[Federal Register Volume 64, Number 245 (Wednesday, December 22, 1999)]
[Rules and Regulations]
[Pages 71947-71954]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32600]


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DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Part 275

[T.D. ATF--422; Re: Notice No. 888]
RIN 1512-AC07


Implementation of Public Law 105-33, Section 9302, Requiring the 
Qualification of Tobacco Product Importers (98R-316P) And Miscellaneous 
Technical Amendments

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of 
the Treasury.

ACTION: Temporary rule (Treasury decision).

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SUMMARY: This temporary rule implements some of the provisions of the 
Balanced Budget Act of 1997. The new law sets forth the requirement 
that, beginning January 1, 2000, importers of tobacco products qualify 
for a permit to conduct that activity. Implementing changes, including 
a transitional rule, are made to part 275. In addition, clarifying 
changes are made to part 275. In the Proposed Rules section of this 
Federal Register, ATF is also issuing a notice of proposed rulemaking 
inviting comments on this temporary rule for a 60-day period following 
the publication of this temporary rule.

DATES: Effective December 22, 1999.

FOR FURTHER INFORMATION CONTACT: Clifford A. Mullen by writing to 
Regulations Division, Bureau of Alcohol, Tobacco and Firearms, 650 
Massachusetts Avenue, NW, Washington, DC 20226, by phone at 202-927-
8210, or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION:

Background

    This temporary rule implements some of the provisions of the 
Balanced Budget Act of 1997, Public Law 105-33 (``the Act''). These 
provisions amended the Internal Revenue Code of 1986 (IRC) to require 
that, beginning January 1, 2000, importers of tobacco products qualify 
for a permit to conduct that activity.

Current Regulation of Tobacco Products Importation

    The Bureau of Alcohol, Tobacco and Firearms (ATF) regulates the 
importation of tobacco products under the IRC, and in the Code of 
Federal Regulations, 27 CFR part 275. Before the enactment of the Act, 
no permit qualification requirement existed for importers of tobacco 
products.
    The Act amended sections 5712 and 5713 of the IRC to require, in 
part, that importers of tobacco products apply for and obtain a permit 
before commencing business as an importer. The Act also provided a 
transitional rule to allow existing importers of tobacco products or 
cigarette papers and tubes, who file an application for a permit with 
ATF before January 1, 2000, to continue in such business pending final 
action on their application.
    Under the temporary rule, persons who are already engaged in the 
business as an importer of tobacco products may continue in such 
business after January 1, 2000, provided they file an application for a 
permit with ATF before January 1, 2000. Such persons will be issued a 
temporary permit, which will remain valid for a period of one year or 
until a final determination is made on their application, if a final 
determination has not been made within that time. All others must 
obtain a permit before engaging in the business as an importer of 
tobacco products or cigarette papers and tubes beginning January 1, 
2000.
    Only manufacturers and export warehouse proprietors may import 
tobacco products in bond. Therefore, no bond need be filed by any other 
importer of tobacco products in conjunction with the permit, because 
such importers are not authorized to import tobacco products without 
payment of tax upon release from customs custody.
    Fully qualified applicants will be issued a permit limited to a 
three-year duration. A three-year permit duration was determined to be 
a reasonable method to avoid the proliferation of numerous unused 
permits, which would pose administrative difficulties and potential 
jeopardy to the revenue. Keeping track of unused permits would strain 
limited resources, and such permits could eventually fall into the 
hands of unqualified persons who would be unknown and unaccountable to 
ATF. Administrative controls will be put in place to facilitate timely 
renewals by permittees.
    In addition, Part 275, Subpart G--Puerto Rican Tobacco Products and 
Cigarette Papers and Tubes, brought into the United States, contains 
obsolete requirements for the release of Puerto Rican tobacco products 
and cigarette papers and tubes from Customs custody without payment of 
tax. Accordingly, subpart G is being amended to eliminate the obsolete 
requirements under this temporary rule.

Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do 
not apply. Moreover, any revenue effects of this rulemaking on small 
businesses flow directly from the underlying statute. Likewise, any 
secondary or incidental effects, and any reporting, recordkeeping, or 
other compliance burdens flow directly from the statute. Pursuant to 26 
U.S.C. 7805(f), this temporary regulation will be submitted to the 
Chief Counsel for Advocacy of the Small Business Administration for 
comment on its impact on small business.

