I 

110TH CONGRESS 

2D SESSION H. R. 5689 

To amend the Internal Revenue Code of 1986 and title 18, United States 

Code, to deter the smuggling of tobacco products into the United States, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 3, 2008 

Mr. DOGGETT (for himself, Mr. ABERCROMBIE, Mr. ACKERMAN, Mr. ALLEN, 

Mr. ANDREWS, Mr. ARCURI, Ms. BALDWIN, Mr. BECERRA, Mr. BERMAN, 

Mr. BLUMENAUER, Mr. BRALEY of Iowa, Ms. GINNY BROWN-WAITE of 

Florida, Mrs. CAPPS, Mr. CAPUANO, Ms. CLARKE, Mr. CUMMINGS, Mr. 

DAVIS of Illinois, Mrs. DAVIS of California, Mr. DEFAZIO, Ms. 

DEGETTE, Mr. DELAHUNT, Ms. DELAURO, Mr. ELLISON, Mr. EMANUEL, Ms. ESHOO, Mr. FARR, Mr. FILNER, Mr. FRANK of Massachusetts, 

Mr. GENE GREEN of Texas, Mr. GRIJALVA, Mr. HARE, Mr. HINCHEY, 

Mr. HINOJOSA, Ms. HIRONO, Mr. HOLT, Mr. HONDA, Ms. HOOLEY, Mr. 

ISRAEL, Mr. JACKSON of Illinois, Ms. JACKSON-LEE of Texas, Ms. 

EDDIE BERNICE JOHNSON of Texas, Ms. KAPTUR, Mr. KENNEDY, Mr. 

KIND, Mr. KUCINICH, Mr. LANGEVIN, Ms. LEE, Mr. LEVIN, Mr. LEWIS

of Georgia, Mr. LIPINSKI, Mr. LOEBSACK, Ms. ZOE LOFGREN of California, Mrs. LOWEY, Mr. LYNCH, Mrs. MALONEY of New York, Mr. MARKEY, Mr. MATHESON, Ms. MATSUI, Mrs. MCCARTHY of New York, Mr. 

MCDERMOTT, Mr. MCGOVERN, Mr. MCNULTY, Mr. MEEKS of New York, 

Mr. GEORGE MILLER of California, Mr. NADLER, Mrs. NAPOLITANO, Mr. 

NEAL of Massachusetts, Mr. OBERSTAR, Mr. OLVER, Mr. PALLONE, Mr. 

PASCRELL, Mr. PAYNE, Mr. PLATTS, Ms. RICHARDSON, Mr. ROTHMAN, 

Ms. ROYBAL-ALLARD, Mr. RUSH, Mr. RYAN of Ohio, Ms. LINDA T. 

SA ́NCHEZ of California, Ms. LORETTA SANCHEZ of California, Mr. SARBANES, Ms. SCHAKOWSKY, Mr. SERRANO, Mr. SESTAK, Mr. SHERMAN, 

Ms. SLAUGHTER, Mr. SMITH of Washington, Mr. SNYDER, Ms. SOLIS, 

Mr. STARK, Ms. SUTTON, Mrs. TAUSCHER, Mr. THOMPSON of California, 

Mr. TIERNEY, Ms. TSONGAS, Mr. UDALL of New Mexico, Mr. VAN

HOLLEN, Mr. WALZ of Minnesota, Ms. WATERS, Ms. WATSON, Mr. WAXMAN, Mr. WEINER, Mr. WELCH of Vermont, Ms. WOOLSEY, and Mr. WU) 

introduced the following bill; which was referred to the Committee on 

Ways and Means, and in addition to the Committee on the Judiciary, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 


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A BILL 

To amend the Internal Revenue Code of 1986 and title 

18, United States Code, to deter the smuggling of tobacco products into the United States, and for other 

purposes. 

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 ‘‘Smuggled Tobacco Prevention Act of 2008’’. 

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—AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 

Sec. 101. Amendment of 1986 code. 

Sec. 102. Improved marking and labeling; export bonds. 

Sec. 103. Wholesalers required to have permit. 

Sec. 104. Conditions of permit. 

Sec. 105. Records to be maintained. 

Sec. 106. Reports. 

Sec. 107. Fraudulent offenses. 

Sec. 108. Civil penalties. 

Sec. 109. Definitions. 

Sec. 110. Effective date. 

TITLE II—AMENDMENTS RELATING TO CONTRABAND CIGARETTE 

TRAFFICKING 

Sec. 201. Expanding scope of penal provisions relating to trafficking in contraband tobacco products. 

Sec. 202. Creating right of action for State tobacco tax administrator for failure to report. 

TITLE III—WHISTLEBLOWER PROTECTION PROVISIONS 

Sec. 301. Whistleblower protection. 


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1 TITLE I—AMENDMENTS TO IN2 TERNAL REVENUE CODE OF 

3 1986 

4 SEC. 101. AMENDMENT OF 1986 CODE. 

5 Except as otherwise expressly provided, whenever in 

6 this title an amendment or repeal is expressed in terms 

7 of an amendment to, or repeal of, a section or other provi8 sion, the reference shall be considered to be made to a 

9 section or other provision of the Internal Revenue Code 

10 of 1986. 

