Federal

No Tax Subsidies for E-Cigarette and Tobacco Ads Act

Source: Congress.gov · 766 words in original text

What This Bill Does

This bill changes federal tax law to prohibit companies from deducting (reducing their taxable income for) expenses they spend on advertising tobacco products and electronic nicotine delivery systems directly to the public. The bill would amend the Internal Revenue Code of 1986, which governs federal income taxes. ##

Who It Affects

Companies that manufacture, sponsor or sell tobacco products and electronic nicotine delivery systems (e-cigarettes, vape pens and similar devices) would be directly impacted by this law. ##

Key Provisions

- No company can deduct advertising expenses for direct-to-consumer advertising of tobacco products or electronic nicotine delivery systems (Sec. 280I(a)) - Direct-to-consumer advertising includes ads published in magazines, newspapers, and journals; broadcast on radio, television and telephone systems; sent by direct mail; displayed on billboards; or posted on the internet and digital platforms like social media and mobile apps (Sec. 280I(b)) - Electronic nicotine delivery systems include e-cigarettes, e-hookah, e-cigars, vape pens and advanced refillable personal vaporizers, as well as any components, liquids, parts or accessories of these devices (Sec. 280I(d)) - The prohibition does not apply to products approved by the Food and Drug Administration as tobacco cessation products (products meant to help people quit tobacco) or for another therapeutic purpose, if marketed and sold solely for that approved purpose (Sec. 280I(d)(2)) ##

What Changes

Companies would no longer be able to claim advertising and promotional expenses for tobacco and electronic nicotine delivery system ads as business deductions on their federal tax returns. This means these companies would owe more in federal income taxes. ##

Important Definitions

The bill defines "tobacco product" by referring to the definition in the Federal Food, Drug and Cosmetic Act (a separate federal law). The bill defines "electronic nicotine delivery system" as any electronic device delivering nicotine, flavor or another substance through an aerosolized solution that a user inhales, including e-cigarettes and vape pens. ##

Effective Date

The law would apply to amounts paid or spent after the bill becomes law, for tax years ending after the bill becomes law. (Sec. 2(c))

II 118TH CONGRESS 1ST SESSION S. 464 To amend the Internal Revenue Code of 1986 to deny the deduction for advertising and promotional expenses for tobacco products and electronic nicotine delivery systems. IN THE SENATE OF THE UNITED STATES FEBRUARY 16, 2023 Mrs. SHAHEEN (for herself, Mr. BLUMENTHAL, Mr. BROWN, Mr. MERKLEY, Mr. REED, and Mr. DURBIN) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to deny the deduction for advertising and promotional expenses for tobacco products and electronic nicotine delivery systems. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘No Tax Subsidies for 4 E-Cigarette and Tobacco Ads Act’’. 5 VerDate Sep 11 2014 04:20 Mar 04, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S464.IS S464 kjohnson on DSK79L0C42PROD with BILLS 2 •S 464 IS SEC. 2. DISALLOWANCE OF DEDUCTION FOR ADVERTISING 1 AND PROMOTIONAL EXPENSES FOR TO- 2 BACCO PRODUCTS AND ELECTRONIC NICO- 3 TINE DELIVERY SYSTEMS. 4 (a) IN GENERAL.—Part IX of subchapter B of chap- 5 ter 1 of subtitle A of the Internal Revenue Code of 1986 6 is amended by adding at the end the following new section: 7 ‘‘SEC. 280I. DISALLOWANCE OF DEDUCTION FOR DIRECT- 8 TO-CONSUMER ADVERTISING OF TOBACCO 9 PRODUCTS AND ELECTRONIC NICOTINE DE- 10 LIVERY SYSTEMS. 11 ‘‘(a) IN GENERAL.—No deduction shall be allowed 12 under this chapter for expenses relating to direct-to-con- 13 sumer advertising of tobacco products (including elec- 14 tronic nicotine delivery systems) for any taxable year. 15 ‘‘(b) DIRECT-TO-CONSUMER ADVERTISING.—For 16 purposes of this section, the term ‘direct-to-consumer ad- 17 vertising’ means any dissemination, by or on behalf of a 18 sponsor of a tobacco product (including an electronic nico- 19 tine delivery system product), of an advertisement 20 which— 21 ‘‘(1) is in regard to such tobacco product (in- 22 cluding an electronic nicotine delivery systems prod- 23 uct), and 24 ‘‘(2) is primarily targeted to the general public, 25 including through— 26 VerDate Sep 11 2014 04:20 Mar 04, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S464.IS S464 kjohnson on DSK79L0C42PROD with BILLS 3 •S 464 IS ‘‘(A) publication in journals, magazines, 1 other periodicals, and newspapers, 2 ‘‘(B) broadcasting through media such as 3 radio, television, and telephone communication 4 systems, direct mail, and billboards, and 5 ‘‘(C) dissemination on the internet or 6 through digital platforms (including social 7 media, mobile media, web applications, digital 8 applications, mobile applications, and electronic 9 applications). 10 ‘‘(c) TOBACCO PRODUCT.—For purposes of this sec- 11 tion, the term ‘tobacco product’ means any product de- 12 scribed in section 201(rr) of the Federal Food, Drug, and 13 Cosmetic Act (21 U.S.C. 321(rr)). 14 ‘‘(d) ELECTRONIC NICOTINE DELIVERY SYSTEM.— 15 For purposes of this section, the term ‘electronic nicotine 16 delivery system’— 17 ‘‘(1) means any electronic device that delivers 18 nicotine, flavor, or another substance via an aero- 19 solized solution to the user inhaling from the device 20 (including e-cigarettes, e-hookah, e-cigars, vape pens, 21 advanced refillable personal vaporizers, and elec- 22 tronic pipes) and any component, liquid, part, or ac- 23 cessory of such a device, whether or not sold sepa- 24 rately, and 25 VerDate Sep 11 2014 04:20 Mar 04, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S464.IS S464 kjohnson on DSK79L0C42PROD with BILLS 4 •S 464 IS ‘‘(2) does not include a product that— 1 ‘‘(A) is approved by the Food and Drug 2 Administration for sale as a tobacco cessation 3 product or for another therapeutic purpose, and 4 ‘‘(B) is marketed and sold solely for a pur- 5 pose described in subparagraph (A).’’. 6 (b) CONFORMING AMENDMENT.—The table of sec- 7 tions for such part IX of the Internal Revenue Code of 8 1986 is amended by adding after the item relating to sec- 9 tion 280H the following new item: 10 ‘‘Sec. 280I. Disallowance of deduction for direct-to-consumer advertising of to- bacco products and electronic nicotine delivery systems.’’. (c) EFFECTIVE DATE.—The amendments made by 11 this section shall apply to amounts paid or incurred after 12 the date of the enactment of this Act, in taxable years 13 ending after such date. 14 Æ VerDate Sep 11 2014 04:20 Mar 04, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\S464.IS S464 kjohnson on DSK79L0C42PROD with BILLS

Important: This plain English summary was generated by AI and is provided for informational purposes only. It is not legal advice. Always consult the official bill text on Congress.gov or a qualified attorney for legal matters.