Rev. Rul. 61-44

Advice has been requested whether tobacco products provided by manufacturers without payment of tax for employees' off-factory personal consumption may be accumulated and distributed weekly.

Section 5704(a) of the Internal Revenue Code of 1954 provides in part that tobacco products may be furnished by a manufacturer of such products, without payment of tax, for use or consumption by employees or, in such quantities, and in such manner as the Secretary of Treasury or his delegate shall by regulations prescribe.

Section 270.150 of the Cigars and Cigarettes-Manufacturers, Importers, and Dealers Regulations provides, in part, that manufacturers of cigars and cigarettes may furnish to each employee, for off-factory personal consumption, not more than five large cigars or cigarettes, or 20 small cigars or cigarettes, without payment of tax, for each day the employee is at work. Such cigars or cigarettes furnished for off-factory consumption shall be taken from the factory by the employee on the day furnished.

Section 275.139 of the Manufactured Tobacco-Manufacturers, Importers, and Dealers Regulations provides, in part , that manufacturers of tobacco may furnish to each employee, for off-factory personal consumption or use, not more than two ounces of manufactured tobacco, without payment of tax, for each day the employee is at work. Such tobacco furnished for off-factory consumption or use shall be taken from the factory by the employee on the day furnished.

It is held that tobacco products provided by manufacturers without payment of tax for employees' off-factory personal consumption may not be accumulated and distributed to the employees on a weekly basis. Such tobacco products must be given to the employees on the day for which furnished and removed from the factory by the employees on that day.