11 SEC. 102. IMPROVED MARKING AND LABELING; EXPORT 

12 BONDS. 

13 (a) IN GENERAL.— 

14 (1) Section 5723 (relating to marks, labels, and 

15 notices) is amended— 

16 (A) by striking ‘‘, if any,’’ in subsection 

17 (b), 

18 (B) by adding at the end of subsection (b) 

19 the following: ‘‘Such marks, labels, and notices 

20 shall include marks and notices relating to the 

21 following: 

22 ‘‘(1) IDENTIFICATION.—Each person who is a 

23 manufacturer or importer of tobacco products shall 

24 (in accordance with regulations prescribed by the 

25 Secretary) legibly print a unique serial number on 


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1 all packages of tobacco products manufactured or 

2 imported by such person for sale or distribution. 

3 Such serial number shall be designed to enable the 

4 Secretary to identify the manufacturer of the prod5 uct (and, in the case of importation, the manufac6 turer and importer of the product), the location and 

7 date of manufacture (and, if imported, the location 

8 and date of importation), and any other information 

9 the Secretary determines necessary or appropriate 

10 for the proper administration of the chapter. The 

11 Secretary shall determine the size and location of 

12 the serial number. 

13 ‘‘(2) MARKING REQUIREMENTS FOR EX14 PORTS.—Each package of a tobacco product that is 

15 exported, or sold for export, shall be marked for ex16 port from the United States and shall be marked as 

17 to the foreign country which is to be the final des18 tination of such product. Such marking shall be visi19 ble and prominent and shall be in English and in the 

20 primary language of such foreign country. The Sec21 retary shall promulgate regulations to determine the 

22 size and location of the mark. 

23 ‘‘(3) ADDITIONAL METHODS OF IDENTIFICA24 TION OR MARKING.—The Secretary may by regula25 tion authorize such additional secure methods of 


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1 identification or marking as may be, taking into ac2 count available technology, necessary or appropriate 

3 to carry out the purposes of this subsection.’’, and 

4 (C) by adding at the end the following new 

5 subsection: 

6 ‘‘(f) ADDITIONAL MARKS.— 

7 ‘‘(1) IN GENERAL.—Not later than 180 days 

8 after the date of the enactment of the Smuggled To9 bacco Prevention Act of 2008, the Secretary shall 

10 prescribe a system of tobacco tax stamps, meter im11 pressions, or other Federal tax-payment indicia to be 

12 affixed by manufacturers and importers of tobacco 

13 products on all tobacco products subject to tax 

14 under this chapter. 

15 ‘‘(2) SYSTEM SPECIFICATIONS.— 

16 ‘‘(A) The Secretary shall design such sys17 tem to coordinate and avoid interference with 

18 State and local tax stamps or markings, facili19 tate collection of the tax under this chapter, im20 pede contraband tobacco trafficking, minimize 

21 counterfeit stamping or meter impressions, 

22 allow for more effective tracking and tracing of 

23 tobacco products, facilitate the enforcement of 

24 related Federal laws, and utilize such available 


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1 technology as may promote the purposes of this 

2 chapter. 

3 ‘‘(B) The Secretary shall prescribe the 

4 method and manner in which such stamps, 

5 meter impressions, or indicia are to be distrib6 uted, purchased, and affixed to tobacco product 

7 packages, and may provide for the cancellation 

8 of such stamps, meter impressions, or indicia. 

9 ‘‘(C) Any such tax stamp, meter impres10 sion, or indicia must provide the following infor11 mation: 

12 ‘‘(i) The denominated value of the 

13 stamp, meter impression, or indicia. 

14 ‘‘(ii) A unique serial number or track15 ing code. 

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

17 person purchasing (and, if different, of the 

18 person affixing) the stamp, meter impres19 sion, or indicia. 

20 ‘‘(iv) The date the stamp, meter im21 pression, or indicia was purchased and 

22 when it was affixed. 

23 ‘‘(v) The name and address of the 

24 person purchasing or otherwise receiving 

25 the tobacco product from the person who 


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1 affixes the tax stamp, meter impression, or 

2 indicia, and the date of such purchase or 

3 transfer. 

4 ‘‘(vi) Such other information as the 

5 Secretary may prescribe to carry out the 

6 purposes of this chapter. 

7 ‘‘(D) The information described in sub8 paragraph (C) shall, to the extent practicable, 

9 be cryptographically encrypted and readable by 

10 a portable scanning device (or similar device) at 

11 the time and place of inspection, and shall oth12 erwise be accessible remotely by such a device 

13 at such time and place. 

14 ‘‘(E) The Secretary may establish different 

15 stamps, meter impressions, or indicia for the 

16 same type of tobacco product to correspond to 

17 different jurisdictions of manufacture, distribu18 tion, or sale. 

19 ‘‘(F) The Secretary may by regulation au20 thorize such additional secure methods of iden21 tification or marking as may be, taking into ac22 count available technology, necessary or appro23 priate to carry out the purposes of this sub24 section. 


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1 ‘‘(G) No tobacco product may be sold, dis2 tributed, or otherwise delivered to any consumer 

3 in the United States unless the tax stamp, 

4 meter impression, or indicia required under reg5 ulations prescribed pursuant to this section is 

6 affixed to the tobacco product packaging in ac7 cordance with such regulations.’’. 

8 (b) SALES ON INDIAN RESERVATIONS; PACKAGE DE9 FINED.—Section 5723, as amended by subsection (a), is 

10 amended by adding at the end the following new sub11 sections: 

12 ‘‘(g) SALES ON INDIAN RESERVATIONS.—Each pack13 age of a tobacco product that is sold on an Indian reserva14 tion (as defined in section 403(9) of the Indian Child Pro15 tection and Family Violence Prevention Act (25 U.S.C. 

