I 
112TH CONGRESS 
1ST SESSION H. R. 3186 
To amend the Internal Revenue Code of 1986 to reduce tobacco smuggling, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 13, 2011 
Mr. DOGGETT (for himself, Mr. BLUMENAUER, Mr. DEFAZIO, Ms. DEGETTE, 
Ms. DELAURO, Mr. ELLISON, Mr. FRANK of Massachusetts, Mr. GENE 
GREEN of Texas, Mr. GRIJALVA, Mr. HIMES, Mr. HINCHEY, Mr. HINO-
JOSA, Ms. HIRONO, Mr. HOLT, Mr. HONDA, Mr. JACKSON of Illinois, Ms. 
JACKSON LEE of Texas, Mr. LIPINSKI, Mr. LOEBSACK, Mrs. LOWEY, 
Mrs. MALONEY, Mrs. MCCARTHY of New York, Mr. MCGOVERN, Mr. 
MORAN, Ms. NORTON, Mr. OLVER, Ms. RICHARDSON, Ms. LINDA T. 
SA´NCHEZ of California, Ms. LORETTA SANCHEZ of California, Ms. SCHA-
KOWSKY, Mr. SHERMAN, Ms. SLAUGHTER, Mr. STARK, Mr. THOMPSON 
of California, Mr. TONKO, Ms. TSONGAS, and Mr. WAXMAN) 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 reduce 
tobacco smuggling, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Smuggled Tobacco Prevention Act of 2011’’ or the 
‘‘STOP Act’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
TITLE I—AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 
Sec. 101. Amendment of 1986 code. 
Sec. 102. Machines used to manufacture or package tobacco products or proc-
essed tobacco. 
Sec. 103. Improved marking and labeling. 
Sec. 104. Wholesalers and manufacturers, importers, and sellers of tobacco pro-
duction machines required to have permit. 
Sec. 105. Conditions of permit. 
Sec. 106. Records to be maintained. 
Sec. 107. Reports. 
Sec. 108. Fraudulent offenses. 
Sec. 109. Penalties. 
Sec. 110. Coordination with other government officials. 
Sec. 111. Definitions. 
Sec. 112. Conforming amendments. 
Sec. 113. Effective date. 
TITLE II—IMPORT FRAUD 
Sec. 201. Maximum penalty for importation of tobacco products and cigarette 
papers and tubes by fraudulent means. 
TITLE III—EXCLUSIONS REGARDING INDIAN TRIBES AND TRIBAL 
MATTERS 
Sec. 301. Exclusions regarding Indian Tribes and Tribal matters. 
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-
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sion, the reference shall be considered to be made to a 
section or other provision of the Internal Revenue Code 
of 1986. 
SEC. 102. MACHINES USED TO MANUFACTURE OR PACKAGE 
TOBACCO PRODUCTS OR PROCESSED TO-
BACCO. 
(a) IN GENERAL.—Section 5762 is amended— 
(1) by redesignating subsection (b) as sub-
section (c), and 
(2) by inserting after subsection (a) the fol-
lowing new subsection: 
‘‘(b) MACHINES USED TO MANUFACTURE OR PACK-
AGE TOBACCO PRODUCTS OR PROCESSED TOBACCO.— 
‘‘(1) TRANSFER OF MANUFACTURING MACHINES 
TO
LICENSED
PERSONS.—Any tobacco production 
machine may be sold, leased, imported, exported, de-
livered, or otherwise made available only to per-
sons— 
‘‘(A) lawfully engaged in— 
‘‘(i) the sale, lease, importation, ex-
portation, or delivery of such machines, 
‘‘(ii) the manufacture or packaging of 
tobacco products or processed tobacco, or 
‘‘(iii) the application of unique identi-
fication markings onto tobacco product or 
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processed tobacco packages pursuant to 
section 5723, and 
‘‘(B) that have all Federal, State, local, 
and Indian tribal government permits, registra-
tions, and licenses required to engage in such 
activities. 
‘‘(2) TRANSFER OF MACHINES TO PERSONS EN-
GAGED
IN
ILLEGAL
MANUFACTURE
OF
CONTRA-
BAND.—No tobacco production machine shall know-
ingly be manufactured for or be (directly or indi-
rectly) sold, leased, imported, exported, delivered, or 
otherwise made available to any person engaged in 
the illegal manufacture, distribution, or sale of coun-
terfeit or contraband tobacco products or processed 
tobacco, unique identification markings, or other 
tax-payment indicia. 
‘‘(3) RENDERING UNUSED MACHINES INOPER-
ABLE.—Any tobacco production machine that is no 
longer being used as such shall be made irreparably 
inoperable for such use before being disposed of or 
put to any other use. This paragraph shall not apply 
to any such machines being kept solely for display 
or for historical purposes. 
