[Federal Register Volume 75, Number 144 (Wednesday, July 28, 2010)]
[Proposed Rules]
[Pages 44173-44179]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-18552]
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DEPARTMENT OF JUSTICE
Bureau of Alcohol, Tobacco, Firearms, and Explosives
27 CFR Part 646
[Docket No. ATF 22P; AG Order No. 3179-2010]
RIN 1140-AA31
Implementation of the USA PATRIOT Improvement and Reauthorization
Act of 2005 Regarding Trafficking in Contraband Cigarettes or Smokeless
Tobacco (2006R-1P)
AGENCY: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF),
Department of Justice.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Department of Justice is proposing to amend the
regulations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives
(ATF) to implement certain provisions of the USA PATRIOT Improvement
and Reauthorization Act of 2005 (enacted March 9, 2006) relating to
trafficking in contraband cigarettes or smokeless tobacco. The new law
amends the Contraband Cigarette Trafficking Act by: reducing the
threshold amount of cigarettes necessary to trigger jurisdiction under
the CCTA from a quantity in excess of 60,000 to a quantity in excess of
10,000; extending the provisions of the CCTA to cover contraband
smokeless tobacco; imposing reporting requirements on persons, except
tribal governments, who engage in delivery sales of more than 10,000
cigarettes or 500 single-unit consumer-sized cans or packages of
smokeless tobacco in a single month; requiring that cigarettes and
smokeless tobacco seized and forfeited under the CCTA be either used in
law enforcement operations or destroyed; and by authorizing state and
local governments, and Federal tobacco permittees to bring civil causes
of action against violators of the CCTA.
DATES: Written comments must be postmarked and electronic comments must
be submitted on or before October 26, 2010. Commenters should be aware
that the electronic Federal Docket Management System will not accept
comments after midnight Eastern Time on the last day of the comment
period.
ADDRESSES: Send comments to any of the following addresses--
James P. Ficaretta, Program Manager, Mailstop 6N-602,
Enforcement Programs and Services, Bureau of Alcohol, Tobacco,
Firearms, and Explosives, U.S. Department of Justice, 99 New York
Avenue, NE., Washington, DC 20226; Attn: ATF 22P. Written comments must
appear in a minimum 12-point size of type (.17 inches), include your
mailing address, be signed, and may be of any length.
202-648-9741 (facsimile).
http://www.regulations.gov. Federal eRulemaking portal;
follow the instructions for submitting comments.
You may also view an electronic version of this proposed rule at
the http://www.regulations.gov site.
Comments may also be submitted electronically to ATF to http://www.regulations.gov by using the electronic comment form provided on
that site. You may also view an electronic version of this proposed
rule at the http://www.regulations.gov site. Comments submitted
electronically must contain your name and mailing address. They must
also reference this document docket number, as noted above, and be
legible when printed on 8\1/2\ x 11 paper. ATF
will treat comments submitted electronically as originals and it will
not acknowledge receipt of comments submitted electronically.
Interested parties will not be able to submit comments electronically
to ATF via http://www.regulations.gov after the comment period closes.
See the Public Participation section at the end of the
SUPPLEMENTARY INFORMATION section for instructions and requirements for
submitting written comments, and for information on how to request a
public hearing.
FOR FURTHER INFORMATION CONTACT: James P. Ficaretta; Enforcement
Programs and Services; Bureau of Alcohol, Tobacco, Firearms, and
Explosives; U.S. Department of Justice;
[[Page 44174]]
99 New York Avenue, NE., Washington, DC 20226, telephone (202) 648-
7094.
SUPPLEMENTARY INFORMATION:
I. Background
In 1978, the Contraband Cigarette Trafficking Act (CCTA), 18 U.S.C.
Chapter 114, was enacted to deter the interstate smuggling of
cigarettes where the taxation on tobacco products varies between the
States. The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF)
was given primary jurisdiction to enforce and administer the CCTA.
Contraband cigarettes were originally defined as any quantity of more
than 60,000 cigarettes that bear no evidence of the payment of
applicable state tax.
The legislative history of the CCTA and ATF's investigative efforts
over the years have established that organized crime has been involved
in the diversion of legal tobacco products into the illegal market.