16 3202(9)) shall be visibly and prominently labeled as such. 

17 The Secretary, in consultation with the Secretary of the 

18 Interior, shall promulgate regulations with respect to such 

19 labeling, including requirements for the size and location 

20 of the label. 

21 ‘‘(h) DEFINITION OF PACKAGE.—For purposes of 

22 this section, the term ‘package’ means the innermost 

23 sealed container visible from the outside of the individual 

24 container irrespective of the material from which such con25 tainer is made, in which a tobacco product is placed by 


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1 the manufacturer and in which such tobacco product is 

2 offered for sale to a member of the general public.’’. 

3 (c) REQUIREMENTS FOR TRACKING OF TOBACCO

4 PRODUCTS.— 

5 (1) IN GENERAL.—Subchapter B of chapter 52 

6 is amended by adding at the end the following new 

7 section: 

8 ‘‘SEC. 5714. EXPORT BONDS. 

9 ‘‘(a) POSTING OF BOND.— 

10 ‘‘(1) IN GENERAL.—It shall be unlawful for any 

11 person to export any tobacco product unless such 

12 person— 

13 ‘‘(A) has posted with the Secretary a to14 bacco product bond in accordance with this sec15 tion for such product that contains a disclosure 

16 of the country to which such product will be ex17 ported; and 

18 ‘‘(B) receives a written statement from the 

19 recipient of the tobacco products involved that 

20 such person— 

21 ‘‘(i) will not knowingly and willfully 

22 violate or cause to be violated any law or 

23 regulation of such country, the United 

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1 bia, or any possession of the United States 

2 with respect to such products; and 

3 ‘‘(ii) has never been convicted of any 

4 offense with respect to tobacco products. 

5 ‘‘(2) REGULATIONS.—The Secretary shall pro6 mulgate regulations that determine the frequency 

7 and the amount of each bond that must be posted 

8 under paragraph (1), but in no case shall such 

9 amount be less than an amount equal to the tax im10 posed under this chapter on the value of the ship11 ment of the products involved if such products were 

12 consumed within the United States. 

13 ‘‘(3) EXPORT.—For purposes of this subsection, 

14 property shall be treated as exported if it is shipped 

15 to a foreign country, Puerto Rico, the Virgin Is16 lands, or a possession of the United States, or for 

17 consumption beyond the jurisdiction of the internal 

18 revenue laws of the United States. 

19 ‘‘(b) RETURN OF BOND.—The Secretary shall return 

20 a bond posted under subsection (a)— 

21 ‘‘(1) upon a determination by the Secretary 

22 (based on documentation provided by the person who 

23 posted the bond in accordance with regulations pro24 mulgated by the Secretary) that the items to which 


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1 the bond applies have been received in the country 

2 of final destination as designated in the bond, or 

3 ‘‘(2) under such other circumstance as the Sec4 retary may specify which is consistent with the pur5 poses of this chapter.’’. 

6 (2) CLERICAL AMENDMENT.—The table of sec7 tions for such subchapter B is amended by adding 

8 at the end the following new item: 

‘‘Sec. 5714. Export bonds.’’. 

9 SEC. 103. WHOLESALERS REQUIRED TO HAVE PERMIT. 

10 Section 5712 (relating to application for permit) is 

11 amended by inserting ‘‘, wholesaler,’’ after ‘‘manufac12 turer’’. 

13 SEC. 104. CONDITIONS OF PERMIT. 

14 Subsection (a) of section 5713 (relating to issuance 

15 of permit) is amended to read as follows: 

16 ‘‘(a) ISSUANCE.— 

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

18 in business as a manufacturer, wholesaler, or im19 porter of tobacco products or as an export ware20 house proprietor without a permit to engage in such 

21 business. Such permit shall be issued in such form 

22 and in such manner as the Secretary shall by regula23 tion prescribe, to every person properly qualified 

24 under sections 5711 and 5712. A new permit may 


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1 be required at such other time as the Secretary shall 

2 by regulation prescribe. 

3 ‘‘(2) CONDITIONS.—The issuance of a permit 

4 under this section shall be conditioned upon the 

5 compliance with the requirements of— 

6 ‘‘(A) this chapter, 

7 ‘‘(B) chapter 114 of title 18, United States 

8 Code, 

9 ‘‘(C) the Act of October 19, 1949 (15 

10 U.S.C. 375 et seq.), 

11 ‘‘(D) any regulations issued pursuant to 

12 such statutes, and 

13 ‘‘(E) any other federal laws or regulations 

14 relating to the taxation, manufacture, distribu15 tion, marketing, sale, or transportation of to16 bacco products.’’. 

17 SEC. 105. RECORDS TO BE MAINTAINED. 

18 Section 5741 (relating to records to be maintained) 

19 is amended— 

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

21 ‘‘Every manufacturer’’, 

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

23 ‘‘every importer,’’, 

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

25 ‘‘records concerning the chain of custody of the toVerDate Aug 31 2005 22:13 Apr 04, 2008 Jkt 059200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H5689.IH H5689

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1 bacco products (including the foreign country of 

2 final destination for packages marked for export) 

3 and such other records’’, and 

4 (4) by adding at the end the following new sub5 section: 

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

7 of receipt of tobacco products, and such records shall be 

8 available to the Secretary for inspection and audit. An or9 dinary commercial record or invoice shall satisfy the re10 quirements of this subsection if such record shows the date 

11 of receipt, from whom tobacco products were received, and 

12 the quantity of tobacco products received. The preceding 

13 provisions of this subsection shall not be construed to limit 

14 or preclude other recordkeeping requirements imposed on 

15 any retailer.’’. 

