Rev. Ruling 66-135
Advice has been requested whether cigars may be removed from a taxpaid package by a dealer for delivery by mail to customers as free samples. Advice has also been requested whether sample packages may be made up of cigars from taxpaid packages of more than one manufacturer for sale through the mail to customers.
Under section 5751(a)(3) of the Internal Revenue Code of 1954 and 26 CFR 296.166, all cigars and cigarettes purchased, received, possessed, offered for sale, sold or otherwise disposed of, by a dealer (wholesale or retail) must be in proper packages (as put up by the manufacturer or importer) which bear the mark and notice as prescribed in 26 CFR 270.211 through 270.215 and 275.71 through 275.75. Cigars and cigarettes may be sold or offered for sale at retail from such package, provided the products remain in the packages until removed by the customer or in the presence of the customer.
A dealer in cigars and cigarettes (wholesale or retail) may not remove such products from the required packages (as put up by the manufacturer or importer) for transmission by mail, express, or other similar method to prospective customers, either as free samples so solicit trade or for sale.
Revenue Ruling 64-28, C.B. 1964-1 (Part 1), 594, is hereby superseded.
26 U.S.C. 5751; 26 CFR 296.166