INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS.

SEC. 9302. INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS. (a) Cigarettes.—Subsection (b) of section 5701 of the Internal Revenue Code of 1986 is amended— (1) by striking “$12 per thousand ($10 per thousand on cigarettes removed during 1991 or 1992)” in paragraph (1) and inserting “$19.50 per thousand ($17 per thousand on cigarettes removed during 2000 or 2001)”, and (2) by striking “$25.20 per thousand ($21 per thousand on cigarettes removed during 1991 or 1992)” in paragraph (2) and inserting “$40.95 per thousand ($35.70 per thousand on cigarettes removed during 2000 or 2001)”. (b) Cigars.—Subsection (a) of section 5701 of such Code is amended— (1) by striking “$1,125 cents per thousand (93.75 cents per thousand on cigars removed during 1991 or 1992)” in paragraph (1) and inserting “$1,828 cents per thousand ($1,594 cents per thousand on cigars removed during 2000 or 2001)”, and111 STAT. 672 (2) by striking “equal to” and all that follows in paragraph (2) and inserting “equal to 20.719 percent (18.063 percent on cigars removed during 2000 or 2001) of the price for which sold but not more than $48.75 per thousand ($42.50 per thousand on cigars removed during 2000 or 2001).”. (c) Cigarette Papers.—Subsection (c) of section 5701 of such Code is amended by striking “0.75 cent (0.625 cent on cigarette papers removed during 1991 or 1992)” and inserting “1.22 cents (1.06 cents on cigarette papers removed during 2000 or 2001)”. (d) Cigarette Tubes.—Subsection (d) of section 5701 of such Code is amended by striking “1.5 cents (1.25 cents on cigarette tubes removed during 1991 or 1992)” and inserting “2.44 cents (2.13 cents on cigarette tubes removed during 2000 or 2001)”. (e) Smokeless Tobacco.—Subsection (e) of section 5701 of such Code is amended— (1) by striking “36 cents (30 cents on snuff removed during 1991 or 1992)” in paragraph (1) and inserting “58.5 cents (51 cents on snuff removed during 2000 or 2001)”, and (2) by striking “12 cents (10 cents on chewing tobacco removed during 1991 or 1992)” in paragraph (2) and inserting “19.5 cents (17 cents on chewing tobacco removed during 2000 or 2001)”. (f) Pipe Tobacco.—Subsection (f) of section 5701 of such Code is amended by striking “67.5 cents (56.25 cents on pipe tobacco removed during 1991 or 1992)” and inserting “$1.0969 cents (95.67 cents on pipe tobacco removed during 2000 or 2001)”. (g) Imposition Of Excise Tax On Manufacture Or Importation Of Roll-Your-Own Tobacco.— (1) In general.—Section 5701 of such Code (relating to rate of tax) is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: “(g) Roll-Your-Own Tobacco.—On roll-your-own tobacco, manufactured in or imported into the United States, there shall be imposed a tax of $1.0969 cents (95.67 cents on roll-your-own tobacco removed during 2000 or 2001) per pound (and a proportionate tax at the like rate on all fractional parts of a pound).”. (2) Roll-your-own tobacco.—Section 5702 of such Code (relating to definitions) is amended by adding at the end the following new subsection: “(p) Roll-your-own tobacco.—The term ‘roll-your-own 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 for making cigarettes.”. (3) Technical amendments.— (A) Subsection (c) of section 5702 of such Code is amended by striking “and pipe tobacco” and inserting “pipe tobacco, and roll-your-own tobacco”. (B) Subsection (d) of section 5702 of such Code is amended— (i) in the material preceding paragraph (1), by striking “or pipe tobacco” and inserting “pipe tobacco, or roll-your-own tobacco”, and (ii) by striking paragraph (1) and inserting the following new paragraph:111 STAT. 673 “(1) a person who produces cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own tobacco solely for the person’s own personal consumption or use, and”. (C) The chapter heading for chapter 52 of such Code is amended to read as follows: “CHAPTER 52—TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES”. (D) The table of chapters for subtitle E of such Code is amended by striking the item relating to chapter 52 and inserting the following new item: “CHAPTER 52. Tobacco products and cigarette papers and tubes.”. (h) Modifications of Certain Tobacco Tax Provisions.— (1) Exemption for exported tobacco products and cigarette papers and tubes to apply only to articles marked for export.