Executive Order 12866

    It has been determined that this temporary rule is not a 
significant regulatory action as defined by Executive Order 12866. 
Therefore, a regulatory assessment is not required.

Paperwork Reduction Act

    This regulation is being issued without prior notice and public 
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). 
For this reason, the collection of information contained in this 
regulation has been reviewed under the requirements of the Paperwork 
Reduction Act (44 U.S.C. 3507(j)), and pending receipt and evaluation 
of

[[Page 71948]]

public comments, approved by the Office of Management and Budget (OMB) 
under control number 1512-0398. An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a valid control number assigned by OMB.
    The collection of information initiated by this document is found 
in 27 CFR 275.204 and 275.205. This information is required to ensure 
proper payment of excise taxes on imported tobacco products and 
cigarette papers and tubes.
    For further information concerning this collection of information, 
and where to submit comments on the collection of information, refer to 
the preamble of the cross-referenced notice of proposed rulemaking 
published elsewhere in this issue of the Federal Register.

``Plain Language'' Changes

    During the revision of the regulations in this document, we also 
tried to simplify and clarify the language of the affected regulations. 
Any suggestions for improving the readability of these regulations may 
be submitted as comments to the cross-referenced notice of proposed 
rulemaking.

Delegations

    In the sections of the regulations that are affected by this 
document, we have changed obsolete ATF titles to read ``the appropriate 
ATF officer'' and referred to a delegation order that specifies the 
current title of the ATF official responsible for each activity. The 
titles of responsible persons in the remaining sections of these parts 
will be updated by a future technical amendment.

Administrative Procedure Act

    Because this document merely implements sections of the law which 
are effective on January 1, 2000, and because immediate guidance is 
necessary to implement the provisions of the law, it is not found to be 
necessary to issue this Treasury decision with notice and public 
procedure under 5 U.S.C. 553(b) or subject to the effective date 
limitation in section 553(d).

Drafting Information

    The principal author of this document is Clifford A. Mullen, of the 
Regulations Division, Bureau of Alcohol, Tobacco and Firearms. However, 
other personnel of ATF and the Treasury Department participated in 
developing the document.

List of Subjects in 27 CFR Part 275

    Administrative practice and procedure, Authority delegations, 
Cigarette papers and tubes, Cigars and cigarettes, Claims, Customs 
duties and inspections, Electronic funds transfers, Excise taxes, 
Imports, Labeling, Packaging and containers, Penalties, Reporting and 
record keeping requirements, Seizures and forfeitures, Surety bonds, 
U.S. Possessions, Warehouses.

Authority and Issuance

    Par. 1. The authority citation for 27 CFR part 275 is revised to 
read:

    Authority: 26 U.S.C. 5701, 5703, 5704, 5705, 5706, 5708, 5712, 
5713, 5721, 5722, 5723, 5741, 5761, 5762, 5763, 6301, 6302, 6313, 
6404, 7101, 7212, 7342, 7606, 7652, 7805; 31 U.S.C. 9301, 9303, 
9304, 9306; 18 U.S.C. 2342.

    Par. 2-3. Section 275.11 is amended by removing the definition of 
``District director of customs,'' revising the definition of ``Removal 
or Remove,'' and adding the definitions for ``Appropriate ATF 
officer,'' ``Customs officer, ``Port director of Customs,'' and 
``Records'' to read in alphabetical order as follows:


Sec. 275.11  Meaning of terms.

* * * * *
    Appropriate ATF officer. An officer or employee of the Bureau of 
Alcohol, Tobacco and Firearms (ATF) authorized to perform any functions 
relating to the administration or enforcement of this part by ATF Order 
1130.16, Delegation Order--Delegation of the Director's Authorities in 
27 CFR Part 275, Importation of Tobacco Products and Cigarette Papers 
and Tubes.
* * * * *
    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.
* * * * *
    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 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;
    (ii) Establish the correctness of any importation;
    (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 ATF and the Customs Service, and any other 
documents required under laws or regulations administered by ATF and 
the Customs Service.
* * * * *
    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.
* * * * *
    Par. 4. The fourth sentence of Sec. 275.25 is revised to read as 
follows:


Sec. 275.25  Disposal of forfeited, condemned, and abandoned tobacco 
products and cigarette papers and tubes.

