[Code of Federal Regulations]
[Revised as of April 1, 1997]
Subpart A--Scope
Sec.
19.1 General.
19.2 Territorial extent.
19.3 Related regulations.
Subpart B--Definitions
19.11 Meaning of terms.
Subpart C--Taxes
Gallonage Taxes
19.21 Tax.
19.22 Attachment of tax.
19.23 Lien.
19.24 Persons liable for tax.
19.25 Time for tax determination.
19.26 Tax on wine.
Assessments
19.31 Production not accounted for.
19.32 Assessment of tax on spirits, denatured spirits,
or wines in bond which are lost, destroyed or removed without authorization.
Effective Tax Rates
19.34 Computation of effective tax rate.
19.35 Application of effective tax rate (Actual).
19.36 Standard effective tax rate.
19.37 Average effective tax rate.
19.38 Inventory reserve account.
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Claims
19.41 Claims on spirits, denatured spirits, articles, or wines
lost or destroyed in bond.
19.42 Claims on spirits returned to bonded premises.
19.43 Claims relating to spirits lost after tax determination.
19.44 Execution of claims and supporting documents.
19.45 Claims for credit of tax.
19.46 Adjustments for credited tax.
Subpart Ca--Special (Occupational) Taxes
Sec.
19.49 Liability for special tax.
19.50 Rates of special tax.
19.51 Special tax returns.
19.52 Employer identification number.
Special Tax Stamps
19.53 Issuance, distribution, and examination of special tax
stamps.
19.54 Changes in special tax stamps.
Subpart D--Administrative and Miscellaneous Provisions
Activities Not Subject to This Part
19.57 Recovery and reuse of denatured spirits in manufacturing
processes.
19.58 Use of taxpaid distilled spirits to manufacture products
unfit for beverage use.
Authorities of the Director
19.61 Forms prescribed.
19.62 Alternate methods or procedures.
19.63 Pilot operations.
19.64 [Reserved]
19.65 Experimental distilled spirits plants.
19.66 Application to establish experimental plants.
19.67 Spirits produced in industrial processes.
19.68 Other businesses.
19.70 Exemptions to meet the requirements of National defense.
19.71 Experimental or research operations by scientific
institutions and colleges of learning.
Authorities of the regional director (Compliance)
19.72 Other businesses.
19.73 Emergency variations from requirements.
19.74 Disaster exemptions.
19.75 Assignment of officers and supervision of operations.
19.76 Allowance of remission, abatement, credit or refund
of tax.
19.77 Installation of meters, tanks and other apparatus.
19.78 Approval of qualifying documents.
19.79 Discontinuance of storage facilities.
Authorities of ATF Officers
19.81 Right of entry and examination.
19.82 Detention of containers.
19.83 Samples for the United States.
19.84 Gauging and measuring equipment.
Entry and Examination of Premises
19.86 Furnishing facilities and assistance.
Gauging of Spirits, Wines or Alcoholic Flavoring Materials
19.91 Gauging.
19.92 When gauges are required.
19.93 Quantity determination of spirits in bond.
Securing of Conveyances Used for Transporting Spirits
19.96 Securing of conveyances.
Conveyance of Spirits or Wines on Plant Premises
19.97 Taxpaid spirits or wines on bonded premises.
19.98 Conveyance of untaxpaid spirits or wines within a
distilled spirits plant.
19.99 Spirits in customs custody.
Penalties of Perjury
19.100 Execution under penalties of perjury.
Subpart E--[Reserved]
Subpart F--Location and Use
19.131 Restrictions as to location.
19.132 Continuity of premises.
19.133 Use of distilled spirits plant premises.
19.134 Bonded warehouses not on premises qualified for
production of spirits.
Subpart G--Qualification of Distilled Spirits Plants
19.151 General requirements for registration.
19.152 Data for application for registration.
19.153 Statement of physical security.
19.154 Notice of registration.
19.155 Maintenance of registration file.
19.156 Powers of attorney.
19.157 Operating permits.
19.158 Data for application for operating permits.
19.159 Issuance of operating permits.
19.160 Duration of permits.
19.161 Denial of permit.
19.162 Correction of permits.
19.163 Suspension or revocation.
19.164 Rules of practice in permit proceedings.
19.165 Trade names.
19.166 Major equipment.
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19.167 Organizational documents.
19.168 Description of plant.
19.169 Registry of stills.
19.170 Statement of production procedure.
Changes After Original Qualification
19.180 Application for amended registration.
19.181 Automatic termination of permits.
19.182 Change in name of proprietor.
19.183 Change of trade name.
19.184 Changes in stockholders.
19.185 Changes in officers and directors.
19.186 Change in proprietorship.
19.187 Adoption of formulas.
19.188 Partnerships.
19.189 Change in location.
19.190 Changes in premises.
19.191 Change in operations.
19.192 Change in production procedure.
19.193 Changes in construction or use of buildings and
equipment.
Operations by Alternating Proprietors
19.201 Procedure for alternating proprietors.
Alternate Operations
19.202 Alternate use of premises and equipment for customs
purposes.
19.203 Alternation of distilled spirits plant and bonded wine
cellar
premises.
19.204 Alternation of distilled spirits plant and taxpaid
wine bottling
house premises.
19.205 Alternate curtailment and extension of bonded premises
for use
as general premises.
19.206 Curtailment and extension of plant premises for
the manufacture of eligible flavors.
Permanent Discontinuance of Business
19.211 Notice of permanent discontinuance.
Subpart H--Bonds and Consents of Surety
19.231 Filing of operations or unit bonds.
19.232 Additional condition of operations bond.
19.233 Corporate surety.
19.234 Deposit of securities in lieu of corporate surety.
19.235 Consents of surety.
19.236 Filing and execution of powers of attorney.
19.237 Disapproval of bonds or consents of surety.
19.238--19.240 [Reserved]
19.241 Operations bond--distilled spirits plant and adjacent
bonded wine cellar.
19.242 Area operations bond.
19.243 Withdrawal bond.
19.244 Unit bond.
19.245 Bonds and penal sums of bonds.
19.246 Strengthening bonds.
New or Superseding Bonds
19.247 General.
19.248 New or superseding bond.
Termination of Bonds
19.249 Termination of bonds.
19.250 Application of surety for relief from bond.
19.251 Relief of surety from bond.
19.252 Release of pledged securities.
Subpart I--Construction, Equipment and Security
19.271 Construction of buildings.
19.272 Equipment.
19.273 Tanks.
19.274 Pipelines.
19.275 Continuous distilling system.
19.276 Package scales.
19.277 Measuring devices and proofing instruments.
19.278 Identification of structures, areas, apparatus,
and equipment.
19.279 Office facilities.
19.280 Signs.
19.281 Security.
19.282 Breaking Government locks.
Subpart J--Production
19.311 Notice by proprietor.
19.312 Receipt of materials.
19.313 Use of materials in production of spirits.
19.314 Removal of fermenting material.
19.315 Removal or destruction of distilling material.
19.316 Distillation.
19.317 Treatment during production.
19.318 Addition of caramel to rum or brandy and addition
of oak chips to spirits.
19.319 Production gauge.
19.320 Identification of spirits.
19.321 Entry.
19.322 Distillates containing extraneous substances.
Formula
19.324 Statement of production procedure or Form 5110.38.
Chemical By-Products
19.326 Spirits content of chemicals produced.
19.327 Disposition of chemicals.
19.328 Wash water.
Inventories
19.329 Production inventories.
Subpart K--Redistillation
19.331 General.
19.332 Receipts for redistillation
19.333 Redistillation.
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Subpart L--Storage
19.341 General.
19.342 Receipt and storage of bulk spirits and wines.
19.343 Addition of oak chips to spirits and addition of
caramel to brandy and rum.
Filling and Changing Packages
19.344 Filling of packages from tanks.
19.345 Change of packages.
Mingling or Blending of Spirits
19.346 Mingling or blending of spirits for further storage.
19.347 Packages dumped for mingling.
19.348 Determining age of mingled spirits.
19.349 Mingled spirits or wines held in tanks.
Inventories
19.353 Storage inventories.
Subpart M--Processing Operations Other Than Denaturation and Manufacture
of Articles
19.371 General.
Receipt and Use of Spirits, Wines, and Alcoholic Flavoring Materials
19.372 Receipt of spirits, wines and alcoholic flavoring materials
for processing.
19.373 Use of spirits, wines and alcoholic flavoring materials.
19.374 Manufacture of nonbeverage products, intermediate
products or eligible flavors.
Obscuration
19.376 Determining obscuration.
Formulas
19.378 Formula requirement.
Bottling, Packaging and Removal of Products
19.381 Removals from processing.
19.382 Bottling tanks.
19.383 Bottling tank gauge.
19.384 Preparation of bottling or packaging record.
19.385 Labels to agree with contents of tanks and containers.
19.386 Alcohol content and fill.
19.387 Completion of bottling.
19.388 Cases.
19.389 Remnants.
19.390 Filling packages.
19.391 Removal by bulk conveyances or pipelines.
19.392 Rebottling.
19.393 Reclosing and relabeling.
19.394 Bottled-in-bond spirits.
19.395 Labels for export spirits.
19.396 Spirits removed for shipment to Puerto Rico.
19.397 Spirits not originally intended for export.
19.398 Alcohol.
Records
19.400 Daily summary record of spirits bottled or packaged.
Inventories
19.401 Inventories of wines and bulk spirits (except in packages)
in processing account.
19.402 Inventories of bottled and packaged spirits.
Subpart N--Denaturing Operations and Manufacture of Articles
19.451 General.
Denaturation
19.452 Formulas.
19.453 Testing of denaturants.
19.454 Gauge of denaturation.
19.455 Dissolving of denaturants.
19.456 Adding denaturants.
19.457 Neutralizing denatured spirits.
19.458 Restoration and redenaturation of recovered denatured
spirits and recovered articles.
19.459 Mixing of denatured spirits.
19.460 Conversion of denatured alcohol formulas.
19.461 Receipt and storage of denatured spirits.
19.462 Filling of containers from tanks.
19.463 Containers for denatured spirits.
Inventories
19.464 Denatured spirits inventories.
Articles
19.471 Manufacture of articles.
Subpart O--Spirits From Customs Custody
19.481 General.
19.482 Age and fill date.
19.483 Recording gauge.
Imported Spirits
19.484 Marks on containers of imported spirits.
Puerto Rican and Virgin Islands Spirits
19.485 Marks on containers of Puerto Rican and Virgin Islands
spirits.
19.486 Additional tax on nonbeverage spirits.
19.487 Abatement, remission, credit or refund.
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Subpart P--Transfers and Withdrawals
General
19.501 Authority to withdraw.
19.502 Withdrawal of spirits on production or filling
gauge.
19.503 Determination of tare.
Transfer Between Bonded Premises
19.505 Authorized transfers.
19.506 Application to receive spirits in bond.
19.507 Termination of application.
19.508 Consignor premises.
19.509 Reconsignment.
19.510 Consignee premises.
Withdrawals on Determination and Payment of Tax
19.515 Determination and payment of tax.
19.516 Bond account.
19.517 Gauge for tax determination.
19.518 Imported spirits.
19.519 Methods of tax payment.
19.520 Employer indentification number.
19.521 Application for employer identification number.
19.522 Taxes to be collected by returns.
19.523 Time for filing returns.
19.524 Payment of tax by electronic fund transfer.
19.525 Manner of filing returns.
19.526 Removal of spirits on tax determination.
Withdrawal of Spirits Without Payment of Tax
19.531 Authorized withdrawals without payment of tax.
19.532 Withdrawals of spirits for use in wine production.
19.533 Withdrawal of spirits without payment of tax for
experimental or research use.