16 SEC. 106. REPORTS. 

17 Section 5722 (relating to reports) is amended— 

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

19 ‘‘Every manufacturer’’, and 

20 (2) by adding at the end the following new sub21 section: 

22 ‘‘(b) REPORTS BY EXPORT WAREHOUSE PROPRI23 ETORS.— 

24 ‘‘(1) IN GENERAL.—Prior to exportation of to25 bacco products from the United States, the export 


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1 warehouse proprietor shall submit a report (in such 

2 manner and form as the Secretary may by regula3 tion prescribe) to enable the Secretary to identify 

4 the shipment and assure that it reaches its intended 

5 destination. 

6 ‘‘(2) AGREEMENTS WITH FOREIGN GOVERN7 MENTS.—Notwithstanding section 6103 of this title, 

8 the Secretary is authorized to enter into agreements 

9 with foreign governments to exchange or share infor10 mation contained in reports received from export 

11 warehouse proprietors of tobacco products if— 

12 ‘‘(A) the Secretary believes that such 

13 agreement will assist in— 

14 ‘‘(i) ensuring compliance with the pro15 visions of this chapter or regulations pro16 mulgated thereunder, or 

17 ‘‘(ii) preventing or detecting violations 

18 of the provisions of this chapter or regula19 tions promulgated thereunder, and 

20 ‘‘(B) the Secretary obtains assurances 

21 from such government that the information will 

22 be held in confidence and used only for the pur23 poses specified in clauses (i) and (ii) of sub24 paragraph (A). 


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1 No information may be exchanged or shared with 

2 any government that has violated such assurances.’’. 

3 SEC. 107. FRAUDULENT OFFENSES. 

4 (a) IN GENERAL.—Subsection (a) of section 5762 

5 (relating to fraudulent offenses) is amended by striking 

6 paragraph (1) and redesignating paragraphs (2) through 

7 (6) as paragraphs (1) through (5), respectively. 

8 (b) OFFENSES RELATING TO DISTRIBUTION OF TO9 BACCO PRODUCTS.—Section 5762 is amended— 

10 (1) by redesignating subsection (b) as sub11 section (c), 

12 (2) in subsection (c) (as so redesignated), by in13 serting ‘‘or (b)’’ after ‘‘(a)’’, and 

14 (3) by inserting after subsection (a) the fol15 lowing new subsection: 

16 ‘‘(b) OFFENSES RELATING TO DISTRIBUTION OF TO17 BACCO PRODUCTS.—It shall be unlawful— 

18 ‘‘(1) for any person to engage in the business 

19 as a manufacturer or importer of tobacco products 

20 or cigarette papers and tubes, or to engage in the 

21 business as a wholesaler or an export warehouse pro22 prietor, without filing the bond and obtaining the 

23 permit where required by this chapter or regulations 

24 thereunder; 


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1 ‘‘(2) for a manufacturer, importer, or whole2 saler permitted under this chapter intentionally to 

3 ship, transport, deliver, or receive any tobacco prod4 ucts from or to any person other than a person per5 mitted under this chapter or a retailer, except a per6 mitted importer may receive foreign tobacco prod7 ucts from a foreign manufacturer or a foreign dis8 tributor that have not previously entered the United 

9 States; 

10 ‘‘(3) for any person (other than the original 

11 manufacturer of such tobacco products or an export 

12 warehouse proprietor authorized to receive any to13 bacco products that have previously been exported 

14 and returned to the United States) to receive any to15 bacco products that have previously been exported 

16 and returned to the United States; 

17 ‘‘(4) for any export warehouse proprietor inten18 tionally to ship, transport, sell, or deliver for sale 

19 any tobacco products to any person other than the 

20 original manufacturer of such tobacco products, an21 other export warehouse proprietor, or a foreign pur22 chaser; 

23 ‘‘(5) for any person (other than a manufacturer 

24 or an export warehouse proprietor permitted under 

25 this chapter) intentionally to ship, transport, receive, 


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1 or possess, for purposes of resale, any tobacco prod2 uct in packages marked pursuant to regulations 

3 issued under section 5723, other than for direct re4 turn to a manufacturer for repacking or for re-ex5 portation or to an export warehouse proprietor for 

6 re-exportation; 

7 ‘‘(6) for any manufacturer, importer, export 

8 warehouse proprietor, or wholesaler permitted under 

9 this chapter to make intentionally any false entry in, 

10 to fail willfully to make appropriate entry in, or to 

11 fail willfully to maintain properly any record or re12 port that such person is required to keep as required 

13 by this chapter or the regulations promulgated 

14 thereunder; 

15 ‘‘(7) for any person to alter, mutilate, destroy, 

16 obliterate, or remove any mark or label required 

17 under this chapter upon a tobacco product held for 

18 sale, except pursuant to regulations of the Secretary 

19 authorizing relabeling for purposes of compliance 

20 with the requirements of this section or of State law, 

21 or to create, possess, or apply on any tobacco prod22 uct or its packaging any counterfeit versions of any 

23 such marks or labels; and 

24 ‘‘(8) for any person to sell at retail more than 

25 5,000 cigarettes in a single transaction or in a series 


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1 of related transactions, or, in the case of other to2 bacco products, an equivalent quantity as deter3 mined by regulation. 

