[Congressional Record Volume 165, Number 151 (Thursday, September 19, 2019)]
[Senate]
[Pages S5605-S5606]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. DURBIN (for himself, Mr. Brown, Mr. Markey, Mr.
Blumenthal, Mr. Reed, Ms. Hirono, Mr. Wyden, Mrs. Murray, and
Mr. Merkley):
S. 2517. A bill to amend the Internal Revenue Code of 1986 to provide
tax rate parity among all tobacco products, and for other purposes; to
the Committee on Finance.
Mr. DURBIN. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 2517
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Tobacco Tax Equity Act of
2019''.
SEC. 2. INCREASING EXCISE TAXES ON CIGARETTES AND
ESTABLISHING EXCISE TAX EQUITY AMONG ALL
TOBACCO PRODUCT TAX RATES.
(a) Tax Parity for Roll-your-own Tobacco.--Section 5701(g)
of the Internal Revenue Code of 1986 is amended by striking
``$24.78'' and inserting ``$49.56''.
(b) Tax Parity for Pipe Tobacco.--Section 5701(f) of the
Internal Revenue Code of 1986 is amended by striking
``$2.8311 cents'' and inserting ``$49.56''.
(c) Tax Parity for Smokeless Tobacco.--
(1) Section 5701(e) of the Internal Revenue Code of 1986 is
amended--
(A) in paragraph (1), by striking ``$1.51'' and inserting
``$26.84'';
(B) in paragraph (2), by striking ``50.33 cents'' and
inserting ``$10.74''; and
(C) by adding at the end the following:
``(3) Smokeless tobacco sold in discrete single-use
units.--On discrete single-use units, $100.66 per
thousand.''.
(2) Section 5702(m) of such Code is amended--
(A) in paragraph (1), by striking ``or chewing tobacco''
and inserting ``, chewing tobacco, or discrete single-use
unit'';
(B) in paragraphs (2) and (3), by inserting ``that is not a
discrete single-use unit'' before the period in each such
paragraph; and
(C) by adding at the end the following:
``(4) Discrete single-use unit.--The term `discrete single-
use unit' means any product containing tobacco that--
``(A) is not intended to be smoked; and
``(B) is in the form of a lozenge, tablet, pill, pouch,
dissolvable strip, or other discrete single-use or single-
dose unit.''.
(d) Tax Parity for Small Cigars.--Paragraph (1) of section
5701(a) of the Internal Revenue Code of 1986 is amended by
striking ``$50.33'' and inserting ``$100.66''.
(e) Tax Parity for Large Cigars.--
(1) In general.--Paragraph (2) of section 5701(a) of the
Internal Revenue Code of 1986 is amended by striking ``52.75
percent'' and all that follows through the period and
inserting the following: ``$49.56 per pound and a
proportionate tax at the like rate on all fractional parts of
a pound but not less than 10.066 cents per cigar.''.
(2) Guidance.--The Secretary of the Treasury, or the
Secretary's delegate, may issue guidance regarding the
appropriate method for determining the weight of large cigars
for purposes of calculating the applicable tax under section
5701(a)(2) of the Internal Revenue Code of 1986.
(f) Tax Parity for Roll-your-own Tobacco and Certain
Processed Tobacco.--Subsection (o) of section 5702 of the
Internal Revenue Code of 1986 is amended by inserting ``, and
includes processed tobacco that is removed for delivery or
delivered to a person other than a person with a permit
provided under section 5713, but does not include removals of
processed tobacco for exportation'' after ``wrappers
thereof''.
(g) Clarifying Tax Rate for Other Tobacco Products.--
(1) In general.--Section 5701 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(i) Other Tobacco Products.--Any product not otherwise
described under this section that has been determined to be a
tobacco product by the Food and Drug Administration through
its authorities under the Family Smoking Prevention and
Tobacco Control Act shall be taxed at a level of tax
equivalent to the tax rate for cigarettes on an estimated per
use basis as determined by the Secretary.''.
(2) Establishing per use basis.--For purposes of section
5701(i) of the Internal Revenue Code of 1986, not later than
12 months after the later of the date of the enactment of
this Act or the date that a product has been determined to be
a tobacco product by the Food and Drug Administration, the
Secretary of the Treasury (or the Secretary of the Treasury's
delegate) shall issue final regulations establishing the
level of tax for such product that is equivalent to the tax
rate for cigarettes on an estimated per use basis.
(h) Clarifying Definition of Tobacco Products.--
(1) In general.--Subsection (c) of section 5702 of the
Internal Revenue Code of 1986 is amended to read as follows:
``(c) Tobacco Products.--The term `tobacco products'
means--
``(1) cigars, cigarettes, smokeless tobacco, pipe tobacco,
and roll-your-own tobacco, and
``(2) any other product subject to tax pursuant to section
5701(i).''.
