Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Rules and Regulations 14479 

CFR Correction 

In Title 26 of the Code of Federal 

Regulations, Part 1 (§§ 1.908 to 1.1000), 

revised as of April 1, 2008, in 

§ 1.924(c)–1, make the following 

corrections: 

1. On pages 62 and 63, remove 

paragraphs (d) introductory text, (d)(1) 

through (7), and (2) following (d)(7); 

2. Reinstate paragraphs (d)(1) and (2) 

to read as set forth below; and 

3. On page 64, in the last sentence of 

paragraph (d)(6), insert the word ‘‘in’’ 

before the words ‘‘§ 1.415(c)–2(b) and 

(c)’’. 

§ 1.924(c)–1 Requirement that a FSC be 

managed outside the United States. 

* * * * * 

(d) Disbursement of dividends, legal 

and accounting fees, and salaries of 

officers and directors out of the 

principal bank account of the FSC—(1) 

In general. All dividends, legal fees, 

accounting fees, salaries of officers of 

the FSC, and salaries or fees paid to 

members of the board of directors of the 

FSC that are disbursed during the 

taxable year must be disbursed out of 

bank account(s) of the FSC maintained 

outside the United States. Such an 

account is treated as the principal bank 

account of the FSC for purposes of 

section 924(c). Dividends, however, may 

be netted against amounts owed to the 

FSC (e.g., commissions) by a related 

supplier through book entries. If the 

FSC regularly disburses its legal or 

accounting fees, salaries of officers, and 

salaries or fees of directors out of its 

principal bank account, the occasional, 

inadvertent payment by mistake of fact 

or law of such amounts out of another 

bank account will not be considered a 

disbursement by the FSC if, upon 

determination that such payment was 

made from another account, 

reimbursement to such other account is 

made from the principal bank account 

of the FSC within a reasonable period 

from the date of the determination. 

Disbursement out of the principal bank 

account of the FSC may be made by 

transferring funds from the principal 

bank account to a U.S. account of the 

FSC provided that (i) the payment of the 

dividends, salaries or fees to the 

recipients is made within 12 months of 

the transfer, (ii) the purpose of the 

expenditures is designated and, (iii) the 

payment of the dividends, salaries or 

fees is actually made out of the same 

U.S. account that received the 

disbursement from the principal bank 

account. 

(2) Reimbursement. Legal or 

accounting fees, salaries of officers, and 

salaries or fees of directors that are paid 

by a related person wholly or partially 

on behalf of a FSC must be reimbursed 

by the FSC. The amounts paid by the 

related person are not considered 

disbursed by the FSC until the related 

person is reimbursed by the FSC. The 

related person must be reimbursed no 

later than the last date prescribed for 

filing the FSC’s tax return (including 

extensions) for the taxable year to which 

the reimbursement relates. Any 

reimbursement for amounts paid on 

behalf of the FSC must be disbursed out 

of the FSC’s principal bank account 

(and not netted against any obligation 

owed by the related person to the FSC), 

as set forth in paragraph (c) of this 

section. To determine the amounts paid 

on behalf of the FSC, the FSC may rely 

upon a written statement or invoice 

furnished to it by the related person 

which shows the following: 

(i) The actual fees charged for 

performing the legal or accounting 

services for the FSC or, if such fees 

cannot be ascertained by the related 

person, a good faith estimate thereof, 

and the actual salaries or fees paid for 

services as officers and directors of the 

FSC, and 

(ii) The person who performed or 

provided the services. 

* * * * * 

[FR Doc. E9–7205 Filed 3–30–09; 8:45 am] 

BILLING CODE 1505–01–D 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

Income Taxes; Transfers of Property 

by U.S. Persons to Foreign 

Corporations 

CFR Correction 

In Title 26 of the Code of Federal 

Regulations, Part 1 (§§ 1.301 to 1.400), 

revised as of April 1, 2008, on page 306, 

in § 1.367(a)–6T, in paragraph 

(e)(5)(ii)(B), reinstate the remainder of 

the first sentence, following the word 

‘‘some’’, to read as follows: ‘‘. . . portion 

of which was recaptured on the 

disposition, of the recaptured portions 

of those overall foreign losses after 

multiplication by the following 

fraction:’’. 

[FR Doc. E9–7203 Filed 3–30–09; 8:45 am] 

BILLING CODE 1505–01–D 

DEPARTMENT OF THE TREASURY 

Alcohol and Tobacco Tax and Trade 

Bureau 

27 CFR Parts 40, 41, 44, 46, and 71 

[Docket No. TTB–2009–0001; T.D. TTB–75; 

Re: Notice No. 93] 

RIN 1513–AB70 

Increase in Tax Rates on Tobacco 

Products and Cigarette Papers and 

Tubes; Floor Stocks Tax on Certain 

Tobacco Products, Cigarette Papers, 

and Cigarette Tubes; and Changes to 

Basis for Denial, Suspension, or 

Revocation of Permits (2009R–118P) 

AGENCY: Alcohol and Tobacco Tax and 

Trade Bureau, Treasury. 

ACTION: Temporary Rule. 

SUMMARY: The Alcohol and Tobacco Tax 

and Trade Bureau is amending its 

regulations to implement certain 

provisions of the Children’s Health 

Insurance Program Reauthorization Act 

of 2009 (the Act). This final rule amends 

existing regulations to reflect increases 

in the Federal excise tax rates on 

tobacco products and cigarette papers 

and tubes, revises existing floor stocks 

tax regulations to reflect the scope of the 

floor stocks tax provisions of the Act, 

and revises existing regulations to 

include the new statutory criteria for 

denial, suspension, or revocation of 

tobacco permits. We also are soliciting 

comments from all interested parties on 

these amendments through a notice of 

proposed rulemaking published 

elsewhere in this issue of the Federal 

Register. 

DATES: Effective date: March 31, 2009. 

Applicability dates: The amendments in 

27 CFR 40.21, 40.23, 40.25, 40.25a, 

40.351, 40.352, 41.30 through 41.35, 

46.75, and 46.191 through 46.274, are 

applicable April 1, 2009. The 

amendments in 27 CFR 40.74, 40.332, 

41.198, 44.92, 44.162, 71.46, and 71.46b 

were applicable on February 4, 2009. 

FOR FURTHER INFORMATION CONTACT: For 

questions concerning floor stocks tax, 

contact the National Revenue Center, 

Alcohol and Tobacco Tax and Trade 

Bureau (FloorStocksTax@ttb.gov, 513– 

684–3334 or 1–877–TTB–FAQS (1–877– 

882–3277)); for other questions 

concerning this document, contact Amy 

Greenberg, Regulations and Rulings 

Division, Alcohol and Tobacco Tax and 

Trade Bureau (202–927–8210). 

SUPPLEMENTARY INFORMATION: 


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14480 Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Rules and Regulations 

Impact of the Homeland Security Act 

on This Rulemaking 

Effective January 24, 2003, the 

Homeland Security Act of 2002 (Pub. L. 

107–296, 116 Stat. 2135 (2002)) divided 

the Bureau of Alcohol, Tobacco and 

Firearms (ATF) into two new agencies, 

the Alcohol and Tobacco Tax and Trade 

Bureau (TTB) in the Department of the 

Treasury and the Bureau of Alcohol, 

Tobacco, Firearms and Explosives in the 

Department of Justice. The regulation 

and taxation of tobacco products and 

cigarette papers and tubes remains a 

function of the Department of the 

Treasury and is the responsibility of 

TTB. References to ATF in this 

document reflect the time period prior 

to January 24, 2003, while references to 

TTB are after that date. 

TTB Authority 

Chapter 52 of the Internal Revenue 

Code of 1986 (IRC) contains permit, 

Federal excise tax payment, and related 

provisions regarding tobacco products 

and cigarette papers and tubes. TTB has 

authority to issue, deny, suspend, and 

revoke permits of manufacturers, 

importers, and export warehouse 

proprietors pursuant to regulations 

contained in parts 40, 41, 44, and 71 of 

title 27 of the Code of Federal 

Regulations (CFR). TTB also collects 

Federal excise taxes on tobacco 

products and cigarette papers and tubes 

from proprietors of domestic bonded 

manufacturing premises pursuant to 

regulations contained in 27 CFR part 40; 

the Bureau of Customs and Border 

Protection (CBP) collects these taxes 

from importers of these products 

pursuant to regulations contained in 

title 19 of the CFR. TTB also has 

authority to regulate the importation 

and exportation of tobacco products and 

cigarette papers and tubes, and the 

removal of tobacco products and 

cigarette papers and tubes for use of the 

United States under 27 CFR parts 41, 44 

and 45, respectively. Under 27 CFR part 

46, TTB has authority to administer 

floor stocks taxes and other 

miscellaneous matters involving these 

products. 

Tax Increase 

The Children’s Health Insurance 

Program Reauthorization Act of 2009 

(the Act), Public Law 111–3, was 

enacted on February 4, 2009. Section 

701 of the Act increases the rate of 

Federal excise tax on tobacco products 

and cigarette papers and tubes removed 

from the factory or from internal 

revenue bond or from Customs custody 

on or after April 1, 2009. 

This document amends the tobacco 

regulations in parts 40, 41, 44, and 46 

to reflect the new excise tax rates. These 

amendments include additional 

examples of computations that show the 

new tax rates. 

