[Federal Register Volume 61, Number 119 (Wednesday, June 19, 1996)]
[Rules and Regulations]
[Pages 31028-31035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14853]
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[[Page 31029]]
DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and Firearms
27 CFR Part 24, 70, and 170
[T.D. ATF 376]
RIN 1512-AB44
Miscellaneous Regulations Relating to Liquor (95R-039P)
AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of
the Treasury.
ACTION: Final rule, Treasury decision.
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SUMMARY: ATF is amending its regulations by transferring Subparts E and
O from 27 CFR Part 170 to 27 CFR Part 70, and redesignating these
regulations as Subparts F and G respectively within Part 70. 27 CFR
Part 170, Subpart E contains regulations which implement 26 U.S.C. 6423
relating to certain refunds or credits of tax on distilled spirits,
wines, and beer. Subpart O contains regulations which implement 26
U.S.C. 5064 relating to payments for losses of distilled spirits,
wines, and beer due to disaster, vandalism, or malicious mischief.
ATF has also reviewed the regulations within 27 CFR Part 170,
Subpart E and determined that the bonding requirements provided for in
Secs. 170.94-170.99 are no longer needed. Consequently, these bonding
provisions have been eliminated.
EFFECTIVE DATE: September 17, 1996.
FOR FURTHER INFORMATION CONTACT: Daniel J. Hiland, Wine, Beer and
Spirits Regulations Branch, Bureau of Alcohol, Tobacco and Firearms,
650 Massachusetts Avenue, NW., Washington, DC 20226 (202-927-8210).
SUPPLEMENTARY INFORMATION:
Background
On February 21, 1995, President Clinton announced a regulatory
reform initiative. As part of this initiative, each Federal agency was
instructed to conduct a page by page review of all agency regulations
to identify those which are obsolete or burdensome and those whose
goals could be better achieved through the private sector, self-
regulation or state and local governments. In cases where the agency's
review disclosed regulations which should be revised or eliminated, the
agency would, as soon as possible, propose administrative changes to
its regulations.
The page by page review of all regulations was completed as
directed by the President. In addition, on April 13, 1995 the Bureau
published a notice in the Federal Register requesting comments from the
public regarding which ATF regulations could be improved or eliminated.
As a result of both the Bureau's analysis of its regulations, and from
the public comments received, a number of regulatory initiatives were
developed which are intended to accomplish the President's goals.
Transfer of Subparts E and O
This Treasury decision implements one of the regulatory initiatives
identified by ATF personnel, the transfer of regulations found in 27
CFR Subparts E and O from Part 170 to 27 CFR Part 70.
These two subparts were located within 27 CFR Part 170, which
contains miscellaneous regulations relating to liquor. The Bureau has
determined that the placement of this information in a miscellaneous
part within 27 CFR is not appropriate and not easily accessible to
persons seeking information regarding claims, refunds, and credits. The
Bureau has decided that since much of this type of information is
already located within Part 70, Procedures and Practices, it would be
more appropriate to transfer these two subparts to 27 CFR Part 70.
Elimination of Bond
This Treasury decision also eliminates a bonding requirement
relating to certain claims filed under 26 U.S.C. 6423. The regulations
at 27 CFR Part 170, Subpart E contain provisions whereby a claim, for
refund or credit of tax on articles which the claimant or owner has
neither sold nor contracted to sell at the time of filing of the claim
under 26 U.S.C. 6423, must be accompanied by a bond on Form 2490. ATF
has reviewed the background and legislative history surrounding Section
6423 and determined that this bonding provision is no longer needed in
the regulations.
ATF finds that this bonding provision dates back to the passage of
Public Law 85-323 in 1958. At that time, the tax law required
distillers to remove distilled spirits from bond after a period of
eight years and pay the distilled spirits tax on the spirits so
removed. Distillers filed suit against the Government because they
considered this law unconstitutional. In addition, many distillers
filed claims for refund of taxes paid on spirits which they were
required to remove from bond.
In response to these actions, Congress passed Public Law 85-323
which added Section 6423 to the Internal Revenue Code. The purpose of
this section was to prevent claimants from realizing a windfall gain
from the possible credit or refund of tax in those instances where
someone else bore the ultimate burden for the tax. The provisions of
Section 6423 set certain conditions for payment of such refunds or
credits. Generally, these provisions required that the claimant
establish that he bore the ultimate burden for the tax claimed. Section
6423 also provided that, where the taxed commodities had not yet been
sold, the claimant must agree not to shift the burden of the tax, or to
seek relief from it, and the Secretary could require filing of a bond
to guarantee compliance with this agreement. A bonding requirement was
incorporated into ATF's regulations.
