Revision of Distilled Spirits Plant Regulations
Federal RegisterFeb 16, 2011
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DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau
27 CFR Parts 1, 17, 19, 24, 26, 28, 30, and 31
[Docket No. TTB-2008-0004; T.D. TTB-92; Re: ATF Notice No. 870 and TTB Notice Nos. 83, 86, and 92]
RIN 1513-AA23
Revision of Distilled Spirits Plant Regulations
AGENCY:
Alcohol and Tobacco Tax and Trade Bureau, Treasury.
ACTION:
Final rule; Treasury decision.
SUMMARY:
In this document, the Alcohol and Tobacco Tax and Trade Bureau adopts as a final rule, with some changes, a proposed revision of its distilled spirits plant regulations. The revision modernizes the requirements for operating distilled spirits plants and includes a number of organizational changes to improve the layout of the regulatory texts. These changes make the regulations easier to apply, thereby facilitating compliance by distilled spirits plant proprietors and allowing those proprietors to operate in a more efficient manner. The revision also incorporates plain language principles in order to improve the clarity and readability of the regulatory texts.
DATES:
Effective Date:
This final rule is effective on April 18, 2011.
FOR FURTHER INFORMATION CONTACT:
Christopher M. Thiemann, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street, NW., Suite 200E, Washington, DC 20220; telephone 202-453-2265.
SUPPLEMENTARY INFORMATION:
Distilled Spirits Plants in General
Distilled spirits taxation is a specialized area of Federal law. The following background material provides basic information about how distilled spirits plants operate and are regulated, and how taxes on distilled spirits are collected, under Federal law.
Basic Definitions
Distilled spirits.
The term “distilled spirits” refers to those products that contain ethyl alcohol and are generally the result of distillation of fermented materials. This term does not apply to wine and beer, which generally are products of fermentation alone. Examples of distilled spirits products are vodka, whiskey, gin, brandy, cordials, liqueurs, and flavored brandies.
Distilled spirits plants.
The term “distilled spirits plant” (DSP) refers to a plant at which distilled spirits are manufactured or produced, aged or stored, or packaged or bottled, for either beverage or industrial use.
Federal Laws and Regulatory Authority
Federal law prohibits the manufacture or production of distilled spirits in the United States at other than a registered DSP for which a permit has been issued by the Alcohol and Tobacco Tax and Trade Bureau (TTB). While Federal law allows for the limited home production of wine and beer, no such provision exists for distilled spirits.
DSPs are regulated under the provisions of two laws, the Internal Revenue Code of 1986 (the IRC, codified as title 26 of the United States Code (26 U.S.C.)) and the Federal Alcohol Administration Act (the FAA Act, codified in title 27 of the United States Code (27 U.S.C.)). The IRC imposes an excise tax on distilled spirits, requires the registration of DSPs, mandates DSP proprietors to obtain permits not otherwise required by the FAA Act, and imposes strict controls over the operation of DSPs. The FAA Act imposes a requirement to obtain a basic permit and contains various consumer-protection provisions, including provisions related to the formulation, labeling, and advertising of alcohol beverages. The FAA Act also prohibits various types of trade practices within the alcohol industry, including DSPs.
Both the IRC and the FAA Act authorize the Secretary of the Treasury to prescribe regulations to carry out and enforce their provisions regarding the establishment and operation of DSPs. Those regulations are administered by TTB. The TTB regulations that concern DSPs, which are the subject of this document, are contained in part 19 of title 27 of the Code of Federal Regulations (27 CFR part 19).
Major Regulatory Provisions
A DSP consists of one or more of the following: Production, storage, processing, denaturation, and bottling facilities for beverage and industrial use distilled spirits. A DSP may be a large and complex plant having all of those facilities or may be a simple storage facility consisting of only one building or a small bottling facility with storage facilities. Production facilities are usually accompanied by storage facilities. Bottling facilities are often accompanied by storage facilities, and in fact must by law be accompanied by either a production facility or a storage facility. However, large storage facilities are often not accompanied by bottling or production facilities.
Registration.
Before commencing any of the operations discussed in the previous paragraph, the IRC requires that the DSP proprietor must first obtain approval of a notice of registration. This application for registration includes documents to set up distilling apparatus, environmental impact forms, personnel questionnaires, authorized signatories, and a statement of security.
Permits.
Under the FAA Act, all persons must file for, and obtain, a basic permit before engaging in the business of:
• Distilling spirits;
• Rectifying, blending, or bottling (processing) distilled spirits; or
• Warehousing and bottling distilled spirits.
To maintain control over the industrial use of distilled spirits, the IRC requires that an operating permit be obtained before commencing the production, warehousing, or bottling of alcohol for industrial use. Specifically, a permit is required for:
• Distilling of spirits for industrial use;
• Bonded warehousing of spirits for industrial use;
• Denaturation of spirits;
• Bonded warehousing of spirits (without bottling) for nonindustrial use;
• Bottling or packaging of spirits for industrial use; or
• Any other distilling, warehousing, or bottling operations not required to be covered by a basic permit under the FAA Act.
DSP bonded premises.
The physical premises of a DSP are divided into two technical categories—“bonded premises” and unbonded “general premises.” All activities relating to the distilling, storing, and processing (blending and mixing) of distilled spirits must be conducted on bonded premises. Most activities relating to taxpaid alcohol beverages conducted at the distilled spirits plant must be conducted on general premises.
Operations as a distiller, warehouseman, or processor may be conducted only on the bonded premises of a DSP by a person who is qualified to carry on such operations under 27 CFR part 19 and who has obtained the FAA Act basic permits required by 27 CFR part 1, or, as appropriate, the operating permit required by part 19. However, certain other activities, such as those of apothecaries, customs bonded warehousemen, manufacturers of nonbeverage products, and users of specially denatured alcohol (SDA), may be carried on outside DSPs.
The physical continuity of a DSP must be unbroken except for separations that may include public waterways, thoroughfares, or carrier rights-of-way. In most instances, DSPs are also prohibited from being located in a dwelling house, in a shed, yard, or enclosure connected with a dwelling house, on board a vessel or boat, on premises where beer or wine is produced, in a retail liquor establishment, or where any other business is conducted.
Bonds.
Normally, the distilled spirits tax is not collected while spirits are held on the “bonded” premises of a distilled spirits plant. The potential tax liability of the spirits held on bonded premises is guaranteed by an operations bond, and taxable removals from the bonded premises of a DSP are covered by a withdrawal bond.
The bond is a legally binding, written agreement involving three parties—the taxpayer, the surety (insurance or bonding company), and the U.S. Government. The purpose of the bond is to protect the financial interest of the Government. If for any reason the taxpayer fails to pay the tax, the surety is then obliged to pay the tax, up to the face amount (limit) of the bond.
Other requirements.
In addition to registering, obtaining a permit, and providing a bond, DSP proprietors are required to comply with a number of regulatory provisions relating to: Plant security; production, storage, and processing of spirits; recordkeeping; inspection and audit; and filing of reports. These requirements are reflected in the part 19 regulations.
Recordkeeping accounts.
All operations at a DSP are accounted for within four recordkeeping accounts—production, storage, denaturation, and processing. Since the facilities (tanks and rooms) of a DSP may be used for multiple purposes, the accountability for spirits must be maintained of necessity by appropriate records within the four accounts instead of by physical separation.
Payment of taxes.
The Federal excise tax on distilled spirits attaches to the spirits as soon as they are produced, and the distilled spirits plant is held liable for the tax on all distilled spirits held in the bonded premises. The amount of Federal excise tax that a distilled spirits plant proprietor must pay is based on the taxable removal of the spirits from the bonded premises. There are two basic methods of paying the tax on distilled spirits withdrawn from bonded premises—deferred payment and prepayment. Under the deferred payment system, the proprietor may withdraw spirits from bond after tax determination but before payment of tax. The excise tax is paid pursuant to a semimonthly tax return based on the amount of spirits removed from bond during each return period. Under the prepayment system, the proprietor must pay the distilled spirits tax after tax determination but before withdrawal of the spirits from bonded premises. Most DSP proprietors use the deferred payment system.
Currently, the Federal excise tax rate on distilled spirits is $13.50 per proof gallon. The term “proof gallon” is unique to this particular commodity and means: A liquid gallon at 60 degrees Fahrenheit that contains 50 percent ethyl alcohol by volume.
Although the tax rate for distilled spirits is $13.50 per proof gallon, many distilled spirits products are actually taxed at a lower rate. Many products contain added wine and/or flavors, and the IRC at 26 U.S.C. 5010 provides a tax credit for the wine and flavors content of the product. These credits effectively reduce the rate of excise tax paid on distilled spirits products that contain wine or flavors.
Nontaxable transactions.
Under the IRC, certain types of shipments to and from a distilled spirits plant are permitted without payment of tax. Examples include:
• Shipments of bulk (unbottled) spirits from one registered distilled spirits plant to another. (Bottled spirits are not eligible for untaxed transfer in bond between plants.)
• Shipments of bulk imported spirits from U.S. Customs and Border Protection custody to a distilled spirits plant. (Only bulk imported spirits are eligible for this type of transfer.)
• Direct exports of products from the United States.
• Shipments to users of industrial alcohol (certain permit holders who use alcohol for medical, research, or industrial purposes).
Rulemaking History
ATF Notice No. 870
On November 30, 1998, TTB's predecessor agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), published in the
Federal Register
(63 FR 65720) a notice of proposed rulemaking, Notice No. 870, that solicited comments on proposed changes to several sections of the regulations in 27 CFR part 19. The proposed changes included: (1) Delegations of authority, (2) removing a special tax provision, (3) liberalizing the requirement for approval of certain changes in plant personnel or procedures, (4) reducing the paperwork when plant premises are alternated with other premises, (5) providing for alternation of distilled spirits plant and brewery premises, (6) allowing denaturation and manufacture of articles to be done in a single, unified process, (7) specifying marks for packages of industrial spirits withdrawn taxpaid, (8) clarifying regulations that refer to a transfer record, and (9) incorporating into the regulations a provision of an ATF Industry Circular regarding alcohol fuel.
In addition to these proposed changes, ATF invited comments regarding the general recordkeeping system for distilled spirits plants prescribed in part 19.
In response to Notice No. 870, ATF received extensive comments from the Distilled Spirits Council of the United States (DISCUS), a trade association representing distilled spirits industry members with interests in the U.S. market. While DISCUS provided comments on the specific issues raised in Notice No. 870, it also asked that ATF consider a broad range of regulatory changes to part 19, essentially requesting the initiation of a complete revision of that part. In support of its request, DISCUS provided ATF with sample regulations that consisted of a “markup” version of the part 19 texts, along with numerous copies of variances (alternate methods or procedures) that ATF approved for members of the distilled spirits industry over the years. The amendments requested by DISCUS covered a broad range of issues and included reduced recordkeeping requirements for distilled spirits plants, greater use of commercial records, reduced reporting requirements, reduced requirements for reporting changes affecting the DSP's registration, liberalized use of DSP premises, storage of distilled spirits on bonded premises through “constructive segregation” based on commercial records, and inclusion of alternative method or procedure approvals in the regulations for universal applicability.
ATF also received comments from Equistar Chemicals, LP in response to Notice No. 870. Equistar is a producer of industrial ethyl alcohol, and its comments addressed issues in Notice No. 870 related to industrial alcohol. Equistar also commented on other issues affecting distilled spirits plants, such as the amendment of plant registrations, recordkeeping, denaturation, and gauging.
After reviewing the comments received in response to Notice No. 870, ATF concluded that the amendments proposed in that notice were not extensive enough to address the changes
that had taken place in the industry since the last major revision of the distilled spirits plant regulations, which took place when ATF implemented the Distilled Spirits Tax Revision Act of 1979, commonly referred to as “All in Bond.” No further action was taken by ATF in regard to this matter.
TTB Notice No. 83
As the successor to ATF, TTB undertook a comprehensive review of the distilled spirits plant regulations in part 19, taking into account the comments received in response to Notice No. 870, intervening statutory changes, and other issues that had come to the attention of TTB that appeared to warrant changes to the part 19 regulations. As a result of this review, on May 8, 2008, TTB published in the
Federal Register
(73 FR 26200) Notice No. 83, a notice of proposed rulemaking that set forth a complete revision of part 19 and superseded Notice No. 870.
The preamble of Notice No. 83 contained a detailed discussion of the proposed changes reflected in the revised part 19 texts. The following points are noted regarding the proposed changes:
1. Each section of the regulations was examined for clarity and rewritten as necessary, with application of plain language principles (use of active voice and shorter sentences and paragraphs, elimination of jargon and unnecessary technical terms, and use of gender-neutral language) where practicable. Many lengthy sections of the regulations were split into multiple sections to make them more understandable and readable. In addition, in some cases textual information was converted to a table format for easier reference.
2. The individual sections within part 19 were rearranged into a more logical order. In some cases this involved the reordering of sections within a subpart, and in other cases this involved the creation of a new subpart to set forth regulations involving the same general subject matter that previously was dealt with in more than one subpart. For example, prior to this revision, information regarding distilled spirits taxes was found in two separate subparts, subpart C (containing basic information about distilled spirits taxes) and subpart P (containing information regarding determination of taxes and the filing of tax returns); the revision combines these provisions in one new Subpart I, Distilled Spirits Taxes. In addition, duplicative sections were eliminated.
3. Amendments to the IRC made by the Taxpayer Relief Act of 1997 were incorporated into the regulations, including provisions whereby: (a) Imported bottled spirits that were taxpaid through Customs may be returned to bond at a DSP and a claim for a credit, refund, or abatement may be filed for the return, (b) beer to be used in the production of spirits can be received at a DSP without payment of tax, and (c) taxpaid beer can be removed from a brewery and shipped to a DSP with refund or credit of tax.
4. The revised regulations allow for expanded use of letterhead applications and letterhead notices for purposes of amending a registration or permit in lieu of filing an entire new registration or permit application.
5. The regulations were revised to allow for the use of mass flow meters that meet certain volumetric tolerances for tax determination, as well as the use of other bulk gauges for general gauging, without prior approval from TTB.
6. In view of the increased number of limited liability companies (LLCs) and limited liability partnerships (LLPs) that own and operate DSPs, references to these types of business entities were included in the provisions that govern the qualification of DSPs.
