I 

115TH CONGRESS 

1ST SESSION H. R. 729 

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

of tobacco products. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 30, 2017 

Mrs. LAWRENCE introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to reform 

and enforce taxation of tobacco products. 

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

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

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

5 ‘‘Tobacco Excise Tax and Parity Act of 2017’’. 

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

7 this Act is as follows: 

Sec. 1. Short title and table of contents. 

TITLE I—TOBACCO EXCISE TAX AND PARITY 

Sec. 101. Tobacco excise tax and parity. 

TITLE II—AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 


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Sec. 201. Amendment of 1986 code. 

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

Sec. 203. Improved marking and labeling. 

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

Sec. 205. Conditions of permit. 

Sec. 206. Records to be maintained. 

Sec. 207. Reports. 

Sec. 208. Fraudulent offenses. 

Sec. 209. Penalties. 

Sec. 210. Coordination with other government officials. 

Sec. 211. Definitions. 

Sec. 212. Conforming amendments. 

Sec. 213. Effective date. 

TITLE III—IMPORT FRAUD 

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

papers and tubes by fraudulent means. 

TITLE IV—EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL 

MATTERS 

Sec. 401. Exclusions regarding Indian tribes and tribal matters. 

1 TITLE I—TOBACCO EXCISE TAX 

2 AND PARITY 

3 SEC. 101. TOBACCO EXCISE TAX AND PARITY. 

4 (a) INCREASE IN EXCISE TAX ON SMALL CIGARS

5 AND CIGARETTES.— 

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

7 Internal Revenue Code of 1986 is amended by strik8 ing ‘‘$50.33’’ and inserting ‘‘$97.65’’. 

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

10 Code is amended— 

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

12 and inserting ‘‘$97.65’’, and 

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

14 (2) and inserting ‘‘$205.06’’. 


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

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

5 ‘‘$2.8311 cents’’ and inserting ‘‘$48.08’’. 

6 (2) ROLL-YOUR-OWN TOBACCO.—Section 

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

8 ‘‘$24.78’’ and inserting ‘‘$48.08’’. 

9 (c) TAX PARITY FOR LARGE CIGARS.— 

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

11 5701(a) of the Internal Revenue Code of 1986 is 

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

13 follows through the period and inserting ‘‘$24.78 per 

14 pound (and a proportionate tax at the like rate on 

15 all fractional parts of a pound) but not less than 

16 5.033 cents per cigar.’’. 

17 (2) GUIDANCE.—The Secretary of the Treasury 

18 or the Secretary of the Treasury’s delegate may 

19 issue guidance regarding the appropriate method for 

20 determining the weight of large cigars for purposes 

21 of calculating the applicable tax under section 

22 5701(a)(2) of the Internal Revenue Code of 1986. 

23 (d) TAX PARITY FOR ROLL-YOUR-OWN TOBACCO

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


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1 section 5702 of the Internal Revenue Code of 1986 is 

2 amended to read as follows: 

3 ‘‘(o) ROLL-YOUR-OWN TOBACCO.—The term ‘roll4 your-own tobacco’ means— 

5 ‘‘(1) any tobacco which, because of its appear6 ance, type, packaging, or labeling, is suitable for use 

7 and likely to be offered to, or purchased by, con8 sumers as tobacco for making cigarettes or cigars, 

9 or for use as wrappers thereof, or 

10 ‘‘(2) any processed tobacco which is— 

11 ‘‘(A) not removed for exportation, and 

12 ‘‘(B) removed or transferred to a person 

13 who has not been issued a permit pursuant to 

14 section 5713.’’. 

15 (e) TAX PARITY FOR SMOKELESS TOBACCO.— 

16 (1) IN GENERAL.—Section 5701(e) of the Inter17 nal Revenue Code of 1986 is amended— 

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

19 and inserting ‘‘$26.04’’; 

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

21 cents’’ and inserting ‘‘$10.42’’; and 

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

23 ‘‘(3) SMOKELESS TOBACCO SOLD IN DISCRETE

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

25 $97.65 per each 1,000 single-use units.’’. 


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

2 5702(m) of such Code is amended— 

3 (A) in paragraph (1), by striking ‘‘or chew4 ing tobacco’’ and inserting ‘‘chewing tobacco, 

5 discrete single-use unit’’; 

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

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

8 the period in each such paragraph; and 

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

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

11 ‘discrete single-use unit’ means any product con12 taining tobacco that— 

13 ‘‘(A) is not intended to be smoked, and 

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

15 pill, pouch, dissolvable strip, or other discrete 

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

17 (f) OTHER TOBACCO PRODUCTS.— 

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

19 Revenue Code of 1986 is amended by adding at the 

20 end the following new subsection: 

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

22 otherwise described under this section that has been deter23 mined to be a tobacco product by the Food and Drug Ad24 ministration through its authorities under the Family 

25 Smoking Prevention and Tobacco Control Act shall be 


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1 taxed at a level of tax equivalent to the tax rate for ciga2 rettes on an estimated per use basis as determined by the 

3 Secretary.’’. 

4 (2) ESTABLISHING PER USE BASIS.—For pur5 poses of section 5701(i) of the Internal Revenue 

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

7 date that a product has been determined to be a to8 bacco product by the Food and Drug Administra9 tion, the Secretary of the Treasury (or the Secretary 

10 of the Treasury’s delegate) shall issue final regula11 tions establishing the level of tax for such product 

12 that is equivalent to the tax rate for cigarettes on 

13 an estimated per use basis. 

