---
kind: "range"
citation: "27 C.F.R. §§ 40.401–40.410"
title: "27"
from: "40.401"
to: "40.410"
count: 10
url: "https://uscodex.org/cfr/27/40.401..40.410"
---

# §40.401. Corporate surety.

- (a) Surety bonds required by this subpart may be given only with corporate sureties holding certificates of authority from, and subject to any limitations prescribed by the Secretary of the Treasury as set forth in the current revision of Treasury Department Circular 570 (Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies). The surety shall have no interest whatever in the business covered by the bond.
- (b) Each bond and each extension of coverage of bond shall at the time of filing be accompanied by a power of attorney authorizing the agent or officer who executed the bond to so act on behalf of the surety. The appropriate TTB officer who is authorized to approve the bond may, whenever deemed necessary, require additional evidence of the authority of the agent or officer to execute the bond or extension of coverage of bond. The power of attorney shall be prepared on a form provided by the surety company and executed under the corporate seal of the company. If the power of attorney submitted is other than a manually signed document, it shall be accompanied by a certificate of its validity.
- (c) Treasury Department Circular 570 is published in the Federal Register annually on the first business day in July, and supplemental changes are published periodically thereafter (see https://www.federalregister.gov). The most recent circular and any supplemental changes to it may be viewed on the Bureau of the Fiscal Service website (see https://fiscal.treasury.gov).

# §40.402. Two or more corporate sureties.


A bond executed by two or more corporate sureties shall be the joint and several liability of the principal and the sureties. However, each corporate surety may limit its liability in terms upon the face of the bond in a definite, specific amount, which amount shall not exceed the limitations prescribed for such corporate surety by the Secretary, as set forth in the current revision of Treasury Department Circular 570 (Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies); see [§ 40.401(c)](/cfr/27/40.401.md?p=c). When the sureties so limit their liability, the aggregate of such limited liabilities must equal the required amount of the bond.


# §40.403. Deposit of securities in lieu of corporate surety.


In lieu of corporate surety, the manufacturer of cigarette papers and tubes may pledge and deposit, as security for the bond, securities which are transferable and are guaranteed as to both interest and principal by the United States, in accordance with the provisions of [31 CFR Part 225](/cfr/31/part225.md)—Acceptance of Bonds Secured by Government Obligations in Lieu of Bonds with Sureties.


# §40.404. Amount of bond.


The amount of the bond of a manufacturer of cigarette papers and tubes shall be not less than the maximum amount of the tax liability on the cigarette papers and tubes manufactured in the factory, received without payment of tax from other factories, and released without payment of tax from customs custody as provided in [§ 40.452](/cfr/27/40.452.md), during any month. In the case of a manufacturer commencing business, the production, receipts from other factories, and releases from customs custody, without payment of tax, shall be estimated for the purpose of this section. The amount of any such bond (or the total amount where strengthening bonds are filed) shall not exceed $20,000, nor be less than $1,000.


# §40.405. Strengthening bond.


Where the appropriate TTB officer determines that the amount of the bond, under which a manufacturer of cigarette papers and tubes is currently carrying on such business, no longer adequately protects the revenue, the appropriate TTB officer may require the manufacturer to file a strengthening bond in an appropriate amount with the same surety as that on the bond already in effect, in lieu of a superseding bond to cover the full liability on the basis of [§ 40.404](/cfr/27/40.404.md). The appropriate TTB officer shall refuse to approve any strengthening bond where any notation is made thereon which is intended or which may be construed as a release of any former bond, or as limiting the amount of either bond to less than its full amount.


# §40.406. Superseding bond.


A manufacturer of cigarette papers and tubes shall file a new bond to supersede the current bond immediately when:

- (a) The corporate surety on the current bond becomes insolvent,
- (b) The appropriate TTB officer approves a request from the surety of the current bond to terminate liability under the bond,
- (c) Payment of any liability under a bond is made by the surety thereon, or
- (d) The appropriate TTB officer considers such a superseding bond necessary for the protection of the revenue.

# §40.407. Extension of coverage of bond.


An extension of the coverage of bond filed under this subpart shall be manifested on TTB F 5000.18 by the manufacturer of cigarette papers and tubes and by the surety on the bond with the same formality and proof of authority as required for the execution of the bond.


# §40.408. Approval of bond and extension of coverage of bond.


No person shall commence operations under any bond, nor extend operations, until such person receives from the appropriate TTB officer notice of approval of the bond or an appropriate extension of coverage of the bond required under this subpart. Upon receipt of an approved bond or extension of coverage of bond from the appropriate TTB officer, such bond or extension of coverage of bond shall be retained by the manufacturer of cigarette papers and tubes in factory and shall be made available for inspection by any TTB officer upon request.


# §40.409. Termination of liability of surety under bond.


The liability of a surety on any bond required by this subpart shall be terminated only as to operations on and after the effective date of a superseding bond, or the date of approval of the discontinuance of operations by the manufacturer of cigarette papers and tubes, or otherwise in accordance with the termination provisions of the bond. The surety shall remain bound in respect of any liability for unpaid taxes, penalties and interest, not in excess of the amount of the bond, incurred by the manufacturer while the bond is in force.


# §40.410. Release of pledged securities.


Securities of the United States pledged and deposited as provided in [§ 40.403](/cfr/27/40.403.md) shall be released only in accordance with the provisions of [31 CFR part 225](/cfr/31/part225.md). Such securities will not be released by the appropriate TTB officer until liability under the bond for which they were pledged has been terminated. When the appropriate TTB officer is satisfied that they may be released, the appropriate TTB officer shall fix the date or dates on which a part or all of such securities may be released. At any time prior to the release of such securities, the appropriate TTB officer may extend the date of release for such additional length of time as is deemed necessary.