INVENTORY SHORTAGES OF CIGARS AND CIGARETTES
Manufacturers of tobacco products:
This is to remind you that the regulations in 26 CFR 270.255
require that the tax be paid by adjustment in the next tax return
for all shortages of packaged cigars and cigarettes disclosed by
physical inventory. This section of regulations also requires
that all overages and shortages of cigars and cigarettes disclosed
by physical inventory be reported on the monthly report for the
month in which the overages and shortages were disclosed.
The tax does not have to be paid at such time on unpackaged
products or on those products for which the packaged status cannot
be determined from your records - i.e., if your records do not show
whether the products were packaged or unpackaged. Such shortages
should be taxpaid or a claim for remission filed when called for
by the Assistant Regional Commissioner (Alcohol and Tobacco Tax).
This claim will usually be called for by the Alcohol and Tobacco
Tax Inspector during a periodic inspection at the factory.
While the regulations and the monthly report forms do not
require separate reporting of "packaged" and "unpackaged" shortages,
if your records enable you to do so you may prefer to make such a
distinction on your monthly report. This may make it easier for
you to ascertain that tax is paid by adjustment on the tax returns
for all shortages of packaged cigars and cigarettes.
Inquiries regarding this circular should refer to its number
and be addressed to the office of your Assistant Regional Commissioner,
Alcohol and Tobacco Tax.
Harold A. Serr
Director, Alcohol and Tobacco Tax Division