4 Any person violating any of the provisions of this sub5 section shall, upon conviction, be fined as provided in sec6 tion 3571 of title 18, United States Code, or imprisoned 

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

8 (c) INTENTIONALLY DEFINED.—Section 5762 is 

9 amended by adding at the end the following: 

10 ‘‘(d) DEFINITION OF INTENTIONALLY.—For pur11 poses of this section and section 5761, the term ‘inten12 tionally’ means doing an act, or omitting to do an act, 

13 deliberately, and not due to accident, inadvertence, or mis14 take, regardless of whether the person knew that the act 

15 or omission constituted an offense.’’. 

16 SEC. 108. CIVIL PENALTIES. 

17 Subsection (a) of section 5761 (relating to civil pen18 alties) is amended— 

19 (1) by striking ‘‘willfully’’ and inserting ‘‘inten20 tionally’’, and 

21 (2) by striking ‘‘$1,000’’ and inserting 

22 ‘‘$10,000’’. 

23 SEC. 109. DEFINITIONS. 

24 (a) EXPORT WAREHOUSE PROPRIETOR.—Subsection 

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1 house proprietor) is amended by inserting before the pe2 riod the following: ‘‘or any person engaged in the business 

3 of exporting tobacco products from the United States for 

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

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

6 in any single transaction more than 30 packages of ciga7 rettes, or its equivalent for other tobacco products as the 

8 Secretary shall by regulation prescribe, shall be deemed 

9 an export warehouse proprietor under this chapter’’. 

10 (b) RETAILER; WHOLESALER.—Section 5702 is 

11 amended by adding at the end the following new sub12 sections: 

13 ‘‘(p) RETAILER.—The term ‘retailer’ means any deal14 er who sells, or offers for sale, any tobacco product at re15 tail. The term ‘retailer’ includes any duty free store that 

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

17 any single transaction 30 or fewer packages of cigarettes 

18 or its equivalent for other tobacco products. 

19 ‘‘(q) WHOLESALER.—The term ‘wholesaler’ means 

20 any person engaged in the business of purchasing tobacco 

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

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

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


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1 SEC. 110. EFFECTIVE DATE. 

2 (a) IN GENERAL.—Except as provided in subsection 

3 (b), the amendments made by this title shall take effect 

4 on January 1, 2009. 

5 (b) ADDITIONAL TOBACCO MARK SYSTEM.—The 

6 amendments made by subparagraph (C) of section 

7 102(a)(1) of this Act shall take effect on the date of the 

8 enactment of this Act. 

9 TITLE II—AMENDMENTS RELAT10 ING TO CONTRABAND CIGA11 RETTE TRAFFICKING 

12 SEC. 201. EXPANDING SCOPE OF PENAL PROVISIONS RE13 LATING TO TRAFFICKING IN CONTRABAND 

14 TOBACCO PRODUCTS. 

15 (a) PROVISIONS RELATING TO DEFINITION OF TO16 BACCO PRODUCTS.— 

17 (1) IN GENERAL.—Paragraphs (1) and (2) of 

18 section 2341 of title 18, United States Code, are 

19 amended to read as follows: 

20 ‘‘(1) the term ‘tobacco product’ has the mean21 ing given to such term by section 5702 of the Inter22 nal Revenue Code of 1986; 

23 ‘‘(2) the term ‘contraband tobacco product’ 

24 means any tobacco product if— 


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1 ‘‘(A)(i) in the case of cigarettes, such ciga2 rettes are in a quantity in excess of 2,000 ciga3 rettes; or 

4 ‘‘(ii) in the case of a tobacco product other 

5 than a cigarette, such product is in a quantity 

6 in excess of the equivalent of 2,000 cigarettes 

7 as determined under rules made by the Attor8 ney General; 

9 ‘‘(B) such tobacco product is not marked 

10 with a Federal tax stamp, meter impression, or 

11 other Federal tax-payment indicia as required 

12 by law; 

13 ‘‘(C) such tobacco product is marked with 

14 a counterfeit, stolen, or unauthorized Federal 

15 or State tax stamp, meter impression, or other 

16 tax-payment indicia; 

17 ‘‘(D) such tobacco product is a counterfeit 

18 tobacco product, including tobacco products 

19 having any counterfeit markings, labels, or 

20 packaging or bearing any unauthorized trade21 marks; 

22 ‘‘(E) such tobacco product has been 

23 brought into the United States illegally; 

24 ‘‘(F)(i) if the State or other jurisdiction in 

25 which such tobacco product is found requires a 


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1 stamp, impression, or other indication to be 

2 placed on packages or other containers of prod3 uct to evidence payment of tobacco taxes, such 

4 tobacco product bears no evidence of such pay5 ment; or 

6 ‘‘(ii) if such State or other such jurisdic7 tion has no such requirement, applicable to8 bacco taxes are found to be not paid; and 

