A farmer who purchases leaf tobacco from other growers is not free to dispose of such tobacco under the same conditions as that of his own raising, but in order to sell such leaf tobacco lawfully must qualify as a dealer in leaf tobacco (see Ch. IV) and be guided by the restrictions governing such business. One who purchases a crop of tobacco before it is severed from the land does not thereby become the farmer or grower of such tobacco, but may sell it only after qualification as a dealer in leaf tobacco. and in accordance with the law applicable thereto. ART. 16. Farmer's liability.-The farmer or grower of tobacco who prepares his leaf tobacco or any part of it for consumption, except for his own personal use, by stemming, twisting, crushing, grinding, pressing or rubbing, plaiting, rolling, cutting or sweetening, or other process, is, in respect to the manipulation of such tobacco, no longer a farmer relieved of all liability, but is regarded as liable to all the provisions of law and the regulations governing the manufacture of tobacco or cigars, and to tax on the product disposed of for consumption or sale. ART. 17. Farmer may employ an agent.—If a farmer or grower of tobacco places his tobacco in the hands of a qualified dealer in leaf tobacco to be sold for him, such dealer may sell and deliver such tobacco only in accordance with the restrictions imposed by law. Any other agent employed by a farmer or group of farmers who may form a pool to sell his or their tobacco for him or them may sell for his principal or principals, the farmer or farmers, without incurring liability as a dealer or a manufacturer, provided he is employed on other than a commission basis or is not compensated on the basis of the selling price, the quantity of tobacco sold, or a sum per pound, and does not mingle the tobacco received from one farmer with that of another, and (1) conducts all sales in the name of his principal or principals, (2) transmits to his principal or principals the proceeds of such sales without deduction of any kind, and (3) keeps records of receipts and sales of goods, which will enable him to furnish information showing (a) with respect to receipts, the date thereof, the quantity received, and the name and address of the principal or principals, and (b) with respect to sales, the date thereof, the quantity sold, the name and address of the purchaser, and the selling price. Agents may sell by mail; checks and money orders in payment of the purchase price may be made payable to their order. They may receive as compensation a stipulated salary to be made up by charging each member of the pool a fixed sum for each 100 pounds of tobacco sold, any excess in the amount of such fund over the salary of the agent to be refunded pro rata. On the other hand, where, for example, farmers form a corporation and designate it as agent to sell for them under by-laws providing that compensation shall be upon the basis of a percentage charge upon returns for tobacco sold or of a uniform fixed price per pound, and that a sum equal to 10 per cent of the net profits shall be set aside as a contingent fund until there shall have been accumulated a sum equal to 20 per cent of the capital stock, the balance to be distributed among members in proportion to the amount or value of their products sold, liability as a dealer in leaf tobacco would be incurred by the corporation. * SEC. 3360 (R. S., as amended). * * * (f) For the purpose of this section * * a tobacco growers' cooperative association shall not be regarded as a dealer in leaf tobacco in respect to the leaf tobacco * * * handled by such association: Provided, That such cooperative associations shall be required to keep available records of all purchases and sales of tobacco, such records to be open to inspection by the agents of the Government. As used in this section the term "tobacco growers' cooperative association" means an association of farmers or growers of tobacco organized and operated as sales agent for the purpose of marketing the tobacco produced by its members and turning back to them the proceeds of sales, less the necessary selling expenses, on the basis of the quantity and quality of tobacco furnished by them. ART. 18. Tobacco growers' cooperative associations.-A tobacco growers' cooperative association which is an association of farmers or growers of tobacco organized and operated as sales agent for the purpose of marketing the tobacco produced by its members and turning back to them the proceeds of sales, less the necessary selling expenses, on the basis of the quality and quantity of tobacco furnished by them, is, in respect to the leaf tobacco handled by such association, not regarded as a dealer in leaf tobacco. Proof that an association is entitled to the foregoing exemption must be submitted to the collector of internal revenue for the district for transmission to the Commissioner. Such cooperative associations are, however, required to keep available records of all receipts and sales of tobacco, such records to be open to inspection by the agents of the Government. A tobacco growers' cooperative association would incur liability as a dealer in leaf tobacco by selling tobacco received from a registered dealer. Such an association is also restricted in the handling of leaf tobacco the same as the individual farmer or grower-that is, it can not manipulate tobacco by stemming, pressing, twisting, screening, or other method without incurring liability as a manufacturer of tobacco and to tax on the quantity of tobacco so manipulated which has been sold. CHAPTER IV DEALERS IN LEAF TOBACCO * SEC. 3244 (R. S., as amended, subsec. 6). * * Every person shall be regarded as a dealer in leaf tobacco whose business it is, for himself or on commission, to sell, or offer for sale, or consign for sale on commission, leaf tobacco. ART. 19. Definitions and classifications.-(a) Person.-See article 4. (b) Dealer.-The term "dealer" as used in this chapter shall, with the exception indicated below, include every person whose business it is, for himself or on commission, to sell, or offer for sale, leaf tobacco, and every person who, as a principal, receives leaf tobacco into his actual possession. One who operates a warehouse, stemmery, or rehandling plant will be regarded as a dealer and will be required to make report of the tobacco received for such purposes. (c) Buyer.-A buyer employed by a dealer will not himself be regarded as a dealer, unless he purchases on his own account. (d) Manufacturer.