II 

116TH CONGRESS 

1ST SESSION S. 2517 

To amend the Internal Revenue Code of 1986 to provide tax rate parity 

among all tobacco products, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 19, 2019 

Mr. DURBIN (for himself, Mr. BROWN, Mr. MARKEY, Mr. BLUMENTHAL, Mr. 

REED, Ms. HIRONO, Mr. WYDEN, Mrs. MURRAY, and Mr. MERKLEY) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

tax rate parity among all tobacco products, 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. 

4 This Act may be cited as the ‘‘Tobacco Tax Equity 

5 Act of 2019’’. 


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1 SEC. 2. INCREASING EXCISE TAXES ON CIGARETTES AND 

2 ESTABLISHING EXCISE TAX EQUITY AMONG 

3 ALL TOBACCO PRODUCT TAX RATES. 

4 (a) TAX PARITY FOR ROLL-YOUR-OWN TOBACCO.— 

5 Section 5701(g) of the Internal Revenue Code of 1986 is 

6 amended by striking ‘‘$24.78’’ and inserting ‘‘$49.56’’. 

7 (b) TAX PARITY FOR PIPE TOBACCO.—Section 

8 5701(f) of the Internal Revenue Code of 1986 is amended 

9 by striking ‘‘$2.8311 cents’’ and inserting ‘‘$49.56’’. 

10 (c) TAX PARITY FOR SMOKELESS TOBACCO.— 

11 (1) Section 5701(e) of the Internal Revenue 

12 Code of 1986 is amended— 

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

14 and inserting ‘‘$26.84’’; 

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

16 cents’’ and inserting ‘‘$10.74’’; and 

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

18 ‘‘(3) SMOKELESS TOBACCO SOLD IN DISCRETE

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

20 $100.66 per thousand.’’. 

21 (2) Section 5702(m) of such Code is amend22 ed— 

23 (A) in paragraph (1), by striking ‘‘or chew24 ing tobacco’’ and inserting ‘‘, chewing tobacco, 

25 or discrete single-use unit’’; 


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

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

3 the period in each such paragraph; and 

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

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

6 ‘discrete single-use unit’ means any product con7 taining tobacco that— 

8 ‘‘(A) is not intended to be smoked; and 

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

10 pill, pouch, dissolvable strip, or other discrete 

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

12 (d) TAX PARITY FOR SMALL CIGARS.—Paragraph 

13 (1) of section 5701(a) of the Internal Revenue Code of 

14 1986 is amended by striking ‘‘$50.33’’ and inserting 

15 ‘‘$100.66’’. 

16 (e) TAX PARITY FOR LARGE CIGARS.— 

17 (1) IN GENERAL.—Paragraph (2) of section 

18 5701(a) of the Internal Revenue Code of 1986 is 

19 amended by striking ‘‘52.75 percent’’ and all that 

20 follows through the period and inserting the fol21 lowing: ‘‘$49.56 per pound and a proportionate tax 

22 at the like rate on all fractional parts of a pound but 

23 not less than 10.066 cents per cigar.’’. 

24 (2) GUIDANCE.—The Secretary of the Treas25 ury, or the Secretary’s delegate, may issue guidance 


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1 regarding the appropriate method for determining 

2 the weight of large cigars for purposes of calculating 

3 the applicable tax under section 5701(a)(2) of the 

4 Internal Revenue Code of 1986. 

5 (f) TAX PARITY FOR ROLL-YOUR-OWN TOBACCO

6 AND CERTAIN PROCESSED TOBACCO.—Subsection (o) of 

7 section 5702 of the Internal Revenue Code of 1986 is 

8 amended by inserting ‘‘, and includes processed tobacco 

9 that is removed for delivery or delivered to a person other 

10 than a person with a permit provided under section 5713, 

11 but does not include removals of processed tobacco for ex12 portation’’ after ‘‘wrappers thereof’’. 

13 (g) CLARIFYING TAX RATE FOR OTHER TOBACCO

14 PRODUCTS.— 

15 (1) IN GENERAL.—Section 5701 of the Internal 

16 Revenue Code of 1986 is amended by adding at the 

17 end the following new subsection: 

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

19 otherwise described under this section that has been deter20 mined to be a tobacco product by the Food and Drug Ad21 ministration through its authorities under the Family 

22 Smoking Prevention and Tobacco Control Act shall be 

23 taxed at a level of tax equivalent to the tax rate for ciga24 rettes on an estimated per use basis as determined by the 

25 Secretary.’’. 


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1 (2) ESTABLISHING PER USE BASIS.—For pur2 poses of section 5701(i) of the Internal Revenue 

3 Code of 1986, not later than 12 months after the 

4 later of the date of the enactment of this Act or the 

5 date that a product has been determined to be a to6 bacco product by the Food and Drug Administra7 tion, the Secretary of the Treasury (or the Secretary 

8 of the Treasury’s delegate) shall issue final regula9 tions establishing the level of tax for such product 

10 that is equivalent to the tax rate for cigarettes on 

11 an estimated per use basis. 

12 (h) CLARIFYING DEFINITION OF TOBACCO PROD13 UCTS.— 

14 (1) IN GENERAL.—Subsection (c) of section 

15 5702 of the Internal Revenue Code of 1986 is 

16 amended to read as follows: 

17 ‘‘(c) TOBACCO PRODUCTS.—The term ‘tobacco prod18 ucts’ means— 

19 ‘‘(1) cigars, cigarettes, smokeless tobacco, pipe 

20 tobacco, and roll-your-own tobacco, and 

21 ‘‘(2) any other product subject to tax pursuant 

22 to section 5701(i).’’. 