7. The revised regulations include the addition of a provision that would permit the alternation of DSP premises with adjacent brewery premises.
8. The revised regulations require alcohol fuel plants (AFPs) to file an application in order to receive spirits in bond. This corrected an oversight in the regulations because 26 U.S.C. 5005(c)(1) establishes tax liability during a transfer in bond based on an application filed by the consignee. Under this change, AFPs would be required to file the same applications as regular DSPs.
9. The revised regulations eliminate the requirement that proprietors file form TTB F 5110.34, Change in Plant Status, when DSP premises are curtailed or extended. Under the revised regulations, the proprietor would document curtailment or extension with a record kept at the plant or by commercial records.
10. The revised regulations retained the requirement that the closure on each container requires breaking to gain access to the contents of the container. However, the requirement that a portion of the closure remain on the container after its breakage was eliminated, because that particular feature is not a requirement of the underlying IRC provision at 26 U.S.C. 5301(d).
11. The revised regulations clarify that required records may consist of documents created in the ordinary course of business rather than records created to expressly meet the requirements of part 19, if those documents contain the information that the regulations require. However, the revised regulations do not include a DISCUS recommendation that we eliminate most of the internal records of activities within a DSP, such as the production account, the storage account, and the processing/denaturation account, because the internal accounts are specifically called for in the IRC and they are discussed in the legislative history relating to “all-in-bond.”
Notice No. 83 invited the public to make comments on the proposed regulations by August 6, 2008. The comment period for Notice No. 83 was extended twice. On May 8, 2008, after a request from an industry member, TTB published in the
Federal Register
Notice No. 86 (73 FR 44952), which extended the comment period by 90 days. On October 29, 2008, after a request from DISCUS, TTB published in the
Federal Register
Notice No. 92 (73 FR 64287), which extended the comment period by an additional 90 days. The comment period for Notice No. 83 therefore closed on February 3, 2009.
Comments Received in Response to Notice No. 83
In response to Notice No. 83, TTB received 7 comments. Six of the comments expressed strong support for the revisions to part 19 and commented on specific areas of agreement and recommendations for further changes. One commenter asked a specific question regarding a particular regulatory requirement. Descriptions of the comments and TTB responses follow.
Comment 1
A comment from a manufacturer of nonbeverage products was supportive of TTB's efforts to modernize the DSP requirements. The commenter specifically addressed the application of part 19 to cosmetic and topical over-the-counter drug products such as instant hand sanitizers and skin cleansers. The commenter noted that its products are subject to several Federal laws and to regulation by the FDA as well as TTB.
The commenter stated that due to growth in the hand sanitizer product category, TTB should create category-specific regulations, similar to the regulations for vinegar plants and alcohol fuel plants.
TTB Response:
TTB notes that vinegar plants and alcohol fuel plants differ from cosmetics containing alcohol because vinegar as an end product does not contain alcohol, and alcohol fuel plants are created as a category by statute. The commenter is correct that
TTB does not have specialty categories for denatured alcohol products in its regulations. Denatured alcohol products include cosmetics, flavors, fuel, over-the-counter products, medical products, laboratory products, industrial products such as solvents and cleaners, and food ingredients, just to name a few. Creating category-specific regulations would create an increased regulatory burden on those entities that manufacture multiple types of denatured products. Also, adding new nonbeverage product categories within part 19 is outside the scope of Notice No. 83, and it would be inconsistent with the Administrative Procedure Act to make such substantive changes not proposed in Notice No. 83 in this final rule document without notice and comment. However, we agree that hand sanitizer products have grown as a market segment since their introduction in 1988. We currently are undertaking a rulemaking project relating to 27 CFR Part 20, Distribution and Use of Denatured Alcohol and Rum, and we will retain these comments for consideration in that project.
The commenter also noted that it has several production and recordkeeping processes in place that have been validated by the FDA, but that are not recognized as meeting TTB requirements without other TTB mandated records and reports.
TTB Response:
TTB has a unique responsibility to protect the revenue while FDA regulations are designed to ensure safe products, not to protect the revenue. Thus, TTB's reporting and recordkeeping requirements are different from those of FDA.
The commenter listed several proposed changes that it suggests apply specifically to cosmetic and over-the-counter producers:
• “Exempt companies from monthly reporting if they are only purchasing and using [specially denatured alcohol (SDA)] * * *. Document the yearly usage of SDA alcohol on the User's Report of Denatured Spirits (TTB Form 5150.18).”
TTB Response:
Companies that only purchase and use SDA may operate under the provisions of 27 CFR part 20. Under § 20.264(b), SDA users are required to file an annual report as opposed to a monthly report. However, monthly reporting is a requirement for DSPs because it provides information to TTB to ensure that the revenue is protected. TTB would not know what operations were occurring at a DSP if reports were not filed on a more frequent basis.
• “Allow denaturants other than the specified SDA formulations based on pre-approval of the TTB through submission of formulas on form 5150.19.”
TTB Response:
This process is already permitted under 27 CFR 21.91.
• “Maintain Special Tax Stamp (form 5630.6A).”
TTB Response:
The requirement to maintain a special tax stamp was repealed by the American Jobs Creation Act of 2004. Therefore, we have no authority to require this.
The commenter also stated that the quarterly physical inventory of denatured spirits required in proposed § 19.394 is unnecessary due to the records and systems maintained to coordinate inventory of raw materials and cosmetic and over-the-counter (OTC) products. The commenter recommended that manufacturers of topical OTC drugs and cosmetics be required to allow TTB to access inventory records and perform a physical inventory annually without a date stipulation. We note that DISCUS made a similar recommendation in its comments to ATF Notice No. 870, but we did not adopt this recommendation in Notice No. 83.
TTB Response:
The shorter time period between quarterly versus annual inventories makes it easier for both TTB and a proprietor to reconcile discrepancies and thereby protect the revenue. A proprietor may continue to apply for approval of an alternate procedure pursuant to § 19.26, and TTB may grant such an alternate procedure if appropriate.
The commenter stated that the serial number for records required in various subparts should not include the requirement that the serial number commence with “1” at the beginning of each calendar or fiscal year. The commenter proposed that as long as the serial or identifying number meets the requirements of § 19.572, concerning the format of records, it should be considered satisfactory.
TTB Response:
We agree that a unique identifier is sufficient to identify a particular record, and we have amended §§ 19.618 and 19.620 in this final rule document to allow unique identifiers that do not necessarily begin with the number “1” each year.
Finally, the commenter recommended amending the regulations to allow for letterhead or single form notification of changes to the permit regarding an address change that does not involve a physical move.
TTB Response:
We agree that a letterhead notice is sufficient to notify TTB of a change of address that does not involve a physical move or any change in physical area or layout of a DSP. We have added a new section, § 19.691, to address changes of address not involving a change in location.
Comment 2
A manufacturer of nonbeverage products stated that the changes proposed by TTB would indeed help streamline the many processes involved in the operations of a distilled spirits plant. The commenter listed eight specific areas of the part 19 revision that it particularly supported:
• The use of plain language while minimizing the use of jargon and technical terms;
• The restructuring of information to consolidate major topics and bring like information together;
• The expanded use of letterhead notices for reporting certain changes such as changes in officers and directors;
• The use of a single area operations bond to cover all of the proprietor's plants in the United States;
• The use of mass flow meters for all required bulk gauges at a DSP;
• The allowance for a unified process for denaturation and article manufacture;
• The allowance for a single gauge measurement when filling containers from tanks; and
• The ability to file computer-generated reports and forms.
In addition, the commenter noted three areas of regulation where it suggested further changes.
First, the commenter requested that TTB allow an average tare (that is, the weight of an empty package) to be used for gauging individual packages (drum, barrel, or similar container of spirits (see the definition of “package” in § 19.1). The commenter noted that the variance for package tare is often less than 0.25 lb.
TTB Response:
We believe that the degree of variance can be significant. In the preamble to Notice No. 83, we addressed a similar recommendation made in comments to ATF Notice No. 870 and we explained that we did not adopt this recommendation in the proposed rule because TTB requires an accurate gauge of spirits that are withdrawn from bonded premises. Accordingly, we are not adopting the commenter's proposal in this final rule. The requirement that the proprietor establish the actual tare of each package to be withdrawn from bond appears at § 19.288.
Second, the commenter suggested that TTB allow minimum amounts of denaturants rather than specific amounts of denaturants.
TTB Response:
Part 21 of the TTB regulations sets forth specific formulas
for denatured spirits, not part 19, and therefore such a change is not appropriate in this rulemaking action. We have noted this comment for possible future rulemaking involving part 21.
Third, the commenter suggested that temporary permit delivery addresses be allowed through a letterhead notification process. The commenter noted that temporary situations, such as road construction or utilities maintenance, occasionally require deliveries to alternate addresses such as a side entrance, but that the current regulations require permittees to amend their permits for each address change.
TTB Response:
We agree that there should be provisions for temporary changes to a delivery address, without a change in the location or street address of the plant, and that a letterhead notice provides sufficient notice to TTB. Accordingly, for the final rule we have incorporated this change in the language of § 19.118
Comments 3 and 4
TTB received two comments from a large ethanol producer that holds a number of DSP and Alcohol Fuel Plant (AFP) permits. The commenter noted that it supports the streamlining of procedures and the overall organizational improvements proposed in the revisions to part 19.
In its first comment, the commenter referred to two areas of the Notice No. 83 preamble with which it disagrees. Both areas relate to TTB's interpretation of 26 U.S.C. 5181, which relates to AFPs. First, the commenter stated that it believes “the interpretation that an AFP permit may be granted to a facility that will solely receive and not produce spirits is inconsistent with the law that established the AFP.” Similarly, the commenter suggested that TTB should not allow the establishment of an AFP for the purpose of receiving imported alcohol.
TTB Response:
As noted in Notice No. 83, while the Bureau had formerly interpreted 26 U.S.C. 5181(a)(1) to mean that all alcohol fuel plants must produce distilled spirits, it is now the position of the Bureau that a person may establish an AFP solely for the receipt and processing of distilled spirits for fuel use. We also noted that we had already set the precedent that receipt of distilled spirits counts as “production” at an AFP (see former § 19.956, which treated receipts as production.) Section 5181 of the IRC was established to generally encourage and promote (through regulation or otherwise) the production of alcohol for fuel purposes. As fuel needs have changed dramatically, the goal of the Bureau's AFP regulations is to ensure adequate supplies of fuel ethanol. We find that it is appropriate to read the applicable law, 26 U.S.C. 5181, as permitting facilities to qualify as AFPs even when their production operations consist solely of blending ethanol with authorized denaturants for the purpose of producing alcohol fuels. Consistent with the goal stated above, as well as 26 U.S.C. 5232 which provides for the receipt of imported spirits by DSPs, TTB does not distinguish, in this case, between domestically produced and imported ethanol.
In its second comment, the commenter raised specific issues that it believed should be addressed in the revision of part 19, and provided markups of the various regulatory sections involved in its recommendations. Specifically, the commenter's suggestions and TTB's responses to those suggestions are as follows:
• In addition to the performance limits for use of mass flow meters provided in the proposed regulation, suggested providing specific performance limits for volumetric flow meters and other equipment such as seals and density meters.
TTB Response:
The new part 19 regulations, at § 19.284, allow the use of mass flow meters for tax determination purposes, as well as volumetric determinations, and establish specifications for their performance. In regard to such equipment as seals and density meters, the Bureau does not receive a significant number of requests for the use of these types of equipment and evaluates them, when necessary, on a case-by-case basis.
• Suggested that gauging by accurate flow meter and by accurate density meter, as proposed in Notice No. 83, be reflected in part 30 of the TTB regulations. The commenter recommended a direct final rule for part 30 to harmonize with the updated part 19.
TTB Response:
The new part 19 regulations, at § 19.188, allow either the use of the gauging methods specified in part 30 or the use of accurate meters, so further changes to this part are unnecessary in regard to distilled spirits. We do not believe it is appropriate to amend part 30 because part 30 applies to other products in addition to distilled spirits. Additionally, any such amendment would be beyond the scope of this rulemaking action.
• Made several suggestions about receipt of denatured spirits at a DSP and return to bonded premises. One such suggestion was that denatured spirits should be permitted on bonded premises for comingling, storage, or withdrawal even after they had been previously removed.
TTB Response:
The IRC in section 5215 permits distilled spirits on which tax has been determined to be returned to bonded premises only for destruction, denaturation, redistillation, reconditioning or rebottling. Further, IRC section 5612(a) states that, with some exceptions not applicable here, no distilled spirits on which tax has been paid or determined shall be stored or allowed to remain on the bonded premises of any distilled spirits plant, under the penalty of forfeiture of all spirits found. The TTB regulations in part 19 provide alternatives, such as transfers in bond and alternations of premises.
• Suggested that fuel alcohol produced at an AFP be considered completely denatured alcohol.
TTB Response:
Section 5181 of the IRC, which provides authority for TTB to permit AFPs, requires that distilled spirits withdrawn must be rendered “unfit for beverage use.” Section 5214(a)(1) of the IRC authorizes the withdrawal of distilled spirits from a DSP after denaturation for specific purposes, and section 5214(a)(12) separately authorizes the withdrawal free of tax for distilled spirits produced under section 5181. The IRC does not refer to alcohol produced at an AFP as “denatured” and clearly intends to distinguish the term “denatured ” as used for DSPs in general and “unfit for beverage use” as used for alcohol produced for fuel use under the authority of section 5181.
• Suggested the proposal of a direct final rule for part 21 of the TTB regulations dealing with completely denatured alcohol to harmonize the regulations for fuel produced by an AFP and CDA 20 produced by a DSP.
TTB Response:
This final rule, which covers proposed substantive changes to part 19, is not an appropriate venue for making changes to other parts of the TTB regulations. We may consider this proposal in future rulemaking.
• Suggested allowing AFPs to send samples of undenatured spirits to a lab off the bonded premises similar to the procedures for DSPs.
TTB Response:
TTB is considering making a number of substantive changes to the regulations governing AFPs in a separate rulemaking initiative. We will consider this proposal in that rulemaking action.
• Suggested removing the requirement for TTB approval for sending samples to a recognized commercial laboratory.
TTB Response:
The Bureau is not adopting this suggestion as TTB needs to approve a DSP's transfer activities on a case-by-case basis. We look at a number of facts, including risk to the revenue and compliance history of the DSP.
