I
107TH CONGRESS
2D SESSION
H. R. 5264
To amend the Internal Revenue Code of 1986 to deter the smuggling of
tobacco products into the United States, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 26, 2002
Mr. DOGGETT (for himself, Mr. WAXMAN, Mr. HANSEN, Mr. BECERRA, Mr.
CARDIN, Mr. COYNE, Mr. LEVIN, Mr. LEWIS of Georgia, Mr. MATSUI,
Mr. MCDERMOTT, Mr. MCNULTY, Mr. STARK, Mr. ABERCROMBIE, Mr.
ACKERMAN, Mr. ALLEN, Mr. ANDREWS, Ms. BALDWIN, Mr. BENTSEN,
Mr. BERMAN, Mr. BLUMENAUER, Mr. BROWN of Ohio, Mrs. CAPPS, Mr.
CAPUANO, Mr. CARSON of Oklahoma, Mr. CROWLEY, Mr. DAVIS of Illi-
nois, Mr. DEFAZIO, Ms. DEGETTE, Mr. DELAHUNT, Ms. ESHOO, Mr.
EVANS, Mr. FARR of California, Mr. FILNER, Mr. GUTIERREZ, Mr.
HINOJOSA, Mr. HOEFFEL, Mr. HOLT, Mr. HONDA, Ms. JACKSON-LEE of
Texas, Mr. JACKSON of Illinois, Ms. KAPTUR, Mr. KENNEDY of Rhode
Island, Mr. KILDEE, Mr. KIND, Mr. KUCINICH, Mr. LAFALCE, Mr.
LAMPSON, Mr. LANGEVIN, Mr. LANTOS, Ms. LEE, Ms. LOFGREN, Mr.
LYNCH, Mrs. MCCARTHY of New York, Ms. MCCARTHY of Missouri, Mr.
MCGOVERN, Mrs. MALONEY of New York, Mr. MATHESON, Mr. MEE-
HAN, Mr. MEEKS of New York, Mr. GEORGE MILLER of California, Mrs.
MINK of Hawaii, Mr. NADLER, Mrs. NAPOLITANO, Mr. OBERSTAR, Mr.
OLVER, Mr. OWENS, Mr. PALLONE, Mr. PASCRELL, Ms. PELOSI, Mr.
RODRIGUEZ, Mr. ROTHMAN, Ms. ROYBAL-ALLARD, Mr. RUSH, Ms.
SANCHEZ, Mr. SANDERS, Ms. SCHAKOWSKY, Mr. SCHIFF, Mr. SERRANO,
Mr. SHERMAN, Ms. SLAUGHTER, Ms. SOLIS, Mr. TIERNEY, Mr. UDALL
of Colorado, Mr. UDALL of New Mexico, Ms. VELA´ZQUEZ, Ms. WATERS,
Ms. WATSON of California, Mr. WEINER, Ms. WOOLSEY, Mr. WU, and
Ms. MILLENDER-MCDONALD) introduced the following bill; which was re-
ferred 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
A BILL
To amend the Internal Revenue Code of 1986 to deter the
smuggling of tobacco products into the United States,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Tobacco Smuggling Eradication Act of 2002’’.
TITLE I—AMENDMENTS TO IN-
TERNAL REVENUE CODE OF
1986
SEC. 101. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in
this title an amendment or repeal is expressed in terms
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a
section or other provision of the Internal Revenue Code
of 1986.
SEC. 102. IMPROVED MARKING AND LABELING.
(a) IN GENERAL.—Subsection (b) of section 5723
(relating to marks, labels, and notices) is amended—
(1) by striking ‘‘, if any,’’ and
(2) by adding at the end the following: ‘‘Such
marks, labels, and notices shall include marks and
notices relating to the following:
‘‘(1) IDENTIFICATION.—The Secretary shall
promulgate regulations that require each manufac-
turer or importer of tobacco products to legibly print
a unique serial number on all packages of tobacco
products manufactured or imported for sale or dis-
tribution. Such serial number shall be designed to
enable the Secretary to identify the manufacturer or
importer of the product, and the location and date
of manufacture or importation. The Secretary shall
determine the size and location of the serial number.
‘‘(2) 
MARKING
REQUIREMENTS
FOR
EX-
PORTS.—Each package of a tobacco product that is
exported shall be marked for export from the United
States. The Secretary shall promulgate regulations
to determine the size and location of the mark and
under what circumstances a waiver of this para-
graph shall be granted.’’.
(b) SALES
ON
INDIAN
RESERVATIONS.—Section
5723 is amended by adding at the end the following new
subsections:
‘‘(f) SALES ON INDIAN RESERVATIONS.—The Sec-
retary, in consultation with the Secretary of the Interior,
shall promulgate regulations that require that each pack-
age of a tobacco product that is sold on an Indian reserva-
tion (as defined in section 403(9) of the Indian Child Pro-
tection and Family Violence Prevention Act (25 U.S.C.
3202(9)) be labeled as such. Such regulations shall include
requirements for the size and location of the label.