The bonding provision was intended to cover spirits which the
distiller withdrew from bond and taxpaid, but had not yet marketed. Any
person filing a claim for spirits which were not yet marketed was
required to provide a bond to ensure compliance with the agreement that
they would not also shift the tax burden for the spirits to another
person after the claim was filed.
Ultimately, the court ruled in favor of the Government and the
claims filed by the various distillers were denied. See Schenley
Distillers, Inc. v. United States, 255 F.2d 334 (3rd Cir. 1958), cert.
denied, 358 U.S. 835 (1958). Later, the tax law was amended, and the
requirement to withdraw spirits from bond after eight years was
eliminated from the law.
Under current law, it would be unusual for a claimant to file a
request for credit or refund on a product which had been taxpaid, but
not yet marketed, since products are generally sold immediately after
removal from bond. Since the circumstances which brought about this
bonding provision have changed, and the bond is not required by law,
ATF has decided to remove the bonding requirement from the regulations.
ATF has determined that elimination of the bonding requirement will not
jeopardize the revenue.
Miscellaneous
The transfer of two subparts of regulations from 27 CFR Part 170 to
Part 70 affects references to refund and claim procedures found in
several sections of 27 CFR Part 24. Therefore, this Treasury decision
also makes minor technical amendments to 27 CFR Part 24 whereby
references to provisions formerly found in 27 CFR Part 170 will now
refer to 27 CFR Part 70.
Executive Order 12866
It has been determined that this final rule is not a significant
regulatory action as defined by Executive Order 12866.
[[Page 31030]]
Accordingly, this final rule is not subject to the analysis required by
this Executive Order.
Regulatory Flexibility Act
The provisions of the Regulatory Flexibility Act relating to a
final regulatory flexibility analysis (5 U.S.C. 604) are not applicable
to this final rule because the agency was not required to publish a
general notice of proposed rulemaking under 5 U.S.C. 553 or any other
law. A copy of this final rule has been submitted to the Administrator
of the Small Business Administration for comment on the impact of such
regulations on small business, pursuant to 26 U.S.C. 7805(f).
Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1980, Pub. L. 96-
511, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR Part
1320, do not apply to this notice because no new requirement to collect
information is imposed. This final rule only transfers two Subparts
from 27 CFR Part 170 to 27 CFR Part 70.
Administrative Procedure Act
Because this final rule merely makes technical amendments and
conforming changes to improve the clarity of the regulations, it is
unnecessary to issue this final rule with notice and public procedure
under 553(b).
Drafting Information: The principal author of this document is
Daniel J. Hiland, Wine, Beer and Spirits Regulations Branch, Bureau
of Alcohol, Tobacco and Firearms.
List of Subjects
27 CFR Part 24
Administrative practice and procedure, Authority delegations,
Claims, Electronic fund transfers, Excise taxes, Exports, Food
additives, Fruit juices, Labeling, Liquors, Packaging and containers,
Reporting and recordkeeping requirements, Research, Scientific
equipment, Spices and flavorings, Surety bonds, Taxpaid wine bottling
house, Transportation, Vinegar, Warehouses, Wine.
27 CFR Part 70
Administrative practice and procedure, Authority delegations,
Claims, Customs duties and inspection, Disaster assistance, Excise
taxes, Government employees, Law enforcement, Law enforcement officers.
27 CFR Part 170
Alcohol and alcoholic beverages, Authority delegations, Customs
duties and inspection, Labeling, Liquors, Penalties, Reporting
requirements, Wine.
Issuance
Chapter I of title 27, Code of Federal Regulations is amended as
follows:
PART 24--WINE
Par. 1. The authority citation for part 24 continues to read as
follows:
Authority: 5 U.S.C. 552(a); 26 U.S.C. 5001, 5008, 5041, 5042,
5044, 5061, 5062, 5081, 5111-5113, 5121, 5122, 5142, 5143, 5173,
5206, 5214, 5215, 5351, 5353, 5354, 5356, 5357, 5361, 5362, 5364-
5373, 5381-5388, 5391, 5392, 5511, 5551, 5552, 5661, 5662, 5684,
6065, 6091, 6109, 6301, 6302, 6311, 6651, 6676, 7011, 7302, 7342,
7502, 7503, 7606, 7805, 7851; 31 U.S.C. 9301, 9303, 9304, 9306.
Par. 2. Section 24.65(c) is revised to read as follows:
Sec. 24.65 Claims for wine or spirits lost or destroyed in bond.