‘‘(4) RECORDS.— 
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‘‘(A) IN
GENERAL.—Any person selling, 
leasing, importing, exporting, delivering, or oth-
erwise making available a tobacco production 
machine shall maintain and keep records relat-
ing to any transfers of the machine, including 
the name, address, other contact information, 
and any permit, registration, or license number 
of the person receiving delivery of the machine, 
or to whom the machine is otherwise trans-
ferred, as the case may be. 
‘‘(B) 
5-YEAR
HOLDING
PERIOD
FOR 
RECORDS.—Any record required to be main-
tained and kept under subparagraph (A) shall 
be kept for the 5-year period beginning on the 
first date such record is required to be so main-
tained and kept. 
‘‘(C) AVAILABILITY
OF
RECORDS.—Such 
records shall be available for inspection by any 
internal revenue officer during business hours. 
‘‘(D) SAFE
HARBOR.—An ordinary com-
mercial record or invoice shall satisfy the re-
quirements of this paragraph if such record or 
invoice contains all of the information required 
under subparagraph (A). 
‘‘(5) VIOLATIONS.— 
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‘‘(A) IN
GENERAL.—Whoever knowingly 
violates paragraph (1), (2), or (3) shall, for 
each offense, be fined not more than $10,000 or 
an amount equal to 3 times the fair market 
value of the tobacco product machine involved 
(whichever is greater), or imprisoned not more 
than five years, or both. 
‘‘(B) RECORDKEEPING.—Whoever know-
ingly violates paragraph (4) shall, for each of-
fense, be fined not more than $10,000.’’. 
(b) TOBACCO PRODUCTION MACHINE.—Section 5702 
is amended by adding at the end the following new sub-
section: 
‘‘(q) TOBACCO PRODUCTION MACHINE.—The term 
‘tobacco production machine’ means any machine (or com-
ponent integral to the operation of such a machine) used 
to manufacture or package tobacco products or processed 
tobacco or to apply unique identification markings or 
other tax-payment indicia to packages of tobacco products 
or processed tobacco. Such term includes any machine 
used to produce tobacco products for compensation, lease, 
or hire, or otherwise used in a commercial setting.’’. 
(c) CONFORMING AMENDMENT.—Subsection (c) of 
section 5762 (as so redesignated) is amended by striking 
‘‘subsection (a)’’ and inserting ‘‘subsections (a) and (b)’’. 
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(d) EFFECTIVE DATE.—The amendment made by 
this section shall apply to transfers more than 6 months 
after the date of the enactment of this Act. 
SEC. 103. IMPROVED MARKING AND LABELING. 
(a) IN GENERAL.—Subsection (b) of section 5723 is 
amended to read as follows: 
‘‘(b) MARKS, LABELS, AND NOTICES.— 
‘‘(1) IN GENERAL.—Subject to paragraphs (2), 
(3), and (4), every package of tobacco products, 
processed tobacco, or cigarette papers or tubes shall, 
before removal, bear the marks, labels, and notices 
that the Secretary by regulation prescribes. 
‘‘(2) MARKING REQUIREMENTS FOR DOMESTIC 
MARKET.— 
‘‘(A) IN GENERAL.—Each person who is a 
manufacturer or importer of tobacco products 
or processed tobacco shall (in accordance with 
regulations prescribed by the Secretary) ensure 
that, before any product intended for sale or 
distribution within the United States is re-
moved, a unique identification marking is af-
fixed to or forms part of each package of to-
bacco product or processed tobacco manufac-
tured or imported by such person for sale or 
distribution. 
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‘‘(B) MARKINGS
ON
INDIVIDUAL
PACK-
AGES.—Any markings required to be placed on 
a tobacco product or processed tobacco package 
by this subsection shall be placed on the inner-
most sealed container visible from the outside 
of the individual package. For any tobacco 
product or processed tobacco package that con-
tains multiple smaller packages of tobacco prod-
ucts or processed tobacco, any markings re-
quired to be so placed on tobacco product or 
processed tobacco packages shall be placed on 
all the individual tobacco product or processed 
tobacco packages. 
‘‘(C) MARKINGS ON AGGREGATE PACKING 
MODES.—To facilitate efficient tracking and 
tracing of tobacco products or processed to-
bacco through the distribution system, all man-
ufacturers or importers of tobacco products or 
processed tobacco shall, in addition to such 
unique identification marking, also, in accord-
ance with regulations prescribed by the Sec-
retary, ensure that unique identification mark-
ings are affixed to or form part of aggregate 
packing modes (such as cartons, cases, and 
master cases for cigarettes). The Secretary 
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shall determine the size, location, and methods 
for such markings. The Secretary shall estab-
lish regulations requiring that all persons with-
in the distribution chain, up to but not includ-
ing the ultimate retailer, utilize the unique 
identification markings on aggregate packing 
modes to facilitate the tracking and tracing of 
tobacco products or processed tobacco through 
the distribution system. 