19.534 Withdrawals of spirits for use in production of
nonbeverage wine and nonbeverage wine products.
Withdrawal of Spirits Free of Tax
19.536 Authorized withdrawals free of tax.
19.537 Withdrawal of spirits free of tax.
19.538 Withdrawal of spirits by the United States.
19.539 Disposition of excess spirits.
19.540 Removal of denatured spirits and articles.
19.541 Reconsignment.
Subpart Q--Losses and Shortages
Losses
19.561 Losses in general.
19.562 Determination of losses in bond.
19.563 Loss of spirits from packages.
19.564 Losses after tax determination.
Shortages
19.565 Shortages of bottled distilled spirits.
Subpart R--Containers and Marks
Containers
19.581 Authorized containers.
19.582 Spirits for nonindustrial use.
19.583 Spirits for industrial use.
19.584 Packages.
19.585 Bulk conveyances.
19.586 Tanks.
19.587 Pipelines.
19.588 Construction of bulk conveyances.
19.589 Restrictions on dispositions of bulk spirits.
Marks
19.592 General.
19.593 Package identification numbers in production and
storage.
19.594 Numbering of packages and cases in processing.
19.595 Specifications for marks.
19.596 Marks on packages of spirits filled on bonded remises.
19.597 Kind of spirits.
19.598 [Reserved]
19.599 Change of packages in storage.
19.600 [Reserved]
19.601 Marks on containers of specially denatured spirits.
19.602 Marks on containers of completely denatured alcohol.
19.603 [Reserved]
19.604 Caution label.
19.605 Additional marks on portable containers.
19.606 Marks on bulk conveyances.
19.607 Marks on cases.
19.608 Cases of industrial alcohol.
19.609 [Reserved]
19.610 Obliteration of marks.
19.611 Relabeling and reclosing off bonded premises.
19.612 Authorized abbreviations to identify marks.
Subpart S--Liquor Bottle and Label Requirements
19.631 Scope of subpart.
Liquor Bottle Requirements
19.632 Bottles authorized.
19.633 Distinctive liquor bottles.
19.634 Receipt and storage of liquor bottles.
19.635 Bottles to be used for display purposes.
19.636 Bottles for testing purposes.
19.637 Bottles not constituting approved containers.
19.638 Disposition of stocks of liquor bottles.
19.639 Use and resale of liquor bottles.
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Bottle Label Requirements
19.641 Certificate of label approval or exemption.
19.642 Statements required on labels under an exemption
from label approval.
19.643 Brand name, kind, alcohol content, and State of
distillation.
19.644 Net contents.
19.645 Name and address of bottler.
19.646 Age of whisky containing no neutral spirits.
19.647 Age of whisky containing neutral spirits.
19.648 Age of brandy.
19.649 Presence of neutral spirits and coloring, flavoring,
and blending materials.
19.650 Country of origin.
Subpart T--Closures.
19.661 General.
19.662 Affixing closures.
19.663 Reclosing.
Subpart U--Return of Spirits to Bonded Premises and Voluntary
Destruction
Returns
19.681 Return of taxpaid spirits to bonded premises.
19.682 Receipt and gauge of returned taxpaid spirits.
19.683 Return of recovered denatured spirits and recovered
articles.
19.684 Articles and spirits residues received for redistillation.
19.685 Return of recovered tax-free spirits, and spirits
and denatured
spirits withdrawn free of tax.
19.686 Return of spirits withdrawn without payment of
tax.
19.687 Return of spirits withdrawn for export with benefit
of drawback.
19.688 Abandoned spirits.
Voluntary Destruction
19.691 Voluntary destruction.
Subpart V--Samples of Spirits
19.701 Spirits withdrawn from bonded premises.
19.702 Samples used on bonded premises.
19.703 Taxpayment of samples.
19.704 Labels.
Subpart W--Records and Reports
General
19.721 Records.
19.722 Conversion between metric and U.S. units.
19.723 Maintenance and preservation of records.
19.724 Modified forms.
19.725 Photographic copies of records.
19.726 Authorized abbreviations to identify spirits.
Records
19.731 General.
19.732 Details of daily records.
Production Account
19.736 Daily production records.
Storage Account
19.740 Daily storage records.
19.741 Package summary records.
19.742 Tank record of wine or spirits of less than 190
degrees of proof.
19.743 Tank summary record for spirits of 190 degrees
or more of proof.
Processing Account
19.746 Processing.
19.747 Records of manufacturing.
19.748 Dump/batch records.
19.749 Bottling and packaging record.
19.750 Records of alcohol content and fill tests.
19.751 Records of finished products.
19.752 Denaturation records.
19.753 Record of article manufacture.
Tax Records
19.761 Record of tax determination.
19.762 Daily summary record of tax determinations.
19.763 Record of average effective tax rates.
19.764 Inventory reserve records.
19.765 Standard effective tax rates.
Other Records
19.766 Record of samples.
19.767 Record of destruction.
19.768 Gauge record.
19.769 Package gauge record.
19.770 Transfer record.
19.771--19.772 [Reserved]
19.773 Daily record of wholesale liquor dealer and taxpaid
storeroom operations.
19.774 Record of inventories.
19.775 Record of securing devices.
19.776 Record of scale tests.
19.777 [Reserved]
19.778 Removal on or after January 1, 1987 of Puerto Rican
and Virgin slands spirits, and rum imported from all other areas.
19.779 Record of shipment of spirits and specially denatured
spirits withdrawn free of tax.
19.780 Record of distilled spirits shipped to manufacturers
of nonbeverage products.
Submission of Forms and Reports
19.791 Submission of transaction forms.
19.792 Reports.
[[Page 264]]
Subpart X--Production of Vinegar by the Vaporizing Process
Scope of Subpart
19.821 Production of vinegar by the vaporizing process.
Qualification Documents
19.822 Application.
19.823 Changes after original qualification.
19.824 Notice of permanent discontinuance of business.
Construction and Equipment
19.825 Construction and equipment.
Plant Operations
19.826 Authorized operations.
19.827 Conduct of operations.
19.828 Removals from the premises.
Records
19.829 Daily records.
Administrative and Miscellaneous
19.830 Application of distilled spirits tax.
Subpart Y--Distilled Spirits for Fuel Use
19.901 Scope of subpart.
19.902 Waiver for alcohold fuel plants.
19.903 Alternate methods or procedures.
19.904 Emergency variations from requirements.
19.905 Taxes.
19.906 Special (occupational) tax.
Definitions
19.907 Meaning of terms.
Permits
19.910 Application for permit required.
19.911 Criteria for issuance of permit.
19.912 Small plants.
19.913 Action on applications to establish small plants.
19.914 Medium plants.
19.915 Large plants.
19.916 Organizational documents.
19.917 Powers of attorney.
19.918 Information already on file and supplemental information.
Changes Affecting Applications and Permits
19.919 Changes affecting applications and permits.
19.920 Automatic termination of permits.
19.921 Change in type of alcohol fuel plant.
19.922 Change in name of proprietor.
19.923 Changes in officers, directors, or principal persons.
19.924 Change in proprietorship.
19.925 Continuing partnerships.
19.926 Change in location.
Alternate Operations
19.930 Alternating proprietorship.
Permanent Discontinuance of Business
19.945 Notice of permanent discontinuance.
Suspension or Revocation of Permits
19.950 Suspension or revocation.
Bonds
19.955 Bonds.
19.956 Amount of bond.
19.957 Instructions to compute bond penal sum.
19.958 Conditions of bond.
19.959 Additional provisions with respect to bonds.
Construction, Equipment and Security
19.965 Construction and equipment.
19.966 Security.
19.967 Additional security.
Supervision
19.970 Supervision of operations.
Accounting for Spirits
19.980 Gauging.
19.981 Inventories.
19.982 Records.
19.983 Spirits rendered unfit for beverage use in the
production process.
19.984 Record of spirits received.
19.985 Record of spirits rendered unfit for beverage use.
19.986 Record of dispositions.
19.987 Maintenance and retention of records.
19.988 Reports.
Redistillation
19.990 Redistillation of spirits or fuel alcohol received
on the plant premises.
Uses, Withdrawals, and Transfers
19.995 Use on premises.
19.996 Withdrawal of spirits.
19.997 Withdrawal of fuel alcohol.
19.998 Transfer in bond of spirits.
19.999 Consignor premises.
19.1000 Reconsignment in transit.
19.1001 Consignee premises.
19.1002 Prohibited uses, transfers and withdrawals.
Materials for Rendering Spirits Unfit for Beverage Use
19.1005 Authorized materials.
19.1006 Other materials.
19.1007 Samples.
Marks
19.1008 Marks.
[[Page 265]]
Subpart Z--Paperwork Reduction Act
19.1010 OMB control numbers assigned pursuant to the Paperwork
Reduction Act.
Authority: 19 U.S.C. 81c, 1311; 26 U.S.C. 5001, 5002, 5004-5006,
5008, 5010, 5041, 5061, 5062, 5066, 5081, 5101, 5111-5113, 5142, 5143,
5146, 5171-5173, 5175, 5176, 5178-5181, 5201-5204, 5206, 5207, 5211-
5215, 5221-5223, 5231, 5232, 5235, 5236, 5241-5243, 5271, 5273, 5301,
5311-5313, 5362, 5370, 5373, 5501-5505, 5551-5555, 5559, 5561, 5562,
5601, 5612, 5682, 6001, 6065, 6109, 6302, 6311, 6676, 6806, 7011, 7510,
7805; 31 U.S.C. 9301, 9303, 9304, 9306.
Source: T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, unless otherwise
noted.
Subpart A--Scope
Sec. 19.1 General.
The regulations in this part relate to the location, construction,
equipment, arrangement, qualification, and operation (including
activities incident thereto) of distilled spirits plants.
Sec. 19.2 Territorial extent.
This part applies to the several States of the United States and the
District of Columbia.
Sec. 19.3 Related regulations.
Regulations relating to this part are listed below:
27 CFR part 1--Basic Permit Requirements Under the Federal Alcohol
Administration Act.
27 CFR part 2--Nonindustrial Use of Distilled Spirits and Wine.
27 CFR part 3--Bulk Sales and Bottling of Distilled Spirits.
27 CFR part 4--Wine Labeling and Advertising.
27 CFR part 5--Labeling and Advertising Distilled Spirits.
27 CFR part 20--Distribution and Use of Denatured Alcohol and Rum.
27 CFR part 21--Formulas for Denatured Alcohol and Rum.
27 CFR part 22--Distribution and Use of Tax-Free Alcohol.
27 CFR part 24--Wine.
27 CFR part 30--Gauging Manual.
27 CFR part 170--Miscellaneous Regulations Relating to Liquor.
27 CFR part 194--Liquor Dealers.
27 CFR part 197--Drawback on Distilled Spirits Used in Manfacturing Nonbeverage
Products.
27 CFR part 200--Rules of Practice in Permit Proceedings.
27 CFR part 250--Liquors and Articles from Puerto Rico and the
Virgin Islands.
27 CFR part 251--Importation of Distilled Spirits, Wine, and Beer.
27 CFR part 252--Exportation of Liquors.
31 CFR part 225--Acceptance of Bonds, Notes, or Other Obligations
Issued or Guaranteed by the United States as Security in Lieu of Surety
or Sureties on Penal Bonds.
