,,ii #aaith ,,congress #ast ,session ,s4 #hai ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,march #c1 #bjbe,mr4 ,durbin 7for himself1 ,mr4 ,wyden1 ,mrs4 ,murray1 ,mr4 ,reed1 ,mr4 ,merkley1 ,mr4 ,blumenthal1 ,mr4 ,markey1 and ,ms4 ,hirono7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide tax rate parity among all tobacco products1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,end ,tobacco ,loopholes ,act4 #b4 ,increasing excise taxes on cigarettes and establishing excise tax equity among all tobacco product tax rates 7a7 ,tax parity for ,roll-,your-,own tobacco ,section #egja7;g7 of the ,internal ,revenue ,code of #aihf is amended by striking #bd4gh and inserting #di4ef4 7b7 ,tax parity for pipe tobacco ,section #egja7;f7 of the ,internal ,revenue ,code of #aihf is amended by striking #b4hcaa cents and inserting #di4ef4 7c7 ,tax parity for smokeless tobacco 7#a7 ,section #egja7;e7 of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 in paragraph 7#a71 by striking #a4ea and inserting #bf4hd2 7,b7 in paragraph 7#b71 by striking #ej4cc cents and inserting #aj4gd2 and 7,c7 by adding at the end the following3 7#c7 ,smokeless tobacco sold in discrete single-use units ,on discrete single-use units1 #ajj4ff per thousand4 4 7#b7 ,section #egjb7m7 of such ,code is amended-- 7,a7 in paragraph 7#a71 by striking or chewing tobacco and inserting 1 chewing tobacco1 or discrete single-use unit2 7,b7 in paragraphs 7#b7 and 7#c71 by inserting that is not a discrete single-use unit before the period in each such paragraph2 and 7,c7 by adding at the end the following3 7#d7 ,discrete single-use unit ,the term discrete single-use unit means any product containing1 made from1 or derived from tobacco or nicotine that-- 7,a7 is not intended to be smoked2 and 7,b7 is in the form of a lozenge1 tablet1 pill1 pouch1 dissolvable strip1 or other discrete single-use or single-dose unit4 4 7d7 ,tax parity for small cigars ,paragraph 7#a7 of section #egja7;a7 of the ,internal ,revenue ,code of #aihf is amended by striking #ej4cc and inserting #ajj4ff4 7e7 ,tax parity for large cigars 7#a7 ,in general ,paragraph 7#b7 of section #egja7;a7 of the ,internal ,revenue ,code of #aihf is amended by striking #eb4ge percent and all that follows through the period and inserting the following3 #di4ef per pound and a proportionate tax at the like rate on all fractional parts of a pound but not less than #aj4jff cents per cigar44 7#b7 ,guidance ,the ,secretary of the ,treasury1 or the ,secretary's delegate1 may issue guidance regarding the appropriate method for determining the weight of large cigars for purposes of calculating the applicable tax under section #egja7;a77#b7 of the ,internal ,revenue ,code of #aihf4 7#c7 ,conforming amendment ,section #egjb of such ,code is amended by striking subsection 7l74 7f7 ,tax parity for ,roll-,your-,own tobacco and certain processed tobacco ,subsection 7o7 of section #egjb of the ,internal ,revenue ,code of #aihf is amended by inserting 1 and includes processed tobacco that is removed for delivery or delivered to a person other than a person with a permit provided under section #egac1 but does not include removals of processed tobacco for exportation after wrappers thereof4 7g7 ,imposition of tax on nicotine for use in vaping1 etc 7#a7 ,in general ,section #egja of the ,internal ,revenue ,code of #aihf is amended by redesignating subsection 7h7 as subsection 7i7 and by inserting after subsection 7g7 the following new subsection3 7h7 ,nicotine ,on taxable nicotine1 manufactured in or imported into the ,united ,states1 there shall be imposed a tax equal to the dollar amount specified in section #egja7;b77#a7 per #a1haj milligrams of nicotine 7and a proportionate tax at the like rate on any fractional part thereof74 4 7#b7 ,taxable nicotine ,section #egjb of such ,code is amended by adding at the end the following new subsection3 7q7 ,taxable nicotine 7#a7 ,in general ,except as otherwise provided in this subsection1 the term taxable nicotine means any nicotine which has been extracted1 concentrated1 or synthesized4 7#b7 ,exception for products approved by ,food and ,drug ,administration ,such