Federal Register: October 17, 2001 (Volume 66, Number 201)
DOCID: FR Doc 01-25843
DEPARTMENT OF THE TREASURY
Alcohol, Tobacco and Firearms Bureau
CFR Citation: 27 CFR Part 40
RIN ID: RIN 1512-AC32
DOCUMENT ID: [Notice No. 931]
NOTICE: PROPOSED RULES
ACTION: Alcohal, tobacco, and other excise taxes:
DOCUMENT ACTION: Notice of proposed rulemaking.
Elimination of Application To Remove Tobacco Products From Manufacturer's Premises For Experimental Purposes (2000R-353P)
DATES: Written comments must be received on or before December 17, 2001.
This proposed rule eliminates the requirements that
manufacturers of tobacco products apply to ATF to remove tobacco
products from their factories in bond for experimental purposes and
maintain the approved applications for their records. In place of these requirements, manufacturers of
tobacco products will prepare and maintain records of tobacco products removed from their factories in bond for experimental purposes. In addition, this proposed rule defines ``experimental purposes'' under section 5704(a) of Title 26 of the United States Code.
Tobacco products and cigarette papers and tubes—; Removal from manufacturer's premises for experimental purposes; application requirement eliminated,
Elimination of Application
We are proposing to eliminate the applications that manufacturers of tobacco products are required to submit for removing tobacco products in bond from their factories for experimental purposes. We believe that these applications are not necessary to protect the revenue. ATF will continue to conduct selected examinations and audits of manufacturers of tobacco products, including those who remove tobacco products in bond for experimental purposes.
In addition, manufacturers of tobacco products will continue to report the kind and amounts of tobacco products removed in bond for experimental purposes for use off factory premises. This reporting is done every month on ATF Form 5210.5 as a separate item and provides ATF an invaluable tool to monitor the operations of tobacco manufacturers in respect to such removals. Overall, this proposed rule allows greater flexibility and choice in managing our limited government resources.
The amount of taxes involved in such removals for experimental purposes is not significant. The total potential tax liability at the present tax rates for such shipments is estimated to be no more than $500,000. This potential tax liability is not significant when compared to the total excise tax collections for tobacco products. It is less than 0.001 percent of the total excise taxes collected from tobacco products. In addition, ATF has not had any significant tax losses associated with such removals. Also, ATF has rarely, if ever, denied an application submitted by a manufacturer for removing tobacco products in bond for experimental purposes.
This notice of proposed rulemaking eliminates the burdens imposed on the manufacturer to prepare and file applications and on ATF to take action on such applications. A manufacturer typically spends about 30 minutes to prepare, send and file each application. ATF typically spends a similar amount of time acting upon, sending and filing each application. ATF estimates that 100 of these applications are received each year.
Definition of Experimental Purposes
This notice of proposed rulemaking defines ``experimental
purposes'' under section 5704(a) of Title 26 of the United States Code
and provides additional examples of uses for such experimental
purposes. However, the proposed rule retains the examples that are not considered experimental.
2. Public Participation
Who May Comment on This Notice?
ATF requests comments on the proposed regulations from all interested persons. Comments received on or before the closing date will be carefully considered. Comments received after that date will be given the same consideration if it is practicable to do so. However, assurance of consideration can only be given if comments are received on or before the closing date.
Will ATF Keep My Comments Confidential?
ATF cannot recognize any material in comments as confidential. Comments may be disclosed to the public. If you consider your material to be confidential or inappropriate for disclosure to the public, you should not include it in the comment. We may also disclose the name of any person who submits a comment.
Can I Review Comments Received?
Yes. You may view and copy written comments on this project during normal business hours in the ATF Public Reading Room, Room 6480, 650 Massachusetts Avenue, NW., Washington, DC 20226, telephone (202) 927 8480. For information on filing a Freedom of Information Act request for a copy of the comments, please call (202) 9278480, FAX (202) 927 8866 or Email: FOIAMail@atfhq.atf.treas.gov. (ATF cannot accept FOIA requests via Email).
How Do I Send Facsimile Comments?
You may submit comments of not more than three pages of facsimile transmission to (202) 9278525. Facsimile comments must:
We will not acknowledge receipt of facsimile transmissions. We will treat facsimile transmissions as originals.
How Do I Send Comments by Email?
If you send an email, you must follow these instructions. Email comments must:
We will not acknowledge receipt of email. We will treat email as originals.
Can I Request a Public Hearing?
If you desire the opportunity to comment orally at a public hearing
on this proposed regulation, you must submit a request in writing to
the Director within the 60day comment period. The Director reserves
the right, in light of all circumstances, to determine if a public hearing is necessary.
3. Regulatory Analyses and Notices
Is This a Significant Regulatory Action as Defined by Executive Order 12866?
It has been determined that this proposed rule is not a significant
regulatory action as defined by Executive Order 12866. Therefore, a regulatory assessment is not required.
How Does the Regulatory Flexibility Act Apply to This Proposed Rule?
It is certified that these proposed regulations will not have a
significant economic impact on a substantial number of small entities
(see the following discussion concerning the Paperwork Reduction Act.
Accordingly, a regulatory flexibility analysis is not required.
Pursuant to 26 U.S.C. 7805(f), this proposed regulation was submitted [[Page 52732]]
to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. No comments were received. Does the Paperwork Reduction Act Apply to This Proposed Rule?