    * * * 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 ATF officer showing such payment. * * *
* * * * *


Sec. 275.39  [Removed and reserved]

    Par. 5. Section. 275.39 is removed and reserved.
    Par. 6. Section 275.40 is revised to read as follows:


Sec. 275.40  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)

[[Page 71949]]

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. 275.11). 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.
    Par. 7. Section 275.41 is revised to read as follows:


Sec. 275.41  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.
    Par. 8. The last sentence of Sec. 275.50 and the undesignated 
centerheading preceding it are revised to read as follows:

Exemptions From Taxes and Permits


Sec. 275.50  Exemptions.

    * * *. 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.
    Par. 9. Section 275.62 is revised to read as follows:


Sec. 275.62  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.
    Par. 10. Paragraphs (a), (b), and (c), introductory text, of 
Sec. 275.81 are revised to read as follows:


Sec. 275.81  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.
    (b) Method of payment. Except in the case of articles imported or 
brought into the United States under Sec. 275.85 and 275.85a, 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 taxpaid 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) * * *
* * * * *
    Par. 11. Section 275.85 is revised to read as follows:


Sec. 275.85  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 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. 275.86: 
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 ATF 
Form 2105, and receive a notice of approval from the appropriate ATF 
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 270 of 
this chapter.
    Par. 12. Section 275.85a is revised to read as follows:


Sec. 275.85a  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

[[Page 71950]]

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. 275.86. 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 270 of this 
chapter as if they had not been exported or otherwise removed from 
internal revenue bond.
    Par. 13. Section 275.86 is revised to read as follows:


Sec. 275.86  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. 275.85 or Sec. 275.85a, must prepare 
a notice of release, Form 2145, in triplicate, and file the three 
copies of the form with the appropriate ATF officer. The appropriate 
ATF officer will not certify Form 2145 covering the release of tobacco 
products and cigarette papers and tubes unless the manufacturer is 
authorized, under part 270 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 ATF Form 2145 
certified by the appropriate ATF 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 ATF Form 2145 along 
with a copy of the electronic filing and customs release to the 
appropriate ATF officer at the address shown thereon. The importer will 
retain one copy of the ATF Form 2145 to meet ATF 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 ATF Form 2145 to the appropriate customs officer along 
with their request for release. The customs officer will verify that 
the ATF Form 2145 has been certified by the appropriate ATF 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 
ATF Form 2145 along with a copy of the customs release to the 
appropriate ATF office at the address shown thereon. The importer will 
retain one copy of the ATF Form 2145 to meet ATF recordkeeping 
requirements and one copy to meet customs recordkeeping requirements.


Sec. 275.101  [Amended]

    Par. 14. Section 275.101 is amended by removing paragraphs (d) and 
(e).
    Par. 15. Section 275.106 is revised to read as follows:


Sec. 275.106  Inspection of shipment and certification of prepayment by 
ATF officer.

    The taxpayer will prepare ATF Form 3075 (5200.9), in triplicate, 
identifying the tobacco products and cigarette papers and tubes 
released in each shipment, for certification by the ATF officer that 
the tax has been prepaid. The ATF officer assigned to inspect the 
shipment must obtain the receipted copy of the tax return from the 
taxpayer and verify on ATF Form 3075 (5200.9) that the proper tax has 
been prepaid. After verification of the tax return on ATF Form 3075 
(5200.9), the ATF officer will return the receipted copy of the tax 
return to the taxpayer. The ATF officer will then present one copy of 
ATF Form 3075 (5200.9) to the taxpayer for attachment to the bill of 
lading to accompany the shipment, mail one copy to the appropriate ATF 
officer, and retain the remaining copy. The ATF officer will then 
prepare for each shipping container, a statement on ATF Form 3074 
(5200.6) that the tax has been prepaid, and show the other information 
required by that form. The shipper must affix the completed ATF Form 
3074 (5200.6) to the outside of each shipping container in which the 
articles are packed. Such statement, ATF Form 3074 (5200.6), must be 
affixed to the outside container used in the shipment of freight in 
bulk (crate, packing box, van, trailer, etc.) and not to the individual 
cartons, cases, etc., included in such outer container. Noncommercial 
mail shipments of tobacco products and cigarette papers and tubes to 
the United States are exempt from the provisions of this section, 
except that the ATF officer in Puerto Rico receiving a payment of 
internal revenue tax on mail shipments of such articles will prepare a 
certificate to be affixed to the container stating that the United 
States internal revenue tax has been prepaid on the articles contained 
therein.


