II 

113TH CONGRESS 

1ST SESSION S. 826 

To amend the Internal Revenue Code of 1986 to reform and enforce taxation 

of tobacco products. 

IN THE SENATE OF THE UNITED STATES 

APRIL 25, 2013 

Mr. REID (for Mr. LAUTENBERG (for himself, Mr. BLUMENTHAL, Mr. HARKIN, and Mr. DURBIN)) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to reform 

and enforce taxation of tobacco products. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Tobacco Tax and Enforcement Reform Act’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title and table of contents. 

TITLE I—TOBACCO TAX INCREASE AND PARITY 

Sec. 101. Tobacco tax increase and parity. 

TITLE II—AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 


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Sec. 201. Amendment of 1986 code. 

Sec. 202. Machines used to manufacture or package tobacco products or processed tobacco. 

Sec. 203. Improved marking and labeling. 

Sec. 204. Wholesalers and manufacturers, importers, and sellers of tobacco production machines required to have permit. 

Sec. 205. Conditions of permit. 

Sec. 206. Records to be maintained. 

Sec. 207. Reports. 

Sec. 208. Fraudulent offenses. 

Sec. 209. Penalties. 

Sec. 210. Coordination with other government officials. 

Sec. 211. Definitions. 

Sec. 212. Conforming amendments. 

Sec. 213. Effective date. 

TITLE III—IMPORT FRAUD 

Sec. 301. Maximum penalty for importation of tobacco products and cigarette 

papers and tubes by fraudulent means. 

TITLE IV—EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL 

MATTERS 

Sec. 401. Exclusions regarding Indian Tribes and Tribal matters. 

1 TITLE I—TOBACCO TAX 

2 INCREASE AND PARITY 

3 SEC. 101. TOBACCO TAX INCREASE AND PARITY. 

4 (a) INCREASE IN EXCISE TAX ON SMALL CIGARS

5 AND CIGARETTES.— 

6 (1) SMALL CIGARS.—Section 5701(a)(1) of the 

7 Internal Revenue Code of 1986 is amended by strik8 ing ‘‘$50.33’’ and inserting ‘‘$97.55’’. 

9 (2) CIGARETTES.—Section 5701(b) of such 

10 Code is amended— 

11 (A) by striking ‘‘$50.33’’ in paragraph (1) 

12 and inserting ‘‘$97.55’’, and 

13 (B) by striking ‘‘$105.69’’ in paragraph 

14 (2) and inserting ‘‘$204.09’’. 


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1 (b) TAX PARITY FOR PIPE TOBACCO AND ROLL2 YOUR-OWN TOBACCO.— 

3 (1) PIPE TOBACCO.—Section 5701(f) of the In4 ternal Revenue Code of 1986 is amended by striking 

5 ‘‘$2.8311 cents’’ and inserting ‘‘$49.55’’. 

6 (2) ROLL-YOUR-OWN TOBACCO.—Section 

7 5701(g) of such Code is amended by striking 

8 ‘‘$24.78’’ and inserting ‘‘$49.55’’. 

9 (c) CLARIFICATION OF DEFINITION OF SMALL CI10 GARS.—Paragraphs (1) and (2) of section 5701(a) of the 

11 Internal Revenue Code of 1986 are each amended by 

12 striking ‘‘three pounds per thousand’’ and inserting ‘‘four 

13 and one-half pounds per thousand’’. 

14 (d) CLARIFICATION OF DEFINITION OF CIGA15 RETTE.—Paragraph (2) of section 5702(b) of the Internal 

16 Revenue Code of 1986 is amended by inserting before the 

17 final period the following: ‘‘, which includes any roll for 

18 smoking containing tobacco that weighs no more than four 

19 and a half pounds per thousand, unless it is wrapped in 

20 whole tobacco leaf and does not have a cellulose acetate 

21 or other cigarette-style filter’’. 

22 (e) TAX PARITY FOR SMOKELESS TOBACCO.— 

23 (1) IN GENERAL.—Section 5701(e) of the Inter24 nal Revenue Code of 1986 is amended— 


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1 (A) in paragraph (1), by striking ‘‘$1.51’’ 

2 and inserting ‘‘$25.91’’; 

3 (B) in paragraph (2), by striking ‘‘50.33 

4 cents’’ and inserting ‘‘$10.37’’; and 

5 (C) by adding at the end the following: 

6 ‘‘(3) SMOKELESS TOBACCO SOLD IN DISCRETE

7 SINGLE-USE UNITS.—On discrete single-use units, 

8 $97.55 per each 1,000 single-use units.’’. 

9 (2) DISCRETE SINGLE-USE UNIT.—Section 

10 5702(m) of such Code is amended— 

11 (A) in paragraph (1), by striking ‘‘or chew12 ing tobacco’’ and inserting ‘‘chewing tobacco, 

13 discrete single-use unit’’; 

14 (B) in paragraphs (2) and (3), by inserting 

15 ‘‘that is not a discrete single-use unit’’ before 

16 the period in each such paragraph; and 

17 (C) by adding at the end the following: 

18 ‘‘(4) DISCRETE SINGLE-USE UNIT.—The term 

19 ‘discrete single-use unit’ means any product con20 taining tobacco that— 

21 ‘‘(A) is intended or expected to be con22 sumed without being combusted; and 

23 ‘‘(B) is in the form of a lozenge, tablet, 

24 pill, pouch, dissolvable strip, or other discrete 

25 single-use or single-dose unit.’’. 


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1 (3) OTHER TOBACCO PRODUCTS.—Section 5701 

2 of such Code is amended by adding at the end the 

3 following new subsection: 

4 ‘‘(i) OTHER TOBACCO PRODUCTS.—Any product not 

5 otherwise described under this section that has been deter6 mined to be a tobacco product by the Food and Drug Ad7 ministration through its authorities under the Family 

8 Smoking Prevention and Control Act shall be taxed at a 

9 level of tax equivalent to the tax rate for cigarettes on 

10 an estimated per use basis as determined by the Sec11 retary.’’. 

12 (f) CLARIFYING OTHER TOBACCO TAX DEFINI13 TIONS.— 

14 (1) TOBACCO PRODUCT DEFINITION.—Section 

15 5702(c) of the Internal Revenue Code of 1986 is 

16 amended by inserting before the period the fol17 lowing: ‘‘, and any other product containing tobacco 

18 that is intended or expected to be consumed’’. 

19 (2) CIGARETTE TUBE DEFINITION.—Section 

20 5702(f) of such Code is amended by inserting before 

21 the period ‘‘or cigars’’. 

22 (3) IMPORTER DEFINITION.—Section 5702(k) 

23 of such Code is amended by inserting ‘‘or any other 

24 tobacco product’’ after ‘‘cigars or cigarettes’’. 


