Tobacco products
- Document symbol
- G/LIC/N/3/USA/21
- Original language
- English
- Published on
- 16/10/2024
Outline of Systems
Q1. Give a brief description of each licensing system as a whole and, with respect to each, reply to the following questions as relevant, placing all of the material with respect to a given system in sequence together, and using cross references as appropriate when elements which have already been described are also present in another system.
The Internal Revenue Code of 1986 (Title 26 U.S.C. Chapter 52 – please see https://www.govinfo.gov/app/details/USCODE-2023-title26/USCODE-2023-title26-subtitleA-chap1-subchapA-partIV-subpartF-sec52) requires that manufacturers and importers of tobacco products or processed tobacco and proprietors of export warehouses (bonded internal revenue warehouses for the storage of tobacco products or cigarette papers or tubes or any processed tobacco, upon which the internal revenue tax has not been paid, for subsequent export) must apply for and obtain a permit from TTB before engaging in such businesses. The primary purpose of these permits is to ensure proper collection of Federal excise tax revenue from tobacco products.
Purposes and Coverage of Licensing
Q2. Identify each licensing system maintained and state what products, appropriately grouped, are covered.
As noted, manufacturers and importers of tobacco products or processed tobacco and proprietors of export warehouses (bonded internal revenue warehouses for the storage of tobacco products or cigarette papers or tubes or any processed tobacco, upon which the internal revenue tax has not been paid, for subsequent export) must apply for and obtain a permit from TTB before engaging in such businesses. Tobacco products are defined in the Internal Revenue Code as cigarettes, cigars, smokeless tobacco (that is, chewing tobacco or snuff), pipe tobacco, and roll your own tobacco. Manufacturers of tobacco products and export warehouse proprietors are required to maintain a bond related to their Federal excise tax liability. Processed tobacco is any tobacco that has undergone processing, but does not include tobacco products. The processing of tobacco includes, but is not limited to, stemming (that is, removing the stem from the tobacco leaf), fermenting, threshing, cutting, or flavouring the tobacco, or otherwise combining tobacco with non-tobacco ingredients. It does not include curing, baling, or packaging activities. Those who farm or grow tobacco or who handle tobacco solely for sale, shipment, or delivery to a manufacturer of tobacco products or processed tobacco are not required to obtain from TTB a permit to engage in such activities.
Q3. The system applies to goods originating in and coming from which countries?
All countries.
Q4. Is the licensing intended to restrict the quantity or value of imports, and if not, what are its purposes? Have alternative methods of accomplishing the purposes been considered and if so which? Why have they not been adopted?
The permit system does not restrict the quantity or value of imported tobacco products or processed tobacco. No alternative methods have been considered.
Q5. Cite the law, regulation and/or administrative order under which the licensing is maintained. Is the licensing statutorily required? Does the legislation leave designation of products to be subjected to licensing to administrative discretion? Is it possible for the government (or the executive branch) to abolish the system without legislative approval?
The Internal Revenue Code of 1986 at 26 U.S.C. 5712 and 5713 requires that every person, prior to commencing business as a manufacturer or importer of tobacco products or processed tobacco, or as an export warehouse proprietor, qualify for and obtain a permit to engage in such business (https://www.govinfo.gov/app/details/USCODE-2023-title26/USCODE-2023-title26-subtitleE-chap52-subchapB-sec5712). There is no discretion for the executive branch to change the products (https://www.govinfo.gov/app/details/USCODE-2023-title26/USCODE-2023-title26-subtitleE-chap52-subchapB-sec5713) subject to the permit requirements or to abolish the permit system without legislative approval.
Procedures
Q6. For products under restriction as to the quantity or value of imports (whether applicable globally or to a limited number of countries or whether established bilaterally or unilaterally):
Q6.I. Is information published, and where, concerning allocation of quotas and formalities of filing applications for licences? If not, how is it brought to the attention of possible importers? Of governments and export promotion bodies of exporting countries and their trade representatives? Is the overall amount published? The amount allocated to goods from each country? The maximum amount allocated to each importer? How to request any exceptions or derogations from the licensing requirement?
Q6.II. How is the size of the quotas determined: on a yearly, six-monthly or quarterly basis? Are there cases where the size of quota is determined on a yearly basis but licences are issued for imports on a six-monthly or quarterly basis? In the latter case, is it necessary for importers to apply for fresh licence on a six-monthly or quarterly basis?
Q6.III. Are licences allotted for certain goods partly or only to domestic producers of like goods? What steps are taken to ensure that licences allocated are actually used for imports? Are unused allocations added to quotas for a succeeding period? Are the names of importers to whom licences have been allocated made known to governments and export promotion bodies of exporting countries upon request? If not, for what reason? (Indicate products to which replies relate.)
Q6.IV. From the time of announcing the opening of quotas, as indicated in I above, what is the period of time allowed for the submission of applications for licences?
Q6.V. What are the minimum and maximum lengths of time for processing applications?