term shall not include any nicotine if the manufacturer or importer thereof demonstrates to the satisfaction of the ,secretary of ,health and ,human ,services that such nicotine will be used in-- 7,a7 a drug-- 7i7 that is approved under section #eje of the ,federal ,food1 ,drug1 and ,cosmetic ,act or licensed under section #cea of the ,public ,health ,service ,act2 or 7ii7 for which an investigational use exemption has been authorized under section #eje7;i7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act or under section #cea7;a7 of the ,public ,health ,service ,act2 or 7,b7 a combination product 7as described in section #ejc7;g7 of the ,federal ,food1 ,drug1 and ,cosmetic ,act71 the constituent parts of which were approved or cleared under section #eje1 #eaj7k71 or #eae of such ,act4 7#c7 ,coordination with taxation of other tobacco products ,tobacco products meeting the definition of cigars1 cigarettes1 smokeless tobacco1 pipe tobacco1 and roll-your-own tobacco in this section shall be classified and taxed as such despite any concentration of the nicotine inherent in those products or any addition of nicotine to those products during the manufacturing process4 7#d7 ,regulations ,the ,secretary shall prescribe such regulations or other guidance as is necessary or appropriate to carry out the purposes of this subsection1 including regulations or other guidance for coordinating the taxation of tobacco products and taxable nicotine to protect revenue and prevent double taxation4 4 7#c7 ,taxable nicotine treated as a tobacco product ,section #egjb7;c7 of such ,code is amended by striking and roll-your-own tobacco and inserting roll-your-own tobacco1 and taxable nicotine4 7#d7 ,manufacturer of taxable nicotine ,section #egjb of such ,code1 as amended by paragraph 7#b71 is amended by adding at the end the following new subsection3 7r7 ,manufacturer of taxable nicotine 7#a7 ,in general ,any person who extracts1 concentrates1 or synthesizes nicotine shall be treated as a manufacturer of taxable nicotine 7and as manufacturing such taxable nicotine74 7#b7 ,application of rules related to manufacturers of tobacco products ,any reference to a manufacturer of tobacco products1 or to manufacturing tobacco products1 shall be treated as including a reference to a manufacturer of taxable nicotine1 or to manufacturing taxable nicotine1 respectively4 4 7h7 ,increasing tax on cigarettes 7#a7 ,small cigarettes ,section #egja7;b77#a7 of such ,code is amended by striking #ej4cc and inserting #ajj4ff4 7#b7 ,large cigarettes ,section #egja7;b77#b7 of such ,code is amended by striking #aje4fi and inserting #baa4ch4 7i7 ,tax rates adjusted for inflation ,section #egja of such ,code1 as amended by subsection 7g71 is amended by adding at the end the following new subsection3 7j7 ,inflation adjustment 7#a7 ,in general ,in the case of any calendar year beginning after #bjbe1 the dollar amounts provided under this chapter shall each be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment determined under section #a7;f77#c7 for the calendar year1 determined by substituting #8calendar year #bjbd' for #8calendar year #bjaf' in subparagraph 7,a77ii7 thereof4 7#b7 ,rounding ,if any amount as adjusted under paragraph 7#a7 is not a multiple of #j4ja1 such amount shall be rounded to the next highest multiple of #j4ja4 4 7j7 ,floor ,stocks ,taxes 7#a7 ,imposition of tax ,on tobacco products manufactured in or imported into the ,united ,states which are removed before any tax increase date and held on such date for sale by any person1 there is hereby imposed a tax in an amount equal to the excess of-- 7,a7 the tax which would be imposed under section #egja of the ,internal ,revenue ,code of #aihf on the article if the article had been removed on such date1 over 7,b7 the prior tax 7if any7 imposed under section #egja of such ,code on such article4 7#b7 ,credit against tax ,each person shall be allowed as a credit against the taxes imposed by paragraph 7#a7 an amount equal to #ejj4 ,such credit shall not exceed the amount of taxes imposed by paragraph 7#a7 on such date for which such person is liable4 7#c7 ,liability for tax and method