[T.D. ATF-199, 50 FR 9160, Mar. 6, 1985, as amended by T.D. ATF-207, 50
FR 23681, June 5, 1985; T.D. ATF-299, 55 FR 24989, June 19, 1990]
Subpart B--Definitions
Sec. 19.11 Meaning of terms.
When used in this part and in forms prescribed under this part,
terms shall have the meaning ascribed in this section. Words in the
plural form include the singular, and vice versa, and words indicating
the masculine gender include the feminine. The terms ``includes'' and
``including'' do not exclude other things not enumerated which are in
the same general class.
Alcoholic flavoring materials. Any nonbeverage product on which
drawback has been or will be claimed under 26 U.S.C. 5131-5134 or
flavors imported free of tax which are unfit for beverage purposes. The
term includes eligible flavors but does not include flavorings or
flavoring extracts manufactured on the bonded premises of distilled
spirits plant as an intermediate product.
Application for registration. The application required under 26
U.S.C. 5171(c).
Area supervisor. The supervisory officer of the Bureau of Alcohol,
Tobacco and Firearms area office.
Article. A product, containing denatured spirits, which was
manufactured under 27 CFR part 20 or this part.
ATF bond. For purposes of this part, ATF bond means the internal
revenue bond as prescribed in 26 U.S.C. Chapter 51.
ATF officer. An officer or employee of the Bureau of Alcohol,
Tobacco and Firearms (ATF) authorized to perform any function relating
to the administration or enforcement of this part.
Bank. Any commercial bank.
Banking day. Any day during which a bank is open to the public for
carrying on substantially all its banking functions.
Basic permit. The document authorizing the person named therein to
engage in a designated business or activity
[[Page 266]]
under the Federal Alcohol Administration Act.
Bonded premises. The premises of a distilled spirits plant, or part
thereof, as described in the application for registration, on which
distilled spirits operations defined in 26 U.S.C. 5002 are authorized to
be conducted.
Bottler. A proprietor of a distilled spirits plant qualified under
this part as a processor who bottles distilled spirits.
Bulk container. Any approved container having a capacity in excess
of one wine gallon.
Bulk conveyance. A tank car, tank truck, tank ship, tank barge, or a
compartment of any such conveyance, or any other container approved by
the Director for the conveyance of comparable quantities of spirits,
including denatured spirits, and wines.
Bulk distilled spirits. The term bulk distilled spirits means
distilled spirits in a container having a capacity in excess of one
gallon.
Business day. Any day, other than a Saturday, Sunday, or a legal
holiday. (The term legal holiday includes all holidays in the District
of Columbia and statewide holidays in the particular State in which the
claim, report, or return, as the case may be, is required to be filed,
or the act is required to be performed.)
Carrier. Any person, company, corporation, or organization,
including a proprietor, owner, consignor, consignee, or bailee, who
transports distilled spirits, denatured spirits, or wine in any manner
for himself or others.
CFR. The Code of Federal Regulations.
Commercial bank. A bank, whether or not a member of the Federal
Reserve system, which has access to the Federal Reserve Communications
System (FRCS) or Fedwire. The ``FRCS'' or ``Fedwire'' is a
communications network that allows Federal Reserve system member banks
to effect a transfer of funds for their customers (or other commercial
banks) to the Treasury Account at the Federal Reserve Bank of New York.
Container. A receptacle, vessel, or form of bottle, can, package,
tank or pipeline (where specifically included) used or capable of being
used to contain, store, transfer, convey, remove, or withdraw spirits
and denatured spirits.
Denaturant or denaturing material. Any material authorized under 27
CFR part 21 for addition to spirits in the production of denatured
spirits.
Denatured spirits. Spirits to which denaturants have been added as
provided in 27 CFR part 21.
Director. The Director, Bureau of Alcohol, Tobacco and Firearms, the
Department of the Treasury, Washington, DC.
Director of the service center. A director of an internal revenue
service center.
Distilled spirits operations. Any authorized distilling,
warehousing, or processing operations conducted on the bonded premises
of a plant qualified under this part.
Distilling material. Any fermented or other alcoholic substance
capable of, or intended for use in, the original distillation or other
original processing of spirits.
District director. A district director of internal revenue.
Effective tax rate. The net tax rate after reduction for any credit
allowable under 26 U.S.C. 5010 for wine and flavor content at which the
tax imposed on distilled spirits by 26 U.S.C. 5001 or 7652 is paid or
determined.
Electronic fund transfer or EFT. Any transfer of funds effected by a
proprietor's commercial bank, either directly or through a correspondent
banking relationship, via the Federal Reserve Communications System
(FRCS) or Fedwire to the Treasury Account at the Federal Reserve Bank of
New York.
Eligible flavor. A flavor which:
(1) Is of a type that is eligible for drawback of tax under 26
U.S.C. 5134,
(2) Was not manufactured on the premises of a distilled spirits
plant, and
(3) Was not subjected to distillation on distilled spirits plant
premises such that the flavor does not remain in the finished product.
Eligible wine. A wine containing not more than 0.392 gram of carbon
dioxide per 100 milliliters of wine which has not been subject to
distillation at a distilled spirits plant after receipt in bond.
[[Page 267]]
Export or exportation. A severance of goods from the mass of things
belonging to the United States with the intention of uniting them to the
mass of things belonging to some foreign country and shall include
shipments to any possession of the United States. For the purposes of
this part, shipments to the Commonwealth of Puerto Rico, and to the
territories of the Virgin Islands, American Samoa, and Guam, shall also
be treated as exportations.
Fermenting material. Any material which is to be subjected to a
process of fermentation to produce distilling material.
Fiduciary. A guardian, trustee, executor, administrator, receiver,
conservator, or any person acting in any fiduciary capacity for any
person.
Fiscal year. The period October 1 of one calendar year through
September 30 of the following year.
Gallon or wine gallon. The liquid measure equivalent to the volume
of 231 cubic inches.
In bond. When used with respect to spirits, denatured spirits,
articles, or wine refers to spirits, denatured spirits, articles, or
wine possessed under bond to secure the payment of the taxes imposed by
26 U.S.C. Chapter 51, and on which such taxes have not been determined.
The term includes such spirits, denatured spirits, articles, or wine on
the bonded premises of a distilled spirits plant, such spirits,
denatured spirits, or wines in transit between bonded premises
(including, in the case of wine, bonded wine cellar premises).
Additionally, the term refers to spirits in transit from customs custody
to bonded premises, and spirits withdrawn without payment of tax under
26 U.S.C. 5214, and with respect to which relief from liability has not
occurred under the provisions of 26 U.S.C. 5005(e)(2).
Industrial use. As applied to spirits, shall have the meaning
ascribed in 27 CFR part 2.
Intermediate product. Any product manufactured pursuant to an
approved formula under 27 CFR part 5, not intended for sale as such but
for use in the manufacture of a distilled spirits product.
I.R.C. The Internal Revenue Code of 1954, as amended.
Kind. As applied to spirits, except as provided in Sec. 19.597, kind
shall mean class and type as prescribed in 27 CFR part 5. As applied to
wines, kind shall mean the classes and types of wines as prescribed in
27 CFR part 4.
Liquor bottle. A bottle made of glass or earthenware, or of other
suitable material approved by the Food and Drug Administration, which
has been designed or is intended for use as a container for distilled
spirits for sale for beverage purposes and which has been determined by
the Director to protect the revenue adequately.
Liter. A metric unit of capacity equal to 1,000 cubic centimeters of
alcoholic beverage, and equivalent to 33.814 fluid ounces. A liter is
divided into 1,000 milliliters. Milliliter or milliliters may be
abbreviated as ``ml.''
Lot identification. The lot identification described in Sec. 19.593.
Mash, wort, wash. Any fermented material capable of, or intended
for, use as a distilling material.
Nonindustrial use. As applied to spirits, shall have the meaning
ascribed in 27 CFR part 2.
Operating permit. The document issued pursuant to 26 U.S.C. 5171(d),
authorizing the person named therein to engage in the business or
operation described therein.
Package. A cask or barrel or similar wooden container, or a drum or
similar metal container.
Package identification number. The package identification number
described in Sec. 19.593.
Person. An individual, trust, estate, partnership, association,
company, or corporation.
Plant or distilled spirits plant. An establishment qualified under
this part for distilling, warehousing, processing or any combination
thereof.
Plant number. The number assigned to a distilled spirits plant by
the regional director (compliance).
Processor. Except as otherwise provided under 26 U.S.C. 5002(a)(6),
any person qualified under this part who manufactures, mixes, bottles,
or otherwise processes distilled spirits or denatured spirits, or
manufactures any article.
Proof. The ethyl alcohol content of a liquid at 60 degrees
Fahrenheit, stated
[[Page 268]]
as twice the percent of ethyl alcohol by volume.
Proof of distillation. The composite proof of the spirits at the
time the production gauge is made,or, if the spirits had been reduced in
proof prior to the production gauge, the proof of the spirits prior to
such reduction, unless the spirits are subsequently redistilled at a
higher proof than the proof prior to reduction.
Proof gallon. A gallon of liquid at 60 degrees Fahrenheit which
contains 50 percent by volume of ethyl alcohol having a specific gravity
of 0.7939 at 60 degrees Fahrenheit referred to water at 60 degrees
Fahrenheit as unity, or the alcoholic equivalent thereof.
Proprietor. The person qualified under this part to operate the
distilled spirits plant.
Reconditioning. The dumping of distilled spirits products in bond
after their bottling or packaging, for purposes other than destruction,
denaturation, redistillation, or rebottling. The term may include the
filtration, clarification, stabilization, or reformulation of a product.
Recovered article. An article containing specially denatured spirits
salvaged without all of its original ingredients, or an article
containing completely denatured alcohol salvaged without all of the
denaturants for completely denatured alcohol, under 27 CFR part 20.
Region. A Bureau of Alcohol, Tobacco and Firearms region.
Region director (compliance). The principal regional official
responsible for administering regulations in this part.
Season. The period from January 1 through June 30, is the spring
season, and the period from July 1 through December 31 is the fall
season.
Secretary. The Secretary of the Treasury or his delegate.
Service center. An Internal Revenue Service Center in any of the
Internal Revenue regions.
Spirits or distilled spirits. That substance known as ethyl alcohol,
ethanol, or spirits of wine in any form (including all dilutions and
mixtures thereof, from whatever source or by whatever process produced)
but not denatured spirits unless specifically stated. The term does not
include mixtures of distilled spirits and wine, bottled at 48 deg. proof
or less, if the mixture contains more than 50 percent wine on a proof
gallon basis.
Spirits residues. Residues, containing distilled spirits, of a
manufacturing process related to the production of an article under 27
CFR part 20.
Tax-determined or determined. When used with respect to the tax on
any distilled spirits to be withdrawn from bond on determination of tax,
shall mean that the taxable quantity of spirits has been established.
Taxpaid. When used with respect to distilled spirits shall mean that
all applicable taxes imposed by law in respect of such spirits have been
determined or paid as provided by law.
This chapter. Title 27, Code of Federal Regulations, Chapter I (27
CFR Chapter I).
Transfer in bond. The removal of spirits, denatured spirits and
wines from one bonded premises to another bonded premises.
Treasury Account. The Department of the Treasury's General Account
at the Federal Reserve Bank of New York.
Unfinished spirits. Spirits in the production system prior to
production gauge.
U.S.C. The United States Code.