Floor Stocks Tax 

Section 701 of the Act also imposes a 

floor stocks tax on taxpaid or tax 

determined tobacco products (other 

than large cigars described in 26 U.S.C. 

5701(a)(2)), and on cigarette papers and 

tubes, held for sale on April 1, 2009. 

The floor stocks tax rate is equal to the 

difference between the new Federal 

excise tax rate and the immediately 

prior rate. Persons likely to be holding 

articles for sale that are subject to the 

floor stocks tax include manufacturers, 

importers, and wholesale and retail 

dealers of these articles. The floor stocks 

tax provisions of section 701 also permit 

a credit against the floor stocks tax of 

$500 or the amount of tax due, 

whichever is less, and also contain rules 

for handling articles in foreign trade 

zones and for controlled groups. 

The floor stocks tax regulations 

currently in 27 CFR part 46, subpart I, 

were promulgated by ATF to administer 

the 2000 and 2002 cigarette floor stocks 

taxes imposed by section 9302(j) of 

Public Law 105–33. There is no need to 

retain those regulations (any collection 

or other administrative action relating to 

those taxes would be conducted under 

the provisions of the law and 

regulations in effect at the time). 

Accordingly, in this document, TTB 

revises subpart I of part 46 to implement 

the new floor stocks tax imposed by the 

Act, relying on and replicating the prior 

provisions to the greatest extent 

possible. However, TTB notes that there 

are some differences between the law 

that imposed the earlier floor stocks tax 

and the 2009 floor stocks tax imposed 

by the Act, which are addressed in the 

new regulations adopted in this 

document as follows: 

• The 2009 floor stocks tax applies to 

more articles (that is, not only to 

cigarettes), so the instructions for taking 

inventories and computing appropriate 

tax are modified accordingly. 

• For purposes of the previous floor 

stocks tax regime, ATF included 

instructions for keeping separate 

inventories of cigarettes marked for 

export. Since holding products marked 

for export is prohibited by 26 U.S.C. 

5751, inventory instructions for such 

products are not necessary. 

• The Act provides no exemption for 

products held in vending machines, so 

no such exemption is provided in this 

circumstance. 

• Under the previous floor stocks tax, 

ATF regulations provided that a person 

holding articles subject to floor stocks 

tax who owed no tax after taking the 

allowed credit, would not have to file a 

return. However, based on experience 

under that previous floor stocks tax, 

TTB believes that it is necessary to 

require the filing of a return even when 

no tax is due. If TTB were to provide an 

exemption from filing a return when no 

tax is due, TTB would not be able to 

determine if the failure to file a return 

is due to zero liability or willful 

noncompliance with the requirements 

of the statute, so no exemption is 

provided for in the regulatory texts 

adopted in this document. Therefore, 

those whose tax owed is zero must file 

a return. 

Section 702(d) of the Act expanded 

the definition of ‘‘roll-your-own’’ 

tobacco to include tobacco for making 

cigars and tobacco for use as wrappers 

for cigars, effective April 1, 2009. The 

floor stocks tax, however, applies only 

to ‘‘roll-your-own’’ products covered by 

the old definition (that is, ‘‘any tobacco 

which, because of its appearance, type, 

packaging, or labeling, is suitable for use 

and likely to be offered to, or purchased 

by, consumers as tobacco for making 

cigarettes’’). Therefore, in order to avoid 

confusion in the implementation of the 

floor stocks tax, that definition change 

will be reflected in a separate 

rulemaking. 

Denial, Suspension and Revocation of 

Permits 

Section 702(b) of the Act amended 26 

U.S.C. 5712 and 5713 to expand the 

basis for denial, suspension and 

revocation of tobacco permits with 

effect from February 4, 2009. In this 

document, TTB includes the amended 

statutory language in the pertinent 

sections of the TTB regulations, that is, 

in §§ 40.74, 40.332, 41.198, 44.92, 

44.162, 71.46, and 71.49b. 

Temporary Rule 

Based on the February 4, 2009, 

enactment of the changes to the criteria 

for denial, suspension, and revocation 

of permits and the April 1, 2009, 

effective date of the tax increases and 

floor stocks tax, TTB believes that 

proper administration and enforcement 

of those requirements necessitates the 

immediate adoption of implementing 

regulations as a temporary rule. TTB 

believes that such implementing action 

ensures that affected industry members 

will have timely knowledge of the 

regulatory requirements. 


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Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Rules and Regulations 14481 

Public Participation 

For submitting comments, please refer 

to the notice of proposed rulemaking on 

this subject published in the Proposed 

Rules section of this issue of the Federal 

Register. 

Regulatory Flexibility Act 

We certify that this temporary rule 

will not have a significant economic 

impact on a substantial number of small 

entities. Accordingly, a regulatory 

flexibility analysis is not required. The 

regulatory obligations and relevant 

collections of information derive 

directly from the Internal Revenue Code 

of 1986, as amended, and the 

regulations in this rule concerning these 

obligations and collections merely 

implement and provide necessary 

standards for complying with the 

statutory requirements. Likewise, any 

secondary or incidental effects, and any 

reporting, recordkeeping, or other 

compliance burdens flow directly from 

the statute. Pursuant to 26 U.S.C. 

7805(f), this temporary regulation will 

be submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small businesses. 

Paperwork Reduction Act 

TTB has provided estimates of the 

burden that the collection of 

information contained in these 

regulations imposes, and the estimated 

burden has been reviewed and approved 

by the Office of Management and 

Budget (OMB) in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3507) and assigned control 

numbers 1513–0129 and 1513–0030. 

Under the Paperwork Reduction Act 

of 1995, 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 OMB control 

number. 

Comments concerning suggestions for 

reducing the burden of the collections of 

information in this document should be 

directed to Mary A. Wood, Alcohol and 

Tobacco Tax and Trade Bureau, at any 

of these addresses: 

• P.O. Box 14412, Washington, DC 

20044–4412; 

• 202–927–8525 (facsimile); or 

• formcomments@ttb.gov (e-mail). 

Executive Order 12866 

This is not a significant regulatory 

action as defined in E.O. 12866. 

Therefore, it requires no regulatory 

assessment. 

Inapplicability of Prior Notice and 

Comment and Delayed Effective Date 

Procedures 

Because this document implements 

provisions of a law which are effective 

on February 4 and on April 1, 2009, and 

because immediate guidance is 

necessary to implement these 

provisions, it is found to be 

impracticable to issue this Treasury 

decision with notice and public 

procedure under 5 U.S.C. 553(b). 

Pursuant to the provisions of 5 U.S.C. 

553(d)(2), and (d)(3), we are issuing 

these regulations without a delayed 

effective date. TTB has determined that 

this regulation is an interpretative rule 

that implements Public Law 111–3 as 

provided for in section 553(d)(2). TTB 

also has determined that good cause 

exists to provide industry members with 

immediate guidance on procedures to 

conduct an inventory and pay the 

appropriate floor stocks tax in 

accordance with section 553(d)(3). 

Drafting Information 

Marjorie D. Ruhf of the Regulations 

and Rulings Division drafted this 

document. Other employees of the 

Alcohol and Tobacco Tax and Trade 

Bureau participated in its development. 

List of Subjects 

27 CFR Part 40 

Cigars and cigarettes, Claims, 

Electronic funds transfers, Excise taxes, 

Imports, Labeling, Packaging and 

containers, Reporting and recordkeeping 

requirements, Surety bonds, Tobacco. 

27 CFR Part 41 

Cigars and cigarettes, Claims, Customs 

duties and inspection, Electronic funds 

transfers, Excise taxes, Imports, 

Labeling, Packaging and containers, 

Puerto Rico, Reporting and 

recordkeeping requirements, Surety 

bonds, Tobacco, Virgin Islands, 

Warehouses. 

27 CFR Part 44 

Aircraft, Armed forces, Cigars and 

cigarettes, Claims, Customs duties and 

inspection, Excise taxes, Exports, 

Foreign trade zones, Labeling, Packaging 

and containers, Reporting and 

recordkeeping requirements, Surety 

bonds, Tobacco, Vessels, Warehouses. 

27 CFR Part 46 

Administrative practice and 

procedure, Cigars and cigarettes, Claims, 

Excise taxes, Packaging and containers, 

Penalties, Reporting and recordkeeping 

requirements, Seizures and forfeitures, 

Surety bonds, Tobacco. 

27 CFR Part 71 

Administrative practice and 

procedure, Alcohol and alcoholic 

beverages, Tobacco. 

Amendments to the Regulations 

■ For the reasons set forth in the 

preamble, chapter I of title 27 of the 

Code of Federal Regulations is amended 

as follows: 

PART 40—MANUFACTURE OF 

TOBACCO PRODUCTS AND 

CIGARETTE PAPERS AND TUBES 

■ 1. The authority citation for part 40 

continues to read as follows: 

Authority: 26 U.S.C. 5142, 5143, 5146, 

5701, 5703–5705, 5711–5713, 5721–5723, 

5731, 5741, 5751, 5753, 5761–5763, 6061, 

6065, 6109, 6151, 6301, 6302, 6311, 6313, 

6402, 6404, 6423, 6676, 6806, 7011, 7212, 

7325, 7342, 7502, 7503, 7606, 7805; 31 U.S.C. 

9301, 9303, 9304, 9306. 

