AMENDMENT OF REGULATIONS IN 26 CFR PART 270
Manufacturers of tobacco products:
(a) Section 270.212 was amended to provide greater operating
flexibility for manufacturers operating more than one factory
and desiring to use the same packaging materials at all factories.
Under such circumstances, the mark may consist of the name of the
manufacturer (including, if he wishes, the city and State where
he has a place of business), if the factory where the products
are packaged is identified on or in the package by a means approved
by the Director, Alcohol and Tobacco Tax Division. This means that
the factory where packaged may be identified by imprinting (at the
time of packaging, either on the outside or inside the package) a
symbol, number, letter, etc., approved by the Director. Such
symbol, number, letter, etc., may even be impressed into the tinfoil at the time of packaging.
(b) Section 270.231 was amended to make it clear that any tobacco
products furnished without determination and payment of tax, for
personal consumption by employees, must be furnished gratuitously.
In addition, the section was amended to make it clear that such
tax-exempt tobacco products gratuitously furnished to employees
for off-factory consumption must be furnished to the employee
within the factory and taken from the factory by the employee on
the day for which furnished. "Employee" as used in the section
has been changed to include only those persons whose duties require
their presence in the factory or whose duties relate to the manufacture, distribution, or sale of tobacco products.
(c) A new Section 270.186 was added to prescribe the specific
information to be included in manufacturers' auxiliary or
supporting records of transfers of tobacco products in bond to
or from other factories.
(d) Section 270.202 was amended to prescribe the manner in which
the overages and shortages of tobacco products disclosed by inventories will be summarized and included in the monthly report.
(e) A new Section 270.255 was added to clarify the procedures for
recording shortages or overages of tobacco products disclosed by
inventories and to provide for the filing of a claim for remission
if such shortage can be satisfactorily explained or for the taxpayment of shortages not satisfactorily explained. For example,
shortages of unpackaged cigars are generally recognizable as
reasonable if they result from normal loss or breakage in grading,
humidifying, sorting, rewrapping, cellophaning, or packaging, or
if they result from inherent difficulties in accurately establishing production or otherwise accounting for the product.
Overages and shortages in inventories made at different times cannot be netted against each other; each discrepancy must be recorded
and reported. However, it should not be misunderstood as requiring
overages and shortages to be recorded and reported by brand, type
of package, etc., or as requiring recording and reporting of
differences between two or more counts taken to arrive at one
accurate inventory. This Treasury Decision continues the existing
requirement to record overages and shortages in such categories as
small cigarettes, large cigarettes, small cigars, and large cigars.
Form 3068, Monthly Report Manufacturer of Tobacco Products, has
been revised to conform with the amended regulations and upon
receipt of this revised form (Rev. 9-64) by manufacturers the
prior form (Rev. 7-63) should be destroyed.
(f) A new Section 270.286 was added to include in the regulations
provisions for handling errors (e.g., erroneous invoices) made in
computing the tax which result in overpayments, since it is
recognized that such errors are common and, to a certain extent,
unavoidable in today's volume of removals of tobacco products.
(g) Section 270.69 was amended to provide that a diagram shall be
submitted identifying each building where the factory consists of
more than one building at the same street address. If an existing
factory consists of more than one building at the same address, no
action need be taken by a manufacturer unless the assistant regional
commissioner requests that a diagram be submitted.
(h) Section 270.183 was amended to provide that in recording the
daily totals of manufactured tobacco, a manufacturer may disregard
fractions of less than one-half pound and increase fractions of
one-half pound or more to the next whole pound. A new Section
270.216 was added to recognize slight variations in weight inherent
in filling packages of manufactured tobacco.
(i) The regulations were also amended to delete obsolete provisions
relating to the redemption of stamps and to make miscellaneous
clarifying and conforming changes of a minor nature.
Harold A. Serr