of tobacco products by dealers in such products.

(Approved by the Office of Management and Budget under control number 
1512-0472)

[T.D. ATF-251, 52 FR 19325, May 22, 1987, as amended by T.D. ATF-271, 53 
FR 17549, May 17, 1988. Redesignated and amended by T.D. ATF-301, 55 FR 
47606, 47654, Nov. 14, 1990; T.D. ATF-457, 66 FR 32219, June 14, 2001; 
T.D. ATF-460, 66 FR 39093, July 27, 2001; T.D. ATF-463, 66 FR 42734, 
Aug. 15, 2001; T.D. ATF-464, 66 FR 43480, Aug. 20, 2001; T.D. ATF-469, 
66 FR 56758, Nov. 13, 2001; T.D. TTB-16, 69 FR 52423, Aug. 26, 2004]



Sec. 70.432  Qualification and bonding requirements.

    (a) Manufacturers of tobacco products and proprietors of export 
warehouses. Every person, before commencing business as a manufacturer 
of tobacco products or as a proprietor of an export warehouse, is 
required to qualify with the Alcohol and Tobacco Tax and Trade Bureau by 
making application for a permit and filing bond and other required 
documents and obtaining a permit.
    (b) Manufacturers of cigarette papers and tubes. Every person, 
before commencing business as a manufacturer of cigarette papers and 
tubes, is required to qualify with the Alcohol and Tobacco Tax and Trade 
Bureau by filing bond and other required documents.
    (c) Puerto Rican manufacturers of tobacco products. Every 
manufacturer of tobacco products in Puerto Rico who desires to defer 
payment in Puerto Rico of the internal revenue tax imposed by section 
7652(a) of the Internal Revenue Code on tobacco products of Puerto Rican 
manufacture coming into the United States must file a bond with the 
appropriate TTB officer. Such bond is conditioned on the principal's 
paying, at the time and in the manner prescribed in the regulations, the 
full amount of tax computed on the tobacco products which are released 
for shipment to the United States. No bond is required if the tax is 
prepaid.
    (d) Proprietors of customs warehouses. Every proprietor of a customs 
bonded manufacturing warehouse, Class 6, who desires to remove under 
part 44 tax-exempt cigars for exportation (including supplies for 
vessels and aircraft), or for delivery for subsequent exportation, is

[[Page 334]]

required to file a bond. However, removal of cigars for sale or 
consumption in the United States is subject to customs regulations.
    (e) Drawback of tax. Taxpaid tobacco products, and cigarette papers 
and tubes may be exported with benefit of drawback of tax. Drawback may 
be allowed only to the person who paid the tax on such articles and who 
files a claim and otherwise complies with the provisions contained in 
the applicable regulations referred to in Sec. 70.431. As a condition 
precedent to the allowance of any drawback claim, the claimant is 
required to file a bond in an amount not less than the amount of tax 
covered in the claim.
    (f) General. Detailed information relating to the qualification and 
bonding requirements, including the forms to be used and the procedure 
to be followed, is fully set forth in the regulations referred to in 
Sec. 70.431.

[T.D. ATF-251, 52 FR 19325, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47654, Nov. 14, 1990; T.D. ATF-450, 66 FR 
29029, May 29, 2001; T.D. ATF-464, 66 FR 43480, Aug. 20, 2001]



Sec. 70.433  Collection of taxes.

    (a) Tobacco products. Taxes on tobacco products are paid by the 
manufacturer on the basis of a return. If the manufacturer has filed a 
proper bond, such manufacturer may defer payment at the time of removal 
and file semimonthly returns to cover the taxes. If the manufacturer has 
not filed such a bond or if the manufacturer has defaulted in any way in 
paying the taxes, the manufacturer is required to file a prepayment 
return prior to removal of such products, and to continue so doing until 
the appropriate TTB officer finds that the revenue will not be 
jeopardized by deferred payment. Tax returns, with remittances, are 
filed by the domestic manufacturer in accordance with instructions on 
the appropriate TTB form. Taxes on cigars produced in a customs bonded 
manufacturing warehouse, Class 6, are paid on the basis of a return to 
the director of customs in accordance with customs procedures and 
regulations. Taxes on tobacco products imported or brought into the 
United States from a foreign country, Puerto Rico, the Virgin Islands, 
or a possession of the United States are paid by the importer to the 
director of customs on the basis of a return made on the customs form by 
which release from customs custody is to be effected. However, taxes on 
tobacco products manufactured in Puerto Rico and brought into the United 
States may be prepaid in Puerto Rico on the basis of a return. If a 
Puerto Rican manufacturer has filed a proper bond, such manufacturer may 
defer payment at the time of release for shipment to the United States 
and file a semimonthly return to cover the taxes. If the manufacturer 
has not filed such a bond or if such manufacturer has defaulted in any 
way in payment of taxes, the manufacturer must file a prepayment return 
prior to removal of such products for shipment to the United States, and 
continue to do so until the appropriate TTB officer finds that the 
revenue will not be jeopardized by deferred payment. Tax returns, with 
remittances, are filed by the domestic manufacturer in accordance with 
instructions on the appropriate TTB form.
    (b) Cigarette papers and tubes. Taxes on cigarette papers and tubes 
are paid by the manufacturer on the basis of a semimonthly return. Such 
returns, with remittances, are filed in accordance with the instructions 
on the appropriate TTB form. Taxes on cigarette papers and tubes 
imported or brought into the United States from a foreign country, 
Puerto Rico, the Virgin Islands, or a possession of the United States 
are paid to the director of customs before removal on the basis of a 
return made on the customs form by which release from customs custody is 
effected. However, taxes on cigarette papers and tubes of Puerto Rican 
manufacture which are to be shipped to the United States may be prepaid 
in Puerto Rico on the basis of a return.
    (c) Special tax. Special (occupational) taxes are paid by 
manufacturers of tobacco products, manufacturers of cigarette papers and 
tubes, and export warehouse proprietors on the basis of a return. 
Special tax stamps are issued to denote the payment of special 
(occupational) taxes.
    (d) General. Detailed information about the payment of taxes on 
tobacco products, and cigarette papers and

[[Page 335]]

tubes, including the forms to be used, records to be kept, and reports 
and inventories to be filed, is contained in the respective regulations 
referred to in Sec. 70.431.

(Approved by the Office of Management and Budget under control number 
1512-0472)

[T.D. ATF-251, 52 FR 19325, May 22, 1987, as amended by T.D. ATF-271, 53 
FR 17549, May 17, 1988. Redesignated and amended by T.D. ATF-301, 55 FR 
47606, 47654, Nov. 14, 1990; T.D. ATF-450, 66 FR 29029, May 29, 2001]



Sec. 70.434  Assessments.

    When additional or delinquent tax liability on tobacco products, and 
cigarette papers and tubes is disclosed by an investigation or by an 
examination of the taxpayer's records, a notice (except where delay may 
jeopardize collection of the tax, or where the amount is nominal or the 
result of an evident mathematical error) is forwarded to the taxpayer 
indicating the basis for, and amount of, the liability and affording the 
taxpayer an opportunity to show cause, in writing, against assessment.

[T.D. ATF-251, 52 FR 19325, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47606, Nov. 14, 1990]



Sec. 70.435  Claims.

    (a) General. Detailed requirements, including the procedure to be 
followed in the filing of a claim, the form to be used, the supporting 
documents which must be submitted, the time within which a claim must be 
filed, and any other limitations or instructions are contained in the 
applicable regulations referred to in Sec. 70.431.
    (b) Abatement of assessment. Abatement of the unpaid portion of an 
assessment of any tax on tobacco products, and cigarette papers and 
tubes, or any liability in respect thereof, may be allowed to the extent 
that such assessment is excessive in amount, is assessed after 
expiration of the applicable period of limitation, or is erroneously or 
illegally assessed.
    (c) Allowance of tax. Relief from the payment of tax on tobacco 
products, and cigarette papers and tubes may be extended to a 
manufacturer by approval of a claim for allowance where such articles, 
after removal from the factory upon determination of tax and prior to 
the time for payment of such tax, are lost (otherwise than by theft) or 
destroyed by fire, casualty, or act of God, while in the possession or 
ownership of the manufacturer who removed such articles, or are 
withdrawn by the manufacturer from the market.
    (d) Remission of tax liability. Remission of the tax liability on 
tobacco products, and cigarette papers and tubes may be extended to a 
manufacturer or export warehouse proprietor liable for the tax, where 
such articles in bond are lost (otherwise than by theft) or destroyed by 
fire, casualty, or act of God, while in the possession or ownership of 
the manufacturer or export warehouse proprietor.
    (e) Refund of tax. Taxes paid on tobacco products, cigarette papers 
and tubes lost (otherwise than by theft) or destroyed by fire, casualty, 
or act of God, while in the possession or ownership of the manufacturer, 
importer, or export warehouse proprietor, or withdrawn from the market, 
may be refunded. Refunds may also be made within certain limitations for 
overpayments of tax on tobacco products, and cigarette papers and tubes.
    (f) Losses caused by disaster. Payment of an amount equal to the 
amount of internal revenue taxes paid or determined and customs duties 
paid on tobacco products, and cigarette papers and tubes removed from 
the factory or released from customs custody, which are lost, rendered 
unmarketable, or condemned by a duly authorized official by reason of a 
``major disaster'' as determined by the President of the United States 
may be made only if, at the time of the disaster, such articles were 
being held for sale by the claimant. Claims must be filed within 6 
months from the date on which the President makes the determination that 
the disaster has occurred. The determination date is construed to mean 
the date the Director, Office of Emergency Preparedness, identifies the 
specific disaster area.
    (g) Drawback of tax. Drawback may be allowed to the person who paid 
the tax on tobacco products, and cigarette papers and tubes which are 
shipped to a foreign country, Puerto Rico, the Virgin Islands, or a 
possession of the United States.

[[Page 336]]

    (h) Credit of tax. Taxes paid on tobacco products, and cigarette 
papers and tubes lost (otherwise than by theft) or destroyed by fire, 
casualty, or act of God, while in the possession or ownership of the 
manufacturer, or withdrawn from the market, may be credited upon 
approval of a claim.
    (i) Reopening claims. A claimant who wishes to have a rejected claim 
reopened must, within the applicable statutory period of limitations, 
submit a written application to the appropriate TTB officer for 
reconsideration of the claim. Such application must show that the 
additional evidence to be presented is new and material, and that such 
evidence was unknown to the claimant, or unobtainable by the claimant, 
when the claim was previously under consideration.
    (j) Claimant's rights under law and regulations. Before final action 
has been taken on a claim, a claimant who, by reason of an oversight, 
misunderstanding of law and regulations, miscalculation, or other cause, 
did not claim the full amount of abatement, refund, credit, or drawback, 
as the case may be, of tax to which the claimant is legitimately 
entitled, may amend a valid claim, and statements filed in support 
thereof, in instances where such a claim is deficient in establishing 
the claimants eligibility to rights extended under law and regulations.

[T.D. ATF-251, 52 FR 19325, May 22, 1987. Redesignated and amended by 
T.D. ATF-301, 55 FR 47606, 47654, Nov. 14, 1990]



Sec. 70.436  Offers in compromise.

    Procedure in the case of offers in compromise of liabilities under 
26 U.S.C. chapter 52 is set forth in Sec. Sec. 70.482 through 70.484.

[T.D. ATF-301, 55 FR 47654, Nov. 14, 1990]



Sec. 70.437  Rulings.

    The procedure for rulings in tobacco tax matters is set forth in 
Sec. 70.471.

[T.D. ATF-301, 55 FR 47654, Nov. 14, 1990]



Sec. 70.438  Forms.

    Detailed information as to all forms prescribed for use in 
connection with tobacco taxes is contained in the regulations referred 
to in Sec. 70.431(b).

[T.D. ATF-251, 52 FR 19325, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47653, Nov. 14, 1990, as amended by T.D. ATF-450, 66 FR 29029, May 
29, 2001]

 Provisions Relating to Firearms, Shells and Cartridges, and Explosives



Sec. 70.441  Applicable laws.

    (a) Chapter 53 of the Internal Revenue Code (26 U.S.C. 5801-5872), 
the provisions of which are derived from the National Firearms Act 
Amendments of 1968 (82 Stat. 1227), imposes a tax on the making and 
transfer in the United States of machine guns, destructive devices, and 
certain other types of firearms, and an occupational tax upon every 
importer and manufacturer of, and dealer in, such firearms. Section 1(b) 
(2) of the act of August 9, 1939 (52 Stat. 1291; 49 U.S.C. 781-788), 
makes provision for the seizure and forfeiture of vessels, vehicles, and 
aircraft which are used to transport, carry, or possess, or to 
facilitate the same, any firearms with respect to which there has been 
committed any violation of the National Firearms Act or any regulations 
issued pursuant thereto.
    (b) Title I, State Firearms Control Assistance (18 U.S.C., Chapter 
44), of the Gun Control Act of 1968 (82 Stat. 1213), as amended by Pub. 
L. 99-308 (100 Stat. 449), Pub. L. 99-360 (100 Stat. 766) and Pub. L. 
99-408 (100 Stat. 920), provides for the licensing of manufacturers and 
importers of firearms and ammunition, collectors of firearms, and 
dealers in firearms, and establishes controls for firearms and 
ammunition acquisitions and dispositions.
    (c) Title I, State Firearms Control Assistance (18 U.S.C. Chapter 
44), of the Gun Control Act of 1968 (82 Stat. 1213) as amended by Pub. 
L. 99-308 (100 Stat. 449) and Pub. L. 99-360 (100 Stat. 766), provides 
that no person may ship or transport any firearms or ammunition in 
interstate or foreign commerce, or receive any firearms or ammunition 
which has been shipped or transported in interstate or foreign commerce, 
or possess any firearms or ammunition in or affecting commerce, who (1) 
has been convicted of a crime punishable

[[Page 337]]

by imprisonment for a term exceeding 1 year, (2) is a fugitive from 
justice, (3) is an unlawful user of or addicted to any controlled 
substance (as defined in section 102 of the Controlled Substances Act, 
21 U.S.C. 802), (4) has been adjudicated as a mental defective or has 
been committed to a mental institution, (5) is an alien illegally or 
unlawfully in the United States, (6) has been discharged from the Armed 
Forces under dishonorable conditions, or (7) having been a citizen of 
the United States, has renounced citizenship.
    (d) Section 38 of the Arms Export Control Act (22 U.S.C. 2778) and 
regulations thereunder and part 47 of this chapter are applicable to the 
registration and licensing of persons engaged in the business of 
manufacturing, importing or exporting arms, ammunition, or implements of 
war. The Secretary of the Treasury is authorized to control, in 
furtherance of world peace and the security and foreign policy of the 
United States, the import of articles enumerated on the U.S. Munitions 
Import List.
    (e) Title XI, Regulation of Explosives (18 U.S.C. chapter 40) of the 
Organized Crime Control Act of 1970 (84 Stat. 922) provides for the 
licensing of manufacturers, importers, and limited manufacturers of, and 
dealers in, explosives in interstate or foreign commerce, and for 
issuance of permits for users who buy or transport explosives in 
interstate or foreign commerce.
    (f) Chapter 32 of the Internal Revenue Code (26 U.S.C. 4181), 
imposes a tax upon the sale by the manufacturer, producer, or importer 
of pistols, revolvers, firearms (other than pistols and revolvers), and 
shells and cartridges.

[T.D. ATF-251, 52 FR 19325, May 22, 1987. Redesignated by T.D. ATF-301, 
55 FR 47653, Nov. 14, 1990, as amended by T.D. ATF-331, 57 FR 40328, 
Sept. 3, 1992]



Sec. 70.442  Taxes relating to machine guns, destructive devices, and certain 

other firearms.

    Part 179 of title 27 CFR contains the regulations relative to the:
    (a) Payment of special (occupational) taxes by manufacturers and 
importers of and dealers in, machine guns, destructive devices, and 
certain other types of firearms,
    (b) Payment of the tax on the making or transfer of such firearms,
    (c) Registration, identification, importation, and exportation of 
such firearms,
    (d) Keeping of books and records and rendering of returns, and
    (e) The forfeiture and disposition of seized firearms under the 
provisions of the National Firearms Act.



Sec. 70.443  Firearms and ammunition.

    (a) Commerce in firearms and ammunition. (1) 27 CFR part 178 
contains the regulations relative to:
    (i) The licensing of importers and manufacturers of firearms and 
ammunition, collectors of firearms, and dealers in firearms,
    (ii) The identification of firearms,
    (iii) The acquisition and disposition of firearms and ammunition,
    (iv) The records required to be kept by licensees, and
    (v) The forfeiture and disposition of seized firearms and 
ammunition, under the provisions of title I of the Gun Control Act of 
1968, as amended, and also
    (vi) The restrictions regarding the receipt, possession, or 
transportation of firearms by certain persons.
    (b) Firearms and ammunition excise taxes. (1) 27 CFR part 53 
contains the regulations relative to:
    (i) Payment of excise tax on the sale of pistols, revolvers, 
firearms (other than pistols and revolvers), shells and cartridges,
    (ii) Establishing constructive sales price,
    (iii) Registration for tax free sales,
    (iv) Keeping of records and rendering of returns, and
    (v) The exportation or use in further manufacture of tax-paid 
articles.

[T.D. ATF-331, 57 FR 40328, Sept. 3, 1992]



Sec. 70.444  Importation of arms, ammunition, and implements of war.

    Part 47 of title 27 CFR implements Executive Order 11958 and 
supplements the import provisions contained in parts 178 and 179 of 
title 27 CFR. Part 47 establishes the U.S. Munitions Import List and 
contains the regulations relative to:
    (a) The registration of importers in arms, ammunition, and 
implements of war,

[[Page 338]]

    (b) Import permit requirements,
    (c) Import certification and verification,
    (d) Import restrictions applicable to certain countries, and
    (e) The forfeiture of seized arms, ammunition, and implements of war 
under the Arms Export Control Act.



Sec. 70.445  Commerce in explosives.

    Part 55 of title 27 CFR contains the regulations relative to:
    (a) Licensing of manufacturers, importers, and limited manufacturers 
of, and dealers in, explosives,
    (b) Permits for users who buy or transport explosives in interstate 
or foreign commerce,
    (c) Construction of different types of storage facilities for three 
classes of explosive material,
    (d) The identification of explosives,
    (e) The acquisition and disposition of explosives,
    (f) The records required to be kept by licensees and permittees,
    (g) The forfeiture and disposition of seized explosive material, 
under the provision of Title XI of the Organized Crime Control Act of 
1970,
    (h) Operations by licensees or permittees and hearings procedure 
after denial or revocation of license or permit, and also
    (i) Restrictions regarding the receipt, possession, or 
transportation of explosives by certain persons under the provisions of 
Title XI of the Organized Crime Control Act of 1970.



Sec. 70.446  Rulings.

    The procedure for rulings in the firearms and explosives area is set 
forth in Sec. 70.471.

[T.D. ATF-301, 55 FR 47654, Nov. 14, 1990]



Sec. 70.447  Assessments.

    Where the evidence disclosed by investigation establishes that 
additional or delinquent tax liability has been incurred and not paid, 
the appropriate TTB officer will list the tax as an assessment. 
Notification and demand for payment of assessed taxes will be issued to 
the taxpayer by the appropriate TTB officer.

[T.D. ATF-301, 55 FR 47654, Nov. 14, 1990]



Sec. 70.448  Claims.

    (a) The procedures applicable to the filing of claims under chapter 
53 of the Internal Revenue Code are set forth below:
    (1) Claims for refund of the making and transfer taxes, and of 
occupational taxes, whether paid pursuant to assessment or voluntarily 
paid, and claims for redemption of ``National Firearms Act'' stamps, are 
prepared and filed in accordance with the procedures set forth in 27 CFR 
part 179.
    (2) Claims for abatement of making and transfer taxes, and claims 
for abatement of occupational taxes and penalties erroneously assessed, 
are prepared and filed in accordance with the procedures set forth in 
Sec. 70.413(b).
    (3) Claims may be reopened or amended in accordance with the 
provisions of Sec. 70.414 (k) and (l).
    (b) The procedures applicable to the filing of claims relating to 
the tax imposed by section 4181 of the Internal Revenue Code are set 
forth below:
    (1) Claims for credit or refund of manufacturers taxes, whether paid 
pursuant to assessment of voluntarily paid, are prepared and filed in 
accordance with the procedures set forth in Sec. 70.123 and 27 CFR 
53.171 through 53.186. For regulations under section 6416 of the 
Internal Revenue Code, relating to conditions to allowance and other 
procedural requirements, see 27 CFR 53.172 through 53.186.
    (2) Claims for abatement of manufacturers taxes are to be prepared 
and filed in accordance with Sec. 70.125.
    (3) Claims may be reopened or amended in accordance with the 
provisions of Sec. 70.414 (k) and (l).

[T.D. ATF-331, 57 FR 40328, Sept. 3, 1992]



Sec. 70.449  Offers in compromise.

    The procedures in the case of offers in compromise of liabilities 
under 26 U.S.C. 4181 and chapter 53 are set forth in Sec. Sec. 70.482 
and 70.484.

[T.D. ATF-331, 57 FR 40329, Sept. 3, 1992]

                             Seized Property



Sec. 70.450  Seizure and forfeiture of personal property.

    Part 72 of title 27 CFR contains the regulations relative to the 
personal

[[Page 339]]

property seized by officers of the Bureau of Alcohol, Tobacco and 
Firearms as subject to forfeiture as being used, or intended to be used, 
to violate certain Federal laws; the remission or mitigation of such 
forfeiture; and the administrative sale or other disposition, pursuant 
to forfeiture, of such seized property other than firearms seized under 
the National Firearms Act and firearms and ammunition seized under Title 
I of the Gun Control Act of 1968, as amended. For disposal of firearms 
under the National Firearms Act, see 26 U.S.C. 5872(b). For disposal of 
firearms and ammunition under Title I of the Gun Control Act of 1968, 
see 18 U.S.C. 924(d). For disposal of explosives under Title XI of 
Organized Crime Control Act of 1970, see 18 U.S.C. 844(c).

                               Possessions



Sec. 70.461  Shipments to the United States.

    For regulations under 26 U.S.C. 7652, see 27 CFR part 26 relating to 
liquors and articles from Puerto Rico and the Virgin Islands; and 27 CFR 
part 41 relating to cigars, cigarettes, and cigarette papers and tubes.

(68A Stat. 907, as amended (26 U.S.C. 7652))

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-249, 52 
FR 5961, Feb. 27, 1987. Redesignated by T.D. ATF-301, 55 FR 47606, Nov. 
14, 1990, as amended by T.D. ATF-459, 66 FR 38550, July 25, 2001; T.D. 
TTB-16, 69 FR 52423, Aug. 26, 2004]



Sec. 70.462  Shipments from the United States.

    For regulations under 26 U.S.C. 7653, see 27 CFR part 196 relating 
to stills; 27 CFR part 28 relating to exportation of liquors; and 27 CFR 
part 44, relating to exportation of cigars, cigarettes, and cigarette 
papers and tubes.

(68A Stat. 908, as amended; (26 U.S.C. 7653))

[T.D. ATF-6, 38 FR 32445, Nov. 26, 1973, as amended by T.D. ATF-249, 52 
FR 5961, Feb. 27, 1987. Redesignated by T.D. ATF-301, 55 FR 47606, Nov. 
14, 1990; T.D. ATF-464, 66 FR 43480, Aug. 20, 2001; T.D. TTB-8, 69 FR 
3830, Jan. 27, 2004]

                                 Rulings



Sec. 70.471  Rulings.

    (a) Requests for rulings. Any person who is in doubt as to any 
matter arising in connection with:
    (1) Operations or transactions in the alcohol tax area or under the 
Federal Alcohol Administration Act;
    (2) Operations or transactions in the tobacco tax area; or
    (3) The taxes relating to machine guns, destructive devices, and 
certain other firearms imposed by chapter 53 of the Internal Revenue 
Code; the registration by importers and manufacturers of, and dealers 
in, such firearms; the registration of such firearms; the licensing of 
importers and manufacturers of, and dealers in, firearms and ammunition, 
and collectors of firearms and ammunition curios and relics under 
chapter 44 of title 18 of the United States Code; the licensing of 
manufacturers, importers, limited manufacturer of, and dealers in, 
explosives and issuance of permits for users of explosives under chapter 
40 of title 18 of the United States Code; and registration of importers 
of, and permits to import, arms, ammunition, and implements of war, 
under section 38 of the Arms Export Control Act of 1976; and the taxes 
relating to pistols, revolvers, firearms (other than pistols and 
revolvers), shells and cartridges imposed by chapter 32 of the Internal 
Revenue Code, may request a ruling thereon by addressing a letter to the 
appropriate ATF official. A ruling can be issued only from Bureau 
Headquarters unless the issues involved are clearly covered by currently 
effective rulings or come within the plain intent of the statutes or 
regulations.
    (b) Routine requests for information. Routine requests for 
information should be addressed to the appropriate ATF officer.

[T.D. ATF-450, 66 FR 29029, May 29, 2001]

                         Administrative Remedies



Sec. 70.481  Agreements for payment of liability in installments.

    (a) Authorization of agreements. The appropriate TTB officer, is 
authorized to enter into written agreements with

[[Page 340]]

any taxpayer under which such taxpayer is allowed to satisfy liability 
for payment of any tax in installment payments if the appropriate TTB 
officer determines that such agreement will facilitate collection of 
such liability.
    (b) Extent to which agreements remain in effect--(1) In general. 
Except as otherwise provided in this paragraph (b), any agreement under 
paragraph (a) of this section shall remain in effect for the term of the 
agreement.
    (2) Inadequate information or jeopardy. The officer who entered into 
an installment agreement under paragraph (a) of this section may 
terminate such agreement if:
    (i) Information which the taxpayer provided prior to the date such 
agreement was entered into was inaccurate or incomplete, or
    (ii) The appropriate TTB officer believes that collection of any tax 
to which an agreement under this section relates is in jeopardy.
    (3) Subsequent change in financial conditions--(i) In general. If 
the officer who entered into an installment agreement under paragraph 
(a) of this section makes a determination that the financial condition 
of the taxpayer has significantly changed, the officer may alter, 
modify, or terminate such agreement.
    (ii) Notice. Action may be taken by the appropriate TTB officer 
under paragraph (b)(3)(i) of this section only if:
    (A) Notice of such determination is provided to the taxpayer no 
later than 30 days prior to the date of such action, and
    (B) Such notice includes the reasons why the officer believes a 
significant change in the financial condition of the taxpayer has 
occurred.
    (4) Failure to pay an installment or any other tax liability when 
due or to provide requested financial information. The officer who 
entered into an installment agreement under paragraph (a) of this 
section may alter, modify, or terminate such agreement in the case of 
the failure of the taxpayer:
    (i) To pay an installment at the time such installment payment is 
due under such agreement,
    (ii) To pay any other tax liability at the time such liability is 
due, or
    (iii) To provide a financial condition update as requested by the 
appropriate TTB officer.

(26 U.S.C. 6159)

[T.D. ATF-301, 55 FR 47655, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29029, May 29, 2001]



Sec. 70.482  Offers in compromise of liabilities (other than forfeiture) 

under 26 U.S.C.

    (a) In general. The appropriate TTB officer may compromise any civil 
or criminal liability arising under the provisions of 26 U.S.C. enforced 
and administered by TTB prior to reference of a case involving such 
liability to the Department of Justice for prosecution or defense. (For 
compromise of forfeiture liability, see Sec. 70.484 of this part.) Any 
such liability may be compromised only upon one or both of the following 
two grounds:
    (1) Doubt as to liability; or
    (2) Doubt as to collectibility.

No such liability will be compromised if the liability has been 
established by a valid judgment or is certain, and there is no doubt as 
to the ability of the Government to collect the amounts owing with 
respect to such liability.
    (b) Scope of compromise agreement. A compromise agreement may relate 
to civil or criminal liability for taxes, interest, ad valorem 
penalties, or specific penalties. However, a criminal liability may be 
compromised only if it involves a violation of a regulatory provision of 
26 U.S.C., or a related statute, and then only if such violation was not 
deliberately committed with an intent to defraud.
    (c) Effect of compromise agreement. A compromise agreement relates 
to the entire liability of the taxpayer (including taxes, ad valorem 
penalties, and interest) with respect to which the offer in compromise 
is submitted and all questions of such liability are conclusively 
settled thereby. Specific penalties, however, shall be compromised 
separately and not in connection with taxes, interest, or ad valorem 
penalties. Neither the taxpayer nor the Government shall, upon 
acceptance of an offer in compromise, be permitted to reopen the case 
except by reason of falsification or concealment of assets by the 
taxpayer, or mutual mistake of

[[Page 341]]

a material fact sufficient to cause a contract to be reformed or set 
aside. However, acceptance of an offer in compromise of a civil 
liability does not remit a criminal liability, nor does acceptance of an 
offer in compromise of a criminal liability remit a civil liability.
    (d) Procedure with respect to offers in compromise--(1) Submission 
of offers. (i) Offers in compromise under this section shall be 
submitted on TTB Form 5640.1, along with any additional information 
required by the officer authorized to accept or reject the offer. If the 
offer in compromise is based on inability to pay, the proponent must 
submit any financial statement required by such officer.
    (ii) The offer should generally be accompanied by a remittance 
representing the amount of the compromise offer or a deposit if the 
offer provides for future installment payments. When final action has 
been taken, the proponent is notified of the acceptance or rejection of 
the offer.
    (2) Stay of collection. The submission of an offer in compromise 
shall not automatically operate to stay the collection of any tax 
liability. However, enforcement of collection may be deferred if the 
interests of the United States will not be jeopardized thereby.
    (3) Acceptance. An offer in compromise shall be considered accepted 
only when the proponent thereof is so notified in writing. As a 
condition to accepting an offer in compromise, the taxpayer may be 
required to enter into any collateral agreement or to post any security 
which is deemed necessary for the protection of the interests of the 
United States. If the final payment on an accepted offer is contingent 
upon the immediate or simultaneous release of a tax lien in whole or in 
part, such payment must be in cash, or in the form of a certified, 
cashier's, or treasurer's check drawn on any bank or trust company 
incorporated under the laws of the United States or any State, 
Territory, or possession of the United States, or by a U.S. postal, 
bank, express, or telegraph money order.
    (4) Withdrawal or rejection. An offer in compromise may be withdrawn 
by the proponent at any time prior to its acceptance. In the event an 
offer is rejected, the proponent shall be promptly notified in writing. 
Frivolous offers or offers submitted for the purpose of delaying the 
collection of tax liabilities shall be immediately rejected. If an offer 
in compromise is withdrawn or rejected, the amount tendered with the 
offer, including all installments paid, shall be refunded without 
interest, unless the taxpayer has stated or agreed that the amount 
tendered may be applied to the liability with respect to which the offer 
was submitted.
    (e) Record. Except as otherwise provided in this paragraph, if an 
offer in compromise is accepted, there shall be placed on file the 
opinion of counsel for the Bureau with respect to such compromise, with 
the reason therefor, and including a statement of:
    (1) The amount of tax assessed,
    (2) The amount of interest, additional amount, addition to the tax, 
or assessable penalty, imposed by law on the person against whom the tax 
is assessed, and
    (3) The amount actually paid in accordance with the terms of the 
compromise.