Moreover, several investigations by ATF and its law enforcement
partners have established links to international terrorist groups,
including Hezbollah and al Qaeda. Since the enactment of the CCTA,
cigarette smuggling has grown in complexity. Not only are cigarettes
smuggled between low-tax and high-tax States, they are smuggled through
international borders. The counterfeiting of legitimate brands is also
very prevalent. The trafficking of contraband cigarettes is a worldwide
problem. Billions of dollars of tax revenue are lost by all levels of
government throughout the world due to the smuggling of cigarettes.
Much of the illicit profit gained by organized crime and terrorist
groups is used in furtherance of their criminal enterprises.
The trafficking in counterfeit and contraband tobacco products also
poses a serious health risk to our society. There are no standards of
production in counterfeit product. This allows for such things as
biological or chemical contamination of the product. Furthermore,
contraband cigarettes are more likely to be sold to underage persons
than legitimate product. Finally, the sale of counterfeit and
contraband products poses a serious financial threat to legitimate
manufacturers, wholesalers, and retailers.
II. USA PATRIOT Improvement and Reauthorization Act of 2005--Proposed
Rule
Public Law 109-177 (120 Stat. 192), the USA PATRIOT Improvement and
Reauthorization Act of 2005 (``the Act''), was enacted on March 9,
2006. Section 121 of the Act made several amendments to the CCTA, 18
U.S.C. 2341 et seq. The provisions of section 121 and the proposed
implementing regulations (if applicable), are discussed in the
following paragraphs.
Section 121(a)--Threshold Quantity for Treatment as Contraband
Cigarettes
Prior to amendment, section 2342 of the CCTA made it unlawful for
any person knowingly to ship, transport, receive, possess, sell,
distribute, or purchase contraband cigarettes. Contraband cigarettes
were defined as any quantity in excess of 60,000 cigarettes that bear
no evidence of the payment of applicable state tax. Section 121(a) of
the Act amended the CCTA by reducing the number of cigarettes that
trigger application of the CCTA from a quantity in excess of 60,000 to
a quantity in excess of 10,000 and which bear no evidence of the
payment of applicable state or local tax, if the States or local
governments require such indicia of tax payment.
Proposed amendments to the regulations to reflect the statutorily
imposed reduction to the CCTA threshold are contained in 27 CFR
646.141, 646.143, 646.146, and 646.147. The Department is also
proposing to amend Sec. 646.143 by adding a definition for the term
``cigarette.'' The proposed definition reflects the meaning of the term
set forth in the CCTA as amended, i.e., to update the existing
regulatory language to conform to the statutory change.
Section 121(b)--Contraband Smokeless Tobacco
Section 121(b) amended the CCTA by extending its provisions to
include contraband smokeless tobacco and by defining the terms
``smokeless tobacco'' and ``contraband smokeless tobacco.'' The term
``smokeless tobacco'' means any finely cut, ground, powdered, or leaf
tobacco that is intended to be placed in the oral or nasal cavity or
otherwise consumed without being combusted. The term ``contraband
smokeless tobacco'' means a quantity in excess of 500 single-unit
consumer-sized cans or packages of smokeless tobacco, or their
equivalent, that are in the possession of any person other than--
1. A person holding a permit issued pursuant to chapter 52 of the
Internal Revenue Code of 1986 as manufacturer of tobacco products or as
an export warehouse proprietor, a person operating a customs bonded
warehouse pursuant to section 311 or 555 of the Tariff Act of 1930 (19
U.S.C. 1311, 1555), or an agent of such person;
2. A common carrier transporting such smokeless tobacco under a
proper bill of lading or freight bill which states the quantity,
source, and designation of such smokeless tobacco;
3. A person who is licensed or otherwise authorized by the State
where such smokeless tobacco is found to engage in the business of
selling or distributing tobacco products, and has complied with the
accounting, tax, and payment requirements relating to such license or
authorization with respect to such smokeless tobacco; or
4. An officer, employee, or agent of the United States or a State,
or any department, agency, or instrumentality of the United States or a
State (including any political subdivision of a State), having
possession of such smokeless tobacco in connection with the performance
of official duties.