9 ‘‘(G) such tobacco product is in the posses10 sion of any person other than— 

11 ‘‘(i) a person holding a permit issued 

12 pursuant to chapter 52 of the Internal 

13 Revenue Code of 1986 as a manufacturer 

14 or importer of tobacco products or as an 

15 export warehouse proprietor, or a person 

16 operating a customs bonded warehouse 

17 pursuant to section 311 or 555 of the Tar18 iff Act of 1930 (19 U.S.C. 1311 or 1555) 

19 or an agent of such person; 

20 ‘‘(ii) a common or contract carrier 

21 transporting the tobacco product involved 

22 under a proper bill of lading or freight bill 

23 which states the quantity, source, and des24 tination of such product; 

25 ‘‘(iii) a person— 


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1 ‘‘(I) who is licensed or otherwise 

2 authorized by the State where the to3 bacco product is found to account for 

4 and pay tobacco taxes imposed by 

5 such State; and 

6 ‘‘(II) who has complied with the 

7 accounting and payment requirements 

8 relating to such license or authoriza9 tion with respect to the tobacco prod10 uct involved; or 

11 ‘‘(iv) an officer, employee, or other 

12 agent of the United States or a State, or 

13 any department, agency, or instrumentality 

14 of the United States or a State (including 

15 any political subdivision of a State) having 

16 possession of such tobacco product in con17 nection with the performance of official du18 ties;’’. 

19 (2) CIGARETTES.—Section 2341 of title 18, 

20 United States Code, is amended by adding at the 

21 end the following new paragraph: 

22 ‘‘(8) the term ‘cigarette’ has the meaning given 

23 such term by section 5702 of the Internal Revenue 

24 Code of 1986.’’. 


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1 (3) CONFORMING AMENDMENTS.—Section 2341 

2 of title 18, United States Code, as amended by para3 graph (2), is amended— 

4 (A) by inserting ‘‘and’’ at the end of para5 graph (5); 

6 (B) by striking paragraphs (6) and (7); 

7 and 

8 (C) by redesignating paragraph (8) as 

9 paragraph (6). 

10 (b) PROVISIONS RELATING TO UNLAWFUL ACTS.— 

11 Section 2342 of title 18, United States Code, is amended 

12 to read as follows: 

13 ‘‘§ 2342. Unlawful acts 

14 ‘‘(a) It shall be unlawful for any person knowingly 

15 to ship, transport, receive, possess, sell, distribute, or pur16 chase contraband tobacco products. 

17 ‘‘(b) It shall be unlawful for any person knowingly— 

18 ‘‘(1) to make any false statement or representa19 tion with respect to the information required by this 

20 chapter to be kept in the records or reports of any 

21 person who ships, sells, or distributes (in a single 

22 transaction or in a series of related transactions) 

23 any quantity of tobacco product in excess of the 

24 quantity specified in or pursuant to section 

25 2341(2)(A) with respect to such product; or 


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1 ‘‘(2) to fail to maintain records or reports, alter 

2 or obliterate required markings, or interfere with 

3 any inspection, required under this chapter, with re4 spect to such quantity of tobacco product. 

5 ‘‘(c) It shall be unlawful for any person knowingly 

6 to transport tobacco products under a false bill of lading 

7 or without any bill of lading.’’. 

8 (c) PROVISIONS RELATING TO RECORDKEEPING, RE9 PORTING, AND INSPECTION REQUIREMENTS.— 

10 (1) IN GENERAL.—Section 2343 of title 18, 

11 United States Code, is amended— 

12 (A) in subsection (a), by striking ‘‘any 

13 quantity of cigarettes in excess of 10,000, or’’ 

14 and all that follows through ‘‘cans or packages, 

15 in a single transaction’’ and inserting ‘‘(in a 

16 single transaction or in a series of related 

17 transactions) any quantity of tobacco product in 

18 excess of the quantity specified in or pursuant 

19 to section 2341(2)(A) with respect to such 

20 product’’; 

21 (B) in subsection (b), by striking ‘‘any 

22 quantity in excess of 10,000 cigarettes, or’’ and 

23 all that follows through ‘‘smokeless tobacco, or 

24 their equivalent’’ and inserting ‘‘any quantity of 

25 tobacco product in excess of the quantity speciVerDate Aug 31 2005 22:13 Apr 04, 2008 Jkt 059200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H5689.IH H5689

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1 fied in or pursuant to section 2341(2)(A) with 

2 respect to such product’’; and 

3 (C) in subsection (c), by striking ‘‘any 

4 quantity of cigarettes in excess of 10,000 in a 

5 single transaction’’ and inserting ‘‘(in a single 

6 transaction or in a series of related trans7 actions) any quantity of tobacco product in ex8 cess of the quantity specified in or pursuant to 

9 section 2341(2)(A) with respect to such prod10 uct’’. 

11 (2) CONFORMING AMENDMENTS.—Section 2343 

12 of title 18, United States Code, as amended by para13 graph (1) of this subsection, is amended— 

14 (A) in paragraph (2) of subsection (e), by 

15 striking ‘‘are’’ and inserting ‘‘is’’; and 

16 (B) by striking— 

17 (i) ‘‘cigarettes’’ each place it appears 

18 in subsections (a) and (c); 

19 (ii) ‘‘cigarettes and cans or packages 

20 of smokeless tobacco’’ each place it ap21 pears in subsection (b); and 

22 (iii) ‘‘cigarettes or smokeless tobacco’’ 

23 each place it appears in subsection (e); 

24 and inserting ‘‘tobacco product’’. 


