[Federal Register Volume 81, Number 119 (Tuesday, June 21, 2016)]
[Rules and Regulations]
[Pages 40183-40185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14358]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau
27 CFR Parts 40, 41, and 44
[Docket No. TTB-2013-0006; T.D. TTB-137; Re: T.D. TTB-115; Notice No.
137; T.D. ATF-421; T.D. ATF-422; ATF Notice Nos. 887 and 888]
RIN 1513-AB37
Importer Permit Requirements for Tobacco Products and Processed
Tobacco, and Other Requirements for Tobacco Products, Processed Tobacco
and Cigarette Papers and Tubes
AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.
ACTION: Final rule; Treasury decision.
-----------------------------------------------------------------------
SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau is adopting as a
final rule, without change, a temporary rule concerning permit and
other requirements related to importers and manufacturers of tobacco
products and processed tobacco published in the Federal Register on
June 27, 2013. The regulatory amendments adopted in this final rule
include an extension in the duration of new permits for importers of
tobacco products and processed tobacco from three years to five years,
a technical correction amending the definition of ``Manufacturer of
tobacco products'' to reflect a statutory change, and a technical
correction related to references to the sale price of large cigars.
This final rule also permanently incorporates and reissues other TTB
regulations pertaining to importer permit requirements for tobacco
products as well as minimum manufacturing and marking requirements for
tobacco products and cigarette papers and tubes that also were
incorporated in the June 27, 2013, temporary rule.
DATES: Effective July 21, 2016, the temporary regulations published in
the Federal Register as T.D. TTB-115 at 78 FR 38555 on June 27, 2013,
are adopted as final, and those temporary regulations will no longer
have a sunset date of August 26, 2016.
FOR FURTHER INFORMATION CONTACT: Jessie Longbrake, Regulations and
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G
Street, Box 12, Washington, DC 20005; telephone 202-453-2265; email
[email protected].
SUPPLEMENTARY INFORMATION:
[[Page 40184]]
Background
TTB Authority
Chapter 52 of the Internal Revenue Code of 1986 (IRC) contains
excise tax and related provisions pertaining to tobacco products and
cigarette papers and tubes. Section 5701 of the IRC (26 U.S.C. 5701)
imposes various rates of tax on such products manufactured in, or
imported into, the United States. Section 5704 of the IRC (26 U.S.C.
5704) provides for certain exemptions from those taxes. Sections 5712
and 5713 of the IRC (26 U.S.C. 5712 and 5713) provide that
manufacturers and importers of tobacco products or processed tobacco
and export warehouse proprietors must apply for and possess a permit in
order to engage in such businesses. Section 5712 also allows for the
promulgation of regulations prescribing minimum manufacturing and
activity requirements for such permittees, and section 5713 also sets
forth standards regarding the suspension and revocation of permits.
Section 5754 of the IRC (26 U.S.C. 5754) sets forth restrictions on the
importation of previously exported tobacco products. Section 5761 of
the IRC (26 U.S.C. 5761) sets forth civil penalties for, among other
things, selling, relanding, or receiving any tobacco products or
cigarette papers or tubes that were labeled or shipped for exportation.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers
these statutory provisions pursuant to section 1111(d) of the Homeland
Security Act of 2003, codified at 6 U.S.C. 531(d). The Secretary has
delegated various authorities through Treasury Department Order 120-01
(dated December 10, 2013, superseding Treasury Order 120-01 (Revised),
``Alcohol and Tobacco Tax and Trade Bureau,'' dated January 24, 2003),
to the TTB Administrator to perform the functions and duties in the
administration and enforcement of these laws.
Regulations implementing the Chapter 52 provisions are contained in
chapter I of title 27 of the Code of Federal Regulations (27 CFR).
Those regulations include: Part 40 (Manufacture of tobacco products,
cigarette papers and tubes, and processed tobacco); part 41
(Importation of tobacco products, cigarette papers and tubes, and
processed tobacco); and part 44 (Exportation of tobacco products and
cigarette papers and tubes, without payment of tax, or with drawback of
tax).
Publication of Temporary Regulations and Notice of Proposed Rulemaking
On June 27, 2013, TTB published in the Federal Register at 78 FR
38555, T.D. TTB-115 amending the regulations in 27 CFR parts 40, 41,
and 44. The temporary rule was effective on August 26, 2013, and would
have expired on August 26, 2016, if not finalized prior to that date.
In the same issue of the Federal Register, TTB also requested public
comments on the temporary rule via a notice of proposed rulemaking,
Notice No. 137 (78 FR 38646). TTB received one comment in response to
Notice No. 137 by the close of the comment period on August 26, 2013.
That comment is discussed in more detail below.
