Collapse to view only § 41.50 - Exemptions.
Tax Rates
Classification of Large Cigars and Cigarettes
Liability for and Payment of Taxes
Exemptions From Taxes and Permits
Assessment of Taxes
Customs' Collection of Taxes
Tax Rates
§ 41.30 - Pipe tobacco and roll-your-own tobacco tax rates.
(a) Tax rates. Pipe tobacco and roll-your-own tobacco are taxed at the following rates under 26 U.S.C. 5701(f) and (g), respectively:
| Product | Tax rate per pound* for removals during the following periods: | 2002 to
March 31, 2009 | April 1, 2009 and after | Pipe tobacco | $ 1.0969 | $ 2.8311 | Roll-your-own tobacco | $ 1.0969 | $ 24.78 |
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* Prorate tax for fractions of a pound.
(b) Classification. (1) Pipe tobacco and roll-your-own tobacco, before removal subject to tax, must be put up in packages that conform to the requirements of § 41.71 and of § 41.72a or § 41.72b as appropriate.
(2) Any tobacco that has been processed and that is removed in a package, as that term is defined in § 41.11, that does not bear the notice for smokeless tobacco prescribed in § 41.72 or the notice for pipe tobacco prescribed in § 41.72a is deemed to be roll-your-own tobacco and subject to tax at the rate applicable to roll-your-own tobacco. A container of processed tobacco, the contents of which weigh 10 pounds or less (including any added non-tobacco ingredients or constituents), that is removed within the meaning of this part for any purpose other than destruction, export, delivery as a sample to a manufacturer of processed tobacco or tobacco products for the purpose of soliciting orders of processed tobacco, or for scientific testing or testing of equipment that results in the destruction of the processed tobacco or the return of the processed tobacco, is deemed to be a package offered for sale or delivery to the ultimate consumer.
(3) Subject to paragraph (b)(4) of this section, any tobacco that has been processed and that is removed in a package, as that term is defined in § 41.11, is deemed to be roll-your-own tobacco and subject to tax at the rate applicable to roll-your-own tobacco, even though the package bears the notice required for pipe tobacco under § 41.72a, if:
(i) The package does not bear the declaration “pipe tobacco” in direct conjunction with, parallel to, and in substantially the same conspicuousness of type and background as the brand name each time the brand name appears on the package; or
(ii) The package or accompanying materials bear any representation that would suggest a use other than as pipe tobacco. The term 'accompanying materials' includes, but is not limited to, any point of sale advertising or other printed product communications issued by the manufacturer or importer of pipe tobacco products. In addition, the inclusion of cigarette papers or tubes in a package bearing a 'pipe tobacco' declaration will suggest a use other than pipe tobacco.
(4) During the period from June 22, 2009, through March 23, 2010, importers may continue to remove products as pipe tobacco in packages that do not bear the declaration “pipe tobacco” in the manner prescribed in paragraph (b)(3)(i) of this section.
§ 41.31 - Cigar tax rates.
(a) Cigars are taxed at the following rates under 26 U.S.C. 5701(a):
| Type and amount | Tax rate for removals during the following periods: | 2002 to
March 31, 2009 | April 1, 2009 and after | Small cigars per thousand | $1.828 | $50.33 | Large cigars* | • percentage of sale price | 20.719% | 52.750% | • but not to exceed— | $48.75 per thousand | $0.4026 per cigar. |
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* For large cigars: Until March 31, 2009, the percentage tax rate applies when the sale price is $235.294 per thousand or less, and the flat tax rate applies when the sale price is more than $235.294 per thousand. On and after April 1, 2009, the percentage tax rate applies when the sale price is $763.222 or less per thousand cigars, and the flat tax rate applies when the sale price is more than $763.222 per thousand cigars.
(b) See § 41.39 of this part for rules concerning determination of sale price of large cigars.
(c) Cigars not exempt from tax under 26 U.S.C. chapter 52 and the provisions of this part which are removed but not intended for sale shall be taxed at the same rate as similar cigars removed for sale.
§ 41.32 - Cigarette tax rates.
Cigarettes are taxed at the following rates under 26 U.S.C. 5701(b):
| Product | Tax rate per thousand for removals during the following periods: | 2002 to
March 31, 2009 | April 1, 2009 and after | Small cigarettes | $19.50 | $50.33 | Large cigarettes up to 6 1/2″ long | $40.95 | $105.69 | Large cigarettes over 6 1/2″ long | Taxed at the rate for small cigarettes, counting each 2 3/4 or fraction thereof of the length of each as one cigarette. |
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§ 41.33 - Smokeless tobacco tax rates.
Smokeless tobacco products are taxed at the following rates under 26 U.S.C. 5701(e):
| Product | Tax rate per pound* for removals during the following periods: | 2002 to
March 31, 2009 | April 1, 2009 and after | Snuff | $0.585 | $1.51 | Chewing tobacco | $0.195 | $0.5033 |
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* Prorate tax for fractions of a pound.
§ 41.34 - Cigarette papers.