14 (g) CLARIFYING DEFINITION OF TOBACCO PROD15 UCTS.— 

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

17 5702 of the Internal Revenue Code of 1986 is 

18 amended to read as follows: 

19 ‘‘(c) TOBACCO PRODUCTS.—The term ‘tobacco prod20 ucts’ means— 

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

22 tobacco, and roll-your-own tobacco, and 

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

24 to section 5701(i).’’. 


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1 (2) CONFORMING AMENDMENTS.—Subsection 

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

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

4 tobacco, or roll-your-own tobacco’’ each place it ap5 pears and inserting ‘‘tobacco products’’. 

6 (h) INFLATION ADJUSTMENT.—Section 5701 of the 

7 Internal Revenue Code of 1986, as amended by subsection 

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

9 subsection: 

10 ‘‘(j) INFLATION ADJUSTMENT.— 

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

12 year after 2017, each amount set forth in this sec13 tion shall be increased by an amount equal to— 

14 ‘‘(A) such amount, multiplied by 

15 ‘‘(B) the cost-of-living adjustment deter16 mined under section 1(f)(3) for such calendar 

17 year by substituting ‘calendar year 2016’ for 

18 ‘calendar year 1992’ in subparagraph (B) 

19 thereof. 

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

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

22 amount shall be rounded to the next highest multiple 

23 of $0.01.’’. 

24 (i) FLOOR STOCKS TAXES.— 


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

2 manufactured in or imported into the United States 

3 which are removed before any tax increase date and 

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

5 hereby imposed a tax in an amount equal to the ex6 cess of— 

7 (A) the tax which would be imposed under 

8 section 5701 of the Internal Revenue Code of 

9 1986 on the article if the article had been re10 moved on such date, over 

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

12 section 5701 of such Code on such article. 

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

14 be allowed as a credit against the taxes imposed by 

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

16 shall not exceed the amount of taxes imposed by 

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

18 is liable. 

19 (3) LIABILITY FOR TAX AND METHOD OF PAY20 MENT.— 

21 (A) LIABILITY FOR TAX.—A person hold22 ing tobacco products on any tax increase date 

23 to which any tax imposed by paragraph (1) ap24 plies shall be liable for such tax. 


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1 (B) METHOD OF PAYMENT.—The tax im2 posed by paragraph (1) shall be paid in such 

3 manner as the Secretary shall prescribe by reg4 ulations. 

5 (C) TIME FOR PAYMENT.—The tax im6 posed by paragraph (1) shall be paid on or be7 fore the date that is 120 days after the effective 

8 date of the tax rate increase. 

9 (4) ARTICLES IN FOREIGN TRADE ZONES.— 

10 Notwithstanding the Act of June 18, 1934 (com11 monly known as the Foreign Trade Zone Act, 48 

12 Stat. 998, 19 U.S.C. 81a et seq.), or any other pro13 vision of law, any article which is located in a for14 eign trade zone on any tax increase date shall be 

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

16 (A) internal revenue taxes have been deter17 mined, or customs duties liquidated, with re18 spect to such article before such date pursuant 

19 to a request made under the 1st proviso of sec20 tion 3(a) of such Act, or 

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

22 the supervision of an officer of the United 

23 States Customs and Border Protection of the 

24 Department of Homeland Security pursuant to 

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


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1 (5) DEFINITIONS.—For purposes of this sub2 section— 

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

4 subsection which is also used in section 5702 of 

5 such Code shall have the same meaning as such 

6 term has in such section. 

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

8 increase date’’ means the effective date of any 

9 increase in any tobacco product excise tax rate 

10 pursuant to the amendments made by this sec11 tion (other than subsection (g) thereof). 

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

13 means the Secretary of the Treasury or the 

14 Secretary’s delegate. 

15 (6) CONTROLLED GROUPS.—Rules similar to 

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

17 apply for purposes of this subsection. 

18 (7) OTHER LAWS APPLICABLE.—All provisions 

19 of law, including penalties, applicable with respect to 

20 the taxes imposed by section 5701 of such Code 

21 shall, insofar as applicable and not inconsistent with 

22 the provisions of this subsection, apply to the floor 

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

24 extent as if such taxes were imposed by such section 

25 5701. The Secretary may treat any person who bore 


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1 the ultimate burden of the tax imposed by para2 graph (1) as the person to whom a credit or refund 

3 under such provisions may be allowed or made. 

4 (j) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as provided in para6 graphs (2) through (4), the amendments made by 

7 this section shall apply to articles removed (as de8 fined in section 5702(j) of the Internal Revenue 

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

10 includes the date of the enactment of this Act. 

11 (2) DISCRETE SINGLE-USE UNITS AND PROC12 ESSED TOBACCO.—The amendments made by sub13 sections (d), (e)(1)(C), and (e)(2) shall apply to arti14 cles removed (as defined in section 5702(j) of the 

15 Internal Revenue Code of 1986) after the date that 

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

17 Act. 

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

19 subsection (c) shall apply to articles removed after 

20 December 31, 2017. 

21 (4) OTHER TOBACCO PRODUCTS.—The amend22 ments made by subsection (f)(1) shall apply to prod23 ucts removed after the last day of the month which 

24 includes the date that the Secretary of the Treasury 

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


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1 final regulations establishing the level of tax for 

2 such product. 

3 TITLE II—AMENDMENTS TO IN4 TERNAL REVENUE CODE OF 

5 1986 

6 SEC. 201. AMENDMENT OF 1986 CODE. 

7 Except as otherwise expressly provided, whenever in 

8 this title an amendment or repeal is expressed in terms 

9 of an amendment to, or repeal of, a section or other provi10 sion, the reference shall be considered to be made to a 

11 section or other provision of the Internal Revenue Code 

12 of 1986. 