However, no such opinion shall be required with respect to the offer in 
compromise of any civil case in which the unpaid amount of tax assessed 
(including any interest, additional amount, addition to the tax, or 
assessable penalty is less than $50,000. However, such compromise shall 
be subject to continuing quality review by the Secretary.
    (f) Requirement with respect to statute of limitations. No offer in 
compromise shall be accepted unless the taxpayer waives the running of 
the statutory period of limitations on both or either assessment or 
collection of the tax liability involved for the period during which the 
offer is pending, or the period during which any installment remains 
unpaid, and for one year thereafter.
    (g) Inspection with respect to accepted offers in compromise. For 
provisions relating to the inspection of returns and

[[Page 342]]

accepted offers in compromise, see 26 U.S.C. 6103(k)(l).

(26 U.S.C. 7122)

(Approved by the Office of Management and Budget under control number 
1512-0472)

[T.D. ATF-301, 55 FR 47655, Nov. 14, 1990, as amended by T.D. ATF-331, 
57 FR 40329, Sept. 3, 1992; T.D. ATF-450, 66 FR 29029, May 29, 2001]



Sec. 70.483  Offers in compromise of violations of Federal Alcohol 

Administration Act.

    The Federal Alcohol Administration Act provides penalties for 
violations of its provisions. The appropriate TTB officer is authorized 
to compromise such liabilities. Persons desiring to submit offers in 
compromise may submit such offers on Form 5640.2. When the offer is 
acted upon, the proponent is notified of the acceptance or rejection of 
the offer. If the offer is rejected, the sum submitted with the offer in 
compromise is returned to the proponent. If the offer is accepted, the 
proponent is notified and the case is closed.

[T.D. ATF-450, 66 FR 29029, May 29, 2001]



Sec. 70.484  Offers in compromise of forfeiture liabilities.

    The appropriate TTB officer is authorized to compromise liabilities 
to administrative forfeiture of personal property seized under the laws 
administered and enforced by the Bureau. Persons desiring to submit 
offers in compromise of such liabilities may submit such offers on Form 
656-E to the appropriate TTB officer. When the offer is acted upon, the 
proponent is notified of the acceptance or rejection of the offer. If 
the offer is rejected, the sum submitted with the offer in compromise is 
returned to the proponent. If the offer is accepted, the proponent is 
notified and the case is closed. Acceptance of an offer in compromise of 
civil liabilities does not remit criminal liabilities, nor does 
acceptance of an offer in compromise of criminal liabilities remit civil 
liabilities.

[T.D. ATF-301, 55 FR 47655, Nov. 14, 1990, as amended by T.D. ATF-450, 
66 FR 29030, May 29, 2001]



Sec. 70.485  Closing agreements.

    (a) In general. The appropriate TTB officer may enter into a written 
agreement with any person relating to the liability of such person (or 
of the person or estate for whom the person acts) in respect of any tax 
imposed under the provisions of 26 U.S.C. enforced and administered by 
the Bureau for any taxable period ending prior or subsequent to the date 
of such agreement. A closing agreement may be entered into in any case 
in which there appears to be an advantage in having the case permanently 
and conclusively closed, or if good and sufficient reasons are shown by 
the taxpayer for desiring a closing agreement and it is determined by 
the appropriate TTB officer that the United States will sustain no 
disadvantage through consummation of such an agreement.
    (b) Scope of closing agreement--(1) In general. A closing agreement 
may be executed even though under the agreement the taxpayer is not 
liable for any tax for the period to which the agreement relates. There 
may be a series of closing agreements relating to the tax liability for 
a single period.
    (2) Taxable periods ended prior to date of closing agreement. 
Closing agreements with respect to taxable periods which ended prior to 
the date of the agreement may relate to the total tax liability of the 
taxpayer or to one or more separate items affecting the tax liability of 
the taxpayer.
    (3) Taxable periods ending subsequent to date of closing agreement. 
Closing agreements with respect to taxable periods ending subsequent to 
the date of the agreement may relate to one or more separate items 
affecting the tax liability of the taxpayer.
    (c) Finality. A closing agreement which is approved within such time 
as may be stated in such agreement, or later agreed to, shall be final 
and conclusive, and, except upon a showing of fraud or malfeasance, or 
misrepresentation of a material fact:
    (1) The case shall not be reopened as to the matters agreed upon or 
the agreement modified by any officer, employee, or agent of the United 
States, and
    (2) In any suit, action, or proceeding, such agreement, or any 
determination,

[[Page 343]]

assessment, collection, payment, abatement, refund, or credit made in 
accordance therewith, shall not be annulled, modified, set aside, or 
disregarded.

However, a closing agreement with respect to a taxable period ending 
subsequent to the date of the agreement is subject to any change in, or 
modification of, the law enacted subsequent to the date of the agreement 
and made applicable to such taxable period, and each closing agreement 
shall so recite.
    (d) Procedure with respect to closing agreements--(1) Submission of 
request. A request for a closing agreement which relates to a prior 
taxable period may be submitted at any time before a case with respect 
to the tax liability involved is filed with a court of the United 
States. The procedure with respect to requests for closing agreements 
shall be under such rules as may be prescribed from time to time by the 
Administrator in accordance with the regulations under this section.
    (2) Collection, credit, or refund. Any tax or deficiency in tax 
determined pursuant to a closing agreement shall be assessed and 
collected, and any overpayment determined pursuant thereto shall be 
credited or refunded, in accordance with the applicable provisions of 
law.

(26 U.S.C. 7121)

[T.D. ATF-301, 55 FR 47655, Nov. 14, 1990]



Sec. 70.486  Managerial review.

    If at any step in the collection process a taxpayer does not agree 
with an TTB employee under the authority of the appropriate TTB officer, 
the taxpayer has the right to discuss the matter with the employee's 
immediate supervisor. The TTB employee will give the taxpayer the name 
and telephone number of the person to be contacted.

[T.D. ATF-301, 55 FR 47655, Nov. 14, 1990]



Subpart F_Application of Section 6423, Internal Revenue Code of 1954, as 
  Amended, to Refund or Credit of Tax on Distilled Spirits, Wines, and 
                                  Beer

    Source: T.D. ATF-376, 61 FR 31031, June 19, 1996, unless otherwise 
noted.

                                 General



Sec. 70.501  Meaning of terms.

    When used in this subpart, where not otherwise distinctly expressed 
or manifestly incompatible with the intent thereof, terms shall have the 
meaning ascribed in this section.
    Article. The commodity in respect to which the amount claimed was 
paid or collected as a tax.
    Claimant. Any person who files a claim for a refund or credit of tax 
under this subpart.
    District director of customs. The district director of customs at a 
headquarters port of the district (except the district of New York, 
N.Y.); the area directors of customs in the district of New York, N.Y.; 
and the port director at a port not designated as a headquarters port.
    I.R.C. Internal Revenue Code of 1986, as amended.
    Owner. A person who, by reason of a proprietary interest in the 
article, furnished the amount claimed to the claimant for the purpose of 
paying the tax.
    Person. An individual, a trust, estate, partnership, association, 
company, or corporation.
    Tax. Any tax imposed by 26 U.S.C. 5001-5066, or by any corresponding 
provision of prior internal revenue laws, and in the case of any 
commodity of a kind subject to a tax under any such sections, any tax 
equal to any such tax, any additional tax, or any floor stocks tax. The 
term includes an extraction denominated a ``tax'', and any penalty, 
addition to tax, additional amount, or interest applicable to any such 
tax.



Sec. 70.502  Applicability to certain credits or refunds.

    The provisions of this subpart apply only where the credit or refund 
is claimed on the grounds that an amount of tax was assessed or 
collected erroneously, illegally, without authority, or in any manner 
wrongfully, or on the grounds that such amount was excessive. This 
subpart does not apply to:
    (a) Any claim for drawback,
    (b) Any claim made in accordance with any law expressly providing 
for credit or refund where an article is

[[Page 344]]

withdrawn from the market, returned to bond, or lost or destroyed, and
    (c) Any claim based solely on errors in computation of the quantity 
of an article subject to tax or on mathematical errors in computation of 
the amount of the tax due, or to any claim in respect of tax collected 
or paid on an article seized and forfeited, or destroyed, as contraband.



Sec. 70.503  Ultimate burden.

    For the purposes of this subpart, the claimant, or owner, shall be 
treated as having borne the ultimate burden of an amount of tax only if:
    (a) The claimant or owner has not, directly or indirectly, been 
relieved of such burden or shifted such burden to any other person,
    (b) No understanding or agreement exists for any such relief or 
shifting, and
    (c) If the claimant or owner has neither sold nor contracted to sell 
the articles involved in such claim, such claimant or owner agrees that 
there will be no such relief or shifting.



Sec. 70.504  Conditions to allowance of credit or refund.

    No credit or refund to which this subpart is applicable shall be 
allowed or made, pursuant to a court decision or otherwise, of any 
amount paid or collected as a tax unless a claim therefor has been 
filed, as provided in this subpart, by the person who paid the tax and 
the claimant, in addition to establishing that such claimant is 
otherwise legally entitled to credit or refund of the amount claimed, 
establishes:
    (a) That the claimant bore the ultimate burden of the amount 
claimed, or
    (b) That the claimant has unconditionally repaid the amount claimed 
to the person who bore the ultimate burden of such amount, or
    (c) That:
    (1) The owner of the article furnished the claimant the amount 
claimed for payment of the tax;
    (2) The claimant has filed with the appropriate TTB officer the 
written consent of such owner to the allowance to the claimant of the 
credit or refund; and
    (3) Such owner satisfies the requirements of paragraph (a) or (b) of 
this section.



Sec. 70.505  Requirements on persons intending to file claim.

    Any person who, having paid the tax with respect to an article, 
desires to claim refund or credit of any amount of such tax to which the 
provisions of this subpart are applicable must:
    (a) File a claim, as provided in Sec. 70.506, and
    (b) Comply with any other provisions of law or regulations which may 
apply to the claim.

                             Claim Procedure



Sec. 70.506  Execution and filing of claim.

    Claims to which this subpart is applicable must be executed on Form 
2635 (5620.8) in accordance with the instructions on the form. (For 
provisions relating to handcarried documents, see 27 CFR 70.304). Claims 
for credit or refund of taxes collected by district directors of 
customs, to which the provisions of section 6423, I.R.C., are applicable 
and which Customs regulations (19 CFR Part 24--Customs Financial and 
Accounting Procedure) require to be filed with the appropriate TTB 
officer, must be executed and filed in accordance with applicable 
Customs regulations and this subpart. The claim must set forth each 
ground upon which the claim is made in sufficient detail to apprise the 
appropriate TTB officer of the exact basis therefor. Allegations 
pertaining to the bearing of the ultimate burden relate to additional 
conditions which must be established for a claim to be allowed and are 
not in themselves legal grounds for allowance of a claim. There shall 
also be attached to the form and made part of the claim the supporting 
data required by Sec. 70.507. All evidence relied upon in support of 
such claim shall be clearly set forth and submitted with the claim.

[T.D.ATF-376, 61 FR 31031, June 19, 1996, as amended by T.D. ATF-450, 66 
FR 29030, May 29, 2001]



Sec. 70.507  Data to be shown in claim.

    Claims to which this subpart is applicable, in addition to the 
requirements

[[Page 345]]

of Sec. 70.506 must set forth or contain the following:
    (a) A statement that the claimant paid the amount claimed as a 
``tax'' as defined in this subpart.
    (b) Full identification (by specific reference to the form number, 
the date of filing, the place of filing, and the amount paid on the 
basis of the particular form or return) of the tax forms or returns 
covering the payments for which refund or credit is claimed.
    (c) The written consent of the owner to the allowance of the refund 
or credit to the claimant (where the owner of the article in respect of 
which the tax was paid furnished the claimant the amount claimed for the 
purpose of paying the tax).
    (d) If the claimant (or owner, as the case may be) has neither sold 
nor contracted to sell the articles involved in the claim, a statement 
that the claimant (or owner, as the case may be) agrees not to shift, 
directly or indirectly in any manner whatsoever, the burden of the tax 
to any other person.
    (e) If the claim is for refund of a floor stocks tax, or of an 
amount resulting from an increase in rate of tax applicable to an 
article, a statement as to whether the price of the article was 
increased on or following the effective date of such floor stocks tax or 
rate increase, and if so, the date of the increase, together with full 
information as to the amount of such price increase.
    (f) Specific evidence (such as relevant records, invoices, or other 
documents, or affidavits of individuals having personal knowledge of 
pertinent facts) which will satisfactorily establish the conditions to 
allowance set forth in Sec. 70.504.
    (g) The appropriate TTB officer may require the claimant to furnish 
as a part of the claim such additional information as may be deemed 
necessary.



Sec. 70.508  Time for filing claim.

    No credit or refund of any amount of tax to which the provisions of 
this subpart apply shall be made unless the claimant files a claim 
therefor within the time prescribed by law and in accordance with the 
provisions of this subpart.

                                Penalties



Sec. 70.509  Penalties.

    It is an offense punishable by fine and imprisonment for anyone to 
make or cause to be made any false or fraudulent claim upon the United 
States, or to make any false or fraudulent statements, or 
representations, in support of any claim, or to falsely or fraudulently 
execute any documents required by the provisions of the internal revenue 
laws, or any regulations made in pursuance thereof.



   Subpart G_Losses Resulting From Disaster, Vandalism, or Malicious 
                                Mischief

                               Definitions

    Source: T.D. ATF-376, 61 FR 31033, June 19, 1996, unless otherwise 
noted.



Sec. 70.601  Meaning of terms.

    When used in this subpart, terms are defined as follows in this 
section. Words in the plural shall include the singular, and vice versa, 
and words indicating the masculine gender shall include the feminine. 
The terms ``includes'' and ``including'' do not exclude other things not 
named which are in the same general class or are otherwise within the 
scope of the term defined.
    Alcoholic liquors or liquors. Distilled spirits, wines, and beer 
lost, made unmarketable, or condemned, as provided in this subpart.
    Beer. Beer, ale, porter, stout, and other similar fermented 
beverages (including sake, or other similar products) of any name or 
description containing one-half of 1 percent or more of alcohol by 
volume on which the internal revenue tax has been paid or determined, 
and if imported, on which duties have been paid.
    Claimant. The person who held the liquors for sale at the time of 
the disaster or other specified cause of loss and who files a claim 
under this subpart.
    Commissioner of Customs. The Commissioner of Customs, U.S. Customs 
Service, the Department of the Treasury, Washington, DC.

[[Page 346]]

    Distilled spirits, or spirits. Ethyl alcohol and other distillates 
such as whisky, brandy, rum, gin, vodka, in any form (including all 
dilutions and mixtures thereof, from whatever source or by whatever 
process produced), on which the internal revenue tax has been paid or 
determined and, if imported, on which duties have been paid.
    Duly authorized official. Any Federal, State or local government 
official who is authorized to condemn liquors on which a claim is filed 
under this subpart.
    Duty or duties. Any duty or duties paid under the customs laws of 
the United States.
    Major Disaster. A flood, fire, hurricane, earthquake, storm, or 
other catastrophe defined as a ``major disaster'' under the Disaster 
Relief Act (42 U.S.C. 5122(2)), which occurs in any part of the United 
States and which the President has determined causes sufficient damage 
to warrant ``major disaster'' assistance under that Act.
    Tax. (1) With respect to distilled spirits, ``tax'' means the 
internal revenue tax that is paid or determined on spirits.
    (2) With respect to wines, ``tax'' means the internal revenue tax 
that is paid or determined on the wine.
    (3) With respect to beer, ``tax'' means the internal revenue tax 
that is paid or determined on the beer.
    United States. When used in a geographical sense includes only the 
States and the District of Columbia.
    Wines. All still wines, effervescent wines, and flavored wines, on 
which internal revenue wine tax has been paid or determined, and if 
imported, on which duty has been paid.

[T.D. ATF-376, 61 FR 31033, June 19, 1996, as amended by T.D. ATF-450, 
66 FR 29030, May 29, 2001]

                                Payments



Sec. 70.602  Circumstances under which payment may be made.

    (a) Major disasters. The appropriate TTB officer shall allow payment 
(without interest) of an amount equal to the tax paid or determined, and 
the Commissioner of Customs shall allow payment (without interest) of an 
amount equal to the duty paid, on distilled spirits, wines, and beer 
previously withdrawn, if the liquors are lost, made unmarketable, or 
condemned by a duly authorized official as the result of a major 
disaster (as defined in Sec. 70.601).
    (b) Other causes of loss--(1) Payment. The appropriate TTB officer 
shall allow payment (without interest) of an amount equal to the tax 
paid or determined, and the Commissioner of Customs shall allow payment 
(without interest) of an amount equal to the duty paid, on distilled 
spirits, wines, and beer previously withdrawn, if the liquors are lost, 
made unmarketable, or condemned by a duly authorized official as a 
result of:
    (i) Fire, flood, casualty, or other disaster; or
    (ii) Breakage, destruction, or other damage (excluding theft) 
resulting from vandalism or malicious mischief.
    (2) Minimum claim. No claim of less than $250 will be allowed for 
losses resulting from any disaster or damage described in paragraph 
(b)(1) of this section.
    (c) General. Payment under this section may be made only if:
    (1) The disaster or other specified cause of loss occurred in the 
United States;
    (2) At the time of the disaster or other specified cause of loss, 
the liquors were being held for sale by the claimant;
    (3) Refund or credit of the amount claimed, or any part of the 
amount claimed, has not or will not be claimed for the same liquors 
under any other law or regulations; and
    (4) The claimant was not indemnified by any valid claim of insurance 
or otherwise for the tax and/or duty on the liquors covered by the 
claim.

                            Claims Procedures



Sec. 70.603  Execution and filing of claim.

    (a) General. (1) Claims under this subpart must be filed on Form 
2635 (5620.8).
    (2) The claim shall include all the facts on which the claim is 
based, and be accompanied by a record of inventory of the liquors lost, 
made unmarketable, or condemned. (See Sec. 70.604.)
    (3) The claim shall contain a statement that no other claim for 
refund or credit of the amount claimed, or for

[[Page 347]]

any part of the amount claimed, has been or will be filed under any 
other law or regulations.
    (b) Major disasters. Claims for refund of tax and/or duty on liquors 
which were lost, became unmarketable, or were condemned as a result of a 
major disaster must be filed not later than 6 months from the day on 
which the President determines that a major disaster has occurred.
    (c) Other causes of loss. (1) Claims for amounts of $250 or more for 
refund of tax and/or duty on liquors which were lost, became 
unmarketable, or were condemned as the result of:
    (i) Fire, flood, casualty, or other disaster; or
    (ii) Damage (excluding theft) resulting from vandalism or malicious 
mischief, must be filed within 6 months after the date on which the 
disaster or damage occurred.
    (2) Claims for amounts less than $250 will not be allowed.

[T.D. ATF-376, 61 FR 31033, June 19, 1996, as amended by T.D. ATF-450, 
66 FR 29030, May 29, 2001]



Sec. 70.604  Record of inventory to support claims.

    (a) Claims relating to distilled spirits. The record of inventory of 
distilled spirits lost, made unmarketable, or condemned, which is 
required to support claims filed under Sec. 70.603, shall show the 
following information:
    (1) Name and business address of claimant (as shown on claim, Form 
2635 (5620.8)).
    (2) Address where the spirits were lost, became unmarketable, or 
were condemned, if different from the business address.
    (3) Kind of spirits.
    (4) Brand name.
    (5) For full cases, show:
    (i) Number of cases;
    (ii) Serial numbers;
    (iii) Bottles per case;
    (iv) Size of bottles;
    (v) Wine gallons per case;
    (vi) Proof; and
    (vii) Proof gallons.
    (6) For bottles not in cases, show:
    (i) Total number;
    (ii) Size of bottles;
    (iii) Wine gallons;
    (iv) Proof; and
    (v) Total proof gallons.
    (7) Total proof gallons for all items.
    (b) Claims relating to wines. The record of inventory of wines lost, 
made unmarketable, or condemned, which is required to support claims 
filed under Sec. 70.603, shall show the following information:
    (1) Name and business address of claimant (as shown on claim, Form 
2635 (5620.8)).
    (2) Address where the wines were lost, became unmarketable, or were 
condemned, if different from the business address.
    (3) Kind of wine.
    (4) Percent of alcohol by volume.
    (5) Number of barrels or kegs.
    (6) Kind and number of other bulk containers.
    (7) Number of full cases and bottles per case.
    (8) Size of bottles.
    (9) Number of bottles not in cases and wine gallons.
    (10) Total wine gallons.
    (c) Claims relating to beer. The record of inventory of beer lost, 
made unmarketable, or condemned, which is required to support claims 
filed under Sec. 70.603, shall show the following information:
    (1) Name and business address of claimant (as shown on claim, Form 
2635 (5620.8)).
    (2) Address where the beer was lost, became unmarketable, or was 
condemned, if different from the business address.
    (3) Number and size of barrels.
    (4) For full cases, show:
    (i) Number of cases;
    (ii) Bottles or cans per case; and
    (iii) Size (in ounces) of bottles or cans.
    (5) Number and size of bottles and cans not in cases.
    (6) Quantity in terms of 31-gallon barrels.
    (7) Total quantity.
    (d) Special instructions. (1) Inventories of domestic liquors, 
imported liquors, and liquors manufactured in the Virgin Islands shall 
be reported separately.
    (2) Liquors manufactured in Puerto Rico may not be included in 
claims filed under this subpart. Claims for losses of Puerto Rican 
liquors shall be

[[Page 348]]

filed with the Secretary of the Treasury of Puerto Rico under the laws 
of Puerto Rico.



Sec. 70.605  Claims relating to imported, domestic, and Virgin Islands 

liquors.

    (a) Claims involving taxes on domestic liquors, imported liquors, 
and liquors manufactured in the Virgin Islands must show the quantities 
of each separately in the claim.
    (b) A separate claim on Form 2635 (5620.8) must be filed for customs 
duties.



Sec. 70.606  Claimant to furnish proof.

    The claimant shall furnish proof to the satisfaction of the 
appropriate TTB officer regarding the following:
    (a) That the tax on the liquors, or the tax and duty if imported, 
was fully paid; or the tax, if not paid, was fully determined.
    (b) That the liquors were lost, made unmarketable, or condemned by a 
duly authorized official, by reason of damage sustained as a result of a 
disaster or other cause of loss specified in this subpart.
    (c) The type and date of occurrence of the disaster or other 
specified cause of loss, and the location of the liquors at the time.
    (d) That the claimant was not indemnified by a valid claim of 
insurance or otherwise for the tax, or tax and duty, on the liquors 
covered by the claim.
    (e) That the claimant is entitled to payment under this subpart.



Sec. 70.607  Supporting evidence.

    (a) The claimant shall support the claim with any evidence (such as 
inventories, statements, invoices, bills, records, labels, formulas, 
stamps) that is available to submit, relating to the quantities and 
identities of the liquors, on which duty has been paid or tax has been 
paid or determined, that were on hand at the time of the disaster or 
other specified cause of loss and alleged to have been lost, made 
unmarketable, or condemned as a result of it.
    (b) If the claim is for refund of duty, the claimant shall furnish, 
if possible:
    (1) The customs number;
    (2) The date of entry; and
    (3) The name of the port of entry.



Sec. 70.608  Action on claims.

    The appropriate TTB officer shall date stamp and examine each claim 
filed under this subpart and will determine the validity of the claim. 
Claims and supporting data involving customs duties will be forwarded to 
the Commissioner of Customs with a summary statement by the appropriate 
TTB officer regarding his or her findings.

                         Destruction of Liquors



Sec. 70.609  Supervision.

    When allowance has been made under this subpart for the tax and/or 
duty on liquors condemned by a duly authorized official or made 
unmarketable, the liquors shall be destroyed by suitable means under 
supervision satisfactory to the appropriate TTB officer, unless the 
liquors were previously destroyed under supervision satisfactory to the 
appropriate TTB officer. The Commissioner of Customs will notify the 
appropriate TTB officer as to allowance under this subpart of claims for 
duty on unmarketable or condemned liquors.

                                Penalties



Sec. 70.610  Penalties.

    (a) Penalties are provided in 26 U.S.C. 7206 for making any false or 
fraudulent statement under the penalties of perjury in support of any 
claim.
    (b) Penalties are provided in 26 U.S.C. 7207 for filing any false or 
fraudulent document under this subpart.
    (c) All laws and regulations, including penalties, which apply to 
internal revenue taxes on liquors shall, when appropriate, apply to 
payments made under this subpart the same as if the payments were actual 
refunds of internal taxes on liquors.



                 Subpart H_Rules, Regulations and Forms



Sec. 70.701  Rules and regulations.

    (a) Formulation. (1) Alcohol, tobacco, and firearms rules take 
various forms. The most important rules are issued as Treasury 
decisions, prescribed by the Administrator, and approved by the 
Secretary. Other rules may be issued

[[Page 349]]

over the signature of the Administrator or the signature of any 
appropriate TTB officer. The channeling of rules varies with the 
circumstances. Treasury decisions are prepared within the appropriate 
TTB offices. After approval by the Administrator, Treasury decisions are 
forwarded to the Secretary for further consideration and final approval.
    (2) Where required by 5 U.S.C. 553, the Administrator publishes in 
the Federal Register general notice of proposed rules unless all persons 
subject thereto are named and either personally served or otherwise have 
actual notice thereof in accordance with law. Notice may also be 
published in the Federal Register in such other instances as may be 
desirable. This notice includes (i) a statement of the time, place, and 
nature of public rulemaking proceedings; (ii) reference to the authority 
under which the rule is proposed; and (iii) either the terms or 
substance of the proposed rule or a description of the subjects and 
issues involved. Interested persons may participate in the rulemaking by 
submitting written data, views, or arguments. Persons may also submit 
requests for a public hearing. However, the Bureau reserves the right to 
determine, in the light of all circumstances, whether a public hearing 
should be held.
    (3) If the Bureau determines that the public good will be served 
thereby, it may hold a public hearing for discussion of the issues 
raised by the proposed regulations. Such a hearing is announced by a 
notice in the Federal Register, stating the time and place where the 
hearing is to be held. The following rules govern the conduct of the 
public hearing only if incorporated by reference in the notice 
announcing the hearing:
    (i) A person wishing to make oral comments at a public hearing shall 
submit, within the time prescribed in the notice of hearing, an outline 
of the topics he wishes to discuss, and the time he wishes to devote to 
each topic. Ordinarily, a period of 10 minutes is the time allotted to 
each person for making his oral comments.
    (ii) A person making oral comments should be prepared to answer 
questions not only on the topics listed in his outline but also on 
matters relating to any written comments which he has submitted.
    (iii) At the conclusion of the presentation of comments of persons 
listed in the agenda, to the extent time permits, other comments will be 
received.
    (iv) Written comments submitted prior to the hearing shall be 
available at the hearing for inspection. Any request for copies of such 
written comments is treated as a request for records under 27 CFR 
70.802(g).
    (v) To the extent resources permit, the public hearings to which 
this paragraph applies may be transcribed.
    (vi) In unusual circumstances or for good cause shown, the 
application of rules contained in this paragraph may be waived.
    (b) Comments on proposed rules. Interested persons may submit data, 
views, or arguments with respect to a notice of proposed rulemaking 
published pursuant to 5 U.S.C. 553. Procedures are provided in Sec. 
70.802(g) for members of the public to inspect and obtain copies of 
written comments submitted in response to proposed rules. All such 
comments are open in their entirety to public inspection. Therefore, the 
Bureau does not recognize any designation of material in comments as 
confidential or not to be disclosed, and any material that the commenter 
considers to be confidential or inappropriate for disclosure to the 
public should not be included in his comments. The name of any person 
submitting comments or requesting a public hearing, the issues which may 
be discussed at the hearing, and outlines relating to the hearing are 
open to public disclosure. (See paragraph (a)(3) of this section for 
rules relating to hearing outlines.)
    (c) Petition to change rules. Interested persons may petition for 
the issuance, amendment, or repeal of a rule. A petition for the 
issuance of a rule shall identify the section or sections of law 
involved; and a petition for the amendment or repeal of a rule shall set 
forth the section or sections of the regulations involved. The petition 
shall set forth the reasons for the requested action. Such petitions 
shall be given careful consideration, and the petitioner shall be 
advised of the action

[[Page 350]]

taken thereon. Petitions must be addressed to the Alcohol and Tobacco 
Tax and Trade Bureau, Washington, DC 20220.
    (d) Publication of rules and regulations--(1) General. All Alcohol 
and Tobacco Tax and Trade Bureau regulations and amendments thereto are 
published as Treasury Decisions which appear in the Federal Register, 
the Code of Federal Regulations, and the quarterly Alcohol and Tobacco 
Tax and Trade Bureau (TTB) Bulletin. The TTB Bulletin is the 
authoritative instrument of the Bureau for announcing Treasury 
decisions, legislation, administrative matters, and other items of 
general interest. The Bulletin incorporates, into one publication, all 
matters of the Bureau which are of public record. It is the policy of 
the Bureau to publish in the Bulletin all substantive rulings necessary 
to promote a uniform application of all laws administered by the Bureau 
as well as rulings that supersede, revoke, modify, or amend any of those 
previously published in the Bulletin (including those published prior to 
July 1, 1972, in the Internal Revenue Bulletin). Procedures relating 
solely to matters of internal management are not published; however, 
regulations appearing in internal management documents and statements of 
internal practices and procedures that affect the rights and duties of 
the public are published. Rulings and procedures reported in the 
Bulletin do not have the force and effect of Department of the Treasury 
Regulations, but they may be used as precedents. In applying published 
rulings and procedures, the effect of subsequent legislation, 
regulations, court decisions, rulings, and procedures must be 
considered. Concerned parties are cautioned against reaching the same 
conclusion in other cases unless the facts and circumstances are 
substantially the same. The Bulletin is published quarterly and may be 
obtained, on a subscription basis, from the Superintendent of Documents, 
U.S. Government Printing Office, Washington, DC 20402.
    (2) Objectives and standards for publication of TTB Rulings and TTB 
Procedures in the Alcohol, Tobacco and Firearms Bulletin. (i)(A) An 
``TTB Ruling'' is an official interpretation by the Bureau that has been 
published in the Bulletin for the information and guidance of taxpayers, 
Bureau officers, and others concerned. TTB Rulings represent the 
conclusions of the Bureau on the application of the law to the entire 
state of facts involved. In those that are based on positions taken in 
rulings to industry members or technical advice to Bureau field offices, 
identifying details and confidential information are deleted to prevent 
unwarranted invasions of privacy and to comply with statutory 
requirements concerning disclosure of information obtained from the 
public.
    (B) An ``TTB Procedure'' is a statement of procedure that affects 
the rights or duties of taxpayers or other members of the public under 
law and regulations administered by the Bureau or information that, 
although not necessarily affecting the rights and duties of the public, 
should be a matter of public knowledge. TTB Procedures establish methods 
for performing operations in compliance with the requirements of law and 
regulations. It is Bureau practice to publish as much of the internal 
management document or communication as is necessary for an 
understanding of the procedure. TTB Procedures may also be based on 
internal management documents which should be a matter of public 
knowledge even though not necessarily affecting the rights or duties of 
the public.
    (ii) It is the policy of the Bureau to publish in the Bulletin all 
rulings and other communications to members of the public or to Bureau 
field offices involving substantive law, procedures affecting taxpayer's 
rights or duties, or industry regulations, except those involving:
    (A) Issues specifically and clearly covered by statute or 
regulations;
    (B) Issues specifically covered by rulings, procedures, opinions, or 
court decisions previously published in the Bulletin;
    (C) Issues not likely to arise again because of unique or specific 
facts;
    (D) Determinations of fact rather than interpretations of law;
    (E) Acceptability under the law and regulations of containers, 
labels, and advertising involving alcoholic beverages;

[[Page 351]]

    (F) Tobacco operations, such as the disposition of abandoned, 
seized, or condemned tobacco products;
    (G) Informers and informers' rewards; or
    (H) Disclosure of secret formulas, processes, business practices, 
and other similar information.
    (iii)(A) It is the practice of the Bureau to publish as much of the 
ruling or communication as is necessary for an understanding of the 
position stated. However, in order to prevent unwarranted invasions of 
personal privacy and to comply with statutory provisions, such as 18 
U.S.C. 1905 and 26 U.S.C 6103 and 7213, dealing with disclosure of 
information obtained from members of the public, identifying details, 
including the names and addresses of persons involved, and information 
of a confidential nature are deleted from the ruling.
    (B) TTB Rulings published in the Bulletin do not have the force and 
effect of Department of the Treasury Regulations (including amendatory 
Treasury decisions) but are published to provide precedents to be used 
in the disposition of other cases, and may be cited and relied upon for 
that purpose. No unpublished ruling or decision may be relied on, used, 
or cited by any officer or employee of the Bureau as a precedent in the 
disposition of other cases.
    (C) Concerned persons generally may rely upon TTB Rulings published 
in the Bulletin in determining the Bureau treatment of their own 
transactions and need not request specific rulings applying the 
principles of a published TTB Ruling to the facts of their particular 
cases. However, since each TTB Ruling represents the conclusion of the 
Bureau as to the application of the law to the entire state of facts 
involved, taxpayers, Bureau personnel, and others concerned are 
cautioned against reaching the same conclusion in other cases unless the 
facts and circumstances are substantially the same. They should consider 
the effect of subsequent legislation, regulations, court decisions and 
TTB Rulings.
    (D) Comments and suggestions from taxpayers or other concerned 
persons on TTB Rulings being prepared for publication in the Bulletin 
may be solicited, if justified by special circumstances. Conferences on 
TTB Rulings being prepared for publication will not be granted except 
where the Bureau determines that such action is justified by special 
circumstances.
    (iv)(A) The appropriate TTB officer is responsible for administering 
the program for the publication of TTB Rulings and TTB Procedures in the 
Bulletin including the standards for style and format.
    (B) In accordance with the standards set forth in paragraph 
(d)(2)(ii) of this section, each appropriate TTB officer is responsible 
for the preparation and appropriate referral for publication of TTB 
Rulings reflecting interpretations of substantive law made by his office 
and communicated in writing to members of the public or field offices. 
In this connection, the Chief Counsel is responsible for the referral to 
the appropriate TTB officer, for consideration for publication as TTB 
rulings, of interpretations of substantive law made by his office.
    (C) In accordance with the standards set forth in paragraph 
(d)(2)(ii) of this section, the appropriate TTB officers and the Chief 
Counsel are responsible for determining whether procedures established 
by an office under their jurisdiction should be published as TTB 
Procedures and for the initiation, content, and appropriate referral for 
publication of such TTB Procedures.

