EXCISE TAX REDUCTION ACT OF 1965
Manufacturers of tobacco products,
proprietors of export warehouses,
and dealers in tobacco materials:
1. Purpose. This industry circular is issued to call to your attention
certain situations generated by the provisions of the Excise Tax
Reduction Act of 1965, Public Law 89-44, becoming effective January 1, 1966.
2. Background. Public Law 89-44 repeals the Federal tax on manufactured
tobacco (smoking tobacco, chewing tobacco, and snuff) and eliminates
internal revenue controls concerning manufactured tobacco and tobacco
materials on and after January 1, 1966. It is expected that a Treasury
decision will be issued in December amending the regulations in 26 CFR
Parts 270, 275, 290, 295, and 296, and revoking the regulations in
26 CFR Part 280, to conform these regulations to Public Law 89-44.
During the development of this Treasury decision, several situations
have been perceived that we think would be of interest to you.
3. Packages. Supplies of packaging material for manufactured tobacco
(smoking tobacco, chewing tobacco, and snuff) bearing the label or
notice reading "Tax-exempt. For use outside U.S." or "U.S. Tax-exempt.
For use outside U.S." as prescribed in the regulations in 26 CFR 290.185,
or bearing the label reading "Tax Exempt. For use of U.S. Not to be Sold."
as prescribed by the regulations in 26 CFR 295.46, may be used up after
December 31, 1965, if you so desire. Internal revenue laws and regulations
about packages, marks, labels, notices, and stamps will, after that date,
no longer apply to manufactured tobacco. But, any terminated permit
number should be eliminated, when ordering supplies of such packaging
4. Forms 2149 and 2150 Notices of Removal for Export. Manufactured tobacco
(smoking tobacco, chewing tobacco, and snuff) to be exported, including
removals for use as supplies on vessels and aircraft, and shipments between
factories and export warehouses should not be included in the Notices of
Removal, Forms 2149 and 2150, after December 31, 1965.
5. Shipper's Export Declaration Commerce Form 7525-V. The extra copy of the
Shipper's Export Declaration, Commerce Form 7525-V, marked "For internal
revenue purposes" as required by the regulations in 26 CFR 290.171 and
290.172 in respect to the exportation of tobacco materials need not be
prepared by dealers in tobacco materials after December 31, 1965.
Of course, this has no effect upon the requirements of the
Department of Commerce in respect to the preparation of Form 7525-V
in connection with the exportation of tobacco materials.
6. Records. Records of operations and transactions in manufactured
tobacco and in tobacco materials which occurred prior to
January 1, 1966, are required to be retained available for
inspection until the expiration of the retention period expressed
in the applicable regulations.
7. Inquiries. Inquiries concerning this circular should refer to its
number and be addressed to your assistant regional commissioner,
alcohol and tobacco tax.
Harold A. Serr
Director, Alcohol and Tobacco Tax Division