‘‘(3) 
MARKING
REQUIREMENTS
FOR
EX-
PORTS.—A unique identification marking shall be af-
fixed to or form part of each package of tobacco 
product or processed tobacco that is exported, or 
sold for export, that distinguishes it from those 
products or processed tobacco intended for sale or 
distribution within the United States. The Secretary 
shall by regulation prescribe the size, location, and 
other characteristics of such marking, and it may 
contain a serial number that is assigned to the coun-
try of export, except that no such serial number 
shall be required on tobacco products or processed 
tobacco sold at retail to consumers by duty free 
stores for consumption beyond the jurisdiction of the 
internal revenue laws of the United States. Such to-
bacco products or processed tobacco shall instead 
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bear markings indicating the tobacco product or 
processed tobacco is only for duty-free sale to con-
sumers, as prescribed through regulation by the Sec-
retary, before the product or processed tobacco is re-
moved. 
‘‘(4) AUTHORIZATION
OF
FEDERAL
UNIQUE 
IDENTIFICATION MARKING.—Not later than 3 years 
after the date of the enactment of the Smuggled To-
bacco Prevention Act of 2011, the Secretary shall by 
regulation require the use of a unique identification 
marking on all products subject to tax under this 
chapter.’’. 
(b) UNIQUE IDENTIFICATION MARKING.—Section 
5723 is amended by adding at the end the following new 
subsection: 
‘‘(f) UNIQUE IDENTIFICATION MARKING.— 
‘‘(1) IN
GENERAL.—No tobacco product or 
processed tobacco may be sold, offered for sale, dis-
tributed, mailed, or otherwise delivered for final sale 
to any consumer in the United States unless the 
unique identification marking that meets the re-
quirements of this section (and any regulations pre-
scribed thereunder) is affixed to or forms part of the 
package in which it is contained. 
‘‘(2) SYSTEM SPECIFICATIONS.— 
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‘‘(A) The Secretary shall design such sys-
tem to coordinate and avoid interference with 
State, local, and Indian tribal tax stamps and 
markings, facilitate collection of the tax im-
posed by this chapter, impede contraband to-
bacco trafficking, minimize counterfeit marking, 
allow for more effective tracking and tracing of 
tobacco products and processed tobacco, facili-
tate the enforcement of related Federal laws, 
and utilize such available technology as may 
promote the purposes of this chapter. 
‘‘(B) The Secretary shall prescribe the 
method and manner in which such unique iden-
tification markings are to be distributed, pur-
chased, and applied to or made part of tobacco 
product and processed tobacco packages, and 
may provide for the cancellation of such mark-
ings. 
‘‘(C) The unique identification marking 
must provide the following information: 
‘‘(i) The denominated value of the 
marking. 
‘‘(ii) A unique serial number or track-
ing code for each tobacco product or proc-
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essed tobacco package or aggregate pack-
age. 
‘‘(iii) The name and address of the 
person purchasing the marking (and, if dif-
ferent, of the person ensuring the marking 
is affixed to or made part of the package). 
‘‘(iv) The date the marking was pur-
chased and when it was affixed to or made 
part of the package. 
‘‘(v) The name and address of the 
first unrelated person purchasing or other-
wise receiving the tobacco product or proc-
essed tobacco from the person who ensures 
the marking is affixed to or made part of 
the package and the date of such purchase 
or receipt. 
‘‘(vi) Such other information as the 
Secretary may prescribe to carry out the 
purposes of this chapter. 
‘‘(D) The information described in sub-
paragraph (C) shall, to the extent practicable— 
‘‘(i) be cryptographically encrypted, 
and 
‘‘(ii)(I) be readable by a portable 
scanning device (or similar device) to be 
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utilized by regulatory and law enforcement 
officials at the time and place of inspec-
tion, or 
‘‘(II) be otherwise accessible re-
motely at such time and place. 
‘‘(3) UNRELATED
PERSON.—For purposes of 
this subsection, the term ‘unrelated person’ means a 
person other than a related person within the mean-
ing of section 267(b) or 707(b)(1).’’. 
(c) DEFINITIONS.—Section 5723, as amended by 
subsection (b), is amended by adding at the end the fol-
lowing new subsections: 
‘‘(g) PACKAGE DEFINED.—For purposes of this sec-
tion, the term ‘package’ means a pack, box, carton, or con-
tainer of any kind or, if no other container, any wrapping 
(including cellophane), in which a tobacco product or proc-
essed tobacco is sold, offered for sale, distributed, or oth-
erwise delivered for final sale to any consumer. 
‘‘(h) 
UNIQUE
IDENTIFICATION
MARKING
DE-
FINED.—For purposes of this section, the term ‘unique 
identification marking’ means a device in such design and 
denomination as the Secretary authorizes by regulation 
that is affixed to or made part of a package of a tobacco 
product or processed tobacco. Such markings shall contain 
overt security features for public authentication and covert 
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security features embedding a unique, secure, encrypted 
identifier onto the marking, enabling law enforcement au-
thentication, production control, and tracking and tracing 
of the product or processed tobacco bearing the marking.’’. 
