[Federal Register Volume 82, Number 232 (Tuesday, December 5, 2017)]
[Rules and Regulations]
[Pages 57351-57353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26281]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 24 and 27

[Docket No. TTB-2016-0016; T.D. TTB-147A; Re: T.D. TTB-145, T.D. TTB-
146, T.D. TTB-147, Notice No. 168, and Notice No. 168A]
RIN 1513-AC31


Implementation of Statutory Amendments Requiring the Modification 
of the Definition of Hard Cider; Delayed Compliance Date of the Hard 
Cider Tax Class Labeling Statement Requirement

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Temporary rule; delay of compliance date.

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SUMMARY: This temporary rule delays the compliance date of a wine 
labeling requirement that was established by T.D. TTB-147, a temporary 
rule published on January 23, 2017. In that rule, TTB required the 
statement ``Tax class 5041(b)(6)'' to appear on the container of any 
wine for which the hard cider tax rate is claimed if it is removed from 
wine premises or customs custody on or after January 1, 2018. This 
temporary rule delays the compliance date for that requirement by one 
year. Specifically, the tax class statement ``Tax Class 5041(b)(6)'' 
will not be required to appear on containers of wine that are taxed at 
the hard cider tax rate until January 1, 2019. Through a notice of 
proposed rulemaking published elsewhere in this issue of the Federal 
Register, TTB is soliciting comments from all interested parties on 
this delay of the compliance date for the wine labeling requirement, 
and, also in that document, TTB is reopening for 60 days the comment 
period for Notice No 168, the notice of proposed rulemaking that 
published concurrently with T.D. TTB-147 on January 23, 2017.

DATES: This temporary rule is effective December 5, 2017 through 
January 23, 2020.

FOR FURTHER INFORMATION CONTACT: Kara Fontaine, Regulations and Rulings 
Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., 
Box 12, Washington, DC 20005; telephone (202) 453-1039 ext. 103.

SUPPLEMENTARY INFORMATION: 

Background

TTB Authority

    The Alcohol and Tobacco Tax and Trade Bureau (TTB) of the 
Department of the Treasury administers chapter 51 of the Internal 
Revenue Code (IRC), which sets forth the Federal excise taxes on wine 
and related provisions, including provisions addressing the production 
and marking of wine (see 26 U.S.C. chapter 51). Section 5041 of the IRC 
(26 U.S.C. 5041) imposes six excise tax rates, including the hard cider 
tax rate, on wines. These tax rates are associated with six tax classes 
that correspond to section 5041(b), subparagraphs (1) through (6). The 
tax on wine is determined at the time of removal (generally, removal 
from a bonded wine premises or release from customs custody) for 
consumption or sale (26 U.S.C. 5041(a)). Wine so removed must be in 
containers bearing marks and labels evidencing compliance with the IRC 
as the Secretary of the Treasury may by regulations prescribe (26 
U.S.C. 5368(b)).
    TTB administers chapter 51 of the IRC and its implementing 
regulations pursuant to section 1111(d) of the Homeland Security Act of 
2002, codified at 6 U.S.C. 531(d). In addition, the Secretary has 
delegated various authorities through Treasury Department Order 120-01, 
dated December 10, 2013 (superseding Treasury Order 120-01, dated 
January 24, 2003), to the TTB Administrator to perform the functions 
and duties in the administration and enforcement of these laws. The TTB 
regulations that implement the provisions of the IRC, as they relate to 
wine, include regulations in 27 CFR part 24 for domestic wine and 27 
CFR part 27 for imported wine.

