Frequently Asked Questions About “Roll-Your-Own Cigarette Machines” and Other Machines for Making Tobacco Products Used by Consumers

Yes. Other agencies have their own requirements, and you should contact those agencies to find out if you are subject to their requirements. You may be subject to payments, registration, reporting, and other requirements by the U.S. Food and Drug Administration (FDA) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

In addition, you may be subject to registration, reporting, and other requirements by the State Attorneys General offices, State revenue departments, or other agencies of the States in which you operate or sell tobacco products, and you may be liable for State excise and sales taxes.

In certain States, you may also be subject to requirements of the Master Settlement Agreement (MSA), including payments required under that agreement, and you may be subject to additional payments in certain non-MSA States. For more information about MSA and additional payments under MSA or otherwise, contact the office of the Attorney General for the state in which you sell tobacco products.

You may apply for a permit to engage in business as a manufacturer of tobacco products electronically using TTB’s Permits Online system.

You may also contact TTB’s National Revenue Center toll free at 1-877-882-3277.

There is no cost to apply for a TTB permit as a manufacturer of tobacco products. However, you must pay a special (occupational) tax on or before the date of commencing business, and you are also required to file a bond as part of the application process when you apply for a permit to manufacture tobacco products. For information about the special (occupational) tax, see Frequently Asked Question CMM 12, and for information about the bond, see Frequently Asked Questions CMM 6 and CMM 7.

The time it will take to process a permit application depends on many things, such as the number of applications we receive and their complexity. The applicant should expect that the permit process will take at least 60 days, but it could take significantly longer. The processing time will depend on the completeness of the application packet, the results of a site inspection, the number of permits submitted during that time and other circumstances of the application that TTB must take into consideration. We will make every attempt to handle your application in a timely manner.  Average application processing times for the prior three months are available here.

No. You must immediately discontinue use of the machine. Federal law prohibits any person from commencing business as a manufacturer of tobacco products without first applying for, and obtaining, a TTB permit (26 U.S.C. 5712 and 5713) and without filing, and obtaining TTB approval of, a bond (26 U.S.C. 5711). An application for a TTB permit may be denied if the applicant fails to meet the statutory qualifications (26 U.S.C. 5712). In addition, the manufacturer may not commence business until that manufacturer has paid the special (occupational) tax (26 U.S.C. 5731 and 5732), described in Frequently Asked Question CMM 12.

You must file either a surety bond using TTB F 5200.26 or a collateral bond using TTB F 5200.25.

In general, the amount of an individual bond cannot be less than the total amount of tax liability on all tobacco products manufactured, received in bond from other factories and from export warehouses, and released to you in bond from customs custody, during any calendar month.  However, the minimum amount for an individual bond is $1,000 and the maximum amount is $250,000.  See 27 CFR 40.133 and 40.134.

The factory premises generally includes all areas used exclusively for the purposes of manufacturing and storing tobacco products; storing materials, equipment, and supplies used to conduct the business of a manufacturer of tobacco products; and carrying on activities in connection with that business. The premises can be a portion of one building (such as an area within a store), a whole building, or multiple buildings or portions of buildings. You may have multiple locations covered under one TTB permit. If the different locations are not located within the same city, town or village, specific authorization from TTB is required. If you operate a retail establishment at the same location as the factory premises, you must show in your application where that establishment connects to the factory premises, including any doors or other openings between the premises.

Where the factory consists of a portion of a building, the factory must be completely separated from the adjoining portions of the building by walls or other means approved by the appropriate TTB officer. The factory premises must be sufficiently separated from the adjoining portions of the building to protect the revenue, and the premises must be accessible directly from a common means of entrance, such as a street. See 27 CFR 40.69, 40.70, and 40.72.

As a manufacturer of tobacco products, you must keep records of your operations and transactions as described in the TTB regulations at 27 CFR 40.181 through 40.187. In general, these records must account for all tobacco products and tobacco received, manufactured, removed from the factory, lost, destroyed or otherwise disposed of.

You are required to submit a monthly report of operations on TTB F 5210.5. The monthly report must be submitted no later than 20 days after the end of the month that the report covers. Information regarding electronic filing of monthly reports using Pay.gov is available here. The specific reporting requirements are in 27 CFR 40.202. You may also be required to submit reports regarding processed tobacco, depending on the circumstances of your business. The relevant requirements are in 27 CFR 40.72 and 40.522, and you may contact TTB toll free at 1-877-882-3277 if you have any questions regarding this report.

Every manufacturer of tobacco products must make an accurate inventory on TTB F 5210.9 on certain occasions. These are:

• when it commences business (the effective date of the TTB permit);
• when there is a transfer of ownership;
• when there is a change in the location of the factory;
• when it concludes business (ceases operations); and
• at any other time that an appropriate TTB officer requires (typically, at the time of an audit).

The specific requirements are in 27 CFR 40.201. Inventories must include all tobacco products and processed tobacco for which records are required under 27 CFR 40.182 (record of tobacco and processed tobacco) and 27 CFR 40.183 (record of tobacco products).

Yes. As a manufacturer of tobacco products, you are liable for the payment of Federal excise tax on the tobacco products manufactured. The specific statutory and regulatory requirements are in 26 U.S.C. 5703 and 27 CFR 40.26. The Excise Tax Return is TTB F 5000.24, and the applicable tax rates can be found at TTB’s Tax and Fee Rate page.

In addition, you must pay a special (occupational) tax (SOT) at a rate specified by 27 CFR 40.32. The SOT is either $500 or $1,000 per year, depending on your gross receipts, and it must be paid by filing TTB F 5630.5t. Please note that you may also be subject to State and local taxes on tobacco products. For questions on those requirements, we recommend you contact the appropriate State revenue department.

TTB regulations require certain marks, labels, and notices on packages of tobacco products. Generally, the required marks, labels, and notices specify the type of tobacco product, the taxable unit (quantity or weight, depending on the product), and certain information that identifies the domestic manufacturer. The requirements regarding the package are in 27 CFR 40.211 and the marks, labels, and notices (with regard to cigarettes) are prescribed at 27 CFR 40.212, 40.213, and 40.215, respectively. For example, a domestic package of small cigarettes must include a notice that states the quantity of cigarettes in the package and the words "small" (or "Class A") and "cigarettes." The package generally must also include a mark that either: states the name of the manufacturer along with the city and State of the factory where they were removed subject to tax; or else states the TTB permit number of this factory.

In addition, the statutory and regulatory provisions administered by other Federal agencies may require that specific marks, statements, or notices appear on tobacco product packages. Meeting the TTB requirements for packages, marks, labels, and notices does not imply that such packages meet the requirements established by other Federal agencies.

The statutory and regulatory provisions administered by TTB do not require that cigarettes be sold by the carton. There may be provisions administered by other Federal or State agencies that require certain package or container sizes of tobacco products.

The statutory and regulatory provisions administered by TTB do not prohibit you from hand-writing the required package information. The requirements of other Federal agencies, State agencies, or if applicable, the Master Settlement Agreement could affect whether you may hand-write information on the packages. For TTB purposes, the required markings on a package may be imprinted on the package or securely affixed to it (for example, by a sticker that adheres to the package to such an extent that it would damage the package if removed).

No. If you are engaged in the business of making tobacco products or if you are, for commercial purposes, making a machine available for use by consumers in making tobacco products, you must obtain a TTB permit, you must comply with all applicable laws and regulations, and you are liable for Federal excise and special (occupational) tax. The size or speed of the machine does not affect the requirement to obtain a TTB permit, nor does it affect your tax liability.

You may call TTB’s National Revenue Center toll free at 1-877-882-3277.