■ 2. Paragraph (a) of § 40.21 is revised 

to read as follows: 

§ 40.21 Cigar tax rates. 

(a) Cigars are taxed at the following 

rates under 26 U.S.C. 5701(a): 

Type and amount 

Tax rate for removals during the following periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Small cigars per thousand ............................................................................................. $1.828 ................................ $50.33 

Large cigars* 

• percentage of sale price ..................................................................................... 20.719% ............................. 52.750% 

• but not to exceed— ............................................................................................ $48.75 per thousand .......... $0.4026 per cigar. 

* For large cigars: Until March 31, 2009, the percentage tax rate applies when the sale price is $235.294 per thousand or less, and the flat tax 

rate applies when the sale price is more than $235.294 per thousand. On and after April 1, 2009, the percentage tax rate applies when the sale 

price is $763.222 or less per thousand cigars, and the flat tax rate applies when the sale price is more than $763.222 per thousand cigars. 


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14482 Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Rules and Regulations 

* * * * * 

■ 3. Section 40.23 is revised to read as 

follows: 

§ 40.23 Cigarette tax rates. 

Cigarettes are taxed at the following 

rates under 26 U.S.C. 5701(b): 

Product 

Tax rate per thousand for removals during the following 

periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Small cigarettes ............................................................................................................. $19.50 ................................ $50.33 

Large cigarettes up to 61⁄2′′ long ................................................................................... $40.95 ................................ $105.69 

Large cigarettes over 61⁄2′′ long .................................................................................... Taxed at the rate for small cigarettes, counting each 23⁄4′′ 

or fraction thereof of the length of each as one cigarette. 

■ 4. Section 40.25 is revised to read as 

follows: 

§ 40.25 Smokeless tobacco tax rates. 

Smokeless tobacco products are taxed 

at the following rates under 26 U.S.C. 

5701(e): 

Product 

Tax rate per pound* for removals during the following 

periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Snuff ............................................................................................................................... $ 0.585 ............................... $ 1.51 

Chewing tobacco ........................................................................................................... $ 0.195 ............................... $ 0.5033 

* Prorate tax for fractions of a pound. 

■ 5. Section 40.25a is revised to read as 

follows: 

§ 40.25a Pipe tobacco and roll-your-own 

tobacco tax rates. 

Pipe tobacco and roll-your-own 

tobacco are taxed at the following rates 

under 26 U.S.C. 5701(f) and (g), 

respectively: 

Product 

Tax rate per pound* for removals during the following 

periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Pipe tobacco .................................................................................................................. $ 1.0969 ............................. $ 2.8311 

Roll-your-own tobacco ................................................................................................... $ 1.0969 ............................. $ 24.78 

* Prorate tax for fractions of a pound. 

■ 6. Section 40.74 is revised to read as 

follows: 

§ 40.74 Investigation of applicant. 

(a) Investigation. The appropriate TTB 

officer may cause inquiry or 

investigation to be made to verify the 

information furnished in connection 

with an application for permit and to 

ascertain whether the applicant is 

eligible for a permit. Any of the 

following conditions may be grounds for 

denial of a permit: 

(1) The premises on which it is 

proposed to conduct the business are 

not adequate to protect the revenue; 

(2) The activity proposed to be carried 

out at such premises does not meet the 

minimum manufacturing or activity 

requirements of § 40.61(b); or 

(3) The applicant (including, in the 

case of a corporation, any officer, 

director, or principal stockholder and, 

in the case of a partnership, a partner)— 

(i) Is, by reason of his business 

experience, financial standing, or trade 

connections or by reason of previous or 

current legal proceedings involving a 

felony violation of any other provision 

of Federal criminal law relating to 

tobacco products, processed tobacco, 

cigarette paper, or cigarette tubes, not 

likely to maintain operations in 

compliance with this chapter; 

(ii) Has been convicted of a felony 

violation of any provision of Federal or 

State criminal law relating to tobacco 

products, processed tobacco, cigarette 

paper, or cigarette tubes; or 

(iii) Has failed to disclose any 

material information required or made 

any material false statement in the 

application therefor. 

(b) TTB action. The appropriate TTB 

officer, if there is reason to believe that 

the applicant is not entitled to a permit, 

shall promptly give the applicant notice 

of the contemplated disapproval of the 

application and opportunity for hearing 

thereon in accordance with part 71 of 

this chapter, which part (including the 

provisions relating to the recommended 

decision and to appeals) is applicable to 

such proceedings. If, after such notice 

and opportunity for hearing, the 

appropriate TTB officer finds that the 

applicant is not entitled to a permit, he 

shall, by order stating the findings on 

which his decision is based, deny the 

permit. 

(26 U.S.C. 5712) 

■ 7. Section 40.183 is amended by 

revising paragraph (e) to read as follows: 

§ 40.183 Record of tobacco products. 

* * * * * 

(e) Removed subject to tax (itemize 

large cigars by sale price in accordance 

with § 40.22, except that before April 1, 

2009, cigars that cost more than 

$235.294 may optionally be shown as if 

the price were $236 per thousand, and 

on and after April 1, 2009, cigars that 

cost more than $763.222 may optionally 

be shown as if the price were $764 per 

thousand); 

* * * * * 


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Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Rules and Regulations 14483 

■ 8. Section 40.184 is amended by 

revising paragraph (a)(4) to read as 

follows: 

§ 40.184 Record of removals subject to 

tax. 

(a) * * * 

(4) For large cigars, show the sale 

price (if the sale price is more than 

$235.294 per thousand before April 1, 

2009, or more than $763.222 per 

thousand on and after April 1, 2009, you 

may place a note to that effect in the 

record instead of the actual price). 

* * * * * 

■ 9. Section 40.332 is revised to read as 

follows: 

§ 40.332 Suspension and revocation of 

permit. 

Where the appropriate TTB officer has 

reason to believe that a manufacturer of 

tobacco products has not in good faith 

complied with the provisions of 26 

U.S.C. chapter 52, and regulations 

thereunder, or with any other provision 

of 26 U.S.C. with intent to defraud, or 

has violated any condition of his permit, 

or has failed to disclose any material 

information required or made any 

material false statement in the 

application for the permit, or has failed 

to maintain his premises in such 

manner as to protect the revenue, or is, 

by reason of previous or current legal 

proceedings involving a felony violation 

of any other provision of Federal 

criminal law relating to tobacco 

products, processed tobacco, cigarette 

paper, or cigarette tubes, not likely to 

maintain operations in compliance with 

26 U.S.C. chapter 52, or has been 

convicted of a felony violation of any 

provision of Federal or State criminal 

law relating to tobacco products, 

processed tobacco, cigarette paper, or 

cigarette tubes, the appropriate TTB 

officer shall issue an order, stating the 

facts charged, citing such person to 

show cause why his permit should not 

be suspended or revoked. Such citation 

shall be issued and opportunity for 

hearing afforded in accordance with 

part 71 of this chapter, which part is 

applicable to such proceedings. If, after 

hearing, the hearing examiner, or on 

appeal, the Administrator, finds that 

such person has not shown cause why 

his permit should not be suspended or 

revoked, such permit shall be 

suspended for such period as the 

appropriate TTB officer deems proper or 

shall be revoked. 

(72 Stat 1421, as amended; 26 U.S.C. 5713) 

■ 10. Section 40.351 is revised to read 

as follows: 

§ 40.351 Cigarette papers. 

Cigarette papers are taxed at the 

following rates under 26 U.S.C. 5701(c): 

Product 

Tax rate for each 50 papers* for removals during the following periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Cigarette papers up to 61⁄2′′ long .................................................................................. $ 0.0122 ............................. $ 0.0315 

Cigarette papers over 61⁄2′′ long .................................................................................... Use rates above, but count each 23⁄4 inches, or fraction 

thereof, of the length of each as one cigarette paper. 

* Tax rate for less than 50 papers is the same. The tax is not prorated. 

(72 Stat. 1414; 26 U.S.C. 5701) 

■ 11. Section 40.352 is revised to read 

as follows: 

§ 40.352 Cigarette tubes. 

Cigarette tubes are taxed at the 

following rates under 26 U.S.C. 5701(d): 

Product 

Tax rate for each 50 tubes* for removals during the 

years: 

2002 to March 31, 2009 April 1, 2009 and after 

Cigarette tubes up to 61⁄2’’ long ..................................................................................... $ 0.0244 ............................. $ 0.0630 

Cigarette tubes over 61⁄2’’ long ...................................................................................... Use rates above, but count each 23⁄4 inches, or fraction 

thereof, of the length of each as one cigarette tube. 

* Tax rate for less than 50 tubes is the same. The tax is not prorated. 

(72 Stat. 1414; 26 U.S.C. 5701) 

PART 41—IMPORTATION OF 

TOBACCO PRODUCTS AND 

CIGARETTE PAPERS AND TUBES 

■ 12. The authority citation for part 41 

continues to read as follows: 

Authority: 18 U.S.C. 2342; 26 U.S.C. 5701, 

5703, 5704, 5705, 5708, 5712, 5713, 5721– 

5723, 5741, 5754, 5761–5763, 6301, 6302, 

6313, 6404, 7101, 7212, 7342, 7606, 7651, 

7652, 7805; 31 U.S.C. 9301, 9303, 9304, 9306. 

■ 13. Section 41.30 is revised to read as 

follows: 

§ 41.30 Pipe tobacco and roll-your-own 

tobacco tax rates. 

