Text: S.1837 — 115th Congress (2017-2018)All Information (Except Text)

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Introduced in Senate (09/19/2017)


115th CONGRESS
1st Session
S. 1837


To amend the Internal Revenue Code of 1986 to provide tax rate parity among all tobacco products, and for other purposes.


IN THE SENATE OF THE UNITED STATES

September 19, 2017

Mr. Durbin (for himself, Mr. Brown, Mr. Reed, Mr. Blumenthal, Mr. Markey, and Mr. Franken) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Internal Revenue Code of 1986 to provide tax rate parity among all tobacco products, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

This Act may be cited as the “Tobacco Tax Equity Act of 2017”.

SEC. 2. Establishing excise tax equity among all tobacco product tax rates.

(a) Tax parity for pipe tobacco and roll-Your-Own tobacco.—Section 5701(f) of the Internal Revenue Code of 1986 is amended by striking “$2.8311 cents” and inserting “$24.78”.

(b) Tax parity for smokeless tobacco.—

(1) Section 5701(e) of the Internal Revenue Code of 1986 is amended—

(A) in paragraph (1), by striking “$1.51” and inserting “$13.42”;

(B) in paragraph (2), by striking “50.33 cents” and inserting “$5.37”; and

(C) by adding at the end the following:

“(3) SMOKELESS TOBACCO SOLD IN DISCRETE SINGLE-USE UNITS.—On discrete single-use units, $50.33 per thousand.”.

(2) Section 5702(m) of such Code is amended—

(A) in paragraph (1), by striking “or chewing tobacco” and inserting “, chewing tobacco, or discrete single-use unit”;

(B) in paragraphs (2) and (3), by inserting “that is not a discrete single-use unit” before the period in each such paragraph; and

(C) by adding at the end the following:

“(4) DISCRETE SINGLE-USE UNIT.—The term ‘discrete single-use unit’ means any product containing tobacco that—

“(A) is not intended to be smoked; and

“(B) is in the form of a lozenge, tablet, pill, pouch, dissolvable strip, or other discrete single-use or single-dose unit.”.

(c) Tax parity for large cigars.—

(1) IN GENERAL.—Paragraph (2) of section 5701(a) of the Internal Revenue Code of 1986 is amended by striking “52.75 percent” and all that follows through the period and inserting the following: “$24.78 per pound and a proportionate tax at the like rate on all fractional parts of a pound but not less than 5.033 cents per cigar.”.

(2) GUIDANCE.—The Secretary of the Treasury, or the Secretary's delegate, may issue guidance regarding the appropriate method for determining the weight of large cigars for purposes of calculating the applicable tax under section 5701(a)(2) of the Internal Revenue Code of 1986.

(d) Tax parity for roll-Your-Own tobacco and certain processed tobacco.—Subsection (o) of section 5702 of the Internal Revenue Code of 1986 is amended by inserting “, and includes processed tobacco that is removed for delivery or delivered to a person other than a person with a permit provided under section 5713, but does not include removals of processed tobacco for exportation” after “wrappers thereof”.

(e) Clarifying tax rate for other tobacco products.—

(1) IN GENERAL.—Section 5701 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

“(i) Other tobacco products.—Any product not otherwise described under this section that has been determined to be a tobacco product by the Food and Drug Administration through its authorities under the Family Smoking Prevention and Tobacco Control Act shall be taxed at a level of tax equivalent to the tax rate for cigarettes on an estimated per use basis as determined by the Secretary.”.

(2) ESTABLISHING PER USE BASIS.—For purposes of section 5701(i) of the Internal Revenue Code of 1986, not later than 12 months after the later of the date of the enactment of this Act or the date that a product has been determined to be a tobacco product by the Food and Drug Administration, the Secretary of the Treasury (or the Secretary of the Treasury's delegate) shall issue final regulations establishing the level of tax for such product that is equivalent to the tax rate for cigarettes on an estimated per use basis.

(f) Clarifying definition of tobacco products.—

(1) IN GENERAL.—Subsection (c) of section 5702 of the Internal Revenue Code of 1986 is amended to read as follows:

“(c) Tobacco products.—The term ‘tobacco products’ means—

“(1) cigars, cigarettes, smokeless tobacco, pipe tobacco, and roll-your-own tobacco, and

“(2) any other product subject to tax pursuant to section 5701(i).”.

(2) CONFORMING AMENDMENTS.—Subsection (d) of section 5702 of such Code is amended by striking “cigars, cigarettes, smokeless tobacco, pipe tobacco, or roll-your-own tobacco” each place it appears and inserting “tobacco products”.

(g) Tax rates adjusted for inflation.—Section 5701 of such Code, as amended by subsection (e), is amended by adding at the end the following new subsection:

“(j) Inflation adjustment.—

“(1) IN GENERAL.—In the case of any calendar year beginning after 2017, the dollar amounts provided under this chapter shall each be increased by an amount equal to—

“(A) such dollar amount, multiplied by

“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting ‘calendar year 2016’ for ‘calendar year 1992’ in subparagraph (B) thereof.

“(2) ROUNDING.—If any amount as adjusted under paragraph (1) is not a multiple of $0.01, such amount shall be rounded to the next highest multiple of $0.01.”.

(h) Effective dates.—

(1) IN GENERAL.—Except as provided in paragraphs (2) through (4), the amendments made by this section shall apply to articles removed (as defined in section 5702(j) of the Internal Revenue Code of 1986) after the last day of the month which includes the date of the enactment of this Act.

(2) DISCRETE SINGLE-USE UNITS AND PROCESSED TOBACCO.—The amendments made by subsections (b)(1)(C), (b)(2), and (d) shall apply to articles removed (as defined in section 5702(j) of the Internal Revenue Code of 1986) after the date that is 6 months after the date of the enactment of this Act.

(3) LARGE CIGARS.—The amendments made by subsection (c) shall apply to articles removed after December 31, 2017.

(4) OTHER TOBACCO PRODUCTS.—The amendments made by subsection (e)(1) shall apply to products removed after the last day of the month which includes the date that the Secretary of the Treasury (or the Secretary of the Treasury's delegate) issues final regulations establishing the level of tax for such product.