Rev. Ruling 64-39
Advice has been requested whether a bonded dealer in specially denatured alcohol may (1) procure and sell for industrial use taxpaid alcohol contained in drums having a capacity of 54 gallons, (2) transport such drum of taxpaid alcohol in the same conveyance with specially denatured alcohol, and (3) store such drums of taxpaid alcohol on bonded dealer premises.
Section 5122(a) of the Internal Revenue Code of 1954 defines the term "retail dealer in liquors" as any dealer, other than a retail dealer in beer or a limited retail dealer, who sells, or offer limited retail dealer, who sell, or offers for sale, any distilled spirits wines or beer, to any person other than a dealer.
It is held that a bonded dealer in specially denatured alcohol may purchase and receive on his bonded dealer premises taxpaid alcohol contained in drums having a capacity of 54 gallons and resell them exclusively to industrial users for industrial use. These drums of taxpaid alcohol may also be shipped in conveyances with specially denatured alcohol and may be stored on the bonded dealer premises, provided such drums are kept separated from the specially denatured alcohol.
Since an industrial user is a consumer, a dealer who sells taxpaid alcohol under the circumstances described above is a retail dealer in liquors. Therefore, he is liable for the special tax imposed by section 5121(a) of the Code, and is subject to the provision of the Liquor Dealer Regulations relation to retail dealer in liquors.
To avoid the presumption under section 5691(b) of the Code of being a wholesale dealer in liquors, the dealer must keep a record of disposition of the taxpaid alcohol and identify the purchaser as a person other than a dealer. The record of disposition must be kept in the detail (including package serial numbers) required by section 194.239(b) of the regulations.
27 U.S.C. 206; 27 CFR 3.25