(d) REGULATIONS.—The Secretary of the Treasury 
shall consult with the Secretary of Health and Human 
Services as may be appropriate to carry out the purposes 
of subsection (f), and paragraphs (2), (3), and (4) of sub-
section (b), of section 5723 of the Internal Revenue Code 
of 1986 (as added by this section). 
SEC. 104. WHOLESALERS AND MANUFACTURERS, IMPORT-
ERS, AND SELLERS OF TOBACCO PRODUC-
TION MACHINES REQUIRED TO HAVE PER-
MIT. 
(a) WHOLESALERS.—Section 5712 is amended by in-
serting ‘‘, wholesaler,’’ after ‘‘manufacturer’’. 
(b) MANUFACTURERS, IMPORTERS, AND SELLERS OF 
TOBACCO
PRODUCTION
MACHINES.—Section 5712 is 
amended by striking ‘‘or as an export warehouse propri-
etor’’ and inserting ‘‘, as an export warehouse proprietor, 
or as a manufacturer, seller, or importer of tobacco pro-
duction machines’’. 
SEC. 105. CONDITIONS OF PERMIT. 
(a) ISSUANCE.—Subsection (a) of section 5713 is 
amended to read as follows: 
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‘‘(a) ISSUANCE.— 
‘‘(1) IN GENERAL.—A person shall not engage 
in business as a manufacturer, wholesaler, or im-
porter of tobacco products or processed tobacco, as 
an export warehouse proprietor, or as a manufac-
turer, seller, or importer of tobacco production ma-
chines without a permit to engage in such business. 
Such permit, conditioned upon compliance with this 
chapter and regulations issued thereunder, shall be 
issued in such form and in such manner as the Sec-
retary shall by regulation prescribe, to every person 
properly qualified under sections 5711 and 5712. 
Any entity granted such a permit is not eligible to 
provide any services the Secretary may elect to pro-
cure to facilitate the purposes of section 5723. Per-
mit holders shall automatically count output and 
register, record, and transmit the quantities meas-
ured, in the form, conditions, and time limits estab-
lished by the Secretary. A new permit may be re-
quired at such other time as the Secretary shall by 
regulation prescribe. 
‘‘(2) CONDITIONS.—The Secretary shall not 
issue a permit under this section unless— 
‘‘(A) the applicant is in compliance with 
the requirements of— 
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‘‘(i) this chapter, 
‘‘(ii) chapter 114 of title 18, United 
States Code, 
‘‘(iii) the Act of October 19, 1949 (15 
U.S.C. 375 et seq.; commonly referred to 
as the ‘Jenkins Act’), 
‘‘(iv) the Fair and Equitable Tobacco 
Reform Act of 2004, and any amendments 
made thereby, 
‘‘(v) the Family Smoking Prevention 
and Tobacco Control Act, and any amend-
ments made thereby, 
‘‘(vi) the Prevent All Cigarette Traf-
ficking Act of 2009, and any amendments 
made thereby, and 
‘‘(vii) any related regulations there-
under, 
as in effect on the date of the issuance of the 
permit, 
‘‘(B) the applicant certifies that the appli-
cant is in compliance with all other Federal, 
State, local, and Indian tribal laws relating to 
the taxation, manufacture, importation, expor-
tation, distribution, marketing, sale, or trans-
portation of tobacco products, processed to-
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bacco, or tobacco production machines, as in ef-
fect on the date of the issuance of the permit, 
and 
‘‘(C) the applicant identifies in the applica-
tion any violation of a law described in subpara-
graph (A) or (B) by the applicant resulting in 
a penalty under any such law during the 5-year 
period ending on the date of the application.’’. 
(b) SUSPENSION
OR REVOCATION.—Subparagraph 
(A) of section 5713(b)(1) is amended by inserting ‘‘or any 
other law described in subparagraph (A) or (B) of sub-
section (a)(2)’’ after ‘‘this chapter’’. 
SEC. 106. RECORDS TO BE MAINTAINED. 
(a) IN GENERAL.—Section 5741 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 processed tobacco (including the 
foreign country of final destination for packages 
marked for export) and the serial numbers, marks, 
labels, and notices required under section 5723, and 
such other records’’, and 
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(4) by adding at the end the following new sub-
sections: 
‘‘(b) RETAILERS.—Retailers shall maintain records 
of receipt, and any non-retail sale or delivery, of tobacco 
products and processed tobacco. 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 or processed to-
bacco were received, and the quantity of tobacco products 
or processed tobacco received (or, in the case of non-retail 
sale or delivery, the date of sale or delivery, to whom the 
tobacco products or processed tobacco were sold or deliv-
ered, and the quantity of the tobacco products or proc-
essed tobacco sold or delivered). To the extent the Sec-
retary determines that the records maintained by retail 
entities licensed pursuant to section 555(b) of the Tariff 
Act of 1930 (19 U.S.C. 1555(b)) satisfy the recordkeeping 
requirements of this section, no additional records shall 
be required for such entities under this section. The pre-
ceding provisions of this subsection shall not be construed 
to limit or preclude other recordkeeping requirements im-
posed on any retailer. 