— (A) Subsection (b) of section 5704 of such Code is amended by adding at the end the following new sentence: “Tobacco products and cigarette papers and tubes may not be transferred or removed under this subsection unless such products or papers and tubes bear such marks, labels, or notices as the Secretary shall by regulations prescribe.”. (B) Section 5761 of such Code is amended by redesignating subsections (c) and (d) as subsections (d) and (e), respectively, and by inserting after subsection (b) the following new subsection: “(c) Sale of Tobacco Products and Cigarette Papers and Tubes for Export.—Except as provided in subsections (b) and (d) of section 5704— “(1) every person who sells, relands, or receives within the jurisdiction of the United States any tobacco products or cigarette papers or tubes which have been labeled or shipped for exportation under this chapter, “(2) every person who sells or receives such relanded tobacco products or cigarette papers or tubes, and “(3) every person who aids or abets in such selling, relanding, or receiving, shall, in addition to the tax and any other penalty provided in this title, be liable for a penalty equal to the greater of $1,000 or 5 times the amount of the tax imposed by this chapter. All tobacco products and cigarette papers and tubes relanded within the jurisdiction of the United States, and all vessels, vehicles, and aircraft used in such relanding or in removing such products, papers, and tubes from the place where relanded, shall be forfeited to the United States.”. (C) Subsection (a) of section 5761 of such Code is amended by striking “subsection (b)” and inserting “subsection (b) or (c)”. (D) Subsection (d) of section 5761 of such Code, as redesignated by subparagraph (B), is amended by striking “The penalty imposed by subsection (b)” and inserting “The penalties imposed by subsections (b) and (c)”. (E)(i) Subpart F of chapter 52 of such Code is amended by adding at the end the following new section:111 STAT. 674 “SEC. 5754. RESTRICTION ON IMPORTATION OF PREVIOUSLY EXPORTED TOBACCO PRODUCTS. “(a) In General.—Tobacco products and cigarette papers and tubes previously exported from the United States may be imported or brought into the United States only as provided in section 5704(d). For purposes of this section, section 5704(d), section 5761, and such other provisions as the Secretary may specify by regulations, references to exportation shall be treated as including a reference to shipment to the Commonwealth of Puerto Rico. “(b) Cross Reference.— “For penalty for the sale of tobacco products and cigarette papers and tubes in the United States which are labeled for export, see section 5761(c)”. (ii) The table of sections for subpart F of chapter 52 of such Code is amended by adding at the end the following new item: “Sec. 5754. Restriction on importation of previously exported tobacco products.”. (2) Importers required to be qualified.— (A) Sections 5712, 5713(a), 5721, 5722, 5762(a)(1), and 5763 (b) and (c) of such Code are each amended by inserting “or importer” after “manufacturer”. (B) The heading of subsection (b) of section 5763 of such Code is amended by inserting “Qualified Importers,” after “Manufacturers,”. (C) The heading for subchapter B of chapter 52 of such Code is amended by inserting “and Importers” after “Manufacturers.” (D) The item relating to subchapter B in the table of subchapters for chapter 52 of such Code is amended by inserting “and importers” after “manufacturers”. (3) Books of 25 or fewer cigarette papers subject to tax.—Subsection (c) of section 5701 of such Code is amended by striking “On each book or set of cigarette papers containing more than 25 papers,” and inserting “On cigarette papers,”. (4) Storage of tobacco products.—Subsection (k) of section 5702 of such Code is amended by inserting “under section 5704” after “internal revenue bond”. (5) Authority to prescribe minimum manufacturing activity requirements.—Section 5712 of such Code is amended by striking “or” at the end of paragraph (1), by redesignating paragraph (2) as paragraph (3), and by inserting after paragraph (1) the following new paragraph: “(2) the activity proposed to be carried out at such premises does not meet such minimum capacity or activity requirements as the Secretary may prescribe, or”. (i) Effective Date.