Proposed regulations that implement the provisions of section
121(b) are in 27 CFR 646.143, 646.146, 646.147, and 646.154.
Section 121(c)--Recordkeeping, Reporting, and Inspection
Section 121(c) of the Act amended the CCTA by:
Authorizing the Attorney General to prescribe regulations
concerning additional recordkeeping requirements that he considers
appropriate for purposes of enforcement of the CCTA on persons who
ship, sell, or distribute more than 10,000 cigarettes or 500 single-
unit consumer-sized cans or packages of smokeless tobacco in a single
transaction.
Requiring persons, except for tribal governments, who
engage in a delivery sale, and who ship, sell, or distribute more than
10,000 cigarettes or 500 single-unit consumer-sized cans or packages of
smokeless tobacco within a single month, to submit to the Attorney
General a report that sets forth the following:
1. The person's beginning and ending inventory of cigarettes and
cans or packages of smokeless tobacco (in total) for such month.
2. The total quantity of cigarettes and cans or packages of
smokeless tobacco that the person received within such month from each
other person (itemized by name and address).
3. The total quantity of cigarettes and cans or packages of
smokeless tobacco that the person distributed within such month to each
person (itemized by name and address) other than a retail purchaser.
Adding the term ``delivery sale,'' which means any sale of
cigarettes or smokeless tobacco in interstate commerce to a consumer
if--
[[Page 44175]]
(a) The consumer submits the order for such sale by means of a
telephone or other method of voice transmission, the mails, or the
Internet or other online service, or by any other means where the
consumer is not in the same physical location as the seller when the
purchase or offer of sale is made; or
(b) The cigarettes or smokeless tobacco are delivered by use of the
mails, common carrier, private delivery service, or any other means
where the consumer is not in the same physical location as the seller
when the consumer obtains physical possession of the cigarettes or
smokeless tobacco.
Proposed regulations that reflect the new CCTA requirements
regarding contraband smokeless tobacco are in 27 CFR 646.143 and
646.146. The regulatory language is identical to the statutory
language.
Specifying that any report required to be submitted under
the CCTA to the Attorney General must also be submitted to the
Secretary of the Treasury and to the attorneys general and the tax
administrators of the States from where the shipments, deliveries, or
distributions both originated and concluded.
Proposed regulations that reflect the new CCTA requirements
regarding contraband smokeless tobacco are in 27 CFR 646.146. The
regulatory language is identical to the statutory language.
Section 121(d)--Disposal or Use of Forfeited Cigarettes and Smokeless
Tobacco
Pursuant to section 121(d) of the Act, any contraband cigarettes or
contraband smokeless tobacco involved in any violation of the CCTA will
be subject to seizure and forfeiture and will be either (1) destroyed
and not resold, or (2) used for undercover investigative operations for
the detection and prosecution of crimes, and then destroyed and not
resold.
Proposed regulations that implement this new CCTA provision are in
27 CFR 646.155. The regulatory language is identical to the statutory
language.
Section 121(e)--Effect on State and Local Law
Section 121(e) of the Act amended the CCTA to make it clear that
the CCTA is not intended to affect the concurrent jurisdiction of a
state or local government to enact and enforce its own cigarette tax
laws, to provide for the confiscation of cigarettes or smokeless
tobacco and other property seized for violation of such laws, and to
provide for penalties for the violation of such laws. This section also
amended the CCTA to make it clear that the CCTA is not intended to
inhibit or otherwise affect any coordinated law enforcement effort by a
number of state or local governments, through interstate compact or
otherwise, to provide for the administration of state or local
cigarette tax laws, to provide for the confiscation of cigarettes or
smokeless tobacco and other property seized in violation of such laws,
and to establish cooperative programs for the administration of such
laws. This statutory change does not necessitate any amendments to
these regulations.
Section 121(f)--Enforcement
Section 121(f) of the Act creates a new civil cause of action
allowing state and local governments and federal tobacco permittees
under the Internal Revenue Code to prevent or restrain CCTA violations
in Federal district court. In addition, these entities could also seek
civil penalties and monetary damages, and injunctive or equitable
relief. This statutory change does not necessitate any amendments to
these regulations.