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1 (4) PIPE TOBACCO DEFINITION.—Section 

2 5702(n) of such Code is amended— 

3 (A) by striking ‘‘The term’’ and inserting 

4 the following: 

5 ‘‘(1) IN GENERAL.—The term’’; and 

6 (B) by adding at the end the following: 

7 ‘‘(2) ROLL-YOUR-OWN TOBACCO.—Any tobacco 

8 that meets the definition under both this subsection 

9 and section 5702(o) shall be treated as roll-your-own 

10 tobacco under section 5702(o). 

11 ‘‘(3) EXCEPTION.—Paragraph (2) shall not 

12 apply to a product that, as of January 1, 2009, was 

13 either commercially marketed in the United States 

14 in packaging that bore, pursuant to part 40 or 41 

15 of title 27, Code of Federal Regulations, a designa16 tion as ‘pipe tobacco’ or ‘Tax Class L’, or is sub17 stantially equivalent to such product, provided that 

18 such product is widely used as pipe tobacco.’’. 

19 (g) INFLATION ADJUSTMENT.—Section 5701 of the 

20 Internal Revenue Code of 1986, as amended by subsection 

21 (f)(3), is amended by adding at the end the following new 

22 subsection: 

23 ‘‘(j) INFLATION ADJUSTMENT.—In the case of any 

24 calendar year after 2013, each amount set forth in this 

25 section shall be increased by an amount equal to— 


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1 ‘‘(1) such amount, multiplied by 

2 ‘‘(2) the cost-of-living adjustment determined 

3 under section 1(f)(3) for such calendar year by sub4 stituting ‘calendar year 2012’ for ‘calendar year 

5 1992’ in subparagraph (B) thereof.’’. 

6 (h) FLOOR STOCKS TAXES.— 

7 (1) IMPOSITION OF TAX.—On tobacco products 

8 manufactured in or imported into the United States 

9 which are removed before any tax increase date and 

10 held on such date for sale by any person, there is 

11 hereby imposed a tax in an amount equal to the ex12 cess of— 

13 (A) the tax which would be imposed under 

14 section 5701 of the Internal Revenue Code of 

15 1986 on the article if the article had been re16 moved on such date, over 

17 (B) the prior tax (if any) imposed under 

18 section 5701 of such Code on such article. 

19 (2) CREDIT AGAINST TAX.—Each person shall 

20 be allowed as a credit against the taxes imposed by 

21 paragraph (1) an amount equal to $500. Such credit 

22 shall not exceed the amount of taxes imposed by 

23 paragraph (1) on such date for which such person 

24 is liable. 


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1 (3) LIABILITY FOR TAX AND METHOD OF PAY2 MENT.— 

3 (A) LIABILITY FOR TAX.—A person hold4 ing tobacco products on any tax increase date 

5 to which any tax imposed by paragraph (1) ap6 plies shall be liable for such tax. 

7 (B) METHOD OF PAYMENT.—The tax im8 posed by paragraph (1) shall be paid in such 

9 manner as the Secretary shall prescribe by reg10 ulations. 

11 (C) TIME FOR PAYMENT.—The tax im12 posed by paragraph (1) shall be paid on or be13 fore the date that is 120 days after the effective 

14 date of the tax rate increase. 

15 (4) ARTICLES IN FOREIGN TRADE ZONES.— 

16 Notwithstanding the Act of June 18, 1934 (com17 monly known as the Foreign Trade Zone Act, 48 

18 Stat. 998, 19 U.S.C. 81a et seq.), or any other pro19 vision of law, any article which is located in a for20 eign trade zone on any tax increase date shall be 

21 subject to the tax imposed by paragraph (1) if— 

22 (A) internal revenue taxes have been deter23 mined, or customs duties liquidated, with re24 spect to such article before such date pursuant 


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1 to a request made under the 1st proviso of sec2 tion 3(a) of such Act, or 

3 (B) such article is held on such date under 

4 the supervision of an officer of the United 

5 States Customs and Border Protection of the 

6 Department of Homeland Security pursuant to 

7 the 2d proviso of such section 3(a). 

8 (5) DEFINITIONS.—For purposes of this sub9 section— 

10 (A) IN GENERAL.—Any term used in this 

11 subsection which is also used in section 5702 of 

12 such Code shall have the same meaning as such 

13 term has in such section. 

14 (B) TAX INCREASE DATE.—The term ‘‘tax 

15 increase date’’ means the effective date of any 

16 increase in any tobacco product excise tax rate 

17 pursuant to the amendments made by this sec18 tion (other than subsection (g) thereof). 

19 (C) SECRETARY.—The term ‘‘Secretary’’ 

20 means the Secretary of the Treasury or the 

21 Secretary’s delegate. 

22 (6) CONTROLLED GROUPS.—Rules similar to 

23 the rules of section 5061(e)(3) of such Code shall 

24 apply for purposes of this subsection. 


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1 (7) OTHER LAWS APPLICABLE.—All provisions 

2 of law, including penalties, applicable with respect to 

3 the taxes imposed by section 5701 of such Code 

4 shall, insofar as applicable and not inconsistent with 

5 the provisions of this subsection, apply to the floor 

6 stocks taxes imposed by paragraph (1), to the same 

7 extent as if such taxes were imposed by such section 

8 5701. The Secretary may treat any person who bore 

9 the ultimate burden of the tax imposed by para10 graph (1) as the person to whom a credit or refund 

11 under such provisions may be allowed or made. 

12 (i) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to articles removed (as defined in 

14 section 5702(j) of the Internal Revenue Code of 1986) 

15 after December 31, 2013. 

16 TITLE II—AMENDMENTS TO IN17 TERNAL REVENUE CODE OF 

18 1986 

19 SEC. 201. AMENDMENT OF 1986 CODE. 

20 Except as otherwise expressly provided, whenever in 

21 this title an amendment or repeal is expressed in terms 

22 of an amendment to, or repeal of, a section or other provi23 sion, the reference shall be considered to be made to a 

24 section or other provision of the Internal Revenue Code 

25 of 1986. 


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1 SEC. 202. MACHINES USED TO MANUFACTURE OR PACKAGE 

2 TOBACCO PRODUCTS OR PROCESSED TO3 BACCO. 

4 (a) IN GENERAL.—Section 5762 is amended— 

5 (1) by redesignating subsection (b) as sub6 section (c), and 

7 (2) by inserting after subsection (a) the fol8 lowing new subsection: 

9 ‘‘(b) MACHINES USED TO MANUFACTURE OR PACK10 AGE TOBACCO PRODUCTS OR PROCESSED TOBACCO.— 

11 ‘‘(1) TRANSFER OF MANUFACTURING MACHINES

12 TO LICENSED PERSONS.—Any tobacco production 

13 machine may be sold, leased, imported, exported, de14 livered, or otherwise made available only to per15 sons— 

16 ‘‘(A) lawfully engaged in— 

17 ‘‘(i) the sale, lease, importation, ex18 portation, or delivery of such machines, 

19 ‘‘(ii) the manufacture or packaging of 

20 tobacco products or processed tobacco, or 

21 ‘‘(iii) the application of unique identi22 fication markings onto tobacco product or 

23 processed tobacco packages pursuant to 

24 section 5723, and 

25 ‘‘(B) that have all Federal, State, local, 

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1 tions, and licenses required to engage in such 

2 activities. 