— (1) In general.—The amendments made by this section shall apply to articles removed (as defined in section 5702(k) of the Internal Revenue Code of 1986, as amended by this section) after December 31, 1999. (2) Transitional rule.—Any person who— (A) on the date of the enactment of this Act is engaged in business as a manufacturer of roll-your-own tobacco or as an importer of tobacco products or cigarette papers and tubes, and111 STAT. 675 (B) before January 1, 2000, submits an application under subchapter B of chapter 52 of such Code to engage in such business, may, notwithstanding such subchapter B, continue to engage in such business pending final action on such application. Pending such final action, all provisions of such chapter 52 shall apply to such applicant in the same manner and to the same extent as if such applicant were a holder of a permit under such chapter 52 to engage in such business. (j) Floor Stocks Taxes.— (1) Imposition of tax.—On tobacco products and cigarette note papers and tubes manufactured in or imported into the United States which are removed before any tax increase date, and held on such date for sale by any person, there is hereby imposed a tax in an amount equal to the excess of— (A) the tax which would be imposed under section 5701 of the Internal Revenue Code of 1986 on the article if the article had been removed on such date, over (B) the prior tax (if any) imposed under section 5701 of such Code on such article. (2) Authority to exempt cigarettes held in vending machines.—To the extent provided in regulations prescribed by the Secretary, no tax shall be imposed by paragraph (1) on cigarettes held for retail sale on any tax increase date, by any person in any vending machine. If the Secretary provides such a benefit with respect to any person, the Secretary may reduce the $500 amount in paragraph (3) with respect to such person. (3) Credit against tax.—Each person shall be allowed as a credit against the taxes imposed by paragraph (1) an amount equal to $500. Such credit shall not exceed the amount of taxes imposed by paragraph (1) on any tax increase date, for which such person is liable. (4) Liability for tax and method of payment.— (A) Liability for tax.—A person holding cigarettes on any tax increase date, to which any tax imposed by paragraph (1) applies shall be liable for such tax. (B) Method of payment.—The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations. (C) Time for payment.—The tax imposed by paragraph (1) shall be paid on or before April 1 following any tax increase date. (5) Articles in foreign trade zones.—Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C. 81a) and any other provision of law, any article which is located in a foreign trade zone on any tax increase date, shall be subject to the tax imposed by paragraph (1) if— (A) internal revenue taxes have been determined, or customs duties liquidated, with respect to such article before such date pursuant to a request made under the 1st proviso of section 3(a) of such Act, or (B) such article is held on such date under the supervision of a customs officer pursuant to the 2d proviso of such section 3(a). (6) Definitions.—For purposes of this subsection—111 STAT. 676 (A) In general.—Terms used in this subsection which are also used in section 5702 of the Internal Revenue Code of 1986 shall have the respective meanings such terms have in such section, as amended by this Act. (B) Tax increase date.—The term “tax increase date” means January 1, 2000, and January 1, 2002. (C) Secretary.—The term “Secretary” means the Secretary of the Treasury or the Secretary’s delegate. (7) Controlled groups.—Rules similar to the rules of section 5061(e)(3) of such Code shall apply for purposes of this subsection. (8) Other laws applicable.—All provisions of law, including penalties, applicable with respect to the taxes imposed by section 5701 of such Code shall, insofar as applicable and not inconsistent with the provisions of this subsection, apply to the floor stocks taxes imposed by paragraph (1), to the same extent as if such taxes were imposed by such section 5701. The Secretary may treat any person who bore the ultimate burden of the tax imposed by paragraph (1) as the person to whom a credit or refund under such provisions may be allowed or made.