277 
the provisions of this subsection, apply to the floor 
stocks taxes imposed by paragraph (1), to the same 
extent as if such taxes were imposed by such section 
5701. The Secretary may treat any person who bore 
the ultimate burden of the tax imposed by para-
graph (1) as the person to whom a credit or refund 
under such provisions may be allowed or made. 
(i) EFFECTIVE DATE.—The amendments made by 
this section shall apply to articles removed (as defined in 
section 5702(j) of the Internal Revenue Code of 1986) 
after March 31, 2009. 
SEC. 702. ADMINISTRATIVE IMPROVEMENTS. 
(a) PERMIT, INVENTORIES, REPORTS, AND RECORDS 
REQUIREMENTS FOR MANUFACTURERS AND IMPORTERS 
OF PROCESSED TOBACCO.— 
(1) PERMIT.— 
(A) APPLICATION.—Section 5712 of the 
Internal Revenue Code of 1986 is amended by 
inserting ‘‘or processed tobacco’’ after ‘‘tobacco 
products’’. 
(B) ISSUANCE.—Section 5713(a) of such 
Code is amended by inserting ‘‘or processed to-
bacco’’ after ‘‘tobacco products’’. 
(2) INVENTORIES, REPORTS, AND PACKAGES.— 
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278 
(A) INVENTORIES.—Section 5721 of such 
Code is amended by inserting ‘‘, processed to-
bacco,’’ after ‘‘tobacco products’’. 
(B) REPORTS.—Section 5722 of such Code 
is amended by inserting ‘‘, processed tobacco,’’ 
after ‘‘tobacco products’’. 
(C) PACKAGES, MARKS, LABELS, AND NO-
TICES.—Section 5723 of such Code is amended 
by inserting ‘‘, processed tobacco,’’ after ‘‘to-
bacco products’’ each place it appears. 
(3) RECORDS.—Section 5741 of such Code is 
amended by inserting ‘‘, processed tobacco,’’ after 
‘‘tobacco products’’. 
(4) 
MANUFACTURER
OF
PROCESSED
TO-
BACCO.—Section 5702 of such Code is amended by 
adding at the end the following new subsection: 
‘‘(p) MANUFACTURER OF PROCESSED TOBACCO.— 
‘‘(1) IN GENERAL.—The term ‘manufacturer of 
processed tobacco’ means any person who processes 
any tobacco other than tobacco products. 
‘‘(2) PROCESSED TOBACCO.—The processing of 
tobacco shall not include the farming or growing of 
tobacco or the handling of tobacco solely for sale, 
shipment, or delivery to a manufacturer of tobacco 
products or processed tobacco.’’. 
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279 
(5) 
CONFORMING
AMENDMENT.—Sections 
5702(j), 5702(k), and 5704(h) of such Code is 
amended by inserting ‘‘, or any processed tobacco,’’ 
after ‘‘nontaxpaid tobacco products or cigarette pa-
pers or tubes’’. 
(6) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on April 1, 2009. 
(b) BASIS FOR DENIAL, SUSPENSION, OR REVOCA-
TION OF PERMITS.— 
(1) DENIAL.—Paragraph (3) of section 5712 of 
such Code is amended to read as follows: 
‘‘(3) such person (including, in the case of a 
corporation, any officer, director, or principal stock-
holder and, in the case of a partnership, a part-
ner)— 
‘‘(A) is, by reason of his business experi-
ence, financial standing, or trade connections or 
by reason of previous or current legal pro-
ceedings involving a felony violation of any 
other provision of Federal criminal law relating 
to tobacco products, processed tobacco, ciga-
rette paper, or cigarette tubes, not likely to 
maintain operations in compliance with this 
chapter, 
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280 
‘‘(B) has been convicted of a felony viola-
tion of any provision of Federal or State crimi-
nal law relating to tobacco products, processed 
tobacco, cigarette paper, or cigarette tubes, or 
‘‘(C) has failed to disclose any material in-
formation required or made any material false 
statement in the application therefor.’’. 
(2) SUSPENSION OR REVOCATION.—Subsection 
(b) of section 5713 of such Code is amended to read 
as follows: 
‘‘(b) SUSPENSION OR REVOCATION.— 
‘‘(1) SHOW CAUSE HEARING.—If the Secretary 
has reason to believe that any person holding a per-
mit— 
‘‘(A) has not in good faith complied with 
this chapter, or with any other provision of this 
title involving intent to defraud, 
‘‘(B) has violated the conditions of such 
permit, 
‘‘(C) has failed to disclose any material in-
formation required or made any material false 
statement in the application for such permit, 
‘‘(D) has failed to maintain his premises in 
such manner as to protect the revenue, 
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281 
‘‘(E) is, by reason of previous or current 
legal proceedings involving a felony violation of 
any other provision of Federal criminal law re-
lating to tobacco products, processed tobacco, 
cigarette paper, or cigarette tubes, not likely to 
maintain operations in compliance with this 
chapter, or 
‘‘(F) has been convicted of a felony viola-
tion of any provision of Federal or State crimi-
nal law relating to tobacco products, processed 
tobacco, cigarette paper, or cigarette tubes, 
the Secretary shall issue an order, stating the facts 
charged, citing such person to show cause why his 
permit should not be suspended or revoked. 
