Form Atf F 5000.28t - Instructions Sheet (Page 4 of 6) in pdf

You may use a book or record inventory if you have

11. Unmerchantable cigarettes.

source records that show:

Any cigarettes that you hold for return to a supplier

(a) The quantity of receipts and dispositions of all

because of some defect are not subject to this tax. You must

cigarettes.

prepare a separate list of these items. You cannot include as

(b) The actual type and quantities of cigarettes on hand

unmerchantable any items that may be held because of poor

as if a physical inventory had taken place the moment the tax

market demand or to reduce your inventory.

increase became effective.

12. Cigarettes in vending machines.

You do not have to inventory cigarettes held in a

consignee.

vending machine for retail sale, provided:

(d) The date of receipt or disposition of the cigarettes.

(a) The vending machine holding the cigarettes is

(e) The brand name of each product.

placed at a location where retail sales occur, and

(f) If you do not take the inventory between the close of

(b) The cigarettes are ready to be dispensed by a

business on the last business day of 2001, the records must be

consumer.

reconciled.

13. Cigarettes marked "not for sale" or "complimentary."

7. Cigarettes in transit.

Cigarettes marked "not for sale" or "complimentary" that

Cigarettes in transit must be included in your inventory

are part of a sale (for example, buy two packs and get one pack

if you hold title to the cigarettes. If you have transferred the title,

free) are subject to this tax and must be included in the book or

you must document the title transfer in writing. For example, you

record inventory. Cigarettes marked in this manner are intended

may mark the bill of lading with a written statement that indicates

to be given away and not in conjunction with any sale are not

the time and place of the title transfer.

subject to this tax.

8. Guidelines to determine title of cigarettes in transit.

C. COMPUTE TAX LIABILITY

You may use the following guidelines to establish who

holds title to cigarettes in transit.

1. Determine the amount of tax due.

(a) If State law mandates the change in title, no

After you have taken your inventory, apply the

agreement or contract between seller and buyer can alter it.

applicable tax rate for each type of cigarette using the table

(b) In the absence of State law, the Uniform

below. Multiply the amount of each type of cigarette by the

Commercial Code allows the seller and buyer to agree when title

applicable tax rate.

passes.

2. Floor stocks tax rates table.

Type or Kind

January 1, 2002

Commercial Code states that title transfer depends on how the

seller ships the cigarettes.

Small Cigarettes - Class A

$2.50 per 1,000 or

(1) Freight on board (F.O.B.) destination. The title

(3 pounds or less per

5 cents per 20

transfer occurs when the seller completes the performance of

1,000)

the physical delivery of the cigarettes.

Large Cigarettes - Class B

$5.25 per 1,000 or 10.5 cents

(2) Freight on board (F.O.B.) shipping point. The title

(more than 3 pounds per

per 20

transfer occurs when the seller transfers the title at the time and

1,000)

place of shipment, which is generally by common carrier.

Almost all cigarettes sold in the United States are small

cigarettes.

9. Cigarettes in a foreign-trade zone.

Special rule for large cigarettes over 6 1/2 inches long are

You are liable for the tax and must take an inventory

taxable at the rate prescribed for small cigarettes counting

when either of the following conditions apply:

each 2 3/4 inches or fraction thereof of the length of each

(a) Internal revenue taxes have been determined or

as one cigarette.

Customs duties liquidated, with respect to cigarettes pursuant to

the first proviso of section 3(a) of the Act of June 18, 1934 (48

3. Apply tax credit.

Stat. 998, 19 U.S.C. 81a), or

You are allowed a credit against your floor stocks tax of

(b) Cigarettes are held by a Customs officer pursuant to

up to $500. However, controlled groups are eligible for only one

the second proviso of section 3(a) of the Act of June 18, 1934

credit for the entire group. The credit may be divided equally

(48 Stat. 998, 19 U.S.C. 81a).

among the members or apportioned in any other manner

agreeable to the members.

10. Cigarettes held in bond.

If you are a manufacturer or export warehouse

D. FILING REQUIREMENTS

proprietor and hold cigarettes in ATF bond on the tax increase

1. How to obtain a tax return.

date, the floor stocks tax does not apply to those cigarettes.

You may obtain ATF Form 5000.28T, Floor Stocks Tax

Likewise, if you have cigarettes held in a Customs bonded

Return for Cigarettes, from any of the following sources:

warehouse, the floor stocks tax does not apply on those

cigarettes.

(a) ATF web site ( );

Form Atf F 5000.28t - Instructions Sheet Page 4

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