
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC5703]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
      Subtitle E--Alcohol, Tobacco, and Certain Other Excise Taxes
 
       CHAPTER 52--TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES
 
Subchapter A--Definitions; Rate and Payment of Tax; Exemption From Tax; 
                     and Refund and Drawback of Tax
 
Sec. 5703. Liability for tax and method of payment


(a) Liability for tax

                       (1) Original liability

        The manufacturer or importer of tobacco products and cigarette 
    papers and tubes shall be liable for the taxes imposed thereon by 
    section 5701.

                      (2) Transfer of liability

        When tobacco products and cigarette papers and tubes are 
    transferred, without payment of tax, pursuant to section 5704, the 
    liability for tax shall be transferred in accordance with the 
    provisions of this paragraph. When tobacco products and cigarette 
    papers and tubes are transferred between the bonded premises of 
    manufacturers and export warehouse proprietors, the transferee shall 
    become liable for the tax upon receipt by him of such articles, and 
    the transferor shall thereupon be relieved of his liability for such 
    tax. When tobacco products and cigarette papers and tubes are 
    released in bond from customs custody for transfer to the bonded 
    premises of a manufacturer of tobacco products or cigarette papers 
    and tubes, the transferee shall become liable for the tax on such 
    articles upon release from customs custody, and the importer shall 
    thereupon be relieved of his liability for such tax. All provisions 
    of this chapter applicable to tobacco products and cigarette papers 
    and tubes in bond shall 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.

(b) Method of payment of tax

                           (1) In general

        The taxes imposed by section 5701 shall be determined at the 
    time of removal of the tobacco products and cigarette papers and 
    tubes. Such taxes shall be paid on the basis of return. The 
    Secretary shall, by regulations, prescribe the period or the event 
    for which such return shall be made and the information to be 
    furnished on such return. Any postponement under this subsection of 
    the payment of taxes determined at the time of removal shall be 
    conditioned upon the filing of such additional bonds, and upon 
    compliance with such requirements, as the Secretary may prescribe 
    for the protection of the revenue. The Secretary may, by 
    regulations, require payment of 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 tax on the basis 
    of a return under this subsection or regulations prescribed 
    thereunder. All administrative and penalty provisions of this title, 
    insofar as applicable, shall apply to any tax imposed by section 
    5701.

                    (2) Time for payment of taxes

        (A) In general

            Except as otherwise provided in this paragraph, in the case 
        of taxes on tobacco products and cigarette papers and tubes 
        removed during any semimonthly period under bond for deferred 
        payment of tax, the last day for payment of such taxes shall be 
        the 14th day after the last day of such semimonthly period.

        (B) Imported articles

            In the case of tobacco products and cigarette papers and 
        tubes which are imported into the United States--
            (i) In general

                The last day for payment of tax shall be the 14th day 
            after the last day of the semimonthly period during which 
            the article is entered into the customs territory of the 
            United States.
            (ii) Special rule for entry for warehousing

                Except as provided in clause (iv), in the case of an 
            entry for warehousing, the last day for payment of tax shall 
            not be later than the 14th day after the last day of the 
            semimonthly period during which the article is removed from 
            the 1st such warehouse.
            (iii) Foreign trade zones

                Except as provided in clause (iv) and in regulations 
            prescribed by the Secretary, articles brought into a foreign 
            trade zone shall, notwithstanding any other provision of 
            law, be treated for purposes of this subsection as if such 
            zone were a single customs warehouse.
            (iv) Exception for articles destined for export

                Clauses (ii) and (iii) shall not apply to any article 
            which is shown to the satisfaction of the Secretary to be 
            destined for export.

        (C) Tobacco products and cigarette papers and tubes brought into 
                the United States from Puerto Rico

            In the case of tobacco products and cigarette papers and 
        tubes which are brought into the United States from Puerto Rico, 
        the last day for payment of tax shall be the 14th day after the 
        last day of the semimonthly period during which the article is 
        brought into the United States.

        (D) Special rule for tax due in September

            (i) In general

                Notwithstanding the preceding provisions of this 
            paragraph, the taxes on tobacco products and cigarette 
            papers and tubes for the period beginning on September 16 
            and ending on September 26 shall be paid not later than 
            September 29.
            (ii) Safe harbor

                The requirement of clause (i) shall be treated as met if 
            the amount paid not later than September 29 is not less than 
            \11/15\ of the taxes on tobacco products and cigarette 
            papers and tubes for the period beginning on September 1 and 
            ending on September 15.
            (iii) Taxpayers not required to use electronic funds 
                    transfer

                In the case of payments not required to be made by 
            electronic funds transfer, clauses (i) and (ii) shall be 
            applied by substituting ``September 25'' for ``September 
            26'', ``September 28'' for ``September 29'', and ``\2/3\'' 
            for ``\11/15\''.

        (E) Special rule where due date falls on Saturday, Sunday, or 
                holiday

            Notwithstanding section 7503, if, but for this subparagraph, 
        the due date under this paragraph would fall on a Saturday, 
        Sunday, or a legal holiday (as defined in section 7503), such 
        due date shall be the immediately preceding day which is not a 
        Saturday, Sunday, or such a holiday (or the immediately 
        following day where the due date described in subparagraph (D) 
        falls on a Sunday).