13 SEC. 202. MACHINES USED TO MANUFACTURE OR PACKAGE 

14 TOBACCO PRODUCTS OR PROCESSED TO15 BACCO. 

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

17 (1) by redesignating subsection (b) as sub18 section (c), and 

19 (2) by inserting after subsection (a) the fol20 lowing new subsection: 

21 ‘‘(b) MACHINES USED TO MANUFACTURE OR PACK22 AGE TOBACCO PRODUCTS OR PROCESSED TOBACCO.— 

23 ‘‘(1) TRANSFER OF MANUFACTURING MACHINES

24 TO LICENSED PERSONS.—Any tobacco production 

25 machine may be sold, leased, imported, exported, deVerDate Sep 11 2014 00:52 Feb 03, 2017 Jkt 069200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H729.IH H729

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1 livered, or otherwise made available only to per2 sons— 

3 ‘‘(A) lawfully engaged in— 

4 ‘‘(i) the sale, lease, importation, ex5 portation, or delivery of such machines, 

6 ‘‘(ii) the manufacture or packaging of 

7 tobacco products or processed tobacco, or 

8 ‘‘(iii) the application of unique identi9 fication markings onto tobacco product or 

10 processed tobacco packages pursuant to 

11 section 5723, and 

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

13 and Indian tribal government permits, registra14 tions, and licenses required to engage in such 

15 activities. 

16 ‘‘(2) TRANSFER OF MACHINES TO PERSONS EN17 GAGED IN ILLEGAL MANUFACTURE OF CONTRA18 BAND.—No tobacco production machine shall know19 ingly be manufactured for or be (directly or indi20 rectly) sold, leased, imported, exported, delivered, or 

21 otherwise made available to any person engaged in 

22 the illegal manufacture, distribution, or sale of coun23 terfeit or contraband tobacco products or processed 

24 tobacco, unique identification markings, or other 

25 tax-payment indicia. 


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1 ‘‘(3) REGISTRATION OF MACHINES.— 

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

3 possession or custody of, or having control over, 

4 the installation of any tobacco production ma5 chine shall register such machine with the Sec6 retary immediately on its being installed, by 

7 subscribing and filing with the Secretary a 

8 statement, in writing, setting forth the par9 ticular place where such machine is installed, 

10 the kind of machine and its capacity, the owner 

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

12 purpose for which the machine has been or is 

13 intended to be used. 

14 ‘‘(B) EXCEPTION.—Under regulations pre15 scribed by the Secretary, this paragraph shall 

16 not apply to any tobacco production machine 

17 not used or intended to be used— 

18 ‘‘(i) for the manufacture or produc19 tion of cigarette or cigars, or to manufac20 ture any other tobacco product or proc21 essed tobacco, 

22 ‘‘(ii) to package any tobacco product 

23 or processed tobacco, or 

24 ‘‘(iii) to apply unique identification 

25 markings to any package. 


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1 ‘‘(4) RECORDS.— 

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

3 leasing, importing, exporting, delivering, or oth4 erwise making available a tobacco production 

5 machine shall maintain and keep records, as the 

6 Secretary prescribes by regulation, relating to 

7 any transfers of the machine, including the 

8 name, address, other contact information, and 

9 any permit, registration, or license number of 

10 the person receiving delivery of the machine, or 

11 to whom the machine is otherwise transferred, 

12 as the case may be. 

13 ‘‘(B) 5-YEAR HOLDING PERIOD FOR

14 RECORDS.—Any record required to be main15 tained and kept under subparagraph (A) shall 

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

17 first date such record is required to be so main18 tained and kept. 

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

20 records shall be available for inspection by any 

21 internal revenue officer during business hours. 

22 ‘‘(D) SAFE HARBOR.—An ordinary com23 mercial record or invoice shall satisfy the re24 quirements of this paragraph if such record or 


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1 invoice contains all of the information required 

2 under subparagraph (A). 

3 ‘‘(5) VIOLATIONS.— 

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

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

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

7 an amount equal to 3 times the fair market 

8 value of the tobacco product machine involved 

9 (whichever is greater), or imprisoned not more 

10 than five years, or both. 

11 ‘‘(B) RECORDKEEPING.—Whoever know12 ingly violates paragraph (4) shall, for each of13 fense, be fined not more than $10,000.’’. 

14 (b) TOBACCO PRODUCTION MACHINE.—Section 5702 

15 is amended by adding at the end the following new sub16 section: 

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

18 ‘tobacco production machine’ means any machine (or com19 ponent integral to the operation of such a machine) used 

20 to manufacture or package tobacco products or processed 

21 tobacco or to apply unique identification markings or 

22 other tax-payment indicia to packages of tobacco products 

23 or processed tobacco. Such term includes any machine 

24 used to produce tobacco products for compensation, lease, 

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


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

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

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

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

5 this section shall apply to transfers more than 6 months 

6 after the date of the enactment of this Act. 

7 SEC. 203. IMPROVED MARKING AND LABELING. 

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

9 amended to read as follows: 

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

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

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

13 processed tobacco, or cigarette papers or tubes shall, 

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

15 that the Secretary by regulation prescribes. 

16 ‘‘(2) MARKING REQUIREMENTS FOR DOMESTIC

17 MARKET.— 

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

19 manufacturer or importer of tobacco products 

20 or processed tobacco shall (in accordance with 

21 regulations prescribed by the Secretary) ensure 

22 that, before any product intended for sale or 

23 distribution within the United States is re24 moved, a unique identification marking is af25 fixed to or forms part of each package of toVerDate Sep 11 2014 00:52 Feb 03, 2017 Jkt 069200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H729.IH H729

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1 bacco product or processed tobacco manufac2 tured or imported by such person for sale or 

3 distribution. 