Notice No. 137 and the Comment Received
TTB received one comment in response to Notice No. 137, submitted
by a Washington, DC law firm on behalf of an individual who imports
cigars.
The comment regards the amendment in the temporary rule, in which
TTB inserted the words ``United States'' before the word
``manufacturer'' in 27 CFR 41.39, Determination of Sale Price of Large
Cigars. Under 26 U.S.C. 5701(a)(2), the Federal excise tax on large
cigars manufactured in or imported into the United States is a
percentage of the ``price for which sold'' but not more than a maximum.
Currently, the tax is 52.75 percent of the price for which sold but not
more than 40.26 cents per cigar. The commenter objects to the ``price
for which sold'' being the price for which the cigars are sold by the
importer, and concludes by requesting that TTB not insert ``United
States'' before the word ``manufacturer'' in Sec. 41.39, Determination
of Sale Price of Large Cigars, and, instead, adopt a regulation to
authorize importers of large cigars to base their Federal excise tax
calculations on the foreign manufacturer's sales price.
TTB Response
In the temporary rule, T.D. TTB-115, TTB did not propose to change
its interpretation regarding the Federal excise tax determination of
large cigars. Rather, the addition of ``United States'' before the word
``manufacturer'' in Sec. 41.39 is a technical correction intended to
bring Sec. 41.39 more clearly into conformity with other regulatory
provisions in parts 40 and 41 which already reflect the interpretation
by TTB and TTB's predecessor agency, the Bureau of Alcohol, Tobacco and
Firearms (ATF), of the text of section 5701(a)(2), that is, that the
Federal excise tax for large cigars is based on the sale price at which
the cigars are sold by the importer or the United States manufacturer.
This interpretation dates to the Omnibus Budget Reconciliation Act of
1990 (Pub. L. 101-508, 104 Stat. 1388), which changed the basis of
taxation on large cigars, from the ``wholesale price'' (generally, the
manufacturer's or importer's suggested delivered price at which the
cigars are sold to retailers) to the ``price for which sold.''
In T.D. ATF-307 (December 21, 1990; 55 FR 52742), ATF amended its
regulations to reflect the new text of section 5701(a)(2). On March 19,
1991, ATF issued Industry Circular 91-3, which provided guidance
concerning the implementation of the tax on large cigars and included
specific guidance regarding the tax on imported large cigars. The
Industry Circular explains how an importer determines the tax on large
cigars when the release from customs custody (the taxable event) occurs
before the sale of the cigars. In T.D. TTB-78 (June 22, 2009; 74 FR
29401), TTB clarified the definition of ``sale price'' in Sec. 41.11
by adding the words ``United States'' before ``manufacturer.'' (That
temporary rule was finalized by T.D. TTB-104 (June 21, 2012, 77 FR
37287).) However, when this change was made, TTB inadvertently failed
to make a corresponding change to the operative regulation in Sec.
41.39. Therefore in T.D. TTB-115, TTB made the necessary technical
change by adding ``United States'' before the word ``manufacturer'' in
Sec. 41.39.
As stated above, the temporary rule did not introduce a substantive
change to the TTB regulations regarding the application of the sale
price but, rather, made a technical correction to bring Sec. 41.39
more clearly into conformity with other TTB regulatory provisions and
with the position stated in Industry Circular 91-3. Thus, the request
of the commenter is beyond the scope of the rulemaking.
Adoption of Final Rule
TTB adopts as a final rule, without change, the temporary
regulatory amendments contained in T.D. TTB-115, effective 30 days from
the publication of this document. As a result, TTB is permanently
amending its regulations in 27 CFR parts 40, 41, and 44 pertaining to
permits for importers of tobacco products and processed tobacco by
extending the duration of new permits from three years to five years.
In addition, TTB is permanently amending the definition of
``Manufacturer of tobacco products'' to reflect a recent
[[Page 40185]]
statutory change, and is amending a reference to the sale price of
large cigars to incorporate a clarification published in a prior TTB
temporary rule that was finalized in 2012. Finally, this final rule
makes permanent regulatory changes pertaining to importer permit
requirements for tobacco products, and minimum manufacturing and
marking requirements for tobacco products and cigarette papers and
tubes.
Please see T.D. TTB-115 for a detailed discussion of the temporary
regulatory amendments finalized by this document, as well as a detailed
discussion of the various statutory changes and court actions
necessitating regulatory amendments, the earlier related temporary
rules and notices of proposed rulemaking issued by ATF (T.D. ATF-421,
December 22, 1999, 64 FR 71918; Notice No. 887, December 22, 1999, 64
FR 71927; T.D. ATF-422, December 22, 1999, 64 FR 71947; and Notice No.
888, December 22, 1999, 64 FR 71955), the comments received by ATF on
its temporary rules, and other ATF and TTB regulatory documents related
to this rulemaking.
