Title 26 — Internal Revenue CodeRelease 119-73
§5704 Exemption from tax
Title 26 › Subtitle Subtitle E— - Alcohol, Tobacco, and Certain Other Excise Taxes › Chapter CHAPTER 52— - TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES › Subchapter Subchapter A— - Definitions; Rate and Payment of Tax; Exemption From Tax; and Refund and Drawback of Tax › § 5704
Summary
Manufacturers may give tobacco products to employees or use them for tests without paying tax, in amounts and ways the Secretary allows. A manufacturer or export-warehouse owner can move tobacco products, cigarette papers, and tubes tax-free to another bonded manufacturer, or send them tax-free to foreign countries, Puerto Rico, the Virgin Islands, U.S. possessions, places outside U.S. tax law, or for U.S. government use. These moves must follow the Secretary’s rules, may need bonds, and must carry any required labels. Imported tobacco products, papers, and tubes that are not packed may be released from customs tax-free to an export warehouse or a manufacturer under the Secretary’s rules and bond. Articles covered by item 804.00 of title I of the Tariff Act of 1930 can be returned without paying the part of the duty that equals the internal revenue tax, and then are treated as if they had never been exported.
Full Legal Text
Title 26, §5704
Internal Revenue Code — Source: USLM XML via OLRC
(a)Tobacco products may be furnished by a manufacturer of such products, without payment of tax, for use or consumption by employees or for experimental purposes, in such quantities, and in such manner as the Secretary shall by regulation prescribed.
(b)A manufacturer or export warehouse proprietor may transfer tobacco products and cigarette papers and tubes, without payment of tax, to the bonded premises of another manufacturer or export warehouse proprietor, or remove such articles, without payment of tax, for shipment to a foreign country, Puerto Rico, the Virgin Islands, or a possession of the United States, or for consumption beyond the jurisdiction of the internal revenue laws of the United States; and manufacturers may similarly remove such articles for use of the United States; in accordance with such regulations and under such bonds as the Secretary shall prescribe. Tobacco products and cigarette papers and tubes may not be transferred or removed under this subsection unless such products or papers and tubes bear such marks, labels, or notices as the Secretary shall by regulations prescribe.
(c)Tobacco products and cigarette papers and tubes, imported or brought into the United States, may be released from customs custody, without payment of tax, for delivery to the proprietor of an export warehouse, or to a manufacturer of tobacco products or cigarette papers and tubes if such articles are not put up in packages, in accordance with such regulations and under such bond as the Secretary shall prescribe.
(d)Tobacco products and cigarette papers and tubes classifiable under item 804.00 of title I of the Tariff Act of 1930 (relating to duty on certain articles previously exported and returned) may be released from customs custody, without payment of that part of the duty attributable to the internal revenue tax for delivery to the original manufacturer of such tobacco products or cigarette papers and tubes or to the proprietor of an export warehouse authorized by such manufacturer to receive such articles, in accordance with such regulations and under such bond as the Secretary shall prescribe. Upon such release such products, papers, and tubes shall be subject to this chapter as if they had not been exported or otherwise removed from internal-revenue bond.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
Item 804.00 of title I of the Tariff Act of 1930, referred to in subsec. (d), was classified to item 804.00 of the Tariff Schedules of the United States. The Tariff Schedules of the United States were replaced by the Harmonized Tariff Schedule of the United States. The Harmonized Tariff Schedule of the United States is not set out in the Code. See Publication of Harmonized Tariff Schedule note set out under section 1202 of Title 19, Customs Duties.