4 ‘‘(B) MARKINGS ON INDIVIDUAL PACK5 AGES.—Any markings required to be placed on 

6 a tobacco product or processed tobacco package 

7 by this subsection shall be placed on the inner8 most sealed container visible from the outside 

9 of the individual package. For any tobacco 

10 product or processed tobacco package that con11 tains multiple smaller packages of tobacco prod12 ucts or processed tobacco, any markings re13 quired to be so placed on tobacco product or 

14 processed tobacco packages shall be placed on 

15 all the individual tobacco product or processed 

16 tobacco packages. 

17 ‘‘(C) MARKINGS ON AGGREGATE PACKING

18 MODES.—To facilitate efficient tracking and 

19 tracing of tobacco products or processed to20 bacco through the distribution system, all man21 ufacturers or importers of tobacco products or 

22 processed tobacco shall, in addition to such 

23 unique identification marking, also, in accord24 ance with regulations prescribed by the Sec25 retary, ensure that unique identification markVerDate Sep 11 2014 00:52 Feb 03, 2017 Jkt 069200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\H729.IH H729

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1 ings are affixed to or form part of aggregate 

2 packing modes (such as cartons, cases, and 

3 master cases for cigarettes). The Secretary 

4 shall determine the size, location, and methods 

5 for such markings. The Secretary shall estab6 lish regulations requiring that all persons with7 in the distribution chain, up to but not includ8 ing the ultimate retailer, utilize the unique 

9 identification markings on aggregate packing 

10 modes to facilitate the tracking and tracing of 

11 tobacco products or processed tobacco through 

12 the distribution system. 

13 ‘‘(3) MARKING REQUIREMENTS FOR EX14 PORTS.—A unique identification marking shall be af15 fixed to or form part of each package of tobacco 

16 product or processed tobacco that is exported, or 

17 sold for export, that distinguishes it from those 

18 products or processed tobacco intended for sale or 

19 distribution within the United States. The Secretary 

20 shall by regulation prescribe the size, location, and 

21 other characteristics of such marking, and it may 

22 contain a serial number that is assigned to the coun23 try of export, except that no such serial number 

24 shall be required on tobacco products or processed 

25 tobacco sold at retail to consumers by duty free 


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1 stores for consumption beyond the jurisdiction of the 

2 internal revenue laws of the United States. Such to3 bacco products or processed tobacco shall instead 

4 bear markings indicating the tobacco product or 

5 processed tobacco is only for duty-free sale to con6 sumers, as prescribed through regulation by the Sec7 retary, before the product or processed tobacco is re8 moved. 

9 ‘‘(4) AUTHORIZATION OF FEDERAL UNIQUE

10 IDENTIFICATION MARKING.—Not later than 3 years 

11 after the date of the enactment of the Tobacco Ex12 cise Tax and Parity Act of 2017, the Secretary shall 

13 by regulation require the use of a unique identifica14 tion marking on all products subject to tax under 

15 this chapter.’’. 

16 (b) UNIQUE IDENTIFICATION MARKING.—Section 

17 5723 is amended by adding at the end the following new 

18 subsection: 

19 ‘‘(f) UNIQUE IDENTIFICATION MARKING.— 

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

21 processed tobacco may be sold, offered for sale, dis22 tributed, mailed, or otherwise delivered for final sale 

23 to any consumer in the United States unless the 

24 unique identification marking that meets the re25 quirements of this section (and any regulations preVerDate Sep 11 2014 00:52 Feb 03, 2017 Jkt 069200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\H729.IH H729

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1 scribed thereunder) is affixed to or forms part of the 

2 package in which it is contained. 

3 ‘‘(2) SYSTEM SPECIFICATIONS.— 

4 ‘‘(A) The Secretary shall design such sys5 tem to coordinate and avoid interference with 

6 State, local, and Indian tribal tax stamps and 

7 markings, facilitate collection of the tax im8 posed by this chapter, impede contraband to9 bacco trafficking, minimize counterfeit marking, 

10 allow for more effective tracking and tracing of 

11 tobacco products and processed tobacco, facili12 tate the enforcement of related Federal laws, 

13 and utilize such available technology as may 

14 promote the purposes of this chapter. 

15 ‘‘(B) The Secretary shall prescribe the 

16 method and manner in which such unique iden17 tification markings are to be distributed, pur18 chased, and applied to or made part of tobacco 

19 product and processed tobacco packages, and 

20 may provide for the cancellation of such mark21 ings. 

22 ‘‘(C) The unique identification marking 

23 must provide (through the marking or record 

24 associated with the marking) such information 


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1 as the Secretary by regulation prescribes, in2 cluding: 

3 ‘‘(i) A unique serial number or track4 ing code for each tobacco product or proc5 essed tobacco package or aggregate pack6 age. 

7 ‘‘(ii) The name and address of the 

8 person purchasing the marking (and, if dif9 ferent, of the person ensuring the marking 

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

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

12 first unrelated person purchasing or other13 wise receiving the tobacco product or proc14 essed tobacco from the person who ensures 

15 the marking is affixed to or made part of 

16 the package and the date of such purchase 

17 or receipt. 

18 ‘‘(D) The information described in sub19 paragraph (C) may be required to, to the extent 

20 practicable— 

21 ‘‘(i) be cryptographically encrypted, 

22 and 

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

24 scanning device (or similar device) to be 

25 utilized by regulatory and law enforcement 


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1 officials at the time and place of inspec2 tion, or 

3 ‘‘(II) be otherwise accessible remotely 

4 at such time and place. 

