[Federal Register Volume 72, Number 224 (Wednesday, November 21, 2007)]
[Rules and Regulations]
[Pages 65456-65457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-22703]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 45

[T.D. TTB-63; Re: T.D. TTB-26]
RIN 1513-AA99


Removal of Tobacco Products and Cigarette Papers and Tubes, 
Without Payment of Tax, for United States Use in Law Enforcement 
Activities (2003R-268P)

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Final rule; Treasury decision.

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SUMMARY: This Treasury decision adopts as a final rule, without change, 
a temporary rule that allows manufacturers of tobacco products and 
cigarette papers and tubes to remove these articles without payment of 
tax for use by Federal agencies in law enforcement activities, and 
without inclusion of the otherwise required tax-exempt label.

DATES: Effective Date: November 21, 2007.

FOR FURTHER INFORMATION CONTACT: Amy Greenberg, Alcohol and Tobacco Tax 
and Trade Bureau, Regulations and Rulings Division, 1310 G Street, NW., 
Suite 200-E, Washington, DC 20220; telephone 202-927-8210; or e-mail 
[email protected].

SUPPLEMENTARY INFORMATION:

Statutory and Regulatory Provisions

    Section 5704(b) of the Internal Revenue Code of 1986 (26 U.S.C. 
5704(b)) provides that a manufacturer may, among other things, remove 
tobacco products and cigarette papers and tubes without payment of tax 
for use of the United States, in accordance with regulations prescribed 
by the Secretary of the Treasury. The regulations administered by the 
Alcohol and Tobacco Tax and Trade Bureau (TTB) include, in part 45 (27 
CFR part 45), provisions that implement this aspect of section 5704(b). 
Section 45.31 of those regulations (27 CFR 45.31) previously set forth 
two circumstances in which manufacturers of tobacco products and 
cigarette papers and tubes were permitted to remove those articles 
without payment of Federal excise tax for gratuitous distribution under 
the supervision of a Federal agency. Neither of those circumstances 
included the removal of articles for use by Federal agencies in law 
enforcement activities.
    In addition, Section 45.46 of the TTB regulations (27 CFR 45.46) 
provided that every package of tobacco products and cigarette papers 
and tubes removed under part 45 must 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 to the package.

Publication of Temporary Rule

    On April 15, 2005, TTB published in the Federal Register at 70 FR 
19888, as T.D. TTB-26, a temporary rule that amended the TTB 
regulations to eliminate the need for manufacturers of tobacco products 
and cigarette papers and tubes to obtain a variance to remove their 
products without payment of tax for use by a Federal Agency in an 
investigation or other law enforcement activity. Under the temporary 
rule, the supplying of tobacco products and cigarette papers and tubes 
by manufacturers to Federal agencies continued to be voluntary. The 
changes to the regulations did not impose additional cost, compliance, 
or reporting burdens on manufacturers. The temporary rule revised Sec.  
45.31 by dividing that section into paragraphs (a) and (b) in order to 
include the substantive change and improve the readability of the 
section.
    In addition, we amended Sec.  45.46 by adding an exception to the 
tax exempt labeling requirements.
    The Bureau received three comments on the temporary rule. One 
commenter specifically endorsed the temporary changes, recognizing that 
they would significantly help law enforcement

[[Page 65457]]

efforts. The second commenter, a cigarette importer, supported the 
temporary rule for purposes of facilitating law enforcement. The third 
commenter supported the principle of tax-free removals for certain 
purposes.
    Based on the reasons set forth above and on comments received, we 
believe it is appropriate to adopt the temporary rule as a final rule 
without change.

Inapplicability of Delayed Effective Date Requirement

    Because these regulations recognize an exemption to tax payment, 
relieve manufacturers of the requirement to file a variance, and are 
identical to temporary regulations currently in effect, it has been 
determined pursuant to 5 U.S.C. 553(d)(1) and (3) that good cause 
exists to issue these regulations without a delayed effective date.

Regulatory Flexibility Act

    We certify that this regulation will not have a significant impact 
on a substantial number of small entities. This regulation provides 
greater flexibility for manufacturers of tobacco products and cigarette 
papers and tubes to remove these products without being subject to tax 
and imposes no new reporting, recordkeeping, or other administrative 
requirement. Therefore, no regulatory flexibility analysis is required.

Executive Order 12866

    We have determined that this notice of final rulemaking is not a 
significant regulatory action as defined by Executive Order 12866. 
Therefore, a regulatory assessment is not required.

Drafting Information

    Maria Mahone of the Knowledge Management Staff drafted this final 
rule.

List of Subjects in 27 CFR Part 45

    Authority delegations (Government agencies), Cigars and cigarettes, 
Excise taxes, Labeling, Packaging and containers, Reporting and 
recordkeeping requirements, Tobacco.

The Regulatory Amendment

0
For the reasons discussed in the preamble, the temporary rule amending 
27 CFR part 45 published in the Federal Register at 70 FR 19888 on 
April 15, 2005, is adopted as a final rule without change.

    Signed: September 18, 2007.
John J. Manfreda,
Administrator.
    Approved: November 5, 2007.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. E7-22703 Filed 11-20-07; 8:45 am]
BILLING CODE 4810-31-P