PATH Act's Modification of the IRC Definition of Hard Cider

    On December 18, 2015, the President signed into law the 
Consolidated Appropriations Act, 2016 (Pub. L. 114-113). Division Q of 
this Act is titled the Protecting Americans from Tax Hikes Act of 2015 
(PATH Act). Section 335(a) of the PATH Act amended the IRC at 26 U.S.C. 
5041 by modifying the definition of ``hard cider'' for excise tax 
classification purposes. Pursuant to section 335(b) of the PATH Act, 
the amended definition applies to hard cider removed on or after 
January 1, 2017. This allowed a broader range of products to be 
eligible for the hard cider tax rate. Effective January 1, 2017, a wine 
removed from wine premises or customs custody is eligible for the hard 
cider tax rate of 22.6 cents per gallon if it:
     Contains no more than 0.64 gram of carbon dioxide per 100 
milliliters of wine;
     Is derived primarily from apples or pears, or from apple 
juice concentrate or pear juice concentrate and water;
     Contains no fruit product or fruit flavoring other than 
apple or pear; and
     Contains at least one-half of 1 percent and less than 8.5 
percent alcohol by volume.

Publication of Temporary Rule and Notice for Comment

    In response to the PATH Act, TTB published in the Federal Register 
on January 23, 2017, a temporary rule, T.D. TTB-147 (82 FR 7653), to 
amend its regulations in 27 CFR parts 24 and 27 pertaining to the 
modified definition of ``hard cider'' for tax purposes. In addition, 
TTB solicited comments from the public on the temporary regulations 
implementing the PATH Act through a notice of proposed rulemaking 
(NPRM), Notice No. 168 (82 FR 7753), published in the Federal Register 
concurrently with the temporary rule. The temporary rule, the notice of 
proposed rulemaking, and the comments regarding the temporary 
regulations received in response to the NPRM may be viewed in their 
entirety within Docket No. TTB-2016-0014 at the Regulations .gov Web 
site at https://www.regulations.gov/.

Current Requirement for Tax Class Statement To Appear on Containers of 
Wine Taxed at the Hard Cider Tax Rate

    In T.D. TTB-147, TTB amended its regulations in parts 24 and 27 to 
require the statement ``Tax class 5041(b)(6)'' to appear on the 
container of any wine for which the hard cider tax rate is claimed; see 
Sec. Sec.  24.257(a)(4) and 27.59(b). In issuing the temporary rule, 
TTB recognized that industry members who produce and import hard cider 
would need time to comply with this requirement. Therefore, in Sec.  
24.257(a)(4), TTB provided a one-year grace period before the tax class 
labeling requirement would go into effect, and, as set forth in T.D. 
TTB-147, this grace period applies to products removed prior to January 
1, 2018. As such, T.D. TTB-147 requires that for wine removed

[[Page 57352]]

on or after January 1, 2018, the tax class statement ``Tax Class 
5041(b)(6)'' must appear on the container of any wine for which the 
hard cider tax rate is claimed.

Requests for Delay of the Tax Class Statement Compliance Date

    In response to the request for comments on T.D. TTB-147, TTB 
received a comment, posted on February 15, 2017, from Ian Flom of 
Mercier Orchards, indicating that the timeframe to implement the new 
``Tax Class 5041(b)(6)'' labeling statement requirement is insufficient 
because he buys labels in bulk and has a supply of labels that do not 
bear the tax class statement that he will not be able to use up before 
January 1, 2018. Mr. Flom also submitted other comments for TTB 
consideration.
    TTB also was copied on a letter addressed to Steven T. Mnuchin, 
Secretary of the Treasury, dated August 1, 2017, from the United States 
Association of Cider Makers (USACM), which represents approximately 
one-half of the cider makers in the United States. In its letter, USACM 
requested a one year delay of the requirement to place the hard cider 
tax class labeling statement on products claiming the hard cider tax 
rate removed from wine premises or customs custody after January 1, 
2018.
    In light of this comment and request, TTB is delaying the 
compliance date for the labeling statement requirement.

Requests for Extension of and Reopening of the Comment Period

    In a February 23, 2017 comment in response to Notice No. 168, USACM 
formally requested a 60-day extension of the public comment period in 
order to give its members more time to properly address any of their 
concerns with the regulatory changes. USACM referred to the outstanding 
extension request in their August 1, 2017 letter.
    Through a notice of proposed rulemaking published elsewhere in this 
issue of the Federal Register, TTB is reopening for 60 days the comment 
period for Notice No 168. TTB will consider any new comments submitted 
in response to the reopening of the comment period on T.D. TTB-147 
along with any comments received on this Temporary Rule, T.D. TTB-147A, 
and the suggestions that have already been received from Mr. Flom.