Public Disclosure
On the Federal e-rulemaking portal, ``Regulations.gov,'' within
Docket No. TTB-2013-0006, you may view copies of this final rule, the
related temporary and proposed rules, the comment received in response
to the proposed rule, and all other related final and temporary rules
and notices of proposed rulemaking issued by ATF and TTB related to
this matter. A direct link to that docket is posted on the TTB Web site
at https://www.ttb.gov/tobacco/tobacco-rulemaking.shtml under Notice
No. 137. You may also reach that docket through the Regulations.gov
search page at https://www.regulations.gov.
You also may view copies of those documents at the TTB Information
Resource Center, 1310 G Street NW., Washington, DC 20220. You may also
obtain copies at 20 cents per 8.5- x 11-inch page. Contact TTB's
information specialist at the above address or by telephone at 202-453-
2270 to schedule a viewing appointment or to request copies.
Regulatory Flexibility Act
Pursuant to the requirements of the Regulatory Flexibility Act (5
U.S.C. chapter 6), we certify that these regulations will not have a
significant economic impact on a substantial number of small entities.
Any effects of this rulemaking on small businesses flow directly from
the underlying statutes. Accordingly, a regulatory flexibility analysis
is not required. These regulations also reduce the administrative
burden on importers of tobacco products and processed tobacco by
requiring that they renew their permits only every five years rather
than every three years. Pursuant to 26 U.S.C. 7805(f), TTB submitted
the temporary regulations and notice of proposed rulemaking to the
Chief Counsel for Advocacy of the Small Business Administration for
comment on the impact of the regulations on small businesses; TTB
received no comment in reply.
Executive Order 12866
Certain regulations issued pursuant to the IRC, including this one,
are exempt from the requirements of Executive Order 12866, as
supplemented and reaffirmed by Executive Order 13563. Therefore, a
regulatory impact assessment is not required.
Paperwork Reduction Act
The collections of information in the regulations contained in this
final rule have been previously reviewed and approved by Office of
Management and Budget (OMB) in accordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3504(h)) and assigned control numbers 1513-0002,
1513-0068, 1513-0070, 1513-0078, 1513-0106, and 1513-0107. 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 temporary rule did not impose a new collection of
information, and this final rule makes no changes to the temporary
rule.
The list of collections of information in the regulations contained
in the temporary rule inadvertently omitted control number 1513-0002,
which authorizes the collection of information on TTB Form 5000.9, the
Personnel Questionnaire. The changes made in the temporary rule
increased the paperwork burden associated with the control number by
requiring additional submissions of the form. TTB requested comment on
the increased number of respondents and total annual burden hours in a
document published in the Federal Register on March 12, 2015 (Comment
Request No. 51, 80 FR 13072). Based on a comment on TTB Form 5000.9,
TTB proposed revisions to the form in a document published in the
Federal Register on January 13, 2016 (Comment Request No. 57, 81 FR
1679); comments on this notice were due on March 14, 2016.
TTB will submit the information collection requirements described
in the notice to the Office of Management and Budget for approval. When
OMB takes action on the changes, TTB will publish a document in the
Federal Register.
Drafting Information
Michael D. Hoover of the Regulations and Rulings Division, Alcohol
and Tobacco Tax and Trade Bureau, drafted this document.
List of Subjects
27 CFR Part 40
Cigars and cigarettes, Claims, Electronic funds transfers, Excise
taxes Imports, Labeling, Packaging and containers, Reporting and
recordkeeping requirements, Surety bonds, Tobacco.
27 CFR Part 41
Cigars and cigarettes, Claims, Customs duties and inspection,
Electronic fund transfers, Excise taxes, Imports, Labeling, Packaging
and containers, Puerto Rico, Reporting and recordkeeping requirements,
Surety bonds, Tobacco, Virgin Islands, Warehouses.
27 CFR Part 44
Aircraft, Armed forces, Cigars and cigarettes, Claims, Customs
duties and inspection, Excise taxes, Exports, Foreign trade zones,
Labeling, Packaging and containers, Reporting and recordkeeping
requirements, Surety bonds, Tobacco, Vessels, Warehouses.
Amendments to the Regulations
Accordingly, the temporary rule that amended 27 CFR, chapter I,
parts 40, 41, and 44, and published as T.D. TTB-115 at 78 FR 38555 on
June 27, 2013, is adopted as a final rule without change.
Signed: March 28, 2016.
John J. Manfreda,
Administrator.
Approved: April 12, 2016.
Timothy E. Skud,
Deputy Assistant Secretary. (Tax, Trade, and Tariff Policy).
[FR Doc. 2016-14358 Filed 6-20-16; 8:45 am]
BILLING CODE 4810-31-P