[T.D. ATF-47, 43 FR 10687, Mar. 15, 1978, as amended by T.D. ATF-201, 50 
FR 12533, Mar. 29, 1985; T.D. ATF-249, 52 FR 5962, Feb. 27, 1987; 
Redesignated and amended by T.D. ATF-378, 61 FR 29955, June 13, 1996; 
T.D. ATF-432, 65 FR 69253, Nov. 16, 2000; T.D. ATF-450, 66 FR 29030, May 
29, 2001]



Sec. 70.702  Forms and instructions.

    (a) Tax return forms and instructions. Tax forms and instructions 
are developed by the Bureau to explain the requirements of Chapters 32, 
51, 52, and 53 of Title 26 of the United States Code or regulations 
issued thereunder, and are issued for the assistance of taxpayers in 
exercising their rights and discharging their duties under such laws and 
regulations. The tax return forms are the instruments through which 
taxes are collected.

[[Page 352]]

    (b) Other forms and instructions. The Bureau provides other 
necessary or appropriate forms for assisting the public in complying 
with the technical requirements of the laws and regulations administered 
by the Bureau. The material contained in the forms and instructions, and 
the arrangement thereof, is carefully considered and is designed to lead 
the preparer step-by-step through an orderly accumulation of data to an 
accurate report of the information required.
    (c) Procurement of forms and instructions. Forms prescribed by this 
part are available as provided in Sec. 70.2(b).

[T.D. ATF-47, 43 FR 10687, Mar. 15, 1978, as amended by T.D. ATF-92, 46 
FR 46914, Sept. 23, 1981; T.D. ATF-249, 52 FR 5962, Feb. 27, 1987; T.D. 
372, 61 FR 20724, May 8, 1996. Redesignated and amended by T.D. ATF-378, 
61 FR 29955, June 13, 1996]



                          Subpart I_Disclosure



Sec. 70.801  Publicity of information.

    For information relating to the disclosure of records that is not 
contained in this Subpart I, see 31 CFR Part 1 and the Appendix of that 
Part relating to the Bureau of Alcohol, Tobacco and Firearms. Direct 
further questions to the Alcohol and Tobacco Tax and Trade Bureau, 
Washington, DC 20220, (202) 927-8210.

[T.D. ATF-378, 61 FR 29955, June 13, 1996, as amended by T.D. ATF-450, 
66 FR 29030, May 29, 2001]



Sec. 70.802  Rules for disclosure of certain specified matters.

    (a) Accepted offers in compromise. For each offer in compromise 
submitted and accepted pursuant to 26 U.S.C. 7122 in any case arising 
under Chapter 32 (relating to firearms and ammunition excise taxes) and 
Subtitle E (relating to alcohol, tobacco, and certain other excise 
taxes) of Title 26 of the United States Code, under section 107 of the 
Federal Alcohol Administration Act (27 U.S.C. 207) in any case arising 
under that Act, or in connection with property seized under Title I of 
the Gun Control Act of 1968 (18 U.S.C., Chapter 44) or title XI of the 
Organized Crime Control Act of 1970 (18 U.S.C., Chapter 40), a copy of 
the abstract and statement relating to the offer shall be kept available 
for public inspection, for a period of 1 year from the date of 
acceptance, with the appropriate ATF officer, Bureau of Alcohol, Tobacco 
and Firearms, Washington, DC 20226. Information may not be disclosed, 
however, concerning any trade secrets, processes, operations, style of 
work, apparatus, confidential data, or any other matter within the 
prohibition of 18 U.S.C. 1905. ``Return information'' (defined at 26 
U.S.C. 6103 (b)) may not be disclosed except as provided by 26 U.S.C. 
6103 (k) (1).
    (b) Information regarding liquor permits--(1) Applications for 
permits. Information with respect to the handling of applications for 
basic permits under the Federal Alcohol Administration Act (27 U.S.C. 
204) is maintained for public inspection until the expiration of 1 year 
following final action on these applications. See Sec. 1.59 of this 
chapter for more details.
    (c) List of plants and permittees. Upon request, the appropriate TTB 
officer shall furnish a list of any type of qualified proprietor or 
permittee if the disclosure is not prohibited by law.
    (d) Information relating to certificates of label approval for 
distilled spirits, wine, and malt beverages. Upon written request, the 
appropriate TTB officer, Alcohol and Tobacco Tax and Trade Bureau, 
Washington, DC 20220, shall furnish information as to the issuance, 
pursuant to section 105(e) of the Federal Alcohol Administration Act (27 
U.S.C. 205(e)) and Part 4, 5, or 7 of this chapter, of certificates of 
label approval, or of exemption from label approval, for distilled 
spirits, wine, or malt beverages. The request must identify the class 
and type and brand name of the product and the name and address of the 
bottler or importer thereof or of the person to whom the certificate was 
issued. The person making the request may obtain reproductions or 
certified copies of such certificates upon payment of the established 
fees prescribed by 31 CFR 1.7. Information will not be disclosed, 
however, concerning any trade secrets, processes, operations, style of 
work, apparatus, confidential data, or any other matter prohibited by 
statutes such as but not limited to 18 U.S.C. 1905 or 26 U.S.C. 6103.

[[Page 353]]

    (e) True identity of companies authorized to use trade names. 
Information regarding the true identity (name and address) of companies 
authorized to use trade names is available from the appropriate TTB 
officer, for disclosure upon request to any member of the public.
    (f) Information relating to the tax classification of a roll of 
tobacco wrapped in reconstituted tobacco. Upon written request, the 
appropriate TTB officer, Alcohol and Tobacco Tax and Trade Bureau, 
Washington, DC 20220, shall furnish information as to a Bureau 
determination of the tax classification of a roll of tobacco wrapped in 
reconstituted tobacco. The request must identify the brand name of the 
product and the name and address of the manufacturer or importer. 
Information may not be disclosed, however, concerning any trade secrets, 
processes, operations, apparatus, confidential data, or any other matter 
prohibited by statutes such as but not limited to 26 U.S.C. 6103 or 18 
U.S.C. 1905.
    (g) Comments received in response to a notice of proposed 
rulemaking. Written comments received in response to a notice of 
proposed rulemaking may be inspected by any person upon compliance with 
the provisions of this paragraph. Comments may be inspected in the 
Alcohol and Tobacco Tax and Trade Bureau, Washington, DC 20220. The 
request to inspect comments must be in writing and signed by the person 
making the request and should be addressed to the appropriate TTB 
officer. Upon delivery of such a written request to the place where the 
comments are located during the regular business hours of that office, 
the person making the request may inspect those comments. Copies of 
comments (or portions thereof) may be obtained by a written request 
addressed to the appropriate TTB officer. The person making the request 
for copies should allow a reasonable time for processing the request. 
The provisions of 31 CFR 1.7, relating to fees, apply with respect to 
requests made in accordance with this paragraph.

(27 U.S.C. 205; 22 U.S.C. 2778; 26 U.S.C. 7602; 5 U.S.C. 301)

[T.D. ATF-47, 43 FR 10687, Mar. 15, 1978, as amended by T.D. ATF-57, 44 
FR 20794, May 9, 1979; T.D. ATF-201, 50 FR 12533, Mar. 29, 1985; T.D. 
ATF-249, 52 FR 5961, Feb. 27, 1987. Redesignated and amended by T.D. 
ATF-378, 61 FR 29955, 29956, June 13, 1996; T.D. ATF-450, 66 FR 29030, 
May 29, 2001]



Sec. 70.803  Requests or demands for disclosure in testimony and in related 

matters.

    (a) Authority. The provisions of this section are prescribed under 
the authority of 5 U.S.C. 301; section 2 of Reorganization Plan No. 26 
of 1950 (64 Stat. 1280); 12 U.S.C. 3412; 18 U.S.C. 1905; section 2(g) of 
the Federal Alcohol Administration Act (27 U.S.C. 202(c)); and sections 
5274, 6103, 7213, 7803 and 7805 of the Internal Revenue Code of 1954 (26 
U.S.C. 5274, 6103, 7213, 7803 and 7805).
    (b) Definitions. The following definitions apply whenever the 
defined terms appear in this section.
    (1) TTB officer or employee. The terms TTB officer and TTB employee 
mean all officers and employees of the United States, engaged in the 
administration and enforcement of laws administered by the Alcohol and 
Tobacco Tax and Trade Bureau, and appointed or employed by, or subject 
to the directions, instructions or orders of, the Secretary of the 
Treasury or his delegate.
    (2) TTB records or information. The terms TTB records and TTB 
information mean any records (including copies thereof) or information, 
made or obtained by, furnished to, or coming to the knowledge of, any 
TTB officer or employee while acting in his official capacity, or 
because of his official status, with respect to the administration of 
laws administered by or concerning the Alcohol and Tobacco Tax and Trade 
Bureau.
    (3) Demand. The term demand means any subpoena, notice of deposition 
either upon oral examination or written interrogatory, or other order, 
of any court, administrative agency, or other authority.
    (c) Disclosure of TTB records or information prohibited without 
prior approval

[[Page 354]]

of the appropriate TTB officer. The disclosure, including the 
production, of TTB records or information to any person outside the 
Department of the Treasury or to any court, administrative agency, or 
other authority, in response to any request or demand for the disclosure 
of such records or information shall be made only with the prior 
approval of the appropriate TTB officer. However, nothing in this 
section restricts the disclosure of TTB records or information for which 
the appropriate TTB officer has determined that the disclosure is 
authorized under any provision of statute, Executive order, or 
regulations, or for which a procedure has been established by the 
Administrator. For example, this section does not restrict the 
disclosure of TTB records or information under Sec. 71.22, nor does it 
restrict the disclosure of TTB records or information which is requested 
by U.S. attorneys or attorneys of the Department of Justice for use in 
cases which arise under the laws administered by or concerning the 
Alcohol and Tobacco Tax and Trade Bureau and which are referred by the 
Department of the Treasury to the Department of Justice for prosecution 
or defense.
    (d) Delegation of authority to determine disclosure and establish 
procedures. The appropriate TTB officer is hereby authorized to 
determine whether or not TTB officers and employees will be permitted to 
disclose TTB records or information in response to:
    (1) A request by any court, administrative agency, or other 
authority, or by any person, for the disclosure of such records or 
information; or
    (2) A demand for the disclosure of such records or information.
    (3) The Administrator is also authorized to establish such other 
procedures as he or she may deem necessary with respect to the 
disclosure of TTB records or information by TTB officers and employees. 
Any determination by the appropriate TTB officer as to whether TTB 
records or information will be disclosed, or any procedure established 
by the Administrator in connection therewith, must be made in accordance 
with applicable statutes, Executive orders, regulations, and any 
instructions that may be issued by the Secretary. Notwithstanding the 
preceding provisions of this paragraph, the appropriate TTB officer 
shall, where either the Secretary or such officer deems it appropriate, 
refer the opposing of a request or demand for disclosure of TTB records 
or information to the Secretary.
    (e) Procedure in the event of a request or demand for TTB records or 
information--(1) Request procedure. Any TTB officer or employee who 
receives a request for TTB records or information, the disposition of 
which is not covered by a procedure established by the Administrator, 
must promptly communicate the contents of the request to the appropriate 
TTB officer. The officer or employee must await instructions from the 
appropriate TTB officer concerning the response to the request.
    (2) Demand procedure. Any TTB officer or employee who is served with 
a demand for TTB records or information, the disposition of which is not 
covered by a procedure established by the Administrator, must promptly, 
and without awaiting appearance before the court, administrative agency, 
or other authority, communicate the contents of the demand to the 
appropriate TTB officer. The TTB officer or employee must await 
instructions from the appropriate TTB officer concerning the response to 
the demand. If it is determined by the appropriate TTB officer that the 
demand should be opposed, the U.S. attorney, his or her assistant, or 
other appropriate legal representative shall be requested to 
respectfully inform the court, administrative agency, or other authority 
that the appropriate TTB officer has instructed the TTB officer or 
employee to refuse to disclose the TTB records or information sought. If 
instructions have not been received from the appropriate TTB officer at 
the time when the TTB officer or employee is required to appear before 
the court, administrative agency, or other authority in response to the 
demand, the U.S. attorney, his or her assistant, or other appropriate 
legal representative must be requested to appear with the TTB officer or 
employee upon whom the demand has been served and request additional

[[Page 355]]

time in which to receive such instructions. In the event the court, 
administrative agency, or other authority rules adversely with respect 
to the refusal to disclose the records or information pursuant to the 
instructions of the appropriate TTB officer, or declines to defer a 
ruling until instructions from the appropriate TTB officer have been 
received, the TTB officer or employee upon whom the demand has been 
served must, pursuant to this section, respectfully decline to disclose 
the TTB records or information sought.
    (3) Affidavit required for testimony. If testimony of an TTB officer 
or employee is sought by a request or demand on behalf of a party other 
than a State in any case or matter in which the United States is not a 
party, an affidavit, or if that is not feasible, a statement shall be 
submitted. The affidavit or statement shall be prepared by the party (or 
party's attorney) seeking the testimony, and shall set forth a summary 
of the testimony sought and its relevance to the proceedings. The 
affidavit or statement must be submitted before permission to testify 
may be granted. The appropriate TTB officer may, upon request and for 
good cause shown, waive the requirement of this paragraph.
    (4) Time limit for serving request or demand. The request or demand, 
together with the affidavit or statement (if required by paragraph 
(e)(3) of this section), must be served at least 5 working days prior to 
the scheduled date of testimony or disclosure of records, in order to 
ensure that the appropriate TTB officer has adequate time to consider 
whether to grant the request or demand. The appropriate TTB officer may, 
upon request and for good cause shown, waive the requirement of this 
paragraph.
    (5) Factors to be considered in determining whether a request or 
demand will be granted. The appropriate TTB officer must consider 
whether granting the request or demand would be appropriate under the 
relevant rules of procedure and substantive law concerning privilege. 
Among the requests or demands that will not be granted are those that 
would, if granted, result in--
    (i) The violation of a statute, such as 26 U.S.C. 6103 or 7213, or a 
rule of procedure, such as the grand jury secrecy rule (F.R.Cr.P. Rule 
6(e)), or a specific regulation;
    (ii) The disclosure of classified information;
    (iii) The disclosure of a confidential source or informant, unless 
the TTB officer or employee and the source or informant, have no 
objection;
    (iv) The disclosure of investigative records compiled for law 
enforcement purposes if enforcement proceedings would thereby be 
impeded, or of investigative techniques and procedures whose 
effectiveness would thereby be impaired, unless the appropriate TTB 
officer determines that the administration of justice requires 
disclosure;
    (v) The disclosure of trade secrets without the owner's consent; or
    (vi) Testimony in a case in which TTB has no interest, records or 
other official information.
    (f) State cases. The appropriate TTBF officer, may, in the interest 
of Federal and State law enforcement, upon receipt of demands or 
requests of State authorities, and at the expense of the State, 
authorize employees under their supervision to attend trials and 
administrative hearings in liquor, tobacco, firearms, or explosives 
cases in which the State is a party or on behalf of the State in any 
criminal case, to produce records, and to testify as to facts coming to 
their knowledge in their official capacities. However, in cases where a 
defendant in a criminal case requests or demands testimony or the 
production of ATF records or information, authorization from the 
appropriate ATF officer is required. Production or testimony may not 
divulge information contrary to 26 U.S.C. 6103 and 7213, or 12 U.S.C. 
3412. See also 18 U.S.C. 1905.
    (g) Penalties. Any TTB officer or employee who disobeys the 
provisions of this section will be subject to dismissal and may incur 
criminal liability.

[T.D ATF-57, 44 FR 27094, May 9, 1979, as amended by T.D. ATF-302, 55 FR 
47325, Nov. 13, 1990. Redesignated by T.D. ATF-378, 61 FR 29955, June 
13, 1996, as amended by T.D. ATF-446a, 66 FR 19089, Apr. 13, 2001; T.D. 
ATF-450, 66 FR 29030, May 29, 2001]

[[Page 356]]



PART 71_RULES OF PRACTICE IN PERMIT PROCEEDINGS--Table of Contents




             Subpart A_Scope and Construction of Regulations

Sec.
71.1 Scope of part.
71.2 Liberal construction.
71.3 Forms prescribed.
71.4 Delegations of the Administrator.

                          Subpart B_Definitions

71.5 Meaning of terms.

                            Subpart C_General

71.25 Communications and pleadings.
71.26 Service on applicant or respondent.
71.27 Service on the appropriate TTB officer or Administrator.

                                  Time

71.28 Computation.
71.29 Continuances and extensions.

                       Representation at Hearings

71.30 Personal representation.
71.31 Attorneys and other representatives.

                   Subpart D_Compliance and Settlement

71.35 Opportunity for compliance.

                           Informal Settlement

71.36 General.
71.37 Notice of contemplated action.
71.38 Limitation on informal settlement.

                     Subpart E_Grounds for Citation

71.45 Basic permits.
71.46 Tobacco permits.
71.48 Operating permits and industrial use permits.
71.49 Applications for basic permits.
71.49a Applications for operating permits and industrial use permits.
71.49b Applications for tobacco permits.

                       Subpart F_Hearing Procedure

                                Citations

71.55 Content.
71.56 Form.
71.57 Execution and disposition.
71.58 Designated place of hearing.

                           Request for Hearing

71.59 Application cases.
71.60 Suspension, revocation, or annulment proceedings.
71.61 Notice of hearing.

                         Non-Request for Hearing

71.62 Application.
71.63 Suspension, revocation, or annulment proceedings.

                                 Answers

71.64 When required.
71.65 Answer admitting facts.
71.66 Prehearing conferences.

                            Failure to Appear

71.67 Applications.
71.68 [Reserved]
71.69 Suspension, revocation, or annulment.

                            Waiver of Hearing

71.70 Application proceedings.
71.71 Adjudication based upon written submissions.

                           Surrender of Permit

71.72 Before citation.
71.73 After citation.

                                 Motions

71.74 General.
71.75 Prior to hearing.
71.76 At hearing.

                                 Hearing

71.77 General.
71.78 Applications.
71.79 Suspension, revocation, or annulment.

                             Burden of Proof

71.80 Applications.
71.81 Suspension, revocation, or annulment.

                                 General

71.82 Stipulations at hearing.
71.83 Evidence.
71.84 Closing of hearings; arguments, briefs and proposed findings.
71.85 Reopening of the hearing.

                           Record of Testimony

71.86 Stenographic record.
71.87 Oath of reporter.

                   Subpart G_Administrative Law Judges

71.95 Responsibilities of administrative law judges.
71.96 Disqualification.
71.97 Powers.
71.98 Separation of functions.
71.99 Conduct of hearing.
71.100 Unavailability of administrative law judge.

                           Subpart H_Decisions

71.105 Administrative law judge's finding and decision or recommended 
          decision.

[[Page 357]]

71.106 Certification and transmittal of record and decision.

                  Action by the appropriate TTB officer

71.107 Application proceedings.
71.107a Appropriate TTB officer's decision.
71.108 Suspension, revocation, or annulment proceedings.
71.109 Notice to Administrator.
71.110 Proceedings involving violations not within region of issuance of 
          permit.

                            Subpart I_Review

71.115 Appeal on petition to the Administrator.
71.116 Review by Administrator.
71.117 Permit privileges, exceptions.
71.118 Court review.
71.119 [Reserved]

                         Subpart J_Miscellaneous

71.125 Depositions.
71.126 Subpoenas.
71.127 Witnesses and fees.

                                 Record

71.128 What constitutes record.
71.129 Availability.

    Authority: 26 U.S.C. 5271, 5181, 5713, 7805, 27 U.S.C. 204.

    Source: 21 FR 1441, Mar. 6, 1956, unless otherwise noted. 
Redesignated at 40 FR 16835, Apr. 15, 1975, and further redesignated by 
T.D. ATF-463, 66 FR 42734, Aug. 15, 2001.

    Editorial Note: Nomenclature changes to part 71 appear by T.D. ATF-
414, 64 FR 49084, Sept. 10, 1999and T.D. ATF-463, 66 FR 42734, 42735, 
Aug. 15, 2001.



             Subpart A_Scope and Construction of Regulations



Sec. 71.1  Scope of part.

    The regulations in this part govern the procedure and practice in 
connection with the disapproval of applications for basic permits, and 
for the suspension, revocation and annulment of such permits under 
sections 3 and 4 of the Federal Alcohol Administration Act (27 U.S.C. 
201 et seq.) and disapproval, suspension, and revocation of permits 
under title 26 of the U.S. Code. The regulations in this part shall also 
govern, insofar as applicable, any adversary proceeding involving 
adjudication required by statute to be determined on the record after 
opportunity for hearing, under laws administered by the Alcohol and 
Tobacco Tax and Trade Bureau.

[21 FR 1441, Mar. 6, 1956, as amended by T.D. 6389, 24 FR 4790, June 12, 
1959. Redesignated at 40 FR 16835, Apr. 15, 1975]

    Editorial Note: For Federal Register citations affecting Sec. 71.1, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 71.2  Liberal construction.

    The regulations in this part shall be liberally contrued to secure 
just, expeditious, and efficient determination of the issues presented. 
The Rules of Civil Procedure for the U.S. District Courts (28 U.S.C. 
appendix), where applicable, shall be a guide in any situation not 
provided for or controlled by this part but shall be liberally construed 
or relaxed when necessary.

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[T.D. ATF-92, 46 FR 46917, Sept. 23, 1981]



Sec. 71.3  Forms prescribed.

    (a) The appropriate TTB officer is authorized to prescribe all forms 
required by this part. All of the information called for in each form 
shall be furnished as indicated by the headings on the form and the 
instructions on or pertaining to the form. In addition, information 
called for in each form shall be furnished as required by this part.
    (b) Forms prescribed by this part are available for printing through 
the TTB Web site (http://www.ttb.gov) or by mailing a request to the 
Alcohol and Tobacco Tax and Trade Bureau, National Revenue Center, 550 
Main Street, Room 1516, Cincinnati, OH 45202.

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[T.D. ATF-92, 46 FR 46918, Sept. 23, 1981, as amended by T.D. ATF-372, 
61 FR 20725, May 8, 1996; T.D. TTB-44, 71 FR 16964, Apr. 4, 2006]



Sec. 71.4  Delegations of the Administrator.

    Most of the regulatory authorities of the Administrator contained in 
this part are delegated to appropriate TTB officers. These TTB officers 
are specified in TTB Order 1135.71, Delegation of the Administrator's 
Authorities in 27 CFR Part 71, Rules of Practice in Permit Proceedings. 
You may obtain a copy of this order by accessing the TTB

[[Page 358]]

Web site (http://www.ttb.gov) or by mailing a request to the Alcohol and 
Tobacco Tax and Trade Bureau, National Revenue Center, 550 Main Street, 
Room 1516, Cincinnati, OH 45202.

[T.D. TTB-44, 71 FR 16964, Apr. 4, 2006]



                          Subpart B_Definitions



Sec. 71.5  Meaning of terms.

    When used in this part and in forms prescribed under this part, 
where not otherwise distinctly expressed or manifestly incompatible with 
the intent thereof, terms shall have the meaning ascribed in this 
subpart. Words in the plural form shall include the singular, and vice 
versa, and words importing the masculine gender shall include the 
feminine. The terms ``include'' and ``including'' do not exclude things 
not enumerated which are in the same general class.
    Administrative law judge. The person appointed pursuant to 5 U.S.C. 
3105, designated to preside over any administrative proceedings under 
this part.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury, Washington, DC.
    Applicant. Any person who has filed an initial application for a 
permit under the Federal Alcohol Administration Act or the Internal 
Revenue Code (26 U.S.C.).
    Application. Any application for a permit under the Federal Alcohol 
Administration Act or the Internal Revenue Code (26 U.S.C.) for 
operations not covered by an existing permit.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions 
relating to the administration or enforcement of this part by TTB Order 
1135.71, Delegation of the Administrator's Authorities in 27 CFR Part 
71, Rules of Practice in Permit Proceedings.
    Attorney for the Government. The attorney in the appropriate office 
of Chief Counsel authorized to represent the appropriate TTB officer in 
the proceeding.
    CFR. The Code of Federal Regulations.
    Citation. Includes any notice contemplating the disapproval of an 
application or any order to show cause why a permit should not be 
suspended, revoked or annulled.
    Initial decision. The decision of the appropriate TTB officer or 
administrative law judge in a proceeding on the suspension, revocation 
or annulment of a permit.
    Other term. Any other term defined in the Federal Alcohol 
Administration Act (27 U.S.C. 201), the Internal Revenue Code (26 
U.S.C.) or the Administrative Procedure Act (5 U.S.C. 1001), where used 
in this part, shall have the meaning assigned to it therein.
    Permit--(a) Alcohol fuel permit. The document issued under 26 U.S.C. 
5181, authorizing the person named therein to engage in the business 
described therein.
    (b) Basic permit. The document authorizing the person named therein 
to engage in a designated business or activity under the Federal Alcohol 
Administration Act.
    (c) Industrial use permit. The document issued under 26 U.S.C. 
5271(a), authorizing the person named therein to withdraw and use 
distilled spirits free of tax in accordance with part 22 of this 
chapter, or withdraw and deal in or use specially denatured spirits in 
accordance with part 20 of this chapter, as described therein.
    (d) Operating permit. The document issued under 26 U.S.C. 5171, 
authorizing the person named therein to engage in the business described 
therein.
    (e) Tobacco permit. The document issued under 26 U.S.C. 5713(a), 
authorizing the person named therein to engage in the business described 
therein.
    Permittee. Any person holding a basic permit under the Federal 
Alcohol Administration Act or the Internal Revenue Code (26 U.S.C.).
    Person. An individual, trust, estate, partnership, association, 
company, or corporation.
    Recommended decision. The advisory decision of the administrative 
law judge in any proceeding on an initial application for a permit.
    Respondent. Any person holding a permit against which an order has 
been issued to show cause why such permit

[[Page 359]]

should not be suspended, revoked or annulled.

[T.D. ATF-48, 43 FR 13543, Mar. 31, 1978; 44 FR 55845, Sept. 28, 1978, 
and amended by T.D. ATF-62, 44 FR 71696, Dec. 11, 1979; T.D. ATF-199, 50 
FR 9196, Mar. 6, 1985; T.D ATF-244, 51 FR 45762, Dec. 22, 1986; T.D. 
ATF-374, 61 FR 29956, June 13, 1996; T.D. ATF-414, 64 FR 49084, Sept. 
10, 1999; T.D. TTB-44, 71 FR 16964, Apr. 4, 2006]



                            Subpart C_General



Sec. 71.25  Communications and pleadings.

    All communications to the Government regarding the procedures set 
forth in this part and all pleadings, such as answers, motions, 
requests, or other papers or documents required or permitted to be filed 
under this part, relating to a proceeding pending before an 
administrative law judge, shall be addressed to the administrative law 
judge, at his post of duty or to the administrative law judge, in care 
of the appropriate TTB officer to be forwarded to the examiner. 
Communications concerning proceedings not pending before an 
administrative law judge, should be addressed to the appropriate TTB 
officer or the Administrator, as the case may be. All pleadings should 
be filed in quadruplicate.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-374, 61 FR 29957, June 13, 1996]



Sec. 71.26  Service on applicant or respondent.