‘‘(2) ACTION FOLLOWING HEARING.—If, after 
hearing, the Secretary finds that such person has 
not shown cause why his permit should not be sus-
pended or revoked, such permit shall be suspended 
for such period as the Secretary deems proper or 
shall be revoked.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the date of the 
enactment of this Act. 
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282 
(c) APPLICATION
OF INTERNAL REVENUE CODE 
STATUTE OF LIMITATIONS FOR ALCOHOL AND TOBACCO 
EXCISE TAXES.— 
(1) IN GENERAL.—Section 514(a) of the Tariff 
Act of 1930 (19 U.S.C. 1514(a)) is amended by 
striking ‘‘and section 520 (relating to refunds)’’ and 
inserting ‘‘section 520 (relating to refunds), and sec-
tion 6501 of the Internal Revenue Code of 1986 
(but only with respect to taxes imposed under chap-
ters 51 and 52 of such Code)’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to articles imported 
after the date of the enactment of this Act. 
(d) EXPANSION OF DEFINITION OF ROLL-YOUR-OWN 
TOBACCO.— 
(1) IN GENERAL.—Section 5702(o) of the In-
ternal Revenue Code of 1986 is amended by insert-
ing ‘‘or cigars, or for use as wrappers thereof’’ be-
fore the period at the end. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to articles removed (as 
defined in section 5702(j) of the Internal Revenue 
Code of 1986) after March 31, 2009. 
(e) TIME
OF TAX
FOR UNLAWFULLY MANUFAC-
TURED TOBACCO PRODUCTS.— 
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(1) IN GENERAL.—Section 5703(b)(2) of such 
Code is amended by adding at the end the following 
new subparagraph: 
‘‘(F) SPECIAL
RULE
FOR
UNLAWFULLY 
MANUFACTURED TOBACCO PRODUCTS.—In the 
case of any tobacco products, cigarette paper, 
or cigarette tubes manufactured in the United 
States at any place other than the premises of 
a manufacturer of tobacco products, cigarette 
paper, or cigarette tubes that has filed the bond 
and obtained the permit required under this 
chapter, tax shall be due and payable imme-
diately upon manufacture.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall take effect on the date of the 
enactment of this Act. 
(f) DISCLOSURE.— 
(1) IN
GENERAL.—Paragraph (1) of section 
6103(o) of such Code is amended by designating the 
text as subparagraph (A), moving such text 2 ems 
to the right, striking ‘‘Returns’’ and inserting ‘‘(A) 
IN GENERAL.—Returns’’, and by inserting after sub-
paragraph (A) (as so redesignated) the following 
new subparagraph: 
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284 
‘‘(B) USE IN CERTAIN PROCEEDINGS.—Re-
turns and return information disclosed to a 
Federal agency under subparagraph (A) may be 
used in an action or proceeding (or in prepara-
tion for such action or proceeding) brought 
under section 625 of the American Jobs Cre-
ation Act of 2004 for the collection of any un-
paid assessment or penalty arising under such 
Act.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
6103(p)(4) of such Code is amended by striking 
‘‘(o)(1)’’ both places it appears and inserting 
‘‘(o)(1)(A)’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply on or after the date 
of the enactment of this Act. 
(g) TRANSITIONAL RULE.—Any person who— 
(1) on April 1 is engaged in business as a man-
ufacturer of processed tobacco or as an importer of 
processed tobacco, and 
(2) before the end of the 90-day period begin-
ning on such date, submits an application under 
subchapter B of chapter 52 of such Code to engage 
in such business, may, notwithstanding such sub-
chapter B, continue to engage in such business 
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pending final action on such application. Pending 
such final action, all provisions of such chapter 52 
shall apply to such applicant in the same manner 
and to the same extent as if such applicant were a 
holder of a permit under such chapter 52 to engage 
in such business. 
SEC. 703. TREASURY STUDY CONCERNING MAGNITUDE OF 
TOBACCO 
SMUGGLING 
IN 
THE 
UNITED 
STATES. 
Not later than one year after the date of the enact-
ment of this Act, the Secretary of the Treasury shall con-
duct a study concerning the magnitude of tobacco smug-
gling in the United States and submit to Congress rec-
ommendations for the most effective steps to reduce to-
bacco smuggling. Such study shall also include a review 
of the loss of Federal tax receipts due to illicit tobacco 
trade in the United States and the role of imported to-
bacco products in the illicit tobacco trade in the United 
States. 
SEC. 704. TIME FOR PAYMENT OF CORPORATE ESTIMATED 
TAXES. 
The percentage under subparagraph (C) of section 
401(1) of the Tax Increase Prevention and Reconciliation 
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Act of 2005 in effect on the date of the enactment of this 
Act is increased by 1 percentage point. 
Æ 
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