* * * * *
(c) Claim for abatement, credit or refund. A claim for an abatement
of an assessment under Sec. 24.61, or credit or refund of tax which has
been paid or determined, will be filed with the regional director
(compliance) in accordance with the provisions of this paragraph and
the provisions of 27 CFR part 70, subpart F. A claim filed under this
paragraph with respect to spirits, wine, or volatile fruit-flavor
concentrate, will set forth the applicable information required by
paragraphs (a) and (b) of this section. In addition, any claim filed
under this paragraph will set forth the following information:
(1) The date of the assessment for which abatement is claimed; and
(2) The name, registry number, and address of the premises where
the tax was assessed (or name, address, and title of any other person
who was assessed the tax, if the tax was not assessed against the
proprietor).
* * * * *
Par. 3. Section 24.67 is amended by revising paragraphs (b) and (c)
to read as follows:
Sec. 24.67 Other Claims.
* * * * *
(b) Refund or credit of any tax imposed on wine or other liquors by
26 U.S.C. chapter 51, part I, subchapter A, on the grounds that an
amount of tax was assessed or collected erroneously, illegally, without
authority, or in any manner wrongfully, or on the grounds that the
amount was excessive, are contained in 27 CFR part 70 subpart F.
(c) Payment of an amount equal to the internal revenue tax paid or
determined and customs duties paid on wines or other liquors previously
withdrawn, which are lost, rendered unmarketable, or condemned by a
duly authorized official as a result of
(1) A major disaster,
(2) Fire, flood, casualty, or other disaster, or
(3) Breakage, destruction, or damage (excluding theft) resulting
from vandalism or malicious mischief, are found in 27 CFR part 70,
subpart G.
Par. 4. Section 24.295(a) is revised to read as follows:
Sec. 24.295 Return of unmerchantable wine to bond.
(a) General. Wine produced in the United States which has been
taxpaid, removed from bonded wine premises, and subsequently determined
to be unmerchantable may be returned to bonded wine premises for
reconditioning, reformulation or destruction. The tax paid on United
States wine may, when such wine is returned to bond, be refunded or
credited, without interest, to the proprietor of the bonded wine
premises to which such wine is delivered. However, no tax paid on any
United States wine for which a claim has been or will be made under the
provisions of 27 CFR Part 70, subpart G will be refunded or credited.
If the tax on the United States wine has been determined but not paid,
the person liable for the tax may, when such wine is returned to bond,
be relieved of the liability. Claims for refund or credit, or relief
from tax paid or determined on United States wine returned to bond are
filed in accordance with Sec. 24.66.
* * * * *
PART 70--PROCEDURE AND ADMINISTRATION
Par. 5. The authority citation for part 70 is revised to read as
follows:
Authority: 5 U.S.C. 301 and 552; 26 U.S.C. 4181, 4182, 5064,
5146, 5203, 5207, 5275, 5367, 5415, 5504, 5555, 5684(a), 5741,
5761(b), 6020, 6021, 6064, 6102, 6155, 6159, 6201, 6203, 6204, 6301,
6303, 6311, 6313, 6314, 6321, 6323, 6325, 6326, 6331-6343, 6401-
6404, 6407, 6416, 6423, 6501-6503, 6511, 6513, 6514, 6532, 6601,
6602, 6611, 6621, 6622, 6651, 6653, 6656, 6657, 6658, 6665, 6671,
6672, 6701, 6723, 6801, 6862, 6863, 6901, 7011, 7101, 7102, 7121,
7122, 7207, 7209, 7214, 7304, 7401, 7403, 7406, 7423, 7424, 7425,
7426, 7429, 7430, 7432, 7502, 7503, 7505, 7506, 7513, 7601-7606,
7608-7610, 7622, 7623, 7653, 7805.
Penalties
70.610 Penalties.
Par. 6. Section 70.1 is revised to read as follows:
[[Page 31031]]
Sec. 70.1 General.
(a) The regulations in Subparts C, D, and E of this part set forth
the procedural and administrative rules of the Bureau of Alcohol,
Tobacco and Firearms for:
(1) The issuance and enforcement of summonses, examination of books
of account and witnesses, administration of oaths, entry of premises
for examination of taxable objects, granting of rewards for
information, canvass of regions for taxable objects and persons, and
authority of ATF officers.
(2) The use of commercial banks for payment of excise taxes imposed
by 26 U.S.C. Subtitles E and F.
(3) The preparing or executing of returns; deposits; payment on
notice and demand; assessment; abatements, credits and refunds;
limitations on assessment; limitations on credit or refund; periods of
limitation in judicial proceedings; interest; additions to tax,
additional amounts, and assessable penalties; enforced collection
activities; authority for establishment, alteration, and distribution
of stamps, marks, or labels; jeopardy assessment of alcohol, tobacco,
and firearms taxes, and registration of persons paying a special tax.
(4) Distilled spirits, wines, beer, tobacco products, cigarette
papers and tubes, firearms, ammunition, and explosives.
