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on April 1, 2009, shall be subject to the tax imposed 
by paragraph (1) if— 
(A) internal revenue taxes have been deter-
mined, or customs duties liquidated, with respect 
to such article before such date pursuant to a re-
quest made under the 1st proviso of section 3(a) 
of such Act, or 
(B) such article is held on such date under 
the supervision of an officer of the United States 
Customs and Border Protection of the Depart-
ment of Homeland Security pursuant to the 2d 
proviso of such section 3(a). 
(5) DEFINITIONS.—For purposes of this sub-
section— 
(A) IN GENERAL.—Any term used in this 
subsection which is also used in section 5702 of 
the Internal Revenue Code of 1986 shall have the 
same meaning as such term has in such section. 
(B) SECRETARY.—The term ‘‘Secretary’’ 
means the Secretary of the Treasury or the Sec-
retary’s delegate. 
(6) CONTROLLED GROUPS.—Rules similar to the 
rules of section 5061(e)(3) of such Code shall apply 
for purposes of this subsection.
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(7) OTHER LAWS APPLICABLE.—All provisions of 
law, including penalties, applicable with respect to 
the taxes imposed by section 5701 of such Code shall, 
insofar as applicable and not inconsistent with 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 ul-
timate burden of the tax imposed by paragraph (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 In-
ternal Revenue Code of 1986 is amended by in-
serting ‘‘or processed tobacco’’ after ‘‘tobacco 
products’’.
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(B) ISSUANCE.—Section 5713(a) of such 
Code is amended by inserting ‘‘or processed to-
bacco’’ after ‘‘tobacco products’’. 
(2) INVENTORIES, REPORTS, AND PACKAGES.— 
(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 ‘‘tobacco 
products’’ each place it appears. 
(3) RECORDS.—Section 5741 of such Code is 
amended by inserting ‘‘, processed tobacco,’’ after ‘‘to-
bacco products’’. 
(4) MANUFACTURER OF PROCESSED TOBACCO.— 
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.
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‘‘(2) PROCESSED TOBACCO.—The processing of 
tobacco shall not include the farming or growing of 
tobacco or the handling of tobacco solely for sale, ship-
ment, or delivery to a manufacturer of tobacco prod-
ucts or processed tobacco.’’. 
(5) CONFORMING AMENDMENTS.— 
(A) Section 5702(h) of such Code is amend-
ed by striking ‘‘tobacco products and cigarette 
papers and tubes’’ and inserting ‘‘tobacco prod-
ucts or cigarette papers or tubes or any processed 
tobacco’’. 
(B) Sections 5702(j) and 5702(k) of such 
Code are each amended by inserting ‘‘, or any 
processed tobacco,’’ after ‘‘tobacco products or 
cigarette papers or tubes’’. 
(6) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on April 1, 2009. 
(b) BASIS FOR DENIAL, SUSPENSION, OR REVOCATION 
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 cor-
poration, any officer, director, or principal stock-
holder and, in the case of a partnership, a partner)—
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‘‘(A) is, by reason of his business experience, 
financial standing, or trade connections or by 
reason of previous or current legal proceedings 
involving a felony violation of any other provi-
sion of Federal criminal law relating to tobacco 
products, processed tobacco, cigarette paper, or 
cigarette tubes, not likely to maintain operations 
in compliance with this chapter, 
‘‘(B) has been convicted of a felony violation 
of any provision of Federal or State criminal 
law relating to tobacco products, processed to-
bacco, 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,
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‘‘(B) has violated the conditions of such per-
mit, 
‘‘(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, 
‘‘(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, cig-
arette paper, or cigarette tubes, not likely to 
maintain operations in compliance with this 
chapter, or 
‘‘(F) has been convicted of a felony violation 
of any provision of Federal or State criminal 
law relating to tobacco products, processed to-
bacco, 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 suspended 
or revoked, such permit shall be suspended for such
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period as the Secretary deems proper or shall be re-
voked.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the date of the 
enactment of this Act. 
(c) APPLICATION OF INTERNAL REVENUE CODE STAT-
UTE 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 strik-
ing ‘‘and section 520 (relating to refunds)’’ and in-
serting ‘‘section 520 (relating to refunds), and section 
6501 of the Internal Revenue Code of 1986 (but only 
with respect to taxes imposed under chapters 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 Inter-
nal Revenue Code of 1986 is amended by inserting 
‘‘or cigars, or for use as wrappers thereof’’ before the 
period at the end.
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(2) EFFECTIVE DATE.—The amendment made by 
this subsection shall apply to articles removed (as de-
fined in section 5702(j) of the Internal Revenue Code 
of 1986) after March 31, 2009. 
(e) TIME OF TAX FOR UNLAWFULLY MANUFACTURED 
TOBACCO PRODUCTS.— 
(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 MAN-
UFACTURED TOBACCO PRODUCTS.—In the case of 
any tobacco products, cigarette paper, or ciga-
rette tubes manufactured in the United States at 
any place other than the premises of a manufac-
turer of tobacco products, cigarette paper, or cig-
arette tubes that has filed the bond and obtained 
the permit required under this chapter, tax shall 
be due and payable immediately upon manufac-
ture.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
this subsection shall take effect on the date of the en-
actment of this Act. 
(f) DISCLOSURE.— 
(1) IN
GENERAL.—Paragraph (1) of section 
6103(o) of such Code is amended by designating the
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text as subparagraph (A), moving such text 2 ems to 
the right, striking ‘‘Returns’’ and inserting ‘‘(A) IN 
GENERAL.—Returns’’, and by inserting after subpara-
graph (A) (as so redesignated) the following new sub-
paragraph: 
‘‘(B) USE IN CERTAIN PROCEEDINGS.—Re-
turns and return information disclosed to a Fed-
eral 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 Creation Act of 
2004 for the collection of any unpaid 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, 2009 is engaged in business as 
a manufacturer of processed tobacco or as an im-
porter of processed tobacco, and
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(2) before the end of the 90-day period beginning 
on such date, submits an application under sub-
chapter B of chapter 52 of such Code to engage in 
such business, may, notwithstanding such subchapter 
B, continue to engage in such business pending final 
action on such application. Pending such final ac-
tion, 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 enactment 
of this Act, the Secretary of the Treasury shall conduct a 
study concerning the magnitude of tobacco smuggling in the 
United States and submit to Congress recommendations for 
the most effective steps to reduce tobacco 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 tobacco products in the illicit tobacco 
trade in the United States.
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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 
Act of 2005 in effect on the date of the enactment of this 
Act is increased by 0.5 percentage point. 
Attest: 
Secretary.