• Suggested that TTB remove mark requirements found in proposed § 19.495 for bulk conveyances.
TTB Response:
Section 1263 of title 18 of the U.S.C. (18 U.S.C. 1263) provides criminal sanctions for shipping distilled spirits without certain information: The name of the consignee, the nature of its contents, and the quantity contained therein. The requirements of § 19.495 are consistent with this statute. We note that both the statute and § 19.495(b) allow shippers to supply the information on a document as opposed to marks on the conveyance.
• Suggested changing proposed § 19.11 to allow time for verification of credentials in order to comply with potential site security and Homeland Security issues.
TTB Response:
We do not adopt the suggestion because 26 U.S.C. 5203(b) prescribes the requirement for the right of immediate entry and examination, and TTB officers must be able to access facilities whenever necessary to protect the revenue or to determine if internal revenue laws have been violated. TTB is also concerned with site security issues and is willing to work with proprietors on site security and Homeland Security issues as they arise.
• Suggested changing the alternate method or procedure process to include approval for all permit holders.
TTB Response:
We do not adopt this suggestion because not all alternate method or procedures are appropriate for industry-wide approval. Alternate methods and procedures must be evaluated and approved on a case-by-case basis. If a member of the public wishes to suggest changes to the methods or procedures contained in the regulations for use by all permittees, that person may submit a petition for rulemaking to TTB.
• Suggested adding the phrase “on the bonded premises” after “All pipelines” in § 19.187.
TTB Response:
We do not accept this proposal because § 19.187 is intended to apply to all pipelines at a DSP, whether or not they are on bonded premises. The purposes of this section are to protect the revenue and to permit ready access by the appropriate TTB officers to conduct examinations.
Comments 5 and 6
TTB received a comment from DISCUS written on behalf of a coalition of DISCUS members and another industry member. TTB received an additional comment from the industry member which expressed support for DISCUS's comments and provided further details on how the proposed changes to part 19 would affect its operations.
Much of DISCUS's comment related to its suggestion that TTB adopt its concept of “constructive segregation” for various types of products (wine, beer, spirits, or flavors) or tax status (taxpaid, nontaxpaid, or in customs custody).
TTB Response:
While we might agree that in certain circumstances, constructive segregation provides adequate protection to the revenue, we note that the majority of DSPs do not have the sophisticated equipment necessary to maintain segregation through records alone. Accordingly, an across-the-board regulatory constructive segregation provision would not be appropriate. However, proprietors may submit a request for approval of the use of constructive segregation as an alternate method or procedure under new § 19.27 and we will evaluate such a request on a case-by-case basis, taking into account all relevant factors, including the adequacy of the protection of the revenue and the proprietor's compliance history.
DISCUS also proposed that TTB eliminate the requirements to submit diagrams showing extended and curtailed premises, and that TTB not adopt the proposal to require submission of an application and/or letterhead notice for alternations and extensions of premises.
TTB Response:
We are not adopting these suggestions because, in order to ensure compliance with statutory requirements related to revenue protection, we must receive specific information about the layout of a DSP. However, proprietors may continue to submit a request for approval of an alternate method or procedure to vary from the regulatory requirements, and we will consider approving such requests on a case-by-case basis.
DISCUS repeated the comment it made to Notice No. 870 that suggested a 200-mile rule for continuity of premises.
TTB Response:
In the preamble to Notice No. 83, we explained that we would not adopt a 200-mile rule and the current comment does not provide sufficient justification for any change of our position. We will continue to evaluate requests for alternate methods or procedures concerning plant continuity on a case-by-case basis, each analysis to be based upon multiple factors. Generally, we believe that the “same general location” must not be too large an area so that the revenue is placed at risk. Also, because a distance of 200 miles could extend over a multi-state area and would cross over into different field offices within TTB, such a distance would create administrative difficulties for TTB.
DISCUS also commented on TTB's proposed changes to alcohol fill tolerances. It suggested that the Bureau eliminate the requirement that there be approximately the same number of overfills and underfills for each lot bottled.
TTB Response:
We are not adopting this suggestion because this regulatory requirement ensures that the proprietor accurately fills bottles, which supports proper collection of the revenue and protects consumers from deception. It is the responsibility of proprietors to ensure that their bottling equipment accurately fills bottles of spirits.
In order to assist proprietors in determining the standards for fill tolerances, we proposed a specific standard of plus or minus 2 percent for fill. DISCUS and the industry member state that this tolerance is too small for small bottle sizes.
TTB Response:
We agree and have adopted a stepped approach to tolerances similar to fill tolerances used for wine found in 27 CFR 24.255(b). In evaluating DISCUS's and the industry member's slightly different proposals for using a stepped approach similar to that used in wine regulations, we found a 9 percent tolerance, as proposed for the smallest bottle sizes, to be too large. The revised tolerances are found in § 19.356 and range from 1.5 percent for bottles 1.0 liter and above to 4.5 percent for bottles 100 mL and below.
Comment 7
An individual commented on the provisions of § 19.387, “Ensuring the quality of denaturants.” The commenter suggested that TTB reapply an exception that appeared in the ATF regulations prior to 1979 for certain denaturants that were deposited in storage under direct supervision of the assigned ATF officer. The commenter noted that the prior regulation stated, in part, “Synthetic oils approved by the Director, essential oils as defined in Part 212 of this chapter, pure chemicals (liquid or solid), or U.S.P. or N.F. substances used as denaturing materials, deposited in storage under direct supervision of the assigned officer in the original sealed package of a reputable manufacturer of chemicals, bearing a label descriptive of the contents placed thereon by the manufacturer, need not
be tested except when required by the Director.”
TTB Response:
The responsibility for security and purity of denaturants lies with the proprietor of the plant. Because denaturants could be adulterated by various sources, or otherwise be of nonconforming quality, it is the responsibility of the proprietor to ensure that denaturants conform to the specifications prescribed in part 21 of the TTB regulations. The exception that applied prior to 1979 was applicable to denaturants deposited in storage under direct supervision of an ATF officer. Because TTB does not have officers assigned to each DSP, it would be inappropriate to retain that exception. However, it is not the intention of TTB that the proprietor be required to test every lot of every denaturant. We have modified § 19.387 to more clearly state when testing is required and that the testing standards of that section apply only if a proprietor tests any given lot.
Changes to the Proposed Regulations in This Final Rule
After careful consideration of the comments received in response to Notice No. 83, as discussed above, TTB has made several changes to the proposed part 19 regulatory texts contained in that notice of proposed rulemaking. As discussed below, TTB is also making other changes to the proposed part 19 regulatory texts. These changes are technical in nature; they provide additional mailing options for industry members and reflect changes made to part 19 by final or temporary rulemakings issued after the publication of Notice No. 83. TTB also has updated cross-references to part 19 contained in other parts of its regulations in 27 CFR chapter I. In addition, TTB has made technical corrections or other nonsubstantive changes to the proposed part 19 regulatory texts to correct errors or inconsistencies in format, style, grammar, or spelling. None of these corrections or other nonsubstantive changes affects any regulatory or recordkeeping requirement contained in the proposed part 19 regulatory texts as published in Notice No. 83.
Private Delivery Services
In light of the wide-spread use of private courier and delivery services by the public and government agencies, and in accordance with the IRC at 26 U.S.C. 7502(f), TTB is adding the option to send tax returns and remittances by private courier and delivery services to the requirements found in § 19.238, Payment by mail or courier. While this change to part 19 was not included in Notice No. 83, we believe this change will afford industry members, the general public, and TTB greater flexibility in choosing delivery methods for documents and other items while continuing to provide documented sending and delivery dates.
TTB will use the date of tender to the delivery service as the date of delivery if a proprietor sends a return or remittance to TTB by the use of traceable delivery services, provided those services are available to the general public and are at least as timely and reliable as the U.S. mail and provided the date on which items are given to the service for delivery are recorded by the service. These changes to § 19.238 follow the language used in 26 U.S.C. 7502(f) regarding timely mailing and the use of private delivery services.
Subsequent Regulatory Changes
Subsequent to the publication of Notice No. 83, TTB published two Treasury Decisions that amended regulatory provisions of part 19. Changes to the regulatory text in this final rule reflect these provisions:
• T.D. TTB-89, published in the
Federal Register
(76 FR 3502) on January 20, 2011, updated and reissued temporary rules regarding semimonthly and quarterly payment of tax. Provisions reflecting these subjects are found in this document at §§ 19.234-19.237 and § 19.465.
• T.D. TTB-84, published in the
Federal Register
(75 FR 16666), on April 2, 2010, reflected the removal of the requirement for Special (Occupational) Tax and implemented dealer registration requirements. These provisions are found in subpart H of part 19 in this final rule.
Changes to Part 19 Cross-References Elsewhere in 27 CFR
The revision of part 19 contained in this final rule also requires the revision of the cross-references to specific part 19 subparts and sections contained in other parts of the TTB regulations in 27 CFR chapter I. Except for the regulatory changes inherent in the revision of part 19 contained in this final rule, the corrections to the cross-references described below do not change any recordkeeping or regulatory requirement outside of part 19; the changes to these cross-references are merely technical in nature.
The cross-references to part 19 requiring changes in 27 CFR chapter I are shown in the chart below:
Changes in Part 19 Cross-References in 27 CFR Chapter I
In section:
Remove the
reference to:
and replace with a reference to:
§ 1.82(a)
§ 19.157
§ 19.91
§ 17.162(d) and (f)
§ 19.780
§ 19.626
§ 17.163(a)
§ 19.780
§ 19.626
§ 24.226 (1st sentence)
§ 19.510
§ 19.407
§ 24.226 (3rd sentence)
§ 19.508
§ 19.405
§ 24.235(a)
§ 19.522(c)
§ 19.233
§ 26.199f(a)
§ 19.562
§ 19.462
§ 26.293(a)(3)
subpart R
subpart S
§ 28.118
subpart U
subpart Q
§ 30.31(d)
§ 19.383
§ 19.353
§ 30.52
§ 19.722
§ 19.582
§ 31.45(b)
§ 19.58
§ 19.5
§ 31.65(a)
§ 19.58
§ 19.5
Existing Alternate Methods or Procedures
By changing the part 19 regulations to provide for many of the methods or procedures formerly approved as alternate methods or procedures, these regulations have made a number of former approvals obsolete. However, there are some preexisting alternate methods or procedures that we did not make universally applicable and that we did not intend to revoke with this
revision to part 19. Accordingly, any proprietor with a valid, unrevoked alternate method or procedure issued under the authority of the current § 19.62 (recodified in the new § 19.26) that is not contrary to the new regulations may continue to use the approval. Note, however, that any change in law or regulation that makes the alternate method or procedure contrary to law or regulation revokes the alternate method or procedure by the application of law.
It is the proprietor's responsibility to ensure that these existing alternate methods or procedures are not contrary to the new regulations, that is, that they remain consistent with the purpose and effect of the methods and procedures prescribed in this revised part. A proprietor may write to the Director, Regulations and Rulings Division, or the Director, National Revenue Center, as appropriate, to request that approvals in existence prior to the adoption of this final rule be reevaluated under the new regulations.
Any conditions in alternate methods or procedures continue to apply. TTB may revoke any alternate method or procedure if there is jeopardy to the revenue or if the method or procedure increases cost to the Government or hinders TTB's administration of part 19.
Derivation Table for Proposed Part 19
The following table shows the derivation of the new sections of regulations. It is cross-referenced between the new section numbers in the revised 27 CFR part 19 regulations contained in this final rule document and the section numbers in the existing part 19 regulations in effect at the time of publication of this final rule.