(b) The regulations in Subpart F of this part relate to the
limitations imposed by 26 U.S.C. 6423, on the refund or credit of tax
paid or collected in respect to any article of a kind subject to a tax
imposed by Part I, Subchapter A of Chapter 51, I.R.C., or by any
corresponding provision of prior internal revenue laws.
(c) The regulations in Subpart G of this part implement 26 U.S.C.
5064, which permits payments to be made by the United States for
amounts equal to the internal revenue taxes paid or determined and
customs duties paid on distilled spirits, wines, and beer, previously
withdrawn, that were lost, made unmarketable, or condemned by a duly
authorized official as a result of disaster, vandalism, or malicious
mischief. This subpart applies to disasters or other specified causes
of loss, occurring on or after February 1, 1979. This subpart does not
apply to distilled spirits, wines, and beer manufactured in Puerto Rico
and brought into the United States.
Par. 7. Section 70.2 is added to read as follows:
Sec. 70.2 Forms prescribed.
(a) The Director is authorized to prescribe all forms required by
this part. All of the information called for in each form shall be
furnished as indicated by the headings on the form and the instructions
on or pertaining to the form. In addition, information called for in
each form shall be furnished as required by this part.
(b) Requests for forms should be mailed to the ATF Distribution
Center, P.O. Box 5950, Springfield, Virginia 22153-5950.
Par. 8. Section 70.411 is amended by revising paragraph (c)(2) to
read as follows:
Sec. 70.411 Imposition of taxes, qualification requirements, and
regulations.
* * * * *
(c) * * *
(2) Miscellaneous liquor transactions. Part 170 of 27 CFR contains
miscellaneous regulations relative to:
(i) Manufacture, removal, and use of stills and condensers, and to
the notice, registration, and recordkeeping requirements therefor;
(ii) Manufacture and sale of certain compounds, preparations, and
products containing alcohol;
* * * * *
Par. 9. Section 70.414 is amended by revising paragraphs (a) and
(g) to read as follows:
Sec. 70.414 Preparation and filing of claims.
(a) Distilled spirits at distilled spirits plants. Procedural
instructions in respect of claims for remission, abatement, credit, or
refund of tax on spirits (including denatured spirits) lost or
destroyed on or lost in transit to, or on spirits returned to, the
premises of a distilled spirits plant are contained in Part 19 of Title
27 CFR. It is not necessary to file a claim for credit of tax on
taxpaid samples taken by ATF officers from distilled spirits plants, as
the regional director (compliance) will allow credit, without claim,
for tax on such samples.
* * * * *
(g) Miscellaneous. Procedural instructions are contained in 27 CFR
Part 70, subparts F and G in respect of claims for--
(1) Refund or credit of tax on distilled spirits, wines or beer
where such refund or credit is claimed on the grounds that tax was
assessed or collected erroneously, illegally, without authority, or in
any manner wrongfully, or on the grounds that such amount was
excessive, and where such refund or credit is subject to the
limitations imposed by section 6423 of the Internal Revenue Code.
(2) Payment of an amount equal to the internal revenue tax paid or
determined and customs duties paid on distilled spirits, wines,
rectified products, and beer previously withdrawn, which were lost,
rendered unmarketable, or condemned by a duly authorized official by
reason of a major disaster occurring in the United States after June
30, 1959.
* * * * *
Par. 10. 27 CFR Part 70 is amended by adding Subpart F to read as
follows:
Subpart F--Application of Section 6423, Internal Revenue Code of
1954, as Amended, to Refund or Credit of Tax on Distilled Spirits,
Wines, and Beer
General
70.501 Meaning of terms.
70.502 Applicability to certain credits or refunds.
70.503 Ultimate burden.
70.504 Conditions to allowance of credit or refund.
70.505 Requirements on persons intending to file claim.
Claim Procedure
70.506 Execution and filing of claim.
70.507 Data to be shown in claim.
70.508 Time for filing claim.
Penalties
70.509 Penalties.
Subpart F--Application of Section 6423, Internal Revenue Code of
1954, as Amended, to Refund or Credit of Tax on Distilled Spirits,
Wines, and Beer
General
Sec. 70.501 Meaning of terms.
When used in this subpart, where not otherwise distinctly expressed
or manifestly incompatible with the intent thereof, terms shall have
the meaning ascribed in this section.
Article. The commodity in respect to which the amount claimed was
paid or collected as a tax.
Claimant. Any person who files a claim for a refund or credit of
tax under this subpart.
District director of customs. The district director of customs at a
headquarters port of the district (except the district of New York,
N.Y.); the area directors of customs in the district of New York, N.Y.;
and the port director at a port not designated as a headquarters port.
