RETURN OF TAX-EXEMPT CIGARS, CIGARETTES,
CIGARETTE PAPERS, AND CIGARETTE TUBES TO
FACTORY OR EXPORT WAREHOUSE
Manufacturers of tobacco products,
manufacturers of cigarette papers and tubes,
and proprietors of export warehouses:
The purpose of this industry circular is to discuss the return, to
the factory or export warehouse, of cigarettes which have been re-
moved under 26 CFR Part 290, without payment of the tax, for exporta-
tion. Recent experiences demonstrating the need for this industry
circular involved cigarettes. However, the discussion is also ap-
plicable to cigars, cigarette papers, and cigarette tubes.
Regulations in 26 CFR 290.210 provide that a manufacturer or export
warehouse proprietor may return to his factory or export warehouse
cigarettes previously removed therefrom for export but not yet exported.
Cigarettes which have been removed under 26 CFR Part 290 for delivery
to a vessel or aircraft entitled to receive them as ships supplies
are considered to have been "exported" when the vessel or aircraft,
with the cigarettes aboard, has proceeded beyond the jurisdiction of
the internal revenue laws of the United States (i. e. beyond the
three-mile limit or international boundary, as the case may be).
Likewise, cigarettes so removed for delivery to an exporting carrier
for exportation are considered to have been exported when the ex-
porting carrier, with the cigarettes aboard, has proceeded beyond
the three-mile limit or international boundary. Therefore, a manu-
facturer or export warehouse proprietor may, under the regulations
in 26 CFR 290.210, return cigarettes to his factory or export ware-
house before they have been laden on the vessel, aircraft, or exporting
carrier or after lading if the cigarettes have not been taken beyond
the three-mile limit or international boundary. The Internal Revenue
Service and the Bureau of Customs have concurrent jurisdiction over
such cigarettes from the time they are delivered into customs custody
or laden until they are actually exported.
Domestically-produced cigarettes which are returned unchanged to the
United States after having been taken beyond the jurisdiction of the
internal revenue laws of the United States are within the jurisdiction
of the Bureau of Customs and subject to treatment under the Tariff
Laws of the United States. Such cigarettes may under 26 CFR 275.85a be released from customs custody without payment of that part of the
duty attributable to the internal revenue tax for delivery to a tobacco
products factory. The law and regulations do not provide for the re-
turn of such cigarettes to an export warehouse.
Generally, such cigarettes which have been returned to the United
States are entered into customs custody. The release portion of the
Form 2145, "Notice of Release of Cigars, Cigarettes, Cigarette Papers,
or Cigarette Tubes", to be executed by an authorized representative
of the Bureau of Customs. However, if the cigarettes are in the
custody of another agency of the United States, such as the armed
forces, the release portion of the Form 2145 is to be executed by an
authorized representative of such governmental agency.
Inquiries regarding this circular should refer to its number and should
be addressed to the office of your Assistant Regional Commissioner,
Alcohol and Tobacco Tax.
Ralph H. Alkire
Acting Director, Alcohol and Tobacco Tax Division