Requirements of new section:
Are derived from current section:
19.0
19.1
Subpart A
19.1
19.11
19.2
19.2
19.3
19.3
19.4
19.57
19.5
19.58
Subpart B
19.11
19.81
19.12
19.86
19.13
19.75
19.14
19.4
19.15
19.61
19.16
19.724
19.17
19.82
19.18
19.83
19.19
19.79
19.20
19.77
19.26
19.62
19.27
19.62
19.28
19.73
19.29
19.70, 19.74
19.31
19.63
19.32
19.65
19.33
19.66
19.34
19.71
19.35
19.71
19.36
19.67
19.37
19.67
19.38
19.78
19.45
19.100
Subpart C
19.51
New
19.52
19.131
19.53
19.132
19.54
19.133
19.55
19.68, 19.72
19.56
19.134
19.58
19.97
19.59
19.98
19.60
19.99
Subpart D
19.71
19.151
19.72
19.151
19.73
19.152
19.74
19.168
19.75
19.166
19.76
19.153
19.77
19.170, 19.324
19.78
19.156
19.79
19.169
19.80
19.154
19.81
19.155
19.91
19.157
19.92
19.158
19.93
19.167
19.94
19.165
19.95
19.159
19.96
19.161
19.97
19.162
19.98
19.160
19.99
19.163
Subpart E
19.111
New
19.112
19.180
19.113
19.182
19.114
19.184
19.115
19.185
19.116
19.186, 19.187
19.117
19.188
19.118
19.189
19.119
19.190
19.120
19.191
19.121
19.192
19.122
19.193
19.123
19.153(b)
19.126
19.180
19.127
19.181
19.128
19.182
19.129
19.183
19.130
19.184
19.131
19.185
19.132
19.186, 19.187
19.133
19.188
19.134
19.189
19.135
19.191
19.141
19.201
19.142
19.202
19.143
19.203 through 19.206
19.144
19.207
19.147
19.211
Subpart F
19.151
19.231, 19.232
19.152
19.231
19.153
19.233
19.154
19.234
19.155
19.235
19.156
19.236
19.157
19.237
19.161
19.231, 19.232
19.162
19.241
19.163
19.242
19.164
19.243
19.165
19.244
19.166
19.245
19.167
19.246
19.168
19.247, 19.248
19.169
19.248
19.170
19.249
19.171
19.250
19.172
19.251
19.173
19.252
Subpart G
19.181
New
19.182
19.273
19.183
19.273
19.184
19.273
19.185
19.273
19.186
19.276
19.187
19.274
19.188
19.277
19.189
19.278
19.190
19.279
19.191
19.280
19.192
19.281
19.193
19.282
Subpart H
19.201
19.49
19.202
19.50
19.203
19.51
19.204
19.52
Subpart I
19.221
New
19.222
19.21 through 19.23
19.223
19.24
19.225
19.25, 19.515, 19.526
19.226
19.517
19.227
19.515
19.229
New
19.230
19.515(b), 19.522(b)
19.231
19.516
19.233
19.522(c), 19.523(b)
19.234
19.522(a), 19.523(a)
19.235
19.522, 19.523
19.236
19.523
19.237
19.523
19.238
19.525
19.239
19.519
19.240
19.524
19.242
19.520
19.243
19.521
19.245
New
19.246
19.34
19.247
19.35
19.248
19.36
19.249
19.37
19.250
19.38
19.253
19.31
19.254
19.32
19.256
19.26
19.257
19.518
19.258
19.486
Subpart J
19.261
New
19.262
19.44
19.263
19.41
19.264
19.42
19.265
19.43
19.266
19.45
19.267
19.46
19.268
19.76
19.269
19.487
Subpart K
19.281
New
19.282
19.84
19.283
19.92
19.284
19.91, 19.92(a), 19.93
19.285
19.92(a)
19.286
19.91(a)
19.287
19.91(b)
19.288
19.503
19.289
19.319
Subpart L
19.291
New
19.292
19.311
19.293
19.312
19.294
19.314
19.295
19.315
19.296
19.312
19.297
19.313
19.301
19.316
19.302
19.317
19.303
19.318
19.304
19.319
19.305
19.320
19.306
19.321
19.307
19.322
19.308
19.326
19.309
19.327
19.310
19.328
19.312
19.329
19.314
19.331
19.315
19.332
19.316
19.333
Subpart M
19.321
19.341
19.322
19.342
19.324
19.344
19.325
19.345
19.326
19.346
19.327
19.347
19.328
19.348
19.329
19.349
19.331
19.343
19.333
19.353
Subpart N
19.341
19.371
19.342
19.372
19.343
19.373
19.344
19.374
19.346
19.376
19.348
19.378
19.351
19.381
19.352
19.382
19.353
19.383
19.354
19.384, 19.400
19.355
19.385
19.356
19.386
19.357
19.387
19.358
19.388
19.359
19.389
19.360
19.390
19.361
19.391
19.362
19.392
19.363
19.393
19.364
19.394
19.365
19.397
19.366
19.398
19.371
19.401
19.372
19.402
Subpart O
19.381
19.451
19.382
19.452
19.383
19.454
19.384
19.451, 19.456
19.385
19.455
19.386
19.457
19.387
19.453
19.388
19.461
19.389
19.462
19.390
19.463
19.391
19.459
19.392
19.460
19.393
19.458
19.394
19.464
19.395
19.471
19.396
19.451
Subpart P
19.401
New
19.402
19.505
19.403
19.506
19.404
19.507
19.405
19.508
19.406
19.509
19.407
19.510
19.409
19.481
19.410
19.482
19.411
19.483
19.414
19.484
19.415
19.485
19.418
19.531
19.419
19.532
19.420
19.533
19.421
19.534
19.424
19.536
19.425
19.537
19.426
19.538
19.427
19.540
19.428
19.541
19.431
19.502
19.434
19.701
19.435
19.702
19.436
19.703
19.437
19.704
19.441
19.96
Subpart Q
19.451
New
19.452
19.681, 19.682
19.453
New
19.454
19.683 through 19.686
19,455
19.687
19.457
19.688
19.459
19.691
Subpart R
19.461
19.561
19.462
19.562
19.463
19.563
19.464
19.564
19.465
19.565
Subpart S
19.471
New and 19.581
19.472
New
19.473
19.581
19.474
19.582
19.475
19.583
19.476
19.584
19.477
19.585
19.478
19.588
19.479
19.589
19.482
19.592
19.483
19.595
19.484
19.596(a) and (c)
19.485
19.593
19.486
19.599
19.487
19.597
19.488
19.596(b) and (c)
19.489
19.607
19.490
19.594
19.491
19.601
19.492
19.602
19.493
19.604
19.494
19.605
19.495
19.606
19.496
19.608
19.497
19.610
19.498
19.611
19.499
19.612
Subpart T
19.511
19.632
19.512
19.637
19.513
19.633
19.516
19.641
19.517
19.642-19.650
19.518
19.645
19.519
19.395
19.520
19.396
19.523
19.661, 19.662
19.525
19.663
Subpart U—Reserved
Subpart V
19.571
19.721
19.572
19.721, 19.731
19.573
19.723(a)
19.574
19.723(a) and (b)
19.575
19.723(c)
19.576
19.723(b)
19.577
19.721(c), 19.723(c)
19.578
19.721(d)
19.580
19.731
19.581
19.731(b), 19.732
19.582
19.722
19.584
19.736
19.585
19.736
19.586
19.736
19.590
19.740
19.591
19.741
19.592
19.742
19.593
19.743
19.596
19.746
19.597
19.747
19.598
19.748
19.599
19.749
19.600
19.750
19.601
19.751
19.602
19.748(b)
19.603
19.747
19.604
19.747
19.606
19.752
19.607
19.753
19.611
19.761
19.612
19.762
19.613
19.763
19.614
19.764
19.615
19.765
19.616
19.766
19.617
19.767
19.618
19.768
19.619
19.769
19.620
19.770
19.621
19.770
19.622
19.773
19.623
19.774
19.624
19.778
19.625
19.779
19.626
19.780
19.627
New
19.631
19.791
19.632
19.792
19.634
New
Subpart W
19.641
19.821
19.643
19.822
19.644
19.823
19.645
19.824
19.646
19.825
19.647
19.826
19.648
19.827
19.649
19.828
19.650
19.829
19.651
19.830
Subpart X
19.661
New & 19.901
19.662
19.907
19.663
19.901, 19.902
19.665
19.903
19.666
19.903
19.667
19.904
19.669
19.905
19.670
19.906
19.672
New
19.673
19.910, 19.912, 19.913, 19.918
19.674
19.913
19.675
19.910, 19.914, 19.918
19.676
19.910, 19.915 through 19.918
19.677
19.916
19.678
19.911
19.679
19.910
19.680
19.910
19.683
19.919
19.684
19.920
19.685
19.921
19.686
19.922
19.687
19.923
19.688
19.924
19.689
19.925
19.690
19.926
19.691
New
19.692
19.930
19.693
19.930
19.695
19.945
19.697
19.950
19.699
19.955, 19.958, 19.959
19.700
19.956, 19.957
19.703
19.965
19.704
19.966, 19.967
19.706
19.970
19.709
19.980
19.710
19.981
19.714
19.982
19.715
19.982
19.716
19.987
19.717
19.982
19.718
19.982, 19.984, 19.985, 19.986
19.719
19.983
19.720
19.988
19.722
19.990
19.723
19.990
19.724
19.990
19.726
19.1002
19.727
19.995
19.728
19.996
19.729
19.997
19.733
19.998
19.734
19.999
19.735
19.1000
19.736
19.1001
19.739
19.998
19.742
New
19.746
19.1005
19.747
19.1006
19.749
19.1007
19.752
19.1008
Subpart Y
19.761
19.1010
Regulatory Analyses and Notices
Paperwork Reduction Act
The collections of information contained in this final rule have been previously reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under control numbers: 1513-0013, 1513-0014, 1513-0020, 1513-0030, 1513-0038, 1513-0039, 1513-0040, 1513-0041, 1513-0044, 1513-0045, 1513-0046, 1513-0047, 1513-0048, 1513-0049, 1513-0051, 1513-0052, 1513-0056, 1513-0080, 1513-0081, 1513-0083, 1513-0088, and 1513-0113. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB.
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601
et seq.,
provides that whenever a Federal agency proposes regulations that may have a significant economic impact on a substantial number of small entities, the agency must prepare a regulatory flexibility analysis.
The provisions of the Regulatory Flexibility Act relating to an initial and final regulatory flexibility analysis (5 U.S.C. 603 and 604) are not applicable when a final rule does not have a significant economic impact on a substantial number of small entities. This rule restates existing regulations in plain language, makes certain variations currently granted to individual plants available to all plants, and adopts certain suggestions made by industry associations to reduce the burdens of regulatory compliance. This rule reduces the burden on members of the distilled spirits industry, including small businesses. Accordingly, it is hereby certified that this final rule will not have a significant economic impact on a substantial number of small entities and a regulatory flexibility analysis is not required.
Executive Order 12866
We have determined that this final rule is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required.
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.” We certify that this final rule does not have federalism implications. This final 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.
Drafting Information
This notice was prepared by Christopher M. Thiemann of the Regulations and Rulings Division, along with several other employees of the Alcohol and Tobacco Tax and Trade Bureau.
List of Subjects
27 CFR Part 1
Administrative practice and procedure, Alcohol and alcoholic beverages, Imports, Liquors, Packaging and containers, Warehouses, Wine.
27 CFR Part 17
Administrative practice and procedure, Claims, Cosmetics, Customs duties and inspection, Drugs, Excise taxes, Exports, Imports, Liquors, Packaging and containers, Puerto Rico, Reporting and recordkeeping requirements, Spices and flavorings, Surety bonds, Virgin Islands.
27 CFR Part 19
Administrative practice and procedure, Alcohol and alcoholic beverages, Authority delegations (Government agencies), Caribbean Basin initiative, Chemicals, Claims, Customs duties and inspection, Electronic funds transfers, Excise taxes, Exports, Gasohol, Imports, Labeling, Liquors, Packaging and containers, Puerto Rico, Reporting and recordkeeping requirements, Research, Security measures, Spices and flavorings, Stills, Surety bonds, Transportation, Vinegar, Virgin Islands, Warehouses, Wine.
27 CFR Part 24
Administrative practice and procedure, Claims, Electronic funds 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, Vinegar, Warehouses, Wine.
27 CFR Part 26
Alcohol and alcoholic beverages, Caribbean Basin initiative, Claims, Customs duties and inspection, Electronic funds transfers, Excise taxes, Packaging and containers, Puerto Rico, Reporting and recordkeeping requirements, Surety bonds, Virgin Islands, Warehouses.
27 CFR Part 28
Aircraft, Alcohol and alcoholic beverages, Armed forces, Beer, Claims, Excise taxes, Exports, Foreign trade zones, Labeling, Liquors, Packaging and containers, Reporting and recordkeeping requirements, Surety bonds, Vessels, Warehouses, Wine.
27 CFR Part 30
Liquors, Scientific equipment.
27 CFR Part 31
Alcohol and alcoholic beverages, Claims, Excise taxes, Exports, Packaging and containers, Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons explained in the preamble, TTB amends chapter I of title 27 of the Code of Federal Regulations as follows:
PART 1—BASIC PERMIT REQUIREMENTS UNDER THE FEDERAL ALCOHOL ADMINISTRATION ACT, NONINDUSTRIAL USE OF DISTILLED SPIRITS AND WINE, BULK SALES AND BOTTLING OF DISTILLED SPIRITS
1. The authority citation for 27 CFR part 1 continues to read as follows:
Authority:
27 U.S.C. 203, 204, 206, 211 unless otherwise noted.
§ 1.82
[Amended]
2. In § 1.82, paragraph (a) is amended by removing the reference to “§ 19.157” and adding, in its place, a reference to “§ 19.91”.
PART 17—DRAWBACK ON TAXPAID DISTILLED SPIRITS USED IN MANUFACTURING NONBEVERAGE PRODUCTS
3. The authority citation for 27 CFR part 17 continues to read as follows:
Authority:
26 U.S.C. 5010, 5111-5114, 5123, 5206, 5273, 6065, 6091, 6109, 7213, 7652, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.
§ 17.162
[Amended]
4. In § 17.162, paragraphs (d) and (f) are amended by removing the references to “§ 19.780” and adding, in their place, references to “§ 19.626”.
§ 17.163
[Amended]
5. In § 17.163, paragraph (a) is amended by removing the reference to “§ 19.780” and adding, in its place, a reference to “§ 19.626”.
6. Part 19 of title 27 Code of Federal Regulations is revised to read as follows:
PART 19—DISTILLED SPIRITS PLANTS
Sec.
19.0
Scope.
Subpart A—General Provisions
19.1
Definitions.
19.2
Territorial extent of these regulations.
19.3
Related regulations.
19.4
Recovery and reuse of denatured spirits in manufacturing processes.
19.5
Manufacturing products unfit for beverage use.
Subpart B—Administrative and Miscellaneous Provisions
19.11
Right of entry and examination.
19.12
Furnishing facilities and assistance.
19.13
Assignment of officers and supervision of operations.
19.14
Delegation of the Administrator's authorities to the appropriate TTB officer.
19.15
Forms prescribed.
19.16
Modified forms.
19.17
Detention of containers.
19.18
Samples for the United States.
19.19
Discontinuance of storage facilities.
19.20
Installation of meters, tanks, and other apparatus.
Alternate Methods or Procedures and Experimental Operations
19.26
lternate methods or procedures.
19.27
Application for and use of alternative method or procedure.
19.28
Emergency variations from requirements.
19.29
Exemptions for national defense and disasters.
19.31
Pilot operations.
19.32
Experimental distilled spirits plants.
19.33
Application to establish experimental plants.
19.34
Experimental or research operations by scientific institutions and colleges of learning.
19.35
Application by scientific institutions and colleges of learning for experimental or research operations.
19.36
Spirits produced in industrial processes.
19.37
Application for industrial processes waiver.
19.38
Approval of required documents.
“Penalties of Perjury” Declaration
19.45
Execution under penalties of perjury.
Subpart C—Restrictions on Production, Location, and Use of Plants
19.51
Home production of distilled spirits prohibited.
Rules for Location and Use of a DSP
19.52
Restrictions on location of plants.
19.53
Continuity of plant premises.
19.54
Use of distilled spirits plant premises.
19.55
Other businesses.
19.56
Bonded warehouses not on premises qualified for production of spirits.
Conveyance of Spirits or Wines on Plant Premises
19.58
Taxpaid spirits or wines on bonded premises.
19.59
Conveyance of untaxpaid spirits or wines within a distilled spirits plant.
19.60
Spirits in customs custody.
Subpart D—Registration of a Distilled Spirits Plant and Obtaining a Permit
19.71
Registration and permits in general.
Requirements for Registering a Plant
19.72
General requirements for registration.
19.73
Information required in application for registration.