I.R.C. Internal Revenue Code of 1986, as amended.
Owner. A person who, by reason of a proprietary interest in the
article, furnished the amount claimed to the claimant for the purpose
of paying the tax.
Person. An individual, a trust, estate, partnership, association,
company, or corporation.
[[Page 31032]]
Tax. Any tax imposed by 26 U.S.C. 5001-5066, or by any
corresponding provision of prior internal revenue laws, and in the case
of any commodity of a kind subject to a tax under any such sections,
any tax equal to any such tax, any additional tax, or any floor stocks
tax. The term includes an extraction denominated a ``tax'', and any
penalty, addition to tax, additional amount, or interest applicable to
any such tax.
Sec. 70.502 Applicability to certain credits or refunds.
The provisions of this subpart apply only where the credit or
refund is claimed on the grounds that an amount of tax was assessed or
collected erroneously, illegally, without authority, or in any manner
wrongfully, or on the grounds that such amount was excessive. This
subpart does not apply to:
(a) Any claim for drawback,
(b) Any claim made in accordance with any law expressly providing
for credit or refund where an article is withdrawn from the market,
returned to bond, or lost or destroyed, and
(c) Any claim based solely on errors in computation of the quantity
of an article subject to tax or on mathematical errors in computation
of the amount of the tax due, or to any claim in respect of tax
collected or paid on an article seized and forfeited, or destroyed, as
contraband.
Sec. 70.503 Ultimate burden.
For the purposes of this subpart, the claimant, or owner, shall be
treated as having borne the ultimate burden of an amount of tax only
if:
(a) The claimant or owner has not, directly or indirectly, been
relieved of such burden or shifted such burden to any other person,
(b) No understanding or agreement exists for any such relief or
shifting, and
(c) If the claimant or owner has neither sold nor contracted to
sell the articles involved in such claim, such claimant or owner agrees
that there will be no such relief or shifting.
Sec. 70.504 Conditions to allowance of credit or refund.
No credit or refund to which this subpart is applicable shall be
allowed or made, pursuant to a court decision or otherwise, of any
amount paid or collected as a tax unless a claim therefor has been
filed, as provided in this subpart, by the person who paid the tax and
the claimant, in addition to establishing that such claimant is
otherwise legally entitled to credit or refund of the amount claimed,
establishes:
(a) That the claimant bore the ultimate burden of the amount
claimed, or
(b) That the claimant has unconditionally repaid the amount claimed
to the person who bore the ultimate burden of such amount, or
(c) That:
(1) the owner of the article furnished the claimant the amount
claimed for payment of the tax;
(2) The claimant has filed with the regional director (compliance)
the written consent of such owner to the allowance to the claimant of
the credit or refund; and
(3) Such owner satisfies the requirements of paragraph (a) or (b)
of this section.
Sec. 70.505 Requirements on persons intending to file claim.
Any person who, having paid the tax with respect to an article,
desires to claim refund or credit of any amount of such tax to which
the provisions of this subpart are applicable must:
(a) File a claim, as provided in Sec. 70.506, and
(b) Comply with any other provisions of law or regulations which
may apply to the claim.
Claim Procedure
Sec. 70.506 Execution and filing of claim.
Claims to which this subpart is applicable shall be executed on
Form 2635 (5620.8) in accordance with the instructions on the form and
shall (except as hereinafter provided) be filed with the regional
director (compliance) for the region in which the tax was paid. (For
provisions relating to handcarried documents, see 27 CFR 70.304).
Claims for credit or refund of taxes collected by district directors of
customs, to which the provisions of section 6423, I.R.C., are
applicable and which Customs regulations (19 CFR Part 24--Customs
Financial and Accounting Procedure) require to be filed with the
regional director (compliance) of the region in which the claimant is
located, shall be executed and filed in accordance with applicable
Customs regulations and this subpart. The claim shall set forth each
ground upon which the claim is made in sufficient detail to apprise the
regional director (compliance) of the exact basis therefor. Allegations
pertaining to the bearing of the ultimate burden relate to additional
conditions which must be established for a claim to be allowed and are
not in themselves legal grounds for allowance of a claim. There shall
also be attached to the form and made part of the claim the supporting
data required by Sec. 70.507. All evidence relied upon in support of
such claim shall be clearly set forth and submitted with the claim.
Sec. 70.507 Data to be shown in claim.
Claims to which this subpart is applicable, in addition to the
requirements of Sec. 70.506 must set forth or contain the following:
(a) A statement that the claimant paid the amount claimed as a
``tax'' as defined in this subpart.
(b) Full identification (by specific reference to the form number,
the date of filing, the place of filing, and the amount paid on the
basis of the particular form or return) of the tax forms or returns
covering the payments for which refund or credit is claimed.