    All orders, notices, citations, motions and other formal documents, 
except subpoenas, required to be served under the regulations in this 
part may be served by mailing a signed duplicate original copy thereof 
to the permittee or applicant by registered mail, with request for 
return receipt card, at the address stated in his permit or application 
or at his last known address, or by delivery of such original copy to 
the permittee or applicant personally, or in the case of a corporation, 
partnership, or other unincorporated association, by delivering the same 
to an officer, or manager, or general agent thereof, or to its attorney 
of record. Such personal service may be made by any employee of the 
Alcohol and Tobacco Tax and Trade Bureau or by any employee of the 
Treasury Department designated by the Secretary. A certificate of 
mailing and the return receipt card, or certificate of service signed by 
the person making such service, shall be filed as a part of the record.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55846, Sept. 28, 1979]



Sec. 71.27  Service on the appropriate TTB officer or Administrator.

    Pleadings, motions, notices, and other formal documents, except 
subpoenas, may be served, by registered mail or personally, on the 
appropriate TTB officer (or upon the attorney for the Government on 
behalf of the appropriate TTB officer, or on the Administrator, if the 
proceeding is before him for review on appeal.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-374, 61 FR 29957, June 13, 1996]

                                  Time



Sec. 71.28  Computation.

    In computing any period of time prescribed or allowed by this part, 
the day of the act, event or default after which the designated period 
of time is to run, is not to be included. The last day of the period to 
be computed is to be included, unless it be a Saturday, Sunday or legal 
holiday, in which event the period runs until the next day which is 
neither a Saturday, Sunday or legal holiday. Pleading, requests, or 
other papers or documents required or permitted to be filed under this 
part must be received for filing at the appropriate office within the 
time limits, if any, for such filing.



Sec. 71.29  Continuances and extensions.

    For good cause shown, the administrative law judge, Administrator, 
or the appropriate TTB officer, as the case may be, may grant 
continuances and as to all matters pending before him extend any time 
limit prescribed

[[Page 360]]

by the regulations in this part (except where the time limit is 
statutory).

(26 U.S.C. 7805 (68A Stat. 917), 27 U.S.C. 205 (49 Stat. 981 as 
amended), 18 U.S.C. 926 (82 Stat. 959), and Sec. 38, Arms Export Control 
Act (22 U.S.C. 2778, 90 Stat. 744))

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 43 FR 13531, Mar. 31, 1978; T.D. ATF-374, 61 
FR 29957, June 13, 1996]

                       Representation at Hearings



Sec. 71.30  Personal representation.

    Any individual or member of a partnership may after adequate 
identification, appear for himself, or such partnership, and a 
corporation or association may be represented by a bona fide officer of 
such corporation or association, upon showing of adequate authorization.



Sec. 71.31  Attorneys and other representatives.

    A respondent or applicant may be represented by an attorney, 
certified public accountant, or other person enrolled to practice before 
the Alcohol and Tobacco Tax and Trade Bureau under 31 CFR part 8--
Practice before the Alcohol and Tobacco Tax and Trade Bureau. The 
representative shall file in the proceeding a duly executed power of 
attorney to represent the applicant or respondent. See 26 CFR 601.501 
through 601.527 (conference and practice requirements). The appropriate 
TTB officer shall be represented in proceedings under this part by the 
attorney for the Government who is authorize to execute and file 
motions, briefs, and other papers in the proceeding, on behalf of the 
appropriate TTB officer, in his own name as ``Attorney for the 
Government''.

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[T.D. ATF-48, 44 FR 55846, Sept. 28, 1979, as amended by T.D. ATF-92, 46 
FR 46918, Sept. 23, 1981; T.D. ATF-374, 61 FR 29957, June 13, 1996]



                   Subpart D_Compliance and Settlement



Sec. 71.35  Opportunity for compliance.

    Except in proceedings involving willfulness or those in which the 
public interest requires otherwise, and the appropriate TTB officer so 
alleges in his citation, stating his reasons therefor, no permit shall 
be suspended, revoked or annulled, unless, prior to the institution of 
proceedings, facts or conduct warranting such action shall have been 
called to the attention of the permittee by the appropriate TTB officer, 
in writing, and the permittee shall have been accorded an opportunity to 
demonstrate or achieve compliance with all lawful requirements, as set 
forth in section 9(b) of the Administrative Procedure Act. If the 
permittee fails to meet the requirements of the law and regulations 
within such reasonable time as may be specified by the appropriate TTB 
officer, proceedings for suspension, revocation or annulment of the 
permit shall be initiated.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9196, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]

                           Informal Settlement



Sec. 71.36  General.

    In all proceedings in which a permittee is cited to show cause why 
the permit should not be suspended, revoked or annulled, the permittee 
shall be afforded opportunity for the submission and consideration of 
facts, arguments, offers of settlement, or proposals of adjustment, 
where time, the nature of the proceeding, and the public interest 
permit. Such submittals should be made to the appropriate TTB officer, 
but may be made through the attorney for the Government. Where 
necessary, the date of the hearing may be postponed, pending 
consideration of such proposals, when they are made in good faith and 
not for the purpose of delay. If proposals of settlement are submitted, 
and they are considered unsatisfactory, the appropriate TTB officer may 
reject the proposals and may, either directly or through the attorney 
for the Government, inform the permittee of any conditions on which the 
alleged violations may be settled. If the proposals of settlement are 
considered satisfactory to the appropriate TTB officer, the permittee 
shall be notified thereof and the proceeding shall be dismissed, unless 
such proposals of

[[Page 361]]

settlement include a monetary offer in compromise considered 
satisfactory to the appropriate TTB officer, in which event the 
proceeding shall be held in abeyance pending final action on such 
monetary offer in compromise.

[T.D. ATF-244, 51 FR 45762, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



Sec. 71.37  Notice of contemplated action.

    Where the appropriate TTB officer believes that the matter may be 
settled informally, i.e., without formal administrative proceedings, he 
shall, in accordance with section 5 (b) of the Administrative Procedure 
Act, prior to the issuance of a citation, inform the permittee of the 
contemplated issuance of an order to show cause why his permit should 
not be suspended, revoked or annulled, and that he is being given an 
opportunity for the submission and consideration of facts, arguments, 
offers of settlement, or proposals of adjustment. The notice should 
inform the permittee of the charges on which the citation would be 
based, if issued, and afford him a period of 10 days from the date of 
the notice, or such longer period as the appropriate TTB officer deems 
necessary, in which to submit proposals of settlement to the appropriate 
TTB officer. Where informal settlement is not reached promptly because 
of inaction of the permittee or proposals are made for the purpose of 
delay, a citation shall be issued in accordance with Sec. Sec. 71.55 
and 71.56.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9196, Mar. 6, 1985; T.D. ATF-244, 51 
FR 45763, Dec. 22, 1986; T.D. ATF-374, 61 FR 29957, June 13, 1996]



Sec. 71.38  Limitation on informal settlement.

    Where the evidence is conclusive and the nature of the violation is 
such as to preclude any settlement short of suspension, revocation or 
annulment, or the violation is of a continuing character that 
necessitates immediate action to protect the public interest, or where 
the appropriate TTB officer believes that any informal settlement of the 
alleged violation will not insure future compliance with the laws and 
regulations, or in any similar case where the circumstances are such as 
to clearly preclude informal settlement, and the appropriate TTB officer 
so finds and states his reasons therefor as provided in Sec. 71.35, he 
may restrict settlement to that provided in Sec. 71.71.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]



                     Subpart E_Grounds for Citation



Sec. 71.45  Basic permits.

    Whenever the appropriate TTB officer has reason to believe that any 
person has willfully violated any of the conditions of his basic permit, 
or has not in fact or in good faith engaged in the operations authorized 
by such permit for a period of more than two years, or that such permit 
was procured through fraud, misrepresentation or concealment of material 
facts, he shall issue a citation for the suspension, revocation or 
annulment of such permit, as the case may be.

[21 FR 1441, Mar. 6, 1956, as amended by T.D. 6389, 24 FR 4790, June 12, 
1959. Redesignated at 40 FR 16835, Apr. 15, 1975, as amended by T.D. 
ATF-374, 61 FR 29957, June 13, 1996]



Sec. 71.46  Tobacco permits.

    Whenever the appropriate TTB officer has reason to believe that any 
person has not in good faith complied with any of the provisions of 26 
U.S.C. chapter 52 or regulations issued thereunder, or has not complied 
with any provision of 26 U.S.C. which involves intent to defraud, or has 
violated any of the conditions of his permit, or has failed to disclose 
any material information required, or has made any materially false 
statement, in the application for his permit, or has failed to maintain 
his premises in such manner as to protect the revenue, the appropriate 
TTB officer shall issue a citation for the revocation or suspension of 
such permit.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55846, Sept. 28, 1979; T.D. ATF-374, 
61 FR 29957, June 13, 1996]

[[Page 362]]



Sec. 71.48  Operating permits and industrial use permits.

    Whenever the appropriate TTB officer has reason to believe that any 
person who has an operating permit or an industrial use permit:
    (a) Has not in good faith complied with the provisions of 26 U.S.C. 
chapter 51 or enabling regulations; or
    (b) Has violated the conditions of such permit; or
    (c) Has made any false statement as to any material fact in his 
application therefor; or
    (d) Has failed to disclose any material information required to be 
furnished; or
    (e) Has violated or conspired to violate any law of the United 
States relating to intoxicating liquor or has been convicted of any 
offense under 26 U.S.C. punishable as a felony or of any conspiracy to 
commit such an offense; or
    (f) Is (in the case of any person who has a permit to procure or use 
distilled spirits free of tax for nonbeverage purposes and not for 
resale or use in the manufacture of any product for sale, or to procure, 
deal in, or use specially denatured distilled spirits) by reason of his 
operations, no longer warranted in procuring or using the distilled 
spirits or specially denatured distilled spirits authorized by his 
permit; or
    (g) Has, in the case of any person who has a permit to procure, deal 
in, or use specially denatured distilled spirits, manufactured articles 
which do not correspond to the descriptions and limitation prescribed by 
law and regulations; or
    (h) Has not engaged in any of the operations authorized by the 
permit for a period of more than 2 years;


He may issue a citation for the revocation or suspension of such permit.

(72 Stat. 1349, 1370; 26 U.S.C. 5171, 5271)

[T.D. 6389, 24 FR 4790, June 12, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55846, Sept. 28, 1979; T.D. 
ATF-199, 50 FR 9196 and 9197, Mar. 6, 1985; T.D. ATF-374, 61 FR 29957, 
June 13, 1996]



Sec. 71.49  Applications for basic permits.

    If, upon examination of any application (including a renewal 
application) for a basic permit, the appropriate TTB officer has reason 
to believe that the applicant is not entitled to such permit he shall 
issue a citation for the contemplated disapproval of the application.

[T.D. 6954, 33 FR 6814, May 4, 1968. Redesignated at 40 FR 16835, Apr. 
15, 1975; as amended by T.D. ATF-374, 61 FR 29957, June 13, 1996]



Sec. 71.49a  Applications for operating permits and industrial use permits.

    If, on examination of an application for an operating permit or an 
industrial use permit, the appropriate TTB officer has reason to 
believe:
    (a) In case of an application to withdraw and use distilled spirits 
free of tax, the applicant is not authorized by law or regulations 
issued pursuant thereto to withdraw or use such distilled spirits; or
    (b) The applicant (including in the case of a corporation, any 
officer, Administrator, or principal stockholder and, in the case of a 
partnership, a partner) is, by reason of the applicant's business 
experience, financial standing, or trade connections, not likely to 
maintain operations in compliance with 26 U.S.C. chapter 51 or 
implementing regulations; or
    (c) The applicant has failed to disclose any material information 
required, or has made any false statement as to any material fact, in 
connection with his application; or
    (d) The premises on which the applicant proposes to conduct the 
business are not adequate to protect the revenue;


He may issue a citation for the contemplated disapproval of the 
application.

(72 Stat. 1349, 1370; 26 U.S.C. 5171, 5271)

[T.D. 6389, 24 FR 4791, June 12, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55846, Sept. 28, 1979; T.D. 
ATF-199, 50 FR 9196 and 9197, Mar. 6, 1985; T.D. ATF-374, 61 FR 29957, 
June 13, 1996]



Sec. 71.49b  Applications for tobacco permits.

    If, on examination of an application for a tobacco permit provided 
for in 26 U.S.C. 5713, the appropriate TTB officer has reason to 
believe--

[[Page 363]]

    (a) The premises on which it is proposed to conduct the business are 
not adequate to protect the revenue; or
    (b) The applicant for a permit does not meet the minimum 
manufacturing and activity requirements in 27 CFR 40.61; or
    (c) The applicant (including, in the case of a corporation, any 
officer, Administrator, 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 26 U.S.C. chapter 52, or has failed to 
disclose any material information required or made any material false 
statement in the application; the appropriate TTB officer may issue a 
citation for the contemplated disapproval of the application.

(72 Stat. 1421; 26 U.S.C. 5712)

[T.D. 6389, 24 FR 4791, June 12, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975, and amended by T.D. ATF-48, 44 FR 55846, Sept. 28, 1979; T.D. 
ATF-374, 61 FR 29957, June 13, 1996; T.D. ATF-421, 64 FR 71923, Dec. 22, 
1999; T.D. ATF-460, 66 FR 39093, July 27, 2001]



                       Subpart F_Hearing Procedure

                                Citations



Sec. 71.55  Content.

    (a) Citation for the suspension, revocation or annulment of a permit 
shall be issued by the appropriate TTB officer and shall set forth (1) 
the sections of law and regulations relied upon for authority and 
jurisdiction, (2) in separate paragraphs, the matters of fact 
constituting the violations specified, dates, places, section of law and 
regulations violated, and (3) the permittee has 15 days within which to 
request a hearing before an administrative law judge.
    (b) Citations for the disapproval of an application for a permit 
shall set forth (1) the sections of law and regulations relied upon for 
authority and jurisdiction, (2) in separate paragraphs, the matters of 
fact and law relied upon for the contemplated disapproval of the 
application, and (3) that the application will be disapproved unless a 
hearing is requested within 15 days.

[T.D. ATF-244, 51 FR 45763, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



Sec. 71.56  Form.

    Citations shall be issued on the following forms:
    (a) Form 5000.6. ``Order To Show Cause'', shall be used for all 
citations for the suspension, revocation, or annulment, as the case may 
be, of permits under the Internal Revenue Code or the Federal Alcohol 
Administration Act.
    (b) Forms 5000.17. ``Notice of Contemplated Disapproval of 
Application For Basic Permit,'' shall be used to issue notice of 
contemplated disapproval of applications for permit.

[21 FR 1441, Mar. 6, 1956, as amended by T.D. 6389, 24 FR 4791, June 12, 
1959. Redesignated at 40 FR 16835, Apr. 15, 1975, and amended by T.D. 
ATF-199, 50 FR 9197, Mar. 6, 1985]

    Editorial Note: For Federal Register citations affecting Sec. 
71.56, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.



Sec. 71.57  Execution and disposition.

    Forms 5000.6 and 5000.17 shall be executed in quintuplicate. A 
signed duplicated original shall be served on the permittee. If a 
hearing is requested, one copy shall be sent to the administrative law 
judge designated to conduct the hearing. The original copy containing 
the certificate of service shall be placed in the official record of the 
proceeding; and the remaining copies shall be retained by the 
appropriate TTB officer.

[T.D. ATF-244, 51 FR 45763, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



Sec. 71.58  Designated place of hearing.

    The designated place of hearing shall be such as meets the 
convenience and necessity of the parties.

[T.D. 6389, 24 FR 4791, June 12, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975]

[[Page 364]]

                           Request for Hearing



Sec. 71.59  Application cases.

    If the applicant for a permit desires a hearing, he shall file a 
request therefor, in writing, with the appropriate TTB officer within 
fifteen days after receipt of notice of the contemplated disapproval, in 
whole or in part, of his application.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]



Sec. 71.60  Suspension, revocation, or annulment proceedings.

    (a) If a hearing is desired, the respondent shall file a request, in 
writing, with the appropriate TTB officer within 15 days after receipt 
of the citation or within such time as the appropriate TTB officer may 
allow.
    (b) Where a respondent requests a hearing, the appropriate TTB 
officer shall forward a copy of the request together with a copy of the 
citation to the Administrator for the assignment of an administrative 
law judge.
    (c) After the Administrator notifies the appropriate TTB officer of 
the assignment of the administrative law judge, the appropriate TTB 
officer shall serve a notice of designation of the administrative law 
judge on the respondent.
    (d) The administrative law judge shall set a time and place for a 
hearing and shall serve notice thereof on the parties at least 10 days 
in advance of the hearing date.

[T.D. ATF-244, 51 FR 45763, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



Sec. 71.61  Notice of hearing.

    In case a request for a hearing is filed by the applicant within the 
required time, the appropriate TTB officer shall refer the matter to the 
administrative law judge and the administrative law judge shall set a 
time and place for a hearing and shall serve notice thereof upon the 
parties at least ten days in advance of the hearing date.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-374, 61 FR 29957, June 13, 1996]

                         Non-Request for Hearing



Sec. 71.62  Application.

    In the case of an application, if the applicant does not request a 
hearing within the time specified in Sec. 71.59, or within such further 
time as the appropriate TTB officer may in his discretion allow, the 
appropriate TTB officer will by order, stating the findings upon which 
it is based, disapprove the application, and will serve signed duplicate 
original of such order on the applicant.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]



Sec. 71.63  Suspension, revocation, or annulment proceedings.

    If the respondent does not request a hearing within the time 
specified in Sec. 71.60, and does not file an answer as required in 
Sec. 71.64, the appropriate TTB officer shall make the initial decision 
in the case in accordance with Sec. 71.79.

[T.D. ATF-244, 51 FR 45763, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]

                                 Answers



Sec. 71.64  When required.

    (a) Where the respondent requests a hearing in accordance with Sec. 
71.60, a written answer shall be filed with the administrative law judge 
and served on the appropriate TTB officer within 15 days after service 
of the designation of the administrative law judge.
    (b) Where no hearing is requested, the respondent shall file a 
written answer with the appropriate TTB officer within 15 days after 
service of a citation.
    (c) An answer shall contain a concise statement of the facts that 
constitute his grounds for defense. The hearing may be limited to the 
issues contained in the citation and the answer. The administrative law 
judge, or appropriate TTB officer as the case may be, may, as a matter 
of discretion, waive any requirement of this section.
    (d) Answers need not be filed in application proceedings.

[T.D. ATF-244, 51 FR 45763, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]

[[Page 365]]



Sec. 71.65  Answer admitting facts.

    If the respondent desires to waive the hearing on the allegations of 
fact set forth in the order to show cause, and does not contest the 
facts, the answer may consist of a statement that the respondent admits 
all material allegations of fact charged in the citation to be true. The 
appropriate TTB officer shall thereupon base the decision on the 
citation and such answer although such an answer shall not affect the 
respondent's right to submit proposed findings of fact and conclusions 
of law, or the right to appeal.

[T.D. ATF-244, 51 FR 45763, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



Sec. 71.66  Prehearing conferences.

    In any proceeding the administrative law judge may, upon his own 
motion or upon the motion of one of the parties or their qualified 
representatives, in his discretion direct the parties or their qualified 
representatives to appear at a specified time and place for a conference 
to consider:
    (a) The simplifications of the issues;
    (b) The necessity of amendments to the pleadings;
    (c) The possibility of obtaining stipulations, admissions of facts 
and of documents;
    (d) The limitation of the number of expert witnesses; and
    (e) Such other matters as may aid in the disposition of the 
proceeding. As soon as practicable after such conference, the 
administrative law judge shall issue an order which recites the action 
taken thereat, the amendments allowed to the pleadings and the 
agreements made by the parties or their qualified representatives as to 
any of the matters considered, and which limits the issues for hearing 
to those not disposed of by admission or agreement; and such order shall 
control the subsequent course of the proceedings, unless modified for 
good cause by a subsequent order.

                            Failure To Appear



Sec. 71.67  Applications.

    Where the applicant on an application for a permit has requested a 
hearing and does not appear at the appointed time and place, and 
evidence has not been offered to refute or explain the grounds upon 
which disapproval of the application is contemplated, this shall be 
construed as a waiver of the hearing, a default will be entered and the 
administrative law judge shall recommend disapproval of said 
application.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985]



Sec. 71.68  [Reserved]



Sec. 71.69  Suspension, revocation, or annulment.

    If on the date set for the hearing respondent does not appear and no 
evidence has been offered, the attorney for the Government will proceed 
ex parte and offer for the record sufficient evidence to make a prima 
facie case. At such hearing, documents, statements and affidavits may be 
submitted in lieu of testimony of witnesses.

                            Waiver of Hearing



Sec. 71.70  Application proceedings.

    At any time prior to final action thereon the applicant may, by 
filing written notice with the appropriate TTB officer, withdraw his 
application. If such a notice is filed after referral to the 
administrative law judge of a proceeding on an application for a permit 
and prior to issuance of his recommended decision or decision thereon, 
the appropriate TTB officer shall move the administrative law judge to 
dismiss the proceedings as moot. If such a notice is filed while the 
proceeding is before the appropriate TTB officer and prior to final 
action thereon, that is, either (a) after issuance of a notice of 
contemplated disapproval and before referral of the proceeding to the 
administrative law judge or (b) after issuance by the administrative law 
judge of his recommended decision and prior to the appropriate TTB 
officer's order disapproving the application, the appropriate TTB 
officer shall, by order, dismiss the proceeding.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]

[[Page 366]]



Sec. 71.71  Adjudication based upon written submissions.

    The respondent may waive the hearing before the administrative law 
judge, and stipulate that the matter will be adjudicated by the 
appropriate TTB officer based upon written submissions. Written 
submissions may include stipulations of law or facts, proposed findings 
of fact and conclusions of law, briefs, or any other documentary 
material. The pleadings together with the written submissions of both 
the attorneys for the Government and the respondent shall constitute the 
record on which the initial decision shall be based. The election to 
contest the citation without a hearing under this section does not 
affect the respondent's right to appeal.

[T.D. ATF-244, 51 FR 45763, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]

                           Surrender of Permit



Sec. 71.72  Before citation.

    If a respondent surrenders the permit before citation, the 
appropriate TTB officer may accept the surrender. But if the evidence, 
in the opinion of the appropriate TTB officer, warrants citation for 
suspension, revocation or annulment, the surrender shall be refused and 
the appropriate TTB officer shall issue the citation.

[T.D. ATF-244, 51 FR 45764, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



Sec. 71.73  After citation.

    If a respondent surrenders the permit after citation and prior to an 
initial decision, the appropriate TTB officer may accept the surrender 
of the permit and dismiss the proceeding as moot. If, however, in the 
opinion of the appropriate TTB officer, the evidence is such as to 
warrant suspension, revocation or annulment, as the case may be, the 
surrender of the permit shall be refused, and the proceeding shall 
continue.

[T.D. ATF-244, 51 FR 45764, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]

                                 Motions



Sec. 71.74  General.

    All motions shall be made and addressed to the officer before whom 
the proceeding is pending, and copies of all motion papers shall be 
served upon the other party or parties. Such officer may dispose of any 
motion without oral argument, but he may, if he so desires, set it down 
for hearing and request argument. He may dispose of such motion prior to 
the hearing on the merits or he may postpone the disposition until the 
hearing on the merits. No appeal may be taken from any ruling on a 
motion until the whole record is certified for review. Examples of 
typical motions may be found in the Rules of Civil Procedure referred to 
in Sec. 71.2.



Sec. 71.75  Prior to hearing.

    All motions which should be made prior to the hearing, such as 
motion directed to the sufficiency of the pleadings or of preliminary 
orders, shall be filed in writing with the appropriate TTB officer 
issuing the citation or the administrative law judge if the matter has 
been referred to him, and shall briefly state the order or relief 
applied for and the grounds for such motion, and shall be filed within 
15 days after service of the citation.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
as amended by T.D. ATF-374, 61 FR 29957, June 13, 1996]



Sec. 71.76  At hearing.

    Motions at the hearing may be made in writing to the administrative 
law judge or stated orally on the record.

                                 Hearing



Sec. 71.77  General.

    If a hearing is requested, it shall be held at the time and place 
stated in the notice of hearing unless otherwise ordered by the 
administrative law judge.

[T.D. ATF-244, 51 FR 45764, Dec. 22, 1986]



Sec. 71.78  Applications.

    The administrative law judge who presides at the hearing on 
applications shall recommend a decision to the appropriate TTB officer 
who shall make

[[Page 367]]

the initial decision as provided in Sec. 71.107. The applicant may be 
directed by the appropriate TTB officer to produce such records as may 
be deemed necessary for examination. All hearings on applications shall 
be open to the public subject to such restrictions and limitations as 
may be consistent with orderly procedure.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]



Sec. 71.79  Suspension, revocation, or annulment.

    (a) The administrative law judge who presides at the hearing in 
proceedings for the suspension, revocation and annulment of permits 
shall make the initial decision.
    (b) If no hearing is requested, the appropriate TTB officer shall 
make the initial decision.

[T.D. ATF-244, 51 FR 45764, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]

                             Burden of Proof



Sec. 71.80  Applications.

    In hearings on the contemplated disapproval of applications there 
may be incorporated in the record sufficient testimony, reports, 
affidavits and other documents to be considered only for the limited 
purpose of establishing probable cause for the issuance of the notice of 
contemplated disapproval by showing that the appropriate TTB officer had 
reason to believe that the applicant is not entitled to a permit. The 
burden of proof shall be upon the applicant to produce evidence to show 
he is entitled to a permit. The appropriate TTB officer may, instead of 
following the aforementioned procedure, assume the burden of going 
forward.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]



Sec. 71.81  Suspension, revocation, or annulment.

    In hearings on the suspension, revocation, or annulment of a permit, 
the burden of proof is on the Government.

[T.D. ATF-199, 50 FR 9197, Mar. 6, 1985]

                                 General



Sec. 71.82  Stipulations at hearing.

    If there has been no prehearing conference under Sec. 71.66, the 
administrative law judge shall at the beginning of the hearing, require 
that the parties attempt to arrive at such stipulations as will 
eliminate the necessity of taking evidence with respect to allegations 
of fact concerning which there is no substantial dispute. The 
administrative law judge should take similar action, where it appears 
appropriate, throughout the hearing and should call and conduct any 
conferences which he deems advisable with a view to the simplification, 
clarification, and disposition of any of the issues involved.



Sec. 71.83  Evidence.

    Any evidence which would be admissible under the rules of evidence 
governing proceedings in matters not involving trial by jury in the 
Courts of the United States, shall be admissible and controlling as far 
as possible: Provided, That the administrative law judge may relax such 
rules in any hearing when in his judgment such relaxation would not 
impair the rights of either party and would more speedily conclude the 
hearing, or would better serve the ends of justice. Except as provided 
in Sec. 71.81, the proponent of an order shall have the burden of 
proof. Every party shall have the right to present his case or defense 
by oral or documentary evidence, depositions, duly authenticated copies 
of records and documents, to submit rebuttal evidence, and to conduct 
such reasonable cross-examination as may be required for a full and true 
disclosure of the facts. The administrative law judge shall have the 
right in his discretion to limit the number of witnesses whose testimony 
may be merely cumulative and shall, as a matter of policy, not only 
exclude irrelevant, immaterial, or unduly repetitious evidence but shall

[[Page 368]]

also limit the cross-examination of witnesses to reasonable bounds so as 
not to unnecessarily prolong the hearing and unduly burden the record. 
Material and relevant evidence shall not be excluded, because it is not 
the best evidence, unless its authenticity is challenged, in which case 
reasonable time shall be given to establish its authenticity. When 
portions only of a document are to be relied upon, the offering party 
shall prepare the pertinent excerpts, adequately identified, and shall 
supply copies of such excerpts, together with a statement indicating the 
purpose for which such materials will be offered, to the administrative 
law judge and to the other parties. Only the excerpts, so prepared and 
submitted, shall be received in the record. However, the whole of the 
original document should be made available for examination and for use 
by opposing counsel for purposes of cross-examination. Compilations, 
charts, summaries of data and photostatic copies of documents may be 
admitted in evidence if the proceedings will thereby be expedited, and 
if the material upon which they are based is available for examination 
by the parties. Objections to the evidence shall be in short form, 
stating the grounds relied upon. The transcript shall not include 
argument or debate on objections, except as ordered by the 
administrative law judge, but shall include the rulings thereon.



Sec. 71.84  Closing of hearings; arguments, briefs and proposed findings.

    Before closing a hearing, the administrative law judge shall inquire 
of each party whether he has any further evidence to offer, which 
inquiry and the response thereto shall be shown in the record. The 
administrative law judge may hear arguments of counsel and may limit the 
time of such arguments at his discretion, and may, in his discretion, 
allow briefs to be filed on behalf of either party but shall closely 
limit the time within which the briefs for both parties shall be filed, 
so as to avoid unreasonable delay. The administrative law judge shall 
also ascertain whether the parties desire to submit proposed findings 
and conclusions, together with supporting reasons, and if so a period of 
not more than 15 days (unless extended by the administrative law 
judge)--after the close of the hearing or receipt of a copy of the 
record, if one is requested--will be allowed for such purpose.



Sec. 71.85  Reopening of the hearing.

    The Administrator, the appropriate TTB officer, or the 
administrative law judge, as the case may be, may, as to all matters 
pending before him, in his discretion reopen the hearing (a) in case of 
default where applicant failed to request a hearing or to appear after 
one was set, upon petition setting forth reasonable grounds for such 
failure, and (b) in case any party desires leave to adduce additional 
evidence upon petition summarizing such evidence, establishing its 
materiality and stating reasonable grounds why such party with due 
diligence was unable to produce such evidence at the hearing.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 43 FR 13531, Mar. 31, 1978; 44 FR 55846, 
Sept. 28, 1979; T.D. ATF-374, 61 FR 29957, June 13, 1996]

                           Record of Testimony



Sec. 71.86  Stenographic record.

    A stenographic record shall be made of the testimony and 
proceedings, including stipulations and admissions of fact (but not 
arguments of counsel unless otherwise ordered by the administrative law 
judge) in all proceedings. A transcript of the evidence and proceedings 
at the hearing shall be made in all cases.



Sec. 71.87  Oath of reporter.

    The reporter making the stenographic record shall subscribe an oath 
before the administrative law judge, to be filed in the record of the 
case, that he will truly and correctly report the oral testimony and 
proceedings at such hearing and accurately transcribe the same to the 
best of his ability.



                   Subpart G_Administrative Law Judges



Sec. 71.95  Responsibilities of administrative law judges.

    Administrative law judges shall be under the administrative control 
of the

[[Page 369]]

Administrator. They shall be responsible for the conduct of hearings and 
shall render their decisions as soon as is reasonably possible after the 
hearing is closed. Administrative law judges shall also be responsible 
for the preparation, certification and forwarding of reports of 
hearings, and the administrative work relating thereto, and, by 
arrangement with the appropriate TTB officer and representatives of the 
Chief Counsel, shall have access to facilities and temporary use of 
personnel at such times and places as are needed in the prompt dispatch 
of official business.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 43 FR 13531, Mar. 31, 1978; 44 FR 55846, 
Sept. 28, 1979; T.D. ATF-374, 61 FR 29957, June 13, 1996]



Sec. 71.96  Disqualification.