Pipe tobacco and roll-your-own 

tobacco are taxed at the following rates 

under 26 U.S.C. 5701(f) and (g), 

respectively: 

Product 

Tax rate per pound* for removals during the following 

periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Pipe tobacco .................................................................................................................. $ 1.0969 ............................. $ 2.8311 

Roll-your-own tobacco ................................................................................................... $ 1.0969 ............................. $ 24.78 

* Prorate tax for fractions of a pound. 


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■ 14. Paragraph (a) of § 41.31 is revised 

to read as follows: 

§ 41.31 Cigar tax rates. 

(a) Cigars are taxed at the following 

rates under 26 U.S.C. 5701(a): 

Type and amount 

Tax rate for removals during the following periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Small cigars per thousand ............................................................................................. $1.828 ................................ $50.33 

Large cigars* 

• percentage of sale price ............................................................................................ 20.719% ............................. 52.750% 

• but not to exceed— .................................................................................................... $48.75 per thousand .......... $0.4026 per cigar. 

* For large cigars: Until March 31, 2009, the percentage tax rate applies when the sale price is $235.294 per thousand or less, and the flat tax 

rate applies when the sale price is more than $235.294 per thousand. On and after April 1, 2009, the percentage tax rate applies when the sale 

price is $763.222 or less per thousand cigars, and the flat tax rate applies when the sale price is more than $763.222 per thousand cigars. 

* * * * * 

■ 15. Section 41.32 is revised to read as 

follows: 

§ 41.32 Cigarette tax rates. 

Cigarettes are taxed at the following 

rates under 26 U.S.C. 5701(b): 

Product 

Tax rate per thousand for removals during the following 

periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Small cigarettes ............................................................................................................. $19.50 ................................ $50.33 

Large cigarettes up to 61⁄2′′ long ................................................................................... $40.95 ................................ $105.69 

Large cigarettes over 61⁄2′′ long .................................................................................... Taxed at the rate for small cigarettes, counting each 23⁄4

or fraction thereof of the length of each as one cigarette. 

■ 16. Section 41.33 is revised to read as 

follows: 

§ 41.33 Smokeless tobacco tax rates. 

Smokeless tobacco products are taxed 

at the following rates under 26 U.S.C. 

5701(e): 

Product 

Tax rate per pound* for removals during the following 

periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Snuff ............................................................................................................................... $0.585 ................................ $1.51 

Chewing tobacco ........................................................................................................... $0.195 ................................ $0.5033 

* Prorate tax for fractions of a pound. 

■ 17. Section 41.34 is revised to read as 

follows: 

§ 41.34 Cigarette papers. 

Cigarette papers are taxed at the 

following rates under 26 U.S.C. 5701(c): 

Product 

Tax rate for each 50 papers* for removals during the following periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Cigarette papers up to 61⁄2 long .................................................................................... $0.0122 .............................. $0.0315 

Cigarette papers over 61⁄2′′ long .................................................................................... Use rates above, but count each 23⁄4′′ or fraction thereof 

of the length of each as one cigarette paper. 

* Tax rate for less than 50 papers is the same. The tax is not prorated. 

■ 18. Section 41.35 is revised to read as 

follows: 

§ 41.35 Cigarette tubes. 

Cigarette tubes are taxed at the 

following rates under 26 U.S.C. 5701(d): 

Product 

Tax rate for each 50 tubes* for removals during the following periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Cigarette papers up to 61⁄2 long .................................................................................... $0.0244 .............................. $ 0.0630 


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Product 

Tax rate for each 50 tubes* for removals during the following periods: 

2002 to March 31, 2009 April 1, 2009 and after 

Cigarette papers over 61⁄2 long ..................................................................................... Use rates above, but count each 23⁄4 or fraction thereof of 

the length of each as one cigarette tube. 

* Tax rate for less than 50 tubes is the same. The tax is not prorated. 

■ 19. Section 41.81 is amended by 

revising paragraphs (c)(4)(ii) and 

(c)(4)(iii) to read as follows: 

§ 41.81 Taxpayment. 

* * * * * 

(c) * * * 

(4) * * * 

(ii) For large cigars with a sale price 

of not more than $235.294 per thousand 

before April 1, 2009, or a sale price of 

not more than $763.222 per thousand on 

and after April 1, 2009, the number and 

total sale price of such cigars; 

(iii) For large cigars with a sale price 

of more than $235.294 per thousand 

before April 1, 2009, or a sale price 

equal to or more than $763.222 per 

thousand on and after April 1, 2009, the 

number of cigars; 

* * * * * 

■ 20. Section 41.106 is amended by 

revising paragraphs (a)(5) and (a)(6) to 

read as follows: 

§ 41.106 Record of shipment by taxpayer. 

(a) * * * 

(5) The number and total sale price of 

large cigars having a sale price of not 

more than $235.294 per thousand before 

April 1, 2009, or a sale price of not more 

than $763.222 per thousand on and after 

April 1, 2009, to be shipped; 

(6) The number of large cigars having 

a sale price equal to or more than 

$235.294 per thousand before April 1, 

2009, or a sale price equal to or more 

than $763.222 per thousand on and after 

April 1, 2009, to be shipped; 

* * * * * 

■ 21. Section 41.110 is amended by 

revising paragraphs (e) and (f) to read as 

follows: 

§ 41.110 Record of tax computation and 

shipment by bonded manufacturer under 

deferred taxpayment. 

* * * * * 

(e) The number and total sale price of 

large cigars having a sale price of not 

more than $235.294 per thousand before 

April 1, 2009, or a sale price of not more 

than $763.222 per thousand on and after 

April 1, 2009, to be shipped; 

(f) The number of large cigars having 

a sale price equal to or more than 

$235.294 per thousand before April 1, 

2009, or a sale price equal to or more 

than $763.222 per thousand on and after 

April 1, 2009, to be shipped; 

* * * * * 

■ 22. Section 41.198 is revised to read 

as follows: 

§ 41.198 Investigation of applicant. 

Appropriate TTB officers may inquire 

or investigate to verify the information 

in connection with an application for a 

permit. The investigation will ascertain 

whether the applicant is eligible for a 

permit. A permit may be denied if the 

applicant (including, in the case of a 

corporation, any officer, director, or 

principal stockholder and, in the case of 

a partnership, a partner)— 

(a) Is, by reason of his business 

experience, financial standing, or trade 

connections or by reason of previous or 

current legal proceedings involving a 

felony violation of any other provision 

of Federal criminal law relating to 

tobacco products, processed tobacco, 

cigarette paper, or cigarette tubes, not 

likely to maintain operations in 

compliance with this chapter; 

(b) Has been convicted of a felony 

violation of any provision of Federal or 

State criminal law relating to tobacco 

products, processed tobacco, cigarette 

paper, or cigarette tubes; or 

(c) Has failed to disclose any material 

information required or made any 

material false statement in the 

application therefor. 

PART 44—EXPORTATION OF 

TOBACCO PRODUCTS AND 

CIGARETTE PAPERS AND TUBES, 

WITHOUT PAYMENT OF TAX, OR WITH 

DRAWBACK OF TAX 

■ 23. The authority citation for part 44 

continues to read as follows: 

Authority: 26 U.S.C. 5142, 5143, 5146, 

5701, 5703, 5704, 5708, 5711–13, 5721–5723, 

5731, 5741, 5751, 5754, 6066, 6065, 6151, 

6402, 6404, 6806, 7011, 7212, 7342, 7606, 

7805; 31 U.S.C. 9301, 9303, 9304, 9306. 

■ 24. Section 44.92 is revised to read as 

follows: 

§ 44.92 Investigation of applicant. 

(a) Investigation. The appropriate TTB 

officer shall promptly cause such 

inquiry or investigation to be made, as 

may be necessary, to verify the 

information furnished in connection 

with an application for permit and to 

ascertain whether the applicant is 

eligible for a permit. Any of the 

following conditions may be grounds for 

denial of a permit: 

(1) The premises on which it is 

proposed to conduct the business are 

not adequate to protect the revenue; or 

(2) The applicant (including, in the 

case of a corporation, any officer, 

director, or principal stockholder and, 

in the case of a partnership, a partner)— 

(A) Is, by reason of his business 

experience, financial standing, or trade 

connections or by reason of previous or 

current legal proceedings involving a 

felony violation of any other provision 

of Federal criminal law relating to 

tobacco products, processed tobacco, 

cigarette paper, or cigarette tubes, not 

likely to maintain operations in 

compliance with this chapter; 

(B) Has been convicted of a felony 

violation of any provision of Federal or 

State criminal law relating to tobacco 

products, processed tobacco, cigarette 

paper, or cigarette tubes; or 

(C) Has failed to disclose any material 

information required or made any 

material false statement in the 

application therefor. 

(b) TTB action. An appropriate TTB 

officer who has reason to believe that 

the applicant is not entitled to a permit 

shall promptly give the applicant notice 

of the contemplated disapproval of his 

application and opportunity for hearing 

thereon in accordance with part 71 of 

this chapter, which part (including the 

provisions relating to the recommended 

decision and to appeals) is made 

applicable to such proceedings. If, after 

such notice and opportunity for hearing, 

the appropriate TTB officer finds that 

the applicant is not entitled to a permit, 

he shall, by order stating the findings on 

which his decision is based, deny the 

permit. 