(c) The written consent of the owner to the allowance of the refund
or credit to the claimant (where the owner of the article in respect of
which the tax was paid furnished the claimant the amount claimed for
the purpose of paying the tax).
(d) If the claimant (or owner, as the case may be) has neither sold
nor contracted to sell the articles involved in the claim, a statement
that the claimant (or owner, as the case may be) agrees not to shift,
directly or indirectly in any manner whatsoever, the burden of the tax
to any other person.
(e) If the claim is for refund of a floor stocks tax, or of an
amount resulting from an increase in rate of tax applicable to an
article, a statement as to whether the price of the article was
increased on or following the effective date of such floor stocks tax
or rate increase, and if so, the date of the increase, together with
full information as to the amount of such price increase.
(f) Specific evidence (such as relevant records, invoices, or other
documents, or affidavits of individuals having personal knowledge of
pertinent facts) which will satisfactorily establish the conditions to
allowance set forth in Sec. 70.504.
(g)The regional director (compliance) may require the claimant to
furnish as a part of the claim such additional information as may be
deemed necessary.
Sec. 70.508 Time for filing claim.
No credit or refund of any amount of tax to which the provisions of
this subpart apply shall be made unless the claimant files a claim
therefor within the time prescribed by law and in accordance with the
provisions of this subpart.
Penalties
Sec. 70.509 Penalties.
It is an offense punishable by fine and imprisonment for anyone to
make or
[[Page 31033]]
cause to be made any false or fraudulent claim upon the United States,
or to make any false or fraudulent statements, or representations, in
support of any claim, or to falsely or fraudulently execute any
documents required by the provisions of the internal revenue laws, or
any regulations made in pursuance thereof.
Par. 11. 27 CFR Part 70 is amended by adding Subpart G to read as
follows:
Subpart G--Losses Resulting From Disaster, Vandalism, or Malicious
Mischief
Definitions
70.601 Meaning of terms.
Payments
70.602 Circumstances under which payment may be made.
Claims Procedures
70.603 Execution and filing of claims.
70.604 Record of inventory to support claims.
70.605 Claims related to imported, domestic and Virgin Island
liquors.
70.606 Claimant to furnish proof.
70.607 Supporting evidence.
70.608 Action on claims.
Destruction of Liquors
70.609 Supervision.
Subpart G--Losses Resulting From Disaster, Vandalism, or Malicious
Mischief
Sec. 70.601 Meaning of Terms.
When used in this subpart, terms are defined as follows in this
section. Words in the plural shall include the singular, and vice
versa, and words indicating the masculine gender shall include the
feminine. The terms ``includes'' and ``including'' do not exclude other
things not named which are in the same general class or are otherwise
within the scope of the term defined.
Alcoholic liquors or liquors. Distilled spirits, wines, and beer
lost, made unmarketable, or condemned, as provided in this subpart.
Beer. Beer, ale, porter, stout, and other similar fermented
beverages (including sake, or other similar products) of any name or
description containing one-half of 1 percent or more of alcohol by
volume on which the internal revenue tax has been paid or determined,
and if imported, on which duties have been paid.
Claimant. The person who held the liquors for sale at the time of
the disaster or other specified cause of loss and who files a claim
under this subpart.
Commissioner of Customs. The Commissioner of Customs, U.S. Customs
Service, the Department of the Treasury, Washington, DC.
Distilled spirits, or spirits. Ethyl alcohol and other distillates
such as whisky, brandy, rum, gin, vodka, in any form (including all
dilutions and mixtures thereof, from whatever source or by whatever
process produced), on which the internal revenue tax has been paid or
determined and, if imported, on which duties have been paid.
Duly authorized official. Any Federal, State or local government
official who is authorized to condemn liquors on which a claim is filed
under this subpart.
Duty or duties. Any duty or duties paid under the customs laws of
the United States.
Major Disaster. A flood, fire, hurricane, earthquake, storm, or
other catastrophe defined as a ``major disaster'' under the Disaster
Relief Act (42 U.S.C. 5122(2)), which occurs in any part of the United
States and which the President has determined causes sufficient damage
to warrant ``major disaster'' assistance under that Act.
Region. A Bureau of Alcohol, Tobacco and Firearms region.
Tax. (1) With respect to distilled spirits, ``tax'' means the
internal revenue tax that is paid or determined on spirits.
(2) With respect to wines, ``tax'' means the internal revenue tax
that is paid or determined on the wine.
(3) With respect to beer, ``tax'' means the internal revenue tax
that is paid or determined on the beer.
United States. When used in a geographical sense includes only the
States and the District of Columbia.
