[Federal Register Volume 66, Number 46 (Thursday, March 8, 2001)]
[Rules and Regulations]
[Pages 13849-13851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-5424]


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DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Part 275

[T.D. ATF-444]
RIN 1512-AC24


Puerto Rican Tobacco Products and Cigarette Papers and Tubes 
Shipped From Puerto Rico to the United States

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

ACTION: Temporary rule (Treasury decision).

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SUMMARY: This temporary rule eliminates ATF on-site supervision of 
tobacco products and cigarette papers and tubes of Puerto Rican 
manufacture that are shipped from Puerto Rico to the United States and 
related ATF forms. Specifically, this temporary rule eliminates the 
requirements that persons who ship such articles notify ATF prior to 
the shipment and that an ATF officer inspects, certifies that the 
amount of tax on such articles has been calculated correctly for, and 
releases, each shipment. Consequently, four ATF forms are eliminated. 
However, this rule requires that persons who ship such articles 
maintain records so that the amount of tax is calculated and recorded 
for ATF audit and examination. Also, this temporary rule revises 
certain sections to simplify and clarify and corrects a few 
typographical errors. 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.

EFFECTIVE DATE: This rule is effective March 8, 2001.

FOR FURTHER INFORMATION CONTACT: Robert Ruhf, Regulations Division, 
Bureau of Alcohol, Tobacco and Firearms, 650 Massachusetts Avenue NW., 
Washington, DC 20226 (telephone 202-927-8210 or e-mail to 
[email protected]).

SUPPLEMENTARY INFORMATION:

Background

Elimination of On-Site Supervision and Forms

    ATF is eliminating the on-site supervision of, and ATF forms for, 
shipments of tobacco products and cigarette papers and tubes of Puerto 
Rican manufacture from Puerto Rico to the United States. ATF believes 
that the elimination of this supervision and these ATF forms will 
benefit the companies involved with such shipments and the Government.
    ATF has discussed the proposed changes with the three companies in 
Puerto Rico who currently ship Puerto Rican tobacco products from 
Puerto Rico to the United States. All of the companies were in favor of 
eliminating the on-site ATF supervision of shipments of Puerto Rican 
tobacco products and cigarette papers and tubes from Puerto Rico to the 
United States. In addition, all of the companies reported that they 
were ready to use commercial records immediately to replace the ATF 
forms 2987(5210.8) and 3075(5200.9). The replacement of these ATF forms 
with commercial records would not be an additional burden since the ATF 
forms repeat much of the information contained in the companies' 
commercial records. In fact, it would eliminate the time spent in 
preparing, distributing and maintaining these ATF forms and arranging 
for ATF personnel to supervise each shipment.
    This temporary rule allows greater flexibility and choice in 
managing the limited resources of the Bureau. ATF now conducts audits 
of the commercial records of companies who ship Puerto Rican tobacco 
products or cigarette papers and tubes from Puerto Rico to the United 
States. This temporary rule eliminates the requirement that ATF 
personnel be present at a particular place and time to inspect and 
certify each shipment. In addition, this temporary rule relieves the 
Bureau from the costs associated with revising, printing, stocking and 
distributing the four ATF forms related to shipments of such products 
from Puerto Rico to the United States.
    In addition, this temporary rule eliminates the requirement that an 
ATF officer prepare a certificate (ATF Forms 2989 and 3074) for each 
shipment of Puerto Rican tobacco products or cigarette papers or tubes. 
These certificates are affixed to the outside of the package of each 
container and state that the United States tax has been paid. We 
believe that these certificates are not necessary to protect the 
revenue and do not improve compliance with the Federal excise tax on 
tobacco products and cigarette papers and tubes. For commercial 
shipments, the records maintained by the manufacturer or shipper may be 
examined by an appropriate ATF officer to determine that the tax has 
been paid. In the case of noncommercial mail shipments, an appropriate 
ATF officer may request ATF Form 5000.25, Excise Tax Return--Alcohol 
and Tobacco (Puerto Rico), from the taxpayer as evidence that the tax 
has been paid.

Delegations

    In the sections of the regulations that are affected by this 
document, we have removed references to specific ATF officers with whom 
an ATF Form is filed. The instructions on the ATF form specify the ATF 
officer with whom the ATF form is filed. Also, we changed ``ATF 
officer'' in Sec. 275.106(b) to read ``appropriate ATF officer''. The 
``appropriate ATF officer'' is specified in a delegation order, ATF O 
1130.16A. Conforming changes for referencing this ATF order have also 
been made in this document. The titles of ATF officials in the sections 
of this part which are not revised by this temporary rule will be 
updated by a future technical amendment.

Other Changes

    Whenever possible, we tried to simplify and clarify the format and 
language of the particular sections involved. For example, we revised 
Sec. 275.121 by revising its language and used a chart to explain some 
of its requirements. Also, we have made a conforming and clarifying 
addition to the definition of ``records'' in Sec. 275.11. This addition 
will ensure that persons in Puerto Rico who ship Puerto Rican tobacco 
products or cigarette papers or

[[Page 13850]]

tubes from Puerto Rico to the United States prepare and maintain 
appropriate records of each shipment. In addition, we have removed the 
reference to the ATF official and the requirement that ATF Form 5000.25 
be filed in duplicate in the first sentence of Sec. 275.105 from 
``repay'' to ``prepay'' and the references to the ATF form number in 
section 275.114.