Sec. 275.107  [Removed and reserved]

    Par. 16. Section 275.107 is removed and reserved.


Sec. 275.108  [Removed and reserved]

    Par. 17. Section 275.108 is removed and reserved.
    Par. 18. Section 275.110 is amended by revising the first sentence 
to read as follows:


Sec. 275.110  Computation of tax and execution of agreement to pay tax.

    Where tobacco products are to be shipped to the United States on 
computation of internal revenue tax in Puerto Rico (involving deferred 
taxpayment), the bonded manufacturer must calculate the tax and must 
prepare an original and two copies of Form 2987 (5210.8).
* * * * *
    Par. 19. Section 275.111 is amended by revising the introductory 
text, paragraphs (a), (b), and (c) to read as follows:


Sec. 275.111  Inspection of shipment and certification by ATF officer.

    On receipt of the original and two copies of the Form 2987 (5210.8) 
completed and executed by the bonded manufacturer in accordance with 
Sec. 275.110, an ATF officer will inspect the tobacco products covered 
by the form, verify the tax calculation made with respect to such 
products, date and execute the certification on such form, and release 
the tobacco products for shipment to the United States. Such officer 
will then promptly distribute the certified Form 2987 by:
    (a) Mailing one copy to the appropriate ATF officer;
    (b) Returning one copy to the bonded manufacturer and
    (c) Submitting the original to the Chief, Puerto Rico Operations.
* * * * *
    Par. 20. Section 275.115a, paragraph (e), is revised to read as 
follows:

[[Page 71951]]

Sec. 275.115a  Payment of tax by electronic fund transfer.

* * * * *
    (e) Procedure. Upon the notification required under paragraph 
(b)(1) of this section, the appropriate ATF officer will issue to the 
taxpayer an ATF 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.


Sec. 275.117  [Removed and reserved]

    Par. 21. Section 275.117 is removed and reserved.


Sec. 275.118  [Removed and reserved]

    Par.22. Section 275.118 is removed and reserved.
    Par. 23. The undesignated center heading preceding Sec. 275.135 is 
removed.


Secs. 275.135--275.138  [Removed and reserved]

    Par. 24. Sections 275.135 through 275.138 are removed and reserved.
    Par. 25. The first sentence in Sec. 275.140 is revised to read as 
follows:


Sec. 275.140  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 270 of this chapter applicable to the taxpayment of 
tobacco products. * * *
    Par. 26. The first sentence in Sec. 275.141 is revised to read as 
follows:


Sec. 275.141  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. * * *
    Par. 27. Subpart K is added to read as follows:

Subpart K--Tobacco Products Importers

Sec.
275.190  Persons required to qualify.
275.191  Application for permit.
275.192  Transitional rule.
275.193  Corporate documents.
275.194  Articles of partnership or association.
275.195  Trade name certificate.
275.196  Power of attorney.
275.197  Additional information.
275.198  Investigation of applicant.
275.199  Notice of Contemplated Disapproval.
275.200  Issuance of permit.
275.201  Duration of permit
275.202 Renewal of permit.
275.203  Retention of permit and supporting documents.

Required Records and Reports

275.204  General.
275.205  Recordkeeping requirements.

Filing and Retention of Records and Reports

275.206  Reports.
275.207  Filing.
275.208  Retention.

Subpart K--Tobacco Products Importers


Sec. 275.190  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. 275.50 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.


Sec. 275.191  Application for permit.

    Except as provided in Sec. 275.192, every person, before commencing 
business as an importer of tobacco products as defined in Sec. 275.11, 
must make application for, and obtain, the permit provided by this 
subpart K. Such application must be made on ATF 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.


Sec. 275.192  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 ATF before January 1, 2000, may 
continue to import tobacco products and cigarette papers and tubes 
pending action on their application by ATF. Pending such final action, 
all provisions of chapter 52 of the Internal Revenue Code of 1986 will 
apply to such applicant.


Sec. 275.193  Corporate documents.