19.74
Description of the plant.
19.75
Major equipment.
19.76
Statement of plant security.
19.77
Statement of production procedure.
19.78
Power of attorney.
19.79
Registry of stills.
19.80
Approved notice of registration.
19.81
Maintenance of registration file.
Requirements for an Operating Permit Under the IRC
19.91
Operating permit.
19.92
Information required in application for operating permit.
19.93
Applicant organization documents.
19.94
Trade names.
19.95
Issuance of operating permits.
19.96
Denial of permit.
19.97
Correction of permit.
19.98
Duration of permit.
19.99
Suspension or revocation of permit.
Subpart E—Changes to Registrations and Permits
19.111
Scope.
Rules for Amending a Registration
19.112
General rules for amending a registration.
19.113
Change in name of proprietor.
19.114
Changes in stockholders or persons with interest.
19.115
Change in officers, directors, members, or managers.
19.116
Change in proprietorship.
19.117
Partnerships.
19.118
Change in location.
19.119
Change in premises.
19.120
Change in operations.
19.121
Change in production procedure.
19.122
Change in construction or use of buildings and equipment.
19.123
Statement of plant security.
Rules for Amending an Operating Permit
19.126
General rules for amending an operating permit.
19.127
Automatic termination of permits.
19.128
Change in name of proprietor.
19.129
Change in trade name.
19.130
Changes in stockholders or persons with interest.
19.131
Changes in officers, directors, members, or managers.
19.132
Change in proprietorship.
19.133
Partnerships.
19.134
Change in location.
19.135
Change in operations.
Alternation of Plant Proprietors
19.141
Procedures for alternation of proprietors.
Conduct of Alternate Operations at a Plant
19.142
Alternate use of premises and equipment for customs purposes.
19.143
Alternation for other purposes.
19.144
Alternation of distilled spirits plant and volatile fruit-flavor concentrate plant premises.
Discontinuance of Operations
19.147
Notice of discontinuance of operations.
Subpart F—Bonds and Consents of Surety
Bonding Requirements for a DSP
19.151
General.
19.152
Types of bonds.
19.153
Bond guaranteed by a corporate surety.
19.154
Bond guaranteed by deposit of securities.
19.155
Consent of surety bond terms—consent of surety.
19.156
Power of attorney for surety.
19.157
Disapproval of bonds and consents of surety.
Requirements for Operations and Withdrawal Bonds
19.161
Operations bond.
19.162
Operations bond for distilled spirits plant and adjacent bonded wine cellar.
19.163
Area operations bond.
19.164
Withdrawal bond.
19.165
Unit bonds.
19.166
Required penal sums.
19.167
Increase of bond coverage.
19.168
Superseding bonds.
19.169
Effect of failure to furnish a superseding bond.
19.170
Termination of bonds.
19.171
Surety notice of relief from bond liability.
19.172
Relief of surety from bond liability.
19.173
Release of pledged securities.
Subpart G—Construction, Equipment, and Security Requirements
19.181
General.
Tank Requirements
19.182
Tanks—general requirements.
19.183
Scale tanks.
19.184
Scale tank minimum graduations.
19.185
Testing scale tanks for accuracy.
Package Scale and Pipeline Requirements
19.186
Package scales.
19.187
Pipelines.
Measuring and Proofing Equipment Requirements
19.188
Measuring devices and proofing instruments.
Other Plant Requirements
19.189
Identification of structures, areas, apparatus, and equipment.
19.190
Office facilities for TTB use.
19.191
Signs.
19.192
Security.
19.193
Breaking Government locks.
Subpart H—Dealer Registration and Recordkeeping
19.201
Definitions.
19.202
Dealer registration.
19.203
Amending the dealer registration.
19.204
Dealer records.
Subpart I—Distilled Spirits Taxes
19.221
Scope.
Basic Provisions of Tax Law Affecting Spirits
19.222
Basic tax law provisions.
19.223
Persons liable for tax.
Requirements for Gauging and Tax Determination
19.225
Requirement to gauge and tax determine spirits.
19.226
Gauges for tax determination.
19.227
Determination of the tax.
Rules for Deferred Payment and Prepayment of Taxes
19.229
Deferred payment and prepayment of taxes.
19.230
Conditions requiring prepayment of taxes.
19.231
Accounting for bond coverage.
Requirements for Filing Tax Returns
19.233
Filing prepayment returns.
19.234
Filing deferred payment returns.
19.235
Deferred payment return periods—quarterly and semimonthly.
19.236
Due dates for returns.
19.237
Special rule for semimonthly filers for the month of September.
19.238
Payment by mail or courier.
19.239
Form of payment.
19.240
Payment of tax by electronic fund transfer.
Requirements for Employer Identification Numbers
19.242
Employer identification number.
19.243
Application for employer identification number.
Effective Tax Rates
19.245
Tax credits under 26 U.S.C. 5010.
19.246
Computing the effective tax rate for a product.
19.247
Use of effective (actual) tax rates.
19.248
Standard effective tax rate.
19.249
Average effective tax rate.
19.250
Inventory reserve account.
Assessment of Taxes by TTB
19.253
Assessment of tax on spirits not accounted for or reported.
19.254
Assessment of tax for losses or unauthorized removals.
Additional Tax Provisions
19.256
Tax on wine.
19.257
Imported spirits.
19.258
Additional tax on nonbeverage spirits.
Subpart J—Claims
19.261
Scope.
Requirements for Filing Claims
19.262
General requirements for filing claims.
19.263
Claims on spirits, denatured spirits, articles, or wines lost or destroyed in bond—specific requirements.
19.264
Claims on spirits returned to bonded premises—specific requirements.
19.265
Claims relating to spirits lost after tax determination.
Rules Regarding Credits, Abatement, Remission, or Refund
19.266
Claims for credit of tax.
19.267
Adjustments for credited tax.
19.268
Allowance of remission, abatement, credit, or refund of tax.
Rules for Puerto Rican and Virgin Islands Spirits
19.269
Puerto Rican and Virgin Islands spirits.
Subpart K—Gauging
19.281
Scope.
19.282
General requirements for gauging and measuring equipment.
Required Gauges
19.283
When gauges are required.
Rules for Gauging
19.284
Quantity determination of bulk spirits.
19.285
Proof determination of distilled spirits.
19.286
Gauging of spirits in bottles.
19.287
Gauging of alcoholic flavoring materials.
19.288
Determination of tare.
19.289
Production gauge.
Subpart L—Production of Distilled Spirits
19.291
General.
Notification to TTB When Beginning or Suspending Production Operations
19.292
Notice of operations.
Rules for Receipt, Use, and Disposal of Materials
19.293
Receipt of materials.
19.294
Removal of fermenting material.
19.295
Removal or destruction of distilling material.
19.296
Fermented materials.
19.297
Use of materials in production of spirits.
Rules for Production of Spirits
19.301
Distillation.
19.302
Treatment during production.
19.303
Addition of caramel to rum or brandy and addition of oak chips to spirits.
19.304
Production gauge.
19.305
Identification of spirits.
19.306
Entry.
19.307
Distillates containing extraneous substances.
Rules for Chemical Byproducts
19.308
Spirits content of chemicals produced.
19.309
Disposition of chemicals.
19.310
Wash water.
Production Inventories
19.312
Physical inventories.
Rules for Redistillation
19.314
General.
19.315
Receipts for redistillation.
19.316
Redistillation.
Subpart M—Storage of Distilled Spirits
19.321
General.
Receipt and Storage of Spirits and Wines
19.322
Receipt and storage of bulk spirits and wines.
Rules for Filling and Changing Packages
19.324
Filling of packages from tanks.
19.325
Change of packages.
Rules for Mingling or Blending Spirits
19.326
Mingling or blending of spirits for further storage.
19.327
Packages dumped for mingling.
19.328
Determining age of mingled spirits.
19.329
Mingled spirits or wines held in tanks.
Use of Oak Chips and Caramel
19.331
Use of oak chips in spirits and caramel in brandy and rum.
Storage Inventories
19.333
Physical inventories.
Subpart N—Processing of Distilled Spirits
19.341
General.
Rules for Receipt and Use of Spirits, Wines, and Alcoholic Flavoring Materials
19.342
Receipt of spirits, wines, and alcoholic flavoring materials for processing.
19.343
Use of spirits, wines, and alcoholic flavoring materials.
19.344
Manufacture of nonbeverage products, intermediate products, or eligible flavors.
Obscuration Determination
19.346
Determining obscuration.
Filing Formulas with TTB
19.348
Formula requirements.
Rules for Bottling, Packaging, and Removal of Products
19.351
Removals from processing.
19.352
Bottling tanks.
19.353
Bottling tank gauge.
19.354
Bottling or packaging records.
19.355
Labels describing the spirits.
19.356
Alcohol content and fill.
19.357
Completion of bottling.
19.358
Cases.
19.359
Remnants.
19.360
Filling packages.
19.361
Removals by bulk conveyances or pipelines.
19.362
Rebottling.
19.363
Reclosing and relabeling.
19.364
Bottled-in-bond spirits.
19.365
Spirits not originally intended for export.
19.366
Alcohol.
Requirements for Processing Inventories
19.371
Inventories of wines and bulk spirits in processing.
19.372
Physical inventories of bottled and packaged spirits.
Subpart O—Denaturing Operations and Manufacture of Articles
19.381
General.
19.382
Formulas.
Rules for Denaturing Spirits and Testing Denaturants
19.383
Gauge for denaturation.
19.384
Adding denaturants to spirits.
19.385
Making alcohol or water solutions of denaturants.
19.386
Adjusting pH of denatured spirits.
19.387
Ensuring the quality of denaturants.
Rules for Storing Denatured Spirits and Filling Containers
19.388
Storing denatured spirits.
19.389
Filling containers from tanks.
19.390
Container marking requirements.
Rules for Mixing and Converting Denatured Spirits
19.391
Mixing denatured spirits.
19.392
Converting denatured alcohol to a different formula.
Rules for Restoration and Redenaturation, Inventories, and Manufacture of Articles; Records Required
19.393
Restoration and redenaturation of recovered denatured spirits and recovered articles.
19.394
Inventory of denatured spirits.
19.395
Manufacture of articles.
19.396
Required records.
Subpart P—Transfers, Receipts, and Withdrawals
19.401
Authorized transactions.
Transfers Between Bonded Premises
19.402
Authorized transfers in bond.
19.403
Application to receive spirits in bond.
19.404
Termination of application.
19.405
Consignor for in-bond shipments.
19.406
Reconsignment of in-bond shipments.
19.407
Consignee premises.
Receipt of Spirits from Customs Custody
19.409
General.
19.410
Age and fill date.
19.411
Recording gauge.
Marking Requirements for Imported Spirits
19.414
Marks on containers of imported spirits.
19.415
Marks on containers of Puerto Rican and Virgin Islands spirits.
Spirits Withdrawn Without Payment of Tax
19.418
Authorized withdrawals without payment of tax.
19.419
Withdrawals of wine spirits for use in wine production.
19.420
Withdrawals of spirits without payment of tax for experimental or research use.
19.421
Withdrawals of spirits for use in production of nonbeverage wine and nonbeverage wine products.
Spirits Withdrawn Free of Tax
19.424
Authorized withdrawals free of tax.
19.425
Withdrawal of spirits free of tax.
19.426
Withdrawal of spirits by the United States.
19.427
Removal of denatured spirits and articles.
19.428
Reconsignment.
Spirits Withdrawn on Production Gauge
19.431
Withdrawal of spirits on production gauge.
Rules for Taking Sample of Spirits
19.434
Spirits withdrawn from bonded premises.
19.435
Samples used on bonded premises.
19.436
Taxpayment of samples.
19.437
Labels.
Securing Conveyances
19.441
Securing of conveyances.
Subpart Q—Return of Spirits to Bonded Premises and Voluntary Destruction
19.451
Scope.
Conditions for Return of Spirits to Bond
19.452
Return of taxpaid spirits to bonded premises for destruction, denaturation, redistillation, reconditioning, or rebottling.
19.453
Return of bottled spirits for relabeling or reclosing.
19.454
Other authorized returns to bonded premises.
19.455
Return of spirits withdrawn for export with benefit of drawback.
19.457
Receipt of spirits abandoned to the United States.
Rules for Voluntary Destruction
19.459
Voluntary destruction.
Subpart R—Losses and Shortages
19.461
Losses and shortages in general.
19.462
Determination of losses in bond.
19.463
Loss of spirits from packages.
19.464
Losses after tax determination.
19.465
Shortages of bottled spirits.
Subpart S—Containers and Marks
19.471
General.
19.472
Need to determine use of spirits—industrial or nonindustrial.
Requirements for Containers
19.473
Authorized containers.
19.474
Spirits for nonindustrial use.
19.475
Spirits for industrial use.
19.476
Packages.
19.477
Use of bulk conveyances.
19.478
Construction requirements for bulk conveyances.
19.479
Restrictions on dispositions of bulk spirits.
Marking Requirements for Spirits
19.482
General.
19.483
Specifications for marks.
19.484
Marks on packages filled in production or storage.
19.485
Package identification numbers in production and storage.
19.486
Change of packages in storage.
19.487
Kind of spirits.
19.488
Marks on packages filled in processing.
19.489
Marks on cases filled in processing.
19.490
Numbering of packages and cases filled in processing.
19.491
Marks on containers of specially denatured spirits.
19.492
Marks on containers of completely denatured alcohol.
19.493
Caution label for completely denatured alcohol.
19.494
Additional marks on portable containers.
19.495
Marks on bulk conveyances.
19.496
Cases of industrial alcohol.
19.497
Obliteration of marks.
19.498
Relabeling and reclosing off bonded premises.
19.499
Authorized abbreviations to identify marks.
Subpart T—Liquor Bottle, Label, and Closure Requirements
Authorized Liquor Bottles
19.511
Bottles authorized.
19.512
Bottles not constituting approved containers.
19.513
Distinctive liquor bottles.
Labeling Requirements
19.516
Certificate of label approval or exemption.
19.517
Statements required on labels under an exemption from label approval.
19.518
Name and address of bottler.
19.519
Labels for export spirits.
19.520
Spirits for shipment to Puerto Rico.
Closure Requirements
19.523
Affixing closures.
19.525
Reclosing.
