CIGARETTE TAX INCREASE
EFFECT ON BOND SUFFICIENCY
MANUFACTURERS OF TOBACCO PRODUCTS AND PROPRIETORS OF
TOBACCO EXPORT WAREHOUSES
PURPOSE: The purpose of this Industry Circular
is to alert manufacturers of tobacco products and
proprietors of tobacco export warehouses of the need
for strengthening or superseding bonds.
BACKGROUND AND REQUIRED ACTION: Public Law 97-248
was enacted on September 3, 1982, and increases the
Federal tax on small cigarettes from $4.00 to $8.00
per thousand, and on large cigarettes from $8.40 or
more per thousand to $16.80 or more per thousand, and
is effective January 1, 1983.
Due to the tax increase some manufacturers of
tobacco products and proprietors of export warehouses
will, beginning January 1, 1983, have tax liabilities
in excess of the bond coverage which is required by
27 CFR 270.133 or 290.123.
Therefore, manufacturers of tobacco products and
proprietors of export warehouses who will have cigar-
ettes in bond after January 1, 1983, shall, prior to
January 1, 1983, file and obtain the approval of the
Regional Regulatory Administrator for a strengthening
or superseding bond in a sufficient amount to provide
surety for their tax liabilities after January 1, 1983,
as required under 27 CPR Part 270 or Part 290.
Not affected by this requirement are manufacturers
of tobacco products and proprietors of export ware-
houses having bonds in the maximum amount under 27 CFR
Part 270 or Part 290. Also unaffected are manufac-
turers of tobacco products and proprietors of export
warehouses whose tax liabilities under those Parts will
not exceed $1000 after January 1, 1983.
INQUIRIES: If you have any questions about whether
you wiI1 need a superseding or strengthening bond, or
about filing such a bond, please contact the office of
your Regional Regulatory Administrator.