Regulatory Flexibility Act

    Because a notice of proposed rulemaking is not required for this 
rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) do not apply. A copy of this temporary rule was submitted to the 
Chief Counsel for Advocacy of the Small Business Administration in 
accordance with 26 U.S.C. 7805(f). No comments were received.

Executive Order 12866

    It has been determined that this rule is not a significant 
regulatory action because it will not: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
Executive Order 12866.

Paperwork Reduction Act

    The collection of information contained in this regulation has been 
reviewed under the requirements of the Paperwork Reduction Act of 1995 
(44 U.S.C. 3507(j)), and pending receipt and evaluation of public 
comments, approved by the Office of Management and Budget (OMB) under 
control numbers 1512-0560. 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 in this document is found in 27 CFR 
Secs. 275.106, 275.110 and 275.121(b). This information ensures that 
the excise tax on Puerto Rican tobacco products and cigarette papers 
and tubes shipped from Puerto Rico to the United States is properly 
determined and recorded and that bond coverage, if applicable, is 
sufficient.
    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 in the proposed rules section of this 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.

Administrative Procedure Act

    We find that there is good cause for issuing this temporary rule 
without prior notice and public procedure under 5 U.S.C. 553(b) or 
subject to the effective date limitation under 5 U.S.C. 553(d). This 
document will relieve the burden on companies in Puerto Rico by 
eliminating the requirement that ATF personnel inspect and supervise 
each shipment of Puerto Rican tobacco products or cigarette papers and 
tubes from Puerto Rico to the United States. This document also 
eliminates two ATF forms that companies in Puerto Rico were required to 
prepare for ATF personnel to inspect and supervise such shipments and 
two ATF forms that ATF personnel were required to execute for each 
shipment.

Drafting Information

    The principal author of this document is Robert Ruhf, Regulations 
Division, Bureau of Alcohol, Tobacco and Firearms.

List of Subjects in 27 CFR Part 275

    Administrative practice and procedure, Authority delegations, 
Cigarette papers and tubes, Claims, Electronic fund transfer, Customs 
duties and inspection, Excise taxes, Imports, Labeling, Packaging and 
containers, Penalties, Reporting requirements, Seizures and 
forfeitures, Surety bonds, Tobacco products, U.S. possessions, 
Warehouses.

Authority and Issuance

    Title 27, Code of Federal Regulations is amended as follows:

PART 275--IMPORTATION OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND 
TUBES

    Paragraph 1. The authority citation for part 275 is revised to read 
as follows:

    Authority:  18 U.S.C. 2342; 26 U.S.C. 5701, 5703, 5704, 5705, 
5708, 5712, 5713, 5721, 5722, 5723, 5741, 5754, 5761, 5762, 5763, 
6301, 6302, 6313, 6404, 7101, 7212, 7342, 7606, 7651, 7652, 7805; 31 
U.S.C. 9301, 9303, 9304, 9306.


Sec. 275.11  [Amended]

    Par. 2. The definition of ``Appropriate ATF officer'' in 
Sec. 275.11 is amended by the adding the capital letter ``A'' at the 
end of the numbers ``1130.16''.
    Par. 3. Paragraphs (1), (3)(i) and (3)(ii) of the definition of 
``Records'' in Sec. 275.11 are amended by adding the phrases ``or 
shipment into the United States from Puerto Rico'' after the word 
``importation''.


Sec. 275.29  [Amended]

    Par. 4. Section 275.29 is amended by removing the numbers 
``1130.15'' each place it appears and adding, in substitution, the 
numbers ``1130.16A''.

    Par. 5. Section 275.105 is revised to read as follows:


Sec. 275.105  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, ATF Form 
5000.25, with full remittance of tax which will become due on such 
tobacco products and cigarette papers and tubes.
* * * * *

    Par. 6. Section 275.106 is revised to read as follows:


Sec. 275.106  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 275.30 through 275.35;
    (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;

[[Page 13851]]

    (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 ATF 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 ATF Form 5000.25 upon 
request of an appropriate ATF officer.

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


    Par. 7. Section 275.110 is revised to read as follows:


Sec. 275.110  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 
275.30 through 275.35;
    (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)


    Par. 8. Section 275.111 is revised to read as follows:


Sec. 275.111  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 ATF 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.


Sec. 275.114  [Amended]

    Par. 9. Paragraphs (b)(1) and (b)(2) of Sec. 275.114 are amended by 
removing the numbers ``5000.24'' each place that they appear and 
adding, in substitution, the numbers ``5000.25''.


    Par. 10. Section 275.121 is revised to read as follows:


Sec. 275.121  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. 275.111 or is otherwise chargeable against 
such bond and then must credit the account for the amount paid on Form 
5000.25 or other ATF-prescribed document, at the time it is filed.


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


    Signed: February 5, 2001.
Bradley A. Buckles,
Director.
    Approved: February 13, 2001.
Timothy E. Skud,
Acting Deputy Assistant Secretary (Regulatory, Tariff and Trade 
Enforcement).
[FR Doc. 01-5424 Filed 3-8-01; 8:45 am]
BILLING CODE 4810-31-U