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

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

7 person other than a related person within the mean8 ing of section 267(b) or 707(b)(1).’’. 

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

10 subsection (b), is amended by adding at the end the fol11 lowing new subsections: 

12 ‘‘(g) PACKAGE DEFINED.—For purposes of this sec13 tion, the term ‘package’ means a pack, box, carton, or con14 tainer of any kind or, if no other container, any wrapping 

15 (including cellophane), in which a tobacco product or proc16 essed tobacco is sold, offered for sale, distributed, or oth17 erwise delivered for final sale to any consumer. 

18 ‘‘(h) UNIQUE IDENTIFICATION MARKING DE19 FINED.—For purposes of this section, the term ‘unique 

20 identification marking’ means a device in such design and 

21 denomination as the Secretary authorizes by regulation 

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

23 product or processed tobacco. Such markings shall contain 

24 overt security features for public authentication and covert 

25 security features embedding a unique, secure, encrypted 


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1 identifier onto the marking, enabling law enforcement au2 thentication, production control, and tracking and tracing 

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

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

5 shall consult with the Secretary of Health and Human 

6 Services as may be appropriate to carry out the purposes 

7 of subsection (f), and paragraphs (2), (3), and (4) of sub8 section (b), of section 5723 of the Internal Revenue Code 

9 of 1986 (as added by this section). 

10 SEC. 204. WHOLESALERS AND MANUFACTURERS, IMPORT11 ERS, AND SELLERS OF TOBACCO PRODUC12 TION MACHINES REQUIRED TO HAVE PER13 MIT. 

14 (a) WHOLESALERS.—Section 5712 is amended by in15 serting ‘‘, as a wholesaler,’’ after ‘‘or processed tobacco’’. 

16 (b) MANUFACTURERS, IMPORTERS, AND SELLERS OF

17 TOBACCO PRODUCTION MACHINES.—Section 5712 is 

18 amended by striking ‘‘or as an export warehouse propri19 etor’’ and inserting ‘‘, as an export warehouse proprietor, 

20 or as a manufacturer, seller, or importer of tobacco pro21 duction machines’’. 

22 SEC. 205. CONDITIONS OF PERMIT. 

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

24 amended to read as follows: 

25 ‘‘(a) ISSUANCE.— 


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

2 in business as a manufacturer or importer of tobacco 

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

4 export warehouse proprietor, or as a manufacturer, 

5 seller, lessor, or importer of tobacco production ma6 chines without a permit to engage in such business. 

7 Such permit, conditioned upon compliance with this 

8 chapter and regulations issued thereunder, shall be 

9 issued in such form and in such manner as the Sec10 retary shall by regulation prescribe, to every person 

11 properly qualified under sections 5711 and 5712. 

12 Any entity granted such a permit is not eligible to 

13 provide any services the Secretary may elect to pro14 cure to facilitate the purposes of section 5723. Per15 mit holders shall automatically count output and 

16 register, record, and transmit the quantities meas17 ured, in the form, conditions, and time limits estab18 lished by the Secretary. A new permit may be re19 quired at such other time as the Secretary shall by 

20 regulation prescribe. 

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

22 issue a permit under this section unless— 

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

24 the requirements of— 

25 ‘‘(i) this chapter, 


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

2 States Code, 

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

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

5 as the ‘Jenkins Act’), 

6 ‘‘(iv) the Fair and Equitable Tobacco 

7 Reform Act of 2004, and any amendments 

8 made thereby, 

9 ‘‘(v) the Family Smoking Prevention 

10 and Tobacco Control Act, and any amend11 ments made thereby, 

12 ‘‘(vi) the Prevent All Cigarette Traf13 ficking Act of 2009, and any amendments 

14 made thereby, and 

15 ‘‘(vii) any related regulations there16 under, 

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

18 permit, 

19 ‘‘(B) the applicant certifies that the appli20 cant is in compliance with all other Federal, 

21 State, local, and Indian tribal laws relating to 

22 the taxation, manufacture, importation, expor23 tation, distribution, marketing, sale, or trans24 portation of tobacco products, processed to25 bacco, or tobacco production machines, as in efVerDate Sep 11 2014 00:52 Feb 03, 2017 Jkt 069200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\H729.IH H729

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1 fect on the date of the issuance of the permit, 

2 and 

3 ‘‘(C) the applicant identifies in the applica4 tion any violation of a law described in subpara5 graph (A) or (B) by the applicant resulting in 

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

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

8 (b) SUSPENSION OR REVOCATION.—Subparagraph 

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

10 other law described in subparagraph (A) or (B) of sub11 section (a)(2)’’ after ‘‘this chapter’’. 

12 SEC. 206. RECORDS TO BE MAINTAINED. 

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

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

15 ‘‘Every manufacturer’’, 

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

17 ‘‘every importer,’’, 

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

19 ‘‘records concerning the chain of custody of the to20 bacco products and processed tobacco (including the 

21 foreign country of final destination for packages 

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

23 labels, and notices required under section 5723, and 

24 such other records’’, and 


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1 (4) by adding at the end the following new sub2 sections: 

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

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

5 products and processed tobacco. Such records shall be 

6 available to the Secretary for inspection and audit. An or7 dinary commercial record or invoice shall satisfy the re8 quirements of this subsection if such record shows the date 

9 of receipt, from whom tobacco products or processed to10 bacco were received, and the quantity of tobacco products 

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

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

13 tobacco products or processed tobacco were sold or deliv14 ered, and the quantity of the tobacco products or proc15 essed tobacco sold or delivered). To the extent the Sec16 retary determines that the records maintained by retail 

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

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

19 requirements of this section, no additional records shall 

20 be required for such entities under this section. The pre21 ceding provisions of this subsection shall not be construed 

22 to limit or preclude other recordkeeping requirements im23 posed on any retailer. 