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1 (d) PROVISIONS RELATING TO MACHINES USED TO

2 MANUFACTURE OR PACKAGE CIGARETTES OR OTHER TO3 BACCO PRODUCTS.—Chapter 114 of title 18, United State 

4 Code, is amended by inserting after section 2343 the fol5 lowing: 

6 ‘‘§ 2343A. Machines used to manufacture or package 

7 cigarettes or other tobacco products 

8 ‘‘(a) Any machine used to manufacture or package 

9 tobacco products shall be sold, leased, or delivered only 

10 to persons lawfully engaged in the sale, lease, or delivery 

11 of such machines or lawfully engaged in the manufacture 

12 of tobacco products, and that have all permits or licenses 

13 required to engage in such activities by the laws of the 

14 country and other jurisdictions where the person is lo15 cated. 

16 ‘‘(b) Any machine used to apply or affix tax stamps, 

17 meter impressions, or other tax-payment indicia to pack18 ages of tobacco products shall be sold, leased, or delivered 

19 only to persons lawfully engaged in the sale, lease, or deliv20 ery of such machines or lawfully engaged in the applica21 tion of such stamps, meter impressions or other tax-pay22 ment indicia onto tobacco product packages, and that have 

23 all permits or licenses required to engage in such activities 

24 by the laws of the country and other jurisdictions where 

25 the person is located. 


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1 ‘‘(c) No machine used in the manufacture or pack2 aging of tobacco products or in the application of tax 

3 stamps, meter impressions, or other tax-payment indicia 

4 to packages of tobacco products shall knowingly be manu5 factured for or be sold, leased, delivered, directly or indi6 rectly, or otherwise made available to any person engaged 

7 in the manufacture, distribution or sale of counterfeit or 

8 contraband tobacco products or counterfeit tax stamps, 

9 meter impressions, or other tax-payment indicia. 

10 ‘‘(d) Any machine used to manufacture or package 

11 tobacco products or to apply or affix tax stamps, meter 

12 impressions, or other tax-payment indicia to packages of 

13 tobacco products that is no longer being used or offered 

14 for that purpose shall be made irreparably inoperable for 

15 those purposes before being disposed of or put to any 

16 other use. This paragraph shall not apply to any such ma17 chines being kept solely for display or for historical pur18 poses. 

19 ‘‘(e) Any person manufacturing, selling, leasing, de20 livering, or disposing of a machine used to manufacture 

21 or package tobacco products or to apply or affix tax 

22 stamps, meter impressions, or other tax-payment indicia 

23 to packages of tobacco products shall maintain and keep 

24 records relating to any transfers of deliveries of the ma25 chine, including the name, address, and other contact inVerDate Aug 31 2005 22:13 Apr 04, 2008 Jkt 059200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\H5689.IH H5689

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1 formation of any person ordering, buying, leasing, or re2 ceiving delivery of the machine. Such reports shall be 

3 made available to the Secretary and other federal and 

4 state government law enforcement officials for inspection 

5 and audit upon request. An ordinary commercial record 

6 or invoice shall satisfy the requirements of this subsection 

7 if such record describes the transaction and the related 

8 machine and provides the date of the transaction and the 

9 name and contact information of all persons parties to the 

10 transaction or acting as agents for those parties in regard 

11 to the transaction. 

12 ‘‘(f) This section shall not apply to machines meant 

13 and expected for use only by individual consumers of to14 bacco products for personal use.’’. 

15 (e) PROVISIONS RELATING TO PENALTIES.—Section 

16 2344 of title 18, United States Code, is amended— 

17 (1) in subsection (a), by inserting ‘‘or sub18 section (a), (b), or (c) of section 2343A’’ after ‘‘sec19 tion 2342(a)’’, and 

20 (2) in subsection (b), by striking ‘‘section 

21 2342(b)’’ and inserting ‘‘subsection (b) or (c) of sec22 tion 2342 or subsection (d) or (e) of section 

23 2343A’’. 


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1 (f) PROVISIONS RELATING TO EFFECT ON STATE

2 AND LOCAL LAW.—Section 2345 of title 18, United States 

3 Code, is amended— 

4 (1) by striking ‘‘cigarette tax laws’’ each place 

5 it appears and inserting ‘‘tobacco product tax laws’’; 

6 and 

7 (2) by striking ‘‘cigarettes or smokeless to8 bacco’’ and inserting ‘‘tobacco products’’. 

9 (g) CLERICAL AMENDMENTS.—(1) The heading for 

10 chapter 114 of title 18, United States Code, is amended 

11 to read as follows: 

12 ‘‘CHAPTER 114—TRAFFICKING IN 

13 CONTRABAND TOBACCO PRODUCTS’’. 

14 (2) The table of chapters at the beginning of part 

15 I of title 18, United States Code, is amended by striking 

16 the item relating to section 114 and inserting the following 

17 new item: 

‘‘114. Trafficking in contraband tobacco products ............... 2341’’. 

18 (3) The table of sections for chapter 114 of title 18, 

19 United States Code, is amended by inserting after the 

20 item relating to section 2343 the following new item: 

‘‘2343A. Machines used to manufacture or package cigarettes or other tobacco 

products.’’. 