Subpart U—[Reserved]
Subpart V—Records and Reports
General Rules for Records
19.571
Records in general.
19.572
Format of records.
19.573
Location of required records.
19.574
Availability of records.
19.575
Retention of records.
19.576
Preservation of records.
19.577
Documents that are not records.
19.578
Financial records and books of account.
19.580
Time for making entries in records.
19.581
Details of daily records.
19.582
Conversion from metric to U.S. units.
Production Records
19.584
Materials for the production of distilled spirits.
19.585
Production and withdrawal records.
19.586
Byproduct spirits production records.
Storage Records
19.590
Storage operations.
19.591
Package summary records.
19.592
Tank record of wine and spirits of less than 190° of proof.
19.593
Tank summary record for spirits of 190° or more of proof.
Processing Records
19.596
Processing records in general.
19.597
Manufacturing records.
19.598
Dump/batch records.
19.599
Bottling and packaging records.
19.600
Alcohol content and fill test record.
19.601
Finished products records.
19.602
Redistillation records.
19.603
Liquor bottle records.
19.604
Rebottling, relabeling, and reclosing records.
Denaturation and Article Manufacture Records
19.606
Denaturation records.
19.607
Article manufacture records.
Tax Records
19.611
Records of tax determination in general.
19.612
Summary records of tax determinations.
19.613
Average effective tax rate records.
19.614
Inventory reserve records.
19.615
Standard effective tax rate records.
Other Required Records
19.616
Records of samples.
19.617
Destruction records.
19.618
Gauge records.
19.619
Package gauge records.
19.620
Transfer record—consignor's responsibility.
19.621
Transfer record—consignee's responsibility.
19.622
Daily records of wholesale liquor dealer and taxpaid storeroom operations.
19.623
Records of inventories.
19.624
Removal of Puerto Rican and Virgin Islands spirits and rum imported from all other areas.
19.625
Shipping records for spirits and specially denatured spirits withdrawn free of tax.
19.626
Records of distilled spirits shipped to manufacturers of nonbeverage products.
19.627
Alternating premises record.
Filing Forms and Reports
19.631
Submission of transaction forms.
19.632
Submission of monthly reports.
19.634
Computer-generated reports and transaction forms.
Subpart W—Production of Vinegar by the Vaporizing Process
Vinegar Plants in General
19.641
Application.
Qualification, Construction, and Equipment Requirements for Vinegar Plants
19.643
Qualification requirements.
19.644
Changes after original qualification.
19.645
Notice of permanent discontinuance of business.
19.646
Construction and equipment requirements.
Rules for Operating Vinegar Plants
19.647
Authorized operations.
19.648
Conduct of operations.
19.649
Restrictions on alcohol content.
Required Records for Vinegar Plants
19.650
Daily records.
Liability for Distilled Spirits Tax
19.651
Liability for distilled spirits tax.
Subpart X—Distilled Spirits for Fuel Use
19.661
Scope.
General
19.662
Definitions.
19.663
Application of other provisions.
19.665
Alternate methods or procedures.
19.666
Application for and use of an alternate method or procedure.
19.667
Emergency variations from requirements.
Liability for Taxes
19.669
Distilled spirits taxes.
19.670
Dealer registration and recordkeeping.
Obtaining a Permit
19.672
Types of plants.
19.673
Small plant permit applications.
19.674
TTB action on small plant applications.
19.675
Medium plant permit applications.
19.676
Large plant permit applications.
19.677
Large plant applications—organizational documents.
19.678
Criteria for issuance of permit.
19.679
Duration of permit.
19.680
Registration of stills.
Changes to Permit Information
19.683
Changes affecting permit applications.
19.684
Automatic termination of permits.
19.685
Change in type of alcohol fuel plant.
19.686
Change in name of proprietor.
19.687
Change in officers, directors, members, managers, or principal persons.
19.688
Change in proprietorship.
19.689
Continuing partnerships.
19.690
Change in location.
19.691
Change in address without change in location or area.
Alternating Proprietorship
19.692
Qualifying for alternating proprietorship.
19.693
Operating requirements for alternating proprietorships.
Discontinuance of Business and Permit Suspension or Revocation
19.695
Notice of permanent discontinuance.
19.697
Permit suspension or revocation.
Bonds
19.699
General bond requirements.
19.700
Amount of bond.
Requirements for Construction, Equipment, and Security
19.703
Construction and equipment.
19.704
Security.
TTB Rights and Authorities
19.706
Supervision of operations.
Accounting for Spirits
19.709
Gauging.
19.710
Inventory of spirits.
Recordkeeping
19.714
General requirements for records.
19.715
Format of records.
19.716
Maintenance and retention of records.
19.717
Time for making entries in records.
19.718
Required records.
19.719
Spirits made unfit for beverage use in the production process.
Reports
19.720
Reports.
Redistillation
19.722
General rules for redistillation of spirits or fuel alcohol.
19.723
Effect of redistillation on plant size and bond amount.
19.724
Records of redistillation.
Rules for Use, Withdrawal, and Transfer of Spirits
19.726
Prohibited uses, transfers, and withdrawals.
19.727
Use on premises.
19.728
Withdrawal of spirits.
19.729
Withdrawal of fuel alcohol.
Transfer of Spirits Between Alcohol Fuel Plants
19.733
Authorized transfers between alcohol fuel plants.
19.734
Consignor for in-bond shipments.
19.735
Reconsignment while in transit.
19.736
Consignee for in-bond shipments.
Transfer of Spirits to and From Distilled Spirits Plants
19.739
Authorized transfers to or from distilled spirits plants.
Receipt of Spirits From Customs Custody
19.742
Authorized transfers from customs custody.
Materials for Making Spirits Unfit for Beverage Use
19.746
Authorized materials.
19.747
Other materials.
Rules for Taking Samples
19.749
Samples.
Marking Requirements
19.752
Marks.
Subpart Y—Paperwork Reduction Act
19.761
OMB control numbers assigned under the Paperwork Reduction Act.
Authority:
19 U.S.C. 81c, 1311; 26 U.S.C. 5001, 5002, 5004-5006, 5008, 5010, 5041, 5061, 5062, 5066, 5081, 5101, 5111-5114, 5121, 5122-5124, 5142, 5143, 5146, 5148, 5171-5173, 5175, 5176, 5178-5181, 5201-5204, 5206, 5207, 5211-5215, 5221-5223, 5231, 5232, 5235, 5236, 5241-5243, 5271, 5273, 5301, 5311-5313, 5362, 5370, 5373, 5501-5505, 5551-5555, 5559, 5561, 5562, 5601, 5612, 5682, 6001, 6065, 6109, 6302, 6311, 6676, 6806, 7011, 7510, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.
§ 19.0
Scope.
This part concerns the operation of distilled spirits plants in the United States. Topics covered in this part include: Permits and registration procedures; bond requirements; payment of taxes; filing of claims; production, storage, and processing operations; and maintenance of records.
Subpart A—General Provisions
§ 19.1
Definitions.
As used in this part, the following terms shall have the meanings indicated unless either the context in which they are used requires a different meaning, or a different definition is prescribed for a particular subpart, section, or portion of this part:
Accurate mass flow meter.
A mass flow meter for making volume determinations of bulk distilled spirits. A mass flow meter used for tax determination of bulk spirits must be certified by the manufacturer of the meter or other qualified person as accurate within a tolerance of plus or minus 0.1 percent. A mass flow meter used for all other required volume determinations of bulk spirits must be certified by the manufacturer of the meter or other qualified person as accurate within a tolerance of plus or minus 0.5 percent.
Administrator.
The Administrator of the Alcohol and Tobacco Tax and Trade Bureau, the Department of the Treasury, Washington, D.C., or a delegate or designee of the Administrator.
Alcoholic flavoring materials.
Any nonbeverage product on which drawback has been or will be claimed under 26 U.S.C. 5111-5114, and any flavor imported free of tax which is unfit for beverage purposes. This term includes eligible flavors but does not include flavorings or flavoring extracts manufactured on the bonded premises of a distilled spirits plant as an intermediate product.
Application for registration.
The application for registration of a distilled spirits plant that is required by 26 U.S.C. 5171(c).
Appropriate TTB officer.
An officer or employee of the Alcohol and Tobacco Tax and Trade Bureau (TTB) authorized to perform any functions relating to the administration or enforcement of this part by TTB Order 1135.19, Delegation of the Administrator's Authorities in 27 CFR Part 19, Distilled Spirits Plants.
Article.
A product containing denatured spirits, which was manufactured under this part or part 20 of this chapter.
Bank.
Any commercial bank.
Banking day.
Any day that a bank is open to the public to carry on substantially all of its banking functions.
Basic permit.
The document that authorizes a person to engage in a designated business or activity under the Federal Alcohol Administration Act.
Bond.
A bond is a formal guarantee for payment of monies due to TTB, including taxes imposed by 26 U.S.C. chapter 51, and any related fines, penalties or interest that the proprietor of a distilled spirits plant may incur, up to an amount specified by the bond (the bond “penal sum”).
Bonded premises.
The premises of a distilled spirits plant, or part thereof, as described in the application for registration, on which the conduct of distilled spirits operations defined in 26 U.S.C. 5002 is authorized.
Bottler.
A proprietor of a distilled spirits plant qualified under this part as a processor that bottles distilled spirits.
Bulk container.
Any container approved by TTB having a capacity in excess of one wine gallon.
Bulk conveyance.
A tank car, tank truck, tank ship, tank barge, or a
compartment of any such conveyance, or any other container approved by the Administrator for the conveyance of comparable quantities of spirits, including denatured spirits and wines.
Bulk distilled spirits.
Distilled spirits in a container having a capacity in excess of one wine gallon.
Business day.
Any day, other than a Saturday, a Sunday, or a legal holiday (which includes any holiday in the District of Columbia and any statewide holiday in the particular State in which the claim, report, or return, as the case may be, is required to be filed, or the act is required to be performed).
Calendar quarter and quarterly.
These terms refer to the 3-month periods ending on March 31, June 30, September 30, or December 31.
Carrier.
Any person, company, corporation, or organization, including a proprietor, owner, consignor, consignee, or bailee, who transports distilled spirits, denatured spirits, or wine in any manner for itself or others.
CFR.
The Code of Federal Regulations.
Commercial bank.
A bank, whether or not a member of the Federal Reserve system, which has access to the Federal Reserve Communications System or Fedwire (a communications network that allows Federal Reserve system member banks to effect a transfer of funds for their customers (or other commercial banks) to the Treasury Account at the Federal Reserve Bank of New York).
Container.
A receptacle, vessel, or form of bottle, can, package, tank or pipeline (where specifically included) used or capable of being used to contain, store, transfer, convey, remove, or withdraw spirits and denatured spirits.
Denaturant or denaturing material.
Any material authorized by part 21 of this chapter for addition to spirits in the production of denatured spirits.
Denatured spirits.
Spirits to which denaturants have been added as provided in part 21 of this chapter.
Director of the service center.
A director of an Internal Revenue Service Center.
Distilled spirits operations.
Any authorized distilling, warehousing, or processing operation conducted on the bonded premises of a plant qualified under this part.
Distilled spirits plant.
An establishment which is qualified under this part to conduct distilled spirits operations.
Distiller.
Any person who:
(1) Produces distilled spirits from any source or substance;
(2) Brews or makes mash, wort, or wash fit for distillation or for the production of distilled spirits (other than making or using of mash, wort, or wash in the authorized production of wine or beer, or in the production of vinegar by fermentation);
(3) By any process separates alcoholic spirits from any fermented substance; or
(4) Making or keeping mash, wort, or wash, has a still in his possession or use.
Distilling material.
Any fermented or other alcoholic substance capable of, or intended for use in, the original distillation or other original processing of spirits.
District director.
A district director of the Internal Revenue Service.
Effective tax rate.
The net tax rate, after reduction for any credit allowable under 26 U.S.C. 5010 for wine and flavor content, at which the tax imposed on distilled spirits by 26 U.S.C. 5001 or 7652 is paid or determined.
Electronic fund transfer or EFT.
Any transfer of funds effected by the proprietor's commercial bank, either directly or through a correspondent banking relationship, via the Federal Reserve Communications System or Fedwire to the Treasury Account at the Federal Reserve Bank of New York.
Eligible flavor.
A flavor which:
(1) Is of a type that is eligible for drawback of tax under 26 U.S.C. 5114;
(2) Was not manufactured on the premises of a distilled spirits plant; and
(3) Was not subjected to distillation on distilled spirits plant premises such that the flavor does not remain in the finished product.
Eligible wine.
Wine on which tax would be imposed by paragraph (1), (2), or (3) of 26 U.S.C. 5041(b) but for its removal to distilled spirits plant premises and which has not been subject to distillation at a distilled spirits plant after receipt in bond.
Export or exportation.
A separation of goods from the mass of goods belonging to the United States with the intention of uniting them with goods belonging to a foreign country or any possession of the United States, including the Commonwealth of Puerto Rico, the U.S. Virgin Islands, American Samoa, and Guam.
Fermenting material.
Any material that will be subject to a process of fermentation in order to produce distilling material.
Fiduciary.
A guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any fiduciary capacity for any person.
Fiscal year.
The period October 1st of one calendar year through September 30th of the following calendar year.
Gallon or wine gallon.
The liquid measure equivalent to the volume of 231 cubic inches.
General premises.
Any business office, service facility, or other part of the premises described in the notice of registration other than bonded premises.
In bond.
When used to describe spirits, denatured spirits, articles, or wine, this term refers to spirits, denatured spirits, articles, or wine held under bond to secure the payment of the taxes imposed by 26 U.S.C. chapter 51, and on which those taxes have not been determined. The term also refers to such spirits, denatured spirits, articles, or wine on the bonded premises of a distilled spirits plant, and such spirits, denatured spirits, or wines that are in transit between bonded premises (including, in the case of wine, bonded wine cellar premises). In addition, the term refers to spirits in transit from customs custody to bonded premises, and spirits withdrawn without payment of tax under 26 U.S.C. 5214, and with respect to which relief from liability has not occurred under 26 U.S.C. 5005(e)(2).
Industrial use.
When used with reference to spirits, the meaning given to the term in § 19.472.
Intermediate product.
Any product manufactured according to an approved formula under part 5 of this chapter, intended not for sale as such but for use in the manufacture of a distilled spirits product.
