Rev. Ruling 66-132
Cigar and Cigarette Markings
Advice has been requested whether the required mark and notice may appear on a cigar or cigarette package consisting of cellophane (or similar material) or on such material used to wrap a cigar or cigarette package. Advice has also been requested whether cigars and cigarettes possessed by the consumer must be in the package (as put up by the manufacturer or importer) bearing the required mark and notice.
Section 5723(b) of the Internal Revenue Code of 1954 provides, in part, that every package of cigars or cigarettes shall, before removal, bear the marks, labels, notices, and stamps, if any, that the Secretary or his delegate by regulation prescribes.
26 CFR 270.212, 270.214, and 270.215, implementing section 5723(b) of the Code, set forth requirements that every package of cigars of cigarettes shall identify the manufacturer liable for payment of the tax and shall indicate the kind, quantity, and the classification of the product for tax purposes.
Section 5751(a)(3) of the Code provides that no person shall (even without intent to defraud the United States) purchase, receive, possess, offer for sale, or sell or otherwise dispose of, after removal, any cigars or cigarettes which are not put up in packages as required under section 5723 of the Code or which are put in packages not bearing the marks, labels, notices, and stamps, if any, as required under such section. Section 5751(a)(3) of the Code further provides that the restrictions set forth therein shall not prevent the sale of delivery of cigars of cigarettes directly to consumers from proper packages, nor apply to such articles when so sold or delivered.
In addition, 26 CFR 296.166 provides that cigars and cigarettes may be sold, or offered for sale, at retail from such packages, provided the products remain in the packages until removed by the customer or in the presence of the customer.
Accordingly, it is held that the required mark and notice may appear on a cigar or cigarette package consisting of cellophane (or similar material). Similarly, such required mark and notice may appear on cellophane (or similar material) used to wrap a cigar or cigarette package where it is concluded from the type of package (e.g., 20-pack of cigarettes, 5-pack of cigars, specialty box for cigars such as a jewelry box or pocket case, etc.), and from the practice of marketing such package at retail, that it will be delivered to consumer with the wrapping intact.
However, under the law and regulations, the cigars and cigarettes must remain in the package (as put up by the manufacture or importer) bearing the required mark and notice from the time of removal of the cigars and cigarettes from the factory (or their release from customs custody) to the time that the consumer acquires possession of such products. Consequently, where the consumer purchases a 5-pack of cigars, discards the package, and places the loose cigars in his pocket or in a cigar case, the restrictions in section 5751(a)(3) of the Code do not apply to such cigars.
Revenue Ruling 64-23, C.B. 1964-1 (Part 1), 586, is hereby superseded.
26 U.S.C. 5723; 27 CFR 270.212