Cigarette papers are taxed at the following rates under 26 U.S.C. 5701(c):
| Product | Tax rate for each 50 papers* for removals during the following periods: | 2002 to
March 31, 2009 | April 1, 2009 and after | Cigarette papers up to 6 1/2 long | $0.0122 | $0.0315 | Cigarette papers over 6 1/2″ long | Use rates above, but count each 2 3/4″ or fraction thereof of the length of each as one cigarette paper. |
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* Tax rate for less than 50 papers is the same. The tax is not prorated.
§ 41.35 - Cigarette tubes.
Cigarette tubes are taxed at the following rates under 26 U.S.C. 5701(d):
| Product | Tax rate for each 50 tubes* for removals during the following periods: | 2002 to
March 31, 2009 | April 1, 2009 and after | Cigarette tubes up to 6 1/2 long | $0.0244 | $ 0.0630 | Cigarette tubes over 6 1/2 long | Use rates above, but count each 2 3/4 or fraction thereof of the length of each as one cigarette tube. |
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* Tax rate for less than 50 tubes is the same. The tax is not prorated.
Classification of Large Cigars and Cigarettes
§ 41.37 - [Reserved]
§ 41.38 - Cigarettes.
For internal revenue tax purposes, small cigarettes are designated Class A and large cigarettes are designated Class B.
§ 41.39 - Determination of sale price of large cigars.
The tax imposed on large cigars is computed based on the sale price (the price for which the large cigars are sold by the importer or United States manufacturer). In addition to money, goods or services exchanged for cigars may be considered as part of the sale price. See § 40.22(b) of this chapter for information on determining the sale price in special cases. See § 41.40 of this chapter regarding liability for tax on large cigars, not put up in packages, released from customs custody without payment of tax for delivery to a domestic manufacturer of tobacco products.
Liability for and Payment of Taxes
§ 41.40 - Persons liable for tax.
The importer of tobacco products or cigarette papers and tubes is liable for the internal revenue taxes imposed thereon by 26 U.S.C. 5701 or 7652, except when tobacco products or cigarette papers or tubes imported or brought into the United States (other than those previously exported and returned) are released from customs custody, without payment of tax as provided under 26 U.S.C. 5704(c). Under section 5704(c), tobacco products and cigarette papers and tubes, 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, or to a manufacturer of tobacco products or cigarette papers and tubes if such articles are not put up in packages. Under these circumstances the transferee will become liable for the internal revenue tax on these articles upon release from customs custody, and the importer will thereupon be relieved from the liability for the tax. However, if the transferee is also the importer, the importer will not be relieved from the liability for the tax.
§ 41.41 - 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, are not eligible for release from customs custody until those taxes have been determined.
Exemptions From Taxes and Permits
§ 41.50 - Exemptions.
The Harmonized Tariff Schedule of the United States (19 U.S.C. 1202) and Customs Regulations, 19 CFR, chapter I, provide for certain exemptions from internal revenue taxes with respect to tobacco products and cigarette papers and tubes imported into the United States. These exemptions include, but are not limited to, certain importations in passengers' baggage, for use of crew members, and by foreign officials. Persons importing tobacco products and cigarette papers and tubes as described in this section are not required to obtain a permit.
Assessment of Taxes
§ 41.60 - Assessment.
Whenever any person required by law to pay internal revenue tax on tobacco products or cigarette papers or tubes fails to pay such tax, the tax shall be ascertained and assessed against such person, subject to the limitations prescribed in 26 U.S.C. 6501. The tax so assessed shall be in addition to the penalties imposed by law for failure to pay such tax when required. Except in cases where delay may jeopardize collection of the tax, or where the amount is nominal or the result of an evident mathematical error, no such assessment shall be made until and after notice has been afforded such person to show cause against assessment. The person will be allowed 45 days from the date of such notice to show cause, in writing, against such assessment.
Customs' Collection of Taxes
§ 41.62 - 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 officer, 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.
§ 41.63 - Payment of tax by electronic fund transfer.
(a) Each importer who was liable, during a calendar year, for a gross amount equal to or exceeding five million dollars in taxes on cigars, cigarettes, cigarette papers, and cigarette tubes combining tax liabilities incurred under this part and part 40 of this chapter, shall use a commercial bank in making payment by electronic fund transfer (EFT) of such taxes during the succeeding calendar year. Payment of such taxes by cash, check, or money order is not authorized for an importer who is required, by this section, to make remittances by EFT. For purposes of this section, the dollar amount of tax liability is defined as the gross tax liability on all taxable withdrawals and importations (including similar products brought into the United States from Puerto Rico or the Virgin Islands) during the calendar year, without regard to any drawbacks, credits, or refunds, for all premises from which such activities are conducted by the taxpayer.
(b) For the purposes of this section, a taxpayer includes 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 it appears in subsection (a) of 26 U.S.C. 1563, as well as in the implementing regulations. 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 of the members of the controlled group are one taxpayer for the purpose of determining who is required to make remittances by EFT.
(c) For the purposes of this section, (1) electronic fund transfer or EFT means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, or computer of magnetic tape, so as to order, instruct, or authorize a financial institution to either debit or credit an account, in accordance with procedures established by the U.S. Customs Service, and (2) electronic fund transfer or EFT does not have the meaning defined in § 41.11 for use elswhere in this part.
(d) An importer who is required by this section to make remittances by EFT, shall make the EFT remittance in accordance with the requirements of the U.S. Customs Service.