    Every corporation, before commencing business as an importer of 
tobacco products, must furnish with its application for permit, 
required by Sec. 275.191, 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 ATF 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. 275.194  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. 275.191 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 ATF 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.


Sec. 275.195  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. 275.191, 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.


Sec. 275.196  Power of attorney.

    If the application for permit or any report, return, notice, 
schedule, or other

[[Page 71952]]

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 ATF 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. 275.194. Form 1534 does not 
have to be filed again with the appropriate ATF officer if such form 
has previously been submitted to ATF and is still in effect.


Sec. 275.197  Additional information.

    The appropriate ATF 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 ATF officer, furnish as a part 
of his application for such permit such additional information as the 
appropriate ATF officer deems necessary to determine whether the 
applicant is entitled to a permit.


Sec. 275.198  Investigation of applicant.

    Appropriate ATF 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.


Sec. 275.199  Notice of Contemplated Disapproval.

    If the appropriate ATF officer has reason to believe that the 
applicant is not entitled to a permit, the appropriate ATF 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 200 of this chapter. If, after such notice and opportunity 
for hearing, the appropriate ATF 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.


Sec. 275.200  Issuance of permit.

    If the application for permit, together with the required 
supporting documents, is approved, the appropriate ATF officer will 
issue a permit on ATF F 5200.24 to the applicant as an importer of 
tobacco products.


Sec. 275.201  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, ATF F 5200.24.
    (b) Temporary permits will be issued for a one-year period to those 
applicants described in Sec. 275.192.


Sec. 275.202  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 ATF F 5200.24, in accordance with 
instructions for the form. The expiring permit will continue in effect 
until final action is taken by ATF on the application for renewal, 
provided a timely application for renewal is filed.


Sec. 275.203  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 ATF officer upon request.

Required Records and Reports


Sec. 275.204  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. 275.205  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 296, 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.

Filing and Retention of Records and Reports


Sec. 275.206  Reports.

    (a) Importers must file a monthly report on ATF 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.

    (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. 275.224, or when a change in control 
of a corporation described in Sec. 275.226 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.


Sec. 275.207  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 ATF 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 ATF or Customs officers desiring to examine the files 
or delay in the timely transmittal of any documents required to be 
submitted.

[[Page 71953]]

Sec. 275.208  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 ATF 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 ATF during business hours.
    (b) Furthermore, the appropriate ATF 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.
    Par. 28. Subpart L is added to read as follows:

Subpart L--Changes After Original Qualification of Importers

Changes in Name

Sec.
275.220  Change in individual name.
275.221  Change in trade name.
275.222  Change in corporate name.

Changes in Ownership and Control

275.223  Fiduciary successor.
275.224  Transfer of ownership.
275.225  Change in officers, directors, or stockholders of a 
corporation.
275.226  Change in control of a corporation.

Changes in Location or Address

275.227  Change in location.
275.228  Change in address.

Subpart L--Changes After Original Qualification of Importers

Changes in Name


Sec. 275.220  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 
ATF Form 5230.5 for an amended permit within 30 days of such change.


Sec. 275.221  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 ATF 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. 275.195.


Sec. 275.222  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 ATF 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.

Changes in Ownership and Control


Sec. 275.223  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 ATF officer a written statement to 
that effect.


Sec. 275.224  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 ATF 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. 275.205, and surrender the permit with such 
report. The successor must make a commencing report, in accordance with 
the provisions of Sec. 275.206.


Sec. 275.225  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 ATF 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. 275.226 will apply. 
When there is any change in the authority furnished under Sec. 275.196 
for officers to act on behalf of the corporation the importer must 
immediately so notify the appropriate ATF officer in writing.

[[Page 71954]]

Sec. 275.226  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 ATF 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. 275.206, 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.

Changes in Location or Address


Sec. 275.227  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 ATF Form 5230.5 
for, and obtain, an amended permit.


Sec. 275. 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 ATF Form 5230.5 for an amended permit within 30 days of 
such change.

    Signed: November 18, 1999.
John W. Magaw,
Director.
    Approved: December 7, 1999.
Dennis M. O'Connell,
Acting Deputy Assistant Secretary (Regulatory, Tariff and Trade 
Enforcement).
[FR Doc. 99-32600 Filed 12-21-99; 8:45 am]
BILLING CODE 4810-31-P