‘‘(c) RECORDS CONCERNING MARKS AND CHAIN OF 
CUSTODY.—Records concerning the chain of custody and 
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the marks, labels, and notices required under section 5723 
shall be available for inspection by any internal revenue 
officer during business hours.’’. 
(b) CONSULTATION WITH HEALTH
AND HUMAN 
SERVICES.—The Secretary of the Treasury shall consult 
with the Secretary of Health and Human Services as may 
be appropriate to carry out the purposes of section 5741 
of the Internal Revenue Code of 1986. 
SEC. 107. REPORTS. 
Section 5722 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.—Prior to exportation of tobacco products or proc-
essed tobacco from the United States, the export ware-
house proprietor shall submit a report (in such manner 
and form as the Secretary may by regulation prescribe) 
to enable the Secretary to identify the shipment and as-
sure that it reaches its intended destination.’’. 
SEC. 108. FRAUDULENT OFFENSES. 
(a) IN GENERAL.—Subsection (a) of section 5762 is 
amended— 
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(1) by striking paragraph (1) and redesignating 
paragraphs (2) through (6) as paragraphs (1) 
through (5), respectively, and 
(2) by striking ‘‘not more than $10,000’’ and 
inserting ‘‘not more than $10,000 or an amount 
equal to 3 times the amount of the tax imposed 
under this chapter on the tobacco product involved 
(whichever is greater)’’. 
(b) OFFENSES RELATING TO DISTRIBUTION OF TO-
BACCO PRODUCTS, ETC.— 
(1) IN GENERAL.—Section 5762 (as amended 
by section 102 of this Act) is amended— 
(A) by redesignating subsection (c) as sub-
section (d), and 
(B) by inserting after subsection (b) the 
following new subsection: 
‘‘(c) OFFENSES RELATING TO DISTRIBUTION OF TO-
BACCO PRODUCTS, ETC.—It shall be unlawful— 
‘‘(1) for any person to engage in business as a 
manufacturer or importer of tobacco products, proc-
essed tobacco, or cigarette papers and tubes, as a 
wholesaler or an export warehouse proprietor, or as 
a manufacturer, seller, or importer of tobacco pro-
duction machines without filing the bond and obtain-
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ing the permit where required by this chapter or 
regulations thereunder, 
‘‘(2) for a manufacturer, importer, or whole-
saler to knowingly ship, transport, deliver, or receive 
any tobacco products or processed tobacco from or 
to any person other than a person who has obtained 
the permit required by this chapter, a retailer, or a 
person handling such products or processed tobacco 
solely for purposes of shipment or delivery; except 
that an importer who has obtained the permit re-
quired by this chapter may receive, from a foreign 
manufacturer or a foreign distributor, foreign to-
bacco products or processed tobacco that have not 
previously entered the United States, 
‘‘(3) for a manufacturer of processed tobacco to 
knowingly ship, transport, sell, or deliver processed 
tobacco to any person other than a manufacturer of 
processed tobacco, a manufacturer of tobacco prod-
ucts, or an export warehouse proprietor, 
‘‘(4) for any person (other than the original 
manufacturer of such tobacco products or processed 
tobacco or an export warehouse proprietor author-
ized to receive any tobacco products or processed to-
bacco that have previously been exported and re-
turned to the United States) to knowingly receive 
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any tobacco products or processed tobacco that have 
previously been exported and returned to the United 
States, 
‘‘(5) for any export warehouse proprietor to 
knowingly ship, transport, sell, or deliver for sale 
any tobacco products or processed tobacco to any 
person other than the original manufacturer of such 
tobacco products or processed tobacco, another ex-
port warehouse proprietor, a duty free store, or a 
foreign purchaser, 
‘‘(6) for any person (other than a manufac-
turer, wholesaler, or an export warehouse proprietor 
permitted under this chapter) to knowingly ship, 
transport, receive, or possess, for purposes of resale, 
any tobacco product or processed tobacco in pack-
ages marked pursuant to regulations issued under 
section 5723, other than for direct return to a man-
ufacturer for repacking or for re-exportation or to 
an export warehouse proprietor for re-exportation, 
‘‘(7) for any manufacturer, importer, export 
warehouse proprietor, or wholesaler permitted under 
this chapter to make any false entry in, to fail to 
make an entry in, or to knowingly fail to maintain 
properly any record or report required by this chap-
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ter or the regulations promulgated thereunder with 
the intent to defraud the United States, 
‘‘(8) for any person, with the intent to defraud 
the United States, to alter, mutilate, destroy, oblit-
erate, or remove any mark or label required under 
this chapter upon a tobacco product or processed to-
bacco held for sale, or to create, possess, or apply 
on any tobacco product or processed tobacco or its 
packaging any counterfeit versions of any such 
marks or labels, and 
‘‘(9) for any person to sell at retail more than 
3,000 cigarettes in any single transaction (or series 
of related transactions), or, in the case of other to-
bacco products, an equivalent quantity as deter-
mined by regulation. 
