Rev. Proc. 55-12

SECTION 1. PURPOSE

The purpose of this Revenue Procedure is to provide certain information and instructions as an aid in the uniform and orderly transition from the provisions of Regulations 8 to the provisions of the regulations relating to cigars and cigarettes (Manufacturers, Importers, and Dealers), which became effective on June 25, 1955.

SEC. 2. PERMITS AND OPENING INVENTORIES

Existing manufacturers of cigars and cigarettes, in order to continue the manufacture thereof under the new regulations, must file Form 2093, Application for Permit Under Chapter 52, Internal Revenue Code. The permit issued to a manufacturer pursuant thereto will bear the same number as the factory number now assigned to the manufacturer. An existing manufacturer is not required to make an opening inventory in connection with his application for a permit unless a superseding bond is given with such application.

SEC. 3. TRADE NAME CERTIFICATE

It is not intended, under section 270.84 of the regulations relating to cigars and cigarettes (Manufacturers, Importers, and Dealers), to require the refurnishing of a trade name certificate where the Assistant Regional Commissioner, Alcohol and Tobacco Tax, already possesses such a certificate furnished by the manufacturer.

SEC. 4. AMOUNT OF BOND

With respect to the amount of the bond required of a manufacturer of large cigars under section 270.122 of the regulations, it will be necessary to determine the tax liability on such cigars produced during the base 12 months' period by using the percentage of each class removed taxpaid during the same period. In the case of a manufacturer of large cigars commencing business, it will be necessary for him to estimate the quantity of such cigars of each class which he will produce during the next 12 months.

SEC. 5. CIGAR AND CIGARETTE FACTORY AND TOBACCO FACTORY IN ONE BUILDING

Where one building comprises a cigar and cigarette factory and a tobacco factory, and such factories are of common ownership, the separation prescribed by section 270.87(b) of the regulations need not be required, provided the Assistant Regional Commissioner, Alcohol and Tobacco Tax, is satisfied that the present premises afford adequate protection to the revenue.

SEC. 6. OPENING INVENTORY BY FIDUCIARY SUCCESSOR

Where an opening inventory is made by a fiduciary successor under section 270.103, such inventory will also be regarded as the closing inventory of the predecessor.

SEC. 7. PACKAGING MATERIALS

Manufacturers of cigars and cigarettes will be permitted to use their existing supplies of packaging materials until such supplies are exhausted.

SEC. 8. DUMMY PACKAGES FOR DISPLAY PURPOSES

A manufacturer of cigars and cigarettes may use his regular packages as dummy packages for display purposes, notwithstanding they bear the mark and, in the case of large cigars, the class designation thereon, provided they do not have any revenue stamps affixed thereto.

SEC. 9. CIGARS AND CIGARETTES DAMAGED OR WITHDRAWN FROM THE MARKET

Packages of cigars and cigarettes that are damaged or withdrawn from the market may be assembled, before the detail of a revenue officer is requested, in a suitable place in the factory, provided the manufacturer has received the authorization required by section 270.153 of the regulations.

SEC. 10. RECORDS

The records, Forms 2142 and 2143, required under section 270.142 of the regulations, to be kept by manufacturers of cigars and cigarettes, are in the process of preparation. Until these new forms are issued, such manufacturers shall continue to keep records on Parts 1 and 2 of Form 73, appropriately modified to make entries of the operations and transactions required by section 270.172 of the regulations to be recorded. All (a) tobacco materials received (except with respect to samples as provided by section 270.159), shipped, and lost or destroyed, (b) cigars and cigarettes manufactured, received, removed, furnished for personal consumption by employees, used for experimental purposes, reduced to material, and lost or destroyed, and (c) stamps received, used, and lost or destroyed, must be shown. The preparation of internal revenue tobacco invoices, Form 774, by manufacturers of cigars and cigarettes shall be discontinued immediately, except in connection with the importation of tobacco materials until Form 2146, prescribed by section 270.166, becomes available, and except in connection with the exportation of tobacco materials until new regulations with respect thereto become effective.

SEC. 11. REPORTS

The report, Form 2136, required by section 270.143 to be made by manufacturers of cigars and cigarettes, is in the process of preparation. Until the new form is issued, such manufacturers shall continue to make reports monthly on Parts 1 and 2 of Form 72 , appropriately modified to show summary entries of operations and transactions required by section 270.143 of the regulations. Such entries include (a) totals of tobacco materials received (except with respect to samples as provided by section 270.159), shipped, used, and lost or destroyed, (b) totals of cigars and cigarettes manufactured, received, removed, furnished for personal consumption by employees, used for experimental purposes, reduced to material, and lost or destroyed, and (c) total values of stamps of each kind and class received, used, lost or destroyed, and inventories of products and stamps as required by the report forms. Daily entries on such reports are no longer required.

SEC. 12. SERVICING VENDING MACHINES

Partially emptied packages of cigars may be removed from vending machines at the time the machines are serviced, and such cigars may be used to make up full packages for insertion into vending machines.

SEC. 13. RESTAMPING PACKAGES

It is not intended, under section 270.73, to restrict the place where the restamping of packages of cigars and cigarettes from which the stamps have been lost or destroyed, or where the repacking of such products, may be accomplished. If a manufacturer of cigars and cigarettes desires to bring such products back into his factory, he may do so, subject to the provisions of sections 270.73 and 270.153 of the regulations.

SEC. 14. CUSTOMS BONDED MANUFACTURING WAREHOUSES, CLASS 6

The manufacture in, and removal of cigars from, customs bonded manufacturing warehouses, class 6, are governed by customs regulations. Cigars manufactured in such warehouses, when removed for consumption in the United States, shall be treated similarly to cigars imported from a foreign country.

SEC. 15. TERMINATION OF EXPORT AND SEA STORES BONDS

It is intended that the bonds required of manufacturers of cigars and cigarettes by section 270.85 of the regulations shall cover all of the operations of the factories of the manufacturers for which the bonds are furnished, including removals and receipts of tobacco materials, cigars, and cigarettes. See sections 270.151, 270.157, 270.158, 270.166, 270.167, and 270.168 of the regulations relating to cigars and cigarettes (Manufacturers, Importers, and Dealers). Where a manufacturer's bond meets the standard set forth in section 270.85 and the Assistant Regional Commissioner is holding a separate export or sea stores bond, Form 549 or 549-A, furnished for the same factory, he is authorized to terminate such separate bonds. However, the sureties on such bonds shall remain liable in respect of any liability incurred by the manufacturers in connection with export or sea stores removals made under and charged against such bonds.

SEC. 16. ADDITIONAL INFORMATION

Correspondence with respect to information contained in this Revenue Procedure or other information in connection with the requirements of the regulations should be addressed to the appropriate Assistant Regional Commissioner, Alcohol and Tobacco Tax Division.

SEC. 17. EFFECTIVE DATE

This Revenue Procedure is effective June 25, 1955.

¹ Modified by Revenue Ruling 56-73, I.R.B. 1956-10, 20.