3 ‘‘(2) TRANSFER OF MACHINES TO PERSONS EN4 GAGED IN ILLEGAL MANUFACTURE OF CONTRA5 BAND.—No tobacco production machine shall know6 ingly be manufactured for or be (directly or indi7 rectly) sold, leased, imported, exported, delivered, or 

8 otherwise made available to any person engaged in 

9 the illegal manufacture, distribution, or sale of coun10 terfeit or contraband tobacco products or processed 

11 tobacco, unique identification markings, or other 

12 tax-payment indicia. 

13 ‘‘(3) REGISTRATION OF MACHINES.— 

14 ‘‘(A) IN GENERAL.—Every person having 

15 possession or custody of, or having control over, 

16 the installation of any tobacco production ma17 chine shall register such machine with the Sec18 retary immediately on its being installed, by 

19 subscribing and filing with the Secretary a 

20 statement, in writing, setting forth the par21 ticular place where such machine is installed, 

22 the kind of machine and its capacity, the owner 

23 thereof, the owner’s place of residence, and the 

24 purpose for which the machine has been or is 

25 intended to be used. 


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1 ‘‘(B) EXCEPTION.—Under regulations pre2 scribed by the Secretary, this paragraph shall 

3 not apply to any tobacco production machine 

4 not used or intended to be used— 

5 ‘‘(i) for the manufacture or produc6 tion of cigarette or cigars, or to manufac7 ture any other tobacco product or proc8 essed tobacco, 

9 ‘‘(ii) to package any tobacco product 

10 or processed tobacco, or 

11 ‘‘(iii) to apply unique identification 

12 markings to any package. 

13 ‘‘(4) RECORDS.— 

14 ‘‘(A) IN GENERAL.—Any person selling, 

15 leasing, importing, exporting, delivering, or oth16 erwise making available a tobacco production 

17 machine shall maintain and keep records, as the 

18 Secretary prescribes by regulation, relating to 

19 any transfers of the machine, including the 

20 name, address, other contact information, and 

21 any permit, registration, or license number of 

22 the person receiving delivery of the machine, or 

23 to whom the machine is otherwise transferred, 

24 as the case may be. 


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1 ‘‘(B) 5-YEAR HOLDING PERIOD FOR

2 RECORDS.—Any record required to be main3 tained and kept under subparagraph (A) shall 

4 be kept for the 5-year period beginning on the 

5 first date such record is required to be so main6 tained and kept. 

7 ‘‘(C) AVAILABILITY OF RECORDS.—Such 

8 records shall be available for inspection by any 

9 internal revenue officer during business hours. 

10 ‘‘(D) SAFE HARBOR.—An ordinary com11 mercial record or invoice shall satisfy the re12 quirements of this paragraph if such record or 

13 invoice contains all of the information required 

14 under subparagraph (A). 

15 ‘‘(5) VIOLATIONS.— 

16 ‘‘(A) IN GENERAL.—Whoever knowingly 

17 violates paragraph (1), (2), or (3) shall, for 

18 each offense, be fined not more than $10,000 or 

19 an amount equal to 3 times the fair market 

20 value of the tobacco product machine involved 

21 (whichever is greater), or imprisoned not more 

22 than five years, or both. 

23 ‘‘(B) RECORDKEEPING.—Whoever know24 ingly violates paragraph (4) shall, for each of25 fense, be fined not more than $10,000.’’. 


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1 (b) TOBACCO PRODUCTION MACHINE.—Section 5702 

2 is amended by adding at the end the following new sub3 section: 

4 ‘‘(q) TOBACCO PRODUCTION MACHINE.—The term 

5 ‘tobacco production machine’ means any machine (or com6 ponent integral to the operation of such a machine) used 

7 to manufacture or package tobacco products or processed 

8 tobacco or to apply unique identification markings or 

9 other tax-payment indicia to packages of tobacco products 

10 or processed tobacco. Such term includes any machine 

11 used to produce tobacco products for compensation, lease, 

12 or hire, or otherwise used in a commercial setting.’’. 

13 (c) CONFORMING AMENDMENT.—Subsection (c) of 

14 section 5762 (as so redesignated) is amended by striking 

15 ‘‘subsection (a)’’ and inserting ‘‘subsections (a) and (b)’’. 

16 (d) EFFECTIVE DATE.—The amendment made by 

17 this section shall apply to transfers more than 6 months 

18 after the date of the enactment of this Act. 

19 SEC. 203. IMPROVED MARKING AND LABELING. 

20 (a) IN GENERAL.—Subsection (b) of section 5723 is 

21 amended to read as follows: 

22 ‘‘(b) MARKS, LABELS, AND NOTICES.— 

23 ‘‘(1) IN GENERAL.—Subject to paragraphs (2), 

24 (3), and (4), every package of tobacco products, 

25 processed tobacco, or cigarette papers or tubes shall, 


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1 before removal, bear the marks, labels, and notices 

2 that the Secretary by regulation prescribes. 

3 ‘‘(2) MARKING REQUIREMENTS FOR DOMESTIC

4 MARKET.— 

5 ‘‘(A) IN GENERAL.—Each person who is a 

6 manufacturer or importer of tobacco products 

7 or processed tobacco shall (in accordance with 

8 regulations prescribed by the Secretary) ensure 

9 that, before any product intended for sale or 

10 distribution within the United States is re11 moved, a unique identification marking is af12 fixed to or forms part of each package of to13 bacco product or processed tobacco manufac14 tured or imported by such person for sale or 

15 distribution. 

16 ‘‘(B) MARKINGS ON INDIVIDUAL PACK17 AGES.—Any markings required to be placed on 

18 a tobacco product or processed tobacco package 

19 by this subsection shall be placed on the inner20 most sealed container visible from the outside 

21 of the individual package. For any tobacco 

22 product or processed tobacco package that con23 tains multiple smaller packages of tobacco prod24 ucts or processed tobacco, any markings re25 quired to be so placed on tobacco product or 


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1 processed tobacco packages shall be placed on 

2 all the individual tobacco product or processed 

3 tobacco packages. 

