Rev. Ruling 63-12

Warehouse Receipts

Advice has been requested whether a retail liquor dealer may engage in the practice of purchasing warehouse receipts covering distilled spirits in internal revenue bond, and of transferring such receipts to the proprietor of a distilled spirits plant for the bottling of the distilled spirits for the account of the retailer under an agreement where the retailer will pay bottling and storage charges plus federal state, and local taxes. Depending upon state law the bottled and cased spirits are shipped directly to the retailer or through a wholesale dealer in liquors.

Section 5112(b) of the Internal Revenue Code of 1954 defines a wholesale dealer in liquors as a dealer (other than a wholesale dealer in beer) who sells, or offer for sale, distilled spirits, wines, or beer to another dealer. Section 194.35 of the Liquor Dealers Regulations state that the sale of warehouse receipts for distilled spirits is equivalent to the sale of distilled spirits.

Section 3 of the Federal Alcohol Administration Act requires a person engaging in the business of purchasing distilled spirits for resale at wholesale to obtain a basic permit, and section 6(a) of such Act makes it unlawful for any person to sell or offer to sell, contract to sell, or otherwise dispose of warehouse receipts or distilled spirits in bulk unless such warehouse receipts require that the warehouseman (1) package such distilled spirits, before delivery, in bottles, labeled and marked, in accordance with law, or (2) deliver such distilled spirits in bulk to persons who may lawfully received distilled spirits in bulk.

Accordingly, if the retailer neither transfers title nor beneficial ownership of the distilled spirits to the bottling proprietor in the course of the transaction, the retailer does not incur liability for payment of the special tax under the provisions of section 5111 of the Code, nor is he a wholesaler within the intent of the Federal Alcohol Administration Act.

There are no provisions of Federal law requiring a retailer to receive bottled distilled spirits through a person holding a wholesaler's basic permit. Therefore, the distilled spirits bottled by the proprietor of the distilled spirits plant for the account of the retailer may be shipped directly to the retailer or through a wholesaler, depending upon the requirements of state law.

Revenue Ruling 54-129, C.B. 1954-1, 334, is hereby superseded.

26 U.S.C. 5112; 27 CFR 194.24