TOBACCO PRODUCTS WITHDRAWN FROM THE MARKET
Manufacturers of tobacco products
and others concerned:
Purpose. This industry circular is to advise you regarding a condition
governing the allowance of claims for refund of tax on tobacco products
withdrawn from the market and the execution of Form 3069, Schedule of
Tobacco Products or Cigarette Papers or Tubes Withdrawn from the
Market.
Background. Recently it came to our attention that damaged tobacco
products were destroyed at the premises of a wholesale tobacco dealer,
before the manufacturer of the products had any knowledge of the matter
and, therefore, the manufacturer could not claim that the tobacco
products were in his possession or ownership and that he had withdrawn
the products from the market. The dealer prepared the required schedule
and the tobacco products were destroyed under the supervision of an
Alcohol and Tobacco Tax Inspector. The dealer contemplated that the
schedule would thereafter be transmitted to the manufacturer who would
file claim for refund of tax under Section 5705, Internal Revenue Code.
One condition to refund of tax on domestic tobacco products under
Section 5705 of the Code is the withdrawal of the products from the
market by the manufacturer who paid the tax. In the instance cited,
the matter first came to the attention of the manufacturer when the
tobacco products were no longer in existence so the manufacturer could
not properly claim that he had withdrawn them from the market. Accordingly, a claim for refund of tax on such products could not be allowed.
It is to be understood, however, that the law and regulations do not
preclude allowance of a claim where the tobacco products are destroyed
at a dealer's premises if the manufacturer takes possession or acquires
ownership of the tobacco products prior to destruction. The action of
the manufacturer in withdrawing the tobacco products from the market is
evidenced by the signature of the manufacturer (or for the manufacturer
by his designated representative) on the schedule, at Item 12 on Form
3069 (Rev. 2-62). If the previous revision of the Form 3069 is used,
the Form should be signed at Item 11 between such number and the word
"total."
Execution of Schedule for the Manufacturer by his Representative.
Whenever a manufacturer withdraws tobacco products from the market and the
schedule, Form 3069, is to be executed in his behalf by an employee such as
a district manager, distribution manager, etc. (not otherwise authorized
to sign documents filed with the assistant regional commissioner (alcohol
and tobacco tax), the manufacturer is responsible for filing a Power
of Attorney, Form 1534, as provided for in Section 270.68 of regulations,
authorizing such person to so act. Prior to the execution of any schedule
for the manufacturer by the person named in the power of attorney such
power of attorney must be on file with the assistant regional commissioner (alcohol and tobacco tax) for the region where the claim will
be filed. Timely filing of Form 1534 is the responsibility of the
manufacturer. After products have been disposed of and the claim for
refund filed, alcohol and tobacco tax officers will determine whether
the person who executed Form 3069 was duly authorized to act in behalf
of the manufacturer. Execution of Form 3069 by a person not authorized
to do so may result in disallowance of the claim. Additionally, manufacturers should fully instruct their representatives in the proper
preparation of Form 3069, particularly regarding Item 1, Item 5, and
Item 8 of the schedule.
Inquiries. Inquiries in regard to this industry circular should refer
to its number and be addressed to the office of your assistant regional
commissioner (alcohol and tobacco tax).

Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
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