Rev. Proc. 56-30

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to outline the procedure for handling the new cigar tax returns which may be used for reporting the internal revenue excise taxes on cigars.

SEC. 2. BACKGROUND.

Section 5703 of the Internal Revenue Code of 1954 provides for the continued payment of cigar taxes by stamp until such time as the Secretary of the Treasury or his delegate shall, by regulations, provide for the payment of the tax by return. The Regulations relating to Cigars and Cigarettes (manufacturers, Importers, and Dealers), as amended by Treasury Decision 6185, page 917 of this Bulletin, published in the Federal Register on June 26, 1956, 21 F.R. 4555, provide for the use of the return or the continuance of tax payment by the purchase of stamps at the option of the taxpayer.

SEC. 3. ELECTION TO ADOPT RETURN METHOD.

Manufacturers of cigars desiring to convert to the return method must submit a written notice of intention to the Assistant Regional Commissioner, Alcohol and Tobacco Tax. District Directors of Internal Revenue will be notified by the Assistant Regional Commissioner of all taxpayers, in their respective districts, making such election. After a manufacturer has converted to the payment of tax on a return basis, it will not be permissible to revert to the payment of tax by stamp. Accordingly, subsequent sales of stamps to such taxpayers will be prohibited.

SEC. 4. TIME FOR FILING NOTICE OF INTENTION TO PAY TAX BY RETURN SYSTEM.

Section 270.64 of the regulations requires that each manufacturer who intends to pay the tax on cigars by return shall submit a notice of such intention to the Assistant Regional Commissioner, Alcohol and Tobacco Tax, at least five days in advance of the day on which he desires to shift over to the return system. Manufacturers located at a considerable distance from the office of the Assistant Regional Commissioner are requested to use air mail, special delivery, or other expeditious means of communication, in presenting notification of a change over to the return system, in order that the shift-over can be effectuated on the date desired.

SEC. 5. DESCRIPTION OF CIGAR TAX RETURN.

Form 2135, Tax Return-Manufacturer or Importer of Cigars, has been provided as the form of the cigar tax return. It provides space for showing the name and address of the manufacturer or importer and for the date and signature of the person executing the return, as well as the capacity in which he signs. There are spaces provided for the manufacturer or importer to show the `Serial No.' of the return which, for each taxpayer, will begin with one (1) on July 1, 1956, or such other date as the taxpayer may elect to adopt the return system. Schedules A and B of the return will be used for reflecting information on adjustments which will increase or decrease the amount of tax due.

SEC. 6. PREPARATION AND METHOD OF FILING RETURNS.

The instructions on the form require taxpayers who manufacture or import cigars to prepare the form in triplicate. Under the regulations, Form 2135 will be submitted by manufacturers to the District Director not later than the close of the business day next succeeding that on which the tax liability is incurred, except that Form 2135 need not be prepared, nor the remittance of the tax made, until the total gross tax, for one or more days, reaches $100.00, provided that, regardless of the amount of gross tax, Form 2135, with remittance, will be prepared and filed covering the last day, or days, of each month, even though the amount of tax due is less than $100.00. Manufacturers will be allowed an additional day for filing provided an additional remittance equal to, or greater than, the maximum tax liability to be incurred during any one business day is deposited with the District Director. Importers may file Form 2135 for each lot of cigars, imported or brought into the United States, on which tax has not been paid, which are to be withdrawn from customs custody. The receipted copy of Form 2135 returned to the importer or consignee of such cigars by the District Director will be presented to the customs officer having custody of the cigars. Cigar manufacturers and importers will submit the original and two copies of Form 2135, with remittance in full for the amount of tax due, to the District Director of Internal Revenue. The tax may be paid by cash, check, or money order, made payable to the `Internal Revenue Service.' The triplicate copy of the form will be returned to the manufacturer or importer.

SEC. 7. ASSISTANCE IN CHANGING OVER TO THE RETURN SYSTEM.

The Assistant Regional Commissioner, Alcohol and Tobacco Tax, will, upon request, give assistance to manufacturers of cigars, importers of cigars, proprietors of customs bonded cigar manufacturing warehouses, class six, or others concerned, in formulating a plan for the shift over to the return system.

SEC. 8. PROPRIETORS OF CUSTOMS BONDED CIGAR MANUFACTURING WAREHOUSES, CLASS SIX.

Proprietors of customs bonded cigar manufacturing warehouses, class six, are afforded the same optional daily return system for the payment of internal revenue tax on cigars removed for consumption in the United States as is afforded to domestic manufacturers. Section 270.199 of the regulations requires proprietors of such warehouses who intend to pay the tax on such cigars by return to file with the Assistant Regional Commissioner, Alcohol and Tobacco Tax, a bond on Form 2100, Bond-Manufacturer of Cigars and Cigarettes. The form should be appropriately modified by changing (at each place that it appears) the expression `manufacturer of cigars and cigarettes' to `proprietor of customs bonded manufacturing warehouse, class 6,'; by changing (at each place that it appears) `factory' to `customs manufacturing warehouse'; and by deleting the words `or any other change which requires the principal to file an application for a new or amended permit as a manufacturer of cigars and cigarettes under this bond.' The amount of such bond should not be less than the amount of the tax liability on cigars removed from such warehouse for consumption in the United States during the twelve months preceding the month in which the bond is to be filed, divided by twelve, subject to the usual limitations of $1,000 minimum and $200,000 maximum.

SEC. 9. PAYMENT OF TAX BY RETURN ON CIGARS FROM PUERTO RICO.

Where cigars produced in Puerto Rico are to be shipped to the United States, and the manufacturer desires to pay the United States internal revenue tax on such cigars by return prior to shipment from Puerto Rico to the United States, the manufacturer shall file a tax return, Form 2135, as the importer of the cigars, with the United States Internal Revenue Service office in Puerto Rico. It should be accompanied by remittance of the tax on the cigars covered by such tax return. The manufacturer should secure from such office a copy of the return bearing acknowledgment of receipt of the remittance.

SEC. 10. SUPPLY OF FORMS.

Manufacturers and importers desiring Forms 2135 may obtain them from District Directors of Internal Revenue or Assistant Regional Commissioners, Alcohol and Tobacco Tax.

SEC. 11. CONTINUED USE OF STAMPS ON HAND.

A cigar manufacturer may continue to use the cigar tax stamps that are in his factory on the date on which he desires to pay tax by return as indicated in his notice to this effect. If the manufacturer does not wish to use up such stamps on hand, he may return them to the Assistant Regional Commissioner with a claim filed on Form 843, Claim, for redemption or refund. The manufacturer may continue to store and subsequently remove any stamped packages of cigars on hand in his factory at the time of shifting over to the return system.

SEC. 12. USE OF EXISTING STOCKS OF PACKAGES, LABELS, ETC.

No objection will be made to the use of existing stocks of approved packages, wraps, or labels, for packaging cigars to be taxpaid by return, until such stocks are exhausted, provided that the package shows the number of cigars contained therein and the proper class designation.

SEC. 13. FILING OF CLAIMS.

As provided in the regulations, as amended by Treasury Decision 6185, supra , claims for remission, allowance, abatement of assessment, refund, and redemption, will be filed in original only.

SEC. 14. INQUIRIES.

Inquiries in regard to this Revenue Procedure should refer to the number thereof and should be directed to the appropriate Assistant Regional Commissioner, Alcohol and Tobacco Tax.

SEC. 15. EFFECTIVE DATE.

This Revenue Procedure is effective July 1, 1956.