IMPOSITION OF EXCISE TAX ON MANUFACTURE OR IMPORTATION OF PIPE TOBACCO.

SEC. 5061. IMPOSITION OF EXCISE TAX ON MANUFACTURE OR IMPORTATION OF PIPE TOBACCO. (a) In General.— Section 5701 of the 1986 Code (relating to rate of tax on cigarettes, etc.) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: “(f) Pipe Tobacco.— On pipe tobacco, manufactured in or imported into the United States, there shall be imposed a tax of 45 cents per pound (and a proportionate tax at the like rate on all fractional parts of a pound).” (b) Pipe Tobacco Defined.— Section 5702 of the 1986 Code (relating to definitions) is amended by adding at the end thereof the following new subsection: “(o) Pipe Tobacco.— 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.” (c) Technical Amendments.— (1) Subsection (c) of section 5702 of the 1986 Code (defining tobacco products) is amended by striking out “and smokeless tobacco” and inserting in lieu thereof “smokeless tobacco, and pipe tobacco”. (2) Subsection (d) of section 5702 of the 1986 Code (defining tobacco products) is amended by striking out “or smokeless102 STAT. 3680 tobacco” and inserting in lieu thereof “smokeless tobacco, or pipe tobacco”. (3) The chapter heading for chapter 52 of the 1986 Code is amended to read as follows: “CHAPTER 52— CIGARS, CIGARETTES, SMOKELESS TOBACCO, PIPE TOBACCO, AND CIGARETTE PAPERS AND TUBES”. (4) The table of chapters for subtitle E is amended by striking the item relating to chapter 52 and inserting in lieu thereof the following new item: “Chapter 52. Cigars, cigarettes, smokeless tobacco, pipe tobacco, and cigarette papers and tubes”. (d) Effective Date.— (1) In general.— The amendments made by this section shall apply to pipe tobacco removed (within the meaning of section 57O2(k) of the 1986 Code) after December 31, 1988. (2) Transitional rule.— Any person who— (A) on the date of the enactment of this Act, is engaged in business as a manufacturer of pipe tobacco, and (B) before January 1, 1989, submits an application under subchapter B of chapter 52 of the 1986 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 chapter 52 of the 1986 Code shall apply to such applicant in the same manner and to the same extent as if such applicant were a holder of a permit to manufacture pipe tobacco under such chapter 52. (e) Floor Stocks Tax.— (1) Imposition of tax.— On pipe tobacco manufactured in or imported into the United States which is removed before January 1, 1989, and held on such date for sale by any person, there is hereby imposed a tax of 45 cents per pound (and a proportionate tax at the like rate on all fractional parts of a pound). (2) Liability for tax and method of payment.— (A) Liability for tax.— A person holding pipe tobacco on January 1, 1989, to which the tax imposed by paragraph (1) applies shall be liable for such tax. (B) Method of payment.— The tax imposed by paragraph (1) shall be treated as a tax imposed by section 5701 of the 1986 Code and shall be due and payable on February 14, 1989, in the same manner as the tax imposed by such section is payable with respect to pipe tobacco removed on or after January 1, 1989. (C) Treatment of pipe tobacco in foreign trade zones.— Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U3.C. 81a) or any other provision of law, pipe tobacco which is located in a foreign trade zone on January 1, 1989, shall be subject to the tax imposed by paragraph (1) and shall be treated for purposes of this subsection as held on such date for sale if— (i) internal revenue taxes have been determined, or customs duties liquidated, with respect to such pipe102 STAT. 3681 tobacco before such date pursuant to a request made under the first proviso of section 3(a) of such Act, or (ii) such pipe tobacco is held on such date under the supervision of a customs officer pursuant to the second proviso of such section 3(a). Under regulations prescribed by the Secretary of the Treasury or his delegate, provisions similar to sections 5706 and 5708 of the 1986 Code shall apply to pipe tobacco with respect to which tax is imposed by paragraph (1) by reason of this subparagraph. (3) Pipe tobacco.— For purposes of this subsection, the term “pipe tobacco” shall have the meaning given to such term by subsection (o) of section 5702 of the 1986 Code. (4) Exception where liability does not exceed $1,000.— No tax shall be imposed by paragraph (1) on any person if the tax which would but for this paragraph be imposed on such person does not exceed $1,000. For purposes of the preceding sentence, all persons who are treated as a single taxpayer under section 5061(e)(3) of the 1986 Code shall be treated as 1 person.