4 ‘‘(C) MARKINGS ON AGGREGATE PACKING

5 MODES.—To facilitate efficient tracking and 

6 tracing of tobacco products or processed to7 bacco through the distribution system, all man8 ufacturers or importers of tobacco products or 

9 processed tobacco shall, in addition to such 

10 unique identification marking, also, in accord11 ance with regulations prescribed by the Sec12 retary, ensure that unique identification mark13 ings are affixed to or form part of aggregate 

14 packing modes (such as cartons, cases, and 

15 master cases for cigarettes). The Secretary 

16 shall determine the size, location, and methods 

17 for such markings. The Secretary shall estab18 lish regulations requiring that all persons with19 in the distribution chain, up to but not includ20 ing the ultimate retailer, utilize the unique 

21 identification markings on aggregate packing 

22 modes to facilitate the tracking and tracing of 

23 tobacco products or processed tobacco through 

24 the distribution system. 


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1 ‘‘(3) MARKING REQUIREMENTS FOR EX2 PORTS.—A unique identification marking shall be af3 fixed to or form part of each package of tobacco 

4 product or processed tobacco that is exported, or 

5 sold for export, that distinguishes it from those 

6 products or processed tobacco intended for sale or 

7 distribution within the United States. The Secretary 

8 shall by regulation prescribe the size, location, and 

9 other characteristics of such marking, and it may 

10 contain a serial number that is assigned to the coun11 try of export, except that no such serial number 

12 shall be required on tobacco products or processed 

13 tobacco sold at retail to consumers by duty free 

14 stores for consumption beyond the jurisdiction of the 

15 internal revenue laws of the United States. Such to16 bacco products or processed tobacco shall instead 

17 bear markings indicating the tobacco product or 

18 processed tobacco is only for duty-free sale to con19 sumers, as prescribed through regulation by the Sec20 retary, before the product or processed tobacco is re21 moved. 

22 ‘‘(4) AUTHORIZATION OF FEDERAL UNIQUE

23 IDENTIFICATION MARKING.—Not later than 3 years 

24 after the date of the enactment of the Tobacco Tax 

25 and Enforcement Reform Act, the Secretary shall by 


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1 regulation require the use of a unique identification 

2 marking on all products subject to tax under this 

3 chapter.’’. 

4 (b) UNIQUE IDENTIFICATION MARKING.—Section 

5 5723 is amended by adding at the end the following new 

6 subsection: 

7 ‘‘(f) UNIQUE IDENTIFICATION MARKING.— 

8 ‘‘(1) IN GENERAL.—No tobacco product or 

9 processed tobacco may be sold, offered for sale, dis10 tributed, mailed, or otherwise delivered for final sale 

11 to any consumer in the United States unless the 

12 unique identification marking that meets the re13 quirements of this section (and any regulations pre14 scribed thereunder) is affixed to or forms part of the 

15 package in which it is contained. 

16 ‘‘(2) SYSTEM SPECIFICATIONS.— 

17 ‘‘(A) The Secretary shall design such sys18 tem to coordinate and avoid interference with 

19 State, local, and Indian tribal tax stamps and 

20 markings, facilitate collection of the tax im21 posed by this chapter, impede contraband to22 bacco trafficking, minimize counterfeit marking, 

23 allow for more effective tracking and tracing of 

24 tobacco products and processed tobacco, facili25 tate the enforcement of related Federal laws, 


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1 and utilize such available technology as may 

2 promote the purposes of this chapter. 

3 ‘‘(B) The Secretary shall prescribe the 

4 method and manner in which such unique iden5 tification markings are to be distributed, pur6 chased, and applied to or made part of tobacco 

7 product and processed tobacco packages, and 

8 may provide for the cancellation of such mark9 ings. 

10 ‘‘(C) The unique identification marking 

11 must provide (through the marking or record 

12 associated with the marking) such information 

13 as the Secretary by regulation prescribes, in14 cluding: 

15 ‘‘(i) A unique serial number or track16 ing code for each tobacco product or proc17 essed tobacco package or aggregate pack18 age. 

19 ‘‘(ii) The name and address of the 

20 person purchasing the marking (and, if dif21 ferent, of the person ensuring the marking 

22 is affixed to or made part of the package). 

23 ‘‘(iii) The name and address of the 

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1 essed tobacco from the person who ensures 

2 the marking is affixed to or made part of 

3 the package and the date of such purchase 

4 or receipt. 

5 ‘‘(D) The information described in sub6 paragraph (C) may be required to, to the extent 

7 practicable— 

8 ‘‘(i) be cryptographically encrypted, 

9 and 

10 ‘‘(ii)(I) be readable by a portable 

11 scanning device (or similar device) to be 

12 utilized by regulatory and law enforcement 

13 officials at the time and place of inspec14 tion, or 

15 ‘‘(II) be otherwise accessible remotely 

16 at such time and place. 

17 ‘‘(3) UNRELATED PERSON.—For purposes of 

18 this subsection, the term ‘unrelated person’ means a 

19 person other than a related person within the mean20 ing of section 267(b) or 707(b)(1).’’. 

21 (c) DEFINITIONS.—Section 5723, as amended by 

22 subsection (b), is amended by adding at the end the fol23 lowing new subsections: 

24 ‘‘(g) PACKAGE DEFINED.—For purposes of this sec25 tion, the term ‘package’ means a pack, box, carton, or conVerDate Mar 15 2010 04:29 May 01, 2013 Jkt 029200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\S826.IS S826

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1 tainer of any kind or, if no other container, any wrapping 

2 (including cellophane), in which a tobacco product or proc3 essed tobacco is sold, offered for sale, distributed, or oth4 erwise delivered for final sale to any consumer. 

5 ‘‘(h) UNIQUE IDENTIFICATION MARKING DE6 FINED.—For purposes of this section, the term ‘unique 

7 identification marking’ means a device in such design and 

8 denomination as the Secretary authorizes by regulation 

9 that is affixed to or made part of a package of a tobacco 

10 product or processed tobacco. Such markings shall contain 

11 overt security features for public authentication and covert 

12 security features embedding a unique, secure, encrypted 

13 identifier onto the marking, enabling law enforcement au14 thentication, production control, and tracking and tracing 

15 of the product or processed tobacco bearing the marking.’’. 

16 (d) REGULATIONS.—The Secretary of the Treasury 

17 shall consult with the Secretary of Health and Human 

18 Services as may be appropriate to carry out the purposes 

19 of subsection (f), and paragraphs (2), (3), and (4) of sub20 section (b), of section 5723 of the Internal Revenue Code 

21 of 1986 (as added by this section). 


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1 SEC. 204. WHOLESALERS AND MANUFACTURERS, IMPORT2 ERS, AND SELLERS OF TOBACCO PRODUC3 TION MACHINES REQUIRED TO HAVE PER4 MIT. 

5 (a) WHOLESALERS.—Section 5712 is amended by in6 serting ‘‘, as a wholesaler,’’ after ‘‘or processed tobacco’’. 

