[Federal Register Volume 68, Number 197 (Friday, October 10, 2003)]
[Rules and Regulations]
[Pages 58600-58603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25524]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 73

[T.D. TTB-5; Notice No. 5]
RIN 1513-AA61


Electronic Signatures; Electronic Submission of Forms (2000R-
458P)

AGENCY: Alcohol and Tobacco Tax and Trade Bureau (TTB), Treasury.

ACTION: Treasury decision, final rule.

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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) amends its 
regulations to permit industry members to use electronic technology to 
reduce the need for and storage of paper documents. In order to 
accomplish our goals, we are adding a new part 73 that will allow you 
to use electronic, rather than handwritten, signatures to sign certain 
forms, and to submit certain forms to TTB electronically through a TTB-
approved electronic document receiving system.

EFFECTIVE DATE: October 10, 2003.

FOR FURTHER INFORMATION CONTACT: Lisa M. Gesser, Regulations and 
Procedures Division, Alcohol and Tobacco Tax and Trade Bureau, P.O. Box 
128, Morganza, MD 20660; telephone 301-290-1460.

SUPPLEMENTARY INFORMATION:

What Will This Final Rule Do?

    This final rule amends the regulations to allow you to:
    [sbull] Use electronic signatures to sign certain forms you submit 
to us instead of using traditional handwritten signatures; and
    [sbull] Submit certain forms to TTB electronically through an 
electronic document receiving system that we approve.

Why Does TTB Want To Allow You To Submit Certain Forms Electronically?

    We believe that by giving you the option to submit certain forms 
electronically, instead of requiring paper documents, we can:
    [sbull] Reduce the costs associated with submitting and maintaining 
large volumes of paper documents;
    [sbull] Improve the quality and accessibility of data;
    [sbull] Allow for the faster review and approval of a variety of 
documents; and
    [sbull] Allow for a variety of our documents to be available around 
the clock.

What Is TTB's Authority To Implement These Regulations?

    Our authority to implement these regulations comes from:
    (1) Government Paperwork Elimination Act (GPEA). GPEA was signed 
into law on October 21, 1998. GPEA directs Federal agencies to provide 
for the optional use and acceptance of electronic documents and 
signatures, and electronic recordkeeping, where practical, by October 
2003. (See Secs. 1702-1710 of Pub. L. 105-277.)
    (2) Internal Revenue Code of 1986 (26 U.S.C.) The Internal Revenue 
Code of 1986 authorizes the Secretary of the Treasury to, by 
regulation, encourage electronic filing, address what constitutes a 
timely filed electronic document, and develop procedures for the 
acceptance of signatures in digital or other electronic form. (See 26 
U.S.C. 6011, 6061, and 7502.)
    (3) Electronic Signatures in Global and National Commerce Act of 
2000 (E-SIGN). E-SIGN provides that no contract, signature, or record 
relating to a transaction shall be denied legal effect solely because 
it is in electronic form, nor may a document be denied legal effect 
solely because an electronic signature or record was used in its 
formation. E-SIGN applies to documents that are created in a 
commercial, consumer, or business transaction. It does not cover 
transactions that are uniquely governmental such as a compliance 
report. (See Public Law 106-229.)
    (4) Office of Management and Budget Circular A-130. OMB's Circular 
A-130 requires agencies to employ electronic information collection 
techniques where such means will reduce the burden on the public, 
increase efficiency, reduce costs, and help provide better service. 
(See Circular A-130, Para. 8.a.1(k).)

How Does TTB Plan on Implementing Electronic Filing?

    We are creating a new part 73 in title 27 CFR, chapter I, entitled 
``Electronic Signatures; Electronic Submission of Forms.'' Part 73 
explains our overall policy regarding electronic signatures and the 
electronic submission of certain forms to TTB.