Delayed Compliance Date of the Tax Class Labeling Statement Requirement 
for Hard Cider

    Through publication of this new temporary rule, TTB is amending 27 
CFR 24.257(a)(4) to delay until January 1, 2019, the requirement that 
the tax class statement ``Tax class 5041(b)(6)'' appear on any 
container of wine removed from wine premises or customs custody for 
which the hard cider tax rate is claimed. Because the tax class 
labeling requirement for imported wine claiming the hard cider tax rate 
contained in 27 CFR 27.59(b) is a cross-reference to Sec.  
24.257(a)(4), no change to the regulatory text in Sec.  27.59(b) is 
required.

Updating OMB Control Numbers

    In addition, TTB notes that, under the requirements of the 
Paperwork Reduction Act, the Office of Management and Budget (OMB) 
approved the hard cider tax class labeling statement information 
collection requirement under OMB control number 1513-0138. Therefore, 
TTB is amending Sec. Sec.  24.257 and 27.59 in this temporary rule to 
reflect that control number. TTB also is correcting the OMB control 
number statement in Sec.  24.257 to reflect that the IRC-based wine 
labeling requirements are covered under OMB control number 1513-0092, 
Marks on Wine Containers, and not the labeling-related recordkeeping 
requirements covered under 1513-0115, Usual and Customary Business 
Records Relating to Wine.

Correction to Authority Citation for 27 CFR Part 27

    TTB notes that several rule documents published in late 2016 and 
early 2017 affected 27 CFR part 27, including the authority citation 
list set out at the beginning of that part. Specifically, T.D. TTB-145, 
Amendments To Streamline Importation of Distilled Spirits, Wine, Beer, 
Malt Beverages, Tobacco Products, Processed Tobacco, and Cigarette 
Papers and Tubes and Facilitate Use of the International Trade Data 
System, published on December 22, 2016, at 81 FR 94186, revised the 
part 27 authority citation list to add 26 U.S.C. 5382 (Cellar Treatment 
of Natural Wine) and 26 U.S.C. 6109 (Identifying Numbers). However, 
T.D. TTB-146, Changes to Certain Alcohol-Related Regulations Governing 
Bond Requirements and Tax Return Filing Periods, published on January 
4, 2017, at 82 FR 1108, also revised the part 27 authority citation 
list to add 26 U.S.C. 6109 but not 26 U.S.C. 5382, resulting in the 
inadvertent removal of 26 U.S.C. 5382 from the list, and this error was 
not corrected in T.D. TTB-147. Therefore, in this temporary rule, TTB 
is correcting the authority citation for 27 CFR part 27 to return 26 
U.S.C. 5382 to that part's list of authorities.

Regulatory Analysis and Notices

Public Participation

    To submit comments on the delayed compliance date for the hard 
cider tax class labeling statement described in this temporary rule, or 
to submit new comments on any of the hard cider regulations contained 
in T.D. TTB-147, published in the Federal Register on January 23, 2017, 
at 82 FR 7653, please refer to Notice No. 168A, published in the 
``Proposed Rules'' section of this issue of the Federal Register.

Executive Order 12866

    Certain TTB regulations issued under the IRC, including this one, 
are exempt from the requirements of Executive Order 12866, as 
supplemented and reaffirmed by Executive Order 13563. Therefore, a 
regulatory impact assessment is not required.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), TTB certifies that this temporary rule will not have a 
significant economic impact on a substantial number of small entities. 
The temporary rule will not impose, or otherwise cause, a significant 
increase in reporting, recordkeeping, or other compliance burdens on a 
substantial number of small entities. Rather, this temporary rule 
decreases burden on impacted entities by delaying the compliance date 
for a TTB labeling requirement that implements certain changes to the 
Internal Revenue Code of 1986 made by the Protecting Americans from Tax 
Hikes Act of 2015 (see Pub. L. 114-113, Division Q, section 335).

