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Title V — Excise tax on nicotine used in vaping, etc.

H.R. 2339 · 116th Congress · Mar 2, 2020 · Lineage

V Excise tax on nicotine used in vaping, etc.

Sec. 501 Imposition of tax on nicotine for use in vaping, etc

(a)
In general— Section 5701 of the Internal Revenue Code of 1986 is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

“(h) Nicotine—On taxable nicotine, manufactured in or imported into the United States, there shall be imposed a tax equal to the dollar amount specified in section 5701(b)(1) (or, if greater, $50.33) per 1,810 milligrams of nicotine (and a proportionate tax at the like rate on any fractional part thereof).”

(b)
Taxable nicotine— Section 5702 of such Code is amended by adding at the end the following new subsection:

“(q) Taxable nicotine

“(1) In general—Except as otherwise provided in this subsection, the term “taxable nicotine” means any nicotine which has been extracted, concentrated, or synthesized.

“(2) 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—

“(A) a drug—

“(i) that is approved under section 505 of the Federal Food, Drug, and Cosmetic Act or licensed under section 351 of the Public Health Service Act; or

“(ii) for which an investigational use exemption has been authorized under section 505(i) of the Federal Food, Drug, and Cosmetic Act or under section 351(a) of the Public Health Service Act; or

“(B) a combination product (as described in section 503(g) of the Federal Food, Drug, and Cosmetic Act), the constituent parts of which were approved or cleared under section 505, 510(k), or 515 of such Act.

“(3) Coordination with taxation of other tobacco products—Cigars, cigarettes, smokeless tobacco, pipe tobacco, and roll-your-own tobacco shall not be treated as containing taxable nicotine solely because the nicotine naturally occurring in the tobacco from which such product is manufactured has been concentrated during the ordinary course of manufacturing.”

(c)
Taxable nicotine treated as a tobacco product— Section 5702(c) of such Code is amended by striking “and roll-your-own tobacco” and inserting “roll-your-own tobacco, and taxable nicotine”.
(d)
Manufacturer of taxable nicotine— Section 5702 of such Code, as amended by subsection (b), is further amended by adding at the end the following new subsection:

“(r) Manufacturer of taxable nicotine

“(1) In general—Any person who extracts, concentrates, or synthesizes nicotine shall be treated as a manufacturer of taxable nicotine (and as manufacturing such taxable nicotine).

“(2) Application of rules related to manufacturers of tobacco products—Any reference to a manufacturer of tobacco products, or to manufacturing tobacco products, shall be treated as including a reference to a manufacturer of taxable nicotine, or to manufacturing taxable nicotine, respectively.”

(e)
Effective date—
(1)
In general— The amendments made by this section shall apply to articles manufactured or imported in calendar quarters beginning more than 90 days after the date of the enactment of this Act.
(2)
Transition rule for permit and bond requirements— A person which is lawfully engaged in business as a manufacturer or importer of taxable nicotine (within the meaning of subchapter A of chapter 52 of the Internal Revenue Code of 1986, as amended by this section) on the date of the enactment of this Act, first becomes subject to the requirements of subchapter B of chapter 52 of such Code by reason of the amendments made by this section, and submits an application under such subchapter B to engage in such business not later than 90 days after the date of the enactment of this Act, shall not be denied the right to carry on such business by reason of such requirements before final action on such application.