1513-0034 Laws and Regs.

-10-

1513-0034

1513-0034

26 U.S.C.

Sec. 5705. Credit, refund, or allowance of tax

(a) Credit or refund

Credit or refund of any tax imposed by this chapter or section 7652

shall be allowed or made (without interest) to the manufacturer,

importer, or export warehouse proprietor, on proof satisfactory to the

Secretary that the claimant manufacturer, importer, or export warehouse

proprietor has paid the tax on tobacco products and cigarette papers and

tubes withdrawn by him from the market; or on such articles lost

(otherwise than by theft) or destroyed, by fire, casualty, or act of

God, while in the possession of ownership of the claimant.

(b) Allowance

If the tax has not yet been paid on tobacco products and cigarette

papers and tubes provided to have been withdrawn from the market or lost

or destroyed as aforesaid, relief from the tax on such articles may be

extended upon the filing of a claim for allowance therefor in accordance

with such regulations as the Secretary shall prescribe.

(c) Limitation

Any claim for credit or refund of tax under this section shall be

filed within 6 months after the date of the withdrawal from the market,

loss, or destruction of the articles to which the claim relates, and

shall be in such form and contain such information as the Secretary

shall by regulations prescribe.

(Aug. 16, 1954, ch. 736, 68A Stat. 709; Pub. L. 85-859, title II,

Sec. 202, Sept. 2, 1958, 72 Stat. 1419; Pub. L. 89-44, title VIII,

Sec. 808(b)(1), (2), (c)(1), June 21, 1965, 79 Stat. 164, 165; Pub. L.

94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

27 CFR

Sec. 40.283 Credit or refund of tax.

The taxes paid on tobacco products may be credited or refunded

(without interest) to a manufacturer on proof satisfactory to the

appropriate TTB officer that the claimant manufacturer paid the tax on

tobacco products lost (otherwise than by theft) or destroyed, by fire,

casualty, or act of God, while in the possession or ownership of such

manufacturer, or withdrawn by him from the market. Any claim for credit

or refund under this section shall be prepared on Form 2635 (5620.8), in

duplicate. Claims shall include a statement that the tax imposed on

tobacco products by 26 U.S.C. 7652 or chapter 52, was paid in respect to

the tobacco products covered by the claim, and that the products were

lost, destroyed, or withdrawn from the market within 6 months preceding

the date the claim is filed. A claim for credit or refund relating to

products lost or destroyed shall be supported as prescribed in Sec.

40.301, and a claim relating to products withdrawn from the market shall

be accompanied by a schedule prepared and verified as prescribed in

Sec. Sec. 40.311 and 40.313. The original and one copy of Form 2635

(5620.8), claim for credit, or the original of Form 2635 (5620.8), claim

for refund, shall be filed with the appropriate TTB officer. Upon action

by the appropriate TTB officer on a claim for credit he will return the

copy of Form 2635 to the manufacturer as notification of allowance or

disallowance of the claim or any part thereof, which copy, with the copy

of any verified supporting schedules, shall be retained by the

manufacturer. When the manufacturer is notified of allowance of the

claim for credit or any part thereof he shall make an adjusting entry

and explanatory statement in the next tax return(s) to the extent

necessary to take credit in the amount of the allowance. Prior to

consideration and action on his claim the manufacturer may not

anticipate allowance of his claim by taking credit in his tax return.

The duplicate of a claim for refund, with the copy of any verified

supporting schedules, shall be retained by the manufacturer.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1419)

[T.D. 6961, 33 FR 9489, June 28, 1968. Redesignated at 40 FR 16835, Apr.

15, 1975, and amended by T.D. ATF-48, 44 FR 55855, Sept. 28, 1979; T.D.

ATF-219, 50 FR 51389, Dec. 17, 1985; T.D. ATF-232, 51 FR 28083, Aug. 5,

1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR

19340, May 22, 1987]

Sec. 40.311 Action by claimant.

(a) General. Where tobacco products are withdrawn from the market

and the manufacturer desires to file claim under the provisions of Sec.