(2) Conforming amendments.--Subsection (d) of section 5702
of such Code is amended by striking ``cigars, cigarettes,
smokeless tobacco, pipe tobacco, or roll-your-own tobacco''
each place it appears and inserting ``tobacco products''.
(i) Increasing Tax on Cigarettes.--
(1) Small cigarettes.--Section 5701(b)(1) of such Code is
amended by striking ``$50.33'' and inserting ``$100.66''.
(2) Large cigarettes.--Section 5701(b)(2) of such Code is
amended by striking ``$105.69'' and inserting ``$211.38''.
(j) Tax Rates Adjusted for Inflation.--Section 5701 of such
Code, as amended by subsection (g), is amended by adding at
the end the following new subsection:
``(j) Inflation Adjustment.--
``(1) In general.--In the case of any calendar year
beginning after 2019, the dollar amounts provided under this
chapter shall each be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year, determined by
substituting `calendar year 2018' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
``(2) Rounding.--If any amount as adjusted under paragraph
(1) is not a multiple of $0.01, such amount shall be rounded
to the next highest multiple of $0.01.''.
(k) Floor Stocks Taxes.--
(1) Imposition of tax.--On tobacco products manufactured in
or imported into the United States which are removed before
any tax increase date and held on such date for sale by any
person, there is hereby imposed a tax in an amount equal to
the excess of--
(A) the tax which would be imposed under section 5701 of
the Internal Revenue Code of 1986 on the article if the
article had been removed on such date, over
(B) the prior tax (if any) imposed under section 5701 of
such Code on such article.
(2) Credit against tax.--Each person shall be allowed as a
credit against the taxes imposed by paragraph (1) an amount
equal to $500. Such credit shall not exceed the amount of
taxes imposed by paragraph (1) on such date for which such
person is liable.
(3) Liability for tax and method of payment.--
(A) Liability for tax.--A person holding tobacco products
on any tax increase date to which any tax imposed by
paragraph (1) applies shall be liable for such tax.
(B) Method of payment.--The tax imposed by paragraph (1)
shall be paid in such manner as the Secretary shall prescribe
by regulations.
(C) Time for payment.--The tax imposed by paragraph (1)
shall be paid on or before the date that is 120 days after
the effective date of the tax rate increase.
(4) Articles in foreign trade zones.--Notwithstanding the
Act of June 18, 1934 (commonly known as the Foreign Trade
Zone Act, 48 Stat. 998, 19 U.S.C. 81a et seq.), or any other
provision of law, any article which is located in a foreign
trade zone on any tax increase date shall be subject to the
tax imposed by paragraph (1) if--
(A) internal revenue taxes have been determined, or customs
duties liquidated, with respect to such article before such
date pursuant to a request made under the 1st proviso of
section 3(a) of such Act, or
(B) such article is held on such date under the supervision
of an officer of the United States Customs and Border
Protection of the Department of Homeland Security pursuant to
the 2d proviso of such section 3(a).
(5) Definitions.--For purposes of this subsection--
(A) In general.--Any term used in this subsection which is
also used in section 5702 of such Code shall have the same
meaning as such term has in such section.
(B) Tax increase date.--The term ``tax increase date''
means the effective date of any increase in any tobacco
product excise tax rate pursuant to the amendments made by
this section (other than subsection (j) thereof).
(C) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury or the Secretary's delegate.
(6) Controlled groups.--Rules similar to the rules of
section 5061(e)(3) of such Code shall apply for purposes of
this subsection.
(7) Other laws applicable.--All provisions of law,
including penalties, applicable with respect to the taxes
imposed by section 5701 of such Code shall, insofar as
applicable and not inconsistent with the provisions of this
subsection, apply to the floor stocks taxes imposed by
paragraph (1), to the same extent as if such taxes were
imposed by such section 5701. The Secretary may treat any
person who bore the ultimate burden of the tax imposed by
paragraph (1) as the person to whom a credit or refund under
such provisions may be allowed or made.
(l) Effective Dates.--
[[Page S5606]]
(1) In general.--Except as provided in paragraphs (2)
through (4), the amendments made by this section shall apply
to articles removed (as defined in section 5702(j) of the
Internal Revenue Code of 1986) after the last day of the
month which includes the date of the enactment of this Act.
(2) Discrete single-use units and processed tobacco.--The
amendments made by subsections (c)(1)(C), (c)(2), and (f)
shall apply to articles removed (as defined in section
5702(j) of the Internal Revenue Code of 1986) after the date
that is 6 months after the date of the enactment of this Act.
(3) Large cigars.--The amendments made by subsection (e)
shall apply to articles removed after December 31, 2019.
(4) Other tobacco products.--The amendments made by
subsection (g)(1) shall apply to products removed after the
last day of the month which includes the date that the
Secretary of the Treasury (or the Secretary of the Treasury's
delegate) issues final regulations establishing the level of
tax for such product.
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