Amendments
2000—Subsec. (d). Pub. L. 106–476 substituted “the original manufacturer of such” for “a manufacturer of” and inserted “authorized by such manufacturer to receive such articles” after “proprietor of an export warehouse”. 1997—Subsec. (b). Pub. L. 105–33 inserted at end “Tobacco products and cigarette papers and tubes may not be transferred or removed under this subsection unless such products or papers and tubes bear such marks, labels, or notices as the Secretary shall by
Regulations
prescribe.” 1989—Subsec. (c). Pub. L. 101–239 inserted “or to a manufacturer of tobacco products or cigarette papers and tubes if such articles are not put up in packages,” after “export warehouse,”. 1986—Subsec. (c). Pub. L. 99–509 struck out “to a manufacturer of tobacco products or cigarette papers and tubes or” after “for delivery”. 1976—Subsecs. (a), (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”. Subsecs. (c), (d). Pub. L. 94–455, §§ 1905(a)(26), 1906(b)(13)(A), inserted “or to the proprietor of an export warehouse” after “to a manufacturer of tobacco products or cigarette papers and tubes” and struck out “or his delegate” after “Secretary”. 1965—Subsec. (c). Pub. L. 89–44, § 502(b)(4), redesignated subsec. (d) as (c), struck out all references to tobacco materials, and repealed former subsec. (c) which related to tobacco materials shipped or delivered in bond. Subsecs. (d), (e). Pub. L. 89–44, § 502(b)(4)(A), redesignated subsec. (e) as (d). Former subsec. (d) redesignated (c). 1964—Subsec. (e). Pub. L. 88–342 added subsec. (e). 1958—Subsec. (b). Pub. L. 85–859 included transfers by export warehouse proprietors, and substituted “tobacco products and cigarette papers and tubes” for “articles”, before “without payment of tax”. Subsec. (c). Pub. L. 85–859 authorized shipments without payment of tax of tobacco stems and waste only, to any person for use by him as fertilizer or insecticide or in the production of fertilizer, insecticide, or nicotine. Subsec. (d). Pub. L. 85–859 substituted “tobacco products, cigarette papers and tubes” for “articles” wherever appearing, and struck out provisions which related to delivery to bonded premises of manufacturers and dealers.
Statutory Notes and Related Subsidiaries
Effective Date
of 2000 Amendment Pub. L. 106–476, title IV, § 4002(d), Nov. 9, 2000, 114 Stat. 2177, provided that: “The
Amendments
made by this section [amending this section and section 5754 and 5761 of this title] shall take effect 90 days after the date of the enactment of this Act [Nov 9, 2000].”
Effective Date
of 1997 AmendmentAmendment by Pub. L. 105–33 applicable to articles removed, as defined in section 5702(j) of this title, after Dec. 31, 1999, with transition rule, see section 9302(i) of Pub. L. 105–33, set out as a note under section 5701 of this title.
Effective Date
of 1989 Amendment Pub. L. 101–239, title VII, § 7508(b), Dec. 19, 1989, 103 Stat. 2370, provided that: “The amendment made by subsection (a) [amending this section] shall apply to articles imported or brought into the United States after the date of the enactment of this Act [Dec. 19, 1989].”
Effective Date
of 1986 AmendmentAmendment by Pub. L. 99–509 applicable to articles imported, entered for warehousing, or brought into the United States or a foreign trade zone after Dec. 15, 1986, see section 8011(c) of Pub. L. 99–509, set out as a note under section 5061 of this title.
Effective Date
of 1976 AmendmentAmendment by section 1905(a)(26) 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 1965 AmendmentAmendment by Pub. L. 89–44 applicable on and after January 1, 1966, see section 701(d) of Pub. L. 89–44, set out as a note under section 5701 of this title.
Effective Date
of 1964 Amendment Pub. L. 88–342, § 2,
June 30, 1964, 78 Stat. 234, provided that the amendment made by section 2 of Pub. L. 88–342 shall apply with respect to articles entered, or withdrawn from warehouse, for consumption after
June 30, 1964.
Effective Date
of 1958 AmendmentAmendment 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. Report Pub. L. 106–476, title I, § 4002(e), Nov. 9, 2000, 114 Stat. 2177, provided that: “The Secretary of the Treasury shall report to Congress on the impact of requiring export warehouses to be authorized by the original manufacturer to receive relanded export-labeled cigarettes.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 5704
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73