-A manufacturer who receives leaf tobacco for resale or for any other purpose than to manufacture it into completed tobacco products, or who receives leaf tobacco off his bonded factory premises, shall be regarded as a dealer and will be required to report the tobacco thus received or stored. (e) Classification. For reference purposes, dealers will be classified as follows: Class 1, operators of leaf sales warehouses; class 2, operators of tobacco storage warehouses; class 3, operators of rehandling plants; class 4, operators of stemmeries; class 5, packers, exporters, and all other persons not included in classes 1 to 4, liable as dealers within the intent of this section. Class 1. Leaf sales warehouses.-Any person who sells at auction leaf tobacco received from farmers or from a dealer of class 4 or 5 is regarded as included in class 1 as an operator of a leaf sales warehouse. Class 2. Tobacco storage warehouses.-Any person operating a warehouse for the storage of tobacco for others is regarded as included in class 2 as an operator of a tobacco storage warehouse. Class 3. Rehandling plants.—Any person operating any plant where leaf tobacco in green condition is handled by mechanical means, or otherwise, to place it in keeping condition, is regarded as included in class 3. Class 4. Stemmeries.-Any person operating an establishment where leaf tobacco is stemmed or stripped by hand or by machine is regarded as included in class 4. Class 5. Miscellaneous.-Any person not included in classes 1 to 4, inclusive, engaged in buying and selling leaf tobacco, as, for instance, a packer, or exporter, or any person who for himself or others receives leaf tobacco to sell or offer for sale, or consign for sale on commission or otherwise, falls in this class. The manufacturer receiving leaf tobacco off his bonded factory premises is included in this class, as is also a tobacco growers' cooperative association selling tobacco purchased or received from a dealer, a manufacturer, or from persons other than its tobacco-growing members. ART. 20. Registry.-Every person upon commencing business as a dealer in leaf tobacco and within the month of July of each year thereafter while still in business must register with the collector of the district, who will issue to the dealer a certificate of registry on Form 282, which must be posted and conspicuously displayed in his place of business at all times. (As to the form of return for registry, its execution, and penalty for failure to register see article 12.) Separate registration will be required with respect to each place of business at which sales are made and each establishment having immediate direction and control of any place or group of places where tobacco is stored or handled. If one is an operator of more than one class (see article 19, subdivision (e)), at the same or different places, but makes all sales and keeps a consolidated record covering all his establishments at one and the same place, he will be required to register only once. Registry is a requirement entirely separate and distinct from that with respect to the statement covered by article 21. SEC. 3360 (R. S., as amended). * * * (a) Every dealer in leaf tobacco shall file with the collector of the district in which his business is carried on, a statement in duplicate, subscribed under oath, setting forth the place, and, if in a city, the street and number of the street, where his business is to be carried on, and the exact location of each place where leaf tobacco is held by him on storage, and whenever he adds to or discontinues any of his leaf tobacco storage places, he shall give immediate notice to the collector of the district in which he is registered. ART. 21. Statement.-Every person who commences business as a dealer shall, at the time of commencing business, file with the collector of each district where registered, or required to register, a statement in duplicate, subscribed under oath, setting forth the place and the street and number where his business is being, or is to be, carried on, and describing each place where leaf tobacco is held by him as a principal. This statement shall be made on Form 772. The different storage locations to be described thereon shall be designated by consecutive numbers. Any number of storage places located in the same city or town shall be described under one number. The purpose of such numerical designations is to enable the dealer reporting shipments or receipts of tobacco (see article 24) to refer by number rather than by a more extensive description to the place from which the tobacco is shipped or where it is received. Whenever a dealer in leaf tobacco adds to or discontinues any storage place, he shall file a new statement in duplicate under oath. Each storage place in respect to which there has been no change shall be described in such new statement under the same number as in previous statements. SEC. 3360 (R. S., as amended). * * Every such dealer shall give a bond with surety, satisfactory to, and to be approved by, the collector of the district, in such penal sum as the collector may require, not less than $500; and a new bond may be required in the discretion of the collector, or under instructions of the Commissioner ART. 22. Bond.-Every dealer in leaf tobacco must, with respect to each place for which registration is required, give a bond in duplicate with surety satisfactory to, and to be approved by, the collector of the district. The bond, to be executed on Form 771, shall be in such penal sum, not less than $500, as the collector may require. The penal sum of such bond shall be based on the average quantity of tobacco on hand, determined by adding together the quantity on hand at the end of each month of the preceding year and dividing the sum by 12, the scale being as follows: Average amount of tobacco on hand Not more than 25,000 pounds_-- Penalty of bond $500 1,500 2,500 5, 000 7,500 10, 000 In any case where safety to the interests of the Government may render it advisable, the collector of the district, with the approval of the Commissioner, may require a bond in excess of $10,000. A new bond may, in the discretioin of the collector or under instructions of the Commissioner, be required at any time, or a dealer, with the consent of the collector, may furnish a new bond on his own initiative. Not less than two individual sureties will be accepted on any bond given with such sureties. (See article 92 for further general instructions in regard to bonds.) |