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Q: 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 INTERNAL 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 provision, 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 manufacturer or importer of
tobacco products to legibly print a unique serial number on all
packages of tobacco products manufactured or imported for sale
or distribution. 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 exports.--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 paragraph 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 Secretary, in consultation
with the Secretary of the Interior, shall promulgate regulations that
require that each package of a tobacco product that is sold on an
Indian reservation (as defined in section 403(9) of the Indian Child
Protection 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 public.''.

SEC. 103. WHOLESALERS REQUIRED TO HAVE PERMIT.

Section 5712 (relating to application for permit) is amended by
inserting '', wholesaler,'' after ''manufacturer''.

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 importer of tobacco products or
as an export warehouse 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 regulation 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 tobacco products and
such other records'', and
(4) by adding at the end the following new subsection:
''(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 ordinary commercial record or invoice
shall satisfy the requirements 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 subsection:
''(b) Reports By Export Warehouse Proprietors.--
''(1) In general.--Prior to exportation of tobacco products
from the United States, the export warehouse 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 assure that it reaches its intended
destination.
''(2) Agreements with foreign governments.--Notwithstanding
section 6103 of this title, the Secretary is authorized to
enter into agreements with foreign governments to exchange or
share information 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
provisions of this chapter or regulations
promulgated thereunder, or
''(ii) preventing or detecting violations
of the provisions of this chapter or
regulations promulgated thereunder, and
''(B) the Secretary obtains assurances from such
government that the information will be held in
confidence and used only for the purposes specified in
clauses (i) and (ii) of subparagraph (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 Tobacco Products.--Section
5762 is amended--
(1) by redesignating subsection (b) as subsection (c),
(2) in subsection (c) (as so redesignated), by inserting
''or (b)'' after ''(a)'', and
(3) by inserting after subsection (a) the following new
subsection:
''(b) Offenses Relating to Distribution of Tobacco 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 proprietor, without filing the bond and
obtaining the permit where required by this chapter or
regulations thereunder;
''(2) for a manufacturer, importer, or wholesaler permitted
under this chapter intentionally to ship, transport, deliver,
or receive any tobacco products from or to any person other
than a person permitted under this chapter or a retailer,
except a permitted importer may receive foreign tobacco
products from a foreign manufacturer or a foreign distributor
that have not previously entered the United States;
''(3) for any person (other than the original manufacturer
of such tobacco products or an export warehouse proprietor
authorized to receive any tobacco products that have previously
been exported and returned to the United States) to receive any
tobacco products that have previously been exported and
returned to the United States;
''(4) for any export warehouse proprietor intentionally to
ship, transport, sell, or deliver for sale any tobacco products
to any person other than the original manufacturer of such
tobacco products, another export warehouse proprietor, or a
foreign purchaser;
''(5) for any person (other than a manufacturer or an
export warehouse proprietor permitted under this chapter)
intentionally to ship, transport, receive, or possess, for
purposes of resale, any tobacco product in packages marked
pursuant to regulations issued under section 5723, other than
for direct return to a manufacturer for repacking or for re-
exportation or to an export warehouse proprietor for re-
exportation;
''(6) for any manufacturer, importer, export warehouse
proprietor, or wholesaler permitted under this chapter to make
intentionally any false entry in, to fail willfully to make
appropriate entry in, or to fail willfully to maintain properly
any record or report that such person is required to keep as
required by this chapter or the regulations promulgated
thereunder; and
''(7) for any person to alter, mutilate, destroy,
obliterate, or remove any mark or label required under this
chapter upon a tobacco product held for sale, except pursuant
to regulations of the Secretary authorizing relabeling for
purposes of compliance with the requirements of this section or
of State law.
Any person violating any of the provisions of this subsection shall,
upon conviction, be fined as provided in section 3571 of title 18,
United States Code, imprisoned for not more than 5 years, or both.''.
(c) Intentionally Defined.--Section 5762 is amended by adding at
the end the following:
''(d) Definition of Intentionally.--For purposes of this section
and section 5761, the term 'intentionally' means doing an act, or
omitting to do an act, deliberately, and not due to accident,
inadvertence, or mistake, regardless of whether the person knew that
the act or omission constituted an offense.''.

SEC. 108. CIVIL PENALTIES.

Subsection (a) of section 5761 (relating to civil penalties) is
amended--
(1) by striking ''willfully'' and inserting
''intentionally'', and
(2) by striking ''$1,000'' and inserting ''$10,000''.

SEC. 109. DEFINITIONS.

(a) Export Warehouse Proprietor.--Subsection (i) of section 5702
(relating to definition of export warehouse proprietor) is amended by
inserting before the period 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 more than 30 packages of cigarettes, or its equivalent for
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 is amended by adding at the
end the following:
''(p) Retailer.--The term 'retailer' means any dealer 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 30 or less packages, or
its equivalent for other tobacco products.
''(q) 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. 110. EFFECTIVE DATE.

The amendments made by this title shall take effect on January 1,
2003.

TITLE II--AMENDMENTS TO THE CONTRABAND CIGARETTE TRAFFICKING ACT

SEC. 201. AMENDMENTS TO THE CONTRABAND CIGARETTE TRAFFICKING ACT.