40.282 or Sec. 40.283, he shall assemble the products in or adjacent to

a factory if they are to be returned to bond or at any suitable place if

they are to be destroyed or reduced to materials. The manufacturer shall

group the products according to the rates of tax applicable to the

products, and shall prepare a schedule of the products, on TTB Form

5200.7, in triplicate. All copies of the schedule shall be forwarded to

the appropriate TTB officer.

(b) Large cigars. Refund or credit of tax on large cigars withdrawn

from the market is limited to the lowest tax paid on that brand and size

of cigar during the required record retention period (see Sec. 40.185),

except where the manufacturer establishes that a greater amount was

actually paid. For each claim involving large cigars withdrawn from the

market, the manufacturer must include a certification on either Form

5200.7 or Form 2635 (5620.8) to read as follows:

The amounts claimed relating to large cigars are based on the lowest

sale price applicable to the cigars during the required record retention

period, except where specific documentation is submitted with the

claim to establish that any greater amount of tax claimed was actually

paid.

(See 26 U.S.C. 5705)

[T.D. ATF-80, 46 FR 18310, Mar. 24, 1981, as amended by T.D. ATF-232, 51

FR 28083, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D.

ATF-251, 52 FR 19340, May 22, 1987; T.D. ATF-307, 55 FR 52743, Dec. 21,

1990; T.D. ATF-424, 64 FR 71932, Dec. 22, 1999; T.D. ATF-420, 64 FR

71941, Dec. 22, 1999]

Sec. 40.312 Action by the appropriate TTB officer.

Upon receipt of a schedule of tobacco products withdrawn from the

market, the appropriate TTB officer may assign a TTB officer to verify

the schedule and supervise disposition of the tobacco products (and

destruction of the stamps, if any), or he may authorize the manufacturer

to dispose of the products (and destroy the stamps, if any) without

supervision by so stating on the original and one copy of the schedule

returned to the manufacturer.

[T.D. 6871, 31 FR 39, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr.

15, 1975, as amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D.

ATF-243, 51 FR 43194, Dec. 1, 1986]

Sec. 40.313 Disposition of tobacco products and schedule.

When so authorized, as evidenced by the appropriate TTB officer's

statement on the schedule, the manufacturer shall dispose of the tobacco

products (and destroy the stamps, if any) as specified in the schedule.

After the manufacturer has disposed of the products (and destroyed the

stamps, if any), he shall execute a certificate on both copies of the

schedule returned to him by the appropriate TTB officer, to show the

disposition and the date of disposition of the products (and stamps, if

any). In connection with a claim for allowance the manufacturer then

shall return the original of the schedule to the appropriate TTB officer

who authorized such disposition, who will cause such schedule to be

associated with the claim, Form 2635 (5620.8), filed under Sec. 40.282.

In connection with a claim for credit or refund the manufacturer shall

attach the original of the schedule to his claim for credit, Form 2635

(5620.8), or claim for refund, Form 2635 (5620.8), filed under Sec.

40.283. When an appropriate TTB officer is assigned to verify the

schedule and supervise disposition of the tobacco products, such officer

shall, upon completion of his assignment, execute a certificate on all

copies of the schedule to show the disposition and the date of

disposition of the products. In connection with a claim for allowance

the officer shall return one copy of the schedule to be included in the

manufacturers records, and in connection with a claim for credit or

refund, the officer shall return the original and one copy of the

schedule to the manufacturer, the original of which the manufacturer

shall attach to the claim, Form 2635 (5620.8), filed under Sec. 40.283.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 39, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr.

15, 1975, and amended by T.D. ATF-232, 51 FR 28083, Aug. 5, 1986; T.D.

ATF-243, 51 FR 43194, Dec. 1, 1986; T.D. ATF-251, 52 FR 19340, May 22,

1987]

Sec. 40.472 Allowance.