    An administrative law judge shall, at any time, withdraw from any 
proceeding if he deems himself disqualified; and upon the filing in good 
faith by the applicant or respondent, or by the attorney for the 
Government, of a timely and sufficient affidavit of facts showing 
personal bias or otherwise warranting the disqualification of any 
administrative law judge, the Administrator shall upon appeal as 
provided in Sec. 71.115, if the administrative law judge fails to 
disqualify himself, determine the matter as a part of the record and 
decision in the proceeding. If he decides the administrative law judge 
should have declared himself disqualified, he will remand the record for 
hearing de novo before another administrative law judge. If the 
Administrator should decide against the disqualification of the 
administrative law judge, the proceeding will be reviewed on its merits.



Sec. 71.97  Powers.

    Administrative law judges shall have authority to (a) administer 
oaths and affirmations; (b) issue subpoenas authorized by law; (c) rule 
upon offers of proof and receive relevant evidence; (d) take or cause 
depositions to be taken whenever the ends of justice would be served 
thereby; (e) regulate the course of the hearing; (f) hold conferences 
for the settlement or simplification of the issues by consent of the 
parties; (g) dispose of procedural requests or similar matters; (h) 
render recommended decisions in proceedings on applications for permits, 
and in suspension, revocation, or annulment proceedings against permits; 
(i) call, examine and cross-examine witnesses, including hostile or 
adverse witnesses when he deems such action to be necessary to a just 
disposition of the cause, and introduce into the record documentary or 
other evidence; and (j) take any other action authorized by rule of the 
Alcohol and Tobacco Tax and Trade Bureau consistent with the 
Administrative Procedure Act.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 44 FR 55846, Sept. 28, 1979; T.D. ATF-119, 
50 FR 9197, Mar. 6, 1985]



Sec. 71.98  Separation of functions.

    Administrative law judges shall perform no duties inconsistent with 
their duties and responsibilities as such. Administrative law judges may 
be assigned duties not inconsistent with the performance of their 
functions as administrative law judges. Save to the extent required for 
the disposition of ex parte matters as required by law, no 
administrative law judge shall consult any person or party as to any 
fact in issue unless upon notice and opportunity for all parties to 
participate. The functions of the administrative law judge shall be 
entirely separated from the general investigative functions of the 
agency. No officer, employee, or agent engaged in the performance of 
investigative or prosecuting functions in any proceeding shall, in that 
or a factually related proceeding, participate or advise in the 
administrative law judge's or Administrator's decision, or in the agency 
review on appeal, except as a witness or counsel in the proceedings. The 
administrative law judge may not informally obtain advice or opinions 
from the parties or their counsel, or from any officer or employee of 
the Alcohol and Tobacco Tax and Trade Bureau, as to the facts or the 
weight or interpretation to be given to the evidence. He may, however, 
informally obtain advice on matters of law from officers or employees 
who were not engaged in the performance of investigative or prosecuting

[[Page 370]]

functions in that or a factually related proceeding. This limitation 
does not apply to the Administrator, and the administrative law judge 
may, at any time, consult with and obtain instructions from him on 
questions of law and policy.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 43 FR 13531, Mar. 31, 1978; 44 FR 55846, 
Sept. 28, 1979]



Sec. 71.99  Conduct of hearing.

    The administrative law judge is charged with the duty of conducting 
a fair and impartial hearing and of maintaining order in form and manner 
consistent with dignity. In the event that counsel or any person or 
witness in any proceeding shall refuse to obey the orders of the 
administrative law judge, or be guilty of disorderly or contemptuous 
language or conduct in connection with any hearing, the administrative 
law judge may, for good cause stated in the record, suspend the hearing, 
and, in the case of an attorney, recommend that the Administrator report 
the matter to the Administrator of Practice for disciplinary action. The 
refusal of a witness to answer any question which has been ruled to be 
proper shall be considered by the administrative law judge in 
determining the weight to be given all the testimony of that witness.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 43 FR 13531, Mar. 31, 1978; 44 FR 55846, 
Sept. 28, 1979]



Sec. 71.100  Unavailability of administrative law judge.

    In the event that the administrative law judge designated to conduct 
a hearing becomes unavailable before the filing of his findings and 
decision or recommended decision, the Administrator may assign the case 
to another administrative law judge for the continuance of the 
proceeding, in accordance with the regulations in this part in the same 
manner as if he had been designated administrative law judge at the 
commencement of the proceeding.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 43 FR 13531, Mar. 31, 1978; 44 FR 55846, 
Sept. 28, 1979]



                           Subpart H_Decisions



Sec. 71.105  Administrative law judge's finding and decision or recommended 

decision.

    Within a reasonable time after the conclusion of the hearing, and as 
expeditiously as possible, the administrative law judge shall render his 
decision or recommended decision, as the case may be. All decisions 
shall become a part of the record and, if proposed findings and 
conclusions have been filed, shall show the administrative law judge's 
ruling upon each of such proposed findings and conclusions. Decisions 
shall consist of (a) a brief statement of the issues of fact involved in 
the proceeding; (b) the administrative law judge's findings and 
conclusions, as well as the reasons or basis therefor with record 
references, upon all the material issues of fact, law or discretion 
presented on the record (including, when appropriate, comment as to the 
credibility and demeanor of the witnesses); and (c) the administrative 
law judge's determination or recommended determination on the record. 
Where the administrative law judge determines that the imposition of a 
period of suspension of the permit is appropriate, his decision shall 
state the length of such period of suspension, to commence at such time 
as the appropriate TTB officer shall specify.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975. 
as amended by T.D. ATF-374, 61 FR 29957, June 13, 1996]



Sec. 71.106  Certification and transmittal of record and decision.

    After reaching his decision, the administrative law judge shall 
certify to the complete record of the proceeding before him and (a) in 
proceedings on an application, shall immediately forward the complete 
certified record together with four copies of his recommended decision 
to the appropriate TTB officer for initial decision, or (b) in 
revocation, suspension or annulment proceedings, shall immediately 
forward the complete certified record, together with two copies of his 
decision, to the appropriate TTB officer, serve one copy of his decision 
on the respondent or his

[[Page 371]]

counsel and transmit a copy of his decision to the attorney for the 
Government.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]

                  Action by the Appropriate TTB Officer



Sec. 71.107  Application proceedings.

    If, upon receipt of the record and the recommended decision of the 
administrative law judge, the appropriate TTB officer decides that the 
permit should be issued, he shall thereupon approve the application 
briefly stating, for the record, his reasons therefor, but if he 
contemplates the disapproval of the application he shall serve a copy of 
the administrative law judge's recommended decision on the applicant, 
informing the applicant of his contemplated action and affording the 
applicant not more than 10 days in which to submit proposed findings and 
conclusions or exceptions to the recommended decision with reasons in 
support thereof. If the appropriate TTB officer, after consideration of 
the record of the hearing and of any proposed findings, conclusions or 
exceptions filed with him by the applicant, approves the findings, 
conclusions and recommended decision of the administrative law judge, he 
shall by order approve or disapprove of the application in accordance 
therewith. If, after such consideration, he disapproves of the findings, 
conclusions and recommended decision of the administrative law judge, in 
whole or in part, he shall by order make such findings and conclusions 
as in his opinion are warranted by the law and facts in the record. Any 
decision of the appropriate TTB officer ordering the disapproval of an 
application for a permit shall state the findings and conclusions upon 
which it is based, including his ruling upon each proposed finding, 
conclusion and exception to the administrative law judge's recommended 
decision, together with a statement of his findings and conclusions, and 
reasons or basis therefor, upon all material issues of fact, law or 
discretion presented on the record. A signed duplicate original of the 
decision shall be served upon the applicant and the original copy 
containing certificate of service shall be placed in the official record 
of the proceeding.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]



Sec. 71.107a  Appropriate TTB officer's decision.

    (a) When the appropriate TTB officer issues an initial decision in 
accordance with Sec. 71.79, the decision shall become a part of the 
record. The decision shall consist of
    (1) A brief statement of the issues involved in the proceedings;
    (2) The appropriate TTB officer's findings and conclusions, as well 
as the reasons therefor; and
    (3) The appropriate TTB officer's determination on the record.

[T.D. ATF-244, 51 FR 45764, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



Sec. 71.108  Suspension, revocation, or annulment proceedings.

    (a) Upon receipt of the complete certified record of the hearing the 
appropriate TTB officer shall enter an order suspending, revoking, or 
annulling the permit (Form 1430-B) or dismissing the proceedings in 
accordance with the administrative law judge's findings and decision, 
unless he disagrees with such findings and decision and files a petition 
with the Administrator, for review thereof, as provided in Sec. 71.115. 
If the appropriate TTB officer files such petition, he shall withhold 
issuance of the order, pending the decision of the Administrator, upon 
receipt of which he shall issue the order in accordance therewith. A 
signed duplicate original of the order of the appropriate TTB officer 
shall be served upon the respondent and the original copy containing 
certificate of service shall be placed in the official record of the 
proceeding. In all proceedings in which a suspension is imposed, the 
appropriate TTB officer's order shall state the time when the suspension 
period set forth in the administrative law judge's decision shall 
commence and terminate.
    (b) In a case where the initial decision is made by the appropriate 
TTB

[[Page 372]]

officer in accordance with Sec. 71.79, the appropriate TTB officer will 
also issue an order suspending, revoking or annulling the permit (on 
Form 5000.5), or dismissing the proceedings in accordance with his 
initial decision. A signed duplicated original of the decision and order 
of the appropriate TTB officer shall be served upon the respondent and 
the original copy placed in the official record of the proceeding. In 
all proceedings in which a suspension is imposed, the appropriate TTB 
officer's order shall state the time when the suspension period set 
forth in the initial decision shall commence and terminate.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9196 and 9197, Mar. 6, 1985; T.D. 
ATF-244, 51 FR 45764, Dec. 22, 1986; T.D. ATF-374, 61 FR 29957, June 13, 
1996]



Sec. 71.109  Notice to Administrator.

    When the appropriate TTB officer makes an order suspending, revoking 
or annulling a permit, he will furnish a copy of the order and of the 
decision on which it is based to the Administrator. Should such order be 
subsequently set aside on review by the courts, the appropriate TTB 
officer will so advise the Administrator.

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 
FR 29957, June 13, 1996]



Sec. 71.110  Proceedings involving violations not within region of issuance 

of permit.

    In the event violations occurred at a place not within the region of 
issuance of a permit, the appropriate TTB officer of the region of 
issuance will take jurisdiction over any proceeding including issuing 
the citation, and taking appropriate action in accordance with Sec. 
71.108.

[T.D. ATF-244, 51 FR 45764, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



                            Subpart I_Review



Sec. 71.115  Appeal on petition to the Administrator.

    An appeal to the Administrator is required prior to application to 
the Federal courts for review. An appeal may be taken by the applicant 
or respondent or by the appropriate TTB officer. Such appeal shall be 
taken by filing a petition for review on appeal with the Administrator 
within 15 days of the service of the order disapproving an application 
for a permit or the initial decision suspending, revoking or annulling a 
permit. The petition must set forth facts tending to show action of an 
arbitrary nature, or action without reasonable warrant in fact, or 
action contrary to law and regulations. A copy of the petition shall be 
filed with the appropriate TTB officer or served on the respondent or 
applicant as the case may be. In the event of such appeal, the 
appropriate TTB officer shall immediately certify and forward the 
complete original record, by certified mail, to the Administrator, for 
his consideration and review.

[T.D. ATF-244, 51 FR 45764, Dec. 22, 1986, as amended by T.D. ATF-374, 
61 FR 29957, June 13, 1996]



Sec. 71.116  Review by Administrator.

    The Administrator, on appeal on petition for review, shall afford a 
reasonable opportunity for the submission of proposed findings, 
conclusions or exceptions with reasons in support thereof and an 
opportunity for oral argument. He may alter or modify any finding of the 
administrative law judge (or of the appropriate TTB officer in 
application proceedings) and may affirm, reverse, or modify the decision 
of the administrative law judge (or of the appropriate TTB officer in 
initial application proceedings), or he may remand the case for further 
hearing, but he shall not consider evidence which is not a part of the 
record. Appeals and petitions for review shall not be decided by the 
Administrator in any proceeding in which he has engaged in investigation 
or prosecution, and in such event he shall so state his disqualification 
in writing and refer the record to the Under Secretary for appropriate 
action. The Under Secretary may designate an Assistant Secretary or one 
of his principal aides to consider any proceeding instead of the 
Administrator. The original copy of the decision on review shall be 
placed in the official

[[Page 373]]

record of the proceeding, a signed duplicate original shall be served 
upon the applicant or respondent and a copy shall be transmitted to the 
appropriate TTB officer. When, on appeal, the Administrator affirms the 
decision of the appropriate TTB officer or the administrative law judge, 
as the case may be, disapproving an application or suspending, revoking 
or annulling a permit, such action shall not supersede the decision of 
the appropriate TTB officer or the administrative law judge and such 
decision shall be final.

(26 U.S.C. 7805 (68A Stat. 917), 27 U.S.C. 205 (49 Stat. 981 as 
amended), 18 U.S.C. 926 (82 Stat. 959), and Sec. 38, Arms Export Control 
Act (22 U.S.C. 2778, 90 Stat. 744))

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-48, 43 FR 13531, Mar. 31, 1978; T.D. ATF-199, 50 
FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 FR 29957, June 13, 1996]



Sec. 71.117  Permit privileges, exceptions.

    Pending final determination of any timely appeal in revocation, 
suspension, or annulment proceeding to the Administrator, the permit 
involved shall continue in force and effect except that, in the case of 
industrial use permits, any time after a citation has been issued 
withdrawals of tax-free spirits or specially denatured spirits by such 
permittee may, in the discretion of the appropriate TTB officer or 
Administrator, be restricted to the quantity which, together with the 
quantity then on hand, is necessary to carry on legitimate operations 
under such permit. The appropriate TTB officer may, in restricting the 
permittee to his legitimate needs, refuse to issue any withdrawal 
permit.

[T.D. 6389, 24 FR 4791, June 12, 1959. Redesignated at 40 FR 16835, Apr. 
15, 1975; T.D. ATF-199, 50 FR 9197, Mar. 6, 1985; T.D. ATF-374, 61 FR 
29957, June 13, 1996]



Sec. 71.118  Court review.

    If an applicant or respondent files an appeal in Federal court of 
the Administrator's decision, the Administrator, upon notification that 
an appeal has been taken, shall prepare the record for submission to the 
court in accordance with the applicable court rules.

[T.D. ATF-244, 51 FR 45764, Dec. 22, 1986]



Sec. 71.119  [Reserved]



                         Subpart J_Miscellaneous



Sec. 71.125  Depositions.

    The administrative law judge may take or order the taking of 
depositions by either party to the proceeding at such time and place as 
he may designate before a person having the power to administer oaths, 
upon application therefor and notice to the parties to the action. The 
testimony shall be reduced to writing by the person taking the 
deposition, or under his direction, and the deposition shall be 
subscribed by the deponent unless subscribing thereof is waived in 
writing by the parties. Any person may be subpoenaed to appear and 
depose and to produce documentary evidence in the same manner as 
witnesses at hearings.



Sec. 71.126  Subpoenas.

    On written application by a party to a proceeding, the attendance 
and testimony of any person, or the production of documentary evidence 
in proceedings instituted under this part may be required by personal 
subpoena (Form 5600.10) or by subpoena duces tecum (Form 5600.11). 
Application should be addressed to, and subpoenas should be issued by, 
the administrative law judge before whom the proceedings are pending, 
but may be issued by the appropriate TTB officer or by the 
Administrator, if the administrative law judge is unavailable. Both the 
application and the subpoena shall set forth the title of the 
proceedings, the name and address of the person whose attendance is 
required, the date and place of his attendance and, if documents are to 
be produced, a description thereof; and the application must have 
reasonable scope and specify as exactly as possible the documents 
required, if any, and show their general relevance. Subpoenas shall be 
served in person. When issued on behalf of the United States, service 
shall be made by an officer, employee, or agent of the Treasury 
Department; when issued on behalf of a permittee or applicant, service 
shall be made by any person who is not

[[Page 374]]

a party to the proceeding and is not less than 18 years of age.

(49 Stat. 977, 72 Stat. 1372; 27 U.S.C. 202, 26 U.S.C. 5274)

[21 FR 1441, Mar. 6, 1956, as amended by T.D. 6389, 24 FR 4791, June 12, 
1959. Redesignated at 40 FR 16835, Apr. 15, 1975, and amended by T.D. 
ATF-244, 51 FR 45764, Dec. 22, 1986; T.D. ATF-374, 61 FR 29957, June 13, 
1996]



Sec. 71.127  Witnesses and fees.

    Witnesses summoned before the administrative law judge may be paid 
the same fees and mileage that are paid witnesses in the courts of the 
United States, and witnesses whose depositions are taken and the persons 
taking the same shall severally be entitled to the same fees as are paid 
for like services in the courts of the United States. Witness fees and 
mileage shall be paid by the party at whose instance the witnesses 
appear and the person taking the deposition shall be paid by the party 
at whose instance the deposition is taken.

                                 Record



Sec. 71.128  What constitutes record.

    The transcript of testimony, pleadings and exhibits, all papers and 
requests filed in the proceeding, together with all findings, decisions 
and orders, shall constitute the exclusive record. Where the decision 
rests on official notice of material fact not appearing in the record, 
the administrative law judge shall so state in his findings and any 
party shall, on timely request, be afforded an opportunity to show facts 
to the contrary.



Sec. 71.129  Availability.

    A copy of the record shall be available for inspection by the 
parties to the proceedings during business hours at the office of the 
administrative law judge or the appropriate TTB officer or, pending 
administrative review, at the office of the Administrator. Copies of the 
record desired by the respondent or applicant may be purchased from the 
contract reporter or may be obtained in accordance with part 71 of this 
chapter.

(5 U.S.C. 552(a) (80 Stat. 383, as amended))

[21 FR 1441, Mar. 6, 1956. Redesignated at 40 FR 16835, Apr. 15, 1975, 
and amended by T.D. ATF-92, 46 FR 46918, Sept. 23, 1981; T.D. ATF-374, 
61 FR 29957, June 13, 1996]



PART 72_DISPOSITION OF SEIZED PERSONAL PROPERTY--Table of Contents




                     Subpart A_Scope of Regulations

Sec.
72.1 Procedures relating to personal property and carriers.
72.2 Forms prescribed.

                          Subpart B_Definitions

72.11 Meaning of terms.

                   Subpart C_Seizures and Forfeitures

72.21 Personal property and carriers subject to seizure.
72.22 Forfeiture of seized personal property and carriers.
72.23 Type and conditions of cost bond.
72.24 Corporate surety bonds.
72.25 Deposit of collateral.
72.26 Bond for return of seized perishable goods.
72.27 Summary destruction of explosives subject to forfeiture.

            Subpart D_Remission or Mitigation of Forfeitures

72.31 Laws applicable.
72.32 Interest claimed.
72.33 Form of the petition.
72.34 Contents of the petition.
72.35 Time of filing petition.
72.36 Place of filing.
72.37 Discontinuance of administrative proceedings.
72.38 Return of defective petition.
72.39 Final action.
72.40 Acquisition for official use and sale for account of petitioner in 
          allowed petitions.
72.41 Re-appraisal of property involved in an allowed petition.

                       Subpart E_Appraiser's Fees

72.51 Rate of compensation.

    Subpart F_Administrative Sale or Disposition of Personal Property

72.61 Alternative methods of sale.
72.62 All bids on unit basis.
72.63 Conditions of sale.
72.64 Terms of sale.

[[Page 375]]

72.65 Sale of forfeited tobacco products and cigarette papers and tubes.
72.66 Purchaser entitled to bill of sale.
72.67 Sale on open, competitive bids.
72.68 Sale on sealed, competitive bids.
72.69 Alternate disposition of seized carriers.

    Subpart G_Disposal of Forfeited Firearms, Ammunition, Explosive 
                   Materials, or Contraband Cigarettes

72.81 Authority for disposal.

    Authority: 18 U.S.C. 921, 1261; 19 U.S.C. 1607, 1610, 1612, 1613, 
1618; 26 U.S.C. 7101, 7322-7325, 7326, 7805; 31 U.S.C. 9301, 9303, 9304, 
9306; 40 U.S.C. 304(k); 49 U.S.C. 784, 788.

    Source: T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, unless otherwise 
noted.



                     Subpart A_Scope of Regulations



Sec. 72.1  Procedures relating to personal property and carriers.

    Regulations in this part shall relate to personal property and 
carriers seized by alcohol, tobacco and firearms officers as subject to 
forfeiture as being involved, used, or intended to be used, as the case 
may be, in any violation of Federal laws.



Sec. 72.2  Forms prescribed.

    (a) The Director is authorized to prescribe all forms required by 
this part, or necessary for its administration. All of the information 
called for in each form shall be furnished as indicated by the headings 
on the form and the instructions on or pertaining to the form. In 
addition, information called for in each form shall be furnished as 
required by this part.
    (b) ``Public Use Forms'' (ATF Publication 1322.1) is a numerical 
listing of forms issued or used by the Bureau of Alcohol, Tobacco and 
Firearms. This publication is available from the Superintendent of 
Documents, U.S. Government Printing Office, Washington, DC 20402.
    (c) Requests for forms should be mailed to the ATF Distribution 
Center, 7943 Angus Court, Springfield, Virginia 22153.

[T.D. ATF-92, 46 FR 46914, Sept. 23, 1981, as amended by T.D. ATF-249, 
52 FR 5962, Feb. 27, 1987]



                          Subpart B_Definitions



Sec. 72.11  Meaning of terms.

    As used in this part, unless the context otherwise requires, terms 
shall have the meanings ascribed in this section. Words in the plural 
form shall include the singular, and vice versa, and words importing the 
masculine gender shall include the feminine. The terms ``includes'' and 
``including'' do not exclude things not enumerated which are in the same 
general class.
    ATF Officer. An officer or employee of the Bureau of Alcohol, 
Tobacco, and Firearms (ATF) duly authorized to perform any function 
relating to the administration or enforcement of this part.
    Appraised value. The value placed upon seized property or carriers 
by the appraiser or appraisers designated for the purpose of determining 
whether the property or carriers may be forfeited administratively.
    Carrier. A vessel, vehicle, or aircraft seized under 49 U.S.C. 
Chapter 11 for having been used to transport, carry, or conceal a 
contraband firearm or contraband cigarettes. Vessels, vehicles, or 
aircraft seized under other provisions of applicable laws shall be 
considered personal property.
    Commercial crimes. Any of the following types of crimes (Federal or 
State): Offenses against the revenue laws; burglary; counterfeiting; 
forgery; kidnapping; larceny; robbery; illegal sale or possession of 
deadly weapons; prostitution (including soliciting, procuring, 
pandering, white slaving, keeping house of ill fame, and like offenses); 
extortion; swindling and confidence games; and attempting to commit, 
conspiring to commit, or compounding any of the foregoing crimes. 
Addiction to narcotic drugs and use of marihuana will be treated as if 
such were commercial crime.
    Contraband cigarettes. Any quantity of cigarettes in excess of 
60,000, if:
    (a) The cigarettes bear no evidence of the payment of applicable 
State cigarette taxes in the State where the cigarettes are found;
    (b) The State in which the cigarettes are found requires a stamp, 
impression, or other indication to be placed on

[[Page 376]]

packages or other containers of cigarettes to evidence payment of 
cigarette taxes; and
    (c) The cigarettes are in the possession of any person other than 
any person who is:
    (1) Holding a permit issued under 26 U.S.C. Chapter 52 as a 
manufacturer of tobacco products or as an export warehouse proprietor;
    (2) Operating a customs bonded warehouse under 19 U.S.C. 1311 or 
1555;
    (3) An agent of a tobacco products manufacturer, an export warehouse 
proprietor, or an operator of a customs bonded warehouse;
    (4) A common or contract carrier transporting the cigarettes 
involved under a proper bill of lading or freight bill which states the 
quantity, source, and destination of the cigarettes;
    (5) Licensed or otherwise authorized by the State where the 
cigarettes are found to account for and pay cigarette taxes imposed by 
that State; and who has complied with the accounting and payment 
requirements relating to the license or authorization with respect to 
the cigarettes involved; or
    (6) An agent of the United States, of an individual State, or of a 
political subdivision of a State and having possession of cigarettes in 
connection with the performance of official duties.
    (7) Operating within a foreign-trade zone, established under 19 
U.S.C. 81b, when the cigarettes involved have been entered into the 
foreign-trade zone under zone-restricted status or when foreign 
cigarettes have been admitted into the foreign-trade zone but have not 
been entered into the United States.
    Contraband firearm. A firearm with respect to which there has been 
committed a violation of the National Firearms Act (26 U.S.C., Chapter 
53) or any regulation issued thereunder.
    Director. The Director, Bureau of Alcohol, Tobacco, and Firearms, 
the Department of the Treasury, Washington, DC.
    Equity. As used in administrative action on petitions for remission 
or mitigation of forfeitures, shall mean that interest which a 
petitioner has in the personal property or carrier petitioned for at the 
time of final administrative action on the petition, but such interest 
shall not be considered to include any unearned finance charges from the 
date of seizure or the date of default, if later; any amount rebatable 
on account of paid insurance premiums; attorney's fees for collection; 
any amount identified as dealer's reserve; or any amount in the nature 
of liquidated damages that may have been agreed upon by the buyer and 
the petitioner.
    Person. An individual, trust, estate, partnership, association, 
company or a corporation.
    Re-appraisal. An up-to-date statutory appraisal to determine the 
present value of the property or carrier involved in a petition for 
remission or mitigation of forfeiture made in the same manner as the 
original appraisal, and performed at the written request of the 
petitioner whose petition in regard to the property or carrier has been 
allowed and who, for reasonable cause, is not satisfied that the 
original appraisal represents the present value of the property or 
carrier.
    Region. A Bureau of Alcohol, Tobacco, and Firearms Region.
    U.S.C. The United States Code.

[T.D. ATF-48, 43 FR 13535, Mar. 31, 1978; 44 FR 55841, Sept. 28, 1979, 
as amended by T.D. ATF-65, 45 FR 8593, Feb. 8, 1980; T.D. ATF-183, 49 FR 
37061, Sept. 21, 1984]



                   Subpart C_Seizures and Forfeitures



Sec. 72.21  Personal property and carriers subject to seizure.

    (a) Personal property may be seized by duly authorized ATF officers 
for forfeiture to the United States when involved, used, or intended to 
be used, in violation of the laws of the United States which ATF 
officers are empowered to enforce, including Title 18 U.S.C. Chapters 40 
(explosives), 44 (firearms), 59 (liquor traffic), 114 (contraband 
cigarettes), 229 (liquor); Title 26 U.S.C. Chapters 51 (distilled 
spirits), 52 (tobacco), 53 (firearms); and Title 27 U.S.C. 206 (liquor). 
Carriers, as defined in Sec. 72.11, similarly may be seized when used 
in violation of Title 49 U.S.C. App., Chapter 11 (transportation, et 
cetera) of contraband firearms or contraband cigarettes.

[[Page 377]]

    (b) Any action or proceeding for the forfeiture of firearms or 
ammunition seized under 18 U.S.C. Chapter 44 shall be commenced within 
120 days of such seizure.
    (c) Upon acquittal of the owner or possessor, or the dismissal of 
the criminal charges against such person other than upon motion of the 
Government prior to trial, or lapse of or court termination of the 
restraining order to which such person is subject, firearms or 
ammunition seized or relinquished under 18 U.S.C. Chapter 44 shall be 
returned forthwith to the owner or possessor or to a person delegated by 
the owner or possessor unless the return of the firearms or ammunition 
would place the owner or possessor or his delegate in violation of law.

[T.D. ATF-270, 53 FR 10489, Mar. 31, 1988, as amended by T.D. ATF-363, 
60 FR 17449, Apr. 6, 1995]



Sec. 72.22  Forfeiture of seized personal property and carriers.

    (a) Administrative forfeiture. (1) Personal property seized as 
subject to forfeiture under Title 26 U.S.C. which has an appraised value 
of $100,000.00 or less, and any carrier appraised by the seizing officer 
at $100,000.00 or less under the customs laws, shall be forfeited to the 
United States in administrative or summary forfeiture proceedings.
    (2) In respect of personal property seized as subject to forfeiture 
under title 26 U.S.C. which, in the opinion of the seizing officer, has 
an appraised value of $100,000.00 or less, such officer shall cause a 
list containing a particular description of the seized property to be 
prepared and an appraisement thereof to be made by three sworn 
appraisers, selected by the seizing officer, who shall be respectable 
and disinterested citizens of the United States residing within the 
internal revenue district wherein the seizure was made. Such list and 
appraisement shall be properly attested to by the seizing officer and 
such appraisers.
    (3) In respect of personal property seized as subject to forfeiture 
under title 26 U.S.C. and found by the appraisers to have a value of 
$100,000.00 or less, the Director or his delegate shall publish a notice 
once a week for three consecutive weeks, in some newspaper of the 
judicial district where the seizure was made, describing the articles 
and stating the time, place, and cause of their seizure, and requiring 
any person claiming them to make such claim within 30 days from the date 
of the first publication of such notice.
    (4) In respect of carriers seized as subject to forfeiture under the 
customs laws which, in the opinion of the seizing officer, have an 
appraised value of $100,000.00 or less, such officer shall cause a list 
containing a particular description of the seized carriers to be 
prepared and the seizing officer shall make the appraisement thereof. 
Such list and appraisement shall be properly attested to by the seizing 
officer.
    (5) In respect of carriers seized as subject to forfeiture under the 
customs laws and appraised by the seizing officer as having a value of 
$100,000.00 or less, the Director or his delegate shall publish a notice 
of seizure in the same manner as required by paragraph (a)(3) of this 
section; provided that the time for making claim shall be within 20 days 
from the date of first publication. (19 U.S.C. 1608).
    (6) Any person claiming the personal property or carrier so seized, 
within the time specified in the notice, may file with the Director a 
claim stating the interest in the articles or carrier seized, and may 
execute a bond to the United States, conditioned that, in case of 
condemnation of the articles or carrier so seized, the obligators shall 
pay all the costs and expenses of the proceedings to obtain such 
condemnation. The amount of the cost bond is $2,500.00, unless the 
seized property is a vehicle, vessel, or aircraft seized for a violation 
of 49 U.S.C. App., Chapter 11, in which case the cost bond shall be in 
the amount of $2,500 or ten percent of the value of the claimed 
property, whichever is lower, but not less than $250.00. Both the claim 
and the cost bond shall be executed in quadruplicate.
    (b) Judicial condemnation. The Chief Counsel of the Bureau of 
Alcohol, Tobacco and Firearms, shall authorize institution of forfeiture 
proceedings in those instances where the appraised value of the seized 
personal property or

[[Page 378]]

carrier exceeds $100,000.00 or where a claim and cost bond are filed.