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1 SEC. 202. CREATING RIGHT OF ACTION FOR STATE TO2 BACCO TAX ADMINISTRATOR FOR FAILURE 

3 TO REPORT. 

4 (a) IN GENERAL.—(1) Section 4 of the Act of Octo5 ber 19, 1949 (15 U.S.C. 378) is amended by adding at 

6 the end the following: ‘‘A State tobacco tax administrator 

7 may commence a civil action to obtain appropriate relief 

8 with respect to a violation of this Act.’’. 

9 (2) Section 1 of such Act is amended by striking 

10 paragraph (2) and inserting following new paragraph: 

11 ‘‘(2) The term ‘tobacco product’ has the mean12 ing given to such term by section 5702 of the Inter13 nal Revenue Code of 1986.’’. 

14 (b) CONFORMING AMENDMENT.—Such Act is further 

15 amended by striking ‘‘cigarette’’ and ‘‘cigarettes’’ each 

16 place either appears and inserting ‘‘tobacco product’’ and 

17 ‘‘tobacco products’’, respectively. 

18 TITLE III—WHISTLEBLOWER 

19 PROTECTION PROVISIONS 

20 SEC. 301. WHISTLEBLOWER PROTECTION. 

21 (a) IN GENERAL.—Chapter 73 of title 18, United 

22 States Code, is amended by inserting after section 1514A 

23 the following: 


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1 ‘‘§ 1514B. Civil action to protect against retaliation in 

2 contraband tobacco cases 

3 ‘‘(a) WHISTLEBLOWER PROTECTION FOR CONTRA4 BAND TOBACCO.—No person may discharge, demote, sus5 pend, threaten, harass, or in any other manner discrimi6 nate against an employee in the terms and conditions of 

7 employment because of any lawful act done by the em8 ployee— 

9 ‘‘(1) to provide information, cause information 

10 to be provided, or otherwise assist in an investiga11 tion regarding any conduct which the employee rea12 sonably believes constitutes a violation of section 

13 2342 or any other provision of Federal law relating 

14 to contraband tobacco, when the information or as15 sistance is provided to or the investigation is con16 ducted by— 

17 ‘‘(A) a Federal regulatory or law enforce18 ment agency; 

19 ‘‘(B) any Member of Congress or any com20 mittee of Congress; or 

21 ‘‘(C) a person with supervisory authority 

22 over the employee (or such other person work23 ing for the employer who has the authority to 

24 investigate, discover, or terminate misconduct); 

25 or 


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1 ‘‘(2) to file, cause to be filed, testify, participate 

2 in, or otherwise assist in a proceeding filed or about 

3 to be filed (with any knowledge of the employer) re4 lating to an alleged violation of section 2342, or any 

5 provision of Federal law relating to contraband to6 bacco. 

7 ‘‘(b) ENFORCEMENT ACTION.— 

8 ‘‘(1) IN GENERAL.—A person who alleges dis9 charge or other discrimination by any person in vio10 lation of subsection (a) may seek relief under sub11 section (c), by— 

12 ‘‘(A) filing a complaint with the Secretary 

13 of Labor; or 

14 ‘‘(B) if the Secretary has not issued a final 

15 decision within 180 days of the filing of the 

16 complaint and there is no showing that such 

17 delay is due to the bad faith of the claimant, 

18 bringing an action at law or equity for de novo 

19 review in the appropriate district court of the 

20 United States, which shall have jurisdiction 

21 over such an action without regard to the 

22 amount in controversy. 

23 ‘‘(2) PROCEDURE.— 

24 ‘‘(A) IN GENERAL.—An action under para25 graph (1)(A) shall be governed under the rules 


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1 and procedures set forth in section 42121(b) of 

2 title 49, United States Code. 

3 ‘‘(B) EXCEPTION.—Notification made 

4 under section 42121(b)(1) of title 49, United 

5 States Code, shall be made to the person named 

6 in the complaint and to the employer. 

7 ‘‘(C) BURDENS OF PROOF.—An action 

8 brought under paragraph (1)(B) shall be gov9 erned by the legal burdens of proof set forth in 

10 section 42121(b) of title 49, United States 

11 Code. 

12 ‘‘(D) STATUTE OF LIMITATIONS.—An ac13 tion under paragraph (1) shall be commenced 

14 not later than 90 days after the date on which 

15 the violation occurs. 

16 ‘‘(c) REMEDIES.— 

17 ‘‘(1) IN GENERAL.—An employee prevailing in 

18 any action under subsection (b)(1) shall be entitled 

19 to all relief necessary to make the employee whole. 

20 ‘‘(2) COMPENSATORY DAMAGES.—Relief for any 

21 action under paragraph (1) shall include— 

22 ‘‘(A) reinstatement with the same seniority 

23 status that the employee would have had, but 

24 for the discrimination; 


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1 ‘‘(B) the amount of back pay, with inter2 est; and 

3 ‘‘(C) compensation for any special damages 

4 sustained as a result of the discrimination, in5 cluding litigation costs, expert witness fees, and 

6 reasonable attorney fees. 

7 ‘‘(d) RIGHTS RETAINED BY EMPLOYEE.—Nothing in 

8 this section shall be deemed to diminish the rights, privi9 leges, or remedies of any employee under any Federal or 

10 State law, or under any collective bargaining agreement.’’. 

11 (b) CLERICAL AMENDMENT.—The table of sections 

12 at the beginning of chapter 73 of title 18, United States 

13 Code, is amended by inserting after the item relating to 

14 section 1514A the following new item: 

‘‘1514B. Civil action to protect against retaliation in contraband tobacco cases’’. 

Æ 


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