Any person violating any of the provisions of this sub-
section shall, upon conviction, be fined as provided in sec-
tion 3571 of title 18, United States Code, or imprisoned 
for not more than 5 years, or both.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
5762(d) (as so redesignated) is amended by striking 
‘‘and (b)’’ inserting ‘‘, (b), and (c)’’. 
(c) OTHER OFFENSES.—Subsection (d) of section 
5762 (as so redesignated) is amended by striking ‘‘not 
more than $1,000’’ and inserting ‘‘not more than $2,500 
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or an amount equal to the tax imposed under this chapter 
on the tobacco product or processed tobacco involved 
(whichever is greater)’’. 
SEC. 109. PENALTIES. 
(a) IN GENERAL.— 
(1) Subsection (a) of section 5761 is amend-
ed— 
(A) by striking ‘‘willfully’’ and inserting 
‘‘knowingly’’, and 
(B) by striking ‘‘$1,000’’ and inserting 
‘‘$10,000’’. 
(2) Subsection (b) of section 5761 is amended 
by striking ‘‘5 percent’’ and inserting ‘‘10 percent’’. 
(b) PENALTY AMOUNTS ADJUSTED
FOR INFLA-
TION.—Section 5761 is amended by redesignating sub-
section (f) as subsection (g) and inserting after subsection 
(e) the following new subsection: 
‘‘(f) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of a calendar 
year beginning after 2011, the penalty dollar 
amounts provided under this chapter shall each be 
increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
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year, determined by substituting ‘calendar year 
2010’ for ‘calendar year 1992’ in subparagraph 
(B) thereof. 
‘‘(2) ROUNDING.—If any amount as adjusted 
under paragraph (1) is not a multiple of $10, such 
amount shall be rounded to the next highest multiple 
of $10.’’. 
SEC. 110. COORDINATION WITH OTHER GOVERNMENT OF-
FICIALS. 
(a) IN GENERAL.—Subchapter F of chapter 52 is 
amended by adding at the end the following new section: 
‘‘SEC. 5755. COORDINATION WITH OTHER GOVERNMENT OF-
FICIALS. 
‘‘The Secretary shall make reasonable efforts to co-
ordinate with other Federal agencies and with officials of 
foreign, State, local, Indian tribal, and other governments 
to promote the purposes of this chapter, to prevent and 
reduce tobacco tax evasion and contraband trafficking in 
tobacco products and processed tobacco, to enforce settle-
ment agreements between tobacco companies and State or 
other governments and related laws, or for other law en-
forcement or administration purposes.’’. 
(b) INFORMATION SHARING.— 
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(1) IN
GENERAL.—Paragraph (1) of section 
6103(o) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(C) INFORMATION
SHARING
FOR
TO-
BACCO
PRODUCT
LAW
ADMINISTRATION
AND 
ENFORCEMENT PURPOSES.— 
‘‘(i) FEDERAL, STATE, LOCAL, AND 
TRIBAL GOVERNMENTS.—Returns and re-
turn information with respect to taxes im-
posed by chapter 52 may be open to in-
spection by or disclosure to officers and 
employees of any Federal agency, the State 
Tax Administrators, or any other agency 
of any State, local, or Indian tribal govern-
ment responsible for the administration 
and enforcement of laws and regulations 
relating to tobacco products and processed 
tobacco, or their legal representative, solely 
for use in such administration and enforce-
ment, unless the Secretary determines that 
such disclosure would seriously impair 
Federal tax administration. 
‘‘(ii) FOREIGN
GOVERNMENTS
AND 
ORGANIZATIONS.—The 
Secretary 
shall, 
upon written request, disclose returns and 
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return information with respect to taxes 
imposed by chapter 52 to officers and em-
ployees of any agency of any foreign gov-
ernment, OLAF (European Anti-Fraud 
Office), EUROPOL, INTERPOL, or the 
World Customs Organization responsible 
for the administration and enforcement of 
laws and regulations relating to tobacco 
products and processed tobacco, or their 
legal representative, solely for use in such 
administration and enforcement, if the 
Secretary obtains written assurances from 
such government or organization that the 
information will be held in confidence and 
used only for such use. No return or re-
turn information shall be disclosed under 
this clause if the Secretary determines that 
such disclosure would seriously impair 
Federal tax administration. 