(Sec. 111, Pub. L. 95-410, 92 Stat. 897, as amended (19 U.S.C. 1607, 
1610, 1612))

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-65, 45 FR 
8593, Feb. 8, 1980; T.D. ATF-183, 49 FR 37061, Sept. 21, 1984; T.D. ATF-
241, 51 FR 39613, Oct. 29, 1986; T.D. ATF-270, 53 FR 10489, Mar. 31, 
1988]



Sec. 72.23  Type and conditions of cost bond.

    The cost bond delivered by a claimant to effect removal of the 
forfeiture status of the property or carrier claimed to the jurisdiction 
of the Federal court for adjudication shall be a corporate surety bond: 
Provided, however, That upon a showing to the satisfaction of the 
Director or his delegate that the claimant is unable to furnish a 
corporate surety bond such claimant may deliver a cost bond with 
individual sureties acceptable to the Director or his delegate: Provided 
further, That in lieu of a cost bond with corporate or individual 
sureties the claimant may deposit collateral as provided in Sec. 72.25. 
The cost bond shall be conditioned that in the case of the condemnation 
of the property the obligators shall pay all costs and expenses of the 
proceedings to obtain such condemnation.

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-183, 49 
FR 37061, Sept. 21, 1984]



Sec. 72.24  Corporate surety bonds.

    (a) Corporate surety bonds may be given only with surety companies 
holding certificates of authority from the Secretary of the Treasury as 
acceptable sureties on Federal bonds, subject to the limitations 
prescribed by Treasury Department Circular No. 570 (Companies Holding 
Certificates of Authority as Acceptable Sureties on Federal Bonds and as 
Acceptable Reinsuring Companies), and subject to such amendments as may 
be issued from time to time.
    (b) Treasury Department Circular No. 570 is published in the Federal 
Register yearly as of the first workday of July. As they occur, interim 
revisions of the circular are published in the Federal Register. Copies 
may be obtained from the Audit Staff, Bureau of Government Financial 
Operations, Department of the Treasury, Washington, DC 20226.

(July 30, 1947, Ch. 390, 61 Stat. 648, as amended (6 U.S.C. 6, 7); Aug. 
16, 1954, Ch. 736, 68A Stat. 847, as amended (26 U.S.C. 7101))

[T.D. ATF-92, 46 FR 46914, Sept. 23, 1981]



Sec. 72.25  Deposit of collateral.

    (a) Bonds or notes of the United States, or other obligations which 
are unconditionally guaranteed as to both interest and principal by the 
United States, may be pledged and deposited by claimants as collateral 
security in lieu of corporate sureties in accordance with the provisions 
of Treasury Department Circular No. 154 (31 CFR Part 225--Acceptance of 
Bonds, Notes or Other Obligations Issued or Guaranteed by the United 
States as Security in Lieu of Surety or Sureties on Penal Bonds). 
Alternatively, cash, postal money orders, and certified or cashiers' or 
treasurers' checks may be furnished by claimants as collateral security 
in lieu of corporate sureties.
    (b) Treasury Department Circular No. 154 is periodically revised and 
contains the provisions of 31 CFR Part 225 and the forms prescribed in 
31 CFR Part 225. Copies of the circular may be obtained from the Audit 
Staff, Bureau of Government Financial Operations, Department of the 
Treasury, Washington, DC 20226.

(July 30, 1947, Ch. 390, 61 Stat. 650 (6 U.S.C. 15); Aug. 16, 1954, Ch. 
736, 68A Stat. 847, as amended (26 U.S.C. 7101))

[T.D. ATF-92, 46 FR 46914, Sept. 23, 1981]



Sec. 72.26  Bond for return of seized perishable goods.

    The proceedings to enforce forfeiture of perishable goods shall be 
in the nature of a proceeding in rem in the district court of the United 
States for the district wherein such seizure is made. Whenever such 
property is liable to perish or become greatly reduced in price or value 
by keeping, or when it cannot be kept without great expense, the 
Director or his delegate shall advise the owner, when known, of the 
seizure thereof. The owner may apply to the Director or his delegate to 
have the property examined any time prior to referral of the property to 
the U.S. Marshal for disposition, and if in the

[[Page 379]]

opinion of the Director or his delegate it shall be necessary to sell 
such property to prevent waste or expense, the Director or his delegate 
shall cause the property to be appraised. Thereupon the owner shall have 
the property returned to him upon giving a corporate surety bond (see 
Sec. 72.24) in an amount equal to the appraised value of the property, 
which bond shall be conditioned to abide the final order, decree, or 
judgment of the court having cognizance of the case, and to pay the 
amount of the appraised value to the Director or his delegate, the U.S. 
Marshal, or otherwise, as may be ordered and directed by the court, 
which bond shall be filed by the Director or his delegate officer with 
the U.S. Attorney for the district in which the proceedings may be 
commenced. If the owner of such property neglects or refuses to give 
such bond within a reasonable time considering the condition of the 
property the Director or his delegate shall request the U.S. Marshal to 
proceed to sell the property at public sale as soon as practicable and 
to pay the proceeds of sale, less reasonable costs of the seizure and 
sale, to the court to abide its final order, decree, or judgment.

(68A Stat. 869, 870, as amended; 26 U.S.C. 7322, 7323, 7324)

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-183, 49 
FR 37061, Sept. 21, 1984]



Sec. 72.27  Summary destruction of explosives subject to forfeiture.

    (a) Notwithstanding the provisions of Sec. 55.166 of this Title, in 
the case of the seizure of any explosive materials for any offense for 
which the materials would be subject to forfeiture in which it would be 
impracticable or unsafe to remove the materials to a place of storage or 
would be unsafe to store them, the seizing officer may destroy the 
explosive materials forthwith. Any destruction under this paragraph 
shall be in the presence of at least 1 credible witness.
    (b) Within 60 days after any destruction made pursuant to paragraph 
(a) of this section, the owner of the property and any other persons 
having an interest in the property so destroyed may make application to 
the Director for reimbursement of the value of the property in 
accordance with the instructions contained in ATF Publication 1850.1 (9-
93), Information to Claimants. ATF P 1850.1 is available at no cost upon 
request from the ATF Distribution Center, P.O. Box 5950, Springfield, 
Virginia 22150-5950. The Director shall make an allowance to the 
claimant not exceeding the value of the property destroyed, if the 
claimant establishes to the satisfaction of the Director that--
    (1) The property has not been used or involved in a violation of 
law; or
    (2) Any unlawful involvement or use of the property was without the 
claimant's knowledge, consent, or willful blindness.

[T.D. ATF-363, 60 FR 17449, Apr. 6, 1995]



            Subpart D_Remission or Mitigation of Forfeitures



Sec. 72.31  Laws applicable.

    Remission or mitigation of forfeitures shall be governed by the 
applicable customs laws.

(Sec. 613, 618, 46 Stat. 756, as amended, 757, as amended, sec. 4, 53 
Stat. 1292, sec. 7327, 68A Stat. 871; 19 U.S.C. 1613, 1618, 49 U.S.C. 
784, 26 U.S.C. 7327)



Sec. 72.32  Interest claimed.

    Any person claiming an interest in property, including carriers, 
seized by alcohol, tobacco and firearms officers as subject to 
administrative forfeiture may file a petition addressed to the Director, 
for remission or mitigation of the forfeiture of such property.



Sec. 72.33  Form of the petition.

    There is no set or standardized form provided or required by the 
Department for use in filing a petition for remission or mitigation of 
forfeiture. However, it is preferable that the petition be typewritten 
on legal size paper; and it is necessary that the petition be executed 
under oath, prepared in triplicate and addressed to the Director, and 
that all copies of original documents submitted as exhibits in support 
of allegations of the petition be certified as true and accurate copies 
of originals. Each copy of the petition

[[Page 380]]

must contain a complete set of exhibits.



Sec. 72.34  Contents of the petition.

    (a) Description of the property. The petition should contain such a 
description of the property or carrier and such facts of the seizure as 
will enable the alcohol, tobacco and firearms officers concerned to 
identify the property or carrier.
    (b) Statement regarding knowledge of seizure. In the event the 
petition is filed for the restoration of the proceeds derived from sale 
of the property or carrier pursuant to summary forfeiture, it should 
also contain, or be supported by, satisfactory proof that the petitioner 
did not know of the seizure prior to the declaration or condemnation of 
forfeiture, and that he was in such circumstances as prevented him from 
knowing of the same. (See also Sec. 72.35.)
    (c) Interest of petitioner. The petitioner should state in clear and 
concise terms the nature and amount of the present interest of the 
petitioner in the property or carrier, and the facts relied upon to show 
that the forfeiture was incurred without willful negligence or without 
any intention upon the part of the petitioner to defraud the revenue or 
to violate the law, or such other mitigating circumstances as, in the 
opinion of the petitioner, would justify the remission or mitigation of 
the forfeiture.
    (d) Petitioner innocent party. If the petitioner is not the one who 
in person committed the act which caused the seizure the petition should 
state how the property or carrier came into the possession of such other 
person, and that the petitioner had no knowledge or reason to believe, 
if such be the fact, that the property or carrier would be used in 
violation of law. If known to the petitioner, at the time the petition 
is filed, that such other person had either a record or a reputation, or 
both, as a violator in the field of commercial crime, the petition 
should state whether the petitioner had actual knowledge of such record 
or reputation, or both, before the petitioner acquired his interest in 
the property or carrier, before such other person acquired his right in 
the property or carrier, whichever occurred later. When personal 
property is seized for violation of the liquor laws, the determining 
factor will be whether the person dealt with by the petitioner had 
either a record or a reputation, or both, as a violator of the liquor 
laws.
    (e) Documents supporting claim. The petition should also be 
accompanied by copies, certified by the petitioner under oath as 
correct, of contracts, bills of sale, chattel mortgages, reports of 
investigators or credit reporting agencies, affidavits, and any other 
papers or documents that would tend to support the claims made in the 
petition.
    (f) Costs. The petition should also contain an undertaking to pay 
the costs, if costs are assessed as a condition of allowance of the 
petition. Costs shall include all the expenses incurred in seizing and 
storing the property or carrier; the costs borne or to be borne by the 
United States; the taxes, if any, payable by the petitioner or imposed 
in respect of the property or carrier to which the petition relates; the 
penalty, if any, asserted by the Director; and, if the property or 
carrier has been sold, or is in the course of being sold, the expenses 
so incurred.



Sec. 72.35  Time of filing petition.

    A petition may be filed at any time prior to the sale or other 
disposition of the property or carrier involved pursuant to 
administrative forfeiture, but a petition in regard to property or a 
carrier which has already been sold or otherwise disposed of pursuant to 
administrative forfeiture must be filed within three months from the 
date of sale, and must contain the proof defined in Sec. 72.34(b). 
Acquisition for official use is equivalent to sale so far as remission 
or mitigation of any forfeiture is concerned.

(Sec. 306, 49 Stat. 880; 40 U.S.C. 304k)



Sec. 72.36  Place of filing.

    The petition should be filed in triplicate with the Director or his 
delegate for the region in which the seizure was made.

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-183, 49 
FR 37061, Sept. 21, 1984]

[[Page 381]]



Sec. 72.37  Discontinuance of administrative proceedings.

    If the petition is filed prior to administrative sale or retention 
for official use, proceedings to effect such sale or retention will be 
discontinued.



Sec. 72.38  Return of defective petition.

    If the petition is defective in some correctable respect, the 
original of the petition will be returned by letter to the petitioner 
for his submission of a corrected petition, in triplicate, within a 
reasonable time.



Sec. 72.39  Final action.

    (a) Petitions for remission or mitigation of forfeiture. (1) The 
Director shall take final action on any petition filed pursuant to these 
regulations. Such final action shall consist either of the allowance or 
denial of the petition. In the case of allowance, the Director shall 
state the conditions of the allowance.
    (2) In the case of an allowed petition, the Director may order the 
property or carrier returned to the petitioner, sold for the account of 
the petitioner, or, pursuant to agreement, acquired for official use.
    (3) The Director or his delegate shall notify the petitioner of the 
allowance or denial of the petition and, in the case of allowance, the 
terms and conditions under which the Director allowed the petition.
    (b) Offers in compromise of liability to forfeiture. The Director or 
his delegate shall take final action on any offer in compromise of the 
liability to forfeiture of personal property, including carriers, seized 
as provided in Sec. 72.21. Such action shall consist either of the 
acceptance or rejection of the offer.

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-183, 49 
FR 37061, Sept. 21, 1984]



Sec. 72.40  Acquisition for official use and sale for account of petitioner 

in allowed petitions.

    (a) Acquisition for official use. The property or carrier may be 
purchased by the United States pursuant to agreement and retained for 
official use. Where the petitioner is the owner, the purchase price is 
the appraised value of the property or carrier less all costs. Where the 
petitioner is a creditor, the purchase price is whichever one of these 
amounts is the smaller: (1) The petitioner's equity, or (2) the 
appraised value of the property or carrier less the amount of all costs 
incident to the seizure and forfeiture.
    (b) Sale for account of petitioner. The petitioner may elect not to 
comply with the condition on which the property or carrier may be 
returned. In this event, the Director or his delegate is authorized to 
sell it. Where the petitioner is the owner of the property or carrier, 
there is deducted from the proceeds of the sale all costs incident to 
the seizure, forfeiture, and sale, and the Director or his delegate pays 
to the petitioner, out of the proper appropriation, an amount equal to 
the balance, if any. Where the petitioner is a creditor, there is 
deducted from the proceeds of the sale all costs incident to the 
seizure, forfeiture, and sale, and the Director or his delegate pays to 
the petitioner, out of the proper appropriation, an amount equal to the 
balance, if any, of the selling price after deduction of all costs 
incident to the seizure, forfeiture, or sale: Provided, That if the 
amount of such balance exceeds the amount of the equity of the 
petitioner, only the latter amount is paid to the petitioner.

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-183, 49 
FR 37061, Sept. 21, 1984]



Sec. 72.41  Re-appraisal of property involved in an allowed petition.

    In determining the nature and extent of the relief to be afforded a 
petitioner pursuant to allowance of his petition, the value of the 
property or carrier involved in the allowed petition shall be considered 
to mean the value placed on said property or carrier pursuant to 
official appraisal thereof immediately following seizure: Provided, 
however, That if the petitioner desires an up-to-date re-appraisal made 
of the property or carrier, after notification as to the terms of 
allowance of the petition, and makes written request therefor, 
undertaking in said request to pay, or to be liable for, the total costs 
of such re-appraisal, the property or carrier shall be re-appraised 
officially in the same manner in which the original appraisal

[[Page 382]]

was made, and the terms and conditions of allowance shall stand modified 
to the extent required by such re-appraisal.



                       Subpart E_Appraiser's Fees



Sec. 72.51  Rate of compensation.

    Each appraiser selected under Sec. 72.22(a)(2) shall receive 
compensation at a reasonable fee not to exceed $15.00 per hour or 
portion thereof for the performance of his or her duties in appraising 
property seized as subject to forfeiture under Title 26 U.S.C.

(Act of Aug. 16, 1954, Ch. 736, 68A Stat. 870, as amended; 26 U.S.C. 
7325)

[T.D. ATF-8, 46 FR 18536, Mar. 25, 1981]



    Subpart F_Administrative Sale or Disposition of Personal Property



Sec. 72.61  Alternative methods of sale.

    (a) Sale by auction or competitive bid. When personal property or a 
carrier. When personal property or a carrier forfeited administratively 
may be sold, the Director or his delegate shall cause a notice of sale 
to be placed in a newspaper of general circulation published in the 
judicial district wherein the seizure was made. The sale shall not occur 
in less than 10 days from the date of the publication of the notice. At 
the discretion of the Director or his delegate based upon which method 
in his sound judgment is most advantageous to the best interests of the 
United States, the forfeited personal property or carrier may be 
advertised for sale, and sold, at public auction to the highest bidder 
on open, competitive bids, or to the highest bidder on sealed, 
competitive bids.
    (b) Sale by General Services Administration. When a vessel, vehicle, 
or aircraft seized under 49 U.S.C. App., Chapter 11 is forfeited 
administratively, the Director may authorize the General Services 
Administration to conduct the sale pursuant to such conditions as the 
Director deems proper.

(68A Stat. 870, as amended; 26 U.S.C. 7325)

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-183, 49 
FR 37061, Sept. 21, 1984; T.D. ATF-241, 51 FR 39613, Oct. 29, 1986; T.D. 
ATF-270, 53 FR 10489, Mar. 31, 1988]



Sec. 72.62  All bids on unit basis.

    All competitive bids, whether sealed or otherwise, shall be on a 
unit basis, i.e. if a number of forfeited automobiles are advertised for 
sale at the same date, hour and place, whether or not in the same notice 
of sale, there shall be a separate, individual bid required as to each 
automobile, and it shall not be permissible to accept one blanket bid to 
cover the entire group of cars offered for sale.



Sec. 72.63  Conditions of sale.

    (a) No recourse. All personal property and carriers to be sold shall 
be offered for sale ``as is'' and without recourse against the United 
States.
    (b) No guarantee. No guarantee or warranty, expressed or implied, 
shall be given or understood in respect of any forfeited property or 
carrier offered for sale.
    (c) No sale. (1) The United States reserves the right to reject any 
and all bids received at public auction and in sealed, competitive bid 
sales.
    (2) When ``no sale'' is declared for property other than cigars, 
cigarettes, and cigarette papers and tubes, the Director or his delegate 
shall re-advertise the property for sale.
    (3) When ``no sale'' is declared for cigars, cigarettes, or 
cigarette papers or tubes, such property shall be destroyed or, if fit 
for human consumption, be given to a Federal or State hospital or 
institution.
    (d) One bid. When only one bid is received for a single unit of 
property or a carrier offered at public auction or in a sealed, 
competitive bid sale, such bid shall be considered to be and treated as 
the highest bid received for that property or carrier.

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-183, 49 
FR 37061, Sept. 21, 1984]



Sec. 72.64  Terms of sale.

    The terms of sale shall be cash, cashier's check, certified check, 
or postal money order, in the amount of the accepted bid.

[[Page 383]]



Sec. 72.65  Sale of forfeited tobacco products and cigarette papers and tubes.

    All tobacco products and cigarette papers and tubes forfeited under 
the internal revenue laws shall be sold at a price which will include 
the tax due and payable on those forfeited articles. Written, timely 
notice shall be given by the Director or his delegate to the 
manufacturer of any such forfeited articles offered for sale.

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-65, 45 FR 
8593, Feb. 8, 1980; T.D. ATF-183, 49 FR 37061, Sept. 21, 1984]



Sec. 72.66  Purchaser entitled to bill of sale.

    Each purchaser of administratively forfeited property, including 
carriers, shall be entitled to receive a suitable and authentic bill of 
sale on a form to be provided for the purpose.



Sec. 72.67  Sale on open, competitive bids.

    If the personal property or carrier is to be sold at public auction 
to the highest bidder on open, competitive bids, the notice of sale 
shall so specify, and state the date, hour, and place of sale.



Sec. 72.68  Sale on sealed, competitive bids.

    If the property or carrier is to be sold to the highest bidder on 
sealed, competitive bids, the notice of sale shall so specify, and shall 
state the date, hour, and place of sale, and the date, hour, and place 
before the sale when and where the property, including carriers, may be 
viewed by prospective sealed bidders, and necessary information 
obtained. All sealed bids must be filed with the Director or his 
delegate before the sale. No bids will be accepted after the sale 
starts. At the appointed date, hour, and place of sale, all sealed bids 
timely filed shall be opened in the presence of all bidders attending 
the sale, who shall have the privilege of inspecting the bids if they so 
desire.

[T.D. ATF-9, 39 FR 9954, Mar. 15, 1974, as amended by T.D. ATF-183, 49 
FR 37061, Sept. 21, 1984]



Sec. 72.69  Alternative disposition of seized carriers.

    (a) State or local proceedings. The Director may discontinue 
forfeiture proceedings instituted under the Customs laws for seizures of 
carriers under 49 U.S.C. App., Chapter 11 in favor of the institution of 
forfeiture proceedings by State or local authorities under an 
appropriate State or local statute. If such forfeiture proceedings are 
discontinued or dismissed, the Director may transfer the seized property 
to the appropriate State or local official, and notice of discontinuance 
or dismissal shall be provided to all known interested parties.
    (b) Transfer to State or local law enforcement agency. Any carrier 
forfeited under the Customs laws for seizures under 49 U.S.C. App., 
Chapter 11 may be transferred by the Director to any State or local law 
enforcement agency which participated directly in the seizure or 
forfeiture of the property.

(19 U.S.C. 1616)

[T.D. ATF-270, 53 FR 10489, Mar. 31, 1988]



    Subpart G_Disposal of Forfeited Firearms, Ammunition, Explosive 
                   Materials, or Contraband Cigarettes



Sec. 72.81  Authority for disposal.

    Forfeited firearms, aummunition, explosive materials, or contraband 
cigarettes, not the subject of an allowed petition, may only be disposed 
of in accordance with the provisions of 26 U.S.C. 5872(b).

[T.D. ATF-65, 45 FR 8593, Feb. 8, 1980]



PART 73_ELECTRONIC SIGNATURES; ELECTRONIC SUBMISSION OF FORMS--Table of 

Contents




Sec.

                      Subpart A_General Provisions

                                  Scope

73.1 What does this part do?

                               Definitions

73.3 What terms must I know to understand this part?

[[Page 384]]

                     Subpart B_Electronic Signatures

73.10 What does subpart B cover?
73.11 What are the required components and controls for acceptable 
          electronic signatures?
73.12 What security controls must I use for identification codes and 
          passwords?

            Subpart C_Electronic Filing of Documents With TTB

73.30 What does subpart C cover?
73.31 May I submit forms electronically to TTB?
73.32 May I electronically sign forms I submit electronically to TTB?
73.33 Am I legally bound by a form I sign electronically?
73.34 When is an electronically submitted form considered timely filed?
73.35 Do I need to keep paper copies of forms I submit to TTB 
          electronically?

    Authority: 26 U.S.C. 6011, 6061, 7502; 15 U.S.C. 7001, 7004.

    Source: 68 FR 58601, Oct. 10, 2003, unless otherwise noted.



                      Subpart A_General Provisions

                                  Scope



Sec. 73.1  What does this part do?

    (a) This part provides the conditions under which we will allow you 
to:
    (1) Use electronic signatures or digital signatures executed to 
electronic forms instead of traditional handwritten signatures executed 
on paper forms; and
    (2) Electronically submit certain forms to TTB.
    (b) This part does not require you to submit forms to us 
electronically.

                               Definitions



Sec. 73.3  What terms must I know to understand this part?

    You need to know the following terms to understand this part:
    27 CFR. Title 27 of the Code of Federal Regulations, chapter I.
    Biometrics. A method of verifying an individual's identity based on 
measurement of the individual's physical feature(s) or repeatable 
action(s) where those features and/or actions are both unique to that 
individual and measurable.
    Digital signature. An electronic signature based upon cryptographic 
methods of originator authentication, computed by using a set of rules 
and a set of parameters such that the identity of the signer and the 
integrity of the data can be verified. A signer creates a digital 
signature by using public-key encryption to transform a message digest 
of an electronic message. If a recipient of the digital signature has an 
electronic message, message digest function, and the signer's public 
key, the recipient can verify:
    (1) Whether the transformation was accomplished with the private key 
that corresponds to the signer's public key; and
    (2) Whether the electronic message has been altered since the 
transformation was made.
    Electronic document receiving system. Any set of apparatus, 
procedures, software, records, or documentation used to receive 
documents communicated to it via a telecommunications network.
    Electronic signature. A computer data compilation of any symbol or 
series of symbols executed, adopted, or authorized by an individual to 
be the legally binding equivalent of the individual's handwritten 
signature, and that:
    (1) Identifies and authenticates a particular person as the source 
of the electronic message; and
    (2) Indicates such person's approval of the information contained in 
the electronic message.
    Form(s). The term form(s), when used in this part, includes all 
documents required by 27 CFR, chapter I, to be submitted to TTB.
    Handwritten signature. The scripted name or legal mark of an 
individual handwritten by that individual and executed or adopted with 
the present intention to authenticate a writing in a permanent form. The 
act of signing with a writing or marking instrument such as a pen or 
stylus is preserved. The scripted name or legal mark, while 
conventionally applied to paper, may also be applied to other materials 
or devices that capture the name or mark.
    Paper format. A paper document.
    TTB. Refers to the Alcohol and Tobacco Tax and Trade Bureau within 
the Department of the Treasury.
    You and I. ``You'' and ``I'' refer to the organization or person who 
must maintain records or submit documents to

[[Page 385]]

TTB to satisfy the requirements of 27 CFR, chapter I.



                     Subpart B_Electronic Signatures



Sec. 73.10  What does subpart B cover?

    This subpart provides the conditions under which TTB will allow you 
to use electronic signatures executed to electronic forms instead of 
traditional handwritten signatures executed on paper forms. Where 
electronic signatures and their associated electronic forms meet the 
requirements of this part, TTB will consider the electronic signatures 
to be the equivalent of full handwritten signatures, initials, and other 
general signings this chapter requires.



Sec. 73.11  What are the required components and controls for acceptable 

electronic signatures?

    (a) Electronic signatures not based on biometrics. If you use 
electronic signatures that are not based upon biometrics you must:
    (1) Employ at least two distinct identification components such as 
an identification code and a password;
    (2) Use both identification components when executing an electronic 
signature to an electronic document; and
    (3) Ensure that the electronic signature can only be used by the 
authorized user.
    (b) Electronic signatures based on biometrics. If you use electronic 
signatures based upon biometrics, they must be designed to ensure that 
they cannot be used by anyone other than their genuine owners.



Sec. 73.12  What security controls must I use for identification codes and 

passwords?

    If you use electronic signatures based upon use of identification 
codes in combination with passwords, you must employ controls to ensure 
their security and integrity. These controls must include:
    (a) Maintaining the uniqueness of each combined identification code 
and password, such that no two individuals have the same combination of 
identification code and password;
    (b) Ensuring that identification code and password issuances are 
periodically checked, recalled, or revised (e.g., to cover such events 
as password aging);
    (c) Following loss management procedures to electronically 
deauthorize lost, stolen, missing, or otherwise potentially compromised 
tokens, cards, or other devices that bear or generate identification 
code or password information, and to issue temporary or permanent 
replacements using suitable, rigorous controls;
    (d) Using transaction safeguards to prevent unauthorized use of 
passwords and/or identification codes, and to detect and report in an 
immediate and urgent manner any attempts at their unauthorized use to 
the system security unit and, as appropriate, to organizational 
management; and
    (e) Initial and periodic testing of devices, such as tokens or 
cards, that bear or generate identification code or password information 
to ensure that they function properly and have not been altered in any 
unauthorized manner.



            Subpart C_Electronic Filing of Documents with TTB



Sec. 73.30  What does subpart C cover?

    This subpart provides the conditions under which we will allow you 
to satisfy certain reporting requirements of this chapter by submitting 
forms to us electronically.



Sec. 73.31  May I submit forms electronically to TTB?

    Yes; you may submit an electronic form, instead of a paper form, to 
satisfy any reporting requirement in this chapter, only if:
    (a) We have published a notice in the Federal Register and on our 
Web site (http://www.ttb.gov) announcing that we are prepared to receive 
a particular form electronically;
    (b) You have registered to do so pursuant to the instructions in a 
notice published in the Federal Register and on our Web site as stated 
above;
    (c) You submit the electronic form to an electronic document 
receiving system that we have designated for the receipt of that 
specific form; and
    (d) The electronic form bears valid electronic signatures, as 
provided in

[[Page 386]]

subpart B of this part, to the same extent that the paper submission for 
which it substitutes would bear handwritten signatures.



Sec. 73.32  May I electronically sign forms I submit electronically to TTB?

    You may electronically sign the electronic form you submit to us if:
    (a) You have registered with TTB to do so and have certified, prior 
to the time of such use, that the electronic signatures or digital 
signatures in your system are intended to be the legally binding 
equivalent of traditional handwritten signatures;
    (b) The electronic or digital signature meets the standards of this 
part and is authorized by TTB in accordance with this part; and
    (c) The electronic or digital signature is sufficiently trustworthy 
and reliable that the signing party may not repudiate the signature.



Sec. 73.33  Am I legally bound by a form I sign electronically?

    Yes; by electronically signing a form you submit to us, you are 
agreeing to be legally bound to the same extent as if you applied a 
traditional handwritten signature on a paper document submitted to 
satisfy the same reporting requirement. Persons using electronic 
signatures shall, upon TTB's request, provide additional certification 
or testimony that a specific electronic signature is the legally binding 
equivalent of the signer's handwritten signature.



Sec. 73.34  When is an electronically submitted form considered timely filed?

    If you submit a form to our electronic document receiving system, 
your report will be considered filed on the date of the electronic 
postmark given by that system.



Sec. 73.35  Do I need to keep paper copies of forms I submit to TTB 

electronically?

    Nothing in this part alters any other regulatory or statutory 
requirement that records be maintained in paper format. If the 
regulations in this chapter require you to keep paper copies of certain 
forms, you must continue to do so unless TTB otherwise authorizes you to 
maintain electronic copies of these documents through a general notice 
in the Federal Register or through a variance.



                       SUBCHAPTERS G-L [RESERVED]

[[Page 387]]



          SUBCHAPTER M_ALCOHOL, TOBACCO AND OTHER EXCISE TAXES



                        PARTS 194-399 [RESERVED]


[[Page 389]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 391]]



                    Table of CFR Titles and Chapters




                      (Revised as of April 1, 2007)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 100--
                199)
        II  Office of Management and Budget Circulars and Guidance 
                (Parts 200--299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Part 376)
        VI  Department of State (Part 601)
        IX  Department of Energy (Part 901)
        XV  Environmental Protection Agency (Part 1532)
       XXV  National Science Foundation (Part 2520)
      XXVI  National Archives and Records Administration (Part 
                2600)
    XXVIII  Department of Justice (Part 2867)
     XXXII  National Endowment for the Arts (Part 3254)
    XXXIII  National Endowment for the Humanities (Part 3369)
    XXXVII  Peace Corps (Part 3700)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)

[[Page 392]]

       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)
    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
        LV  National Endowment for the Arts (Part 6501)
       LVI  National Endowment for the Humanities (Part 6601)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)

[[Page 393]]

     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
     LXVII  Institute of Museum and Library Services (Part 7701)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Part 
                9701)
      XCIX  Department of Defense Human Resources Management and 
                Labor Relations Systems (Department of Defense--
                Office of Personnel Management) (Part 9901)

                      Title 6--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--99)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)

[[Page 394]]

        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)

[[Page 395]]

         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1303--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)

[[Page 396]]

     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board, Department of 
                Commerce (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board, 
                Department of Commerce (Parts 500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)

[[Page 397]]

            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  Bureau of Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Bureau of Immigration and Customs Enforcement, 
                Department of Homeland Security (Parts 400--599)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees Compensation Appeals Board, Department of 
                Labor (Parts 500--599)

[[Page 398]]

         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

[[Page 399]]

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)

[[Page 400]]

         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)

[[Page 401]]

         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)

[[Page 402]]

         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

[[Page 403]]

                          Title 35 [Reserved]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                301--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)

[[Page 404]]

       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

[[Page 405]]

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10010)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)

[[Page 406]]

     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management, Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)

[[Page 407]]

        21  Office of Personnel Management, Federal Employees' 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  [Reserved]
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)

[[Page 408]]

      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation - [RESERVED]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR

[[Page 409]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of April 1, 2007)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 410]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs and Border Protection Bureau              19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 411]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Acquisition Regulations System          48, II
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II

[[Page 412]]

  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102

[[Page 413]]

  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Defense Acquisition Regulations System          48, 2
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection Bureau            19, I
  Federal Emergency Management Agency             44, I
  Immigration and Customs Enforcement Bureau      19, IV
  Immigration and Naturalization                  8, I
  Transportation Security Administration          49, XII
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Customs Enforcement Bureau        19, IV
Immigration and Naturalization                    8, I
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V; 42, I
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
   Archives and Records Administration
[[Page 414]]

Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50

[[Page 415]]

  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
  Copyright Royalty Board                         37, III
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52

[[Page 416]]

Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII

[[Page 417]]

Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection Bureau            19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 419]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations that were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000,'' published in 
11 separate volumes.