IRC.
The Internal Revenue Code of 1986, as amended.
Kind.
Except as provided in § 19.597, when used with reference to spirits, this term means class and type as prescribed in part 5 of this chapter. When used with reference to wines, this term means the class and type of wine as prescribed in part 4 of this chapter.
Letterhead application.
A letter on a company's letterhead or other piece of paper that clearly shows the company name from a company representative with signature authority. A letterhead application is subject to TTB approval prior to any change requested in the letter.
Letterhead notice.
A letter on a company's letterhead or other piece of paper that clearly shows the company name from a company representative with signature authority. A letterhead notice does not require approval by TTB prior to the change.
Liquor bottle.
A bottle made of glass or earthenware, or of other suitable material approved by the Food and Drug Administration, which has been designed or is intended for use as a container for distilled spirits for sale for beverage purposes and which has been
determined by the Administrator to adequately protect the revenue.
Liter.
A metric unit of capacity equal to 1,000 cubic centimeters or 1,000 milliliters (ml) of alcoholic beverage, and equivalent to 33.814 fluid ounces.
Lot identification number.
The package identification number described in 27 CFR 19.485.
Mash, wort, wash.
Any fermented material capable of, or intended for, use as a distilling material.
National Revenue Center:
TTB's National Revenue Center, in Cincinnati, Ohio.
Nonindustrial use.
When used with reference to spirits, the meaning given to the term in § 19.472.
Operating permit.
The document issued pursuant to 26 U.S.C. 5171(d), that authorizes a person to engage in the business or operation described in the document.
Package.
A cask or barrel or similar wooden container, or a drum or similar metal container.
Package identification number.
The lot identification number described in 27 CFR 19.595.
Person.
An individual, trust, estate, partnership, association, company, corporation, limited liability company, limited liability partnership, or other entity recognized by law as a person.
Plant or distilled spirits plant.
An establishment qualified under this part for distilling, warehousing, processing, or any combination thereof.
Plant number.
The number assigned to a distilled spirits plant by TTB.
Processor.
Except as otherwise provided in 26 U.S.C. 5002(a)(6), any person qualified under this part who manufactures, mixes, bottles, or otherwise processes distilled spirits or denatured spirits or who manufactures any article.
Proof.
The ethyl alcohol content of a liquid at 60 degrees Fahrenheit, stated as twice the percentage of ethyl alcohol by volume.
Proof gallon.
A gallon of liquid at 60 degrees Fahrenheit which contains 50 percent by volume of ethyl alcohol having a specific gravity of 0.7939 at 60 degrees Fahrenheit referred to water at 60 degrees Fahrenheit as unity, or the alcoholic equivalent thereof.
Proof of distillation.
The composite proof of the spirits when the production gauge is made, or, if the spirits are reduced in proof prior to the production gauge, the proof of the spirits prior to that reduction, unless the spirits are subsequently redistilled at a higher proof than the proof prior to reduction.
Proprietor.
The person qualified under this part to operate a distilled spirits plant.
Reconditioning.
The dumping of distilled spirits products in bond after their bottling or packaging, for filtration, clarification, stabilization, reformulation, or other purposes, other than destruction, denaturation, redistillation, or rebottling.
Recovered article.
An article containing specially denatured spirits salvaged without all of its original ingredients, or an article containing completely denatured alcohol salvaged without all of the denaturants for completely denatured alcohol, as provided in part 20 of this chapter.
Season.
The period from January 1st through June 30th (spring season) or the period from July 1st through December 31st (fall season).
Secretary.
The Secretary of the Treasury or his delegate or designee.
Service center.
An Internal Revenue Service Center in any of the Internal Revenue regions.
Spirits or distilled spirits.
The substance known as ethyl alcohol, ethanol, or spirits of wine in any form (including all dilutions and mixtures thereof, from whatever source or by whatever process produced) but not denatured spirits unless specifically stated. The term does not include mixtures of distilled spirits and wine, bottled at 48° proof or less, if the mixture contains more than 50 percent wine on a proof gallon basis.
Spirits residues.
Residues, containing distilled spirits, of a manufacturing process related to the production of an article under part 20 of this chapter.
Tax-determined or determined.
When used with reference to any distilled spirits to be withdrawn from bond on determination of tax, that the taxable quantity of spirits has been established.
Taxpaid.
When used with reference to distilled spirits, all applicable taxes imposed by law on those spirits have been determined or paid as provided by law.
This chapter.
Title 27 of the Code of Federal Regulations, Chapter I, Alcohol and Tobacco Tax and Trade Bureau, Department of the Treasury (27 CFR chapter I).
Transfer in bond.
The removal of spirits, denatured spirits and wines from one bonded premises to another bonded premises.
Treasury Account.
The General Account of the Department of the Treasury at the Federal Reserve Bank of New York.
TTB.
The Alcohol and Tobacco Tax and Trade Bureau of the Department of the Treasury.
TTB bond.
The internal revenue bond as prescribed in 26 U.S.C. chapter 51.
TTB officer.
An officer or employee of TTB authorized to perform any function relating to the administration or enforcement of the provisions of this part.
Unfinished spirits.
Spirits in the production system prior to production gauge.
U.S.C.
The United States Code.
Warehouseman.
A proprietor of a distilled spirits plant qualified under this part to store bulk distilled spirits.
We.
TTB and TTB officers.
Wine gallon.
The liquid measure equivalent to the volume of 231 cubic inches.
Wine spirits.
Spirits authorized for use in wine production by 26 U.S.C. 5373.
§ 19.2
Territorial extent of these regulations.
This part applies to all States of the United States and the District of Columbia.
§ 19.3
Related regulations.
Other regulations relating to distilled spirits and distilled spirits plants are listed below:
27 CFR part 1—Basic Permit Requirements Under the Federal Alcohol Administration Act, Nonindustrial Use of Distilled Spirits and Wine, Bulk Sales and Bottling of Distilled Spirits.
27 CFR part 4—Labeling and Advertising of Wine.
27 CFR part 5—Labeling and Advertising of Distilled Spirits.
27 CFR part 16—Alcoholic Beverage Health Warning Statement.
27 CFR part 17—Drawback on Taxpaid Distilled Spirits Used in Manufacturing Nonbeverage Products.
27 CFR part 20—Distribution and Use of Denatured Alcohol and Rum.
27 CFR part 21—Formulas for Denatured Alcohol and Rum.
27 CFR part 22—Distribution and Use of Tax-Free Alcohol.
27 CFR part 24—Wine.
27 CFR part 25—Beer.
27 CFR part 26—Liquors and Articles from Puerto Rico and the Virgin Islands.
27 CFR part 27—Importation of Distilled Spirits, Wines, and Beer.
27 CFR part 28—Exportation of Alcohol.
27 CFR part 29—Stills and Miscellaneous Regulations.
27 CFR part 30—Gauging Manual.
27 CFR part 31—Alcohol Beverage Dealers.
27 CFR part 71—Rules of Practice in Permit Proceedings.
31 CFR part 225—Acceptance of Bonds Secured by Government Obligations in Lieu of Bonds with Sureties.
§ 19.4
Recovery and reuse of denatured spirits in manufacturing processes.
Certain activities involving distilled spirits are not covered by this part. Instead, manufacturers who engage in any of the activities listed below are
required to comply with the regulations in part 20 of this chapter relating to the use and recovery of spirits or denatured spirits. Those activities are:
(a) Use of denatured spirits, or articles or substances containing denatured spirits, in a process wherein any part or all of the spirits, including denatured spirits, are recovered;
(b) Use of denatured spirits in the production of chemicals which do not contain spirits but which are used on the permit premises in the manufacture of other chemicals resulting in spirits as a byproduct; or
(c) Use of chemicals or substances which do not contain spirits or denatured spirits (but which were manufactured with specially denatured spirits) in a process resulting in spirits as a byproduct.
(26 U.S.C. 5273)
§ 19.5
Manufacturing products unfit for beverage use.
(a)
General.
Except as provided in paragraph (b) of this section, apothecaries, pharmacists, or manufacturers who manufacture or compound any of the following products using tax paid or tax determined distilled spirits are not required to register and qualify as a distilled spirits plant (processor):
(1) Medicines, medicinal preparations, food products, flavors, flavoring extracts, and perfume, conforming to the standards for approval of nonbeverage drawback products found in §§ 17.131 through 17.137 of this chapter, whether or not drawback is actually claimed on those products. Except as provided in paragraph (c) of this section, a formula does not need to be submitted if drawback is not desired;
(2) Patented and proprietary medicines that are unfit for use for beverage purposes;
(3) Toilet, medicinal, and antiseptic preparations and solutions that are unfit for use for beverage purposes;
(4) Laboratory reagents, stains, and dyes that are unfit for use for beverage purposes; and
(5) Flavoring extracts, syrups, and concentrates that are unfit for use for beverage purposes.
(b)
Exception for beverage products.
Products identified in part 17 of this chapter as being fit for beverage use are alcoholic beverages. Bitters, patent medicines, and similar alcoholic preparations that are fit for beverage purposes, although held out as having certain medicinal properties, are also alcoholic beverages. These products are subject to the provisions of this part and must be manufactured on the bonded premises of a distilled spirits plant.
(c)
Submission of formulas and samples.
When requested by the appropriate TTB officer or when the manufacturer wishes to ascertain whether a product is unfit for beverage use, the manufacturer will submit the formula and a sample of the product to the appropriate TTB officer for examination. TTB will determine whether the product is unfit for beverage use and whether manufacture of the product is exempt from qualification requirements.
(d)
Change of formula.
If TTB finds that a product manufactured under paragraph (a) of this section is being used for beverage purposes, or for mixing with beverage spirits other than by a processor, TTB will notify the manufacturer to stop manufacturing the product until the formula is changed to make the product unfit for beverage use and the change is approved by the appropriate TTB officer. However, the provisions of this paragraph will not prohibit products which are unfit for beverage use from use in small quantities for flavoring drinks at the time of serving for immediate consumption.
(26 U.S.C. 5002, 5171)
Subpart B—Administrative and Miscellaneous Provisions
§ 19.11
Right of entry and examination.
A TTB officer may enter any distilled spirits plant, any other premises where distilled spirits operations are carried on, or any structure or place used in connection with distilled spirits operations, at any time of day or night. A TTB officer may examine materials, equipment, and facilities, and make any gauges and inventories. Whenever a TTB officer states his or her name and office and demands admittance but is not admitted into the premises or place, the TTB officer is authorized to use all necessary force to gain entry.
(26 U.S.C. 5203)
§ 19.12
Furnishing facilities and assistance.
The proprietor is required to provide TTB officers with the necessary facilities and assistance in order to gauge spirits in any container, or to examine any apparatus, equipment, containers, or materials, at the distilled spirits plant. Also, when requested by a TTB officer, the proprietor must:
(a) Open any doors and open for examination any containers on the plant premises; and
(b) Provide the exact locations (including the number of containers at each location) of all packages and similar portable approved containers within a given lot and the locations (that is, buildings, rooms, or areas) where spirits in cases are stored.
(26 U.S.C. 5202, 5203)
§ 19.13
Assignment of officers and supervision of operations.
(a)
General.
TTB may assign TTB officers to a distilled spirits plant and utilize controls, such as Government locks and seals, if TTB decides that those measures are necessary to effectively supervise the operations. If TTB decides that such supervision is necessary:
(1) The proprietor must obtain approval of the plant's hours of operations from the appropriate TTB officer;
(2) TTB may require the proprietor to submit a schedule of operations to a TTB officer; and
(3) TTB may require the proprietor to delay any distilled spirits operation until the proprietor can conduct it in the presence of a TTB officer.
(b)
Notification of supervision.
If TTB determines that supervision of plant operations is necessary, TTB will notify the proprietor of the extent to which TTB intends to supervise those operations. If TTB determines later that TTB supervision is no longer necessary, the appropriate TTB officer will notify the proprietor of that fact.
(26 U.S.C. 5201, 5202, 5553)
§ 19.14
Delegation of the Administrator's authorities to the appropriate TTB officer.
Most of the regulatory authorities of the Administrator contained in this part are delegated to appropriate TTB officers. These TTB officers are specified in TTB Order 1135.19, Delegation of the Administrator's Authorities in 27 CFR Part 19, Distilled Spirits Plants. Interested persons may obtain a copy of this order by accessing the TTB Web site (
http://www.ttb.gov
) or by mailing a request to the Alcohol and Tobacco Tax and Trade Bureau, National Revenue Center, 550 Main Street, Room 1516, Cincinnati, OH 45202.
§ 19.15
Forms prescribed.
(a) TTB prescribes and makes available all forms required by this part. Persons completing forms must furnish all of the information required by each form, as indicated by the headings and instructions on the form or as required by these regulations. Each form must be filed in accordance with this part and the instructions for the form.
(b) Persons may obtain TTB forms by accessing the TTB Web site (
http://
www.ttb.gov
) or by mailing a request to the TTB National Revenue Center, 550 Main Street, Suite 8002, Cincinnati, Ohio 45202.
(26 U.S.C. 5207)
§ 19.16
Modified forms.
If a proprietor wishes to modify a form prescribed by these regulations, the proprietor must submit an application for approval of an alternate method or procedure (see §§ 19.26 and 19.27) to the appropriate TTB officer. The proprietor may not use a modified form until TTB approves the application. The application to modify a form must be accompanied by:
(a) A copy of each proposed form with typical entries; and
(b) A statement explaining the need to use a modified form.
(26 U.S.C. 5207)
§ 19.17
Detention of containers.
(a)
General.
A TTB officer may detain any container containing, or supposed to contain, spirits when the appropriate TTB officer believes that the required tax on those spirits has not been paid or determined or that the removal of the container is in violation of law or the provisions of this part. The appropriate TTB officer will hold the container at a safe place until it is determined whether the detained property is subject to forfeiture.
(b)
Limitation.
A detention under paragraph (a) of this section may not exceed 72 hours without process of law or intervention of the appropriate TTB officer. However, the detained container may be kept on the premises beyond the 72-hour period without process of law or intervention if the person possessing the container immediately before its detention executes a waiver of this 72-hour limitation on detention of the container.
(26 U.S.C. 5311)
§ 19.18
Samples for the United States.