Section 121(g)--Conforming and Clerical Amendments
Section 121(g) made several conforming and clerical amendments to
the CCTA (e.g., a change in the title of chapter 114 and a change in
the section headings of sections 2343 and 2345) that do not necessitate
any regulatory changes. This statutory change does not necessitate any
amendments to these regulations.
III. Miscellaneous Amendment of the Regulations
In general, the regulations at 27 CFR 646.150 provide that each
distributor of cigarettes must retain the records required by
Sec. Sec. 646.146 and 646.147 for three years following the close of
the year in which the records are made. The distributor must keep the
required records on his business premises. ATF is considering extending
the record retention requirement to five years. The amendment would
harmonize the regulations with the applicable statute of limitations
for CCTA violations, which is five years. ATF is soliciting comments on
this issue.
How This Document Complies With the Federal Administrative Requirements
for Rulemaking
A. Executive Order 12866
This proposed rule has been drafted and reviewed in accordance with
Executive Order 12866, ``Regulatory Planning and Review'' section 1(b),
The Principles of Regulation. The Department of Justice has determined
that this proposed rule is a ``significant regulatory action'' under
Executive Order 12866, section 3(f), Regulatory Planning and Review,
and accordingly this proposed rule has been reviewed by the Office of
Management and Budget. However, this proposed rule will not have an
annual effect on the economy of $100 million, and will not 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.
Accordingly, this proposed rule is not an ``economically significant''
rulemaking as defined by Executive Order 12866. The proposed
information requirements are contained in records that are kept in the
normal course of business. Likewise, the reporting requirements
contained in this proposed rule merely augment existing federal law as
set forth in the Jenkins Act, 15 U.S.C. 375.
B. Executive Order 13132
This proposed rule will not have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with section 6
of Executive Order 13132, the Attorney General has determined that this
proposed regulation does not have sufficient federalism implications to
warrant the preparation of a federalism summary impact statement.
C. Executive Order 12988
This proposed rule meets the applicable standards set forth in
sections 3(a) and 3(b)(2) of Executive Order 12988.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an
agency to conduct a regulatory flexibility analysis of any rule subject
to notice and comment rulemaking requirements unless the head of the
agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. Small entities
include small businesses, small not-for-profit enterprises, and small
governmental jurisdictions. The Attorney General has reviewed this
proposed regulation and, by approving it, certifies that this proposed
rule will not have a significant economic impact on a substantial
number of small entities. The proposed requirements apply only to
entities that sell the threshold quantities of cigarettes or smokeless
tobacco in a single
[[Page 44176]]
transaction. In addition, the proposed information requirements are
contained in the records that are kept in the normal course of business
and the proposed reporting requirements merely augment existing federal
law as set forth in the Jenkins Act, 15 U.S.C. 375.
ATF estimates that this proposed rule will have an impact on no
more than 3,000 businesses with the majority of those being small
businesses. ATF further estimates that the annual economic impact will
be less than $700,000 per year. ATF estimates for this proposed rule
are as follows:
Mailing Costs (stamp and envelope): $.50 x 3,000 businesses x 12
months = $180,000.
Labor Costs: One hour of labor ($13.50/hr) for filling out ATF F
5200.XX, filing and mailing x 3,000 x 12 = $486,000.
E. Small Business Regulatory Enforcement Fairness Act of 1996
This proposed rule is not a major rule as defined by section 251 of
the Small Business Regulatory Enforcement Act of 1996 (5 U.S.C. 804).
This proposed rule will not result in an annual effect on the economy
of $100 million or more; a major increase in costs or prices; or
significant adverse effects on competition, employment, investment,
innovation, or on the ability of United States-based companies to
compete with foreign-based companies in domestic and export markets.