Warehouseman. A proprietor of a distilled spirits plant qualified
under this part to store bulk distilled spirits.
Wine spirits. The term ``wine spirits'' means spirits authorized for
use in wine production by 26 U.S.C. 5373.
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. ATF-199, 50
FR 9160, Mar. 6, 1985; T.D. ATF-206, 50 FR 23951, June 7, 1985; T.D.
ATF-230, 51 FR 21748, June 16, 1986; T.D. ATF-297, 55 FR 18061, Apr. 30,
1990]
Subpart C--Taxes
Gallonage Taxes
Sec. 19.21 Tax.
(a) A tax is imposed by 26 U.S.C. 5001 and 7652 on all spirits
produced in, imported into or brought into the United States at the rate
prescribed in section 5001 on each proof gallon and a proportionate tax
at a like rate on all fractional parts of a proof gallon. Wines
containing more than 24 percent of alcohol by volume are taxed as
spirits.
[[Page 269]]
All products of distillation, by whatever name known, which contain
spirits, on which the tax imposed by law has not been paid, and any
alcoholic ingredient added to such products, are considered and taxed as
spirits.
(b) A credit against the tax imposed on distilled spirits by 26
U.S.C. 5001 or 7652 is allowable under 26 U.S.C. 5010 on each proof
gallon of alcohol derived from eligible wine or from eligible flavors
which do not exceed 2\1/2\ percent of the finished product on a proof
gallon basis. The credit is allowable at the time the tax is payable as
if it constituted a reduction in the rate of tax.
(c) Where credit against the tax is desired, the person liable for
the tax shall establish an effective tax rate in accordance with
Sec. 19.34. The effective tax rate established will be applied to each
withdrawal or other taxable disposition of the distilled spirits.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1314, as amended (26 U.S.C. 5001);
Sec. 6, Pub. L. 96-598, 94 Stat. 3488, as amended (26 U.S.C. 5010); Act
of August 16, 1954, Pub. L. 591, 68A Stat. 907, as amended (26 U.S.C.
7652)).
[T.D. ATF-297, 55 FR 18061, Apr. 30, 1990]
Sec. 19.22 Attachment of tax.
Under 26 U.S.C. 5001(b), the tax attaches to spirits as soon as the
substance comes into existence as such, whether it be subsequently
separated as pure or impure spirits, or be immediately, or at any
subsequent time, transferred into any other substance, either in the
process of original production, or by any subsequent process.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1314, as amended (26 U.S.C. 5001))
Sec. 19.23 Lien.
Under 26 U.S.C. 5004, the tax becomes a first lien on the spirits
from the time the spirits come into existence as such. The conditions
under which the first lien shall be terminated are described in 26
U.S.C. 5004.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1317, as amended (26 U.S.C. 5004))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985; 50 FR 23410, June 4, 1985]
Sec. 19.24 Persons liable for tax.
(a) Distilling. 26 U.S.C. 5005 provides that the distiller of
spirits is liable for the tax and that each proprietor or possessor of,
and person in any manner interested in the use of, any still, distilling
apparatus, or distillery, shall be jointly and severally liable for the
tax on distilled spirits produced. However, a person, not an officer or
director of a corporate proprietor, owning or having the right of
control of not more than 10 percent of any class of stock of that
proprietor, is not liable by reason of the stock ownership or control.
Persons transferring spirits in bond so liable for the tax are relieved
of liability if
(1) The proprietors of transferring and receiving premises are
independent of each other and neither has a proprietary interest,
directly or indirectly, in the business of the other, and
(2) No person so liable for the tax on the spirits transferred
retains any interest in the spirits.
(b) Storage on bonded premises. 26 U.S.C. 5005(c) provides that each
person operating bonded premises shall be liable for the tax on all
spirits while the spirits are stored on the premises, and on all spirits
which are in transit to the premises from the time of removal from the
transferor's bonded premises, pursuant to an approved application.
Liability for the tax continues until the spirits are transferred or
withdrawn from bonded premises as authorized by law, or until the
liability for tax is relieved under the provisions of 26 U.S.C. 5008(a).
Claims for relief from liability for spirits lost are provided for in
Sec. 19.41. Voluntary destruction of spirits in bond is provided for in
subpart U of this part.
(c) Withdrawals without payment of tax. Under 26 U.S.C. 5005(e), any
person who withdraws spirits from the bonded premises of a plant without
payment of tax, as provided in 26 U.S.C. 5214, shall be liable for the
tax on the spirits from the time of withdrawal. The person shall be
relieved of any liability at the time the spirits are exported,
deposited in a foreign-trade zone, used in production of wine, deposited
in a customs bonded warehouse, laden as supplies upon or used in the
maintenance or repair of certain vessels or aircraft, or used for
certain research, development or testing, as provided by law.
[[Page 270]]
(d) Withdrawals free of tax. Persons liable for tax under paragraph
(a) of this section, are relieved of the liability on spirits withdrawn
from bonded premises free of tax under this part, at the time the
spirits are withdrawn.
(e) Withdrawn from customs custody without payment of tax. 26 U.S.C.
5232(a) provides that when imported distilled spirits in bulk containers
are withdrawn from customs custody and transferred to the bonded
premises of a distilled spirits plant without payment of the tax imposed
on imported distilled spirits by 26 U.S.C. 5001, the person operating
the bonded premises of the distilled spirits plant to which spirits are
transferred shall become liable for the tax on the spirits upon their
release from customs custody, and the importer shall thereupon be
relieved of liability for the tax.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1318, as amended (26 U.S.C. 5005);
Sec. 3, Pub. L. 90-630, 82 Stat. 1328, as amended (26 U.S.C. 5232); Sec.
3, Pub. L. 91-659, 84 Stat. 1965, as amended (26 U.S.C. 5066))
Sec. 19.25 Time for tax determination.
Except as otherwise provided in this part, the tax on spirits shall
be determined when the spirits are withdrawn from bond. The tax on
spirits which are to be withdrawn from bonded premises shall be
determined upon completion of the gauge for determination of tax and
before withdrawal from bonded premises.
(Sec. 201, Pub. L. 85-859, 72 Stat 1320, as amended (26 U.S.C. 5006))
Sec. 19.26 Tax on wine.
(a) Imposition of tax. A tax is imposed by 26 U.S.C. 5041 or 7652 on
wine (including imitation, substandard, or artificial wine, and
compounds sold as wine) produced in or imported or brought into the
United States. Proprietors of distilled spirits plants may become liable
for wine taxes under 26 U.S.C. 5362(b)(3) in connection with wine
transferred in bond to a distilled spirits plant. Wine may not be
removed from the bonded premises of a distilled spirits plant for
consumption or sale as wine.
(b) Liability for tax. Except as otherwise provided by law, the
liability for tax on wine transferred in bond from a bonded wine cellar
to a distilled spirits plant, or transferred in bond between distilled
spirits plants, will continue until the wine is used in a distilled
spirits product.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1331, as amended, 1380, as amended
(26 U.S.C. 5041, 5362))
[T.D. ATF-297, 55 FR 18062, Apr. 30, 1990; 55 FR 23634, June 11, 1990]
Assessments
Sec. 19.31 Production not accounted for.
Where the regional director (compliance) finds that a distiller has
not accounted for all spirits produced by him, assessment shall be made
for the tax on the difference between the quantity reported and the
quantity found to have been actually produced.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1320, as amended (26 U.S.C. 5006))
Sec. 19.32 Assessment of tax on spirits, denatured spirits,
or wines in
bond which are lost, destroyed or removed without
authorization.
When spirits, denatured spirits, or wines in bond are lost or
destroyed (except spirits, denatured spirits, or wines on which the tax
is not collectible by reason of the provisions of 26 U.S.C. 5008 (a) or
(d) or 26 U.S.C. 5370, as applicable) and the proprietor or other person
liable for the tax on the spirits, denatured spirits, or wines fails to
file a claim for remission as provided in Sec. 19.41(a) or when the
claim is denied, the tax shall be assessed. In any case where spirits,
denatured spirits, or wines in bond are removed from bonded premises
other than as authorized by law, the tax shall be assessed. In the case
of losses under circumstances described in 26 U.S.C. 5006(b) with
respect to packages of spirits or denatured spirits on bonded premises,
the tax shall be assessed if the tax is not paid upon the demand of the
regional director (compliance).
(Sec. 201, Pub. L. 85-859, 72 Stat. 1320, as amended, 1323, as amended,
1381, as amended (26 U.S.C. 5006, 5008, 5370))
[[Page 271]]
Effective Tax Rates
Source: Sections 19.34 through 19.38 added by T.D. ATF-297, 55 FR
18062, Apr. 30, 1990, unless otherwise noted.
Sec. 19.34 Computation of effective tax rate.
(a) The proprietor shall compute the effective tax rate for
distilled spirits containing eligible wine or eligible flavors as the
ratio of the numerator and denominator as follows:
(1) The numerator will be the sum of:
(i) The proof gallons of all distilled spirits used in the product
(exclusive of distilled spirits derived from eligible flavors),
multiplied by the tax rate prescribed by 26 U.S.C. 5001;
(ii) The wine gallons of each eligible wine used in the product,
multiplied by the tax rate prescribed by 26 U.S.C. 5041(b)(1), (2), or
(3), which would be imposed on the wine but for its removal to bonded
premises; and
(iii) The proof gallons of all distilled spirits derived from
eligible flavors used in the product, multiplied by the tax rate
prescribed by 26 U.S.C. 5001, but only to the extent that such distilled
spirits exceed 2\1/2\% of the denominator prescribed in paragraph (a)(2)
of this section.
(2) The denominator will be the sum of:
(i) The proof gallons of all distilled spirits used in the product,
including distilled spirits derived from eligible flavors; and
(ii) The wine gallons of each eligible wine used in the product,
multiplied by twice the percentage of alcohol by volume of each, divided
by 100.
(b) In determining the effective tax rate, quantities of distilled
spirits, eligible wine, and eligible flavors will be expressed to the
nearest tenth of a proof gallon. The effective tax rate may be rounded
to as many decimal places as the proprietor deems appropriate, provided
that, such rate is expressed no less exactly than the rate rounded to
the nearest whole cent, and the effective tax rates for all products
will be consistently expressed to the same number of decimal places. In
such case, if the number is less than five it will be dropped; if it is
five or over, a unit will be added.
(c) The following is an example of the use of the formula.
BATCH RECORD
Distilled spirits......................... 2249.1 proof gallons.
Eligible wine (14% alcohol by volume)..... 2265.0 wine gallons.
Eligible wine (19% alcohol by volume)..... 1020.0 wine gallons.
Eligible flavors.......................... 100.9 proof gallons.
2249.1($13.50)+2265.0($1.07)+1020($1.57)+16.6 \1\ ($13.50)
------------------------------------------------------------------ =
2249.1+100.9+(2265.0 x .28)+(1020 x .38)
$30,362.85+$2,423.55+$1,601.40+$224.10
------------------------------------------------------------------ =
2,350.0+634.2+387.6
$34,611.90
---------------- = $10.27, the effective tax
3,371.8 rate.
\1\ Proof gallons by which distilled spirits derived from eligible flavors exceed
2\1/2\%) of the total proof
gallons in the batch (100.9-(2\1/2\%) x 3,371.8=16.6).
(Sec. 6, Pub. L. 96-598, 94 Stat. 3488, as amended (26 U.S.C. 5010))
[T.D. ATF-297, 55 FR 18062, Apr. 30, 1990, as amended by T.D. ATF-307,
52736, Dec. 21, 1990]
Sec. 19.35 Application of effective tax rate (Actual).
