Code Section 5721
|Code Section||Effective Date||Name of Act||Name of Provision||10yr Revenue Estimate ($millions)|
|5702, 5712, 5713, 5721,
5722, 5723, and 5741
|2/4/2009||Children’s Health Insurance Program Reauthorization Act of 2009||Permit, Inventory, Reporting, Recordkeeping Requirements for Manufacturers and Importers of Processed Tobacco||negligible|
Permit, Inventory, Reporting, Recordkeeping Requirements for Manufacturers and Importers of Processed Tobacco
Explanation of Provision
The provision creates a new category of manufacturers and importers who are subject to regulation but not to Federal excise tax. Under the provision, manufacturers and importers of “processed tobacco” are subject to the present-law permit, inventory, reporting, packaging, and recordkeeping requirements. Processed tobacco is any tobacco other than tobacco products.15
A manufacturer of processed tobacco is any person who processes any tobacco other than tobacco products, and an importer includes an importer of processed tobacco. However, the processing of tobacco does not include the farming or growing of tobacco or the handling of whole tobacco leaf solely for sale, shipment, or delivery to a manufacturer of tobacco products or processed tobacco. For example, under the provision an importer of “cut rag” tobacco or a leaf processor that manufactures such tobacco is subject to the general permit, inventory, reporting, and recordkeeping requirements of the Code but is not subject to Federal excise tax (unless it also imports or manufactures tobacco products or cigarette papers or tubes).
Under the provision, any person who is engaged in business as a manufacturer or importer of processed tobacco on April 1, 2009 and who submits a permit application within 90 days of the effective date of this provision may continue to engage in such business pending action on their permit application. Such persons will be subject to the requirements of this provision to the same extent as if the person was a permit holder while final action on the permit application is pending.
15- Sec. 5702(c) defines tobacco products as cigars, cigarettes, smokeless tobacco, pipe tobacco, and roll-your-own tobacco.
-Return to Explanation of Provision
Back to Tax Tracker Codes Menu