F. Unfunded Mandates Reform Act of 1995
This proposed rule will not result in the expenditure by state,
local, and tribal governments, in the aggregate, or by the private
sector of $100 million or more in any one year, and it will not
significantly or uniquely affect small governments. Therefore, no
actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
G. Paperwork Reduction Act
The collections of information contained in this notice of proposed
rulemaking have been submitted to the Office of Management and Budget
for review in accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)). Comments on the collections of information should be
sent to the Office of Management and Budget, Attention: Desk Officer
for the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Office of
Information and Regulatory Affairs, Washington, DC 20503, with copies
to the Chief, Document Services Branch, Bureau of Alcohol, Tobacco,
Firearms, and Explosives, at the address previously specified. Comments
are specifically requested concerning:
Whether the proposed collections of information are
necessary for the proper performance of the functions of the Bureau of
Alcohol, Tobacco, Firearms, and Explosives, including whether the
information will have practical utility;
The accuracy of the estimated burden associated with the
proposed collections of information (see below);
How the quality, utility, and clarity of the information
to be collected may be enhanced; and
How the burden of complying with the proposed collections
of information may be minimized, including through the application of
automated collection techniques or other forms of information
technology.
The collections of information in this proposed regulation are in
27 CFR 646.146, 646.147, and 646.150. This information is required to
implement the provisions of the USA PATRIOT Improvement and
Reauthorization Act of 2005 regarding trafficking in contraband
cigarettes or smokeless tobacco. The likely respondents are businesses.
Estimated total annual reporting and/or recordkeeping burden:
36,000 hours.
Estimated average burden hours per respondent and/or recordkeeper:
12 hours.
Estimated number of respondents and/or recordkeepers: 3,000.
Estimated annual frequency of responses: 12.
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 the Office of Management and Budget.
Public Participation
A. Comments Sought
ATF is requesting comments on the proposed regulations from all
interested persons. ATF is also specifically requesting comments on the
clarity of this proposed rule and how it may be made easier to
understand. All comments must reference this document docket number
(ATF 22P), be legible, and include your name and mailing address. ATF
will treat all comments as originals and it will not acknowledge
receipt of comments.
Comments received on or before the closing date will be carefully
considered. Comments received after that date will be given the same
consideration if it is practical to do so, but assurance of
consideration cannot be given except as to comments received on or
before the closing date.
B. Confidentiality
Comments, whether submitted electronically or in paper, will be
made available for public viewing at ATF, and on the Internet as part
of the President's eRulemaking initiative, and are subject to the
Freedom of Information Act. Commenters who do not want their name or
other personal identifying information posted on the Internet should
submit their comment by mail or facsimile, along with a separate cover
sheet that contains their personal identifying information. Both the
cover sheet and comment must reference this docket number. Information
contained in the cover sheet will not be posted on the Internet. Any
personal identifying information that appears within the comment will
be posted on the Internet and will not be redacted by ATF.
Any material that the commenter considers to be inappropriate for
disclosure to the public should not be included in the comment. Any
person submitting a comment shall specifically designate that portion
(if any) of his comments that contains material that is confidential
under law (e.g., trade secrets, processes, etc.). Any portion of a
comment that is confidential under law shall be set forth on pages
separate from the balance of the comment and shall be prominently
marked ``confidential'' at the top of each page. Confidential
information will be included in the rulemaking record but will not be
disclosed to the public. Any comments containing material that is not
confidential under law may be disclosed to the public. In any event,
the name of the person submitting a comment is not exempt from
disclosure.
C. Submitting Comments
Comments may be submitted in any of three ways:
Mail: Send written comments to ATF at the address listed
in the ADDRESSES section of this document. Written comments must appear
in a minimum 12-point size of type (.17 inches), include your mailing
address, be signed, and may be of any length.
Facsimile: You may submit comments by facsimile
transmission to 202-648-9741. Faxed comments must:
(1) Be legible;
(2) Be on 8\1/2\ '' x 11'' paper;
(3) Contain a legible, written signature; and
(4) Be no more than five pages long. ATF will not accept faxed
comments that exceed five pages.
Federal eRulemaking Portal: To submit comments to ATF via
the Federal eRulemaking portal, visit http://www.regulations.gov and
follow
[[Page 44177]]
the instructions for submitting comments.
D. Request for Hearing
Any interested person who desires an opportunity to comment orally
at a public hearing should submit his or her request, in writing, to
the Director of ATF within the 90-day comment period. The Director,
however, reserves the right to determine, in light of all
circumstances, whether a public hearing is necessary.
Disclosure
Copies of this proposed rule and the comments received will be
available for public inspection by appointment during normal business
hours at: ATF Reading Room, Room 1E-063, 99 New York Avenue, NE.,
Washington, DC 20226; telephone: (202) 648-7080.