7 (b) MANUFACTURERS, IMPORTERS, AND SELLERS OF

8 TOBACCO PRODUCTION MACHINES.—Section 5712 is 

9 amended by striking ‘‘or as an export warehouse propri10 etor’’ and inserting ‘‘, as an export warehouse proprietor, 

11 or as a manufacturer, seller, or importer of tobacco pro12 duction machines’’. 

13 SEC. 205. CONDITIONS OF PERMIT. 

14 (a) ISSUANCE.—Subsection (a) of section 5713 is 

15 amended to read as follows: 

16 ‘‘(a) ISSUANCE.— 

17 ‘‘(1) IN GENERAL.—A person shall not engage 

18 in business as a manufacturer or importer of tobacco 

19 products or processed tobacco, as a wholesaler, as an 

20 export warehouse proprietor, or as a manufacturer, 

21 seller, lessor, or importer of tobacco production ma22 chines without a permit to engage in such business. 

23 Such permit, conditioned upon compliance with this 

24 chapter and regulations issued thereunder, shall be 

25 issued in such form and in such manner as the Sec26 retary shall by regulation prescribe, to every person 


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1 properly qualified under sections 5711 and 5712. 

2 Any entity granted such a permit is not eligible to 

3 provide any services the Secretary may elect to pro4 cure to facilitate the purposes of section 5723. Per5 mit holders shall automatically count output and 

6 register, record, and transmit the quantities meas7 ured, in the form, conditions, and time limits estab8 lished by the Secretary. A new permit may be re9 quired at such other time as the Secretary shall by 

10 regulation prescribe. 

11 ‘‘(2) CONDITIONS.—The Secretary shall not 

12 issue a permit under this section unless— 

13 ‘‘(A) the applicant is in compliance with 

14 the requirements of— 

15 ‘‘(i) this chapter, 

16 ‘‘(ii) chapter 114 of title 18, United 

17 States Code, 

18 ‘‘(iii) the Act of October 19, 1949 (15 

19 U.S.C. 375 et seq.; commonly referred to 

20 as the ‘Jenkins Act’), 

21 ‘‘(iv) the Fair and Equitable Tobacco 

22 Reform Act of 2004, and any amendments 

23 made thereby, 


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1 ‘‘(v) the Family Smoking Prevention 

2 and Tobacco Control Act, and any amend3 ments made thereby, 

4 ‘‘(vi) the Prevent All Cigarette Traf5 ficking Act of 2009, and any amendments 

6 made thereby, and 

7 ‘‘(vii) any related regulations there8 under, 

9 as in effect on the date of the issuance of the 

10 permit, 

11 ‘‘(B) the applicant certifies that the appli12 cant is in compliance with all other Federal, 

13 State, local, and Indian tribal laws relating to 

14 the taxation, manufacture, importation, expor15 tation, distribution, marketing, sale, or trans16 portation of tobacco products, processed to17 bacco, or tobacco production machines, as in ef18 fect on the date of the issuance of the permit, 

19 and 

20 ‘‘(C) the applicant identifies in the applica21 tion any violation of a law described in subpara22 graph (A) or (B) by the applicant resulting in 

23 a penalty under any such law during the 5-year 

24 period ending on the date of the application.’’. 


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1 (b) SUSPENSION OR REVOCATION.—Subparagraph 

2 (A) of section 5713(b)(1) is amended by inserting ‘‘or any 

3 other law described in subparagraph (A) or (B) of sub4 section (a)(2)’’ after ‘‘this chapter’’. 

5 SEC. 206. RECORDS TO BE MAINTAINED. 

6 (a) IN GENERAL.—Section 5741 is amended— 

7 (1) by inserting ‘‘(a) IN GENERAL.—’’ before 

8 ‘‘Every manufacturer’’, 

9 (2) by inserting ‘‘every wholesaler,’’ after 

10 ‘‘every importer,’’, 

11 (3) by striking ‘‘such records’’ and inserting 

12 ‘‘records concerning the chain of custody of the to13 bacco products and processed tobacco (including the 

14 foreign country of final destination for packages 

15 marked for export) and the serial numbers, marks, 

16 labels, and notices required under section 5723, and 

17 such other records’’, and 

18 (4) by adding at the end the following new sub19 sections: 

20 ‘‘(b) RETAILERS.—Retailers shall maintain records 

21 of receipt, and any non-retail sale or delivery, of tobacco 

22 products and processed tobacco. Such records shall be 

23 available to the Secretary for inspection and audit. An or24 dinary commercial record or invoice shall satisfy the re25 quirements of this subsection if such record shows the date 


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1 of receipt, from whom tobacco products or processed to2 bacco were received, and the quantity of tobacco products 

3 or processed tobacco received (or, in the case of non-retail 

4 sale or delivery, the date of sale or delivery, to whom the 

5 tobacco products or processed tobacco were sold or deliv6 ered, and the quantity of the tobacco products or proc7 essed tobacco sold or delivered). To the extent the Sec8 retary determines that the records maintained by retail 

9 entities licensed pursuant to section 555(b) of the Tariff 

10 Act of 1930 (19 U.S.C. 1555(b)) satisfy the recordkeeping 

11 requirements of this section, no additional records shall 

12 be required for such entities under this section. The pre13 ceding provisions of this subsection shall not be construed 

14 to limit or preclude other recordkeeping requirements im15 posed on any retailer. 

16 ‘‘(c) RECORDS CONCERNING MARKS AND CHAIN OF

17 CUSTODY.—Records concerning the chain of custody and 

18 the marks, labels, and notices required under section 5723 

19 shall be available for inspection by any internal revenue 

20 officer during business hours.’’. 

21 (b) CONSULTATION WITH HEALTH AND HUMAN

22 SERVICES.—The Secretary of the Treasury shall consult 

23 with the Secretary of Health and Human Services as may 

24 be appropriate to carry out the purposes of section 5741 

25 of the Internal Revenue Code of 1986. 


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1 SEC. 207. REPORTS. 

2 Section 5722 is amended— 

3 (1) by inserting ‘‘(a) IN GENERAL.—’’ before 

4 ‘‘Every manufacturer’’, and 

5 (2) by adding at the end the following new sub6 section: 

7 ‘‘(b) REPORTS BY EXPORT WAREHOUSE PROPRI8 ETORS.—Prior to exportation of tobacco products or proc9 essed tobacco from the United States, the export ware10 house proprietor shall submit a report (in such manner 

11 and form as the Secretary may by regulation prescribe) 

12 to enable the Secretary to identify the shipment and as13 sure that it reaches its intended destination.’’. 

14 SEC. 208. FRAUDULENT OFFENSES. 

15 (a) IN GENERAL.—Subsection (a) of section 5762 is 

16 amended— 

17 (1) by striking paragraph (1) and redesignating 

18 paragraphs (2) through (6) as paragraphs (1) 

19 through (5), respectively, and 

20 (2) by striking ‘‘not more than $10,000’’ and 

21 inserting ‘‘not more than $10,000 or an amount 

22 equal to 3 times the amount of the tax imposed 

23 under this chapter on the tobacco product involved 

24 (whichever is greater)’’. 