‘‘(iii) 
PUBLIC
INFORMATION.—The 
identity and business address of those per-
sons that have a valid permit, pursuant to 
chapter 52, to engage in business as a 
manufacturer, wholesaler, or importer of 
tobacco products or processed tobacco, as 
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an export warehouse proprietor, or as a 
manufacturer, seller, or importer of to-
bacco production machines (as defined in 
section 5702(q)) shall be made publicly 
available at such time and in such manner 
as the Secretary may prescribe.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Subsection (a) of section 6103 is 
amended— 
(i) by striking ‘‘or any local’’ in para-
graph (2) and inserting ‘‘any local’’, 
(ii) by inserting ‘‘, or any agency de-
scribed in subsection (o)(1)(C)(i)’’ after 
‘‘subsection (l)(7)(D)’’ in paragraph (2), 
(iii) by striking ‘‘or subsection (n)’’ in 
paragraph (3) and inserting ‘‘subsection 
(n), or subsection (o)(1)(C)(i)’’. 
(B) Paragraph (4) of section 6103(p) is 
amended— 
(i) by striking ‘‘(o)(1)(A)’’ both places 
it appears and inserting ‘‘(o)(1)(A) or 
(C)(i)’’, and 
(ii) by striking ‘‘(15), or (16),’’ and 
inserting ‘‘(15), or (16), or (o)(1)(C)(i),’’. 
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(C) Paragraph (2) of section 7213(a) is 
amended— 
(i) by striking ‘‘(21) or’’ and inserting 
‘‘(21),’’, and 
(ii) by striking ‘‘or (7)’’ and inserting 
‘‘or (7), or (o)(1)(C)(i)’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subchapter F of chapter 52 is amended by adding at 
the end the following new item: 
‘‘Sec. 5755. Coordination with other government officials.’’. 
SEC. 111. DEFINITIONS. 
(a) EXPORT WAREHOUSE PROPRIETOR.—Subsection 
(i) of section 5702 is amended by inserting before the pe-
riod the following: ‘‘or any person engaged in the business 
of exporting tobacco products from the United States for 
purposes of sale or distribution. Any duty free store that 
sells, offers for sale, or otherwise distributes to any person 
in any single transaction (or series of related transactions) 
more than 3,000 cigarettes, or an equivalent quantity of 
other tobacco products as the Secretary shall by regulation 
prescribe, shall be deemed an export warehouse proprietor 
under this chapter’’. 
(b) RETAILER; WHOLESALER.—Section 5702, as 
amended by this Act, is amended by adding at the end 
the following new subsections: 
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‘‘(r) RETAILER.—The term ‘retailer’ means any per-
son who sells, or offers for sale, any tobacco product at 
retail. The term ‘retailer’ includes any duty free store that 
sells, offers for sale, or otherwise distributes at retail in 
any single transaction (or series of related transactions) 
not more than 3,000 cigarettes, or not more than an 
equivalent quantity of other tobacco products as the Sec-
retary shall by regulation prescribe. 
‘‘(s) WHOLESALER.—The term ‘wholesaler’ means 
any person engaged in the business of purchasing tobacco 
products for resale at wholesale, or any person acting as 
an agent or broker for any person engaged in the business 
of purchasing tobacco products for resale at wholesale.’’. 
SEC. 112. CONFORMING AMENDMENTS. 
(a) Paragraph (2)(C) of section 2341 of title 18, 
United States Code is amended by inserting ‘‘in regard 
to State, local, or Indian tribal government taxes,’’ before 
‘‘a person’’. 
(b) Sections 2314 and 2315 of title 18, United States 
Code, are each amended— 
(1) by striking ‘‘STATE’’ in the heading there-
of; and 
(2) by striking ‘‘tax stamps’’ each place it ap-
pears and inserting ‘‘tax stamps or markings’’. 
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(c) The headings for subchapters B, C, and E of 
chapter 52 are each amended by inserting ‘‘, Processed 
Tobacco,’’ after ‘‘Products’’. 
(d) The items relating to subchapters B, C, and E 
in the table of subchapters for chapter 52 are each amend-
ed by inserting ‘‘, processed tobacco,’’ after ‘‘products’’. 
(e) The heading for chapter 52 is amended by insert-
ing ‘‘, PROCESSED TOBACCO,’’ after ‘‘PROD-
UCTS’’. 
(f) The item relating to chapter 52 in the table of 
chapters for subtitle E is amended by inserting ‘‘, proc-
essed tobacco,’’ after ‘‘products’’. 
SEC. 113. EFFECTIVE DATE. 
Except as otherwise provided in this title, the amend-
ments made by this title shall take effect 1 year after the 
date of the enactment of this Act. 
TITLE II—IMPORT FRAUD 
SEC. 201. MAXIMUM PENALTY FOR IMPORTATION OF TO-
BACCO PRODUCTS AND CIGARETTE PAPERS 
AND TUBES BY FRAUDULENT MEANS. 
