26 U.S.C. § 5704 — Exemption from tax

Page 3265 TITLE 26—INTERNAL REVENUE CODE § 5704 day’’ in heading, and inserted ‘‘(or the immediately fol- lowing day where the due date described in subpara- graph (D) falls on a Sunday)’’ before period at end. 1988—Subsec. (b)(2)(B)(i), (ii), (C). Pub. L. 100–647 sub- stituted ‘‘the 14th day after the last day of the semi- monthly period during which’’ for ‘‘the 14th day after the date on which’’. 1986—Subsec. (b)(2). Pub. L. 99–509 amended par. (2) generally. Prior to amendment par. (2), time for mak- ing of return and payment of taxes, read as follows: ‘‘In the case of tobacco products and cigarette papers and tubes removed after December 31, 1982, under bond for deferred payment of tax, the last day for filing a return and paying any tax due for each return period shall be the last day of the first succeeding return period plus 10 days.’’ Subsec. (b)(3). Pub. L. 99–514 inserted last sentence. 1984—Subsec. (b)(3). Pub. L. 98–369 added par. (3). 1983—Subsec. (b). Pub. L. 97–448 designated existing provisions as par. (1), struck out provisions that the Secretary prescribe the time for making a return and the time for the payment of taxes and that the Sec- retary prescribe by regulations the conditions for the filing of additional bonds, and added par. (2). 1976—Subsec. (a). Pub. L. 94–455, § 1905(a)(25)(A), di- rected that all provisions of chapter 52 applicable to to- bacco products and cigarette papers and tubes in bond be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose. Subsec. (b). Pub. L. 94–455, §§ 1905(a)(25)(B), 1906(b)(13)(A), struck out provisions which had author- ized payment of taxes by stamp until regulations could be promulgated to provide for payment by return and struck out ‘‘or his delegate’’ after ‘‘Secretary’’ in three places. Subsec. (c). Pub. L. 94–455, §§ 1905(a)(25)(C), 1906(b)(13)(A), redesignated subsec. (d) as (c) and struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Former sub- sec. (c), relating to the use of stamps as evidence of the payment of taxes, was struck out. Subsecs. (d), (e). Pub. L. 94–455, §§ 1905(a)(25)(C), 1906(b)(13)(A), redesignated subsec. (e) as (d) and struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Former sub- sec. (d) redesignated (c). 1958—Subsec. (a)(1). Pub. L. 85–859 designated part of first sentence of subsec. (a) as par. (1) thereof and re- designated the remainder of subsec. (a) as (b). Subsec. (a)(2). Pub. L. 85–859 added par. (2). Subsec. (b). Pub. L. 85–859 designated former subsec. (a), with exception of part of the first sentence, as sub- sec. (b) and substituted ‘‘tobacco products and ciga- rette papers and tubes’’ for ‘‘articles’’, and inserted provisions relating to postponements, and to payment of the tax on the basis of a return prior to removal of the tobacco products and cigarette papers and tubes where a person defaults in the postponed payment of the tax. Former subsec. (b) redesignated (c). Subsec. (c). Pub. L. 85–859 designated former subsec. (b) as (c) and substituted ‘‘If the Secretary or his dele- gate shall by regulation provide for the payment of tax by return and require the use of’’ for ‘‘If the Secretary or his delegate shall, by regulation, require the use’’, and ‘‘tobacco products’’ for ‘‘articles’’. Former subsec. (c) redesignated (d). Subsec. (d). Pub. L. 85–859 redesignated former subsec. (c) as (d). Former subsec. (d) redesignated (e). Subsec. (e). Pub. L. 85–859 designated former subsec. (d) as (e) and permitted assessments in cases where delay may jeopardize collection of the tax, or where the amount is nominal or the result of an evident mathe- matical error. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2009 AMENDMENT Pub. L. 111–3, title VII, § 702(e)(2), Feb. 4, 2009, 123 Stat. 110, provided that: ‘‘The amendment made by this subsection [amending this section] shall take effect on the date of the enactment of this Act [Feb. 4, 2009].’’ EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–465 effective Jan. 1, 1995, see section 712(e) of Pub. L. 103–465, set out as a note under section 5061 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective as if included in the amendments made by section 8011 of the Omni- bus Budget Reconciliation Act of 1986, Pub. L. 99–509, see section 2003(b)(2) of Pub. L. 100–647, set out as a note under section 5061 of this title. EFFECTIVE DATE OF 1986 AMENDMENTS Amendment by Pub. L. 99–514 effective, except as oth- erwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title. Amendment by Pub. L. 99–509 applicable to removals during semimonthly periods ending on or after Dec. 31, 1986, except as otherwise provided, see section 8011(c) of Pub. L. 99–509, set out as a note under section 5061 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 applicable to taxes re- quired to be paid on or after Sept. 30, 1984, see section 27(d)(2) of Pub. L. 98–369, set out as a note under section 5001 of this title. EFFECTIVE DATE OF 1983 AMENDMENT Pub. L. 97–448, title III, § 308(b), Jan. 12, 1983, 96 Stat. 2407, provided that: ‘‘The amendments made by sub- section (a) [amending this section] shall apply with re- spect to tobacco products and cigarette papers and tubes removed after December 31, 1982.’’ EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1905(a)(25) of Pub. L. 94–455 ef- fective on first day of first month which begins more than 90 days after Oct. 4, 1976, see section 1905(d) of Pub. L. 94–455, set out as a note under section 5005 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Amendment by Pub. L. 85–859 effective Sept. 3, 1958, see section 210(a)(1) of Pub. L. 85–859, set out as an Ef- fective Date note under section 5001 of this title. PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. § 5704. Exemption from tax (a) Tobacco products furnished for employee use or experimental purposes Tobacco products may be furnished by a man- ufacturer of such products, without payment of tax, for use or consumption by employees or for experimental purposes, in such quantities, and in such manner as the Secretary shall by regula- tion prescribed. (b) Tobacco products and cigarette papers and tubes transferred or removed in bond from domestic factories and export warehouses A manufacturer or export warehouse propri- etor may transfer tobacco products and ciga- Page 3266 TITLE 26—INTERNAL REVENUE CODE § 5704 rette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, without payment of tax, for shipment to a foreign country, Puerto Rico, the Virgin Is- lands, or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States; and manufacturers may similarly remove such arti- cles for use of the United States; in accordance with such regulations and under such bonds as the Secretary shall prescribe. 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. (c) Tobacco products and cigarette papers and tubes released in bond from customs custody Tobacco products and cigarette papers and tubes, imported or brought into the United States, may be released from customs custody, without payment of tax, for delivery to the pro- prietor of an export warehouse, or to a manufac- turer of tobacco products or cigarette papers and tubes if such articles are not put up in pack- ages, in accordance with such regulations and under such bond as the Secretary shall pre- scribe. (d) Tobacco products and cigarette papers and tubes exported and returned Tobacco products and cigarette papers and tubes classifiable under item 804.00 of title I of the Tariff Act of 1930 (relating to duty on cer- tain articles previously exported and returned) may be released from customs custody, without payment of that part of the duty attributable to the internal revenue tax for delivery to the original manufacturer of such tobacco products or cigarette papers and tubes or to the propri- etor of an export warehouse authorized by such manufacturer to receive such articles, in accord- ance with such regulations and under such bond as the Secretary shall prescribe. Upon such re- lease such products, papers, and tubes shall be subject to this chapter as if they had not been exported or otherwise removed from internal- revenue bond. (Aug. 16, 1954, ch. 736, 68A Stat. 708; Pub. L. 85–859, title II, § 202, Sept. 2, 1958, 72 Stat. 1418; Pub. L. 88–342, § 1(b), June 30, 1964, 78 Stat. 234; Pub. L. 89–44, title V, § 502(b)(4), June 21, 1965, 79 Stat. 151; Pub. L. 94–455, title XIX, §§ 1905(a)(26), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1821, 1834; Pub. L. 99–509, title VIII, § 8011(a)(2), Oct. 21, 1986, 100 Stat. 1952; Pub. L. 101–239, title VII, § 7508(a), Dec. 19, 1989, 103 Stat. 2370; Pub. L. 105–33, title IX, § 9302(h)(1)(A), Aug. 5, 1997, 111 Stat. 673; Pub. L. 106–476, title IV, § 4002(b), Nov. 9, 2000, 114 Stat. 2177.) Editorial Notes REFERENCES IN TEXT Item 804.00 of title I of the Tariff Act of 1930, referred to in subsec. (d), was classified to item 804.00 of the Tariff Schedules of the United States. The Tariff Schedules of the United States were replaced by the Harmonized Tariff Schedule of the United States. The Harmonized Tariff Schedule of the United States is not set out in the Code. See Publication of Harmonized Tariff Schedule note set out under section 1202 of Title 19, Customs Duties. AMENDMENTS 2000—Subsec. (d). Pub. L. 106–476 substituted ‘‘the original manufacturer of such’’ for ‘‘a manufacturer of’’ and inserted ‘‘authorized by such manufacturer to re- ceive such articles’’ after ‘‘proprietor of an export warehouse’’. 