(a) Definitions.--Section 2341 of title 18, United States Code, is
amended--
(1) in paragraph (2)--
(A) by striking ''60,000'' and inserting
''30,000'', and
(B) by inserting ''or importer'' after ''as a
manufacturer'';
(2) in paragraph (4), by striking ''and'' at the end;
(3) in paragraph (5), by striking the period and inserting
a semicolon; and
(4) by adding at the end the following:
''(6) the term 'tobacco product' means cigars, cigarettes,
smokeless tobacco, and pipe tobacco (as such terms are defined
in section 5701 of the Internal Revenue Code of 1986); and
''(7) the term 'contraband tobacco product' means a
quantity of tobacco product that is equivalent to or more than
30,000 cigarettes as determined by regulation, which bear no
evidence of the payment of applicable State tobacco taxes in
the State where such tobacco products are found, if such State
requires a stamp, impression, or other indication to be placed
on packages or other containers of product to evidence payment
of tobacco taxes.''
(b) Unlawful Acts.--Section 2342 of title 18, United States Code,
is amended--
(1) in subsection (a), by inserting ''or contraband tobacco
products'' before the period;
(2) by amending subsection (b) to read as follows:
''(b)(1) It shall be unlawful for any person--
''(A) knowingly to make any false statement or
representation with respect to the information required by this
chapter to be kept in the records or reports of any person who
ships, sells, or distributes--
''(i) any quantity of cigarettes in excess of
30,000 in a single transaction or in a series of
related transactions, or
''(ii) tobacco products in such equivalent
quantities as shall be determined by regulation, or
''(B) knowingly to fail to maintain records or reports,
alter or obliterate required markings, or interfere with any
inspection, required under this chapter, with respect to such
quantity of cigarettes or other tobacco products.''; and
(3) by adding at the end the following:
''(c) It shall be unlawful for any person knowingly to transport
tobacco products under a false bill of lading or without any bill of
lading.''.
(c) Recordkeeping.--Section 2343 of title 18, United States Code,
is amended--
(1) in subsection (a), by striking ''60,000 in a single
transaction'' and inserting ''30,000 in a single transaction or
in a series of related transactions, or, in the case of other
tobacco products an equivalent quantity as determined by
regulation,'';
(2) by amending the last sentence of subsection (a) to read
as follows: ''Except as provided in subsection (c) of this
section, nothing contained herein shall authorize the Secretary
to require reporting under this section.'';
(3) in subsection (b), by striking ''60,000 in a single
transaction'' and inserting ''30,000 in a single transaction or
in a series of related transactions, or, in the case of other
tobacco products an equivalent quantity as determined by
regulation,''; and
(4) by adding at the end the following:
''(c)(1) Any person who ships, sells, or distributes tobacco
products for resale in interstate commerce, whereby such tobacco
products are shipped into a State taxing the sale or use of such
tobacco products or who advertises or offers tobacco products for such
sale or transfer and shipment shall--
''(A) first file with the tobacco tax administrator of the
State into which such shipment is made or in which such
advertisement or offer is disseminated, a statement setting for
the person's name, and trade name (if any), and the address of
the person's principal place of business and of any other place
of business; and
''(B) not later than the 10th of each calendar month, file
with the tobacco tax administrator of the State into which such
shipment is made a memorandum or a copy of the invoice covering
each and every shipment of tobacco products made during the
previous calendar month into such State; the memorandum or
invoice in each case to include the name and address of the
person to whom the shipment was made, the brand, and the
quantity thereof.
''(2) The fact that any person ships or delivers for shipment any
tobacco products shall, if such shipment is into a State in which such
person has filed a statement with the tobacco tax administrator under
paragraph (1)(A) of this subsection, be presumptive evidence that such
tobacco products were sold, shipped, or distributed for resale by such
person.
''(3) For purposes of this subsection--
''(A) the term 'use' in addition to its ordinary meaning,
means consumption, storage, handling, or disposal of tobacco
products; and
''(B) the term 'tobacco tax administrator' means the State
official authorized to administer tobacco tax laws of the
State.''.
(d) Penalties.--Section 2344 of title 18, United States Code, is
amended--
(1) in subsection (b), by inserting ''or (c)'' after
''section 2342(b)'' and by inserting ''or (c)'' after section
2343(a)''; and
(2) by striking subsection (c) and inserting the following
new subsection:
''(c) Any contraband cigarettes or contraband tobacco products
involved in any violation of the provisions of this chapter shall be
subject to seizure and forfeiture, and all provisions of section
9703(o) of title 31, United States Code, shall, so far as applicable,
extend to seizures and forfeitures under the provisions of this
chapter.''
(e) Repeal.--The Act of October 19, 1949, entitled ''An Act to
assist States in collecting sales and use taxes on cigarettes'', 63
Stat. 884 (chapter 10A of title 15, U.S.C.), is hereby repealed.
A:
Tobacco Smuggling Eradication Act of 2002 - Amends chapter 52 (Tobacco Products and Cigarette Papers and Tubes) of the Internal Revenue Code to require all packages of tobacco products to carry a unique legibly printed serial number by which the Secretary of the Treasury can identify the manufacturer or importer and the location and date of manufacture or importation. Requires tobacco products sold on Indian reservations to be labeled as such.Requires a tobacco wholesaler to have a permit and to maintain certain records.Requires export warehouse proprietors to file certain reports with the Secretary. Authorizes the Secretary to enter into certain tobacco related information agreements with foreign countries.Establishes new offenses relating to the distribution of tobacco.Raises the $1,000 civil penalty under chapter 52 to $10,000.Amends the Contraband Cigarette Trafficking Act to: (1) expand the applicability of such Act from cigarettes only to "tobacco product" (cigars, cigarettes, smokeless tobacco, and pipe tobacco); (2) define "contraband tobacco product" as a quantity of tobacco product that is equivalent to or more than 30,000 cigarettes (currently, 60,000) which bear no evidence of the payment of applicable State tobacco taxes; (3) establish new unlawful acts; and (4) require additional recordkeeping.Repeals Federal law provisions concerning reports required to State tobacco tax administrators by individuals engaged in interstate cigarette commerce.