(a) MAXIMUM PENALTY.—Section 592(c)(1) of the 
Tariff Act of 1930 (19 U.S.C. 1592(c)(1)) is amended— 
(1) by striking ‘‘A fraudulent violation of sub-
section (a)’’ and inserting the following: 
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‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), a fraudulent violation of 
subsection (a)’’; and 
(2) by adding at the end the following: 
‘‘(B) TOBACCO PRODUCTS AND CIGARETTE 
PAPERS AND TUBES.—In the case of importa-
tion of tobacco products and cigarette papers 
and tubes subject to tax under chapter 52 of 
the Internal Revenue Code of 1986, a fraudu-
lent violation of subsection (a) is punishable by 
a civil penalty in an amount not to exceed the 
sum of— 
‘‘(i) the domestic value of the mer-
chandise, and 
‘‘(ii) four times the amount of Federal 
excise tax that could be imposed on the 
merchandise, if applicable.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall take effect on the date which is 90 
days after the date of the enactment of this Act, and shall 
apply with respect to violations of section 592 of the Tariff 
Act of 1930 (as so amended) that occur on or after that 
date. 
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TITLE 
III—EXCLUSIONS 
RE-
GARDING INDIAN TRIBES AND 
TRIBAL MATTERS 
SEC. 301. EXCLUSIONS REGARDING INDIAN TRIBES AND 
TRIBAL MATTERS. 
(a) IN GENERAL.—Nothing in this Act or the amend-
ments made by this Act shall be construed to amend, mod-
ify, or otherwise affect— 
(1) any agreements, compacts, or other inter-
governmental arrangements between any State or 
local government and any government of an Indian 
tribe relating to the collection of taxes on tobacco 
products sold in Indian country; 
(2) any State laws that authorize or otherwise 
pertain to any such intergovernmental arrangements 
or create special rules or procedures for the collec-
tion of State, local, or tribal taxes on tobacco prod-
ucts sold in Indian country; 
(3) any limitations under Federal or State law, 
including Federal common law and treaties, on 
State, local, and tribal tax and regulatory authority 
with respect to the sale, use, or distribution of to-
bacco products or processed tobacco by or to Indian 
tribes, tribal members, tribal enterprises, or in In-
dian country; 
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(4) any Federal law, including Federal common 
law and treaties, regarding State jurisdiction, or 
lack thereof, over any Indian tribe, tribal member, 
tribal enterprise, Indian reservations, or other land 
held by the United States in trust for one or more 
Indian tribes; or 
(5) any State or local government authority to 
bring enforcement actions against persons located in 
Indian country. 
(b) COORDINATION OF LAW ENFORCEMENT.—Noth-
ing in this Act or the amendments made by this Act (other 
than the amendments relating to section 6103 of the In-
ternal Revenue Code of 1986) shall be construed to inhibit 
or otherwise affect any coordinated law enforcement effort 
by 1 or more States or other jurisdictions, including In-
dian tribes, through interstate compact or otherwise, 
that— 
(1) provides for the administration of tobacco 
product laws or laws pertaining to interstate sales or 
other sales of tobacco products or processed tobacco; 
(2) provides for the seizure of tobacco products, 
processed tobacco, or other property related to a vio-
lation of such laws; or 
(3) establishes cooperative programs for the ad-
ministration of such laws. 
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(c) TREATMENT OF STATE AND LOCAL GOVERN-
MENTS.—Nothing in this Act or the amendments made 
by this Act shall be construed to authorize, deputize, or 
commission States or local governments as instrumental-
ities of the United States. 
(d) ENFORCEMENT WITHIN INDIAN COUNTRY.— 
Nothing in this Act or the amendments made by this Act 
shall prohibit, limit, or restrict enforcement by the Attor-
ney General of the United States of this Act or an amend-
ment made by this Act within Indian country. 
(e) AMBIGUITY.—Any ambiguity between the lan-
guage of this section or its application and any other pro-
vision of this Act shall be resolved in favor of this section. 
(f) DEFINITIONS.—In this section— 
(1) the term ‘‘Indian country’’ has the meaning 
given that term in section 1151 of title 18, United 
States Code; 
(2) the term ‘‘tribal enterprise’’ means any 
business enterprise, regardless of whether incor-
porated or unincorporated under Federal or tribal 
law, of an Indian tribe or group of Indian tribes; 
(3) the term ‘‘Indian reservation’’ has the 
meaning given that term in section 168(j)(6) of the 
Internal Revenue Code of 1986; 
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(4) the term ‘‘Indian tribe’’ has the meaning 
given that term in section 4(e) of the Indian Self- 
Determination and Education Assistance Act (25 
U.S.C. 450b(e)); and 
(5) the terms ‘‘tobacco products’’ and ‘‘proc-
essed tobacco’’ have the meanings given such terms 
by section 5702 of the Internal Revenue Code of 
1986. 
Æ 
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