Electronic Signatures

    Upon the effective date of this final rule, we recognize electronic 
signatures executed to certain electronic forms as the full equivalent 
of, and having the same legal effect as, traditional handwritten 
signatures executed on paper. We will notify you, by publishing a 
general notice in the Federal Register and on our Web site (http://

[[Page 58601]]

www.ttb.gov), when you may use electronic signatures to execute certain 
electronic forms. The general notice will provide you with specific 
instructions about how to submit and what technology will be acceptable 
to TTB.

Electronic Submission of Forms to TTB

    We are in the process of developing the means to allow you to 
submit forms electronically. This is a lengthy process; we will need to 
develop the hardware and software components to accept each different 
type of form. Once we are able to accept a certain form, we will 
announce in the Federal Register and on our Web site that you may 
register to submit that form electronically. The announcement will 
provide you with instructions on how to register.

Will I Still Have To Maintain Paper Copies?

    If the regulations require you to maintain certain documents in 
paper format, you must continue to maintain those documents in paper 
format even if you submit them to us electronically. Nothing in part 73 
alters any other regulatory or statutory requirement that records be 
maintained in paper format. This part does provide that TTB may publish 
a general notice in the Federal Register authorizing you to maintain 
certain documents electronically instead of in paper form.

Notice of Proposed Rulemaking

    On April 11, 2003, we published a notice of proposed rulemaking, 
Notice No. 5, in the Federal Register (68 FR 17760) to solicit comments 
regarding our proposal to add the new part 73 to chapter I of title 27. 
The notice requested comments from interested persons by May 12, 2003.

Comments on Notice of Proposed Rulemaking

    We did not receive any comments as a result of Notice No. 5.

Regulatory Analyses and Notices

Paperwork Reduction Act

    The provisions of the Paperwork Reduction Act of 1995, 44 U.S.C. 
Chapter 35, and its implementing regulations, 5 CFR part 1320, do not 
apply to this rule because there are no new reporting or recordkeeping 
requirements.

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires an 
agency to conduct a regulatory flexibility analysis of any rule that 
may have a significant economic impact on a substantial number of small 
entities. We certify that this final rule will not have such an impact 
because the electronic submission of forms to TTB and the use of 
electronic signatures are voluntary. This final rule only applies to 
those people who seek our approval to transmit certain forms 
electronically to us.

Executive Order 12866

    This regulation is not a significant regulatory action as defined 
by Executive Order 12866. Accordingly, this rule is not subject to the 
analysis required by this Executive Order.

Executive Order 13132

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires Federal agencies to ensure ``meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have federalism implications.'' This rule does not have 
federalism implications. This rule will not have substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. This rule will 
not require States to accept electronic reports. The effect of this 
rule will be to provide additional regulatory flexibility to States 
because States could choose to accept electronic data that would also 
satisfy our reporting requirements.

Drafting Information

    The principal author of this document is Lisa M. Gesser, 
Regulations and Procedures Division, Alcohol and Tobacco Tax and Trade 
Bureau.

List of Subjects in 27 CFR Part 73

    Electronic signatures, Reporting and recordkeeping requirements.

Authority and Issuance

0
For the reasons set out in the preamble, we amend chapter I of title 27 
of the Code of Federal Regulations by adding a new part 73 to read as 
follows:

PART 73--ELECTRONIC SIGNATURES; ELECTRONIC SUBMISSION OF FORMS

Subpart A--General Provisions

Sec.

Scope

73.1 What does this part do?

Definitions

73.3 What terms must I know to understand this part?
Subpart B--Electronic Signatures
73.10 What does subpart B cover?
73.11 What are the required components and controls for acceptable 
electronic signatures?
73.12 What security controls must I use for identification codes and 
passwords?
Subpart C--Electronic Filing of Documents With TTB
73.30 What does subpart C cover?
73.31 May I submit forms electronically to TTB?
73.32 May I electronically sign forms I submit electronically to 
TTB?
73.33 Am I legally bound by a form I sign electronically?
73.34 When is an electronically submitted form considered timely 
filed?
73.35 Do I need to keep paper copies of forms I submit to TTB 
electronically?

