TTB Newsletter

In the TTB Newsletter, we compile the top TTB news of the week and other helpful information about the Bureau and the Federal alcohol and tobacco laws and regulations we enforce.

Please send any questions and/or comments to Susan Stewart Evans, Executive Liaison for Industry Matters (susan.stewart-evans@ttb.gov) and/or Frosty Chapman, State Liaison (forrest.chapman@ttb.gov).

TTB Newsletter Archives

FLOOR STOCKS TAX NETS 1.2 BILLION DOLLARS

The Children's Health Insurance Program Reauthorization Act of 2009 was signed into law on February 4, 2009. One provision of the Act imposed a floor stocks tax on all tobacco products (except large cigars), cigarette papers and cigarette tubes held for sale on April 1, 2009. A floor stocks tax is a one-time excise tax placed on a commodity undergoing a tax increase. The amount of the floor stocks tax is equal to the difference between the new tax rate and the one just previous to it. The Act stipulated that the floor stocks tax must be paid on or before August 1, 2009.

Working without any additional funding and faced with a short time frame, TTB collected 1.2 billion dollars in tobacco floor stocks tax from over 200,000 businesses that held tobacco products for sale on April 1, 2009. Efforts to identify potential taxpayers resulted in notices issued to over 450,000 business addresses across the US, many of which were previously not of record with TTB.

UPDATED LISTS OF FAA BASIC PERMIT HOLDERS ARE NOW AVAILABLE

TTB is required to make available to the public records that are requested and released on a frequent basis. We have provided links to listings of alcohol industry members who hold permits under the Federal Alcohol Administration Act. These permits allow production, bottling, importation or distribution of beverage alcohol products. Internal Revenue Code (IRC) rules that protect taxpayer records from disclosure, prevent publication of lists for brewers, industrial alcohol producers and users, as well as all tobacco permit holders. Protected information concerning these types of businesses is not available to the public.

We will post updates to these listings quarterly. These lists are available for viewing and download from our website - click on the "FOIA" icon under "Information by Topic" on our homepage, or follow this link: http://www.ttb.gov/foia/index.shtml

Our FOIA page is a good place to start if you seek information concerning TTB's regulated industries.

If you have any questions, please contact Helen Belt, Disclosure Services, at (202) 453-2063 or TTBFOIA@ttb.gov.

As of September 2009, listings of permit holders are available as follows: Spirits Producer and Bottler Permit List:

NORTH CAROLINA MAN SENT TO PRISON AND BARRED FROM TOBACCO INDUSTRY

ABINGDON, VIRGINIA -- Terence P. McLaughlin, an Ayden, North Carolina, business owner was sentenced to imprisonment for a term of one year, barred from any involvement in the tobacco industry for ten years, and ordered to forfeit $801,495 to the United States after admitting to conspiring to avoid federal excise tax on cigarettes removed from his factory and being part of a contraband cigarette trafficking scheme. McLaughlin's company, CLP Inc., was also sentenced today. In addition, as part of his plea agreement McLaughlin agreed to pay over $950,000.00 in past due excise taxes.

McLaughlin, age 56, of Winterville, North Carolina, was sentenced in the United States District Court for the Western District of Virginia in Abingdon for making false statements on federal tax returns, underreporting the number of tax stamps affixed to cigarettes, and creating false billing and shipping documents for cigarettes shipped from his factory.

Beginning in January 2007, McLaughlin and CLP began underreporting the number of tax stamps affixed to cigarettes that were to be delivered into Georgia, Kentucky, South Carolina, Tennessee and Virginia. The laws of these states require that cigarette manufacturers that were not parties to the Master Settlement Agreement of 1998 make specified annual deposits into an escrow fund based on the number of the manufacturer's cigarettes sold in the state and file annual certifications truthfully stating sales in each state and that the required escrow deposits were made. CLP was not a party to the Master Settlement Agreement.

In order to facilitate this fraud, CLP employees, under the direction of McLaughlin created shipping and billing documents for tens of millions of Bridgeton branded cigarettes that falsely identified the shipping destination as a location in New York and stated the cigarettes were "for reservation sales only" when the shipments were actually destined to locations in Virginia and Kentucky. These cigarettes were later resold in the states of Georgia, Kentucky, South Carolina, Tennessee and Virginia.

By having the number of tax stamps affixed understated, McLaughlin was able to understate the number of cigarettes actually sold in these states and decrease his annual deposits to the escrow fund in each state as required by state law. Using this scheme, CLP Inc. derived illegal profits of over $800,000.

During the same time frame, CLP underreported taxable removals from their Ayden, North Carolina factory by over 48,000,000 cigarettes. Throughout 2007, McLaughlin filed false reports and returns with the Alcohol and Tobacco Tax and Trade Bureau and, as a result, failed to pay over $950,000 in federal taxes.

The investigation of this case was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives; Alcohol and Tobacco Tax and Trade Bureau; Roanoke and Washington County, Virginia, Sheriff's Offices; Virginia State Police; and Office of the Attorney General for the Commonwealth of Virginia. Assistant United States Attorney Randy Ramseyer prosecuted the case for the United States.