II 

110TH CONGRESS 

1ST SESSION S. 1799 

To amend the Internal Revenue Code of 1986 to apply rate parity to the 

excise tax on small cigars and small cigarettes, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 17, 2007 

Mrs. LINCOLN 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 apply 

rate parity to the excise tax on small cigars and small 

cigarettes, 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. RATE PARITY FOR SMALL CIGARS AND SMALL 

4 CIGARETTES. 

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

6 Revenue Code of 1986 is amended by striking ‘‘$1.828 

7 cents per thousand’’ and all that follows and inserting 

8 ‘‘$19.50 per thousand,’’. 

9 (b) FLOOR STOCKS TAXES.— 


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•S 1799 IS

1 (1) IMPOSITION OF TAX.—On small cigars 

2 (within the meaning of section 5701(a)(1) of the In3 ternal Revenue Code of 1986) manufactured in or 

4 imported into the United States which are removed 

5 before the date of the enactment of this Act and 

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

7 hereby imposed a tax in an amount equal to the ex8 cess of— 

9 (A) the tax which would be imposed under 

10 section 5701 of the Internal Revenue Code of 

11 1986 on the article if the article had been re12 moved on such date, over 

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

14 section 5701 of such Code on such article. 

15 (2) LIABILITY FOR TAX AND METHOD OF PAY16 MENT.— 

17 (A) LIABILITY FOR TAX.—A person hold18 ing small cigars on the date of the enactment 

19 of this Act to which any tax imposed by para20 graph (1) applies shall be liable for such tax. 

21 (B) METHOD OF PAYMENT.—The tax im22 posed by paragraph (1) shall be paid in such 

23 manner as the Secretary of the Treasury shall 

24 prescribe by regulations. 


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•S 1799 IS

1 (C) TIME FOR PAYMENT.—The tax im2 posed by paragraph (1) shall be paid on or be3 fore the date which 90 days after such date of 

4 enactment. 

5 (3) ARTICLES IN FOREIGN TRADE ZONES.— 

6 Notwithstanding the Act of June 18, 1934 (com7 monly known as the Foreign Trade Zone Act, 48 

8 Stat. 998, 19 U.S.C. 81a et seq.) or any other provi9 sion of law, any article which is located in a foreign 

10 trade zone on the date of the enactment of this Act, 

11 shall be subject to the tax imposed by paragraph (1) 

12 if— 

13 (A) internal revenue taxes have been deter14 mined, or customs duties liquidated, with re15 spect to such article before such date pursuant 

16 to a request made under the 1st proviso of sec17 tion 3(a) of such Act, or 

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

19 the supervision of an officer of the United 

20 States Customs and Border Protection of the 

21 Department of Homeland Security pursuant to 

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

23 (4) CONTROLLED GROUPS.—Rules similar to 

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

25 apply for purposes of this subsection. 


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•S 1799 IS

1 (5) OTHER LAWS APPLICABLE.—All provisions 

2 of law, including penalties, applicable with respect to 

3 the taxes imposed by section 5701 of such Code 

4 shall, insofar as applicable and not inconsistent with 

5 the provisions of this subsection, apply to the floor 

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

7 extent as if such taxes were imposed by such section 

8 5701. The Secretary of the Treasury may treat any 

9 person who bore the ultimate burden of the tax im10 posed by paragraph (1) as the person to whom a 

11 credit or refund under such provisions may be al12 lowed or made. 

13 (c) EFFECTIVE DATE.—The amendments made by 

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

15 section 5702(j) of the Internal Revenue Code of 1986) on 

16 and after the date of the enactment of this Act. 

Æ 


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