Any proprietor who does not apply effective tax rates to taxable
removals in accordance with Sec. 19.36, 19.37 or 19.38 shall establish
an effective tax rate for
[[Page 272]]
each batch of distilled spirits in the processing account on which
credit against tax is desired for alcohol derived from eligible wine or
eligible flavors. The effective tax rate will be computed in accordance
with Sec. 19.34 and will be recorded on the dump or batch record for the
product, as required by Sec. 19.748. The serial numbers of the cases
removed at such rate shall be recorded on the record of tax
determination prescribed in Sec. 19.761 or other related record
available for examination by any ATF officer.
(Sec. 807, Pub. L. 96-39, 93 Stat. 284 (26 U.S.C. 5207); Sec. 201, Pub.
L. 85-859, 72 Stat. 1356, as amended (26 U.S.C. 5201); Sec 6, Pub. L.
96-598, 94 Stat. 3488, as amended (26 U.S.C. 5010))
Sec. 19.36 Standard effective tax rate.
(a) The proprietor may establish a permanent standard effective tax
rate for any eligible distilled spirits product based on the least
quantity and the lowest alcohol content of eligible wine or eligible
flavors used in the manufacture of the product. The permanent standard
effective tax rate must equal the highest tax rate applicable to the
product. The proprietor shall maintain a permanent record of the
standard effective tax rate established for each product in accordance
with Sec. 19.765. Whenever the proprietor manufactures a batch of the
product with a lesser quantity or lower alcohol content of eligible wine
or eligible flavor, he shall keep the cased goods segregated from other
completed cases of the same product and shall tax determine the product
in accordance with Sec. 19.35.
(b) If the regional director (compliance) finds that the use of this
procedure jeopardizes the revenue or causes administrative difficulty,
the proprietor shall discontinue the use of the procedure.
(Sec. 807, Pub. L. 96-39, 93 Stat. 284 (26 U.S.C. 5207); Sec. 201, Pub.
L. 85-859, 72 Stat. 1356, as amended (26 U.S.C. 5201); Sec. 6, Pub. L.
96-598, 94 Stat. 3488, as amended (26 U.S.C. 5010))
Sec. 19.37 Average effective tax rate.
(a) The proprietor may establish an average effective tax rate for
any eligible distilled spirits product based on the total proof gallons
in all batches of the same composition which have been produced during
the preceding 6-month period and which have been or will be bottled or
packaged, in whole or in part, for domestic consumption. At the
beginning of each month, the proprietor shall recompute the average
effective tax rate so as to include only the immediately preceding 6-
month period. The average effective tax rate established for a product
will be shown in the record of average effective tax rates prescribed in
Sec. 19.763.
(b) If the regional director (compliance) finds that the use of this
procedure jeopardizes the revenue or causes administrative difficulty,
the proprietor shall discontinue the use of this procedure.
(Sec. 807, Pub. L. 96-39, 93 Stat. 284 (26 U.S.C. 5207); Sec. 201, Pub.
L. 85-859, 72 Stat. 1356, as amended (26 U.S.C. 5201); Sec. 6, Pub. L.
96-598, 94 Stat. 3488, as amended (26 U.S.C. 5010))
Sec. 19.38 Inventory reserve account.
(a) The proprietor may establish an inventory reserve account for
any eligible distilled spirits product by maintaining an inventory
reserve record as prescribed by 19.764. The effective tax rate applied
to each removal or other disposition will be the effective tax rate
recorded on the inventory reserve record from which the removal or other
disposition is depleted.
(b) If the regional director (compliance) finds that the use of this
procedure jeopardizes the revenue or causes administrative difficulty,
the proprietor shall discontinue the use of this procedure.
(Sec. 807, Pub. L. 96-39, 93 Stat. 284 (26 U.S.C. 5207); Sec. 201, Pub.
L. 85-859, 72 Stat. 1356, as amended (26 U.S.C. 5201); Sec. 6, Pub. L.
96-598, 94 Stat. 3488, as amended (26 U.S.C. 5010))
Claims
Sec. 19.41 Claims on spirits, denatured spirits, articles,
or wines
lost or destroyed in bond.
(a) Claims for remission. All claims for remission of tax required
by this part, relating to the destruction or loss of spirits, denatured
spirits, articles, or wines in bond, shall be filed with the regional
director (compliance) and shall set forth the following:
(1) Identification (including serial numbers if any) and location of
the container or containers from which the
[[Page 273]]
spirits, denatured spirits, articles, or wines were lost, or removed for
destruction;
(2) Quantity of spirits, denatured spirits, articles, or wines lost
or destroyed from each container, and the total quantity of spirits or
wines covered by the claim;
(3) Total amount of tax for which the claim is filed;
(4) Name, number, and address of the plant from which withdrawn
without payment of tax or removed for transfer in bond (if claim
involves spirits so withdrawn or removed or if claim involves wines
transferred in bond) and date and purpose of such withdrawal or removal,
except that in the case of imported spirits lost or destroyed while
being transferred from customs custody to ATF bond as provided in
Sec. 19.481, the name of the customs warehouse, if any, and port of
entry will be given instead of the plant name, number, and address;
(5) Date of the loss or destruction (or, if not known, date of
discovery), the cause or nature thereof, and all the facts relative
thereto;
(6) Name of the carrier, where a loss in transit is involved;
(7) The name and address of the consignee, in the case of spirits
withdrawn without payment of tax which are lost before being used for
research, development or testing;
(8) If lost by theft, facts establishing that the loss did not occur
as the result of any negligence, connivance, collusion or fraud on the
part of the proprietor of the plant, owner, consignor, consignee,
bailee, or carrier, or the employees or agents of any of them;
(9) In the case of a loss by theft, whether the claimant is
indemnified or recompensed for the spirits or wines lost and if so, the
amount and nature of indemnity or recompense and the actual value of the
spirits or wines, less the tax.
(b) Claims for abatement, credit or refund. Claims for abatement of
an assessment, or for credit or refund of tax which has been paid or
determined, for spirits, denatured spirits, articles, or wines lost or
destroyed in bond shall be filed with the regional director
(compliance). The claims shall set forth the information required under
paragraph (a) of this section and, in addition, shall set forth--
(1) The date of assessment or payment (or of tax determination, if
the tax has not been assessed or paid) of the tax for which abatement,
credit or refund is claimed, and
(2) The name, plant number, and the address of the plant where the
tax was determined, paid, or assessed (or name, address and capacity of
any other person who paid or was assessed the tax, if the tax was not
paid by or assessed against a proprietor).
(c) Supporting document. (1) Claims under paragraphs (a) and (b) of
this section shall be supported (whenever possible) by affidavits of
persons having personal knowledge of the loss or destruction. For claims
on spirits, denatured spirits, articles, or wines lost while being
transferred by carrier, the claim shall be supported by a copy of the
bill of lading.
(2) For claims pertaining to losses of spirits withdrawn without
payment of tax and lost prior to being used for research, development or
testing, the claim shall be supported by a copy of the proprietor's
sample record prescribed in subpart W of this part.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1323, as amended, 1381, as amended
(26 U.S.C. 5008, 5370))
Sec. 19.42 Claims on spirits returned to bonded premises.
(a) Claims for credit or refund of tax on spirits which have been
withdrawn from bonded premises on payment or determination of tax and
which are returned under 26 U.S.C. 5215 shall be filed with the regional
director (compliance) and shall set forth the following:
(1) Quantity of spirits so returned;
(2) Amount of tax for which the claim is filed;
(3) Name, address, and plant number of the plant to which the
spirits were returned and the date of the return;
(4) The purpose for which returned; and
(5) The serial number of the gauge record on which the spirits were
returned.
(b) If the alcoholic content of the spirits contain at least 92
percent Puerto Rican or Virgin Islands rum, or if
[[Page 274]]
the spirits contain rum imported from any area other than Puerto Rico
and the Virgin Islands, the claim shall show:
(1) Proof gallons of the finished product derived from Puerto Rican
or Virgin Islands spirits, or derived from rum imported from any other
area; and
(2) The amount of tax imposed by 26 U.S.C. 7652 or 26 U.S.C. 5001,
determined at the time of withdrawal from bond, on the Puerto Rican or
Virgin Islands spirits, or on the rum imported from any other area,
contained in the product.
(c) Claims for credit or refund of tax on spirits containing
eligible wine or eligible flavors must set forth the date and serial
number of the record of tax determination and the effective tax rate at
which the tax was paid or determined. If this information is not
provided, the amount of tax claimed will be based on the lowest
effective tax rate applied to the product.
(d) Claims for credit or refund of tax shall be filed by the
proprietor of the plant to which the spirits were returned within six
months of the date of the return. No interest is allowed on any claims
for refund or credit.
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. ATF-233, 51
FR 28077, Aug. 5, 1986; T.D. ATF-297, 55 FR 18063, Apr. 30, 1990]
Sec. 19.43 Claims relating to spirits lost after tax determination.
Claims for abatement, credit, or refund of tax under this part,
relating to losses of spirits occurring on bonded premises after tax
determination but prior to physical removal from such premises, shall be
prepared and filed as provided in, and contain the information called
for under Sec. 19.41(b) and be supported by documents as provided under
Sec. 19.41(c).
(Sec. 201, Pub. L. 85-859, 72 Stat. 1323, as amended (26 U.S.C. 5008))
Sec. 19.44 Execution of claims and supporting documents.
All claims filed under this part shall be filed on Form 2635
(5620.8). Claims for abatement, remission, credit, or refund shall (a)
show the name, address, and capacity of the claimant, (b) be signed by
the claimant or his duly authorized agent, and (c) be executed under the
penalties of perjury as provided in Sec. 19.100. Supporting documents
required by this part to be submitted with a claim shall be attached to
the claim and shall be deemed to be a part thereof. The regional
director (compliance) may require the submission of additional evidence
in support of any claim filed under this part when deemed necessary for
proper action on the claim.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1323, as amended (26 U.S.C. 5008);
Sec. 807, Pub. L. 96-39, 93 Stat. 285 (26 U.S.C. 5215))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985; 50 FR 23410, June 4, 1985; T.D.
ATF-251, 52 FR 19313, May 22, 1987]
Sec. 19.45 Claims for credit of tax.
Claims for credit of tax, as provided in this part, may be filed
after determination of the tax whether or not the tax has been paid. The
claimant may not anticipate allowance of a credit or make an adjusting
entry in a tax return pending action on the claim.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1323, as amended (26 U.S.C. 5008);
Sec. 807, Pub. L. 96-39, 93 Stat. 285 (26 U.S.C. 5215))
Sec. 19.46 Adjustments for credited tax.
When notification of allowance of credit is received from the
regional director (compliance), including notification of credit for tax
on spirits exported with benefit of drawback as provided in 27 CFR part
252, the claimant shall make an adjusting entry and explanatory
statement (specifically identifying the notification of allowance of
credit) in the next excise tax return (or returns) to the extent
necessary to exhaust the credit.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1323, as amended, 1336, as amended
(26 U.S.C. 5008, 5062))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. ATF-219, 50
FR 51387, Dec. 17, 1985]
Subpart Ca--Special (Occupational) Taxes
Source: T.D. ATF-271, 53 FR 17541, May 17, 1988, unless otherwise
noted.
[[Page 275]]
Sec. 19.49 Liability for special tax.
