RECORDS AND REPORTS FOR LARGE CIGARS
To Manufacturers arid Importers of Tobacco Products, and
Purpose. This circular is to inform you of some changes in
recordkeeping and reporting requirements resulting from the new
basis for taxing large cigars introduced by Section 2128 of P. L.
94-455. These changes are effective on February 1, 1977.
Background. As a result of the recent change in the basis for
taxing large cigars, new record and reporting requirements have
been implemented for domestic manufacturers and importers, and
modifications have been made to some existing record requirements.
It should be noted that importers are now required to keep records
for the first time. The sections of regulations affected are 27 CFR
270.183-184, 270.202, 275.139, 275.153, 275.181-183, and 295.51.
Also see Industry Circular 77-2 for additional discussion of revised
procedures and forms affected.
New Record Requirements
Importers' Record of Tax Declaration. Importers are now
required to keep a copy of each customs entry or withdrawal form
on which tax for large cigars is declared. If an importer has only
a few import transactions involving few brands of large cigars,
these copies of customs entry and withdrawal forms may also fulfill
the new requirement for a "basic record of wholesale prices" if
they show or are annotated to show the brands and sizes of the cigars
included on the forms. Otherwise, importers are required to keep
the same basic record of wholesale prices that manufacturers must
keep, which is described below. The required importers'records
must be kept at the importer's business premises and made available
for inspection by ATF officers.
Manufacturers' and Importers'Basic Record of Wholesale
Prices. Except for those importers maintaining copies of customs
entry and withdrawal forms as the "basic record of wholesale prices"
as discussed above, all manufacturers and importers are required
to keep a separate record of the wholesale price applicable to each
cigar at the beginning of each year. All changes in those prices and
all prices for new cigars added during the year must also be recorded.
A new record must be prepared as of January 1 of each year (except
February 1 for 1977 only), and maintained during the year so that the
wholesale price for each brand and size cigar can be readily deter-
mined for any day during the year. No specific form is prescribed
for this record, but the following format is suggested as one method
of effectively furnishing the required information:
New Reporting Requirements
All manufacturers and importers of large cigars who issue
announcements, either intracompany or to customers, about new
or changed wholesale prices, are required to also send a copy of
these announcements to the Assistant Director (Regulatory Enforce-
ment), Attn: Industry Control Division, Bureau of Alcohol, Tobacco
and Firearms, Washington, DC 20226. This copy must show the
actual date when issued, and be sent to ATF within 5 business days
after that date. All copies of announcements sent to ATF by manu-
facturers must identify the factories to which they apply, either by
factory number or by city and State.
Modifications to Existing Record Requirements
Manufacturers' Record of Taxable Removals. The manu-
facturers' daily record of taxable removals, as well as
invoices or other records covering the individual trans-
actions, must show large cigars by wholesale price
rather than by tax class as previously required.
Transfers of Cigarettes and Cigars to Export Warehouses. A
new breakdown is required in manufacturers' records to show sepa-
rately the quantities of cigarettes and cigars transferred to export
warehouses and those directly exported. This separation is also
made on the manufacturers' monthly report. Previously, both of
these items were included in the single record category "removed
in bond for export purposes."
Copies of New Regulations
A reprint of Treasury Decision ATF-40 containing all of the
regulations affected by the changed tax system for large cigars is
being prepared and will be forwarded to all concerned as soon as it
Inquiries concerning this circular should refer to its number and
be addressed to the Assistant Director (Regulatory Enforcement),
Bureau of Alcohol, Tobacco and Firearms, 1200 Pennsylvania Avenue,
NW, Washington, DC 20226.
Rex D. Davis