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

25 CUSTODY.—Records concerning the chain of custody and 


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

2 shall be available for inspection by any internal revenue 

3 officer during business hours.’’. 

4 (b) CONSULTATION WITH HEALTH AND HUMAN

5 SERVICES.—The Secretary of the Treasury shall consult 

6 with the Secretary of Health and Human Services as may 

7 be appropriate to carry out the purposes of section 5741 

8 of the Internal Revenue Code of 1986. 

9 SEC. 207. REPORTS. 

10 Section 5722 is amended— 

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

12 ‘‘Every manufacturer’’, and 

13 (2) by adding at the end the following new sub14 section: 

15 ‘‘(b) REPORTS BY EXPORT WAREHOUSE PROPRI16 ETORS.—Prior to exportation of tobacco products or proc17 essed tobacco from the United States, the export ware18 house proprietor shall submit a report (in such manner 

19 and form as the Secretary may by regulation prescribe) 

20 to enable the Secretary to identify the shipment and as21 sure that it reaches its intended destination.’’. 

22 SEC. 208. FRAUDULENT OFFENSES. 

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

24 amended— 


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

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

3 through (5), respectively, and 

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

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

6 equal to 3 times the amount of the tax imposed 

7 under this chapter on the tobacco product involved 

8 (whichever is greater)’’. 

9 (b) OFFENSES RELATING TO DISTRIBUTION OF TO10 BACCO PRODUCTS, ETC.— 

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

12 by section 202 of this Act) is amended— 

13 (A) by redesignating subsection (c) as sub14 section (d), and 

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

16 following new subsection: 

17 ‘‘(c) OFFENSES RELATING TO DISTRIBUTION OF TO18 BACCO PRODUCTS, ETC.—It shall be unlawful— 

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

20 manufacturer or importer of tobacco products, proc21 essed tobacco, or cigarette papers and tubes, as a 

22 wholesaler, or an export warehouse proprietor, or as 

23 a manufacturer, seller, or importer of tobacco pro24 duction machines without filing the bond and obtainVerDate Sep 11 2014 00:52 Feb 03, 2017 Jkt 069200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\H729.IH H729

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1 ing the permit where required by this chapter or 

2 regulations thereunder, 

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

4 products, or wholesaler to knowingly ship, transport, 

5 deliver, or receive any tobacco products from or to 

6 any person other than a person who has obtained 

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

8 person handling such products solely for purposes of 

9 shipment or delivery; except that an importer who 

10 has obtained the permit required by this chapter 

11 may receive, from a foreign manufacturer or a for12 eign distributor, foreign tobacco products that have 

13 not previously entered the United States, 

14 ‘‘(3) for a manufacturer or importer of proc15 essed tobacco or a wholesaler to knowingly ship, 

16 transport, deliver, or receive any tobacco products or 

17 processed tobacco from or to any person other than 

18 a person who has obtained the permit required by 

19 this chapter, 

20 ‘‘(4) for a manufacturer or importer of proc21 essed tobacco to knowingly ship, transport, sell, or 

22 deliver processed tobacco to any person other than 

23 a manufacturer of processed tobacco, a manufac24 turer of tobacco products, or an export warehouse 

25 proprietor, 


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

2 manufacturer of such tobacco products or processed 

3 tobacco or an export warehouse proprietor author4 ized to receive any tobacco products or processed to5 bacco that have previously been exported and re6 turned to the United States) to knowingly receive 

7 any tobacco products or processed tobacco that have 

8 previously been exported and returned to the United 

9 States, 

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

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

12 any tobacco products or processed tobacco to any 

13 person other than the original manufacturer of such 

14 tobacco products or processed tobacco, another ex15 port warehouse proprietor, a duty free store, or a 

16 foreign purchaser, 

17 ‘‘(7) for any person (other than a manufac18 turer, wholesaler, or an export warehouse proprietor 

19 permitted under this chapter) to knowingly ship, 

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

21 any tobacco product or processed tobacco not in 

22 packages marked pursuant to regulations issued 

23 under section 5723, other than for direct return to 

24 a manufacturer for repacking or for re-exportation 


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1 or to an export warehouse proprietor for re-expor2 tation, 

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

4 warehouse proprietor, or wholesaler permitted under 

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

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

7 properly any record or report required by this chap8 ter or the regulations promulgated thereunder with 

9 the intent to defraud the United States, 

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

11 the United States, to alter, mutilate, destroy, oblit12 erate, or remove any mark or label required under 

13 this chapter upon a tobacco product or processed to14 bacco held for sale, or to create, possess, or apply 

15 on any tobacco product or processed tobacco or its 

16 packaging any counterfeit versions of any such 

17 marks or labels, and 

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

19 3,000 cigarettes in any single transaction (or series 

20 of related transactions), or, in the case of other to21 bacco products, an equivalent quantity as deter22 mined by regulation. 

23 Any person violating any of the provisions of this sub24 section shall, upon conviction, be fined as provided in secVerDate Sep 11 2014 00:52 Feb 03, 2017 Jkt 069200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 E:\BILLS\H729.IH H729

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1 tion 3571 of title 18, United States Code, or imprisoned 

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

3 (2) CONFORMING AMENDMENT.—Section 

4 5762(d) (as so redesignated) is amended by striking 

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

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

7 5762 (as so redesignated) is amended by striking ‘‘not 

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

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

10 on the tobacco product or processed tobacco involved 

11 (whichever is greater)’’. 