               (3) Payment by electronic fund transfer

        Any person who in any 12-month period, ending December 31, was 
    liable for a gross amount equal to or exceeding $5,000,000 in taxes 
    imposed on tobacco products and cigarette papers and tubes by 
    section 5701 (or 7652) shall pay such taxes during the succeeding 
    calendar year by electronic fund transfer (as defined in section 
    5061(e)(2)) to a Federal Reserve Bank. Rules similar to the rules of 
    section 5061(e)(3) shall apply to the $5,000,000 amount specified in 
    the preceding sentence.

(c) Use of government depositaries

    The Secretary may authorize Federal Reserve banks, and incorporated 
banks or trust companies which are depositaries or financial agents of 
the United States, to receive any tax imposed by this chapter, in such 
manner, at such times, and under such conditions as he may prescribe; 
and he shall prescribe the manner, time, and condition under which the 
receipt of such tax by such banks and trust companies is to be treated 
as payment for tax purposes.

(d) Assessment

    Whenever any tax required to be paid by this chapter is not paid in 
full at the time required for such payment, it shall be the duty of the 
Secretary, subject to the limitations prescribed in section 6501, on 
proof satisfactory to him, to determine the amount of tax which has been 
omitted to be paid, and to make an assessment therefor against the 
person liable for the tax. The tax so assessed shall be in addition to 
the penalties imposed by law for failure to pay such tax when required. 
Except in cases where delay may jeopardize collection of the tax, or 
where the amount is nominal or the result of an evident mathematical 
error, no such assessment shall be made until and after the person 
liable for the tax has been afforded reasonable notice and opportunity 
to show cause, in writing, against such assessment.

(Aug. 16, 1954, ch. 736, 68A Stat. 707; Pub. L. 85-859, title II, 
Sec. 202, Sept. 2, 1958, 72 Stat. 1417; Pub. L. 94-455, title XIX, 
Secs. 1905(a)(25), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1821, 1834; 
Pub. L. 97-448, title III, Sec. 308(a), Jan. 12, 1983, 96 Stat. 2407; 
Pub. L. 98-369, div. A, title I, Sec. 27(c)(2), July 18, 1984, 98 Stat. 
509; Pub. L. 99-509, title VIII, Sec. 8011(a)(1), Oct. 21, 1986, 100 
Stat. 1951; Pub. L. 99-514, title XVIII, Sec. 1801(c)(2), Oct. 22, 1986, 
100 Stat. 2786; Pub. L. 100-647, title II, Sec. 2003(b)(1)(C), (D), Nov. 
10, 1988, 102 Stat. 3598; Pub. L. 103-465, title VII, Sec. 712(c), Dec. 
8, 1994, 108 Stat. 5000.)


                               Amendments

    1994--Subsec. (b)(2)(D). Pub. L. 103-465, Sec. 712(c)(1), added 
subpar. (D). Former subpar. (D) redesignated (E).
    Subsec. (b)(2)(E). Pub. L. 103-465, Sec. 712(c), redesignated 
subpar. (D) as (E), substituted ``due date'' for ``14th day'' in 
heading, and inserted ``(or the immediately following day where the due 
date described in subparagraph (D) falls on a Sunday)'' before period at 
end.
    1988--Subsec. (b)(2)(B)(i), (ii), (C). Pub. L. 100-647 substituted 
``the 14th day after the last day of the semimonthly 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 making 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 
Secretary prescribe by regulations the conditions for the filing of 
additional bonds, and added par. (2).
    1976--Subsec. (a). Pub. L. 94-455, Sec. 1905(a)(25)(A), directed 
that all provisions of chapter 52 applicable to tobacco 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, Secs. 1905(a)(25)(B), 1906(b)(13)(A), 
struck out provisions which had authorized 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, Secs. 1905(a)(25)(C), 1906(b)(13)(A), 
redesignated subsec. (d) as (c) and struck out ``or his delegate'' after 
``Secretary''. Former subsec. (c), relating to the use of stamps as 
evidence of the payment of taxes, was struck out.
    Subsecs. (d), (e). Pub. L. 94-455, Secs. 1905(a)(25)(C), 
1906(b)(13)(A), redesignated subsec. (e) as (d) and struck out ``or his 
delegate'' after ``Secretary''. Former subsec. (d) redesignated (c).
    1958--Subsec. (a)(1). Pub. L. 85-859 designated part of first 
sentence of subsec. (a) as par. (1) thereof and redesignated 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 subsec. (b) and substituted 
``tobacco products and cigarette 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 delegate 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 
mathematical error.


                    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 Omnibus 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 otherwise 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 required 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

    Section 308(b) of Pub. L. 97-448 provided that: ``The amendments 
made by subsection (a) [amending this section] shall apply with respect 
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 effective 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 Effective 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 [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 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.

                  Section Referred to in Other Sections

    This section is referred to in sections 6207, 6302 of this title.
