27 C.F.R. Subpart I—Floor Stocks Tax on Cigarettes Held for Sale on January 1, 2000 and on January 1, 2002
Title 27 - Alcohol, Tobacco Products and Firearms
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.
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. (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” 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] 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. 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 §§46.207 and 46.208). You may also be liable if you hold cigarettes in a foreign trade zone (refer to §46.209). 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. (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 §§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 §46.222. Apply the tax credit as provided by §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 §46.241.
Title 27: Alcohol, Tobacco and Firearms
PART 46—MISCELLANEOUS REGULATIONS RELATING TO TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES
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.
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.
§ 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.
§ 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.
§ 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.------------------------------------------------------------------------
§ 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 §46.222 and whether the cigarettes have export markings as stated in §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[inch] or less in length without export markings. • Number of large cigarettes 6.5[inch] or less in length with export markings. • Number of each size of large cigarettes more than 6.5[inch] in length without export markings. • Number of each size of large cigarettes more than 6.5[inch] in length with export markings.------------------------------------------------------------------------
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(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 §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. § 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 §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. (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 §46.205(e). § 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. § 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. § 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). § 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. § 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. § 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. § 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 §§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§ 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 §46.222. Multiply the amount of each type of cigarette by the applicable tax rate. § 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 20Large 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)------------------------------------------------------------------------
§ 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§ 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] § 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. § 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] § 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.
§ 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. § 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. § 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 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 §46.223 if it is apportioned to you as a member of the controlled group. Records§ 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. § 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 § 46.234.Filed a tax return after the due date 3 years from the date of filing of the tax return. the tax return.------------------------------------------------------------------------
§ 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. § 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. § 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§ 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. § 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. § 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)§ 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 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. § 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§ 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. § 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)§ 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. § 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§ 46.270 [Reserved]§ 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. § 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. (c) Any other appropriate person in connection with the books or tax liability. § 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. § 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. Browse Previous
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