in effect
This is a final rule from the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), part of the Justice Department. It updates ATF’s regulations (27 CFR Part 646) to carry out changes Congress made in the USA PATRIOT Improvement and Reauthorization Act of 2005, which amended the Contraband Cigarette Trafficking Act (CCTA). It takes effect June 8, 2026, and directs how illegal cigarette and smokeless tobacco trafficking is defined, recorded, reported, and handled after seizure.
The amount of untaxed cigarettes that counts as “contraband” drops from more than 60,000 to more than 10,000 (cigarettes with no proof that state or local taxes were paid where they are found). The rules now also cover smokeless tobacco, with “contraband smokeless tobacco” defined as more than 500 consumer-sized cans or packages. Businesses that make “delivery sales” (phone, mail, or internet orders shipped to a customer) and move more than 10,000 cigarettes or 500 cans of smokeless tobacco — in one transaction or added up over a single month — must file monthly reports listing their inventories and the quantities received from and distributed to others, itemized by name and address. Authority to set these record-keeping rules shifts from the Treasury Secretary to the Attorney General, and seized products must be destroyed (or used for undercover operations and then destroyed) rather than resold. The rule also adds inspection authority allowing ATF to inspect delivery sellers’ premises and records, backed by a civil penalty of up to $10,000 for denying access.
Cigarette and smokeless tobacco distributors, wholesalers, retailers, and delivery sellers are the main parties, since they face the lower thresholds and the new record-keeping and reporting duties. Certain groups remain exempt, including federal tobacco permit holders, common carriers, state-licensed sellers, government officials acting in their duties, and operators in foreign-trade zones; tribal governments are exempt from the monthly reporting requirement. State and local governments and federal tobacco permittees also gain the ability to bring their own court actions to stop violations.