‘‘(g) DEFINITION OF PACKAGE.—For purposes of
this section, the term ‘package’ means the innermost
sealed container irrespective of the material from which
such container is made, in which a tobacco product is
placed by the manufacturer and in which such tobacco
product is offered for sale to a member of the general pub-
lic.’’.
SEC. 103. WHOLESALERS REQUIRED TO HAVE PERMIT.
Section 5712 (relating to application for permit) is
amended by inserting ‘‘, wholesaler,’’ after ‘‘manufac-
turer’’.
SEC. 104. CONDITIONS OF PERMIT.
Subsection (a) of section 5713 (relating to issuance
of permit) is amended to read as follows:
‘‘(a) ISSUANCE.—
‘‘(1) IN GENERAL.—A person shall not engage
in business as a manufacturer, wholesaler, or im-
porter of tobacco products or as an export ware-
house proprietor without a permit to engage in such
business. Such permit shall be issued in such form
and in such manner as the Secretary shall by regula-
tion prescribe, to every person properly qualified
under sections 5711 and 5712. A new permit may
be required at such other time as the Secretary shall
by regulation prescribe.
‘‘(2) CONDITIONS.—The issuance of a permit
under this section shall be conditioned upon the
compliance with the requirements of this chapter
and the Contraband Cigarette Trafficking Act (18
U.S.C. chapter 114), and any regulations issued
pursuant to such statutes.’’.
SEC. 105. RECORDS TO BE MAINTAINED.
Section 5741 (relating to records to be maintained)
is amended—
(1) by inserting ‘‘(a) IN GENERAL.—’’ before
‘‘Every manufacturer’’,
(2) by inserting ‘‘every wholesaler,’’ after
‘‘every importer,’’,
(3) by striking ‘‘such records’’ and inserting
‘‘records concerning the chain of custody of the to-
bacco products and such other records’’, and
(4) by adding at the end the following new sub-
section:
‘‘(b) RETAILERS.—Retailers shall maintain records
of receipt of tobacco products, and such records shall be
available to the Secretary for inspection and audit. An or-
dinary commercial record or invoice shall satisfy the re-
quirements of this subsection if such record shows the date
of receipt, from whom tobacco products were received, and
the quantity of tobacco products received.’’.
SEC. 106. REPORTS.
Section 5722 (relating to reports) is amended—
(1) by inserting ‘‘(a) IN GENERAL.—’’ before
‘‘Every manufacturer’’, and
(2) by adding at the end the following new sub-
section:
‘‘(b) REPORTS BY EXPORT WAREHOUSE PROPRI-
ETORS.—
‘‘(1) IN GENERAL.—Prior to exportation of to-
bacco products from the United States, the export
warehouse proprietor shall submit a report (in such
manner and form as the Secretary may by regula-
tion prescribe) to enable the Secretary to identify
the shipment and assure that it reaches its intended
destination.
‘‘(2) AGREEMENTS
WITH
FOREIGN
GOVERN-
MENTS.—Notwithstanding section 6103 of this title,
the Secretary is authorized to enter into agreements
with foreign governments to exchange or share infor-
mation contained in reports received from export
warehouse proprietors of tobacco products if—
‘‘(A) the Secretary believes that such
agreement will assist in—
‘‘(i) ensuring compliance with the pro-
visions of this chapter or regulations pro-
mulgated thereunder, or
‘‘(ii) preventing or detecting violations
of the provisions of this chapter or regula-
tions promulgated thereunder, and
‘‘(B) the Secretary obtains assurances
from such government that the information will
be held in confidence and used only for the pur-
poses specified in clauses (i) and (ii) of sub-
paragraph (A).
No information may be exchanged or shared with
any government that has violated such assurances.’’.
SEC. 107. FRAUDULENT OFFENSES.
(a) IN GENERAL.—Subsection (a) of section 5762
(relating to fraudulent offenses) is amended by striking
paragraph (1) and redesignating paragraphs (2) through
(6) as paragraphs (1) through (5), respectively.
(b) OFFENSES RELATING TO DISTRIBUTION OF TO-
BACCO PRODUCTS.—Section 5762 is amended—
(1) by redesignating subsection (b) as sub-
section (c),
(2) in subsection (c) (as so redesignated), by in-
serting ‘‘or (b)’’ after ‘‘(a)’’, and
(3) by inserting after subsection (a) the fol-
lowing new subsection:
‘‘(b) OFFENSES RELATING TO DISTRIBUTION OF TO-
BACCO PRODUCTS.—It shall be unlawful—
‘‘(1) for any person to engage in the business
as a manufacturer or importer of tobacco products
or cigarette papers and tubes, or to engage in the
business as a wholesaler or an export warehouse pro-
prietor, without filing the bond and obtaining the
permit where required by this chapter or regulations
thereunder;
‘‘(2) for a manufacturer, importer, or whole-
saler permitted under this chapter intentionally to
ship, transport, deliver, or receive any tobacco prod-
ucts from or to any person other than a person per-
mitted under this chapter or a retailer, except a per-
mitted importer may receive foreign tobacco prod-
ucts from a foreign manufacturer or a foreign dis-
tributor that have not previously entered the United
States;