§5703 Liability for tax and method of payment

Summary

Manufacturers and importers must pay the federal tax on tobacco products and on cigarette papers and tubes. If those items move without paying tax under the special bonded rules, the tax responsibility moves too. When goods move between bonded manufacturer or export warehouse sites, the person who receives them becomes responsible for the tax when they get the items, and the sender is no longer responsible. When imported goods are released from customs into a manufacturer’s bonded site, the receiver becomes liable at release and the importer is relieved. Items returned to bond after being taken out for sale or for a tax-free reason follow the same bonded rules. Taxes are figured when the products are removed and are paid by filing a return. The Secretary sets the timing and the required information. Payment may be postponed with extra bonds and other protections the Secretary requires. If someone defaults, the Secretary can require payment before removal. For most items removed under bond, tax is due by the 14th day after the semimonthly period ends. For imports, the due date is generally the 14th day after the semimonthly period when the item was entered, and special rules cover warehousing, foreign-trade zones, and items shown to be for export. Goods from Puerto Rico follow the same 14-day rule. For the September mid-month periods, taxes for Sept. 16–26 are due by Sept. 29, with a rule that paying at least 11/15 of the earlier Sept. 1–15 amount meets the rule; if not paid by electronic funds transfer, use Sept. 25, Sept. 28, and 2/3 instead of those dates and fraction. If a due date falls on a weekend or federal holiday, the due date moves to the preceding business day (except the special September rule may move to the next day if it falls on a Sunday). Tax on tobacco products made at a place that lacks the required bond and permit is due right when made. Anyone whose tax liability on these items was $5,000,000 or more in the 12-month period ending December 31 must pay by electronic funds transfer the next calendar year to a Federal Reserve Bank. The Secretary can let Federal Reserve banks and certain commercial banks receive these taxes and will say when such receipts count as payment. If tax is not paid on time, the Secretary must determine what was missed and assess it, subject to the usual time limits. Assessed tax is in addition to penalties. Except when delay would harm collection, or the amount is tiny or a clear math error, the person must get notice and a chance in writing to explain before an assessment.