(a) Proprietor of distilled spirits plant--(1) General. Except as
provided in Sec. 19.906, every proprietor of a distilled spirits plant
shall pay a special (occupational) tax at a rate specified by
Sec. 19.50. The tax shall be paid on or before the date
of commencing
business as a distilled spirits plant proprietor, and thereafter every
year on or before July 1. On commencing business, the tax shall be
computed from the first day of the month in which liability is incurred,
through the following June 30. Thereafter, the tax shall be computed for
the entire year (July 1 through June 30).
(2) Transition rule. For purposes of paragraph (a)(1) of this
section, a proprietor engaged in distilled spirits plant operations on
January 1, 1988, shall be treated as having commenced business on that
date. The special tax imposed by this transition rule shall cover the
period January 1, 1988, through June 30, 1988, and shall be paid on or
before April 1, 1988.
(b) Liquor Dealer--(1) General. A proprietor of a distilled spirits
plant shall be subject to or exempt from a liquor dealer's special
(occupational) tax as provided in part 194 of this chapter.
(2) Exemption for sales by a proprietor of a distilled spirits
plant. A proprietor of a distilled spirits plant is not required to pay
special tax as a wholesale or retail dealer in liquor because of sales,
at the principal place of business or at the distilled spirits plant, of
liquor which at the time of sale is stored at the distilled spirits
plant or which had been removed and stored in a taxpaid storeroom
operated in connection with the distilled spirits plant. Each proprietor
of a distilled spirits plant shall have only one exemption from dealer's
special tax for each distilled spirits plant. The distiller may
designate, in writing to the regional director (compliance), that the
principal place of business will be exempt from dealer's special tax;
otherwise, the exemption will apply to the distilled spirits plant.
(c) Each place of business taxable--(1) General. A proprietor of a
distilled spirits plant incurs special tax liability at each place of
business in which an occupation subject to special tax is conducted. A
place of business means the entire office, plant or area of the business
in any one location under the same proprietorship. Passageways, streets,
highways, rail crossings, waterways, or partititions dividing the
premises are not sufficient separation to require additional special
tax, if the divisions of the premises are otherwise contiguous.
(2) Exception for contiguous areas. A proprietor of a distilled
spirits plant does not incur additional special tax liability for sales
of liquor made at a location other than on distilled spirits plant
premises described on the notice of registration, Form 5110.41, if the
location where such sales are made is contiguous to the distilled
spirits plant premises in the manner described in paragraph (c)(1) of
this section.
(26 U.S.C. 5081, 5111, 5113, 5142, 5143)
[T.D. ATF-271, 53 FR 17541, May 17, 1988, as amended by T.D. ATF-285, 54
FR 12609, Mar. 28, 1989]
Sec. 19.50 Rates of special tax.
(a) General. Title 26 U.S.C. 5081(a)(1) imposes a special tax of
$1,000 per year on every proprietor of a distilled spirits plant.
(b) Reduced rate for small proprietors. Title 26 U.S.C. 5081(b)
provides for a reduced rate of $500 per year with respect to any
distilled spirits plant proprietor whose gross receipts (for the most
recent taxable year ending before the first day of the taxable period to
which the special tax imposed by Sec. 19.49 relates) are less than
$500,000. The ``taxable year'' to be used for determining gross receipts
is the taxpayer's income tax year. All gross receipts of the taxpayer
shall be included, not just the gross receipts of the business subject
to special tax. Proprietors of new businesses that have not yet begun a
taxable year, as well as proprietors of existing businesses that have
not yet ended a taxable year, who commence a new activity subject to
special tax, qualify for the reduced special (occupational) tax rate,
unless the business is a member of a ``controlled group''; in that case,
the rules of paragraph (c) of this section shall apply.
(c) Controlled group. All persons treated as one taxpayer under 26
U.S.C.
[[Page 276]]
5061(e)(3) shall be treated as one taxpayer for the purpose of
determining gross receipts under paragraph (b) of this section.
``Controlled group'' means a controlled group of corporations, as
defined in 26 U.S.C. 1563 and implementing regulations in 26 CFR 1.1563-
1 through 1.1563-4, except that the words ``at least 80 percent'' shall
be replaced by the words ``more than 50 percent'' in each place they
appear in subsection (a) of 26 U.S.C. 1563, as well as in the
implementing regulations. Also, the rules for a ``controlled group of
corporations'' apply in a similar fashion to groups which include
partnerships and/or sole proprietorships. If one entity maintains more
than 50% control over a group consisting of corporations and one, or
more, partnerships and/or sole proprietorships, all of the members of
the controlled group are one taxpayer for the purpose of this section.
(d) Short taxable year. Gross receipts for any taxable year of less
than 12 months shall be annualized by multiplying the gross receipts for
the short period by 12 and dividing the result by the number of months
in the short period, as required by 26 U.S.C. 448(c)(3).
(e) Returns and allowances. Gross receipts for any taxable year
shall be reduced by returns and allowances made during that year under
26 U.S.C. 448(c)(3).
(26 U.S.C. 448, 5061, 5081)
Sec. 19.51 Special tax returns.
(a) General. Special tax shall be paid by return. The prescribed
return is ATF Form 5630.5, Special Tax Registration and Return. Special
tax returns, with payment of tax, shall be filed with ATF in accordance
with instructions on the form.
(b) Preparation of ATF Form 5630.5. All of the information called
for on Form 5630.5 shall be provided, including:
(1) The true name of the taxpayer.
(2) The trade name(s) (if any) of the business(es) subject to
special tax.
(3) The employer identification number (see Sec. 19.52).
(4) The exact location of the place of business, by name and number
of building or street, or if these do not exist, by some description in
addition to the post office address. In the case of one return for two
or more locations, the address to be shown shall be the taxpayer's
principal place of business (or principal office, in the case of a
corporate taxpayer).
(5) The class(es) of special tax to which the taxpayer is subject.
(6) Ownership and control information: that is, the name, position,
and residence address of every owner of the business and of every person
having power to control its management and policies with respect to the
activity subject to special tax. ``Owner of the business'' shall include
every partner, if the taxpayer is a partnership, and every person owning
10% or more of its stock, if the taxpayer is a corporation. However, the
ownership and control information required by this paragraph need not be
stated if the same information has been previously provided to ATF in
connection with a permit application, and if the information previously
provided is still current.
(c) Multiple locations and/or classes of tax. A taxpayer subject to
special tax for the same period at more than one location or for more
than one class of tax shall--
(1) File one special tax return, ATF Form 5630.5, with payment of
tax, to cover all such locations and classes of tax; and
(2) Prepare, in duplicate, a list identified with the taxpayer's
name, address (as shown on ATF Form 5630.5), employer identification
number, and period covered by the return. The list shall show, by
States, the name, address, and tax class of each location for which
special tax is being paid. The original of the list shall be filed with
ATF in accordance with instructions on the return, and the copy shall be
retained at the taxpayer's principal place of business (or principal
office, in the case of a corporate taxpayer) for the period specified in
Sec. 19.723(c).
(d) Signing of ATF Forms 5630.5--(1) Ordinary returns. The return of
an individual proprietor shall be signed by the individual. The return
of a partnership shall be signed by a general partner. The return of a
corporation shall be signed by any officer. In each case, the person
signing the return shall designate his or her capacity as ``individual
owner,'' ``member of firm,'' or, in
[[Page 277]]
the case of a corporation, the title of the officer.
(2) Fiduciaries. Receivers, trustees, assignees, executors,
administrators, and other legal representatives who continue the
business of a bankrupt, insolvent, deceased person, etc., shall indicate
the fiduciary capacity in which they act.
(3) Agent or attorney in fact. If a return is signed by an agent or
attorney in fact, the signature shall be preceded by the name of the
principal and followed by the title of the agent or attorney in fact. A
return signed by a person as agent will not be accepted unless there is
filed, with the ATF office with which the return is required to be
filed, a power of attorney authorizing the agent to perform the act.
(4) Perjury statement. ATF Forms 5630.5 shall contain or be verified
by a written declaration that the return has been executed under the
penalties of perjury.
(26 U.S.C. 6061, 6065, 6151, 7011)
Sec. 19.52 Employer identification number.
(a) Requirement. The employer identification number (defined in 26
CFR 301.7701-12) of the taxpayer who has been assigned such a number
shall be shown on each special tax return, including amended returns,
filed under this subpart. Failure of the taxpayer to include the
employer identification number may result in the imposition of the
penalty specified in Sec. 70.113 of this chapter.
(b) Application for employer identification number. Each taxpayer
who files a special tax return, who has not already been assigned an
employer identification number, shall file IRS Form SS-4 to apply for
one. The taxpayer shall apply for and be assigned only one employer
identification number, regardless of the number of places of business
for which the taxpayer is required to file a special tax return. The
employer identification number shall be applied for no later than 7 days
after the filing of the taxpayer's first special tax return. IRS Form
SS-4 may be obtained from the director of an IRS service center or from
any IRS district director.
(c) Preparation and filing of IRS Form SS-4. The taxpayer shall
prepare and file IRS Form SS-4, together with any supplementary
statement, in accordance with the instructions on the form or issued in
respect to it.
(26 U.S.C. 6109)
[T.D. ATF-271, 53 FR 17541, May 17, 1988, as amended by T.D. ATF-301, 55
FR 47605, Nov. 14, 1990]
Special Tax Stamps
Sec. 19.53 Issuance, distribution, and examination of special
tax
stamps.
(a) Issuance of special tax stamps. Upon filing a properly executed
return on ATF Form 5630.5, together with the full remittance, the
taxpayer will be issued an appropriately designated special tax stamp.
If the return covers multiple locations, the taxpayer will be issued one
appropriately designated stamp for each location listed on the
attachment required by Sec. 19.51(c), but showing, as to name and
address, only the name of the taxpayer and the address of the taxpayer's
principal place of business (or principal office in the case of a
corporate taxpayer).
(b) Distribution of special tax stamps for multiple locations. On
receipt of the special tax stamps, the taxpayer shall verify that there
is one stamp for each location listed on the attachment to ATF Form
5630.5. The taxpayer shall designate one stamp for each location and
shall type on each stamp the address of the business conducted at the
location for which that stamp is designated. The taxpayer shall then
forward each stamp to the place of business designated on the stamp.
(c) Examination of special tax stamps. All stamps denoting payment
of special tax shall be kept available for inspection by ATF officers,
at the location for which designated, during business hours.
(26 U.S.C. 5146, 6806)
Sec. 19.54 Changes in special tax stamps.
(a) Change in name. If there is a change in the corporate or firm
name, or in the trade name, as shown on Form 5630.5, the proprietor
shall file an amended special tax return as soon as practicable after
the change, covering the new corporate or firm name, or
[[Page 278]]
trade name. No new special tax is required to be paid. The proprietor
shall attach the special tax stamp for endorsement of the change in
name.
(b) Change in proprietorship--(1) General. If there is a change in
the proprietorship of a distilled spirits plant, the successor shall pay
a new special tax and obtain the required special tax stamps.
(2) Exemption for certain successors. Persons having the right of
succession provided for in paragraph (c) of this section may carry on
the business for the remainder of the period for which the special tax
was paid, without paying a new special tax, if within 30 days after the
date on which the successor begins to carry on the business, the
successor files a special tax return on ATF Form 5630.5 with ATF, which
shows the basis of succession. A person who is a successor to a business
for which special tax has been paid and who fails to register the
succession is liable for special tax computed from the first day of the
calendar month in which he or she began to carry on the business.