Paperwork Reduction Act

    The regulatory sections addressed in this temporary rule (27 CFR 
24.257 and 27.59) contain collections of information that have been 
previously reviewed and approved by OMB in accordance with the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3507) and assigned control 
numbers 1513-0092 and 1513-0138. No changes are being made to the 
existing approved information collections.

Inapplicability of Prior Notice and Public Comment and Delayed 
Effective Date Procedures

    TTB is issuing this temporary rule without prior notice and comment 
pursuant to authority under section 4(a) of the Administrative 
Procedure Act, as amended (APA; 5 U.S.C. 553(b)). This provision 
authorizes an agency to issue a rule without prior notice and comment 
when the agency for good cause finds that those procedures are

[[Page 57353]]

``impracticable, unnecessary, or contrary to the public interest.''
    In this temporary rule, TTB is delaying the compliance date for the 
requirement that the tax class statement ``Tax class 5041(b)(6)'' 
appear on containers of wine for which the hard cider tax class is 
claimed, from January 1, 2018, to January 1, 2019. TTB finds that prior 
notice and comment is unnecessary because a delayed compliance date 
will provide additional time to industry members to comply with that 
labeling requirement.
    TTB is issuing this temporary rule without a delayed effective date 
pursuant to authority under section 4(c) of the APA (5 U.S.C. 553(d)). 
TTB finds good cause under 5 U.S.C. 553(d)(1) to dispense with the 
effective date limitation in 5 U.S.C. 553(d). This temporary rule 
grants a one-year exemption by delaying the compliance date for a 
labeling statement requirement that would otherwise become effective on 
January 1, 2018. Accordingly, the effective date of this temporary rule 
is December 5, 2017.

Drafting Information

    Kara Fontaine of the Regulations and Rulings Division drafted this 
document with the assistance of other Alcohol and Tobacco Tax and Trade 
Bureau personnel.

List of Subjects

27 CFR Part 24

    Administrative practice and procedure, Cider, Claims, Electronic 
funds transfers, Excise taxes, Exports, Food additives, Fruit juices, 
Hard Cider, Labeling, Liquors, Packaging and containers, Reporting and 
recordkeeping requirements, Research, Scientific equipment, Spices and 
flavorings, Surety bonds, Vinegar, Warehouses, Wine.

27 CFR Part 27

    Alcohol and alcoholic beverages, Beer, Cosmetics, Customs duties 
and inspections, Electronic funds transfers, Excise taxes, Imports, 
Labeling, Liquors, Packaging and containers, Reporting and 
Recordkeeping requirements, Wine.

Amendments to the Regulations

    For the reasons discussed in the preamble, TTB is amending 27 CFR 
chapter I, parts 24 and 27 as follows:

PART 24--WINE

0
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, 5121, 5122-5124, 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, 7302, 7342, 7502, 7503, 7606, 7805, 7851; 31 
U.S.C. 9301, 9303, 9304, 9306.


Sec.  24.257   [Amended]

0
2. In Sec.  24.257:
0
a. Paragraph (a)(4) is amended by removing the date ``January 1, 2018'' 
each place it appears and adding in its place the date ``January 1, 
2019''; and
0
b. The Office of Management and Budget control number reference at the 
end of the section is amended by removing the phrase ``1513-0115 and 
1513-XXXX'' and adding in its place the phrase ``1513-0092 and 1513-
0138''.

PART 27--IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEER

0
3. The authority citation for part 27 is revised to read as follows:

    Authority:  5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C. 
5001, 5007, 5008, 5010, 5041, 5051, 5054, 5061, 5121, 5122-5124, 
5201, 5205, 5207, 5232, 5273, 5301, 5313, 5382, 5555, 6109, 6302, 
7805.


Sec.  27.59   [Amended]

0
4. In Sec.  27.59, the Office of Management and Budget control number 
reference at the end of the section is amended by removing the phrase 
``number 1513-XXXX'' and adding in its place the phrase ``numbers 1513-
0092 and 1513-0138''.

    Signed: October 30, 2017.
John J. Manfreda,
Administrator.
    Approved: November 30, 2017.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade and Tariff Policy).
[FR Doc. 2017-26281 Filed 12-4-17; 8:45 am]
 BILLING CODE 4810-31-P