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SEMIMONTHLY WINE TAX RETURN SYSTEM
Proprietors of bonded wine cellars and others concerned:
Purpose. The purpose of this industry circular is to give you preliminary information that will help you to effectively plan for a smooth transition from the payment of tax on wine by daily return to the payment of such tax by semimonthly return.
Background. The Secretary of the Treasury has authorized the payment of tax on wine by semimonthly return. This system of taxpayment will be mandatory, except where a winemaker is in default of any payment of the tax on wine or does not have on file a deferral bond in sufficient penal sum, in which instances, the tax must be prepaid. A preliminary draft of regulations for the payment of tax on wine by semimonthly return has been prepared and, as the new system is to be effective June 24, 1959, we are furnishing you a copy so you may be as fully advised as possible at the earliest possible date. General. The proposed regulations will contain requirements for bonds and consents, procedures for filing returns, and other provisions necessary to the semimonthly return system. Conferences have been held with representatives of the Surety Association of America, 6o John Street, New York 38, New York, to acquaint them with the new bonding requirements. They have assured us that they will issue instructions by June 4th so that all bonding companies will be prepared to act expeditiously on requests for bonds conforming with the proposed regulations.
Bond requirements. The regulations will require that the penal sum of a wine tax deferral bond (Form 2053) shall be not less than the tax on the maximum quantity of wine to be removed for consumption or sale during any semimonthly return period, but shall not be more than $250,000. If the penal sum of your tax deferral bond (or bonds) in force on June 23, 1959, is not sufficient to meet these requirements, you must file a new bond or a strengthening bond. If the penal sum of your tax deferral bond (or bonds) in force on June 23, 1959, is sufficient, a new bond need not be filed, but in such instance, and also when a strengthening bond is filed, you must file a consent of surety, Form 1533, extending the terms of the bond (or bonds) in force June 23, 1959, to cover transactions after that date. The Form 1533 should properly identify the bond affected thereby and contain the statement of purpose as given in 170.454 of the attached draft.
Period of semimonthly return. The semimonthly periods for the returns run from the 9th through the 23rd of one month and from the 24th of one month through the 8th of the next month. You must file a return, Form 2050, even though you did not remove wine for consumption or sale during a return period and regardless of whether any or all of the tax for the period has been prepaid. You will enter in schedule D of the return, the quantities of wine by taxable grades removed daily for consumption or sale during the period covered by the return and the aggregate of such daily totals in schedule A. Any wine on which the tax was prepaid during the period covered by the return will be reported in schedule C as an adjustment decreasing the tax. The serial numbers of the prepayment returns will be shown in schedule C.
Time for filing semimonthly return. The semimonthly return must be filed not later than three days (excluding Saturdays, Sundays, and legal holidays) after the close of the return period. Thus, for example, returns for the first period (June 24 through July 8) need not be filed until July 13, as Saturday, July 11, and Sunday, July 12, would be excluded.
Prepayment return. The regulations will require that the tax on wine must be prepaid on Form 2052, if the penal sum of your tax deferral bond (or bonds), Form 2053, is not sufficient to cover all taxes due for the return period, or if you are for any reason in default in your payments of tax on wine. Unless you are in default in a payment of wine tax, prepayment will not be required where the taxes due are not in excess of $100 (covered by your bond, Form 700), or where your tax deferral bond (or bonds), Form 2053, is in a sufficient penal sum.
Preparation and disposition of returns. You will prepare your returns, Forms 2050 and 2052, in quadruplicate, forward or deliver the original and two copies (with remittance) to the district director and, at the same time, forward one copy to your assistant regional commissioner.
Form of remittance. No change has been made in the rules governing the form of remittances which must accompany your returns. Thus, you will continue to be guided by the provisions of Part 240 in this respect.
Inquiries. Any inquiries regarding this industry circular should refer to its number and be addressed to the office of your assistant regional commissioner (alcohol and tobacco tax).
Dwight P. E. Avis
Director, Alcohol and Tobacco Tax Division Attachment
IRS-D.C.-49192
Preliminary Draft
SUBPART S PAYMENT OF TAX ON WINE
Sec. 170.451 Scope of subpart. 170.452 General. 170.453 Meaning of terms. 170.454 Penal sum of tax deferral bond, Form 2053: consent of surety. 170.455 Semimonthly returns. 170.456 Proprietor in default; prepayment of tax. 170.457 Prepayment of tax. 170.458 Date of mailing and delivering of returns.
Authority: §§ 170.451 to 170.458 issued under sec. 7805, I.R.C., 68A Stat. 917; 26 U.S.C. 7805. Other statutory provisions interpreted or applied are cited to text in parentheses.
§ 170.451 Scope of subpart.
This subpart provides temporary regulations for payment by proprietors of bonded wine cellars qualified under chapter 51, I.R.C., of the internal revenue taxes imposed on wines, and temporary procedures relating thereto.
170.452 General.
Notwithstanding any other provision of Part 240 of this chapter relating to the payment of taxes on wines by proprietors of bonded wine cellars qualified under chapter 51, I.R.C., such taxes determined, on and after June 24, 1959, shall be paid and collected on the basis of a semimonthly or prepayment return as provided in this subpart.