                                  2001

27 CFR
                                                                   66 FR
                                                                    Page
Chapter I
40-46 (Subchapter B) Heading added.................................38550
40 Redesignated from Part 270; authority citation revised..........39093
40.11 Amended...............................................39094, 49532
40.21 (b) amended..................................................39094
40.31 (a) amended..................................................39094
40.32 (b) amended..................................................39094
40.33 (b)(3) and (c)(2) amended....................................39094
40.35 (a) amended..................................................39094
40.44 Amended...............................................43479, 56758
40.49 Amended......................................................39094
40.62 Amended......................................................39094
40.63 Amended......................................................39094
40.64 Amended......................................................39094
40.65 Amended......................................................39094
40.67 Amended......................................................39094
40.68 Amended......................................................39094
40.71 Amended......................................................39094
40.72 Amended......................................................39094
40.74 Amended......................................................42734
40.92 Amended......................................................39094
40.101 Amended.....................................................39094
40.102 Amended.....................................................39094
40.103 Amended.....................................................39094
40.104 Amended.....................................................39094
40.111 Amended.....................................................39094
40.113 Amended.....................................................39094
40.114 Amended.....................................................39094
40.134 Amended.....................................................39094
40.135 Amended.....................................................39094
40.136 (d) amended.................................................39094
40.140 Amended.....................................................39094
40.162 Amended.....................................................39094
40.163 Amended.....................................................39095
40.164 (a)(2) and (d)(2) amended...................................39095
40.165 (a) amended.................................................39095
40.165a (a)(1), (b)(2) and (3) amended.............................39095
40.166 Amended.....................................................39095
40.167 (a) and (b) amended.........................................39095
40.168 Amended.....................................................39095
40.181 Amended.....................................................39095
40.183 (e) amended.................................................39094
40.187 Amended.....................................................39094
40.212 Amended.....................................................39094
40.216c (b) and (c) amended........................................39095
40.233 Amended.....................................................43479
40.234 Amended.....................................................56758
40.235 Amended.....................................................43479
40.251 Amended.....................................................39095
40.252 Amended.....................................................39095
40.253 Amended.....................................................39095
40.254 Amended.....................................................39095
40.255 Amended.....................................................39095
40.282 Amended.....................................................39095
40.283 Amended.....................................................39095
40.286 Amended.....................................................39095
40.287 Amended.....................................................39095
40.301 Amended.....................................................39095
40.311 (a) and (b) amended.........................................39095
40.313 Amended.....................................................39095
40.331 Amended.....................................................39095
40.332 Amended.....................................................42734
40.355 (e) and (g)(2) amended......................................39095
40.357 (a)(1), (b)(2) and (3) amended..............................39095
40.371 (a) amended.................................................39096
40.372 (b) amended.................................................39096
40.373 (b)(3) and (c)(2) amended...................................39096
40.374 (a) amended.................................................39096
40.384 Amended.....................................................56758

[[Page 420]]

40.391 Revised.....................................................49532
40.396 Amended.....................................................39096
40.397 Amended.....................................................39096
40.402 Amended.....................................................39096
40.404 Amended.....................................................39096
40.405 Amended.....................................................39096
40.410 Amended.....................................................39096
40.421 (a)(4) amended..............................................39096
40.451 Amended.....................................................43479
40.453 Amended.....................................................56758
40.454 Amended.....................................................43479
40.461 Amended.....................................................39096
40.472 Amended.....................................................39096
40.473 Amended.....................................................39096
40.475 Amended.....................................................39096
40.476 Amended.....................................................39096
40.478 Amended.....................................................39096
44 Redesignated from Part 290......................................43480
44.11 Amended......................................................49532
44.31 (a) amended..................................................43480
44.32 (b) amended..................................................43480
44.33 (b)(3) and (c)(2) amended....................................43480
44.35 (a) amended..................................................43480
44.62 Amended......................................................43480
44.63 Amended......................................................43480
44.67 (a) amended..................................................43480
44.82 Amended......................................................43480
44.83 Amended......................................................43480
44.84 Amended......................................................43480
44.85 Amended......................................................43480
44.86 Amended......................................................43480
44.87 Amended......................................................43480
44.88 Amended......................................................43480
44.93 Amended......................................................43480
44.102 Amended.....................................................43480
44.104 Amended.....................................................43480
44.105 Amended.....................................................43480
44.107 Amended.....................................................43480
44.108 Amended.....................................................43480
44.110 Amended.....................................................43480
44.111 Amended.....................................................43480
44.112 Amended.....................................................43480
44.123 Amended.....................................................43480
44.124 Amended.....................................................43480
44.144 Amended.....................................................43480
44.161 Amended.....................................................43480
44.185 Authority citation revised..................................45618
44.200 Amended.....................................................43480
44.205 (d) amended.................................................43480
44.222 Amended.....................................................43480
44.223 Amended.....................................................43480
44.224 Amended.....................................................43480
44.225 Amended.....................................................43480
44.226 Amended.....................................................43480
44.230 Amended.....................................................43480
44.243 Amended.....................................................43480
44.244 Amended.....................................................43480
44.245 Amended.....................................................43480
44.264 Amended.....................................................43480
44.266 Amended.....................................................43480
45 Redesignated from Part 295......................................56758
45.34 Amended......................................................56758
45.43 OMB number...................................................56758
46 Redesignated from Part 296......................................32220
    Cross reference amended........................................43479
    Authority citation revised.....................................45618
46.4 (c) amended...................................................32220
46.6 (a) and (c) amended...........................................32220
46.7 Amended.......................................................32220
46.8 Introductory text and (f) amended.............................32220
46.15 Amended......................................................32220
46.72 Amended...............................................32220, 39093
46.81 Amended......................................................32220
46.146 Amended.....................................................32220
46.147 (a) introductory text and (b) introductory text amended.....32220
46.150 (a) amended.................................................32220
46.153 Introductory text amended...................................32220
46.166 Amended.....................................................39093
    Revised........................................................45618
46.167 (a) and (c) amended.........................................39093
46.192 (a) amended.................................................32220
46.194 Amended.....................................................32220
46.196 (a), (b) and (d) amended....................................32221
46.205 (a) and (e) amended.........................................32221
46.206 (b) and (f) amended.........................................32221
46.213 Amended.....................................................32221
46.221 Amended.....................................................32221
46.237 Amended.....................................................32221
46.241 (f) amended.................................................32221
46.242 Amended.....................................................32221
46.255 (a) amended.................................................39093
    (b) and (c) amended............................................43479
46.270 Revised.....................................................32220
53.11 Amended......................................................19088
53.20 Added........................................................19088
53.21 (a) amended; (b) revised.....................................19088
53.22 (a)(1) amended...............................................19088
53.23 (a) amended; (b) revised.....................................19088
53.24 (a)(1) and (d)(1) amended....................................19088
53.92 (b)(2) amended...............................................19088
53.96 (b)(4) amended...............................................19088
53.115 (b) amended.................................................19088
53.132 (c)(2)(ii) amended..........................................19088
53.133 (d)(3) amended..............................................19088
53.134 (d)(2)(ii) amended..........................................19088
53.136 (c)(2) amended..............................................19088
53.140 (b) amended.................................................19088

[[Page 421]]

53.142 (a) introductory text amended...............................19088
53.151 (b)(1) and (2) amended......................................19088
53.155 (a) and (b) amended.........................................19088
53.156 (a)(1) and (c) amended......................................19088
53.157 (f)(1) amended..............................................19088
53.158 (b)(1), (3) and (e) amended.................................19088
53.159 (d)(1) and (2) amended......................................19088
    (j)(1) amended.................................................19089
53.172 (a)(3)(ii)(A), (B) and (b)(2)(iii) amended..................19088
53.186 (a) introductory text and (4) amended.......................19088
55.11 Amended......................................................16602
55.23 Amended......................................................16602
55.71 Amended......................................................16602
55.73 Amended......................................................42734
55.75 Amended......................................................42734
55.79 Amended......................................................42734
55.82 Amended......................................................42734
55.105 (b) amended.................................................16602
55.126 (d) amended.................................................16602
55.128 Amended.....................................................16602
    Corrected......................................................19089
55.218 Table amended........................................16602, 19089
70.2 (a) amended; (b) revised......................................29022
70.3 Added.........................................................29022
70.11 Amended......................................................29022
70.21 Amended...............................................29022, 29023
70.22 (a) and (b) amended; (c) removed.............................29023
70.23 (b) revised..................................................29023
70.24 (b) amended..................................................29023
70.25 (a)(4) amended...............................................29022
70.26 (c)(2)(ii) amended...........................................29022
70.30 Revised......................................................29023
70.31 Revised......................................................29023
70.32 Amended......................................................29023
70.33 Introductory text revised....................................29023
70.34 Revised......................................................29023
70.40 Revised......................................................29023
70.41 (a), (c), (d) and (f) amended................................29024
70.42 Heading, (a)(1), (b) and (c)(1) revised......................29024
70.51 Revised......................................................29024
70.61 (a)(1)(i) introductory text, (C) and (2) amended.............29022
    (a)(1)(i) introductory text, (D) and (3) amended...............29024
70.64 Amended......................................................29024
70.71 Introductory text, (a), (b)(1)(ii) and (2) amended...........29024
70.72 Amended......................................................29025
70.73 Amended......................................................29024
70.74 (c)(1) and (2) amended.......................................29024
    (b) amended....................................................29025
70.75 (b) and (c) amended..........................................29024
    (a) introductory text revised..................................29025
70.76 (a), (b)(3), (c) and (d) amended.............................29024
70.77 (a)(1), (2), (b)(1) and (2) amended..........................29024
70.81 (a) amended..................................................29024
70.82 Amended......................................................29024
70.92 (c) and (d)(2)(i) amended....................................29024
70.94 (a) amended..................................................29022
70.96 (a)(1)(iv), (2), (3) and (c) amended.........................29024
    (c) amended.............................................29024, 29025
70.98 (b) amended...........................................29024, 29025
70.100 Amended.....................................................29022
70.101 Amended.....................................................29024
70.113 (b) amended.................................................29024
70.122 Amended.....................................................29024
70.123 (b)(1) and (2) amended......................................29024
    (a)(2) amended.................................................29025
70.124 Amended.....................................................29025
70.125 (a) and (c) revised; (b) amended............................29025
70.126 Amended.....................................................29025
70.131 (b) amended..........................................32219, 42737
70.149 (a)(3) introductory text and (b)(2)(i)(A) amended...........29025
70.150 (a) introductory text revised; (a)(1), (2), (b), (c)(1), 
        (2), (3), (d), (e)(1) introductory text, (2)(i) 
        introductory text and (B) amended..........................29025
70.151 (a), (b), (d), (e)(1), (f)(3) and (g) amended...............29025
    (g) amended....................................................29026
70.161 (a)(4)(i)(B) amended........................................29022
    (a)(1), (2), (b) and (c) amended...............................29025
    (a)(1) and (c) amended.........................................29026
70.162 (a) through (d) amended.....................................29025
70.163 (a)(1), (b)(1) and (c) amended..............................29025
    (a)(2)(ii) introductory text revised...........................29026
70.164 (b)(1) introductory text, (i), (ii), (2)(i), (ii) and (c) 
        amended....................................................29025
70.165 Amended.....................................................29026
70.167 (b)(1) concluding text amended..............................29022
    (a)(2)(ii) amended.............................................29024
    (a)(4), (b)(2) introductory text and (b)(3) amended............29025

[[Page 422]]

    (a)(1), (2)(i)(C), (D), (a)(4) and (b)(1) introductory text 
revised; (a)(2)(i) introductory text and (a)(3) amended............29026
70.168 (a) amended.................................................29022
    (b)(2) amended; (c) revised....................................29026
70.169 Amended.....................................................29022
70.170 (b) amended.................................................29025
70.181 (b)(1), (2), (c)(1)(i), (ii), (2), (3)(i), (4)(i), (ii)(D) 
        concluding text, (iv) introductory text, (5) introductory 
        text, (ii)(B) and (8) amended..............................29022
    (a), (b)(1), (c)(2), (3)(ii), (4)(iii) and (5)(ii)(D) amended 
                                                                   29026
    (c)(5)(ii)(E) and (c)(8) amended...............................29027
70.182 (a) and (b) amended.........................................29022
    (a)(2)(i), (ii), (6)(iv), (v), (7) and (9) amended.............29027
70.183 (b)(2), (3), (6), (7) introductory text, (9)(ii) and (11) 
        amended....................................................29022
    (a), (b) introductory text, (4), (9)(iv), (v), (10), (c), (d) 
and (e) amended; (f) revised.......................................29027
70.184 (a), (b), (c) introductory text and (1) amended.............29022
70.185 (a), (b) and (c) amended....................................29023
70.186 (b)(2) and (c) amended......................................29023
    (a)(5) amended.................................................29025
70.187 (a) amended..........................................29023, 29027
    (a) and (b) amended............................................29025
70.188 Amended.....................................................29023
70.191 (b) introductory text amended...............................29022
    (a) revised....................................................29027
70.192 (a) revised.................................................29027
70.204 (a) concluding text amended..........................29025, 29027
70.205 (a)(1), (2)(i), (ii)(C), (b)(1), (2), (c)(1), (e)(2), (3) 
        and (4) amended............................................29025
    (b)(1) and (c)(1) amended......................................29027
70.206 (a)(1), (b)(3)(ii), (4)(ii) introductory text, (A), 
        concluding text, (iii), (c)(2) and (3) amended.............29023
    (b)(4)(ii)(B) amended..........................................29025
    (a)(1), (b)(1) introductory text and (4)(ii)(B) concluding 
text amended; (c)(1) and (4) revised...............................29027
70.207 (b)(1)(iii) amended.........................................29025
70.208 Amended.....................................................29025
70.209 (a) and (b) amended.........................................29025
70.210 (a)(1) amended..............................................29025
70.213 Amended.....................................................29022
70.222 (b) revised.................................................29028
70.223 (d) amended.................................................29025
70.224 (a)(1) and (2)(i) revised...................................29028
70.227 Amended.....................................................29028
70.231 (i)(3) amended..............................................29025
70.241 (a)(8) amended..............................................29025
70.242 (a) and (c) amended.........................................29025
70.245 Heading, (a), (c)(2) and (d) amended........................29025
70.251 (a)(2) and (b) amended......................................29026
    (b) amended....................................................29027
70.253 (b)(2) amended..............................................29023
    (b)(1) and (2) amended.........................................29028
70.262 (b)(4) and (c)(2) amended...................................29028
70.263 (d) amended.................................................29023
70.271 (d)(1) amended..............................................29025
70.281 (b)(2) introductory text, (vi) (3)(iv) and (v) amended......29025
    (a)(1) and (b)(2) amended......................................29028
70.301 (a) amended.................................................29022
70.304 (a)revised; (b) amended.....................................29028
70.306 (a) amended.................................................29028
70.311 Amended.....................................................29022
70.333 Amended.....................................................29028
70.411 (b), (c) introductory text and (16) amended.................29028
    (c)(26) amended................................................38550
    (c)(5) amended.................................................42734
    (c)(2) amended.................................................42737
70.412 (a) amended.................................................29028
70.413 (a) amended.................................................29023
    (c)(1) amended.................................................29025
    (b) revised; (c)(2) introductory text and (d) introductory 
text amended.......................................................29028
70.414 (k) amended.................................................29026
    (a) amended....................................................29028
70.416 Revised.....................................................29029
70.418 Revised.....................................................29029
70.419 Revised.....................................................29029
70.431 (b)(7) amended..............................................32219
    (b)(2) amended.................................................39093
    (b)(1) amended.................................................42734
    (b)(5) amended.................................................43480
    (b)(6) amended.................................................56758
70.432 (a), (b) and (d) amended....................................29029
    (d) amended....................................................43480
70.433 (a) amended.................................................29023
    (a) and (b) amended............................................29029
70.435 (i) amended.................................................29023
70.438 Amended.....................................................29029
70.447 Amended.....................................................29025
70.461 Amended.....................................................38550
70.462 Amended.....................................................43480
70.471 Revised.....................................................29029

[[Page 423]]

70.481 (a), (b)(2)(ii), (3)(ii) and (4)(iii) amended...............29025
    (b)(2) introductory text, (3)(i), (ii)(B) and (4) introductory 
text amended.......................................................29026
    (b)(1) amended.................................................29029
70.482 (a) introductory text amended...............................29022
    (d)(1)(i) amended..............................................29026
    (d)(1)(ii) through (v) removed; (d)(1)(vi) redesignated as 
(d)(1)(ii); new (d)(1)(ii) amended; (e) introductory text and 
concluding text revised............................................29029
70.483 Revised.....................................................29029
70.484 Amended.....................................................29030
70.485 (a) amended.................................................29022
70.486 Amended.....................................................29025
70.504 (c)(2) amended..............................................29023
70.506 Amended.....................................................29030
70.507 (g) amended.................................................29023
70.601 Amended.....................................................29030
70.602 (a) and (b)(1) introductory text amended....................29023
70.603 (a)(1) revised..............................................29030
70.606 Introductory text amended...................................29023
70.608 Amended.....................................................29023
70.609 Amended.....................................................29023
70.701 (a)(1) revised; (c), (d)(2)(i)(A), (iv)(A), (B) and (C) 
        amended....................................................29030
70.801 Amended.....................................................29030
70.802 (a), (b)(1) and (d) through (g) amended; (b)(2) removed; 
        (c) revised................................................29030
70.803 (c) amended.................................................16602
    (c) corrected..................................................19089
    (c), (e)(3) and (f) amended; (d), (e)(1), (e)(2), (4) and (5) 
revised............................................................29030
71 Redesignated from Part 200; authority citation revised..........42734
71.37 Amended......................................................42734
71.38 Amended......................................................42734
71.62 Amended......................................................42734
71.63 Amended......................................................42734
71.64 (a) amended..................................................42734
71.74 Amended......................................................42734
71.78 Amended......................................................42734
71.82 Amended......................................................42735
71.83 Amended......................................................42735
71.96 Amended......................................................42735
71.107a (a) amended................................................42735
71.108 (a) and (b) amended.........................................42735
71.110 Amended.....................................................42735
170 Authority citation removed......................................8769
    Redesignated as Part 29........................................42737
170.41--170.59 (Subpart C) Authority citation revised...............8769
170.42 Added........................................................8769
170.43 (a) amended; (b) removed; (c) redesignated as new (b); new 
        (b) revised.................................................8769
170.45 Amended......................................................8770
170.47 (a) and (c) amended..........................................8769
170.49 (a), (b) and (c) amended.....................................8769
170.55 (a) revised; (c) amended.....................................8770
170.59 Amended......................................................8770
178 Technical correction...........................................42586
178.92 Heading and (a) revised; OMB number.........................40600
179 Technical correction...........................................42586
179.102 Revised; OMB number........................................40601
200 Redesignated as Part 71........................................42734
200.49b (b) amended................................................39093
250 Redesignated as Part 26........................................38550
250.2 (a) amended; (b) revised.....................................21668
250.3 Added........................................................21668
250.11 Amended..............................................21668, 21669
250.37 Revised.....................................................21669
250.43 Amended.....................................................21668
250.50a (b)(2) revised.............................................21669
250.52 (b) and (c) amended.........................................21669
250.54 Revised.....................................................21669
250.61 Revised.....................................................21669
250.62a Amended....................................................21669
250.65 Amended.....................................................21669
250.70 Amended.....................................................21669
250.70a Amended....................................................21669
250.71 (c) and (d) amended.........................................21669
250.72 Amended.....................................................21669
250.74 Amended.....................................................21669
250.75 Amended.....................................................21669
250.81 Amended.....................................................21669
250.96 Amended.....................................................21669
250.105 Amended....................................................21669
250.110 Amended....................................................21669
250.112 (c)(1), (4) and (e) amended; (c)(3) revised................21669
250.112a (b)(1) and (c)(1) amended.................................21669
250.113 (a) amended................................................21669
250.116 Amended....................................................21669
250.118 Amended....................................................21669
250.119 Revised....................................................21669
250.126 Amended....................................................21669
250.128 Amended....................................................21669
250.172 (a) amended; (b) revised...................................21669
250.173 (a) revised; (d) amended...................................21669
250.174 (a) and (e) amended........................................21669

[[Page 424]]

250.193 (b) amended................................................21670
250.194 Amended....................................................21669
250.197 Amended....................................................21670
250.199f (c) revised...............................................21670
250.209 Amended....................................................21668
250.222 (b) and (c) amended........................................21669
250.224 Revised....................................................21670
250.275 (a) revised................................................21670
250.276 Amended.............................................21669, 21670
250.277 Undesignated center heading and section removed............21670
250.303 Amended....................................................21669
250.308 (a) amended; (b) revised...................................21670
250.309 (a) revised; (d) amended...................................21670
250.310 (a) and (e) amended........................................21669
250.314 (b) amended................................................21668
    (a) and (b) amended............................................21670
250.318 Revised....................................................21670
    (a) and (b) amended............................................21670
250.316 Amended....................................................21668
250.319 Amended....................................................21668
250.331 (b) amended.........................................21668, 21669
251 Cross references amended.......................................38550
251.1 Note revised.................................................38550
251.48a (a) amended................................................38550
270 Redesignated as Part 40........................................39093
270.11 Amended.....................................................32220
270.49 Amended.....................................................32220
270.165 OMB number..........................................16602, 19089
270.165a OMB number.........................................16602, 19089
270.216 OMB number.................................................16602
270.286 Amended....................................................32220
275 Authority citation revised.....................................13850
275.11 Amended.......................................13850, 45618, 49532
275.29 Amended.....................................................13850
275.39 Amended.....................................................39093
275.63 (a) amended.................................................39093
275.72 OMB number..................................................16602
275.82 (b) amended.................................................39093
    Revised........................................................45618
275.83 Revised.....................................................45619
275.85 (b) amended.................................................39093
275.85a (c) amended................................................39093
275.86 (a) amended.................................................39093
275.105 Revised....................................................13850
275.106 Revised....................................................13850
275.110 Revised....................................................13851
275.111 Revised....................................................13851
275.114 (b)(1) and (2) amended.....................................13851
275.115a (a)(1) and (b)(1) amended.................................39093
275.121 Revised....................................................13851
275.140 Amended....................................................39093
275.162 Amended....................................................32220
275.199 Amended....................................................42734
275.205 (b) amended................................................32220
290 Redesignated as Part 44........................................43480
290.11 Amended.....................................................39093
290.67 (b) amended.................................................39093
290.92 Amended.....................................................42734
290.154 Amended....................................................32220
290.162 Amended....................................................42734
290.184 Amended....................................................39093
290.243 Amended....................................................39093
295 Redesignated as Part 45........................................56758
295.11 Amended..............................................39093, 49532
295.34 Amended.....................................................39093
295.42 Amended.....................................................39093
295.45c (b) and (c) amended........................................39093
295.51 (a) introductory text amended...............................39093
296 Redesignated as Part 46........................................32220

                                  2002

27 CFR
                                                                   67 FR
                                                                    Page
Chapter I
40.232 Revised.....................................................19333
44.2 (a) amended; (b) revised......................................30801
44.3 Added.........................................................30801
44.11 Amended......................................................30801
44.35 (c) amended..................................................30801
44.62 Amended......................................................30801
44.66 Amended......................................................30801
44.70 Amended......................................................30801
44.71 Amended......................................................30801
44.72 Introductory text and (c) amended............................30801
44.73 Introductory text and (c) amended............................30801
44.82 Amended......................................................30801
44.83 Amended......................................................30801
44.84 Amended......................................................30801
44.86 Amended......................................................30801
44.87 Amended......................................................30802
44.91 Amended......................................................30802
44.92 Amended......................................................30802
44.93 Revised......................................................30802
44.101 Amended.....................................................30802
44.102 Amended.....................................................30802
44.103 Amended.....................................................30802
44.104 Amended.....................................................30802
44.105 Amended.....................................................30802
44.106 Amended.....................................................30802
44.108 Heading revised; amended....................................30802
44.109 Amended.....................................................30802
44.110 Removed.....................................................30802
44.111 Amended.....................................................30802
44.112 Amended.....................................................30802
44.121 (b) amended.................................................30802

[[Page 425]]

44.123 Amended.....................................................30802
44.124 Amended.....................................................30802
44.125 Amended.....................................................30802
44.126 Amended.....................................................30802
44.127 Amended.....................................................30802
44.129 (a) amended.................................................30802
44.142 (e) amended.................................................30801
44.143 (b) amended.................................................30801
    (a) amended; (a)(1) and (2) removed............................30802
44.144 Amended.....................................................30802
44.145 Amended.....................................................30801
44.146 Amended.....................................................30802
44.147 Amended..............................................30801, 30802
44.150 Amended.....................................................30801
44.152 Amended.....................................................30802
44.153 Amended.....................................................30802
44.154 Amended.....................................................30802
44.161 Amended.....................................................30802
44.162 Amended.....................................................30802
44.184 Amended.....................................................30801
44.199 Amended..............................................30801, 30802
44.200 Amended.....................................................30802
44.201 Amended..............................................30801, 30802
44.202 Amended.....................................................30802
44.203 Amended.....................................................30802
44.204 Amended.....................................................30802
44.205 (b)(3) amended..............................................30802
44.206 Amended.....................................................30802
44.207 Amended.....................................................30802
44.207a Amended....................................................30802
44.208 Amended.....................................................30802
44.209 Amended.....................................................30802
44.210 Amended.....................................................30802
44.212 Amended.....................................................30802
44.213 Amended.....................................................30802
44.222 Revised.....................................................30803
44.223 Amended..............................................30802, 30803
44.224 Revised.....................................................30803
44.225 Amended.....................................................30801
44.226 Amended.....................................................30802
44.227 Amended.....................................................30803
44.228 Amended.....................................................30802
44.229 Amended.....................................................30803
44.230 Amended.....................................................30802
44.231 Amended.....................................................30802
44.232 Amended.....................................................30802
44.242 Amended..............................................30802, 30803
44.243 Amended..............................................30802, 30803
44.244 Amended.....................................................30802
44.245 Amended.....................................................30802
44.246 Amended.....................................................30802
44.257 Amended..............................................30801, 30803
44.258 Amended.....................................................30803
44.259 Amended.....................................................30803
44.260 Amended.....................................................30803
44.261 Amended.....................................................30803
44.262 Amended.....................................................30803
44.263 Amended.....................................................30803
44.264 Amended.....................................................30803
44.264a Amended....................................................30803
44.265 Amended.....................................................30803
44.266 Amended.....................................................30801
44.267 Amended..............................................30801, 30803
45 Heading revised..................................................8880
45.11 Amended......................................................8880,
45.21 Amended.......................................................8880
45.22 Amended.......................................................8880
45.23 Amended.......................................................8880
45.24 Amended.......................................................8880
45.26 Added.........................................................8880
45.27 Added.........................................................8880
45.34 Amended.......................................................8880
45.36 Amended.......................................................8880
45.42 Amended.......................................................8880
45.51 (d) amended...................................................8880
46.2 Amended........................................................8880
46.5 (c) amended....................................................8880
46.6 (c) amended....................................................8880
46.7 Amended........................................................8880
46.8 (f) corrected.................................................63544
46.10 Amended.......................................................8880
46.11 (b) amended...................................................8880
46.13 Revised.......................................................8880
46.14 Amended.......................................................8880
46.15 Amended.......................................................8880
46.21--46.22 (Subpart B) Added......................................8880
46.72 Amended.......................................................8881
46.73 Amended.......................................................8881
46.78 Revised.......................................................8881
46.79 Revised.......................................................8881
46.81 Removed.......................................................8881
46.143 Amended......................................................8881
46.150 (b) amended..................................................8880
    (c) amended...............................................8880, 8881
46.153 Amended......................................................8881
46.163 Amended......................................................8881
46.164 Amended......................................................8881
46.165 Amended......................................................8881
46.192 (a) amended..................................................8881
46.270 Removed......................................................8881
47.11 Amended......................................................64526
47.31 Revised......................................................64526
47.32 (a) revised; (c) amended.....................................64526
47.33 Amended......................................................64526
47.34 (b) amended..................................................64526
47.35 (a) amended; (b) revised.....................................64526
47.41 (a) and (b) amended..........................................64526
47.42 (a)(1) introductory text and (2)(i) amended..................64526
47.43 (c) amended..................................................64526
47.44 Amended......................................................64526

[[Page 426]]