    Authority: 26 U.S.C. 6011, 6061, 7502; 15 U.S.C. 7001, 7004.
Subpart A--General Provisions

Scope


Sec.  73.1  What does this part do?

    (a) This part provides the conditions under which we will allow you 
to:
    (1) Use electronic signatures or digital signatures executed to 
electronic forms instead of traditional handwritten signatures executed 
on paper forms; and
    (2) Electronically submit certain forms to TTB.
    (b) This part does not require you to submit forms to us 
electronically.

Definitions


Sec.  73.3  What terms must I know to understand this part?

    You need to know the following terms to understand this part:
    27 CFR. Title 27 of the Code of Federal Regulations, chapter I.
    Biometrics. A method of verifying an individual's identity based on 
measurement of the individual's physical feature(s) or repeatable 
action(s) where those features and/or actions are both unique to that 
individual and measurable.
    Digital signature. An electronic signature based upon cryptographic 
methods of originator authentication, computed by using a set of rules 
and a set of parameters such that the identity of the signer and the 
integrity of the data can be verified. A signer creates a digital 
signature by using public-key encryption to transform a message digest 
of an electronic message. If a recipient of the digital signature has 
an electronic message, message digest function, and the signer's public 
key, the recipient can verify:
    (1) Whether the transformation was accomplished with the private 
key that

[[Page 58602]]

corresponds to the signer's public key; and
    (2) Whether the electronic message has been altered since the 
transformation was made.
    Electronic document receiving system. Any set of apparatus, 
procedures, software, records, or documentation used to receive 
documents communicated to it via a telecommunications network.
    Electronic signature. A computer data compilation of any symbol or 
series of symbols executed, adopted, or authorized by an individual to 
be the legally binding equivalent of the individual's handwritten 
signature, and that:
    (1) Identifies and authenticates a particular person as the source 
of the electronic message; and
    (2) Indicates such person's approval of the information contained 
in the electronic message.
    Form(s). The term form(s), when used in this part, includes all 
documents required by 27 CFR, chapter I, to be submitted to TTB.
    Handwritten signature. The scripted name or legal mark of an 
individual handwritten by that individual and executed or adopted with 
the present intention to authenticate a writing in a permanent form. 
The act of signing with a writing or marking instrument such as a pen 
or stylus is preserved. The scripted name or legal mark, while 
conventionally applied to paper, may also be applied to other materials 
or devices that capture the name or mark.
    Paper format. A paper document.
    TTB. Refers to the Alcohol and Tobacco Tax and Trade Bureau within 
the Department of the Treasury.
    You and I. ``You'' and ``I'' refer to the organization or person 
who must maintain records or submit documents to TTB to satisfy the 
requirements of 27 CFR, chapter I.

Subpart B--Electronic Signatures


Sec.  73.10  What does subpart B cover?

    This subpart provides the conditions under which TTB will allow you 
to use electronic signatures executed to electronic forms instead of 
traditional handwritten signatures executed on paper forms. Where 
electronic signatures and their associated electronic forms meet the 
requirements of this part, TTB will consider the electronic signatures 
to be the equivalent of full handwritten signatures, initials, and 
other general signings this chapter requires.


Sec.  73.11  What are the required components and controls for 
acceptable electronic signatures?

    (a) Electronic signatures not based on biometrics. If you use 
electronic signatures that are not based upon biometrics you must:
    (1) Employ at least two distinct identification components such as 
an identification code and a password;
    (2) Use both identification components when executing an electronic 
signature to an electronic document; and
    (3) Ensure that the electronic signature can only be used by the 
authorized user.
    (b) Electronic signatures based on biometrics. If you use 
electronic signatures based upon biometrics, they must be designed to 
ensure that they cannot be used by anyone other than their genuine 
owners.