Yes. The collection of information contained in this notice of
proposed rulemaking has been submitted to the Office of Management and
Budget for review in accordance with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)). Comments on the collection(s) of information
should be sent to the Office of Management and Budget, Attention: Desk
Officer for the Department of the Treasury, Bureau of Alcohol, Tobacco
and Firearms (ATF), Office of Information and Regulatory Affairs,
Washington, D.C., 20503, with copies to the Chief, Document Services
Branch, Room 3450, Bureau of Alcohol, Tobacco and Firearms, 650
Massachusetts Avenue, NW., Washington, DC 20226. Comments are specifically requested concerning:
The collection of information in this proposed regulation is contained in 27 CFR 40.232(e). ATF uses this information to verify the kind and amount of tobacco products removed in bond from the premises of manufacturers for experimental purposes. In addition, ATF may use this information to determine that the persons to whom such removals are made are using the tobacco products for legitimate experimental purposes and that the tobacco products are properly destroyed or returned to the premises of a manufacturer following their experimental use. If such tobacco products are not destroyed or returned to the premises of a manufacturer, ATF will use this information to collect the taxes due.
The collection of information is mandatory. The likely respondents may include small businesses or organizations. The estimated annual burden per respondent will vary depending on the number of shipments that manufacturers of tobacco products remove from their premises in bond for experimental purposes. Estimated total annual recordkeeping burden under this proposed rule is 1 hour since the records to be maintained are customary and usual for private and business purposes. Estimated average annual burden per respondent and/or recordkeeper is less than 1 hour. The estimated number of recordkeepers is 165.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget. ``Plain Language'' Changes
During the revision of the regulations in this document, we also tried to simplify and clarify the language of the affected section of the regulations. Any suggestions for improving the readability of these regulations may be submitted as comments to the crossreferenced notice of proposed rulemaking.
4. Drafting Information
The principal author of this document is Robert Ruhf, Regulations Division, Bureau of Alcohol, Tobacco and Firearms. However, other personnel of ATF and the Treasury Department participated in developing the document.
List of Subjects in 27 CFR Part 40
Administrative practice and procedure, Authority delegations, Cigars and cigarettes, Claims, Electronic fund transfers, Excise taxes, Imports, Labeling, Packaging and containers, Penalties, Reporting and recordkeeping requirements, Seizures and forfeitures, Surety bonds, Tobacco.
Authority and Issuance
We propose to amend Title 27 of the Code of Federal Regulations as follows:
PART 40MANUFACTURERS OF TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES
Paragraph 1. The authority citation for part 40 continues to read as follows:
Authority: 26 U.S.C. 5142, 5143, 5146, 5701, 57035705, 5711 5713, 57215723, 5731, 5741, 5751, 5753, 57615763, 6061, 6065, 6109, 6151, 6301, 6302, 6311, 6313, 6402, 6404, 6423, 6676, 6806, 7011, 7212, 7325, 7342, 7502, 7503, 7606, 7805, 31 U.S.C. 9301, 9303, 9304, 9306.
Par. 2. Section 40.232 is revised to read as follows: Sec. 40.232 Experimental purposes.
A manufacturer of tobacco products may use tobacco products without
determination and payment of tax as set forth in this section.
(a) What are experimental purposes? Experimental purposes are
operations or tests carried out under controlled conditions to discover
an unknown scientific principle or to gather facts about an existing
scientific principle. Examples of experimental purposes are:
(1) Use by manufacturers to determine scientific facts relating to tobacco products, such as content of certain chemicals;
(2) Use by producers of machines designed to package such products for testing and experimenting in the operation of these machines; and (3) Use in laboratories, hospitals, medical centers, institutes, colleges, and universities, for scientific, technical, or medical research.
(b) What purposes are not experimental? Tobacco products used for advertising or consumer testing outside the factory premises, or as salesmen's or customers' samples are not experimental purposes. (c) Use in factory. A manufacturer of tobacco products may use tobacco products without determination and payment of tax for experimental purposes in a factory.
(d) Use outside factory. A manufacturer may remove tobacco products in bond for experimental purposes outside a factory. When tobacco products are shipped for experimental purposes outside the factory, the proprietor of the factory remains liable for the taxes imposed by 26 U.S.C. 5701 until the occurrence of one of the following events: (1) The tobacco products are returned to the premises of the factory from which they were shipped; or
(2) The tobacco products are destroyed during or after the use of such products for experimental purposes.
(e) Record of use. In addition to the records prescribed by Sec. 40.183, a manufacturer who removes tobacco products in bond for experimental purposes outside a factory must prepare and maintain a record containing the following information:
(1) Name and address of the consignee;
(2) Kind and quantity of tobacco products removed;
(3) Description of packaging, if any, of the tobacco products removed;
(4) Description of how and when the consignee will use the tobacco products; and
(5) Disposition of any remaining tobacco products after the consignee's use.
(Approved by the Office of Management and Budget under Control Number 1512)
(72 Stat. 1418, as amended; 26 U.S.C. 5704)
Signed: August 28, 2001.
Bradley A. Buckles,
Approved: September 12, 2001.
Timothy E. Skud,
Acting Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 0125843 Filed 101601; 8:45 am] BILLING CODE 481031U
FOR FURTHER INFORMATION CONTACT
Robert Ruhf, Regulations Division, 650 Massachusetts Avenue, NW., Washington, DC 20226; (202) 9278210; or email@example.com.