Wines. All still wines, effervescent wines, and flavored wines, on
which internal revenue wine tax has been paid or determined, and if
imported, on which duty has been paid.
Payments
Sec. 70.602 Circumstances under which payment may be made.
(a) Major disasters. The regional director (compliance) shall allow
payment (without interest) of an amount equal to the tax paid or
determined, and the Commissioner of Customs shall allow payment
(without interest) of an amount equal to the duty paid, on distilled
spirits, wines, and beer previously withdrawn, if the liquors are lost,
made unmarketable, or condemned by a duly authorized official as the
result of a major disaster (as defined in Sec. 70.601).
(b) Other causes of loss--(1) Payment. The regional director
(compliance) shall allow payment (without interest) of an amount equal
to the tax paid or determined, and the Commissioner of Customs shall
allow payment (without interest) of an amount equal to the duty paid,
on distilled spirits, wines, and beer previously withdrawn, if the
liquors are lost, made unmarketable, or condemned by a duly authorized
official as a result of:
(i) Fire, flood, casualty, or other disaster; or
(ii) Breakage, destruction, or other damage (excluding theft)
resulting from vandalism or malicious mischief.
(2) Minimum claim. No claim of less than $250 will be allowed for
losses resulting from any disaster or damage described in paragraph
(b)(1) of this section.
(c) General. Payment under this section may be made only if:
(1) The disaster or other specified cause of loss occurred in the
United States;
(2) At the time of the disaster or other specified cause of loss,
the liquors were being held for sale by the claimant;
(3) Refund or credit of the amount claimed, or any part of the
amount claimed, has not or will not be claimed for the same liquors
under any other law or regulations; and
(4) The claimant was not indemnified by any valid claim of
insurance or otherwise for the tax and/or duty on the liquors covered
by the claim.
Claims Procedures
Sec. 70.603 Execution and filing of claim.
(a) General. (1) Claims under this subpart shall be filed on Form
2635 (5620.8), in original only, with the regional director
(compliance) of the region in which the liquors were lost, became
unmarketable, or were condemned.
(2) The claim shall include all the facts on which the claim is
based, and be accompanied by a record of inventory of the liquors lost,
made unmarketable, or condemned. (See Sec. 70.604.)
(3) The claim shall contain a statement that no other claim for
refund or credit of the amount claimed, or for any part of the amount
claimed, has been or will be filed under any other law or regulations.
(b) Major disasters. Claims for refund of tax and/or duty on
liquors which were lost, became unmarketable, or were condemned as a
result of a major disaster must be filed not later than 6 months from
the day on which the President determines that a major disaster has
occurred.
(c) Other causes of loss. (1) Claims for amounts of $250 or more
for refund of
[[Page 31034]]
tax and/or duty on liquors which were lost, became unmarketable, or
were condemned as the result of:
(i) Fire, flood, casualty, or other disaster; or
(ii) Damage (excluding theft) resulting from vandalism or malicious
mischief, must be filed within 6 months after the date on which the
disaster or damage occurred.
(2) Claims for amounts less than $250 will not be allowed.
Sec. 70.604. Record of inventory to support claims.
(a) Claims relating to distilled spirits. The record of inventory
of distilled spirits lost, made unmarketable, or condemned, which is
required to support claims filed under Sec. 70.603, shall show the
following information:
(1) Name and business address of claimant (as shown on claim, Form
2635 (5620.8)).
(2) Address where the spirits were lost, became unmarketable, or
were condemned, if different from the business address.
(3) Kind of spirits.
(4) Brand name.
(5) For full cases, show. (i) Number of cases;
(ii) Serial numbers;
(iii) Bottles per case;
(iv) Size of bottles;
(v) Wine gallons per case;
(vi) Proof; and
(vii) Proof gallons.
(6) For bottles not in cases, show.
(i) Total number;
(ii) Size of bottles;
(iii) Wine gallons;
(iv) Proof; and
(v) Total proof gallons.
(7) Total proof gallons for all items.
(b) Claims relating to wines. The record of inventory of wines
lost, made unmarketable, or condemned, which is required to support
claims filed under Sec. 70.603, shall show the following information:
(1) Name and business address of claimant (as shown on claim, Form
2635 (5620.8)).
(2) Address where the wines were lost, became unmarketable, or were
condemned, if different from the business address.
(3) Kind of wine.
(4) Percent of alcohol by volume.
(5) Number of barrels or kegs.
(6) Kind and number of other bulk containers.
(7) Number of full cases and bottles per case.
(8) Size of bottles.
(9) Number of bottles not in cases and wine gallons.
(10) Total wine gallons.