1997—Subsec. (b). Pub. L. 105–33 inserted at end ‘‘To- bacco 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, la- bels, or notices as the Secretary shall by regulations prescribe.’’ 1989—Subsec. (c). Pub. L. 101–239 inserted ‘‘or to a manufacturer of tobacco products or cigarette papers and tubes if such articles are not put up in packages,’’ after ‘‘export warehouse,’’. 1986—Subsec. (c). Pub. L. 99–509 struck out ‘‘to a man- ufacturer of tobacco products or cigarette papers and tubes or’’ after ‘‘for delivery’’. 1976—Subsecs. (a), (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Subsecs. (c), (d). Pub. L. 94–455, §§ 1905(a)(26), 1906(b)(13)(A), inserted ‘‘or to the proprietor of an ex- port warehouse’’ after ‘‘to a manufacturer of tobacco products or cigarette papers and tubes’’ and struck out ‘‘or his delegate’’ after ‘‘Secretary’’. 1965—Subsec. (c). Pub. L. 89–44, § 502(b)(4), redesig- nated subsec. (d) as (c), struck out all references to to- bacco materials, and repealed former subsec. (c) which related to tobacco materials shipped or delivered in bond. Subsecs. (d), (e). Pub. L. 89–44, § 502(b)(4)(A), redesig- nated subsec. (e) as (d). Former subsec. (d) redesignated (c). 1964—Subsec. (e). Pub. L. 88–342 added subsec. (e). 1958—Subsec. (b). Pub. L. 85–859 included transfers by export warehouse proprietors, and substituted ‘‘tobacco products and cigarette papers and tubes’’ for ‘‘arti- cles’’, before ‘‘without payment of tax’’. Subsec. (c). Pub. L. 85–859 authorized shipments with- out payment of tax of tobacco stems and waste only, to any person for use by him as fertilizer or insecticide or in the production of fertilizer, insecticide, or nicotine. Subsec. (d). Pub. L. 85–859 substituted ‘‘tobacco prod- ucts, cigarette papers and tubes’’ for ‘‘articles’’ wher- ever appearing, and struck out provisions which related to delivery to bonded premises of manufacturers and dealers. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2000 AMENDMENT Pub. L. 106–476, title IV, § 4002(d), Nov. 9, 2000, 114 Stat. 2177, provided that: ‘‘The amendments made by this section [amending this section and sections 5754 and 5761 of this title] shall take effect 90 days after the date of the enactment of this Act [Nov 9, 2000].’’ EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105–33 applicable to articles removed, as defined in section 5702(j) of this title, after Dec. 31, 1999, with transition rule, see section 9302(i) of Pub. L. 105–33, set out as a note under section 5701 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Pub. L. 101–239, title VII, § 7508(b), Dec. 19, 1989, 103 Stat. 2370, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to ar- ticles imported or brought into the United States after the date of the enactment of this Act [Dec. 19, 1989].’’ EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–509 applicable to articles imported, entered for warehousing, or brought into the Page 3267 TITLE 26—INTERNAL REVENUE CODE [§ 5707 United States or a foreign trade zone after Dec. 15, 1986, see section 8011(c) of Pub. L. 99–509, set out as a note under section 5061 of this title. EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1905(a)(26) of Pub. L. 94–455 ef- fective on first day of first month which begins more than 90 days after Oct. 4, 1976, see section 1905(d) of Pub. L. 94–455, set out as a note under section 5005 of this title. EFFECTIVE DATE OF 1965 AMENDMENT Amendment by Pub. L. 89–44 applicable on and after January 1, 1966, see section 701(d) of Pub. L. 89–44, set out as a note under section 5701 of this title. EFFECTIVE DATE OF 1964 AMENDMENT Pub. L. 88–342, § 2, June 30, 1964, 78 Stat. 234, provided that the amendment made by section 2 of Pub. L. 88–342 shall apply with respect to articles entered, or with- drawn from warehouse, for consumption after June 30, 1964. EFFECTIVE DATE OF 1958 AMENDMENT Amendment by Pub. L. 85–859 effective Sept. 3, 1958, see section 210(a)(1) of Pub. L. 85–859, set out as an Ef- fective Date note under section 5001 of this title. REPORT Pub. L. 106–476, title I, § 4002(e), Nov. 9, 2000, 114 Stat. 2177, provided that: ‘‘The Secretary of the Treasury shall report to Congress on the impact of requiring ex- port warehouses to be authorized by the original manu- facturer to receive relanded export-labeled cigarettes.’’ § 5705. Credit, refund, or allowance of tax (a) Credit or refund Credit or refund of any tax imposed by this chapter or section 7652 shall be allowed or made (without interest) to the manufacturer, im- porter, or export warehouse proprietor, on proof satisfactory to the Secretary that the claimant manufacturer, importer, or export warehouse proprietor has paid the tax on tobacco products and cigarette papers and tubes withdrawn by him from the market; or on such articles lost (otherwise than by theft) or destroyed, by fire, casualty, or act of God, while in the possession of ownership of the claimant. (b) Allowance If the tax has not yet been paid on tobacco products and cigarette papers and tubes pro- vided to have been withdrawn from the market or lost or destroyed as aforesaid, relief from the tax on such articles may be extended upon the filing of a claim for allowance therefor in ac- cordance with such regulations as the Secretary shall prescribe. (c) Limitation Any claim for credit or refund of tax under this section shall be filed within 6 months after the date of the withdrawal from the market, loss, or destruction of the articles to which the claim relates, and shall be in such form and con- tain such information as the Secretary shall by regulations prescribe. (Aug. 16, 1954, ch. 736, 68A Stat. 709; Pub. L. 85–859, title II, § 202, Sept. 2, 1958, 72 Stat. 1419; Pub. L. 89–44, title VIII, § 808(b)(1), (2), (c)(1), June 21, 1965, 79 Stat. 164, 165; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Editorial Notes AMENDMENTS 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wherever appearing. 1965—Pub. L. 89–44, § 808(c)(1), struck out ‘‘Refund or’’ and inserted in lieu thereof ‘‘Credit, refund, or’’ in sec- tion catchline. Subsec. (a). Pub. L. 89–44, § 808(b)(1), substituted ‘‘Credit or refund’’ for ‘‘Refund’’ in heading and struck out ‘‘Refund of any tax imposed by this chapter shall be made’’, replacing it with ‘‘Credit or refund of any tax imposed by this chapter or section 7652 shall be al- lowed or made’’. Subsec. (c). Pub. L. 89–44, § 808(b)(2), inserted ‘‘credit or’’ before ‘‘refund’’. 1958—Subsec. (a). Pub. L. 85–859 authorized refunds to export warehouse proprietors, provided for refunds to be made without interest, and eliminated provisions which authorized refunds where the tax has been paid in error. Subsec. (b). Pub. L. 85–859 permitted relief where a tax has not yet been paid on tobacco products and ciga- rette papers and tubes proved to have been withdrawn from the market. Subsec. (c). Pub. L. 85–859 substituted ‘‘under this sec- tion shall be filed within 6 months after the date of the withdrawal from the market, loss, or destruction of the articles to which the claim relates’’ for ‘‘imposed by this chapter shall be filed within 3 years of the date of payment of tax’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1965 AMENDMENT Pub. L. 89–44, title VIII, § 808(d)(2), June 21, 1965, 79 Stat. 165, provided that: ‘‘The amendments made by subsections (b)(1), (2), and (c) [amending this section] shall take effect on October 1, 1965.’’ EFFECTIVE DATE OF 1958 AMENDMENT Amendment by Pub. L. 85–859 effective Sept. 3, 1958, see section 210(a)(1) of Pub. L. 85–859, set out as an Ef- fective Date note under section 5001 of this title. § 5706. Drawback of tax There shall be an allowance of drawback of tax paid on tobacco products and cigarette papers and tubes, when shipped from the United States, in accordance with such regulations and upon the filing of such bond as the Secretary shall prescribe. (Aug. 16, 1954, ch. 736, 68A Stat. 709; Pub. L. 85–859, title II, § 202, Sept. 2, 1958, 72 Stat. 1419; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Editorial Notes AMENDMENTS 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. 1958—Pub. L. 85–859 substituted ‘‘tobacco products and cigarette papers and tubes’’ for ‘‘articles’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1958 AMENDMENT Amendment by Pub. L. 85–859 effective Sept. 3, 1958, see section 210(a)(1) of Pub. L. 85–859, set out as an Ef- fective Date note under section 5001 of this title. [§ 5707. Repealed. Pub. L. 89–44, title V, § 501(g), June 21, 1965, 79 Stat. 150] Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 709; Mar. 30, 1955, ch. 18, § 3(b)(3), 69 Stat. 15; Mar. 29, 1956, ch. 115,