(72 Stat. 1421; 26 U.S.C. 5712) 

■ 25. Section 44.162 is revised to read 

as follows: 

§ 44.162 Suspension and revocation of 

permit. 

Where the appropriate TTB officer has 

reason to believe that an export 

warehouse proprietor has not in good 

faith complied with the provisions of 26 

U.S.C. chapter 52, and regulations 


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thereunder, or with any other provision 

of 26 U.S.C. with intent to defraud, or 

has violated any condition of his permit, 

or has failed to disclose any material 

information required or made any 

material false statement in the 

application for permit, or has failed to 

maintain his premises in such manner 

as to protect the revenue, or is, by 

reason of previous or current legal 

proceedings involving a felony violation 

of any other provision of Federal 

criminal law relating to tobacco 

products, processed tobacco, cigarette 

paper, or cigarette tubes, not likely to 

maintain operations in compliance with 

26 U.S.C. chapter 52, or has been 

convicted of a felony violation of any 

provision of Federal or State criminal 

law relating to tobacco products, 

processed tobacco, cigarette paper, or 

cigarette tubes, the appropriate TTB 

officer shall issue an order, stating the 

facts charged, citing such export 

warehouse proprietor to show cause 

why the permit should not be 

suspended or revoked after hearing 

thereon in accordance with part 71 of 

this chapter, which part (including the 

provisions relating to appeals) is made 

applicable to such proceedings. If, after 

hearing, the hearing examiner, or on 

appeal, the Administrator, finds that 

such person has not shown cause why 

the permit should not be suspended or 

revoked, such permit shall be 

suspended for such period as the 

appropriate TTB officer deems proper or 

shall be revoked. 

(72 Stat. 1421; 26 U.S.C. 5713) 

PART 46—MISCELLANEOUS 

REGULATIONS RELATING TO 

TOBACCO PRODUCTS AND 

CIGARETTE PAPERS AND TUBES 

■ 26. The authority citation for Part 46 

continues to read as follows: 

Authority: 18 U.S.C. 2341–2346, 26 U.S.C. 

5704, 5708, 5751, 5754, 5761–5763, 6001, 

6601, 6621, 6622, 7212, 7342, 7602, 7606, 

7805; 44 U.S.C. 3504(h), 49 U.S.C. 782, 

unless otherwise noted. 

■ 27. Section 46.75 is amended by 

removing the tables titled ‘‘Example 

using 1993–1999 Rates’’ and ‘‘Example 

using 2000–2001 Rates’’ and by adding 

a new example at the end: 

§ 46.75 Required information for claims. 

* * * * * 

EXAMPLE USING RATES FOR APRIL 1, 2009 AND AFTER

Quantity Article Rate of tax Amount 

20,000 ............................ Small cigars .......................................................... $50.33 per thousand ............................................ $1,006.60 

1,000 .............................. Large cigars—sale price $100/thousand ............. 52.75% of sale price ............................................ 52.75 

500 ................................. Large cigars—sale price $0.77 per cigar ............. $0.4026 per cigar ................................................. 201.30 

10,000 ............................ Small cigarettes .................................................... $50.33 per thousand ............................................ 503.30 

5,000 .............................. Large cigarettes .................................................... $105.69 per thousand .......................................... 528.45 

199,975 .......................... Cigarette papers ................................................... $0.0315 per 50 papers ......................................... 126.00 

1,000 .............................. Cigarette tubes ..................................................... $0.0630 per 50 tubes ........................................... 1.26 

100 lbs ........................... Chewing tobacco .................................................. $0.5033 per pound ............................................... 50.33 

200 lbs ........................... Snuff ..................................................................... $1.51 per pound ................................................... 302.00 

100 lbs ........................... Pipe tobacco ......................................................... $2.8311 per pound ............................................... 283.11 

300 lbs ........................... Roll-your-own tobacco .......................................... $24.78 per pound ................................................. 7,434.00 

Total claimed .......... ............................................................................... ............................................................................... 10,489.10 

■ 28. Subpart I is revised to read as 

follows: 

Subpart I—Floor Stocks Tax on Certain 

Tobacco Products, Cigarette Papers, and 

Cigarette Tubes Held for Sale on April 1, 

2009 

General 

Sec. 

46.191 Purpose of this subpart. 

46.192 Definitions used in this subpart. 

46.193 Persons liable for floor stocks tax. 

46.194 Persons not liable for floor stocks 

tax. 

46.195 Floor stocks requirements. 

Inventories 

46.201 General. 

46.202 Physical inventory requirements. 

46.203 Record (book) inventory 

requirements. 

46.204 Articles in transit. 

46.205 Guidelines to determine title to 

articles in transit. 

46.206 Articles in a foreign trade zone. 

46.207 Articles held in bond. 

46.208 Unmerchantable articles. 

46.209 Articles in vending machines. 

46.210 Articles marked ‘‘not for sale’’ or 

‘‘complimentary.’’ 

Tax Liability Calculation 

46.221 Floor stocks tax rates. 

46.222 Determination of amount of tax due. 

46.223 Tax credit. 

Filing Requirements 

46.231 Floor stocks tax return. 

46.232 Preparation of floor stocks tax 

return. 

46.233 Payment of floor stocks tax. 

46.234 Tax payment deadline. 

46.235 Filing requirements for multiple 

locations. 

46.236 Articles in a warehouse. 

46.237 Controlled group member. 

Records 

46.241 Required records. 

46.242 Period for maintaining records. 

46.243 Articles at multiple locations. 

46.244 Location of records. 

46.245 Errors in records. 

Claims 

46.251 Payment of tax required. 

46.252 Claim based on error on return. 

46.253 Destruction of articles by a 

Presidentially-declared major disaster. 

46.254 Additional reasons for filing a claim. 

Alternate Methods or Procedures 

46.261 Purpose of an alternate method or 

procedure. 

46.262 Application. 

46.263 Conditions for approval. 

46.264 Withdrawal of an approval. 

TTB Authorities 

46.270 [Reserved] 

46.271 Entry, examination and testimony. 

46.272 Issuance of summons. 

46.273 Refusing entry or examination. 

46.274 Penalties for failure to comply. 

Subpart I—Floor Stocks Tax on Certain 

Tobacco Products, Cigarette Papers, 

and Cigarette Tubes Held for Sale on 

April 1, 2009 

Authority: Section 701, Pub. L. 111–3, 

unless otherwise noted. 

General 

§ 46.191 Purpose of this subpart. 

The regulations in this subpart 

implement the floor stocks tax on 

certain tobacco products, cigarette 

papers, and cigarette tubes held for sale 

on April 1, 2009. 

§ 46.192 Definitions used in this subpart. 

As used in this subpart, the following 

terms have the meanings indicated 

unless the context in which they are 

used requires a different meaning or a 

different definition is prescribed for a 


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particular section or portion of this 

subpart. 

(a) Appropriate TTB officer. An 

officer or employee of the Alcohol and 

Tobacco Tax and Trade Bureau (TTB) 

authorized to perform any functions 

relating to the administration or 

enforcement of this part by TTB Order 

1135.46, Delegation of the 

Administrator’s Authorities in 27 CFR 

46, Miscellaneous Regulations Relating 

to Tobacco Products and Cigarette 

Papers and Tubes. 

(b) Articles subject to floor stocks tax. 

All Federally taxpaid or tax determined 

tobacco products (other than large cigars 

described in 26 U.S.C. 5701(a)(2)), 

cigarette papers, and cigarette tubes that 

are held for sale on April 1, 2009. 

(c) Cigarette paper. Paper, or any 

other material except tobacco, prepared 

for use as a cigarette wrapper. 

(d) Cigarette tube. Cigarette paper 

made into a hollow cylinder for use in 

making cigarettes. 

(e) Controlled group. A related group 

of dealers under common control. 

Controlled groups include: 

(1) Controlled group of corporations. 

The term ‘‘controlled group of 

corporations’’ has the meaning given to 

that term by 26 U.S.C. 1563(a) and the 

implementing regulations in 26 CFR 

1.1563–1 through 1.1563–4, except that 

the phrase ‘‘more than 50 percent’’ shall 

be substituted for the phrase ‘‘at least 80 

percent’’ each time it appears. 

Controlled groups of corporations 

include, but are not limited to: 

(i) Parent-subsidiary controlled 

groups as defined in 26 CFR 1.1563– 

1T(a)(2). 

(ii) Brother-sister controlled groups as 

defined in 26 CFR 1.1563–1T(a)(3). 

(iii) Combined groups as defined in 26 

CFR 1.1563–1T(a)(4). 

(2) Nonincorporated dealers under 

common control. A group of dealers is 

considered to be a controlled group 

when the group would qualify as a 

controlled group of corporations, except 

for the fact that one or more of the 

dealers is not incorporated. 

(f) Dealer. A person or other entity 

holding articles subject to floor stocks 

tax for sale on April 1, 2009, including 

manufacturers, importers, wholesalers, 

and retailers. 

(g) Floor stocks tax. A tax imposed on 

all Federally taxpaid or tax determined 

tobacco products (other than large cigars 

described in 26 U.S.C. 5701(a)(2)), 

cigarette papers, and cigarette tubes 

held for sale on April 1, 2009. The floor 

stocks tax is the difference between the 

previous excise tax rate and the new 

excise tax rate. 