(c) Persons having right of succession. Under the conditions
indicated in paragraph (b)(2) of this section, the right of succession
will pass to certain persons in the following cases:
(1) Death. The widowed spouse or child, or executor, administrator,
or other legal representative of the taxpayer;
(2) Succession of spouse. A husband or wife succeeding to the
business of his or her spouse (living);
(3) Insolvency. A receiver or trustee in bankruptcy, or an assignee
for benefit of creditors;
(4) Withdrawal from firm. The partner or partners remaining after
death or withdrawal of a member.
(d) Change in location. If there is a change in location of a
taxable place of business, the proprietor shall, within 30 days after
the change, file with ATF an amended special tax return covering the new
location. The proprietor shall attach the special tax stamp or stamps,
for endorsement of the change in location. No new special tax is
required to be paid. However, if the proprietor does not file the
amended return within 30 days, the proprietor is required to pay a new
special tax and obtain a new special tax stamp.
(26 U.S.C. 5143, 7011)
Subpart D--Administrative and Miscellaneous Provisions
Activities Not Subject to This Part
Sec. 19.57 Recovery and reuse of denatured spirits in manufacturing
processes.
The following persons are not, by reason of the activities listed
below, subject to the provisions of this part, but they shall comply
with the provisions of part 20 of this chapter relating to the use and
recovery of spirits or denatured spirits:
(a) Manufacturers who use denatured spirits, or articles or
substances containing denatured spirits, in a process wherein any part
or all of the spirits, including denatured spirits, are recovered.
(b) Manufacturers who use denatured spirits in the production of
chemicals which do not contain spirits but which are used on the permit
premises in the manufacture of other chemicals resulting in spirits as a
by-product.
(c) Manufacturers who use chemicals or substances which do not
contain spirits or denatured spirits (but which were manufactured with
specially denatured spirits) in a process resulting in spirits as a by-
product.
(Sec 201, Pub. L. 85-859, 72 Stat. 1372, as amended (26 U.S.C. 5273))
[T.D. ATF-379, 61 FR 31425, June 20, 1996]
Sec. 19.58 Use of taxpaid distilled spirits to manufacture
products
unfit for beverage use.
(a) General. Apothecaries, pharmacists, and manufacturers are not
required to qualify as processors under 26 U.S.C. 5171 before
manufacturing or compounding the following products, if the tax has been
paid or determined on all of the distilled spirits contained therein:
(1) Medicines, medicinal preparations, food products, flavors,
flavoring extracts, and perfume, conforming to the standards for
approval of nonbeverage drawback products found in Secs. 17.131-17.137
of this chapter, whether
[[Page 279]]
or not drawback is actually claimed on those products. Except as
provided in paragraph (c) of this section, a formula need not be
submitted if drawback is not desired.
(2) Patented, patent, and proprietary medicines that are unfit for
use for beverage purposes.
(3) Toilet, medicinal, and antiseptic preparations and solutions
that are unfit for use for beverage purposes.
(4) Laboratory reagents, stains, and dyes that are unfit for use for
beverage purposes.
(5) Flavoring extracts, syrups, and concentrates that are unfit for
use for beverage purposes.
(b) Exceptions; products classed as beverages. Products specified
under part 17 of this chapter as being fit for beverage use are
alcoholic beverages. Bitters, patent medicines, and similar alcoholic
preparations which are fit for beverage purposes, although held out as
having certain medicinal properties, are also alcoholic beverages. Such
products are required to be manufactured on the bonded premises of a
distilled spirits plant, and are subject to the provisions of this part.
(c) Formulas and samples; when required. On request of the Director,
or when in doubt as to the classification of a product, the manufacturer
shall submit to the Director the formula for and a sample of the product
for examination to verify the manufacturer's claim of exemption from
qualification requirements.
(d) Change of formula; when required. If the regional director
(compliance) finds at any time that any product manufactured under
paragraph (a) of this section is being used for beverage purposes, or
for mixing with beverage spirits other than by a processor, he or she
shall notify the manufacturer to desist from manufacturing the product
until the formula is changed to make the product not susceptible of
beverage use and the change is approved by the Director. (However, the
provisions of this paragraph shall not prohibit such products, which are
unfit for beverage use, from being used in small quantities for
flavoring drinks at the time of serving for immediate consumption.)
Where, pursuant to notice, the manufacturer does not desist, or the
formula is not so modified as to make the product unsusceptible of
beverage use, the manufacturer shall immediately qualify as a processor.
(Sec. 805, Pub. L. 96-39, 93 Stat. 275, 278 (26 U.S.C. 5002, 5171))
[T.D. ATF-379, 61 FR 31425, June 20, 1996]
Authorities of the Director
Sec. 19.61 Form prescribed.
(a) The Director is authorized to prescribe all forms required by
this part. All of the information required by each form shall be
furnished, as indicated by the headings on the form and the instructions
thereon or issued in respect thereto, and as required by this part.
(b) Requests for forms should be mailed to the ATF Distribution
Center, 7943 Angus Court, Springfield, Virginia 22153.
(Sec. 807, Pub. L. 96-39, 93 Stat. 284 (26 U.S.C. 5207))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. 372, 61 FR
20724, May 8, 1996]
Sec. 19.62 Alternate methods or procedures.
The proprietor, on specific approval by the Director as provided in
this paragraph, may use an alternate method or procedure in lieu of a
method or procedure specifically prescribed in this part. The Director
may approve an alternate method or procedure, subject to stated
conditions, when he finds that--
(a) Good cause has been shown for the use of the alternate method or
procedure;
(b) The alternate method or procedure is within the purpose of, and
consistent with the effect intended by, the specifically prescibed
method or procedure, and affords equivalent security to the revenue; and
(c) The alternate method or procedure will not be contrary to any
provision of law, and will not result in an increase in cost to the
Government or hinder the effective administration of this part. No
alternate method or procedure relating to the giving of any bond or to
the assessment, payment, or collection of tax, shall be authorized under
this paragraph. Where the proprietor desires to employ an alternate
[[Page 280]]
method or procedure, he shall submit a written application to do so to
the regional director (compliance), for transmittal to the Director. The
application shall specifically describe the proposed alternate method or
procedure, and shall set forth the reasons therefor. Alternate methods
or procedures shall not be employed until the application has been
approved by the Director. The proprietor shall, during the period of
authorization of an alternate method or procedure, comply with the terms
of the approved application. Authorization for any alternate method or
procedure may be withdrawn whenever in the judgment of the Director the
revenue is jeopardized or the effective administration of this part is
hindered by the continuation of such authorization. As used in this
paragraph, alternate methods or procedures shall include alternate
construction or equipment.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1353, as amended, 1395, as amended
(26 U.S.C. 5178, 5552))
Sec. 19.63 Pilot operations.
The Director may waive any regulatory provisions of 26 U.S.C.
Chapter 51, and of the regulations in this part, for temporary pilot or
experimental operations for the purpose of facilitating the development
and testing of improved methods of governmental supervision (necessary
for the protection of the revenue) over plants. For this purpose, the
Director may, with the approval of the proprietor thereof, designate any
plant for such operations. The provision of law and regulations waived
and the period of time during which such waiver shall continue shall be
stated in writing by the Director. The provisions of this section shall
not be construed as authority to waive the filing of any bond or the
payment of any tax, including special (occupational) tax, provided for
in 26 U.S.C. Chapter 51.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1395, as amended (26 U.S.C. 5554))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. ATF-271 53
FR 17543, May 17, 1988]
Sec. 19.64 [Reserved]
Sec. 19.65 Experimental distilled spirits plants.
The Director may authorize the establishment and operation of
experimental plants for specific and limited periods of time solely for
experimentation in, or development of--
(a) Sources of materials from which spirits may be produced;
(b) Processes by which spirits may be produced or refined; or
(c) Industrial uses of spirits.
The Director may waive any provision of 26 U.S.C. Chapter 51 (other than
26 U.S.C. 5312) and of this part (other than this section and
Sec. 19.66) to the extent he deems necessary to effectuate the purposes
of 26 U.S.C. 5312(b), except that he may not waive the payment of any
tax on spirits removed from such plant. A proprietor of an experimental
distilled spirits plant established under this section is subject to
special (occupational) tax under subpart Ca of this part and shall hold
a separate special tax stamp to cover the experimental operations.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1375, as amended (26 U.S.C. 5312))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. ATF-271 53
FR 17543, May 17, 1988]
Sec. 19.66 Application to established experimental plants.
Any person desiring to establish an experimental plant shall make
written application to the Director, through the regional director
(compliance), and obtain the Director's approval of the proposed
establishment. The applicant shall file with such application a bond in
such form and penal sum as required by the Director. The application
shall state the nature, extent, and purpose of the operations to be
conducted and describe the operations and equipment, the location of the
plant (including the proximity to other premises or operations subject
to the provisions of 26 U.S.C. Chapter 51) and the security measures to
be provided. The Director may require the submission of additional
information as he deems necessary. The regional director (compliance)
shall not permit operations until he has found that the plant conforms
[[Page 281]]
to the specifications set forth in the application, as approved, and the
applicant has complied with provisions of 26 U.S.C. Chapter 51, and this
part not specifically waived by the Director.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1375, as amended (26 U.S.C. 5312))
Sec. 19.67 Spirits produced in industrial processes.
(a) Applicability. (1) Persons who produce spirits in industrial
processes (including spirits produced as a by-product in connection with
chemical or other processes) are distillers and are required to qualify
and pay special (occupational) tax under provisions of 26 U.S.C. Chapter
51 and this part.
(2) The Director may, however, waive any provision of 26 U.S.C.
Chapter 51, or of this part, with respect to the production of
nonpotable chemical mixtures containing spirits, including any provision
relating to qualification (except the payment of special (occupational)
tax), if such mixtures are produced:
(i) For transfer to the bonded premises of a distilled spirits plant
for completion of distilling; or
(ii) As a by-product which would require expensive and complex
equipment for the recovery of spirits.
(3) The waiver under the provisions of paragraph (a)(2)(ii) of this
section is further conditioned that such mixture would:
(i) Be destroyed on the premises where produced; or
(ii) Contain a minimum quantity of spirits practicable with the
procedure employed, not be subjected to further operations solely for
the purification or recovery of spirits, and be found by the Director to
be as nonpotable and at least as difficult with respect to recovery as
completely denatured alcohol.
(b) Application for waiver. (1) When the producer of nonpotable
mixtures desires to secure a waiver of designated provisions of 26
U.S.C. Chapter 51, or this part, he shall file an application with the
Director through the regional director (compliance).
(2) The application shall include, as applicable--
(i) Name and address of producer;
(ii) Chemical composition and source of the nonpotable mixture;
(iii) Approximate percentages of chemicals and spirits in the
mixture;
(iv) Method of operation proposed;
(v) Bonded premises where the mixture will be distilled; and
(vi) Other pertinent information required by the Director.
(c) Approval. If the Director finds that the waiver of the
requirements, or any of them, will not jeopardize the revenue and will
not unduly hinder supervision of the operations, he may approve the
application under such terms and conditions as he deems advisable and
subject to the furnishing of any bond which he deems necessary.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1356, as amended (26 U.S.C. 5201))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. ATF-271 53
FR 17543, May 17, 1988]
Sec. 19.68 Other businesses.
The Director may authorize the carrying on of other businesses (not
specifically prohibited by 26 U.S.C. 5601(a)(6)) on premises of plants
if he finds that those businesses will not jeopardize the revenue,
hinder the effective administration of this part, or be contrary to law.