23 (2) CONFORMING AMENDMENTS.—Subsection 

24 (d) of section 5702 of such Code is amended by 

25 striking ‘‘cigars, cigarettes, smokeless tobacco, pipe 


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1 tobacco, or roll-your-own tobacco’’ each place it ap2 pears and inserting ‘‘tobacco products’’. 

3 (i) INCREASING TAX ON CIGARETTES.— 

4 (1) SMALL CIGARETTES.—Section 5701(b)(1) 

5 of such Code is amended by striking ‘‘$50.33’’ and 

6 inserting ‘‘$100.66’’. 

7 (2) LARGE CIGARETTES.—Section 5701(b)(2) 

8 of such Code is amended by striking ‘‘$105.69’’ and 

9 inserting ‘‘$211.38’’. 

10 (j) TAX RATES ADJUSTED FOR INFLATION.—Section 

11 5701 of such Code, as amended by subsection (g), is 

12 amended by adding at the end the following new sub13 section: 

14 ‘‘(j) INFLATION ADJUSTMENT.— 

15 ‘‘(1) IN GENERAL.—In the case of any calendar 

16 year beginning after 2019, the dollar amounts pro17 vided under this chapter shall each be increased by 

18 an amount equal to— 

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

20 ‘‘(B) the cost-of-living adjustment deter21 mined under section 1(f)(3) for the calendar 

22 year, determined by substituting ‘calendar year 

23 2018’ for ‘calendar year 2016’ in subparagraph 

24 (A)(ii) thereof. 


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

2 under paragraph (1) is not a multiple of $0.01, such 

3 amount shall be rounded to the next highest multiple 

4 of $0.01.’’. 

5 (k) FLOOR STOCKS TAXES.— 

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

7 manufactured in or imported into the United States 

8 which are removed before any tax increase date and 

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

10 hereby imposed a tax in an amount equal to the ex11 cess of— 

12 (A) the tax which would be imposed under 

13 section 5701 of the Internal Revenue Code of 

14 1986 on the article if the article had been re15 moved on such date, over 

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

17 section 5701 of such Code on such article. 

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

19 be allowed as a credit against the taxes imposed by 

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

21 shall not exceed the amount of taxes imposed by 

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

23 is liable. 

24 (3) LIABILITY FOR TAX AND METHOD OF PAY25 MENT.— 


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1 (A) LIABILITY FOR TAX.—A person hold2 ing tobacco products on any tax increase date 

3 to which any tax imposed by paragraph (1) ap4 plies shall be liable for such tax. 

5 (B) METHOD OF PAYMENT.—The tax im6 posed by paragraph (1) shall be paid in such 

7 manner as the Secretary shall prescribe by reg8 ulations. 

9 (C) TIME FOR PAYMENT.—The tax im10 posed by paragraph (1) shall be paid on or be11 fore the date that is 120 days after the effective 

12 date of the tax rate increase. 

13 (4) ARTICLES IN FOREIGN TRADE ZONES.— 

14 Notwithstanding the Act of June 18, 1934 (com15 monly known as the Foreign Trade Zone Act, 48 

16 Stat. 998, 19 U.S.C. 81a et seq.), or any other pro17 vision of law, any article which is located in a for18 eign trade zone on any tax increase date shall be 

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

20 (A) internal revenue taxes have been deter21 mined, or customs duties liquidated, with re22 spect to such article before such date pursuant 

23 to a request made under the 1st proviso of sec24 tion 3(a) of such Act, or 


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

2 the supervision of an officer of the United 

3 States Customs and Border Protection of the 

4 Department of Homeland Security pursuant to 

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

6 (5) DEFINITIONS.—For purposes of this sub7 section— 

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

9 subsection which is also used in section 5702 of 

10 such Code shall have the same meaning as such 

11 term has in such section. 

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

13 increase date’’ means the effective date of any 

14 increase in any tobacco product excise tax rate 

15 pursuant to the amendments made by this sec16 tion (other than subsection (j) thereof). 

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

18 means the Secretary of the Treasury or the 

19 Secretary’s delegate. 

20 (6) CONTROLLED GROUPS.—Rules similar to 

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

22 apply for purposes of this subsection. 

23 (7) OTHER LAWS APPLICABLE.—All provisions 

24 of law, including penalties, applicable with respect to 

25 the taxes imposed by section 5701 of such Code 


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1 shall, insofar as applicable and not inconsistent with 

2 the provisions of this subsection, apply to the floor 

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

4 extent as if such taxes were imposed by such section 

5 5701. The Secretary may treat any person who bore 

6 the ultimate burden of the tax imposed by para7 graph (1) as the person to whom a credit or refund 

8 under such provisions may be allowed or made. 

9 (l) EFFECTIVE DATES.— 

10 (1) IN GENERAL.—Except as provided in para11 graphs (2) through (4), the amendments made by 

12 this section shall apply to articles removed (as de13 fined in section 5702(j) of the Internal Revenue 

14 Code of 1986) after the last day of the month which 

15 includes the date of the enactment of this Act. 

16 (2) DISCRETE SINGLE-USE UNITS AND PROC17 ESSED TOBACCO.—The amendments made by sub18 sections (c)(1)(C), (c)(2), and (f) shall apply to arti19 cles removed (as defined in section 5702(j) of the 

20 Internal Revenue Code of 1986) after the date that 

21 is 6 months after the date of the enactment of this 

22 Act. 

23 (3) LARGE CIGARS.—The amendments made by 

24 subsection (e) shall apply to articles removed after 

25 December 31, 2019. 


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1 (4) OTHER TOBACCO PRODUCTS.—The amend2 ments made by subsection (g)(1) shall apply to prod3 ucts removed after the last day of the month which 

4 includes the date that the Secretary of the Treasury 

5 (or the Secretary of the Treasury’s delegate) issues 

6 final regulations establishing the level of tax for 

7 such product. 

Æ 


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