12 SEC. 209. PENALTIES. 

13 (a) IN GENERAL.— 

14 (1) Subsection (a) of section 5761 is amend15 ed— 

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

17 ‘‘knowingly’’, and 

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

19 ‘‘$10,000’’. 

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

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

22 (b) PENALTY AMOUNTS ADJUSTED FOR INFLA23 TION.—Section 5761 is amended by redesignating sub24 section (f) as subsection (g) and inserting after subsection 

25 (e) the following new subsection: 


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1 ‘‘(f) INFLATION ADJUSTMENT.— 

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

3 year beginning after 2017, the penalty dollar 

4 amounts provided under this chapter shall each be 

5 increased by an amount equal to— 

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

7 ‘‘(B) the cost-of-living adjustment deter8 mined under section 1(f)(3) for the calendar 

9 year, determined by substituting ‘calendar year 

10 2014’ for ‘calendar year 1992’ in subparagraph 

11 (B) thereof. 

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

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

14 amount shall be rounded to the next highest multiple 

15 of $10.’’. 

16 SEC. 210. COORDINATION WITH OTHER GOVERNMENT OF17 FICIALS. 

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

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

20 ‘‘SEC. 5755. COORDINATION WITH OTHER GOVERNMENT OF21 FICIALS. 

22 ‘‘The Secretary shall make reasonable efforts to co23 ordinate with other Federal agencies and with officials of 

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

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


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1 reduce tobacco tax evasion and contraband trafficking in 

2 tobacco products and processed tobacco, to enforce settle3 ment agreements between tobacco companies and State or 

4 other governments and related laws, or for other law en5 forcement or administration purposes.’’. 

6 (b) INFORMATION SHARING.— 

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

8 6103(o) is amended by adding at the end the fol9 lowing new subparagraph: 

10 ‘‘(C) INFORMATION SHARING FOR TO11 BACCO PRODUCT LAW ADMINISTRATION AND

12 ENFORCEMENT PURPOSES.— 

13 ‘‘(i) FEDERAL, STATE, LOCAL, AND

14 TRIBAL GOVERNMENTS.—Returns and re15 turn information with respect to taxes im16 posed by chapter 52 may be open to in17 spection by or disclosure to officers and 

18 employees of any Federal agency, the State 

19 Tax Administrators, or any other agency 

20 of any State, local, or Indian tribal govern21 ment responsible for the administration 

22 and enforcement of laws and regulations 

23 relating to tobacco products and processed 

24 tobacco, or their legal representative, solely 

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1 ment, unless the Secretary determines that 

2 such disclosure would seriously impair 

3 Federal tax administration. 

4 ‘‘(ii) FOREIGN GOVERNMENTS AND

5 ORGANIZATIONS.—The Secretary shall, 

6 upon written request, disclose returns and 

7 return information with respect to taxes 

8 imposed by chapter 52 to officers and em9 ployees of any agency of any foreign gov10 ernment, OLAF (European Anti-Fraud 

11 Office), EUROPOL, INTERPOL, or the 

12 World Customs Organization responsible 

13 for the administration and enforcement of 

14 laws and regulations relating to tobacco 

15 products and processed tobacco, or their 

16 legal representative, solely for use in such 

17 administration and enforcement, if the 

18 Secretary obtains written assurances from 

19 such government or organization that the 

20 information will be held in confidence and 

21 used only for such use. No return or re22 turn information shall be disclosed under 

23 this clause if the Secretary determines that 

24 such disclosure would seriously impair 

25 Federal tax administration. 


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1 ‘‘(iii) PUBLIC INFORMATION.—The 

2 identity and business address of those per3 sons that have a valid permit, pursuant to 

4 chapter 52, to engage in business as a 

5 manufacturer, wholesaler, or importer of 

6 tobacco products or processed tobacco, as 

7 an export warehouse proprietor, or as a 

8 manufacturer, seller, or importer of to9 bacco production machines (as defined in 

10 section 5702(q)) shall be made publicly 

11 available at such time and in such manner 

12 as the Secretary may prescribe.’’. 

13 (2) CONFORMING AMENDMENTS.— 

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

15 amended— 

16 (i) by striking ‘‘or any local’’ in para17 graph (2) and inserting ‘‘any local’’, 

18 (ii) by inserting ‘‘, or any agency de19 scribed in subsection (o)(1)(C)(i)’’ after 

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

21 and 

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

23 paragraph (3) and inserting ‘‘subsection 

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


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

2 amended— 

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

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

5 (C)(i)’’, and 

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

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

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

9 amended— 

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

11 ‘‘(21),’’, and 

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

13 ‘‘or (7), or (o)(1)(C)(i)’’. 

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

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

16 the end the following new item: 

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

17 SEC. 211. DEFINITIONS. 

18 (a) EXPORT WAREHOUSE PROPRIETOR.—Subsection 

19 (i) of section 5702 is amended by inserting before the pe20 riod the following: ‘‘or any person engaged in the business 

21 of exporting tobacco products from the United States for 

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

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

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

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


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1 other tobacco products as the Secretary shall by regulation 

2 prescribe, shall be deemed an export warehouse proprietor 

3 under this chapter’’. 

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

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

6 the following new subsections: 

7 ‘‘(r) RETAILER.—The term ‘retailer’ means any per8 son who sells, or offers for sale, any tobacco product at 

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

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

11 any single transaction (or series of related transactions) 

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

13 equivalent quantity of other tobacco products as the Sec14 retary shall by regulation prescribe. 