Sec.  73.12  What security controls must I use for identification codes 
and passwords?

    If you use electronic signatures based upon use of identification 
codes in combination with passwords, you must employ controls to ensure 
their security and integrity. These controls must include:
    (a) Maintaining the uniqueness of each combined identification code 
and password, such that no two individuals have the same combination of 
identification code and password;
    (b) Ensuring that identification code and password issuances are 
periodically checked, recalled, or revised (e.g., to cover such events 
as password aging);
    (c) Following loss management procedures to electronically 
deauthorize lost, stolen, missing, or otherwise potentially compromised 
tokens, cards, or other devices that bear or generate identification 
code or password information, and to issue temporary or permanent 
replacements using suitable, rigorous controls;
    (d) Using transaction safeguards to prevent unauthorized use of 
passwords and/or identification codes, and to detect and report in an 
immediate and urgent manner any attempts at their unauthorized use to 
the system security unit and, as appropriate, to organizational 
management; and
    (e) Initial and periodic testing of devices, such as tokens or 
cards, that bear or generate identification code or password 
information to ensure that they function properly and have not been 
altered in any unauthorized manner.

Subpart C--Electronic Filing of Documents with TTB


Sec.  73.30  What does subpart C cover?

    This subpart provides the conditions under which we will allow you 
to satisfy certain reporting requirements of this chapter by submitting 
forms to us electronically.


Sec.  73.31  May I submit forms electronically to TTB?

    Yes; you may submit an electronic form, instead of a paper form, to 
satisfy any reporting requirement in this chapter, only if:
    (a) We have published a notice in the Federal Register and on our 
Web site (http://www.ttb.gov) announcing that we are prepared to 
receive a particular form electronically;
    (b) You have registered to do so pursuant to the instructions in a 
notice published in the Federal Register and on our Web site as stated 
above;
    (c) You submit the electronic form to an electronic document 
receiving system that we have designated for the receipt of that 
specific form; and
    (d) The electronic form bears valid electronic signatures, as 
provided in subpart B of this part, to the same extent that the paper 
submission for which it substitutes would bear handwritten signatures.


Sec.  73.32  May I electronically sign forms I submit electronically to 
TTB?

    You may electronically sign the electronic form you submit to us 
if:
    (a) You have registered with TTB to do so and have certified, prior 
to the time of such use, that the electronic signatures or digital 
signatures in your system are intended to be the legally binding 
equivalent of traditional handwritten signatures;
    (b) The electronic or digital signature meets the standards of this 
part and is authorized by TTB in accordance with this part; and
    (c) The electronic or digital signature is sufficiently trustworthy 
and reliable that the signing party may not repudiate the signature.


Sec.  73.33  Am I legally bound by a form I sign electronically?

    Yes; by electronically signing a form you submit to us, you are 
agreeing to be legally bound to the same extent as if you applied a 
traditional handwritten signature on a paper document submitted to 
satisfy the same reporting requirement. Persons using electronic 
signatures shall, upon TTB's request, provide additional certification 
or testimony that a specific electronic signature is the legally 
binding

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equivalent of the signer's handwritten signature.


Sec.  73.34  When is an electronically submitted form considered timely 
filed?

    If you submit a form to our electronic document receiving system, 
your report will be considered filed on the date of the electronic 
postmark given by that system.


Sec.  73.35  Do I need to keep paper copies of forms I submit to TTB 
electronically?

    Nothing in this part alters any other regulatory or statutory 
requirement that records be maintained in paper format. If the 
regulations in this chapter require you to keep paper copies of certain 
forms, you must continue to do so unless TTB otherwise authorizes you 
to maintain electronic copies of these documents through a general 
notice in the Federal Register or through a variance.

    Dated: May 29, 2003.
Arthur J. Libertucci,
Administrator.
    Approved: September 5, 2003.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 03-25524 Filed 10-9-03; 8:45 am]
BILLING CODE 4810-31-P