47.45 (a) introductory text amended; (a)(1) revised................64526
47.51 Amended......................................................64526
47.52 (b) introductory text and (f) amended........................64526
47.58 Added........................................................64526
70.411 (c)(27) amended.............................................30799
178.1 (a) revised...................................................5425
178.11 Amended......................................................5425
178.32 (a)(5) and (d)(5) revised; (f) added.........................5425
178.44 (a) revised; (b) amended; OMB number.........................5425
178.45 Amended; OMB number..........................................5426
178.99 (c)(5) revised...............................................5426
178.115 (d)(2) through (5) revised; (e) amended.....................5426
178.120 Added; OMB number...........................................5426
178.124 (c)(1) and (2) amended; (c)(3)(iii) redesignated as 
        (c)(3)(iv); new (c)(3)(iii) added; OMB number...............5426
251.2 (a) amended; (b) revised.....................................11231
251.3 Added........................................................11232
251.11 Amended..............................................11231, 11232
251.40--251.49 (Subpart D) Heading and undesignated center heading 
        revised....................................................11232
251.40a Redesignated as 251.41.....................................11232
251.41 Removed; new 251.41 redesignated from 251.401a..............11232
251.55 Amended.....................................................11232
251.59 Amended.....................................................11232
251.77 (d) amended..........................................11231, 11232
251.136 (a) amended................................................11232
251.137 Revised....................................................11232
251.172 Amended....................................................11232
251.181 (a) amended................................................11231
251.182 (b)(1) and (d) revised.....................................11232
251.204 (a), (b) introductory text and undesignated text amended 
                                                                   11232
251.206 amended....................................................11231
251.208 Amended....................................................11232
251.209 Amended....................................................11231
251.221 (b)(3) undesignated paragraph amended......................11231
    (a) introductory text and (b) revised..........................11232
251 Redesignated as Part 27........................................30799
252.2 (a) amended; (b) revised.....................................18087
252.4 Added........................................................18087
252.11 Amended.....................................................18088
252.20 (a)(2) introductory text, (3) and (4) amended...............18087
    Heading and (c) revised; (a)(1), (b)(1), (2) introductory text 
and (3) amended....................................................18088
252.22 Amended..............................................18088, 18089
252.23 Amended.....................................................18089
252.35 Amended.....................................................18089
252.36 Undesignated text and (c) amended...........................18088
    Introductory text and (c) amended..............................18089
252.37 Amended.....................................................18088
252.38 Amended.....................................................18088
252.43 (a)(1), (2), (6), (b)(1), (2) and (3) amended...............18088
    (a)(1), (2), (b)(1) and (2) amended............................18089
252.45 Amended.....................................................18089
252.51 Revised.....................................................18089
252.52a Amended....................................................18088
252.55 Amended.....................................................18088
252.56 Introductory text amended...................................18088
252.57 Amended.....................................................18089
252.58 (c) amended.................................................18088
252.59 Amended.....................................................18089
252.61 Amended.....................................................18089
252.62 (b) amended.................................................18088
    (a) and (c) amended............................................18089
252.63 Amended.....................................................18089
252.64 Amended.....................................................18089
252.65 Amended..............................................18088, 18089
252.67 Amended.....................................................18088
252.70 Amended..............................................18088, 18089
252.71 Amended..............................................18088, 18089
252.72 Amended..............................................18088, 18089
252.73 (a) and (b) amended.........................................18089
252.74 Amended.....................................................18088
252.92 (a) amended.................................................18089
252.96 Amended.....................................................18088
252.103 (b) amended................................................18088
252.104 Amended....................................................18089
252.116 Introductory text amended..................................18089
252.117 Amended....................................................18088
252.122 (c) and (d) amended........................................18088
    (a) and (b) revised............................................18089
252.123 (b) amended.........................................18088, 18090
252.125 Amended....................................................18088
252.131 Amended....................................................18088
    Introductory text amended......................................18090
252.133 Amended....................................................18090
252.142 Amended....................................................18089
252.146 Amended.............................................18088, 18089
252.147 Amended.............................................18088, 18089
252.152 Amended....................................................18090
252.161 Introductory text amended..................................18090

[[Page 427]]

252.162 Amended....................................................18088
252.171 Amended....................................................18088
252.195a Removed...................................................18090
252.195b (b) and (c) amended.......................................18088
252.198 Introductory text amended..................................18090
252.199 Amended....................................................18090
252.211 Amended....................................................18088
252.214 Amended....................................................18088
252.215 Amended....................................................18088
    Heading revised; amended.......................................18090
252.218 Amended....................................................18088
252.220 (b) amended................................................18088
    Introductory text amended......................................18090
252.220a Amended............................................18088, 18090
252.221 Amended....................................................18088
252.222 Amended....................................................18088
252.225 Introductory text amended...........................18088, 18090
252.226 Amended....................................................18088
252.227 Amended.............................................18088, 18090
252.247 Amended....................................................18090
252.250 (a)(4) amended.............................................18088
    Introductory text amended......................................18089
    Amended........................................................18090
    Corrected......................................................48550
252.261 Amended.............................................18088, 18089
252.262 Amended....................................................18090
252.264 Amended.............................................18088, 18089
    252.265 Amended..............................................18088--
                                                                   18090
252.266 Amended....................................................18088
252.267 Amended.............................................18088, 18089
252.268 Amended....................................................18090
252.269 (a), (b) and (c) amended...................................18088
    (a) and (c) amended............................................18089
252.275 Amended.............................................18088, 18089
252.281 Amended....................................................18088
252.282 Amended.............................................18088, 18089
252.285 Amended....................................................18088
252.286 Amended....................................................18090
252.290 Introductory text amended...........................18088, 18089
252.295 Amended.............................................18088, 18089
252.301 Amended....................................................18088
252.302 Amended....................................................18088
252.303 Amended....................................................18088
    Introductory text amended......................................18090
252.304 Amended....................................................18088
252.310 Amended....................................................18088
252.315 Amended....................................................18088
252.316 Amended....................................................18088
252.317 Amended....................................................18088
    Introductory text amended......................................18090
252.320 Amended....................................................18088
    (a) amended....................................................18089
252.321 Amended....................................................18088
    252.331 Amended..............................................18088--
                                                                   18090
252.332 Amended....................................................18088
252.333 Amended......................................18088, 18089, 18090
252.334 Amended....................................................18090
252.335 Amended....................................................18088

                                  2003

27 CFR
                                                                   68 FR
                                                                    Page
Chapter I
Chapter I Heading revised...........................................3747
40.203 Removed.....................................................43295
46.141--46.155 (Subpart F) Transferred to Chapter II (Subchapter 
        D) and redesignated as Part 646.............................3753
47 Transferred to Chapter II (Subchapter B) and redesignated as 
        Part 447....................................................3747
55 Transferred to Chapter II (Subchapter C) and redesignated as 
        Part 555....................................................3748
73 Added...........................................................58601
178 Transferred to Chapter II (Subchapter B) and redesignated as 
        Part 478; note amended......................................3750
179 Transferred to Chapter II (Subchapter B) and redesignated as 
        Part 479....................................................3752
275.37 Removed.....................................................43295

                                  2004

27 CFR
                                                                   69 FR
                                                                    Page
Chapter I
40.165a (a)(1), (b)(1) and (3) amended.............................52423
40.236 Amended.....................................................52423
40.357 (a)(1), (b)(1) and (3) amended..............................52423
40.452 Amended.....................................................52423
41 Redesignated from Part 275......................................52424
41 Authority citation revised......................................52424
41.11 Amended......................................................52424
41.21 (a) amended; (b) revised.....................................52424
41.22 Amended......................................................52424
41.23 Amended......................................................52424
41.24 Amended......................................................52424
41.25 Amended......................................................52424
41.26 Introductory text and concluding text amended................52424
41.27 Introductory text and concluding text amended................52424
41.29 Revised......................................................52424

[[Page 428]]

41.31 (b) amended..................................................52425
41.40 Amended......................................................52425
41.63 (c) amended..................................................52425
41.71 Amended......................................................52425
41.72c (b) and (c) amended.........................................52425
41.73 Introductory text amended....................................52425
41.74 Amended......................................................52425
41.75 Amended......................................................52425
41.81 (a), (b), (c)(4)(iv), (d)(1) and (3) amended.................52425
41.82 (i) and (j) amended..........................................52425
41.83 Introductory text amended....................................52425
41.85 (a) amended..................................................52425
41.85a (c) amended.................................................52425
41.86 (a) through (d) amended......................................52425
41.101 (c) amended.................................................52425
41.105 Amended.....................................................52425
41.106 (a)(3), (11) and (b) amended................................52425
41.109 Amended.....................................................52425
41.110 (c) amended.................................................52425
41.111 (b) amended.................................................52425
41.112 Amended.....................................................52425
41.113 Amended.....................................................52425
41.114 (a), (b)(2) and (c) amended.................................52425
41.114a (a), (b) and (c) amended...................................52425
41.115 Amended.....................................................52425
41.115a (a)(1) amended.............................................52425
    (b)(1), (2), (3), (c)(1) and (e) amended.......................52426
41.116 Amended.....................................................52426
41.121 (b) amended.................................................52426
41.122 Amended.....................................................52426
41.123 Amended.....................................................52426
41.124 Amended.....................................................52426
41.125 Amended.....................................................52426
41.126 Amended.....................................................52426
41.127 Amended.....................................................52426
41.128 Amended.....................................................52426
41.129 Amended.....................................................52426
41.161 Amended.....................................................52426
41.163 Amended.....................................................52426
41.165 Amended.....................................................52426
41.170 Heading, (a) and (b) amended................................52426
41.171 Amended.....................................................52426
41.172 (a) and (b) amended.........................................52426
41.173 Amended.....................................................52426
41.174 Amended.....................................................52426
41.181 (a), (c) and (d) amended....................................52426
41.182 Amended.....................................................52426
41.190 Amended.....................................................52427
41.191 Amended.....................................................52427
41.192 (b) amended.................................................52427
41.193 Amended.....................................................52427
41.194 Amended.....................................................52427
41.195 Amended.....................................................52427
41.196 Amended.....................................................52427
41.197 Amended.....................................................52427
41.198 Amended.....................................................52427
41.199 Amended.....................................................52427
41.200 Amended.....................................................52427
41.201 (a) and (b) amended.........................................52427
41.202 Amended.....................................................52427
41.203 Amended.....................................................52427
41.206 (a) and (d) amended.........................................52427
41.207 Amended.....................................................52427
41.208 (a) and (b) amended.........................................52427
41.220 Amended.....................................................52427
41.221 Amended.....................................................52427
41.222 Amended.....................................................52427
41.223 Amended.....................................................52427
41.224 Amended.....................................................52427
41.225 Amended.....................................................52427
41.226 Amended.....................................................52427
41.227 Amended.....................................................52427
41.228 Amended.....................................................52427
44.11 Amended......................................................52423
45.11 Amended......................................................52423
46.72 Amended......................................................52423
46.166 (a) and (c) amended.........................................52423
46.167 Amended.....................................................52423
46.255 (d) amended.................................................52423
70.411 (c)(28) amended..............................................3830
70.414 (f)(2) amended...............................................3830
70.431 (b)(3) amended..............................................52423
70.461 Amended.....................................................52423
70.462 Amended......................................................3830
194.281 Amended.....................................................3830
252 Redesignated as Part 28.........................................3830
275 Redesignated as Part 41........................................52424

                                  2005

27 CFR
                                                                   70 FR
                                                                    Page
Chapter I
45.31 Revised......................................................19890
45.46 Amended......................................................19890
70.411 (c)(16) amended.............................................19883
70.414 (h) amended.................................................19883
194 Redesignated as Part 31........................................19884

                                  2006

27 CFR
                                                                   71 FR
                                                                    Page
Chapter I
40.11 Amended......................................................16948
    Correctly amended..............................................25753

[[Page 429]]

40.22 (b)(1), (2)(i), (ii) and (iii) amended.......................16948
40.33 (a), (b) heading, (6), (c)(1), (2), (d) heading, (3) and (4) 
        amended....................................................16948
40.35 (a), (b) and (c) amended.....................................16948
40.36 (a) and (b)(2) amended.......................................16948
    (d) amended....................................................16949
40.41 (a) amended; (b) revised.....................................16949
40.42 Amended......................................................16949
40.43 Amended......................................................16949
40.44 Amended......................................................16949
40.45 Introductory text and concluding text amended................16949
40.46 Introductory text and concluding text amended................16949
40.47 Amended......................................................16949
40.49 Revised......................................................16949
40.62 Amended......................................................16949
40.63 Amended......................................................16949
40.64 Amended......................................................16949
40.68 Amended......................................................16949
40.69 Introductory text amended....................................16949
40.70 Amended......................................................16949
40.71 Amended......................................................16949
40.72 Amended......................................................16949
40.73 Amended......................................................16949
40.74 Amended......................................................16949
40.75 Amended......................................................16949
40.76 Amended......................................................16949
40.101 Amended.....................................................16949
40.102 Amended.....................................................16950
40.103 Amended.....................................................16950
40.113 Amended.....................................................16950
40.131 (a) amended.................................................16950
40.136 (b) and (e) amended.........................................16950
40.138 Amended.....................................................16950
40.139 Amended.....................................................16950
40.140 Amended.....................................................16950
40.162 Amended.....................................................16950
40.165a (b)(1), (3), (c)(1) and (e) amended........................16950
40.166 Amended.....................................................16950
40.167 (a) and (b) amended.........................................16950
40.168 Amended.....................................................16950
40.181 Amended.....................................................16950
40.184 (b)(1) amended..............................................16950
40.185 Amended.....................................................16950
40.201 Amended.....................................................16950
40.202 (a) and (b) amended.........................................16950
40.212 Amended.....................................................16950
40.217 Amended.....................................................16950
40.251 Amended.....................................................16950
40.253 Amended.....................................................16950
40.254 Amended.....................................................16950
40.255 Amended.....................................................16950
40.281 Amended.....................................................16950
40.282 Amended.....................................................16950
40.283 Amended.....................................................16950
40.284 Amended.....................................................16950
40.286 Amended.....................................................16950
40.287 Amended.....................................................16950
40.301 Amended.....................................................16950
40.311 (a) amended..........................................16950, 16951
40.312 Amended.....................................................16951
40.313 Amended.....................................................16951
40.331 Amended.....................................................16951
40.332 Amended.....................................................16951
40.355 (a), (b)(2) and (d) amended.................................16951
40.356 Amended.....................................................16951
40.357 (a)(3), (b)(1), (3), (c)(1) and (e) amended.................16951
40.359 Amended.....................................................16951
40.373 (a), (b) heading and introductory text, (6), (c)(1), (2), 
        (d) heading, (3) and (4) amended...........................16951
40.374 (a), (b) and (c) amended....................................16951
40.375 (a), (b)(2) and (d) amended.................................16951
40.382 Amended.....................................................16951
40.383 Amended.....................................................16951
40.384 Amended.....................................................16951
40.385 Introductory text and concluding text amended...............16951
40.386 Introductory text and (c) amended...........................16951
40.392 Amended.....................................................16951
40.393 Amended.....................................................16951
40.394 Amended.....................................................16951
40.395 Amended.....................................................16951
40.396 Amended.....................................................16951
40.401 (b) amended.................................................16951
40.405 Amended.....................................................16951
40.406 (b) and (d) amended.........................................16951
40.407 Amended.....................................................16951
40.408 Amended.....................................................16951
40.410 Amended.....................................................16951
40.422 Introductory text amended...................................16951
40.425 Amended.....................................................16951
40.431 Introductory text amended...................................16951
40.433 Amended.....................................................16951
40.435 Amended.....................................................16952
40.471 Amended.....................................................16952
40.472 Amended.....................................................16952
40.473 Amended.....................................................16952
40.474 Amended.....................................................16952
40.475 Amended.....................................................16952

[[Page 430]]

40.476 Amended.....................................................16952
40.477 Amended.....................................................16952
40.478 Amended.....................................................16952
44.2 (a) amended; (b) revised......................................16952
44.3 Revised.......................................................16952
44.11 Amended......................................................16952
44.33 (a), (b) heading, (6), (c)(1), (2), (d) heading, (3) and (4) 
        amended....................................................16953
44.35 (a), (b) and (c) amended.....................................16953
44.36 (a), (b)(2) and (d) amended..................................16953
44.62 Amended......................................................16953
44.66 Amended......................................................16953
44.67 (a) amended..................................................16953
44.70 Amended......................................................16953
44.71 Amended......................................................16953
44.72 Introductory text and (c) amended............................16953
44.73 Introductory text and (c) amended............................16953
44.82 Amended......................................................16953
44.83 Amended......................................................16953
44.84 Amended......................................................16953
44.91 Amended......................................................16953
44.92 Amended......................................................16953
44.93 Amended......................................................16953
44.104 Amended.....................................................16953
44.105 Amended.....................................................16953
44.106 Amended.....................................................16953
44.112 Amended.....................................................16953
44.121 (b) amended.................................................16953
44.123 Amended.....................................................16953
44.124 Amended.....................................................16953
44.125 Amended.....................................................16953
44.127 Amended.....................................................16953
44.129 (a) amended.................................................16953
44.142 (e) amended.................................................16953
44.143 (a) and (b) amended.........................................16953
44.145 Amended.....................................................16953
44.147 Amended.....................................................16953
44.150 Amended.....................................................16953
44.152 Amended.....................................................16953
44.153 Amended.....................................................16953
44.154 Amended.....................................................16953
44.161 Amended.....................................................16953
44.162 Amended.....................................................16953
44.184 Amended.....................................................16953
44.199 Amended.....................................................16953
44.200 Amended.....................................................16953
44.201 Amended.....................................................16954
44.202 Amended.....................................................16954
44.203 Amended.....................................................16954
44.204 Amended.....................................................16954
44.205 (b)(3) amended..............................................16954
44.206 Amended.....................................................16954
44.207 Amended.....................................................16954
44.207a Amended....................................................16954
44.208 Amended.....................................................16954
44.209 Amended.....................................................16954
44.210 Amended.....................................................16954
44.212 Amended.....................................................16954
44.213 Amended.....................................................16954
44.222 Amended.....................................................16954
44.223 Amended.....................................................16954
44.224 Heading, (a), (b), (d) and (e) amended......................16954
44.225 Amended.....................................................16954
44.226 Amended.....................................................16954
44.227 Amended.....................................................16954
44.228 Amended.....................................................16954
44.229 Amended.....................................................16954
44.230 Amended.....................................................16954
44.231 Amended.....................................................16954
44.232 Amended.....................................................16954
44.242 Amended.....................................................16954
44.244 Amended.....................................................16954
44.245 Amended.....................................................16954
44.246 Amended.....................................................16954
44.257 Amended.....................................................16954
44.258 Amended.....................................................16954
44.259 Amended.....................................................16954
44.260 Amended.....................................................16954
44.261 Amended.....................................................16954
44.262 Amended.....................................................16954
44.263 Amended.....................................................16954
44.264 Amended.....................................................16954
44.264a amended....................................................16954
44.265 Amended.....................................................16954
44.266 Amended.....................................................16954
44.267 Amended.....................................................16954
45.11 Amended......................................................16954
45.21 Introductory text and concluding text amended................16954
45.22 Introductory text and concluding text amended................16954
45.23 Amended......................................................16954
45.24 Amended......................................................16955
45.26 Revised......................................................16955
45.27 (a) amended; (b) revised.....................................16955
45.34 Amended......................................................16955
45.36 Amended......................................................16955
45.42 Amended......................................................16955
45.51 (d) amended..................................................16955
46.2 Amended.......................................................16955
46.5 (c) amended...................................................16955
46.6 (c) amended...................................................16955
46.7 Amended.......................................................16955
46.8 Concluding text amended.......................................16955
46.10 Amended......................................................16955
46.11 (b) amended..................................................16955
46.13 Amended......................................................16955

[[Page 431]]

46.14 Amended......................................................16955
46.15 Amended......................................................16955
46.21 Revised......................................................16955
46.22 (a) amended; (b) revised.....................................16955
46.72 Amended......................................................16955
46.73 Amended......................................................16956
46.74 Amended......................................................16956
46.77 Amended......................................................16956
46.78 Amended......................................................16956
46.79 Amended......................................................16956
46.163 Amended.....................................................16956
46.164 Amended.....................................................16956
46.165 Amended.....................................................16956
46.192 (a) revised.................................................16956
46.210 Amended.....................................................16956
46.231 Revised.....................................................16956
46.233 Revised.....................................................16956
46.242 Amended.....................................................16956
46.244 Amended.....................................................16956
46.251 Amended.....................................................16956
46.253 Amended.....................................................16956
46.262 Amended.....................................................16956
46.264 Amended.....................................................16956
46.270--46.274 Undesignated center heading amended.................16956
46.271 Amended.....................................................16956
46.272 Introductory text amended...................................16956
46.273 Amended.....................................................16956
46.274 Amended.....................................................16957
53.3 Revised.......................................................16957
53.11 Amended......................................................16957
53.20 Revised......................................................16957
53.21 (a) amended; (b) revised.....................................16957
53.22 (a)(3) and (b) amended.......................................16957
53.23 (a) introductory text and (b) amended........................16957
53.24 (a)(1) and (d)(1) amended....................................16957
53.92 (b)(2) amended...............................................16957
53.96 (b)(4) amended...............................................16957
53.115 (b) amended.................................................16957
53.132 (c)(2)(i)(E), (ii) and (iii) amended........................16957
53.133 (d)(2)(vi), (3) and (4) amended.............................16957
53.134 (d)(2)(ii) and (iv) amended.................................16957
53.135 (c)(3) amended.......................................16957, 16958
53.140 (b) amended.................................................16958
53.142 (a) introductory text amended...............................16958
53.151 (a)(1), (2), (3), (b)(1) and (2) amended....................16958
53.152 (a) amended.................................................16958
53.154 (a) and (b) amended.........................................16958
53.155 (a) and (b) amended.........................................16958
53.156 (a)(1) and (c) amended......................................16958
53.157 (a), (b)(1), (2)(i)(A), (ii)(A), (iii)(A), (iv)(B), (c), 
        (d)(3), (e)(1), (4), (f)(1) and (2) amended................16958
53.158 (b)(1), (3), (c)(1) and (e) amended.........................16958
53.159 (b)(1), (c)(3) introductory text, (6) introductory text, 
        (d)(1), (2), (g), (i), (j)(1), (2) and (k) Example 1 
        amended....................................................16958
53.171 Amended.....................................................16958
53.172 (a)(3)(ii)(A), (B) and (b)(2)(iii) amended..................16958
53.179 (b)(1)(iv) amended..........................................16958
53.186 (a) introductory text and (4) amended.......................16958
53.187 (a) amended.................................................16958
70.1 (a) introductory text and (1) amended.........................16958
70.2 (a) amended; (b) revised......................................16959
70.3 Revised.......................................................16959
70.11 Amended......................................................16959
70.21 Amended......................................................16959
70.22 (a) and (b) amended..........................................16959
70.23 (b) amended..................................................16959
70.24 (b) amended..................................................16959
70.25 (a)(4) amended...............................................16959
70.26 (c)(2)(ii) introductory text and (B) amended.................16959
70.30 (a) and (b) amended..........................................16959
70.31 (a), (b) and (c) amended.....................................16959
70.32 Amended......................................................16959
70.33 Introductory text amended....................................16959
70.34 Amended......................................................16959
70.40 Amended......................................................16959
70.41 (a), (c), (d) and (f) amended................................16959
70.42 Heading, (a)(1), (b)(1), (2) and (c)(1) amended..............16959
70.51 Amended......................................................16959
70.61 (a)(1)(i) introductory text, (C), (D), (2) and (3) amended 
                                                                   16959
70.63 (a) and (b)(1) amended.......................................16959
70.64 Amended......................................................16959
70.71 Introductory text amended....................................16959
    (a), (b)(1)(ii) and (2) amended................................16960
70.72 Amended......................................................16960
70.73 Amended......................................................16960
70.74 (b), (c) (1) and (2) amended.................................16960
70.75 (a) introductory text, (b) and (c) amended...................16960

[[Page 432]]

70.76 (a), (b)(3), (c) and (d) amended.............................16960
70.77 (a)(1), (2), (b)(1) and (2) amended..........................16960
70.81 (a) amended..................................................16960
70.82 Amended......................................................16960
70.92 (c) and (d)(2)(i) amended....................................16960
70.94 (a) amended..................................................16960
70.95 Amended......................................................16960
70.96 (a)(1)(iv), (2), (3) and (c) amended.........................16960
70.97 (c)(2) amended...............................................16960
70.98 (b) amended..................................................16960
70.100 Amended.....................................................16960
70.101 Amended.....................................................16960
70.113 (b) amended.................................................16960
70.122 Amended.....................................................16960
70.123 (a)(2), (b)(1) and (2) amended..............................16960
70.124 Amended.....................................................16960
70.125 (a), (b) and (c) amended....................................16960
70.126 Amended.....................................................16960
70.144 (c) amended.................................................16960
70.148 (c)(1) and (2) amended......................................16960
70.149 (a)(3) introductory text and (b)(2)(i)(A) amended...........16960
70.150 (a) introductory text through (d), (e)(1) introductory 
        text, (2)(i) introductory text and (B) amended.............16960
70.151 (f)(1), (2) and (g) amended.................................16960
70.161 (a)(1) and (2) amended......................................16960
    (a)(4)(i)(B), (b) and (c) amended..............................16961
70.162 (a) and (b) amended.........................................16961
70.163 (a)(2)(ii) introductory text, (b)(1) and (c) amended........16961
70.164 (b)(1) introductory text and (c) amended....................16961
70.165 Amended.....................................................16961
70.167 (a)(1), (2)(i) introductory text, (C), (D), (ii), (3) 
        introductory text, (i) through (iv), (4), (b)(1) 
        introductory text, (ii) concluding text and (2)(iv) 
        amended....................................................16961
70.168 (a), (b)(2) and (c) amended.................................16961
70.169 Amended.....................................................16961
70.170 (b) amended.................................................16961
70.181 (a), (b)(1), (2), (c)(1)(i), (ii), (2), (3)(i) introductory 
        text, concluding text, (ii), (4)(i), (ii) concluding text, 
        (iii), (iv) introductory text, (5) introductory text, 
        (ii)(B) and (8) amended....................................16961
70.182 (a)(1), (2)(i), (3), (4) introductory text, (6)(ii) and (b) 
        amended....................................................16961
70.183 (a), (b) introductory text, (2), (3), (6), (7) introductory 
        text, (9)(ii), (11) and (c) through (f) amended............16961
70.184 (a), (b) introductory text, (1), (2), (c) introductory text 
        and (1) amended............................................16961
70.185 (a) and (b) amended.........................................16961
    (c) amended....................................................16962
70.186 (b)(2) and (c) amended......................................16962
70.187 (a) and (b) amended.........................................16962
70.188 Amended.....................................................16962
70.191 (a) and (b) introductory text amended.......................16962
70.192 (a) amended.................................................16962
70.204 (a) concluding text amended.................................16962
70.205 (a)(1), (2)(i), (ii)(C), (b)(1), (2), (c)(1), (e)(1)(ii) 
        introductory text, (2), (3) and (4) amended................16962
70.206 (a)(1), (b)(1) introductory text, (3)(ii), (4)(ii) 
        introductory text, A concluding text, (iii) and (c)(1) 
        through (4) amended........................................16962
70.213 Amended.....................................................16962
70.222 (b) amended.................................................16962
70.223 (d) amended.................................................16962
70.224 (a)(2)(i) amended...........................................16962
70.227 Amended.....................................................16962
70.231 (i)(3) amended..............................................16962
70.241 (a)(8) and (b) amended......................................16962
70.242 (a), (c)(1) and (2) amended.................................16962
70.245 Heading, (a), (c)(2), concluding text, (d) heading, (1) and 
        (2) amended................................................16962
70.251 (a)(2) amended..............................................16962
70.253 (b)(2) amended..............................................16962
70.263 (d) amended.................................................16962
70.271 (d)(1) amended..............................................16962
70.281 (b)(2) introductory text, (vi) and (3)(v) amended...........16962
70.301 (a) amended.................................................16962
70.303 (a), (b) and (c) amended....................................16962

[[Page 433]]

70.304 (a) and (b) amended.........................................16962
70.306 (a) and (b)(2) amended......................................16962
70.311 Amended.....................................................16962
70.321 (a) introductory text and (b) amended.......................16962
70.332 Amended.....................................................16962
70.333 Amended.....................................................16962
70.411 (b), (c) introductory text and (5) amended..................16963
70.412 (a) amended.................................................16963
70.413 (a) and (b) amended.........................................16963
70.414 (a) amended.................................................16963
70.416 Amended.....................................................16963
70.418 Amended.....................................................16963
70.419 Amended.....................................................16963
70.432 (a), (b) and (c) amended....................................16963
70.433 (a) and (b) amended.........................................16963
70.435 (i) amended.................................................16963
70.447 Amended.....................................................16963
70.481 (a), (b)(2)(ii), (3)(ii) introductory text and (4)(iii) 
        amended....................................................16963
70.482 (a) introductory text and (d)(1)(i) amended.................16963
70.483 Amended.....................................................16963
70.484 Amended.....................................................16963
70.485 (a) and (d)(1) amended......................................16963
70.486 Amended.....................................................16963
70.504 (c)(2) amended..............................................16963
70.506 Amended.....................................................16963
70.507 (g) amended.................................................16963
70.602 (a) and (b)(1) introductory text amended....................16963
70.606 Introductory text amended...................................16963
70.608 Amended.....................................................16963
70.609 Amended.....................................................16963
70.701 (a)(1), (2), (c), (d)(1), (2) heading, (i)(A), (B), 
        (iii)(B), (C), (D), (iv)(A), (B) and (C) amended...........16963
70.702 (c) amended.................................................16963
70.801 Amended.....................................................16963
70.802 (c) through (g) amended.....................................16963
70.802 (g) amended.................................................16964
70.803 (b)(1), (2), (c), (d) introductory text, (3), (e) heading, 
        (1) through (5) introductory text, (iii), (iv), (vi), (f) 
        and (g) amended............................................16964
71.1 Amended.......................................................16964
71.3 (a) amended; (b) revised......................................16964
71.4 Added.........................................................16964
71.5 Amended.......................................................16964
71.25 Amended......................................................16965
71.26 Amended......................................................16965
71.27 Amended......................................................16965
71.29 Amended......................................................16965
71.31 Amended......................................................16965
71.35 Amended......................................................16965
71.36 Amended......................................................16965
71.37 Amended......................................................16965
71.38 Amended......................................................16965
71.45 Amended......................................................16965
71.46 Amended......................................................16965
71.48 Introductory text amended....................................16965
71.49 Amended......................................................16965
71.49a Introductory text amended...................................16965
71.49b Introductory text and (c) amended...........................16965
71.55 (a) amended..................................................16965
71.57 Amended......................................................16965
71.59 Amended......................................................16965
71.60 (a), (b) and (c) amended.....................................16965
71.61 Amended......................................................16965
71.62 Amended......................................................16965
71.63 Amended......................................................16965
71.64 (a), (b) and (c) amended.....................................16965
71.65 Amended......................................................16965
71.70 Amended......................................................16965
71.71 Amended......................................................16965
71.72 Amended......................................................16965
71.73 Amended......................................................16965
71.75 Amended......................................................16965
71.78 Amended......................................................16965
71.79 (b) amended..................................................16965
71.80 Amended......................................................16965
71.85 Amended......................................................16965
71.95 Amended......................................................16965
71.96 Amended......................................................16965
71.97 Amended......................................................16965
71.98 Amended......................................................16965
71.99 Amended......................................................16965
71.100 Amended.....................................................16965
71.105 Amended.....................................................16965
71.106 Amended.....................................................16965
71.107--71.110 Undesignated center heading removed.................16965
71.107 Amended.....................................................16965
71.107a Heading, (a) introductory text, (2) and (3) amended........16965
71.108 (a) and (b) amended.........................................16966
71.109 Amended.....................................................16966
71.110 Amended.....................................................16966
71.115 Amended.....................................................16966
71.116 Amended.....................................................16966
71.117 Amended.....................................................16966
71.118 Amended.....................................................16966
71.126 Amended.....................................................16966
71.129 Amended.....................................................16966

[[Page 434]]

                                  2007

 (No regulations published from January 1, 2007, through April 1, 2007)


                                  [all]