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

16 any person engaged in the business of purchasing tobacco 

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

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

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

20 SEC. 212. CONFORMING AMENDMENTS. 

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

22 United States Code, is amended by inserting ‘‘in regard 

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

24 ‘‘a person’’. 


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

2 Code, are each amended— 

3 (1) by striking ‘‘STATE’’ in the heading there4 of; and 

5 (2) by striking ‘‘tax stamps’’ each place it ap6 pears and inserting ‘‘tax stamps or markings’’. 

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

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

9 Tobacco,’’ after ‘‘Products’’. 

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

11 in the table of subchapters for chapter 52 are each amend12 ed by inserting ‘‘, processed tobacco,’’ after ‘‘products’’. 

13 (e) The heading for chapter 52 is amended by insert14 ing ‘‘, PROCESSED TOBACCO,’’ after ‘‘PROD15 UCTS’’. 

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

17 chapters for subtitle E is amended by inserting ‘‘, proc18 essed tobacco,’’ after ‘‘products’’. 

19 SEC. 213. EFFECTIVE DATE. 

20 Except as otherwise provided in this title, the amend21 ments made by this title shall take effect 1 year after the 

22 date of the enactment of this Act. 


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1 TITLE III—IMPORT FRAUD 

2 SEC. 301. MAXIMUM PENALTY FOR IMPORTATION OF TO3 BACCO PRODUCTS AND CIGARETTE PAPERS 

4 AND TUBES BY FRAUDULENT MEANS. 

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

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

7 (1) by striking ‘‘A fraudulent violation of sub8 section (a)’’ and inserting the following: 

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

10 subparagraph (B), a fraudulent violation of 

11 subsection (a)’’; and 

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

13 ‘‘(B) TOBACCO PRODUCTS AND CIGARETTE

14 PAPERS AND TUBES.—In the case of importa15 tion of tobacco products and cigarette papers 

16 and tubes subject to tax under chapter 52 of 

17 the Internal Revenue Code of 1986, a fraudu18 lent violation of subsection (a) is punishable by 

19 a civil penalty in an amount not to exceed the 

20 sum of— 

21 ‘‘(i) the domestic value of the mer22 chandise, and 

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

24 excise tax that could be imposed on the 

25 merchandise, if applicable.’’. 


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

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

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

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

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

6 date. 

7 TITLE IV—EXCLUSIONS REGARD8 ING INDIAN TRIBES AND 

9 TRIBAL MATTERS 

10 SEC. 401. EXCLUSIONS REGARDING INDIAN TRIBES AND 

11 TRIBAL MATTERS. 

12 (a) IN GENERAL.—Nothing in this Act or the amend13 ments made by this Act shall be construed to amend, mod14 ify, or otherwise affect— 

15 (1) any agreements, compacts, or other inter16 governmental arrangements between any State or 

17 local government and any government of an Indian 

18 tribe relating to the collection of taxes on tobacco 

19 products sold in Indian country; 

20 (2) any State laws that authorize or otherwise 

21 pertain to any such intergovernmental arrangements 

22 or create special rules or procedures for the collec23 tion of State, local, or tribal taxes on tobacco prod24 ucts sold in Indian country; 


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

2 including Federal common law and treaties, on 

3 State, local, and tribal tax and regulatory authority 

4 with respect to the sale, use, or distribution of to5 bacco products or processed tobacco by or to Indian 

6 tribes, tribal members, tribal enterprises, or in In7 dian country; 

8 (4) any Federal law, including Federal common 

9 law and treaties, regarding State jurisdiction, or 

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

11 tribal enterprise, Indian reservations, or other land 

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

13 Indian tribes; or 

14 (5) any State or local government authority to 

15 bring enforcement actions against persons located in 

16 Indian country. 

17 (b) COORDINATION OF LAW ENFORCEMENT.—Noth18 ing in this Act or the amendments made by this Act (other 

19 than the amendments relating to section 6103 of the In20 ternal Revenue Code of 1986) shall be construed to inhibit 

21 or otherwise affect any coordinated law enforcement effort 

22 by one or more States or other jurisdictions, including In23 dian tribes, through interstate compact or otherwise, 

24 that— 


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1 (1) provides for the administration of tobacco 

2 product laws or laws pertaining to interstate sales or 

3 other sales of tobacco products or processed tobacco; 

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

5 processed tobacco, or other property related to a vio6 lation of such laws; or 

7 (3) establishes cooperative programs for the ad8 ministration of such laws. 

9 (c) TREATMENT OF STATE AND LOCAL GOVERN10 MENTS.—Nothing in this Act or the amendments made 

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

12 commission States or local governments as instrumental13 ities of the United States. 

14 (d) ENFORCEMENT WITHIN INDIAN COUNTRY.— 

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

16 shall prohibit, limit, or restrict enforcement by the Attor17 ney General of the United States of this Act or an amend18 ment made by this Act within Indian country. 

19 (e) AMBIGUITY.—Any ambiguity between the lan20 guage of this section or its application and any other pro21 vision of this Act shall be resolved in favor of this section. 

22 (f) DEFINITIONS.—In this section— 

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

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

25 States Code; 


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

2 business enterprise, regardless of whether incor3 porated or unincorporated under Federal or tribal 

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

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

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

7 Internal Revenue Code of 1986; 

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

9 given that term in section 4(e) of the Indian Self10 Determination and Education Assistance Act (25 

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

12 (5) the terms ‘‘tobacco products’’ and ‘‘proc13 essed tobacco’’ have the meanings given such terms 

14 by section 5702 of the Internal Revenue Code of 

15 1986. 

Æ 


SSpencer on DSK4SPTVN1PROD with BILLS