(h) Foreign trade zone. A foreign trade 

zone established and operated pursuant 

to the Act of June 18, 1934, as amended, 

19 U.S.C. 81a. 

(i) Person. An individual, trust, estate, 

partnership, association, company, or 

corporation, any State, including the 

District of Columbia, or political 

subdivision thereof, or any agency or 

instrumentality of a State or political 

subdivision thereof. 

(j) Tobacco products. Cigars, 

cigarettes, snuff, chewing tobacco, pipe 

tobacco, and roll-your-own tobacco as 

described in 26 U.S.C. 5702(a), (b), 

(m)(2), (m)(3), (n) and (o), respectively. 

§ 46.193 Persons liable for floor stocks 

tax. 

A dealer who holds for sale any 

articles subject to floor stocks tax on 

April 1, 2009, is liable for floor stocks 

tax. See §§ 46.204 and 46.205 regarding 

articles subject to floor stocks tax that 

are in transit on April 1, 2009 and 

§ 46.206 regarding articles subject to 

floor stocks tax that are held in a foreign 

trade zone on April 1, 2009. 

§ 46.194 Persons not liable for floor stocks 

tax. 

A person who does not meet the 

definition of a dealer is not liable for the 

floor stocks tax under this subpart. 

§ 46.195 Floor stocks requirements. 

(a) Take inventory. The dealer must 

establish the quantity of articles subject 

to the floor stocks tax held for sale on 

April 1, 2009. The dealer may take a 

physical inventory or may use a record 

(book) inventory, as specified in 

§ 46.202 or § 46.203. 

(b) Compute tax. The dealer must 

compute the amount of tax for the 

articles held for sale on April 1, 2009. 

Refer to the table in § 46.222. The dealer 

may apply the tax credit as provided in 

§ 46.223. 

(c) File tax return and pay tax. After 

computing the floor stocks tax, the 

dealer must file a return even if no tax 

is due. See § 46.233 for payment 

methods if tax is due. 

(d) Maintain records. The dealer must 

maintain all records used to determine 

the quantity of articles subject to floor 

stocks tax and the quantity of articles 

held for sale on April 1, 2009 that are 

not subject to floor stocks tax. The 

dealer must also maintain records of all 

computations used to determine the 

amount of tax owed. Refer to § 46.241. 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

Inventories 

§ 46.201 General. 

(a) Date. The dealer must take an 

inventory to establish the quantities of 

articles subject to the floor stocks tax 

held for sale on April 1, 2009. The 

dealer must take the physical inventory 

or record (book) inventory not earlier 

than March 26, 2009 and not later than 

April 10, 2009. 

(b) Reconciliation. If the dealer takes 

a physical inventory on any day other 

than April 1, 2009, the resulting records 

must be reconciled to reflect the actual 

quantity of articles held at 12:01 a.m. on 

April 1, 2009. These records must 

include all supporting records of receipt 

and disposition. 

(c) Method. The dealer may take a 

physical inventory in accordance with 

§ 46.202 or a record (book) inventory in 

accordance with § 46.203. The following 

table lists the taxable articles and the 

method to use for each to determine 

quantities: 

Article Inventory method 

Small cigarettes ................................................... Count the number of cigarettes. 

Large cigarettes 61⁄2′′ or less in length ............... Count the number of large cigarettes. 

Large cigarettes more than 61⁄2′′ in length .......... Keep a separate count for each size of large cigarette. Count each 23⁄4′′, or fraction thereof, 

as one small cigarette. 

Small Cigars ........................................................ Count the number of small cigars. 

Snuff .................................................................... Count the number of packages at each weight, noting the weight in pounds and ounces. Convert the ounces to pounds. 

Chewing tobacco ................................................. Count the number of packages at each weight, noting the weight in pounds and ounces. Convert the ounces to pounds. 

Pipe tobacco ....................................................... Count the number of packages at each weight, noting the weight in pounds and ounces. Convert the ounces to pounds. 

Roll-your-own tobacco ......................................... Count the number of packages at each weight, noting the weight in pounds and ounces. Convert the ounces to pounds. 

Cigarette papers 61⁄2′′ or less in length .............. Count the number of cigarette papers, divide by 50, and round up if there is any remainder. 


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Article Inventory method 

Cigarette papers more than 61⁄2′′ in length ......... Count the number for each size of cigarette paper. Count each 23⁄4′′, or fraction thereof, as 

new cigarette paper. Divide adjusted total by 50 and round up if there is any remainder. 

Cigarette tubes 61⁄2′′ or less in length ................. Count the number of cigarette tubes, divide by 50, and round up if there is any remainder. 

Cigarette tubes more than 61⁄2′′ in length ........... Count the number for each size of cigarette tube. Count each 23⁄4′′, or fraction thereof, as one 

cigarette tube. Divide adjusted total by 50 and round up if there is any remainder. 

§ 46.202 Physical inventory requirements. 

The dealer’s physical inventory must 

result in a written record of: 

(a) The quantity and type of each 

article subject to floor stocks tax 

recorded in sufficient detail to 

determine the tax rate as stated in 

§ 46.222. See the table in § 46.201(c) for 

the information required for each type 

of article; 

(b) The date and time the inventory 

was taken; 

(c) The name of the individual(s) 

conducting the inventory and the name 

of the dealer for whom the inventory 

was taken; and 

(d) The location where the inventory 

was taken (street address, city and 

State). 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

§ 46.203 Record (book) inventory 

requirements. 

(a) The dealer may use a record (book) 

inventory if the dealer has source 

records that show: 

(1) The quantities of receipts and 

dispositions of all articles subject to 

floor stocks tax; 

(2) The types and quantities of articles 

actually on hand as if a physical 

inventory had taken place on April 1, 

2009. See the table in § 46.201(c) for the 

information required for each type of 

article; 

(3) The name and address of the 

consignor and consignee. For over the 

counter sales by retail dealers, the 

consignee name and address is not 

required; 

(4) The date of receipt or disposition 

of the articles; and 

(5) The brand name of each product. 

(b) If the dealer does not take the 

inventory as of the close of business on 

the last business day before April 1, 

2009, the records must be reconciled as 

provided in § 46.201(b). 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

§ 46.204 Articles in transit. 

The dealer must include articles 

subject to floor stocks tax that are in 

transit in the inventory if the dealer 

holds title to those articles. If the dealer 

has transferred title to the article, the 

dealer must document the title transfer 

in writing. For example, the dealer may 

mark the bill of lading with a written 

statement that indicates the time and 

place of the title transfer. 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

§ 46.205 Guidelines to determine title to 

articles in transit. 

The dealer may use the following 

guidelines to establish who holds title to 

articles in transit. 

(a) If State law mandates the change 

in title, then no agreement or contract 

between seller and buyer can alter it. 

(b) In the absence of State law 

governing the change of title between 

seller and buyer, the Uniform 

Commercial Code allows the seller and 

buyer to agree when title passes. 

(c) If there is no State law or 

agreement between the seller and buyer, 

the Uniform Commercial Code states 

that title transfer depends on how the 

seller ships the articles. 

(1) If the shipment is free on board 

(F.O.B.) destination, the title transfer 

occurs when the seller completes the 

physical delivery of the articles. 

(2) If the shipment is free on board 

(F.O.B.) shipping point, the title transfer 

occurs at the time and place of 

shipment, which is generally by 

common carrier. 

§ 46.206 Articles in a foreign trade zone. 

If articles subject to floor stocks tax 

are stored in a foreign trade zone 

established under the Foreign Trade 

Zone Act (the Act of June 18, 1934, 48 

Stat. 998, 19 U.S.C. 81a et seq.), the 

dealer is liable for the tax and must take 

an inventory in accordance with 

§ 46.207 or when either of the following 

conditions apply: 

(a) Internal revenue taxes have been 

determined or customs duties 

liquidated, with respect to the articles 

pursuant to the first proviso of section 

3(a) of the Foreign Trade Zone Act; or 

(b) Articles are held by a customs 

officer pursuant to the second proviso of 

section 3(a) of the Foreign Trade Zone 

Act. 

§ 46.207 Articles held in bond. 

If the dealer is a manufacturer or an 

export warehouse proprietor and holds 

articles in TTB bond on April 1, 2009, 

the floor stocks tax does not apply to 

those articles. Likewise, if the dealer 

holds articles in a customs bonded 

warehouse on which tax has not been 

paid or determined, the floor stocks tax 

does not apply on those articles. 

However, if the dealer on April 1, 2009, 

holds articles in a customs bonded 

warehouse or foreign trade zone on 

which tax has been paid or determined 

pursuant to 26 U.S.C. 5703(b)(2)(B), the 

floor stocks tax applies to those articles. 

§ 46.208 Unmerchantable articles. 

Articles that the dealer holds for 

return to a supplier because of some 

defect are not subject to the floor stocks 

tax. However, the dealer must segregate 

any such unmerchantable articles and 

include them in a separate section of the 

inventory record. The dealer cannot 

include as unmerchantable any items 

that may be held because of poor market 

demand or to reduce the dealer’s 

inventory. If, for any reason, the tobacco 

products or cigarette papers or tubes 

that were determined to be 

unmerchantable are not subsequently 

returned or destroyed, the dealer must 

file an additional floor stocks tax return 

and pay tax on such products plus any 

applicable penalties and interest. 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

§ 46.209 Articles in vending machines. 