(c) Claims relating to beer. The record of inventory of beer lost,
made unmarketable, or condemned, which is required to support claims
filed under Sec. 70.603, shall show the following information:
(1) Name and business address of claimant (as shown on claim, Form
2635 (5620.8)).
(2) Address where the beer was lost, became unmarketable, or was
condemned, if different from the business address.
(3) Number and size of barrels.
(4) For full cases, show. (i) Number of cases;
(ii) Bottles or cans per case; and
(iii) Size (in ounces) of bottles or cans.
(5) Number and size of bottles and cans not in cases.
(6) Quantity in terms of 31-gallon barrels.
(7) Total quantity.
(d) Special instructions. (1) Inventories of domestic liquors,
imported liquors, and liquors manufactured in the Virgin Islands shall
be reported separately.
(2) Liquors manufactured in Puerto Rico may not be included in
claims filed under this subpart. Claims for losses of Puerto Rican
liquors shall be filed with the Secretary of the Treasury of Puerto
Rico under the laws of Puerto Rico.
Sec. 70.605 Claims relating to imported, domestic, and Virgin Islands
liquors.
(a) Claims involving taxes on domestic liquors, imported liquors,
and liquors manufactured in the Virgin Islands must show the quantities
of each separately in the claim.
(b) A separate claim on Form 2635 (5620.8) must be filed for
customs duties.
Sec. 70.606 Claimant to furnish proof.
The claimant shall furnish proof to the satisfaction of the
regional director (compliance) regarding the following:
(a) That the tax on the liquors, or the tax and duty if imported,
was fully paid; or the tax, if not paid, was fully determined.
(b) That the liquors were lost, made unmarketable, or condemned by
a duly authorized official, by reason of damage sustained as a result
of a disaster or other cause of loss specified in this subpart.
(c) The type and date of occurrence of the disaster or other
specified cause of loss, and the location of the liquors at the time.
(d) That the claimant was not indemnified by a valid claim of
insurance or otherwise for the tax, or tax and duty, on the liquors
covered by the claim.
(e) That the claimant is entitled to payment under this subpart.
Sec. 70.607 Supporting evidence.
(a) The claimant shall support the claim with any evidence (such as
inventories, statements, invoices, bills, records, labels, formulas,
stamps) that is available to submit, relating to the quantities and
identities of the liquors, on which duty has been paid or tax has been
paid or determined, that were on hand at the time of the disaster or
other specified cause of loss and alleged to have been lost, made
unmarketable, or condemned as a result of it.
(b) If the claim is for refund of duty, the claimant shall furnish,
if possible:
(1) The customs number;
(2) The date of entry; and
(3) The name of the port of entry.
Sec. 70.608 Action on claims.
The regional director (compliance) shall date stamp and examine
each claim filed under this subpart and will determine the validity of
the claim. Claims and supporting data involving customs duties will be
forwarded to the Commissioner of Customs with a summary statement by
the regional director (compliance) regarding his or her findings.
Destruction of Liquors
Sec. 70.609 Supervision.
When allowance has been made under this subpart for the tax and/or
duty on liquors condemned by a duly authorized official or made
unmarketable, the liquors shall be destroyed by suitable means under
supervision satisfactory to the regional director (compliance), unless
the liquors were previously destroyed under supervision satisfactory to
the regional director (compliance). The Commissioner of Customs will
notify the regional director (compliance) as to allowance under this
subpart of claims for duty on unmarketable or condemned liquors.
Penalties
Sec. 70.610 Penalties.
(a) Penalties are provided in 26 U.S.C. 7206 for making any false
or fraudulent statement under the penalties of perjury in support of
any claim.
(b) Penalties are provided in 26 U.S.C. 7207 for filing any false
or fraudulent document under this subpart.
(c) All laws and regulations, including penalties, which apply to
internal revenue taxes on liquors shall, when appropriate, apply to
payments made under this subpart the same as if the payments were
actual refunds of internal taxes on liquors.
[[Page 31035]]
PART 170--MISCELLANEOUS REGULATIONS RELATING TO LIQUOR
Par. 12. The authority citation for part 170 is revised to read as
follows:
Authority: 26 U.S.C. 5001, 5002, 5111, 5121, 5171, 5205, 5291,
5301, 5362, 7805; 31 U.S.C. 9304, 9306.
Par. 13. Subpart E, Secs. 170.85-170.100 and Subpart O,
Secs. 170.301-170.311 are removed.
Signed: May 7, 1996.
Bradley A. Buckles,
Acting Director.
Approved: May 21, 1996.
John P. Simpson,
Deputy Assistant Secretary, Regulatory, Tariff & Trade Enforcement.
[FR Doc. 96-14853 Filed 6-18-96; 8:45 am]
BILLING CODE 4810-31-P