of payment 7,a7 ,liability for tax ,a person holding tobacco products on any tax increase date to which any tax imposed by paragraph 7#a7 applies shall be liable for such tax4 7,b7 ,method of payment ,the tax imposed by paragraph 7#a7 shall be paid in such manner as the ,secretary shall prescribe by regulations4 7,c7 ,time for payment ,the tax imposed by paragraph 7#a7 shall be paid on or before the date that is #abj days after the effective date of the tax rate increase4 7#d7 ,articles in foreign trade zones ,notwithstanding the ,act of ,june #ah1 #aicd 7commonly known as the ,foreign ,trade ,zone ,act1 #dh ,stat4 #iih1 #ai ,u4,s4,c4 #ha;a et seq471 or any other provision of law1 any article which is located in a foreign trade zone on any tax increase date shall be subject to the tax imposed by paragraph 7#a7 if-- 7,a7 internal revenue taxes have been determined1 or customs duties liquidated1 with respect to such article before such date pursuant to a request made under the first proviso of section #c7;a7 of such ,act1 or 7,b7 such article is held on such date under the supervision of an officer of the ,united ,states ,customs and ,border ,protection of the ,department of ,homeland ,security pursuant to the second proviso of such section #c7;a74 7#e7 ,definitions ,for purposes of this subsection-- 7,a7 ,in general ,any term used in this subsection which is also used in section #egjb of such ,code shall have the same meaning as such term has in such section4 7,b7 ,tax increase date ,the term tax increase date means the effective date of any increase in any tobacco product excise tax rate pursuant to the amendments made by this section 7other than subsection 7j7 thereof74 7,c7 ,secretary ,the term ,secretary means the ,secretary of the ,treasury or the ,secretary's delegate4 7#f7 ,controlled groups ,rules similar to the rules of section #ejfa7;e77#c7 of such ,code shall apply for purposes of this subsection4 7#g7 ,other laws applicable ,all provisions of law1 including penalties1 applicable with respect to the taxes imposed by section #egja of such ,code shall1 insofar as applicable and not inconsistent with the provisions of this subsection1 apply to the floor stocks taxes imposed by paragraph 7#a71 to the same extent as if such taxes were imposed by such section #egja4 ,the ,secretary may treat any person who bore the ultimate burden of the tax imposed by paragraph 7#a7 as the person to whom a credit or refund under such provisions may be allowed or made4 7k7 ,effective dates 7#a7 ,in general ,except as provided in paragraphs 7#b7 through 7#d71 the amendments made by this section shall apply to articles removed 7as defined in section #egjb7;j7 of the ,internal ,revenue ,code of #aihf7 after the last day of the month which includes the date of the enactment of this ,act4 7#b7 ,discrete single-use units and processed tobacco ,the amendments made by subsections 7c77#a77;,c71 7c77#b71 and 7f7 shall apply to articles removed 7as defined in section #egjb7;j7 of the ,internal ,revenue ,code of #aihf7 after the date that is #f months after the date of the enactment of this ,act4 7#c7 ,large cigars ,the amendments made by subsection 7e7 shall apply to articles removed after ,december #ca1 #bjbe4 7#d7 ,taxable nicotine ,the amendments made by subsection 7g7 shall apply to articles removed in calendar quarters beginning after the date which is #ahj days after the date of the enactment of this ,act4 7l7 ,transition rule for permit and bond requirements ,a person which is lawfully engaged in business as a manufacturer or importer of taxable nicotine 7within the meaning of subchapter ,a of chapter #eb of the ,internal ,revenue ,code of #aihf1 as amended by this section7 on the date of the enactment of this ,act1 first becomes subject to the requirements of subchapter ,b of chapter #eb of such ,code by reason of the amendments made by this section1 and submits an application under such subchapter ,b to engage in such business not later than #ij days after the date of the enactment of this ,act1 shall not be denied the right to carry on such business by reason of such requirements before final action on such application4