There is no exemption for articles in 

vending machines. They are subject to 

the floor stocks tax and must be 

included in the dealer’s inventory 

record. 

§ 46.210 Articles marked ‘‘not for sale’’ or 

‘‘complimentary’’. 

Articles marked ‘‘not for sale’’ or 

‘‘complimentary’’ that are part of a sale 

(for example, buy two packs and get one 

pack free) are subject to the floor stocks 

tax and must be included in the 

physical or record (book) inventory as 

provided in §§ 46.202 or § 46.203. 

Tax Liability Calculation 

§ 46.221 Floor stocks tax rates. 


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Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Rules and Regulations 14489 

Product Floor stocks tax rate 

Small cigars ..................................................................................................................................... $48.502 per thousand. 

Small cigarettes ............................................................................................................................... 30.83 per thousand. 

Large cigarettes 6c inch or less in length ....................................................................................... 64.74 per thousand. 

Large cigarettes more than 6c inch in length .................................................................................. 30.83 per thousand units of length. 

Snuff ................................................................................................................................................ 0.925 per pound. 

Chewing tobacco ............................................................................................................................. 0.3083 per pound. 

Pipe tobacco ................................................................................................................................... 1.7342 per pound. 

Roll-your-own .................................................................................................................................. 23.6831 per pound. 

Cigarette papers .............................................................................................................................. 0.0193 per 50 papers or fraction thereof 

Cigarette tubes ................................................................................................................................ 0.0386 per 50 tubes or fraction thereof. 

§ 46.222 Determination of amount of tax 

due. 

After the dealer has taken the 

inventory, the dealer must convert the 

inventory quantities to taxable units 

using the table below. For tobacco 

products, round the quantities to two 

decimal places. The dealer must then 

apply the applicable tax rate for each 

type of taxable article using the table in 

§ 46.221 to determine the amount of tax 

due. 

Product Computation 

Small cigars weighing not more than 3 pounds thousand ....................... Divide number of cigars by 1,000 and multiply by the small cigar tax 

rate. 

Small cigarettes weighing not more than 3 pounds thousand ................. Divide number of cigarettes by 1,000 and multiply by the small cigarette tax rate. 

Large cigarettes weighing more than 3 pounds thousand, measuring 

61⁄2′′ or less in length.

Divide number of cigarettes by 1,000 and multiply by the large cigarette tax rate. 

Large cigarettes weighing more than 3 pounds thousand, measuring 

more than 61⁄2′′ in length.

Mathematically adjust the number of large cigarettes using the instructions below.* Divide the adjusted number of large cigarettes by 1,000 

and multiply by the small cigarette tax rate. 

Snuff ......................................................................................................... Multiply the total in pounds by the snuff tax rate. 

Chewing tobacco ...................................................................................... Multiply the total in pounds by the chewing tobacco tax rate. 

Pipe tobacco ............................................................................................. Multiply the total in pounds by the pipe tobacco tax rate. 

Roll-your-own ............................................................................................ Multiply the total in pounds by the roll-your-own tax rate. 

Cigarette papers 61⁄2′′ or less in length .................................................... Divide the number of cigarette papers by 50, add 1 if there is a remainder, and multiply that number by the cigarette paper tax rate. 

Cigarette papers more than 61⁄2′′ in length .............................................. Mathematically adjust the number of cigarette papers using the instructions below.* Divide the adjusted number of cigarette papers by 50, 

add 1 if there is a remainder, and multiply that number by the cigarette paper tax rate. 

Cigarette tubes 61⁄2′′ or less in length ...................................................... Divide the number of cigarette tubes by 50, add 1 if there is a remainder, and multiply that number by the cigarette tube tax rate. 

Cigarette tubes more than 61⁄2′′ in length ................................................ Mathematically adjust the number of cigarette tubes using the instructions below.* Divide the adjusted number of cigarette tubes by 50, 

add 1 if there is a remainder, and multiply that number by the cigarette tube tax rate. 

*Large cigarettes, cigarette papers, and cigarette tubes more than 61⁄2 inch in length are counted as multiple units. Each 23⁄4 inch or fraction of 

the length is counted as a separate taxable unit. For each different length of product in this category, divide the length by 23⁄4 inch and add 1 to 

the result if there is a remainder. Multiply the number of cigarettes, cigarette papers, or tubes of that length by the resulting number. 

§ 46.223 Tax credit. 

The dealer is allowed a credit of up 

to $500 against the total floor stocks tax. 

However, controlled groups are eligible 

for only one credit for the entire group. 

The credit may be divided equally 

among the members or apportioned in 

any other manner agreeable to the 

members. 

Filing Requirements 

§ 46.231 Floor stocks tax return. 

Form 5000.28T09, 2009 Floor Stocks 

Tax Return—Tobacco Products and 

Cigarette Papers and Tubes, is available 

for printing through the TTB Web site 

(http://www.ttb.gov) or by mailing a 

request to the Alcohol and Tobacco Tax 

and Trade Bureau, National Revenue 

Center, 550 Main Street, Suite 8002, 

Cincinnati, OH 45202–5215. 

§ 46.232 Preparation of floor stocks tax 

return. 

The dealer must complete and file the 

floor stocks tax return in accordance 

with the instructions for the form. 

§ 46.233 Payment of floor stocks tax. 

(a) Electronic funds transfer. If the 

dealer pays any other excise taxes 

collected by TTB by electronic funds 

transfer, then the dealer must also send 

the payment for the floor stocks tax by 

an electronic funds transfer. Other 

dealers may voluntarily elect to pay the 

floor stocks tax by electronic funds 

transfer. Electronic funds transfers of 

floor stocks tax must be received on or 

before July 31, 2009. 

(b) Check or money order. Dealers not 

paying floor stocks tax by electronic 

fund transfer must pay by a check or 

money order sent with Form 

5000.28T09. 

§ 46.234 Tax payment deadline. 

Section 701 of Public Law 111–3 

specifies a tax payment deadline of 

August 1, 2009. However, section 

5703(b)(2)(E) of the Internal Revenue 

Code requires that when a due date falls 

on a Saturday, Sunday or a legal 

holiday, the preceding day that is not a 

Saturday, Sunday or legal holiday will 

be the due date. Therefore, the floor 

stocks tax is due on July 31, 2009, since 

August 1, 2009, falls on a Saturday. 


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14490 Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Rules and Regulations 

§ 46.235 Filing requirements for multiple 

locations. 

The dealer may file a consolidated 

return if all locations or places of 

business have the same employer 

identification number. The dealer also 

has the option of filing a separate return 

for each place of business or location. 

§ 46.236 Articles in a warehouse. 

(a) Articles warehoused at one or 

more locations must be reported on the 

tax return representing the location 

where the articles will be offered for 

sale. 

(b) Articles offered for sale at several 

locations must be reported on a tax 

return filed by one or more of the 

locations. The articles can be reported 

by a single location or apportioned 

among several locations. 

§ 46.237 Controlled group member. 

If the dealer is a member of a 

controlled group, but has its own 

employer identification number, the 

dealer must file a separate floor stocks 

tax return. The dealer may take the tax 

credit referred to in § 46.223 if it is 

apportioned to the dealer as a member 

of the controlled group. 

Records 

§ 46.241 Required records. 

The dealer must maintain: 

(a) Inventory records; 

(b) Tax computation records; 

(c) Names, addresses and employer 

identification numbers of all controlled 

group members, if applicable; 

(d) A copy of the tax return, if the 

dealer filed one; 

(e) A list of locations covered by the 

tax return; and 

(f) A copy of any alternate method or 

procedure approval issued under 

§ 46.263. 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

§ 46.242 Period for maintaining records. 

The dealer must maintain the 

required records for a period of three 

years from the due date of the tax return 

or the date the return was filed, 

whichever is later. However, the 

appropriate TTB officer may require, in 

writing, that the dealer keep these 

records for an additional period of not 

more than 3 years. 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

§ 46.243 Articles at multiple locations. 

The dealer must maintain a list of all 

places where the dealer holds articles 

subject to the floor stocks tax. This list 

must include: 

(a) Address; 

(b) Name of the proprietor (if 

different); 

(c) The employer identification 

number (if different); and 

(d) Types and quantities of articles 

held at each location. 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

§ 46.244 Location of records. 

The dealer must keep the inventory 

records at the principal place of 

business. All records must be made 

available to an appropriate TTB officer 

upon demand. 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

§ 46.245 Errors in records. 

If the inventory records or tax 

computation records contain an error 

that resulted in an overpayment of tax, 

the dealer may file a claim for refund. 

If the inventory or tax computation 

records contain an error that resulted in 

an underpayment of tax, the dealer must 

file an additional tax return on which 

the dealer shows and pays the 

additional tax, interest and any 

applicable penalties. 

(Approved by the Office of Management and 

Budget under control number 1513–0129) 

Claims 

§ 46.251 Payment of tax required. 

Before the dealer can file a claim for 

refund, the dealer must have paid the 

floor stocks tax and subsequently 

determined that there was an 

overpayment of the tax. 

§ 46.252 Claim based on error on return. 

