Imports of Tobacco, Taxes on "Large Cigars"

[Skipper the cigar aFISHinodo]

TTB Issues Industry Circular on Imports of Tobacco, Taxes on "Large Cigars"
The Alcohol and Tobacco Tax and Trade Bureau has issued an Industry Circular to respond to industry requests that TTB publish guidance on the calculation of the Federal excise tax on imported large cigars, in particular, with regard to what sales transaction creates the "sale price" that is the basis for the tax. The circular is also intended to remind all importers of tobacco products of the statutory provisions that prevent imported tobacco products from being transferred without payment of tax from one customs bonded warehouse or foreign trade zone to another, unless the tobacco products are destined for export.

http://www.ttb.treas.gov/industry_circul...11-03.html

[wtfdic]

interesting...

[nayslayer]

I wonder how a 3lb cigar would smoke...lol

[Admin]

Basically, the tax is paid on WHAT you plan to sell the cigars for (or did), NOT what you actually paid the manufacturer for the import.

"For imported large cigars, the price the importer paid the foreign manufacturer to purchase the products is not the sale price for purposes of calculating the tax. Rather, the pertinent sale for purposes of calculating the tax is the sale by the importer (not the sale to the importer) in an arm's length transaction to an unrelated party."

And if you sell them for a discounted price to avoid taxes (and loose money of course in the process), then they can use the "Constructive sale price rules" to figure out your tax which will probably be "retail price" of course.

"Constructive sale price rules apply to cigars sold by an importer or domestic manufacturer at retail, sold on consignment, or sold (otherwise than through an arm's length transaction) at less than the fair market price. Sales of cigars between affiliated corporations and sales to certain retailers may be analyzed under the constructive sale price rules. "

It would seem that to make things easier for reporting and paying taxes, they would just tax the import based on the purchase price and be done with it. Not what you are going to sell the product for, IF and when you sell the product.