USE OF "RECONSTITUTED TOBACCO"
AS A WRAPPER FOR ROLLS OF TOBACCO
Manufacturers of tobacco products:
Purpose. This industry circular is issued to advise you concerning
the procedure to be followed when reconstituted tobacco (also known
as homogenized leaf tobacco and tobacco sheet) is to be used as a
wrapper for rolls of tobacco.
Background. Revenue Procedure 64-34, I.R.B. 1964-35,44, advised
manufacturers of tobacco products of the procedure to be followed to
secure an official determination of the rate of tax applicable to
the tobacco product when reconstituted tobacco is to be used as a
wrapper for rolls of tobacco.
The Excise Tax Reduction Act of 1965 amended the definitions of
"cigar" and "cigarette" in Section 5702 of the Internal Revenue Code
to read as follows:
(a) Cigar."Cigar" means any roll of tobacco
wrapped in leaf tobacco or in any substance containing
tobacco (other than any roll of tobacco which is a
cigarette within the meaning of subsection (b)(2)).
(b) Cigarette."Cigarette" means
(1) any roll of tobacco wrapped in paper
or in any substance not containing tobacco, and
(2) any roll of tobacco wrapped in any
substance containing tobacco which; because of its
appearance, the type of tobacco used in the filler,
or its packaging and labeling, is likely to be
offered to, or purchased by, consumers as a cigarette
described in paragraph (1).
Because of these amendments, questions have been raised as to whether
previous tax determinations would continue in effect and whether
manufacturers of tobacco products should continue to secure an official
determination of the rate of tax applicable to rolls of tobacco
wrapped in reconstituted tobacco.
Comments. The change in the definitions of "cigar" and "cigarette"
will not affect tax determinations which were previously made.
An updated revenue procedure will be published in the Internal Revenue
Bulletin in the near future to supersede Revenue Procedure 64-34. This
revenue procedure will continue to provide that where a manufacturer
of tobacco products intends to use reconstituted tobacco as a wrapper
for rolls of tobacco he should, prior to marketing the product, secure
an official determination from the Director, Alcohol and Tobacco Tax
Division, of the rate of tax applicable to the tobacco product on
which the material is to be used. The provisions relating to the submission of the necessary Samples for the tax determination are set
Submission of samples for tax determination. An adequate sample of
the reconstituted tobacco, consisting of a strip 20 feet to 30 feet
in length, together with the name of the company which produces the
reconstituted tobacco, should be submitted to the Director, Alcohol
and Tobacco Tax Division, Internal Revenue Service, Washington, D. C.,
In addition, where the reconstituted tobacco is to be used as a
wrapper for rolls of tobacco which, when finished, will weigh not more
than three pounds per thousand, a sample of the finished product and
either the package or the proposed design of the package in which the
product will appear on the market showing the mark and notice required
by 26 CFR Part 270 should also be submitted to the Director, Alcohol
and Tobacco Tax Division.
Inquiries. Inquiries in regard to this circular should refer to its
number and be addressed to the office of your assistant regional
commissioner (alcohol and tobacco tax).
Ralph H. Alkire
Alcohol and Tobacco Tax Division