If the dealer overpaid tax due to an 

error on the return, the dealer may file 

a claim for refund. The claim must be 

filed within 3 years from the date the 

tax return was filed or 2 years from the 

time the tax was paid, whichever is 

later. The dealer’s claim must be filed 

on TTB Form 2635 (5620.8). The claim 

must include detailed and sufficient 

evidence explaining why the dealer 

believes the tax was overpaid. The claim 

and supporting documentation must be 

mailed or delivered to the address 

shown on the form. 

(Approved by the Office of Management and 

Budget under control number 1513–0030) 

§ 46.253 Destruction of articles by a 

Presidentially-declared major disaster. 

After the dealer has paid the floor 

stocks tax, the dealer may file a claim 

for refund of tax on articles lost, 

rendered unmarketable, or condemned 

because of a Presidentially-declared 

major disaster. Subpart C of this part 

prescribes the time, evidence, and 

procedures for filing such a claim. 

§ 46.254 Additional reasons for filing a 

claim. 

(a) Manufacturer. Subparts I and K of 

part 40 of this chapter prescribe the 

times, reasons and procedures for filing 

other claims for refunds. 

(b) Export warehouse proprietor. 

Subpart G of part 44 of this chapter 

prescribes the time, evidence, and 

procedures for filing other claims for 

refunds. 

(c) Exported taxpaid. If taxpaid 

articles are shipped from the United 

States, the dealer may file a claim for 

drawback of taxes under subpart K of 

part 44 of this chapter. 

(d) Importer. An importer may follow 

the procedures for filing a claim as set 

forth in subpart I of part 41 of this 

chapter. 

Alternate Methods or Procedures 

§ 46.261 Purpose of an alternate method 

or procedure. 

For purposes of this subpart, an 

alternate method or procedure is a 

different way of meeting a requirement 

imposed by this subpart. An alternate 

method or procedure must be approved 

in writing by TTB. 

§ 46.262 Application. 

The dealer seeking approval of an 

alternate method or procedure under 

this subpart must apply in writing to the 

National Revenue Center, 550 Main 

Street, Room 8002, Cincinnati, Ohio 

45202–5215. The dealer must describe 

the alternate method or procedure and 

reasons the dealer wishes to use it. The 

dealer cannot use the alternate method 

until the dealer receives written 

approval from the appropriate TTB 

officer. 

§ 46.263 Conditions for approval. 

The alternate method or procedure 

may be approved if it meets all of the 

following conditions: 

(a) There is good cause for its use; 

(b) It is consistent with the purpose 

and effect intended by the prescribed 

method or procedure; 

(c) It affords equivalent security to the 

revenue; 

(d) It is not contrary to any provision 

of law; 

(e) It will not result in an increase in 

cost to the Government; 

(f) It will not hinder the effective 

administration of this subpart such as 

delaying timely payment of taxes; and 

(g) It is not a method or procedure 

that relates to the payment or collection 

of tax. 


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Federal Register / Vol. 74, No. 60 / Tuesday, March 31, 2009 / Rules and Regulations 14491 

§ 46.264 Withdrawal of an approval. 

The approval will be withdrawn if 

revenue is jeopardized or administration 

of this subpart is hindered. The 

appropriate TTB officer will give the 

dealer a written notice of the 

withdrawal. 

TTB Authorities 

§ 46.270 [Reserved] 

§ 46.271 Entry, examination and 

testimony. 

Appropriate TTB officers, in 

performing official duties, may enter 

any premises to examine articles subject 

to floor stocks tax. They may enter the 

premises during the day or may also 

enter at night if the premises are open. 

Appropriate TTB officers may audit and 

examine all articles, inventory records, 

books, papers, or other resource data for 

the purpose of ascertaining, 

determining, or collecting floor stocks 

tax. They may take testimony, under 

oath, of any person when inquiring as 

to proper payment of floor stocks taxes. 

§ 46.272 Issuance of summons. 

Appropriate TTB officers can issue 

summonses when there is no referral to 

the Justice Department under the 

authority stated in § 70.22 of this 

chapter. The summons will state a place 

and time for such items or person to 

appear. TTB will issue a summons to 

require: 

(a) Any books of account or other data 

pertaining to liability for floor stocks 

tax; 

(b) Any person liable for the floor 

stocks tax or having possession of books 

of account or other data; and 

(c) Any other appropriate person in 

connection with the books or tax 

liability. 

§ 46.273 Refusing entry or examination. 

If the dealer or another person in 

charge of the premises refuses to admit 

any appropriate TTB officer or prevents 

any appropriate TTB officer from 

examining the records or articles, the 

dealer may be liable for the penalties 

described in 26 U.S.C. 7342 or 7212. 

§ 46.274 Penalties for failure to comply. 

If the dealer fails to follow the 

regulations set forth in this subpart, TTB 

may apply applicable civil and criminal 

penalties under the Internal Revenue 

Code of 1986. For example, failure to 

file and failure to pay penalties may be 

assessed against the dealer if the dealer 

does not timely file the tax return or 

timely pay the taxes due. In addition, 

interest under 26 U.S.C. 6621 accrues 

for any underpayment of tax and on all 

assessed penalties until paid. 

PART 71—RULES OF PRACTICE IN 

PERMIT PROCEEDINGS 

■ 29. The authority citation for part 71 

is revised to read as follows: 

Authority: 26 U.S.C. 5271, 5181, 5712, 

5713, 7805, 27 U.S.C. 204. 

■ 30. Section 71.46 is revised to read as 

follows: 

§ 71.46 Suspension and revocation of 

tobacco permits. 

Whenever the appropriate TTB officer 

has reason to believe that any person 

has not in good faith complied with any 

of the provisions of 26 U.S.C. chapter 52 

or regulations issued thereunder, or has 

not complied with any provision of 26 

U.S.C. which involves intent to defraud, 

or has violated any of the conditions of 

his permit, or has failed to disclose any 

material information required, or has 

made any materially false statement, in 

the application for his permit, or has 

failed to maintain his premises in such 

manner as to protect the revenue, or is, 

by reason of previous or current legal 

proceedings involving a felony violation 

of any other provision of Federal 

criminal law relating to tobacco 

products, processed tobacco, cigarette 

paper, or cigarette tubes, not likely to 

maintain operations in compliance with 

26 U.S.C. chapter 52, or has been 

convicted of a felony violation of any 

provision of Federal or State criminal 

law relating to tobacco products, 

processed tobacco, cigarette paper, or 

cigarette tubes, the appropriate TTB 

officer shall issue a citation for the 

revocation or suspension of such 

permit. 

(72 Stat 1421, as amended; 26 U.S.C. 5713) 

■ 31. Section 71.49b is revised to read 

as follows: 

§ 71.49b Denial of application for tobacco 

permit. 

The appropriate TTB officer may 

issue a citation for the contemplated 

disapproval of an application for a 

tobacco permit provided for in 26 U.S.C. 

5713, if the appropriate TTB officer on 

examination of the application has 

reason to believe— 

(a) The premises on which it is 

proposed to conduct the business are 

not adequate to protect the revenue; 

(b) The applicant for a permit does 

not meet the minimum manufacturing 

and activity requirements in § 40.61 of 

this chapter; or 

(c) The applicant (including, in the 

case of a corporation, any officer, 

administrator, or principal stockholder 

and, in the case of a partnership, a 

partner) is, by reason of his business 

experience, financial standing, or trade 

connections, or by reason of previous or 

current legal proceedings involving a 

felony violation of any other provision 

of Federal criminal law relating to 

tobacco products, processed tobacco, 

cigarette paper, or cigarette tubes, not 

likely to maintain operations in 

compliance with 26 U.S.C. chapter 52, 

or has been convicted of a felony 

violation of any provision of Federal or 

State criminal law relating to tobacco 

products, processed tobacco, cigarette 

paper, or cigarette tubes, or has failed to 

disclose any material information 

required or made any material false 

statement in the application. 

(72 Stat. 1421, as amended; 26 U.S.C. 5712) 

Signed: March 10, 2009. 

John J. Manfreda, 

Administrator. 

Approved: March 12, 2009. 

Timothy E. Skud, 

Deputy Assistant Secretary (Tax, Trade, and 

Tariff Policy). 

[FR Doc. E9–7077 Filed 3–27–09; 11:15 am] 

BILLING CODE 4810–31–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 3 

RIN 2900–AN04 

Posttraumatic Stress Disorder 

AGENCY: Department of Veterans Affairs. 

ACTION: Final rule. 

SUMMARY: This document affirms an 

amendment to the Department of 

Veterans Affairs (VA) adjudication 

regulations regarding service connection 

for posttraumatic stress disorder (PTSD) 

that eliminated the requirement of 

evidence corroborating occurrence of 

the claimed in-service stressor in claims 

in which PTSD is diagnosed in service. 

This amendment is necessary to 

facilitate proof of service connection in 

such claims. By this amendment, we 

intend to more quickly adjudicate 

claims for service connection for PTSD 

for these veterans. 

DATES: The interim final rule became 

effective on October 29, 2008, and is 

applicable to claims pending before VA 

on the effective date of that rule, as well 

as to claims filed after that date. 

FOR FURTHER INFORMATION CONTACT: 

Maya Ferrandino, Regulations Staff 

(211D), Compensation and Pension 

Service, Veterans Benefits 

Administration, Department of Veterans 

Affairs, 810 Vermont Avenue, NW., 

Washington, DC 20420, (727) 319–5847. 

(This is not a toll-free number.) 


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