Drafting Information
The author of this document is James P. Ficaretta; Enforcement
Programs and Services; Bureau of Alcohol, Tobacco, Firearms, and
Explosives.
List of Subjects in 27 CFR Part 646
Administrative practice and procedure, Authority delegations,
Cigars and cigarettes, Claims, Excise taxes, Packaging and containers,
Penalties, Reporting and recordkeeping requirements, Seizures and
forfeitures, Smokeless tobacco, Surety bonds, Tobacco.
Authority and Issuance
Accordingly, for the reasons discussed in the preamble, 27 CFR Part
646 is proposed to be amended as follows:
PART 646--CONTRABAND CIGARETTES AND SMOKELESS TOBACCO
1. The authority citation for 27 CFR part 646 continues to read as
follows:
Authority: 18 U.S.C. 2341-2346.
2. Section 646.141 is revised to read as follows:
Sec. 646.141 Scope of part.
The regulations in this subpart relate to the distribution of
cigarettes in excess of 10,000 and smokeless tobacco in excess of 500
single-unit consumer-sized cans or packages in a single transaction.
3. Section 646.143 is amended by revising the definitions for
``Business premises,'' ``Contraband cigarettes,'' ``Disposition,''
``Distributor,'' and ``Exempted person'' and by adding definitions for
the terms ``Cigarette,'' ``Contraband smokeless tobacco,'' ``Delivery
sale,'' ``Interstate commerce,'' and ``Smokeless tobacco'' to read as
follows:
Sec. 646.143 Meaning of terms.
* * * * *
Business premises. When used with respect to a distributor, the
property on which the cigarettes or smokeless tobacco are kept or
stored. The business premises include the property where the records of
a distributor are kept.
Cigarette. (a) Any roll of tobacco wrapped in paper or in any
substance not containing tobacco; and
(b) Any roll of tobacco wrapped in any substance containing tobacco
which, because of its appearance, the type of tobacco used in the
filler, or its packaging and labeling, is likely to be offered to, or
purchased by, consumers as a cigarette described in paragraph (a) of
this definition.
* * * * *
Contraband cigarettes. Any quantity of cigarettes in excess of
10,000, if--
(a) The cigarettes bear no evidence of the payment of applicable
state or local cigarette taxes in the State or locality where such
cigarettes are found;
(b) The State or local government in which the cigarettes are found
requires a stamp, impression, or other indication to be placed on
packages or other containers of cigarettes to evidence payment of
cigarette taxes; and
(c) The cigarettes are in the possession of any person other than
an exempted person.
Contraband smokeless tobacco. Any quantity of smokeless tobacco in
excess of 500 single-unit consumer-sized cans or packages, or their
equivalent, that are in the possession of any person other than an
exempted person.
Delivery sale. Any sale of cigarettes or smokeless tobacco in
interstate commerce to a consumer if--
(a) The consumer submits the order for such sale by means of a
telephone or other method of voice transmission, the mails, or the
Internet or other online service, or by any other means where the
consumer is not in the same physical location as the seller when the
purchase or offer of sale is made; or
(b) The cigarettes or smokeless tobacco are delivered by use of the
mails, common carrier, private delivery service, or any other means
where the consumer is not in the same physical location as the seller
when the consumer obtains physical possession of the cigarettes or
smokeless tobacco.
Disposition. The movement of cigarettes or smokeless tobacco from a
person's business premises, wherever situated, by shipment or other
means of distribution.
* * * * *
Distributor. Any person who distributes more than 10,000
cigarettes, or smokeless tobacco in excess of 500 single-unit consumer-
sized cans or packages, in a single transaction.