Relief from the payment of tax on cigarette papers and tubes may be

extended to a manufacturer by allowance of the tax where the cigarette

papers and tubes, after removal from the factory upon determination of

tax and prior to the payment of such tax, are lost (otherwise than by

theft) or destroyed by fire, casualty, or act of God, while in the

possession or ownership of the manufacturer who removed such articles,

or are withdrawn by the manufacturer from the market. Any claim for

allowance under this section shall be filed on TTB Form 2635 (5620.8)

with the appropriate TTB officer, shall be executed under penalties and

perjury and shall show the date the cigarette papers and tubes were

removed from the factory. A claim relating to articles lost or destroyed

shall be supported as prescribed in Sec. 40.475. In the case of a claim

relating to cigarette papers or tubes withdrawn from the market the

schedule prescribed in Sec. 40.476 shall be filed with the appropriate

TTB officer. The manufacturer may not anticipate allowance of a claim by

making the adjusting entry in a tax return pending consideration and

action on the claim. Cigarette papers and tubes to which such a claim

relates must be shown as removed on determination of tax in the return

covering the period during which such articles were so removed. Upon

action on the claim by the appropriate TTB officer a copy of TTB Form

2635 (5620.8) will be returned to the manufacturer as notice of such

action. This copy of TTB Form 2635 (5620.8), with the copy of any

verified supporting schedules, shall be retained by the manufacturer.

When such notification of allowance of the claim or any part thereof is

received prior to the time the return covering the tax on the cigarette

papers or tubes to which the claim relates is to be filed, the

manufacturer may make an adjusting entry and explanatory statement in

that tax return. Where the notice of allowance is received after the

filing of the return and taxpayment of the cigarette papers or tubes to

which the claim relates, the manufacturer may make an adjusting entry

and explanatory statement in the next tax return(s) to the extent

necessary to take credit in the amount of the allowance.

(72 Stat. 1419, as amended, 26 U.S.C. 5705)

Sec. 40.473 Credit or refund.

The taxes paid on cigarette papers and tubes may be credited or

refunded (without interest) to a manufacturer on proof satisfactory to

the appropriate TTB officer that the claimant manufacturer paid the tax

on cigarette papers and tubes lost (otherwise than by theft) or destroyed,

by fire, casualty, or act of God, while in the possession or ownership of such manufacturer, or withdrawn by the manufacturer from the market. Any claim for credit or refund under this section shall be prepared on TTB Form 2635 (5620.8), in duplicate. Claims shall include a statement that the tax imposed on cigarette

papers and tubes by 26 U.S.C. 7652 or Chapter 52, was paid in respect to

the cigarette papers or tubes covered by the claim, and that the

articles were lost, destroyed, or withdrawn from the market within 6

months preceding the date the claim is filed. A claim for credit or

refund relating to articles lost or destroyed shall be supported as

prescribed in Sec. 40.475, and a claim relating to articles withdrawn

from the market shall be accompanied by a schedule prepared and verified

as prescribed in Sec. Sec. 40.476, and 40.477. The original and one

copy of TTB Form 2635 (5620.8), shall be filed with the appropriate TTB

officer. Upon action by the appropriate TTB officer on a claim for

credit, a copy of TTB Form 2635 (5620.8) will be returned to the

manufacturer as notification of allowance or disallowance of the claim

or any part thereof. This copy, with the copy of any verified supporting

schedules, shall be retained by the manufacturer. When the manufacturer

is notified of allowance of the claim for credit or any part thereof,

the manufacturer shall make an adjusting entry and explanatory statement

in the next tax return(s) to the extent necessary to take credit in the

amount of the allowance. The manufacturer may not anticipate allowance

of a claim by taking credit on a tax return prior to consideration and

action on such claim. The duplicate of a claim for refund or credit,

with a copy of any verified supporting schedules, shall be retained by

the manufacturer.

(72 Stat. 1419, as amended, 26 U.S.C. 5705)

Sec. 40.476 Action by claimant.

Where cigarette papers and tubes are withdrawn from the market and

the manufacturer desires to file claim under the provisions of Sec.

40.472 or Sec. 40.473, the manufacturer shall assemble the articles in

or adjacent to a factory if they are to be retained in or received into

such factory, or at any suitable place if they are to be destroyed. The

manufacturer shall group the articles according to the rate of tax

applicable thereto, and shall prepare and submit a schedule of the

articles, on TTB Form 5200.7 in accordance with the instructions, on

the form. All copies of the schedule shall be forwarded to the appropriate

TTB officer.

(72 Stat. 1419; 26 U.S.C. 5705)

[T.D. ATF-384, 61 FR 54085, Oct. 17, 1996, as amended by T.D. ATF-424,

64 FR 71932, Dec. 22, 1999]

Sec. 40.477 Action by the appropriate TTB officer.

