Rev. Proc. 64-7

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to set forth the procedure to be followed by manufacturers of large cigars in recording and reporting overages and shortages of large cigars.

SEC. 2. BACKGROUND.

A comprehensive study has been conducted as to the overages and shortages that are frequently disclosed by physical inventories in factories producing large cigars. During this study, the Internal Revenue Service has been repeatedly assured by many manufacturers of large cigars that these overages and shortages occur mainly because large cigars are difficult to accurately count when in a loose condition and in large quantities, and are susceptible to loss and breakage during grading, sorting, and packaging operations which generally are performed many days after the cigars have been made (and so recorded).

SEC. 3. RECORDS.

In order that the records and reports maintained by manufacturers of large cigars may accurately reflect operations and transactions, each overage and shortage of cigars disclosed by physical inventory should be entered in the records and the net overage or net shortage during any month should be reported on Form 3068, Monthly Report-Manufacturer of Tobacco Products, submitted for that month.

SEC. 4. INQUIRIES.

Inquiries in regard to this Revenue Procedure should refer to its number and be addressed to the office of the appropriate Assistant Regional Commissioner, Alcohol and Tobacco Tax.

Revenue Procedure 60-7, C.B. 1960-1, 885, is hereby superseded. 26 CFR 601.311: Imposition of taxes; regulations. Rev. Proc. 64-8/1/ (Also Part III-B, Section 5741 270.182.)

Tobacco materials in the process of production into manufactured tobacco should be shown as tobacco materials under the classification of `Other tobacco materials' in the records required by the Manufacture of Tobacco Products Regulations. Manufacturers should regard all such tobacco (other than plug or twist) as tobacco materials, until it is packaged for removal, furnished to employees for personal consumption or use, or removal for sale, consumption or use.

Revenue Procedure 57-34, C.B. 1957-2, 1107, is hereby superseded.

¹ Prepared pursuant to Revenue Procedure 62-24, C.B. 1962-2, 489.