25 (b) OFFENSES RELATING TO DISTRIBUTION OF TO26 BACCO PRODUCTS, ETC.— 


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1 (1) IN GENERAL.—Section 5762 (as amended 

2 by section 202 of this Act) is amended— 

3 (A) by redesignating subsection (c) as sub4 section (d), and 

5 (B) by inserting after subsection (b) the 

6 following new subsection: 

7 ‘‘(c) OFFENSES RELATING TO DISTRIBUTION OF TO8 BACCO PRODUCTS, ETC.—It shall be unlawful— 

9 ‘‘(1) for any person to engage in business as a 

10 manufacturer or importer of tobacco products, proc11 essed tobacco, or cigarette papers and tubes, as a 

12 wholesaler, or an export warehouse proprietor, or as 

13 a manufacturer, seller, or importer of tobacco pro14 duction machines without filing the bond and obtain15 ing the permit where required by this chapter or 

16 regulations thereunder, 

17 ‘‘(2) for a manufacturer or importer of tobacco 

18 products, or wholesaler to knowingly ship, transport, 

19 deliver, or receive any tobacco products from or to 

20 any person other than a person who has obtained 

21 the permit required by this chapter, a retailer, or a 

22 person handling such products solely for purposes of 

23 shipment or delivery; except that an importer who 

24 has obtained the permit required by this chapter 

25 may receive, from a foreign manufacturer or a forVerDate Mar 15 2010 04:29 May 01, 2013 Jkt 029200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S826.IS S826

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1 eign distributor, foreign tobacco products that have 

2 not previously entered the United States, 

3 ‘‘(3) for a manufacturer or importer of proc4 essed tobacco or a wholesaler to knowingly ship, 

5 transport, deliver, or receive any tobacco products or 

6 processed tobacco from or to any person other than 

7 a person who has obtained the permit required by 

8 this chapter, 

9 ‘‘(4) for a manufacturer or importer of proc10 essed tobacco to knowingly ship, transport, sell, or 

11 deliver processed tobacco to any person other than 

12 a manufacturer of processed tobacco, a manufac13 turer of tobacco products, or an export warehouse 

14 proprietor, 

15 ‘‘(5) for any person (other than the original 

16 manufacturer of such tobacco products or processed 

17 tobacco or an export warehouse proprietor author18 ized to receive any tobacco products or processed to19 bacco that have previously been exported and re20 turned to the United States) to knowingly receive 

21 any tobacco products or processed tobacco that have 

22 previously been exported and returned to the United 

23 States, 

24 ‘‘(6) for any export warehouse proprietor to 

25 knowingly ship, transport, sell, or deliver for sale 


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1 any tobacco products or processed tobacco to any 

2 person other than the original manufacturer of such 

3 tobacco products or processed tobacco, another ex4 port warehouse proprietor, a duty free store, or a 

5 foreign purchaser, 

6 ‘‘(7) for any person (other than a manufac7 turer, wholesaler, or an export warehouse proprietor 

8 permitted under this chapter) to knowingly ship, 

9 transport, receive, or possess, for purposes of resale, 

10 any tobacco product or processed tobacco not in 

11 packages marked pursuant to regulations issued 

12 under section 5723, other than for direct return to 

13 a manufacturer for repacking or for re-exportation 

14 or to an export warehouse proprietor for re-expor15 tation, 

16 ‘‘(8) for any manufacturer, importer, export 

17 warehouse proprietor, or wholesaler permitted under 

18 this chapter to make any false entry in, to fail to 

19 make an entry in, or to knowingly fail to maintain 

20 properly any record or report required by this chap21 ter or the regulations promulgated thereunder with 

22 the intent to defraud the United States, 

23 ‘‘(9) for any person, with the intent to defraud 

24 the United States, to alter, mutilate, destroy, oblit25 erate, or remove any mark or label required under 


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1 this chapter upon a tobacco product or processed to2 bacco held for sale, or to create, possess, or apply 

3 on any tobacco product or processed tobacco or its 

4 packaging any counterfeit versions of any such 

5 marks or labels, and 

6 ‘‘(10) for any person to sell at retail more than 

7 3,000 cigarettes in any single transaction (or series 

8 of related transactions), or, in the case of other to9 bacco products, an equivalent quantity as deter10 mined by regulation. 

11 Any person violating any of the provisions of this sub12 section shall, upon conviction, be fined as provided in sec13 tion 3571 of title 18, United States Code, or imprisoned 

14 for not more than 5 years, or both.’’. 

15 (2) CONFORMING AMENDMENT.—Section 

16 5762(d) (as so redesignated) is amended by striking 

17 ‘‘and (b)’’ inserting ‘‘, (b), and (c)’’. 

18 (c) OTHER OFFENSES.—Subsection (d) of section 

19 5762 (as so redesignated) is amended by striking ‘‘not 

20 more than $1,000’’ and inserting ‘‘not more than $2,500 

21 or an amount equal to the tax imposed under this chapter 

22 on the tobacco product or processed tobacco involved 

23 (whichever is greater)’’. 

24 SEC. 209. PENALTIES. 

25 (a) IN GENERAL.— 


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1 (1) Subsection (a) of section 5761 is amend2 ed— 

3 (A) by striking ‘‘willfully’’ and inserting 

4 ‘‘knowingly’’, and 

5 (B) by striking ‘‘$1,000’’ and inserting 

6 ‘‘$10,000’’. 

7 (2) Subsection (b) of section 5761 is amended 

8 by striking ‘‘5 percent’’ and inserting ‘‘10 percent’’. 

9 (b) PENALTY AMOUNTS ADJUSTED FOR INFLA10 TION.—Section 5761 is amended by redesignating sub11 section (f) as subsection (g) and inserting after subsection 

12 (e) the following new subsection: 

13 ‘‘(f) INFLATION ADJUSTMENT.— 

14 ‘‘(1) IN GENERAL.—In the case of a calendar 

15 year beginning after 2013, the penalty dollar 

16 amounts provided under this chapter shall each be 

17 increased by an amount equal to— 

18 ‘‘(A) such dollar amount, multiplied by 

19 ‘‘(B) the cost-of-living adjustment deter20 mined under section 1(f)(3) for the calendar 

21 year, determined by substituting ‘calendar year 

22 2012’ for ‘calendar year 1992’ in subparagraph 

23 (B) thereof. 

24 ‘‘(2) ROUNDING.—If any amount as adjusted 

25 under paragraph (1) is not a multiple of $10, such 


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1 amount shall be rounded to the next highest multiple 

2 of $10.’’. 

