TTB has received many questions about how to differentiate between pipe tobacco and roll-your-own tobacco for purposes of the Federal excise tax and related provisions. These questions are in response to the tax increases imposed on these products by the Children’s Health Insurance Program Reauthorization Act of 2009 (“Act,” Public Law 111-3) which results in a tax difference between the two products, effective April 1, 2009.
Under the Internal Revenue Code of 1986 (IRC) at 26 U.S.C. 5702(n) the term “pipe tobacco” means “any tobacco which, because of its appearance, type, packaging, or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco to be smoked in a pipe.” The IRC at 26 U.S.C. 5702(o), as amended by the Act, defines the term “roll-your-own tobacco” to mean “any tobacco which, because of its appearance, type, packaging, or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes or cigars, or for use as wrappers thereof.”
Currently, no regulatory standard exists to differentiate between the two products other than the statutory definitions. ATF Procedure 90-2, which described a method for evaluating pipe tobacco and roll-your-own tobacco, is no longer available on the TTB web site, and will be obsoleted in the regulations implementing the Act. We are currently evaluating methods to differentiate between the two products and foresee providing specific guidance in this regard in the near future.
In the meantime, the packaging and labeling of the products in question will have particular significance. For example, TTB will consider the extent to which the packaging and labeling for a pipe tobacco product clearly presents the product to the consumer as such and not as roll-your-own tobacco, or whether there are representations or implications on the package or in other materials which tend to contradict the stated tax declaration.