Q6.VI. How much time remains, at a minimum, between the granting of licences and the date of opening of the period of importation?
Q6.VII. Is consideration of licence applications effected by a single administrative organ? Or must the application be passed on to other organs for visa, note or approval? If so, which? Does the importer have to approach more than one administrative organ?
Q6.VIII. If the demand for licences cannot be fully satisfied, on what basis is the allocation to applicants made? First come, first served? Past performance? Is there a maximum amount to be allocated per applicant and, if so, on what basis is it determined? What provision is made for new importers? Are applications examined simultaneously or on receipt?
Q6.IX. In the case of bilateral quotas or export restraint arrangements where export permits are issued by exporting countries, are import licences also required? If so, are licences issued automatically?
Q6.X. In cases where imports are allowed on the basis of export permits only, how is the importing country informed of the effect given by the exporting countries to the understanding between the two countries?
Q6.XI. Are there products for which licences are issued on condition that goods should be exported and not sold in the domestic market?
Q7. Where there is no quantitative limit on importation of a product or on imports from a particular country:
Q7.a. How far in advance of importation must application for a licence be made? Can licences be obtained within a shorter time-limit or for goods arriving at the port without a licence (for example, owing to inadvertency)?
Permits are usually issued within six to eight months after an application has been filed.
Q7.b. Can a licence be granted immediately on request?
No. The Internal Revenue Code of 1986 at section 5712 (26 U.S.C. 5712) sets forth the conditions for determining whether a person qualifies for a permit, and these conditions cannot be met with immediate licensing.
Q7.c. Are there any limitations as to the period of the year during which application for licence and/or importation may be made? If so, explain.
No.
Q7.d. Is consideration of licence applications effected by a single administrative organ? Or must the application be passed on to other organs for visa, note or approval? If so, which? Does the importer have to approach more than one administrative organ?
TTB has sole authority to issue the permit required under 26 U.S.C. 5712 and 5713, and therefore the importer does not have to approach any other agency in order to meet the application requirements for the permit.
Q8. Under what circumstances may an application for a licence be refused other than failure to meet the ordinary criteria? Are the reasons for any refusal given to the applicant? Have applicants a right of appeal in the event of refusal to issue a licence and, if so, to what bodies and under what procedures?
There are no additional circumstances for denying an application for a permit other than what is stated in 26 U.S.C. 5712 (https://www.govinfo.gov/app/details/USCODE-2023-title26/USCODE-2023-title26-subtitleE-chap52-subchapB-sec5712The reasons for any refusal are given to the applicant in writing. An applicant may appeal the denial of a permit to the Administrator of TTB, and then to a Federal court.
Eligibility of Importers to Apply for Licence
Q9. Are all persons, firms and institutions eligible to apply for licences: (If not, is there a system of registration of persons or firms permitted to engage in importation? What persons or firms are eligible? Is there a registration fee? Is there a published list of authorized importers?) a) under restrictive licensing systems? b) under non-restrictive systems?
Any person, firm, or institution may apply for a license. Individuals must be citizens or legal residents of the United States; firms or institutions must be incorporated in the United States and have the appropriate tax ID with the IRS. There are no registration fees. There is no published list of authorized importers.
Documentational and Other Requirements for Application for Licence
Q10. What information is required in applications? Submit a sample form. What documents is the importer required to supply with the application?
Refer to TTB Form 5230.4 (https://www.ttb.gov/images/pdfs/forms/f52304.pdf), along with such supporting documentation as required.
Q11. What documents are required upon actual importation?
Q12. Is there any licensing fee or administrative charge? If so, what is the amount of the fee or charge?
Q13. Is there any deposit or advance payment requirement associated with the issue of licences? If so, state the amount or rate, whether it is refundable, the period of retention and the purpose of the requirement.
Conditions of Licensing
Q14. What is the period of validity of a licence? Can the validity of a licence be extended? How?
Permits for importers of tobacco products or processed tobacco that are issued on or after August 26, 2013, are valid for five years from the effective date shown on the permit and may be renewed for an additional five years by making application within 30 days of expiration.
Q15. Is there any penalty for the non-utilization of a licence or a portion of a licence?
No.
Q16. Are licences transferable between importers? If so, are any limitations or conditions attached to such transfer?
Permits are not transferable to another person.
Q17. Are any other conditions attached to the issue of a licence? a) for products subject to quantitative restriction? b) for products not subject to quantitative restriction?
An application for the renewal of a permit as an importer of tobacco products or processed tobacco may be rejected and the permit denied if no activity has taken place or been reported under such permit for a period of one year immediately prior to the application for renewal. Permits may also be revoked for the reasons listed under 26 U.S.C. 5713.
Other Procedural Requirements
Q18. Are there any other administrative procedures, apart from import licensing and similar administrative procedures, required prior to importation?
TTB has no other administrative procedures, apart from permit requirements, required prior to importation.