MARKING OF PACKAGES OF TOBACCO PRODUCTS
TRANSFERRED IN BOND TO ANOTHER MANUFACTURER
Manufacturers of tobacco products:
Purpose. The purpose of this industry circular is to advise you of a ruling
as to which manufacturer's name and location, or permit number, (to be shown
in the mark as required by the regulations in 26 CFR 270.146 and 275.135)
should appear on packages of tobacco products produced and packaged by one
manufacturer and transferred in bond to another such manufacturer.
Background. Under the provisions of section 5704(b) of the Internal Revenue
Code of 1954 and the regulations in 26 CFR 270.152 and 275.141, a manufacturer
of tobacco products may transfer such products under his bond, without payment of tax, to the factory of any qualified manufacturer of such products. When
so transferred, the products are exempt from the packaging requirement of
regulations in 26 CFR 270.144 and 275.134. However, the regulations contemplate
that the products may be shipped in bulk or in packages, as desired. When the
products are transferred in packages, the question has been raised as to whether
the mark on such packages should identify the transferee or transferor.
Substance of Ruling. This office has ruled that packages containing tobacco
products produced by one manufacturer and transferred in bond, without payment of tax, to another manufacturer of such products should, in the mark required by regulations, identify the transferee manufacturer by name and
location, or by permit number, since he becomes liable for the tax on such
products upon their receipt and would be the proper claimant in respect to
any refund or allowance of tax provided by law.
Inquiries. Inquiries regarding this industry circular should refer to its
number and be addressed to the office of your assistant regional commissioner
(alcohol and tobacco tax).
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
IRS D. C. 44858