3 SEC. 210. COORDINATION WITH OTHER GOVERNMENT OF4 FICIALS. 

5 (a) IN GENERAL.—Subchapter F of chapter 52 is 

6 amended by adding at the end the following new section: 

7 ‘‘SEC. 5755. COORDINATION WITH OTHER GOVERNMENT OF8 FICIALS. 

9 ‘‘The Secretary shall make reasonable efforts to co10 ordinate with other Federal agencies and with officials of 

11 foreign, State, local, Indian tribal, and other governments 

12 to promote the purposes of this chapter, to prevent and 

13 reduce tobacco tax evasion and contraband trafficking in 

14 tobacco products and processed tobacco, to enforce settle15 ment agreements between tobacco companies and State or 

16 other governments and related laws, or for other law en17 forcement or administration purposes.’’. 

18 (b) INFORMATION SHARING.— 

19 (1) IN GENERAL.—Paragraph (1) of section 

20 6103(o) is amended by adding at the end the fol21 lowing new subparagraph: 

22 ‘‘(C) INFORMATION SHARING FOR TO23 BACCO PRODUCT LAW ADMINISTRATION AND

24 ENFORCEMENT PURPOSES.— 


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1 ‘‘(i) FEDERAL, STATE, LOCAL, AND

2 TRIBAL GOVERNMENTS.—Returns and re3 turn information with respect to taxes im4 posed by chapter 52 may be open to in5 spection by or disclosure to officers and 

6 employees of any Federal agency, the State 

7 Tax Administrators, or any other agency 

8 of any State, local, or Indian tribal govern9 ment responsible for the administration 

10 and enforcement of laws and regulations 

11 relating to tobacco products and processed 

12 tobacco, or their legal representative, solely 

13 for use in such administration and enforce14 ment, unless the Secretary determines that 

15 such disclosure would seriously impair 

16 Federal tax administration. 

17 ‘‘(ii) FOREIGN GOVERNMENTS AND

18 ORGANIZATIONS.—The Secretary shall, 

19 upon written request, disclose returns and 

20 return information with respect to taxes 

21 imposed by chapter 52 to officers and em22 ployees of any agency of any foreign gov23 ernment, OLAF (European Anti-Fraud 

24 Office), EUROPOL, INTERPOL, or the 

25 World Customs Organization responsible 


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1 for the administration and enforcement of 

2 laws and regulations relating to tobacco 

3 products and processed tobacco, or their 

4 legal representative, solely for use in such 

5 administration and enforcement, if the 

6 Secretary obtains written assurances from 

7 such government or organization that the 

8 information will be held in confidence and 

9 used only for such use. No return or re10 turn information shall be disclosed under 

11 this clause if the Secretary determines that 

12 such disclosure would seriously impair 

13 Federal tax administration. 

14 ‘‘(iii) PUBLIC INFORMATION.—The 

15 identity and business address of those per16 sons that have a valid permit, pursuant to 

17 chapter 52, to engage in business as a 

18 manufacturer, wholesaler, or importer of 

19 tobacco products or processed tobacco, as 

20 an export warehouse proprietor, or as a 

21 manufacturer, seller, or importer of to22 bacco production machines (as defined in 

23 section 5702(q)) shall be made publicly 

24 available at such time and in such manner 

25 as the Secretary may prescribe.’’. 


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1 (2) CONFORMING AMENDMENTS.— 

2 (A) Subsection (a) of section 6103 is 

3 amended— 

4 (i) by striking ‘‘or any local’’ in para5 graph (2) and inserting ‘‘any local’’, 

6 (ii) by inserting ‘‘, or any agency de7 scribed in subsection (o)(1)(C)(i)’’ after 

8 ‘‘subsection (l)(7)(D)’’ in paragraph (2), 

9 (iii) by striking ‘‘or subsection (n)’’ in 

10 paragraph (3) and inserting ‘‘subsection 

11 (n), or subsection (o)(1)(C)(i)’’. 

12 (B) Paragraph (4) of section 6103(p) is 

13 amended— 

14 (i) by striking ‘‘(o)(1)(A)’’ both places 

15 it appears and inserting ‘‘(o)(1)(A) or 

16 (C)(i)’’, and 

17 (ii) by striking ‘‘(15), or (16),’’ and 

18 inserting ‘‘(15), or (16), or (o)(1)(C)(i),’’. 

19 (C) Paragraph (2) of section 7213(a) is 

20 amended— 

21 (i) by striking ‘‘(21) or’’ and inserting 

22 ‘‘(21),’’, and 

23 (ii) by striking ‘‘or (7)’’ and inserting 

24 ‘‘or (7), or (o)(1)(C)(i)’’. 


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1 (c) CLERICAL AMENDMENT.—The table of sections 

2 for subchapter F of chapter 52 is amended by adding at 

3 the end the following new item: 

‘‘Sec. 5755. Coordination with other government officials.’’. 

4 SEC. 211. DEFINITIONS. 

5 (a) EXPORT WAREHOUSE PROPRIETOR.—Subsection 

6 (i) of section 5702 is amended by inserting before the pe7 riod the following: ‘‘or any person engaged in the business 

8 of exporting tobacco products from the United States for 

9 purposes of sale or distribution. Any duty free store that 

10 sells, offers for sale, or otherwise distributes to any person 

11 in any single transaction (or series of related transactions) 

12 more than 3,000 cigarettes, or an equivalent quantity of 

13 other tobacco products as the Secretary shall by regulation 

14 prescribe, shall be deemed an export warehouse proprietor 

15 under this chapter’’. 

16 (b) RETAILER; WHOLESALER.—Section 5702, as 

17 amended by this Act, is amended by adding at the end 

18 the following new subsections: 

19 ‘‘(r) RETAILER.—The term ‘retailer’ means any per20 son who sells, or offers for sale, any tobacco product at 

21 retail. The term ‘retailer’ includes any duty free store that 

22 sells, offers for sale, or otherwise distributes at retail in 

23 any single transaction (or series of related transactions) 

24 not more than 3,000 cigarettes, or not more than an 


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1 equivalent quantity of other tobacco products as the Sec2 retary shall by regulation prescribe. 

3 ‘‘(s) WHOLESALER.—The term ‘wholesaler’ means 

4 any person engaged in the business of purchasing tobacco 

5 products for resale at wholesale, or any person acting as 

6 an agent or broker for any person engaged in the business 

7 of purchasing tobacco products for resale at wholesale.’’. 

8 SEC. 212. CONFORMING AMENDMENTS. 

9 (a) Paragraph (2)(C) of section 2341 of title 18, 

10 United States Code is amended by inserting ‘‘in regard 

11 to State, local, or Indian tribal government taxes,’’ before 

12 ‘‘a person’’. 