170.453 Meaning of terms.
When used in this subpart and in forms prescribed under this subpart, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, terms shall have the meaning ascribed in Part 240 of this chapter.
Preliminary Draft § 170.454 Penal sum of tax deferral bond, Form 2053: consent of surety.
Notwithstanding the provisions of §240.2 and subpart H of Part 240 of this chapter, to the extent that they are inconsistent with the provisions of this section, the provisions of this section shall govern. The maximum penal sum of a. tax deferral bond, Form 2053, (or the total penal sums where original and strengthening bonds are filed) shall be not less than an amount equal to the tax on the maximum quantity of wine to be removed for consumption or sale during any semimonthly return period, but shall not be more than $250,000. Where a tax deferral bond (or bonds), Form 2053, in force on June 23, 1959, is not in a sufficient penal sum to meet the requirements of this subpart, a new bond or strengthening bond shall be filed in accordance with the provisions of Part 240 of this chapter. Where a tax deferral bond (or bonds) in force on June 23, 1959, is in a sufficient penal sum, a new bond need not be filed: Provided, That a consent of surety, Form 1533, shall be filed extending the terms of the bond (or bonds) in force on June 23, 1959, to cover transactions after that date. The Form 1533 shall properly identify the bond to which it applies and contain the following statement of purpose:
To continue in effect said bond (including all extensions or limitations of such terms and conditions previously consented to and approved) on and after June 24, 1959, notwithstanding that the time for deferral of payment of the tax on wine removed for consumption or sale will be changed from a period of one day to a semimonthly period.
(68A Stat. 663; 26 U.S.C. 5354)
Preliminary Draft
Payment of Tax
170.455 Semimonthly returns.
The quantities of wine by taxable grades removed daily for consumption or sale during the period covered by the return and the aggregate quantities thereof, shall be reported on the tax returns, Form 2050, prepared in quadruplicate. All entries in the return shall be fully supported by accurate and complete records satisfactory to the assistant regional commissioner. The proprietor shall include for payment on his return, Form 2050, the full amount of tax required to be determined (and not prepaid) on all wine removed daily from the bonded wine cellar premises (or transferred to a taxpaid room on the premises) for consumption or sale during the period covered by the return. Prepayments of tax on wine during the period covered by the return shall be separately shown thereon. The proprietor shall file a tax return, Form 2050, with remittance for the full amount of tax due, semimonthly, covering the period from the 9th day of a month through the 23rd day of the same month and the period from the 24th day of a month through the 8th day of the next succeeding month. The tax return shall be filed not later than the close of the 3rd calendar day next succeeding the 8th or 23rd calendar day of the month, as the case may be, excluding any Saturday, Sunday, or legal holiday of the District of Columbia or any statewide legal holiday of the State in which the return is required to be filed: Provided, That the return for the period ending on June 23rd of each year shall be filed not later than the close of the 2nd next succeeding calendar day after June 23rd, excluding any Saturday, Sunday, or a legal holiday of the District of Columbia or a statewide legal holiday of the particular State in which the return is required to be filed. A return shall be filed covering each return period even though no wine was removed for consumption or sale during the period.
Preliminary Draft
170.456 Proprietor in default; prepayment of tax.
Where a check or money order tendered in payment of taxes on wine is not paid on presentment, or where the proprietor is otherwise in default in payment of tax under § 170.455, no wine shall be removed for consumption or sale until the tax has been paid as provided in § 170.457, for the period of such default and until the assistant regional commissioner finds the revenue will not be jeopardized by payment of tax as provided in § 170.455. Any remittance made during the period of such default shall be in cash or in the form of a certified, cashier's, or treasurer's check drawn on any bank or trust company incorporated under the laws of the United States, or under the laws of any State, Territory, or possession of the United States, or money order as defined in § 301.6311-1 of this chapter.
§ 170.457 Prepayment of tax.
Where a proprietor is required to prepay tax under § 170.456, or the penal sum of any tax deferral bond, Form 2053, (or the total penal SUMS where original and strengthening bonds are filed) is insufficient for deferral of payment of tax on wine to be removed for consumption or sale, the proprietor shall, before removal of the wine, file with the district director a wine tax return, Form 2052, with remittance: Provided, That where an approved tax deferral bond is not on file the tax need not be prepaid where the total amount of tax unpaid does not exceed $100. The return, with remittance, shall be filed by forwarding or delivering it to the district director before the wine is removed for consumption or sale. For the purpose of complying with this section, the term "forwarding" shall mean deposit in the United States mail, properly addressed to the district director. (68A Stat. 614, 777; 26 U.S.C. 5061, 6311)
Preliminary Draft
§ 170.458 Date of mailing and delivering of returns.
Where the return, Form 2052 or Form 2050, as the case may be, and remittance are delivered by United States mail to the office of the district director, the date of the official postmark of the United States Post Office stamped on the cover in which the return and remittance were mailed shall be deemed to be the date of delivery of such return and remittance.
I.R.S-D.C.49192
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