The authorization will designate the premises (i.e., bonded or general)
on which such other business is to be conducted.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1353, as amended (26 U.S.C. 5178))
Sec. 19.70 Exemptions to meet the requirements of National
defense.
The Director may temporarily exempt proprietors from any provision
of the internal revenue laws or this part relating to spirits except
those requiring payment of tax thereon whenever in his judgement it is
expedient to do so to meet the requirements of the National defense.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1397, as amended (26 U.S.C. 5561))
Sec. 19.71 Experimental or research operations by scientific
institutions and colleges of learning.
(a) General. The Director may authorize any scientific university,
college of learning, or institution of scientific research to produce,
receive, blend, treat,
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test, and store spirits, without payment of tax, for experimental or
research use but not for consumption (other than organoleptic tests) or
sale, in quantities as may be reasonably necessary for such purposes.
The Director may waive any provision of 26 U.S.C. Chapter 51 (other than
26 U.S.C. 5312), or this part (other than this section) to the extent
necessary to effect the purposes of 26 U.S.C. 5312(a), except he may not
waive the payment of any tax on distilled spirits removed from any
university, college, or institution. A person conducting experimental or
research operations authorized under this section is subject to special
(occupational) tax under subpart Ca of this part and shall hold a
special tax stamp to cover the experimental or research operations.
(b) Qualification. Any university, college, or institution desiring
to conduct any of the experimental or research operations listed in the
preceding paragraphs shall make written application, to the Director,
through the regional director (compliance), and obtain the Director's
approval of the proposed operations. The applicant shall file with the
application a bond in a form and penal sum as required by the Director.
The application shall state the nature, extent, and purpose of the
operations to be conducted and describe the operations and equipment,
the location at which operations will be conducted (including
identification of the building or buildings, or the portions thereof to
be used), and the security measures to be provided. The Director may
require any additional information. Operations shall not be commenced
until authorized by the Director.
(c) Records. Reports concerning the operations need not be submitted
unless required by the Director, but records of the quantities of
spirits produced, received, and used each day shall be made and retained
for inspection by ATF officers.
(d) Discontinuance of operations. When operations authorized by the
Director are discontinued, all remaining spirits shall be disposed of by
destruction. When these spirits have been destroyed, notice of the
discontinuance of operations shall be given to the regional director
(compliance).
(Sec. 201, Pub. L. 85-859, 72 Stat. 1375, as amended (26 U.S.C. 5312))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. ATF-271, 53
FR 17543, May 17, 1988]
Authorities of the Regional Director (Compliance)
Sec. 19.72 Other businesses.
Application to conduct at a distilled spirits plant a type of
business other than that of a distiller, warehouseman, or processor may
be approved by the regional director (compliance) if the Director has,
as provided in Sec. 19.68, authorized the carrying on of a business of
the type proposed, unless the regional director (compliance) finds that
there are particular conditions in respect to the applicant's plant that
would cause the carrying on of such business to be a jeopardy to the
revenue or a hindrance to the effective administration of this part.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1353, as amended (26 U.S.C. 5178))
Sec. 19.73 Emergency variations from requirements.
The regional director (compliance) may approve construction,
equipment, and methods of operation other than as specified in this
part, where he finds that an emergency exists and the proposed
variations from the specified requirements are necessary, and the
proposed variations--
(a) Will afford the security and protection to the revenue intended
by the prescribed specifications;
(b) Will not hinder the effective administration of this part; and
(c) Will not be contrary to any provisions of law.
Variations from requirements granted under this paragraph are
conditioned on compliance with the procedures, conditions, and
limitations with respect thereto set forth in the approval of the
application. Failure to comply in good faith with such procedures,
conditions, and limitations shall automatically terminate the authority
for such variations and the proprietor thereupon shall fully comply with
the
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prescribed requirements of regulations from which the variations were
authorized. Authority for any variation may be withdrawn whenever in the
judgement of the regional director (compliance) the revenue is
jeopardized or the effective administration of this part is hindered by
the continuation of such variation. Where the proprietor desires to
employ such variation, he shall submit a written application to do so to
the regional director (compliance). The application shall describe the
proposed variations and set forth the reasons therefor. Variations shall
not be employed until the application has been approved.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1353, as amended, 1395, as amended
(26 U.S.C. 5178, 5552))
Sec. 19.74 Disaster exemptions.
The regional director (compliance) may, whenever he finds that it is
necessary or desirable, by reason of disaster, temporarily exempt the
proprietor of any plant from any provisions of the internal revenue laws
and this part relating to spirits, except those requiring the payment of
tax on spirits, to the extent he may deem necessary or desirable.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1397, as amended (26 U.S.C. 5562))
Sec. 19.75 Assignment of officers and supervision of operations.
(a) General. The regional director (compliance) may assign such
number of ATF officers to distilled spirits plants and utilize controls
(including the use of Government locks and seals) as necessary to
maintain supervision of operations conducted at such plants. When
supervision is necessary:
(1) The regional director (compliance) may require a proprietor to
delay any distilled spirits operation so that it may be conducted in the
presence of an ATF officer; and
(2) The regional director (compliance) may require the proprietor to
submit a schedule of operations to an ATF officer.
(b) Hours of operation. When operations at a distilled spirits plant
are to be conducted in the presence of an ATF officer, such operations:
(1) Shall not be conducted on Sunday unless specifically authorized by
the regional director (compliance) in each instance on the showing of an
emergency; and (2) Shall be conducted during an 8-hour period between 7
a.m. and 5 p.m. unless, pursuant to the proprietor's application the
regional director (compliance) authorizes the performance and
supervision of operations during other hours. The regional director
(compliance), in administering this provision, shall not restrict such
operation or function to a greater extent than did the provisions of
internal revenue law and regulations on June 30, 1959.
(c) Notification of supervision. (1) When it is determined that
supervision of plant operations is necessary, the regional director
(compliance) shall notify the proprietor of the extent of ATF
supervision.
(2) If supervision of a distilled spirits plant was not terminated
as of December 31, 1979, notification is not necessary for continued
supervision.
(d) Withdrawal of supervision. The regional director (compliance)
shall notify the proprietor when ATF supervision of plant operations is
to be withdrawn.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1395, as amended (26 U.S.C. 5553);
Sec. 806, Pub. L. 96-39, 93 Stat. 279 (26 U.S.C. 5201, 5202))
Sec. 19.76 Allowance of remission, abatement, credit or
refund of tax.
The regional director (compliance) is authorized to allow claims for
remission, abatement, credit, and refund of tax, filed under the
provisions of this part.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1323, as amended (26 U.S.C. 5008))
Sec. 19.77 Installation of meters, tanks and other apparatus.
The regional director (compliance) is authorized to require the
proprietor to install meters, tanks, pipes, or any other apparatus which
the regional director (compliance) deems advisable for the purpose of
protecting the revenue. Any proprietor refusing or neglecting to install
such apparatus when so required shall not be permitted to conduct
business.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1395, as amended (26 U.S.C. 5552))
[[Page 284]]
Sec. 19.78 Approval of qualifying documents.
The regional director (compliance) is authorized to approve, except
as otherwise provided in this part, all qualifying documents, including
bonds and consents of surety, required by this part.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1349, as amended, 1394, as amended
(26 U.S.C. 5172, 5551); Sec. 805, Pub. L. 96-39, 93 Stat. 275, 276 (26
U.S.C. 5171, 5173))
Sec. 19.79 Discontinuance of storage facilities.
When the regional director (compliance) finds that any facilities
for the storage of spirits on bonded premises are unsafe or unfit for
use, or that spirits stored are subject to great loss or wastage, he may
require the discontinuance of the use of such facilities and require the
spirits contained therein to be transferred to such other storage
facilities as he may designate. Such transfer shall be made at such time
and under such supervision as the regional director (compliance) may
require and the expense of the transfer shall be paid by the owner or
the warehouseman of the spirits. Whenever the owner of such spirits or
the warehouseman fails to make such transfer within the time prescribed
or to pay the just and proper expense of such transfer, as ascertained
and determined by the regional director (compliance), such spirits may
be seized and sold in the same manner as goods sold on distraint for
taxes, and the proceeds of such sale shall be applied to the payment of
the taxes due thereon and the cost and expense of such sale and removal,
and the balance shall be paid over to the owner of such spirits.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1369, as amended (26 U.S.C. 5236))
[T.D. ATF-198, 50 FR 8464, Mar. 1, 1985; 50 FR 23410, June 4, 1985]
Authorities of ATF Officers
Sec. 19.81 Right of entry and examination.
Any ATF officer may at all times, as well by night as by day, enter
any distilled spirits plant, or any other premises where distilled
spirits operations are carried on, or structure or place used in
connection therewith for storage or other purposes; to make examination
of the materials, equipment, and facilities thereon; and make such
gauges and inventories as he deems necessary. Whenever any ATF officer,
having demanded admittance, and having declared his name and office, is
not admitted into such premises by the proprietor or other person having
charge thereof, he may at all times, use such force as is necessary for
him to gain entry to such premises.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1357, as amended (26 U.S.C. 5203))
Sec. 19.82 Detention of containers.
Any ATF officer may detain any container containing, or supposed to
contain, spirits when such officer has reason to believe that the tax
imposed by law on such spirits has not been paid or determined as
required by law or this part, or that such container is being removed in
violation of law or this part. Every such container may be held by the
ATF officer at a safe place until it shall be determined whether the
property so detained is liable by law to be proceeded against for
forfeiture. However, such summary detention shall not continue in any
case longer than 72 hours without process of law or intervention of the
regional director (compliance), unless the person in possession of the
container immediately prior to its detention, in consideration of the
container being kept on his premises during detention, executes a waiver
of the 72-hours limitation on detention of the container.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1375 (26 U.S.C. 5311))
Sec. 19.83 Samples for the United States.
Any ATF officer is authorized to take samples of spirits, denatured
spirits, articles, wines, or any other materials which may be added to
such products for analysis, testing, or other determinations to
ascertain whether there is compliance with the provisions of law and
regulations. When such samples are removed from the bonded premises, the
ATF officer shall give
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the proprietor a receipt covering the sample so removed.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1323, as amended, 1357, as amended,
1362, as amended, 1380, as amended (26 U.S.C. 5201, 5203, 5214, 5362))
Sec. 19.84 Gauging and measuring equipment.
All gauging and measuring equipment and means required by 27 CFR
part 30 and this part to be furnished by the proprietor for the purpose
of ascertaining the quantity, alcoholic content, specific gravity, and
producing capacity of any materials, denaturants, mash, wort, or beer,
or the quantity and alcoholic content of spirits, denatured spirits, or
wines, shall be maintained by the proprietor in accurate and readily
usable condition. Any ATF officer may disapprove the use of any
equipment or means if such officer finds it would be insufficiently
accurate and the proprietor shall promptly provide accurate equipment or
means in lieu of the disapproved equipment or means.
(Sec. 201, Pub. L. 85-859, 72 Stat. 1320, as amended, 1358, as amended
(26 U.S.C. 5006, 5204))
Entry and Examination of Premises
Sec. 19.86 Furnishing facilities and assistance.
On the demand of any ATF officer or agent, the proprietor shall
furnish the necessary facilities and assistance to enable the officer or
agent to gauge the spirits in any container or to examine any apparatus,
equipment, containers, or materials on the distilled spirits plant
premises. The proprietor shall also, on demand of an ATF officer or
agent, open all doors, and