Upon receipt of a schedule of cigarette papers and tubes withdrawn

from the market, the appropriate TTB officer may assign a TTB officer to

verify the schedule and supervise disposition of the cigarette papers

and tubes, or may authorize the manufacturer to dispose of the articles

without supervision by so stating on the original and one copy of the

schedule returned to the manufacturer.

(72 Stat. 1419; 26 U.S.C. 5705)

Sec. 40.478 Disposition of cigarette papers and tubes and schedule.

When so authorized, as evidenced by the appropriate TTB officer's

statement on the schedule, the manufacturer shall dispose of the

cigarette papers and tubes as specified in the schedule. After the

articles are disposed of, the manufacturer shall execute a certificate

on both copies of the schedule received from the appropriate TTB

officer, to show the disposition and the date of disposition of the

articles. In connection with a claim for credit or refund, the

manufacturer shall attach the original of the schedule to the claim for

credit or refund, TTB Form 2635 (5620.8), filed under Sec. 40.473. When

an appropriate TTB officer is assigned to verify the schedule and

supervise disposition of the cigarette papers and tubes, such officer

shall, upon completion of the assignment, execute a certificate on all

copies of the schedule to show the disposition and the date of

disposition of the articles. In connection with a claim for allowance,

the officer shall return one copy of the schedule to the manufacturer

for the record, and in connection with a claim for credit or refund, the

officer shall return the original and one copy of the schedule to the

manufacturer, the original of which the manufacturer shall attach to the

claim filed under Sec. 40.473.

(72 Stat. 1419, as amended; 26 U.S.C. 26 U.S.C. 5705)

Sec. 41.170 Reduction of tobacco products to materials; TTB action.

(a) General. Where tobacco products and cigarette papers and tubes

which have been imported or brought into the United States are withdrawn

from the market and the taxpayer desires to file claim for refund of the

tax on the articles, he shall, in addition to the requirements of Sec.

41.163, assemble the articles at any suitable place, if they are to be

destroyed or reduced to tobacco. The taxpayer shall group the articles

according to the rates of tax applicable to the articles, and shall

prepare a schedule of the articles on TTB Form 5200.7, in triplicate.

All copies of the schedule shall be forwarded to the appropriate TTB

officer.

(b) Large cigars. Refund or credit of tax on large cigars withdrawn

from the market is limited to the lowest tax applicable to that brand

and size of cigar during the required record retention period (see Sec.

41.22) except where the importer establishes that a greater amount was

actually paid. For each claim involving large cigars withdrawn from the

market, the importer must include a certification on either TTB Form

5200.7 or TTB Form 2635 (5620.8) to read as follows:

The amounts claimed relating to large cigars are based on the lowest

sale price applicable to the cigars during the required record retention

period, except where specific documentation is submitted with the claim

to establish that any greater amount of tax claimed was actually paid.

(See 26 U.S.C. 5705)

[T.D. ATF-80, 46 FR 18311, Mar. 24, 1981, as amended by T.D. ATF-232, 51

FR 28086, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D.

ATF-251, 52 FR 19341, May 22, 1987; T.D. ATF-307, 55 FR 52745, Dec. 21,

1990; T.D. ATF-424, 64 FR 71933, Dec. 22, 1999; T.D. ATF-420, 64 FR

71944, Dec. 22, 1999. Redesignated and amended by T.D. TTB-16, 69 FR

52424, 52425, Aug. 26, 2004]

Sec. 41.171 Reduction of tobacco products to materials, action by

appropriate TTB officer.

Upon receipt of a schedule of tobacco products and cigarette papers

and tubes which have been imported or brought into the United States and

which are withdrawn from the market by a taxpayer who desires to destroy

such articles or, in the case of tobacco products, reduce them to

tobacco, the appropriate TTB officer may verify the schedule and

supervise destruction of the articles (and stamps, if any) or the

reduction of tobacco products to tobacco, or the appropriate TTB officer

may authorize the taxpayer to destroy the articles (and stamps, if any)

or reduce tobacco products to tobacco without supervision by so stating

on the original and one copy of the schedule returned to the taxpayer.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 46, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr.

15, 1975, and amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D.

ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D.

TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]

Sec. 41.172 Return to nontaxpaid status, action by taxpayer.

(a) General. Where tobacco products and cigarette papers and tubes

which have been imported or brought into the United States are withdrawn

from the market and the taxpayer desires to file a claim for refund of

the tax on the articles and return them to a nontaxpaid status, he

shall, in addition to the requirements of Sec. 41.163, assemble the

articles in or adjacent to the factory in which the articles are to be

retained or received in a nontaxpaid status. The taxpayer shall group

the articles according to the rates of tax applicable to the articles,

and shall prepare a schedule of the articles, on Form 5200.7, in

triplicate. All copies of the schedule shall be forwarded to the

appropriate TTB officer.

(b) Large cigars. Refund or credit of tax on large cigars withdrawn

from the market is limited to the lowest tax applicable to that brand

and size of cigar during the required record retention period (see Sec.

41.22) except where the importer establishes that a greater amount was

actually paid. For each claim involving large cigars withdrawn from the

market, the importer must include a certification on either TTB Form

5200.7 or TTB Form 2635 (5620.8) to read as follows:

The amounts claimed relating to large cigars are based on the lowest

sale price applicable to the cigars during the required record retention

period, except where specific documentation is submitted with the claim

to establish that any greater amount of tax claimed was actually paid.

(See 26 U.S.C. 5705)

[T.D. ATF-80, 46 FR 18311, Mar. 24, 1981, and amended by T.D. ATF-232,

51 FR 28087, Aug. 5, 1986; T.D. ATF-243, 51 FR 43194, Dec. 1, 1986; T.D.

ATF-251, 52 FR 19341, May 22, 1987; T.D. ATF-307, 55 FR 52745, Dec. 21,

1990; T.D. ATF-424, 64 FR 71933, Dec. 22, 1999; T.D. ATF-420, 64 FR

71944, Dec. 22, 1999. Redesignated and amended by T.D. TTB-16, 69 FR

52424, 52425, Aug. 26, 2004]

Sec. 41.173 Return to nontaxpaid status, action by appropriate TTB officer.

Upon receipt of a schedule of tobacco products and cigarette papers

and tubes which have been imported or brought into the United States and

which are withdrawn from the market by a taxpayer who desires to return

such articles to a nontaxpaid status, the appropriate TTB to officer may

verify the schedule and supervise disposition of the articles (and

destruction of the stamps, if any) or the appropriate TTB officer may

authorize the receiving manufacturer to verify the schedule and

disposition of the articles (and destruction of the stamps, if any)

covered therein, without supervision, by so stating on the original and

one copy of the schedule returned to the manufacturer. Where the receipt

in a factory of tobacco products and cigarette papers and tubes has been

verified, such articles shall be treated by the receiving manufacturer

as nontaxpaid and shall be covered by the manufacturer's bond.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 47, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr.

15, 1975, and amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D.

ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D.

TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]

Sec. 41.174 Disposition of tobacco products and cigarette papers and tubes, and schedule.

When the appropriate TTB officer is assigned to verify the schedule

and supervise destruction or other disposition of tobacco products and

cigarette papers and tubes which have been imported or brought into the

United States, such officer shall, upon completion of his assignment, execute a

certificate on all copies of the schedule to show the disposition and

the date of disposition of such articles. The appropriate TTB officer

shall return the original and one copy of the certified schedule to the

taxpayer. When a taxpayer destroys such articles (and stamps, if any) or

reduces tobacco products to materials, or a receiving manufacturer

verifies the schedule and disposition of such articles (and stamps, if

any), he shall execute a certificate on the original and the copy of the

schedule returned to him, to show the disposition and the date of

disposition of the articles. The taxpayer shall attach the original of

the certified schedule to his claim for refund.

(72 Stat. 1419, as amended; 26 U.S.C. 5705)

[T.D. 6871, 31 FR 47, Jan. 4, 1966. Redesignated at 40 FR 16835, Apr.

15, 1975, and amended by T.D. ATF-232, 51 FR 28087, Aug. 5, 1986; T.D.

ATF-243, 51 FR 43194, Dec. 1, 1986. Redesignated and amended by T.D.

TTB-16, 69 FR 52424, 52425, Aug. 26, 2004]