Exempted person. (a) With respect to cigarettes in excess of
10,000, any person who is--
(1) Holding a permit issued pursuant to chapter 52 of the Internal
Revenue Code of 1954 as a manufacturer of tobacco products or as an
export warehouse proprietor;
(2) Operating a customs bonded warehouse pursuant to section 311 or
555 of the Tariff Act of 1930 (19 U.S.C. 1311 or 1555);
(3) An agent of a tobacco products manufacturer, an export
warehouse proprietor, or an operator of a customs bonded warehouse;
(4) A common or contract carrier transporting the cigarettes
involved under a proper bill of lading or freight bill which states the
quantity, source, and destination of the cigarettes;
(5) Licensed or otherwise authorized by the State, in which he
possesses cigarettes, to account for and pay cigarette taxes imposed by
that State; and who has complied with the accounting and payment
requirements relating to his license or authorization with respect to
the cigarettes involved; or
(6) An officer, employee, or agent of the United States, of an
individual State, or of a political subdivision of a State and having
possession of cigarettes in connection with the performance of official
duties.
(7) Operating within a foreign-trade zone established under 19
U.S.C., section 81b, when the cigarettes involved have been entered
into the zone under zone-restricted status or, in respect to foreign
cigarettes, have been admitted into the zone but have not been entered
in the United States.
(b) With respect to smokeless tobacco in excess of 500 single-unit
consumer-sized cans or packages, any person who is--
(1) Holding a permit issued pursuant to chapter 52 of the Internal
Revenue Code of 1986 as manufacturer of tobacco products or as an
export warehouse proprietor, a person operating a customs bonded
warehouse pursuant to section 311 or 555 of the Tariff Act of 1930 (19
U.S.C. 1311, 1555), or an agent of such person;
(2) A common or contract carrier transporting such smokeless
tobacco under a proper bill of lading or freight
[[Page 44178]]
bill which states the quantity, source, and designation of such
smokeless tobacco;
(3) Licensed or otherwise authorized by the State where such
smokeless tobacco is found to engage in the business of selling or
distributing tobacco products; and who has complied with the
accounting, tax, and payment requirements relating to such license or
authorization with respect to such smokeless tobacco; or
(4) An officer, employee, or agent of the United States, of an
individual State, or of a political subdivision of a State and having
possession of such smokeless tobacco in connection with the performance
of official duties.
Interstate commerce. Commerce between a State and any place outside
the State, or commerce between points in the same State but through any
place outside the State.
* * * * *
Smokeless tobacco. Any finely cut, ground, powdered, or leaf
tobacco that is intended to be placed in the oral or nasal cavity or
otherwise consumed without being combusted.
* * * * *
4. The centered heading preceding section 646.146 is revised to
read as ``Records and Reports.''
5. Sections 646.146 and 646.147 are revised to read as follows:
Sec. 646.146 General requirements.
(a) Each distributor of cigarettes or smokeless tobacco shall keep
copies of invoices, bills of lading, or other suitable commercial
records equivalent thereto relating to each disposition of more than
10,000 cigarettes or smokeless tobacco in excess of 500 single-unit
consumer-sized cans or packages. Dividing a single agreement for the
disposition of more than 10,000 cigarettes or smokeless tobacco in
excess of 500 single-unit consumer-sized cans or packages into the
delivery of smaller components of 10,000 cigarettes or less or
smokeless tobacco of not more than 500 single-unit consumer-sized cans
or packages does not exempt the distributor from the recordkeeping
requirements of this part. The distributor shall include the
information prescribed in Sec. 646.147 in his commercial records of
disposition.
(b)(1) Except for a tribal government, each distributor who engages
in a delivery sale, and who ships, sells, or distributes cigarettes in
excess of 10,000, or smokeless tobacco in excess of 500 single-unit
consumer-sized cans or packages, or their equivalent, within a single
month, shall prepare and submit to the Director ATF Form 5200.XX, in
accordance with the instructions on the form. Form 5200.XX shall
include the following information:
(i) The distributor's beginning and ending inventory of cigarettes
and cans or packages of smokeless tobacco (in total) for such month.
(ii) The total quantity of cigarettes and cans or packages of
smokeless tobacco that the distributor received within such month from
each other distributor (itemized by name and address).
(iii) The total quantity of cigarettes and cans or packages of
smokeless tobacco that was distributed within such month to each person
(itemized by name and address) other than a retail purchaser.
(2) A copy of completed ATF Form 5200.XX shall also be submitted by
each distributor described in paragraph (b)(1) of this section to the
Secretary of the Treasury and to the attorneys general and the tax
administrators of the States from where the shipments, deliveries, or
distributions both originated and concluded.