13 (b) Sections 2314 and 2315 of title 18, United States 

14 Code, are each amended— 

15 (1) by striking ‘‘STATE’’ in the heading there16 of; and 

17 (2) by striking ‘‘tax stamps’’ each place it ap18 pears and inserting ‘‘tax stamps or markings’’. 

19 (c) The headings for subchapters B, C, and E of 

20 chapter 52 are each amended by inserting ‘‘, Processed 

21 Tobacco,’’ after ‘‘Products’’. 

22 (d) The items relating to subchapters B, C, and E 

23 in the table of subchapters for chapter 52 are each amend24 ed by inserting ‘‘, processed tobacco,’’ after ‘‘products’’. 


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1 (e) The heading for chapter 52 is amended by insert2 ing ‘‘, PROCESSED TOBACCO,’’ after ‘‘PROD3 UCTS’’. 

4 (f) The item relating to chapter 52 in the table of 

5 chapters for subtitle E is amended by inserting ‘‘, proc6 essed tobacco,’’ after ‘‘products’’. 

7 SEC. 213. EFFECTIVE DATE. 

8 Except as otherwise provided in this title, the amend9 ments made by this title shall take effect 1 year after the 

10 date of the enactment of this Act. 

11 TITLE III—IMPORT FRAUD 

12 SEC. 301. MAXIMUM PENALTY FOR IMPORTATION OF TO13 BACCO PRODUCTS AND CIGARETTE PAPERS 

14 AND TUBES BY FRAUDULENT MEANS. 

15 (a) MAXIMUM PENALTY.—Section 592(c)(1) of the 

16 Tariff Act of 1930 (19 U.S.C. 1592(c)(1)) is amended— 

17 (1) by striking ‘‘A fraudulent violation of sub18 section (a)’’ and inserting the following: 

19 ‘‘(A) IN GENERAL.—Except as provided in 

20 subparagraph (B), a fraudulent violation of 

21 subsection (a)’’; and 

22 (2) by adding at the end the following: 

23 ‘‘(B) TOBACCO PRODUCTS AND CIGARETTE

24 PAPERS AND TUBES.—In the case of importa25 tion of tobacco products and cigarette papers 


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1 and tubes subject to tax under chapter 52 of 

2 the Internal Revenue Code of 1986, a fraudu3 lent violation of subsection (a) is punishable by 

4 a civil penalty in an amount not to exceed the 

5 sum of— 

6 ‘‘(i) the domestic value of the mer7 chandise, and 

8 ‘‘(ii) four times the amount of Federal 

9 excise tax that could be imposed on the 

10 merchandise, if applicable.’’. 

11 (b) EFFECTIVE DATE.—The amendments made by 

12 subsection (a) shall take effect on the date which is 90 

13 days after the date of the enactment of this Act, and shall 

14 apply with respect to violations of section 592 of the Tariff 

15 Act of 1930 (as so amended) that occur on or after that 

16 date. 

17 TITLE IV—EXCLUSIONS REGARD18 ING INDIAN TRIBES AND 

19 TRIBAL MATTERS 

20 SEC. 401. EXCLUSIONS REGARDING INDIAN TRIBES AND 

21 TRIBAL MATTERS. 

22 (a) IN GENERAL.—Nothing in this Act or the amend23 ments made by this Act shall be construed to amend, mod24 ify, or otherwise affect— 


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1 (1) any agreements, compacts, or other inter2 governmental arrangements between any State or 

3 local government and any government of an Indian 

4 tribe relating to the collection of taxes on tobacco 

5 products sold in Indian country; 

6 (2) any State laws that authorize or otherwise 

7 pertain to any such intergovernmental arrangements 

8 or create special rules or procedures for the collec9 tion of State, local, or tribal taxes on tobacco prod10 ucts sold in Indian country; 

11 (3) any limitations under Federal or State law, 

12 including Federal common law and treaties, on 

13 State, local, and tribal tax and regulatory authority 

14 with respect to the sale, use, or distribution of to15 bacco products or processed tobacco by or to Indian 

16 tribes, tribal members, tribal enterprises, or in In17 dian country; 

18 (4) any Federal law, including Federal common 

19 law and treaties, regarding State jurisdiction, or 

20 lack thereof, over any Indian tribe, tribal member, 

21 tribal enterprise, Indian reservations, or other land 

22 held by the United States in trust for one or more 

23 Indian tribes; or 


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1 (5) any State or local government authority to 

2 bring enforcement actions against persons located in 

3 Indian country. 

4 (b) COORDINATION OF LAW ENFORCEMENT.—Noth5 ing in this Act or the amendments made by this Act (other 

6 than the amendments relating to section 6103 of the In7 ternal Revenue Code of 1986) shall be construed to inhibit 

8 or otherwise affect any coordinated law enforcement effort 

9 by one or more States or other jurisdictions, including In10 dian tribes, through interstate compact or otherwise, 

11 that— 

12 (1) provides for the administration of tobacco 

13 product laws or laws pertaining to interstate sales or 

14 other sales of tobacco products or processed tobacco; 

15 (2) provides for the seizure of tobacco products, 

16 processed tobacco, or other property related to a vio17 lation of such laws; or 

18 (3) establishes cooperative programs for the ad19 ministration of such laws. 

20 (c) TREATMENT OF STATE AND LOCAL GOVERN21 MENTS.—Nothing in this Act or the amendments made 

22 by this Act shall be construed to authorize, deputize, or 

23 commission States or local governments as instrumental24 ities of the United States. 


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1 (d) ENFORCEMENT WITHIN INDIAN COUNTRY.— 

2 Nothing in this Act or the amendments made by this Act 

3 shall prohibit, limit, or restrict enforcement by the Attor4 ney General of the United States of this Act or an amend5 ment made by this Act within Indian country. 

6 (e) AMBIGUITY.—Any ambiguity between the lan7 guage of this section or its application and any other pro8 vision of this Act shall be resolved in favor of this section. 

9 (f) DEFINITIONS.—In this section— 

10 (1) the term ‘‘Indian country’’ has the meaning 

11 given that term in section 1151 of title 18, United 

12 States Code; 

13 (2) the term ‘‘tribal enterprise’’ means any 

14 business enterprise, regardless of whether incor15 porated or unincorporated under Federal or tribal 

16 law, of an Indian tribe or group of Indian tribes; 

17 (3) the term ‘‘Indian reservation’’ has the 

18 meaning given that term in section 168(j)(6) of the 

19 Internal Revenue Code of 1986; 

20 (4) the term ‘‘Indian tribe’’ has the meaning 

21 given that term in section 4(e) of the Indian Self22 Determination and Education Assistance Act (25 

23 U.S.C. 450b(e)); and 

24 (5) the terms ‘‘tobacco products’’ and ‘‘proc25 essed tobacco’’ have the meanings given such terms 


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1 by section 5702 of the Internal Revenue Code of 

2 1986. 

Æ 


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