Sec. 646.147 Required information.
(a) Distributors who are exempted persons. Each distributor who is
an exempted person as defined in Sec. 646.143 shall show the following
information in his commercial records.
(1) For each disposition of more than 10,000 cigarettes or
smokeless tobacco in excess of 500 single-unit consumer-sized cans or
packages to an exempted person; or for each disposition of more than
10,000 cigarettes or smokeless tobacco in excess of 500 single-unit
consumer-sized cans or packages to a person who is not an exempted
person and which is delivered by the distributor to the recipient's
place of business, the distributor shall show on dated records--
(i) The full name of the purchaser (or the recipient if there is no
purchaser);
(ii) The street address (including city and state) to which the
cigarettes or smokeless tobacco are destined; and
(iii) The quantity of cigarettes or smokeless tobacco disposed of.
(2) For each disposition of more than 10,000 cigarettes or
smokeless tobacco in excess of 500 single-unit consumer-sized cans or
packages, other than the dispositions specified in paragraph (a)(1) of
this section, the distributor shall show on dated records--
(i) The full name of the purchaser (if any);
(ii) The name, address (including city and state), and signature of
the person receiving the cigarettes or smokeless tobacco;
(iii) The street address (including city and state) to which the
cigarettes or smokeless tobacco are destined;
(iv) The quantity of cigarettes or smokeless tobacco disposed of;
(v) The driver's license number of the individual receiving the
cigarettes or smokeless tobacco;
(vi) The license number of the vehicle in which the cigarettes or
smokeless tobacco are removed from the distributor's business premises;
(vii) A declaration by the individual receiving the cigarettes or
smokeless tobacco of the specific purpose of receipt (such as personal
use, resale, delivery to another person, etc.); and
(viii) A declaration by the person receiving the cigarettes or
smokeless tobacco of the name and address of his principal when he is
acting as an agent.
(b) Distributors who are not exempted persons. Each distributor who
is not an exempted person as defined in Sec. 646.143 shall show on
dated commercial records the information specified in paragraphs
(a)(2)(i) through (viii) of this section for each disposition of more
than 10,000 cigarettes or smokeless tobacco in excess of 500 single-
unit consumer-sized cans or packages.
6. Section 646.150 is amended by revising paragraph (b)(2) to read
as follows:
Sec. 646.150 Retention of records.
* * * * *
(b) * * *
(2) The tobacco products manufacturer will keep the required record
for each disposition of more than 10,000 cigarettes or smokeless
tobacco in excess of 500 single-unit consumer-sized cans or packages
from the agent's premises for the full retention period specified in
paragraph (a) of this section; and
* * * * *
Sec. 646.154 [Amended]
7. Section 646.154(a) is amended by adding ``or contraband
smokeless tobacco'' after ``contraband cigarettes''.
8. Section 646.155 is revised to read as follows:
Sec. 646.155 Forfeitures.
(a) Any contraband cigarettes or contraband smokeless tobacco
involved in any violation of the provisions of 18 U.S.C. chapter 114
shall be subject to seizure and forfeiture. The provisions of 18 U.S.C.
chapter 46 relating to civil forfeitures shall extend to any seizure or
civil forfeiture under this section. Any cigarettes or smokeless
tobacco so seized and forfeited shall be either--
(1) Destroyed and not resold; or
(2) Used for undercover investigative operations for the detection
and prosecution of crimes, and then destroyed and not resold.
[[Page 44179]]
(b) Any vessel, vehicle, or aircraft used to transport, carry,
convey, or conceal or possess any contraband cigarettes or contraband
smokeless tobacco with respect to which there has been committed any
violation of any provision of 18 U.S.C. chapter 114 or the regulations
in this subpart shall be subject to seizure and forfeiture pursuant to
49 U.S.C. 80302-80303. The provisions of 18 U.S.C. chapter 46 relating
to civil forfeitures shall extend to any seizure or civil forfeiture
under this section.
Dated: July 22, 2010.
Eric H. Holder, Jr.,
Attorney General.
[FR Doc. 2010-18552 Filed 7-27-10; 8:45 am]
BILLING CODE 4410-FY-P