TTB officers are authorized to take samples of spirits, denatured spirits, articles, wines, or other materials from a distilled spirits plant for analysis, testing, or to determine whether the product complies with the law and regulations. When TTB removes a sample from a plant, TTB will give the proprietor a receipt for the sample.
(26 U.S.C. 5201, 5203, 5214, 5362)
§ 19.19
Discontinuance of storage facilities.
If TTB determines that a proprietor's bonded storage facility for spirits is unsafe or unfit for use, or causes excessive waste or loss of spirits, TTB can require that the proprietor discontinue using the facility. Further, TTB can require the transfer of the spirits stored in the facility to another storage facility. The transfer will take place at such time and under such supervision as TTB may require, and will be at the expense of the owner or warehouseman of the spirits. If the owner or warehouseman fails to transfer the spirits within the prescribed time or to pay the expense of the transfer, as ascertained and determined by the appropriate TTB officer, the spirits may be seized and sold. TTB will first apply the proceeds of such sale to the payment of the taxes due on the spirits and then to the cost and expense of the sale and removal, and the remaining balance, if any, will be paid over to the owner or warehouseman.
(26 U.S.C. 5236)
§ 19.20
Installation of meters, tanks, and other apparatus.
The appropriate TTB officer may require the proprietor to install meters, tanks, pipes, or any other apparatus at the proprietor's plant if that officer decides that the equipment is necessary for the protection of the revenue. If the proprietor refuses or fails to install any such apparatus when instructed to do so, the proprietor will not be permitted to conduct business as a distilled spirits plant.
(26 U.S.C. 5552)
Alternate Methods or Procedures and Experimental Operations
§ 19.26
Alternate methods or procedures.
(a)
General.
The appropriate TTB officer may approve the use of an alternate method or procedure that varies from the regulatory requirements in this part if the proprietor shows good cause for its use and the alternate method or procedure:
(1) Is not contrary to law;
(2) Will not have the effect of waiving an existing regulatory requirement;
(3) Is consistent with the purpose and effect of the method or procedure prescribed in this part;
(4) Provides equal security to the revenue; and
(5) Will not cause an increase in cost to the Government and will not hinder TTB's administration of this part.
(b)
Exceptions.
TTB will not authorize the use of an alternate method or procedure relating to the giving of any bond, or to the assessment, payment, or collection of tax.
(c)
Prior approvals.
Alternate methods or procedures in effect prior to April 18, 2011, which are not contrary to the regulations in this part, are preserved until renewed unless revoked by operation of law due to the enactment of law that is contrary to the alternate method or procedure.
(26 U.S.C. 5552, 5556)
§ 19.27
Application for and use of alternate method or procedure.
(a)
Application.
If a proprietor wishes to use an alternate method or procedure as described in § 19.26, the proprietor must submit a written letterhead application to the appropriate TTB officer for approval. The application must identify the method or procedure specified in the regulation, must describe the proposed alternate method or procedure in detail, and must explain why the alternate method or procedure is needed.
(b)
Approval and use.
The proprietor may not use an alternate method or procedure until the appropriate TTB officer has in writing approved the proprietor's application. During the period that the proprietor is authorized to use the alternate method or procedure, the proprietor must comply with any conditions imposed on its use by TTB. TTB may withdraw the approval to use the alternate method or procedure if TTB finds that the revenue is jeopardized, that the alternate method or procedure hinders effective administration of the laws or regulations, that the proprietor has violated any of the conditions imposed by TTB, or that the circumstances that gave rise to the need for the alternate method or procedure no longer exist.
(c)
Retention.
The proprietor must retain each alternate method or procedure approval as part of the proprietor's records and must make the approval available for examination by TTB officers upon request.
(26 U.S.C. 5552, 5556)
§ 19.28
Emergency variations from requirements.
(a)
Application.
A proprietor may request emergency approval of the use of a method or procedure relating to construction, equipment, and methods of operation that represents a variance from the requirements of this part. When a proprietor wishes to use an emergency method or procedure, the proprietor must submit a written letterhead application to the appropriate TTB officer for approval; the proprietor may send the application via regular mail, email, or facsimile transmission. The application must describe the proposed emergency method or procedure and the emergency situation it will address. For purposes of this section, an emergency is considered to exist only if it results from a weather or
other natural event or from an accident or other event not involving an intentional act on the part of the proprietor.
(b)
Approval.
The appropriate TTB officer may approve in writing the use of an emergency method or procedure if the proprietor demonstrates that an emergency exists and the proposed method or procedure:
(1) Is not contrary to law;
(2) Is necessary to address the emergency situation;
(3) Will afford the same security and protection to the revenue as intended by the regulations; and
(4) Will not hinder the effective administration of this subpart.
(c)
Terms of emergency method or procedure approval and use.
(1) The proprietor may not use an emergency method or procedure until the application has been approved by TTB except when the emergency method or procedure requires immediate implementation to correct a situation that threatens life or property. In a situation involving a threat to life or property, the proprietor may implement the corrective action while concurrently notifying the appropriate TTB officer by telephone of the action and filing the required written application. Use of the emergency method or procedure must conform to any conditions specified in the approval.
(2) The proprietor must retain the emergency method or procedure approval as part of the proprietor's records and must make the approval available for examination by TTB officers upon request.
(3) The emergency method or procedure will automatically terminate when the situation that created the emergency no longer exists. TTB may withdraw the approval to use the emergency method or procedure if TTB finds that the revenue is jeopardized, that the emergency method or procedure hinders effective administration of the laws or regulations, or that the proprietor has failed to follow any of the conditions specified in the approval. When use of the emergency method or procedure terminates, the proprietor must revert to full compliance with all applicable regulations.
(26 U.S.C. 5178, 5556)
§ 19.29
Exemptions for national defense and disasters.
Whenever TTB finds it is necessary to meet the requirements of national defense or necessary or desirable by reason of disaster, TTB may temporarily exempt the proprietor from any provisions of the internal revenue laws and the provisions of this part relating to distilled spirits, except those requiring the payment of tax.
(26 U.S.C. 5561, 5562)
§ 19.31
Pilot operations.
Except for the filing of any bond or the payment of any tax provided for in 26 U.S.C. chapter 51, TTB may waive any regulatory provision in this part for temporary pilot or experimental operations for the purpose of facilitating the development and testing of improved methods of governmental supervision (necessary for the protection of the revenue) over plants. For this purpose, the appropriate TTB officer may, with the approval of the proprietor thereof, designate any plant for such operations. Any waiver granted under this section must be in writing and signed by the appropriate TTB officer. The waiver will identify the provisions of law and/or regulations waived and the period of time during which the waiver will be effective. The appropriate TTB officer may terminate the waiver if he or she determines that the waiver jeopardizes the revenue.
(26 U.S.C. 5554)
§ 19.32
Experimental distilled spirits plants.
(a)
General.
The appropriate TTB officer may authorize the establishment and operation of experimental plants for specific and limited periods of time solely for experimentation in, or development of:
(1) Sources of materials from which spirits may be produced;
(2) Processes by which spirits may be produced or refined; or
(3) Industrial uses of spirits.
(b)
Waiver.
The appropriate TTB officer may waive any provision of 26 U.S.C. chapter 51 (other than 26 U.S.C. 5312) and of this part (other than § 19.33) to the extent necessary to effectuate the purposes of 26 U.S.C. 5312(b) as outlined in paragraph (a) of this section. However, TTB will not waive the payment of any tax on spirits removed from an experimental plant.
(26 U.S.C. 5312)
§ 19.33
Application to establish experimental plants.
(a)
Application requirements.
Any person who wishes to establish an experimental plant for the purposes specified in § 19.32 must submit a written application to the appropriate TTB officer and obtain approval of the proposed experimental plant. The application must:
(1) State the nature, extent, and purpose of the operations to be conducted;
(2) Describe the operations and equipment;
(3) Describe the location of the plant (including the proximity to other premises or operations subject to the provisions of 26 U.S.C. chapter 51); and
(4) Describe the security measures to be provided.
(b)
Bond.
The applicant must file a bond with the application in such form and penal sum as required by the appropriate TTB officer.
(c)
Approval of application.
Before approving the application, the appropriate TTB officer may require that the applicant submit additional information if necessary. TTB will not approve the application and permit operations until the plant conforms to the specifications stated in the application and the applicant complies with provisions of 26 U.S.C. chapter 51 and with any provisions in this part that are not specifically waived.
(26 U.S.C. 5312)
§ 19.34
Experimental or research operations by scientific institutions and colleges of learning.
(a)
General.
The appropriate TTB officer may authorize any scientific university, college of learning, or institution of scientific research to produce, receive, blend, treat, test, and store spirits, without payment of tax, for experimental or research use but not for consumption (other than in organoleptic tests) or sale, in quantities as may be reasonably necessary for those purposes.
(b)
Waiver.
For purposes of this section, the appropriate TTB officer may waive any provision of 26 U.S.C. chapter 51 (other than 26 U.S.C. 5312) or this part (other than this section and § 19.35) to the extent necessary to effect the purposes of 26 U.S.C. 5312(a). However, TTB will not waive the payment of any tax on distilled spirits removed from any university, college, or institution.
(26 U.S.C. 5312)
§ 19.35
Application by scientific institutions and colleges of learning for experimental or research operations.
(a)
Application requirements.
A university, college, or scientific institution that wants to conduct any of the experimental or research operations mentioned in § 19.34, must submit a written application to the appropriate TTB officer and obtain approval for the proposed operations. The application may be submitted on letterhead. The application must:
(1) State the nature, extent, and purpose of the operations to be conducted;
(2) Describe the operations and equipment;
(3) Describe the location where the operations will be conducted (including identification of the building or buildings, or the portions thereof to be used); and
(4) Describe the security measures to be provided.
(b)
Bond.
The applicant must file a bond with the application in such form and amount as required by the appropriate TTB officer.
(c)
Approval of application.
Before approving the application, the appropriate TTB officer may require that the applicant submit additional information. The applicant may not commence operations until authorized by the appropriate TTB officer.
(d)
Records and reports.
Any university, college, or institution authorized to conduct experimental or research operations must maintain records of the quantities of spirits produced, received, and used each day and must make these records available for inspection by TTB officers. Universities, colleges, or institutions authorized to conduct experimental or research operations are not required to submit reports of operations to TTB unless specifically required by the appropriate TTB officer.
(e)
Discontinuance of operations.
When operations authorized under this section are discontinued, the university, college, or institution must destroy all remaining spirits and notify the appropriate TTB officer that operations are discontinued.
(26 U.S.C. 5312)
§ 19.36
Spirits produced in industrial processes.
(a)
General.
Except as otherwise provided in paragraph (b) of this section, any person who produces distilled spirits in an industrial process, including spirits produced as a byproduct in connection with chemical or other processes, is considered to be a distiller and therefore is required to qualify such operations as a distilled spirits plant and is subject to the registration requirements under the provisions of 26 U.S.C. chapter 51 and this part.
(b)
Waiver.
TTB may waive application of any provision of 26 U.S.C. chapter 51, or of this part, involving the production of nonpotable chemical mixtures containing spirits, including any provision relating to qualification (except the dealer registration requirement) if the mixture is produced:
(1) For transfer to the bonded premises of a distilled spirits plant for completion of distilling; or
(2) As a byproduct which would require expensive and complex equipment for the recovery of spirits, and the mixture:
(i) Would be destroyed on the premises where produced; or
(ii) Would contain a minimum quantity of spirits, taking into account the procedure employed, would not be subjected to further operations solely for the purification or recovery of spirits, and would be found by TTB to be as nonpotable and as difficult to recover as completely denatured alcohol.
(26 U.S.C. 5201)
§ 19.37
Application for industrial processes waiver.
(a)
Application for waiver.
If the producer of a nonpotable chemical mixture containing spirits, as described in § 19.36, wishes to obtain a waiver from the provisions of 26 U.S.C. chapter 51, or of this part, the producer must submit a written waiver application to the appropriate TTB officer. The application must include the following information, as applicable:
(1) The name and address of the producer;
(2) Chemical composition and source of the nonpotable mixture;
(3) Approximate percentages of chemicals and spirits in the mixture;
(4) Method of operation proposed;
(5) Bonded premises where the mixture will be distilled; and
(6) Any other pertinent information required by the appropriate TTB officer.
(b)
Approval of waiver.
The appropriate TTB officer may approve the waiver if it will not jeopardize the revenue and will not hinder supervision of the operations. Approval of the application may be subject to such terms and conditions, and to the furnishing of any bond, that the appropriate TTB officer determines is necessary.
(26 U.S.C. 5201)
§ 19.38
Approval of required documents.
Except as otherwise provided in this part, the appropriate TTB officer is authorized to approve all documents, bonds, and consents of surety required by this part.
(26 U.S.C. 5171, 5172, 5173, and 5551)
“Penalties of Perjury” Declaration
§ 19.45
Execution under penalties of perjury.
(a)
Declaration.
When TTB requires under this part that a document be executed under penalties of perjury, the document must contain the following declaration:
I declare under the penalties of perjury that this [insert type of document, such as report, or claim], including supporting documents, has been examined by me and, to the best of my knowledge and belief, is true, correct, and complete.
(b)
Signing.
The declaration in paragraph (a) of this section must bear the signature and title of the proprietor or a duly authorized representative.
(26 U.S.C. 6065)
Subpart C—Restrictions on Production, Location, and Use of Plants
§ 19.51
Home production of distilled spirits prohibited.
A person may not produce distilled spirits at home for personal use. Except as otherwise provided by law, distilled spirits may only be produced by a distilled spirits plant registered with TTB under the provisions of 26 U.S.C. 5171. All distilled spirits produced in the United States are subject to the tax imposed by 26 U.S.C. 5001.
(26 U.S.C. 5001, 5601, and 5602)
Rules for Location and Use of a DSP
§ 19.52
Restrictions on location of plants.
A person who intends to establish a distilled spirits plant may not locate it in any of the following places:
(a) In any residence, shed, yard, or enclosure connected to a residence;
(b) On any vessel or boat;
(c) Where beer or wine is produced;
(d) Where liquors are sold at retail; or
(e) Where any other business is conducted except as provided in § 19.54.
(26 U.S.C. 5178)
§ 19.53
Continuity of plant premises.
As a general rule, the premises of a distilled spirits plant must be continuous except for separations by public waterways, roads, or carrier rights-of-way. However, the appropriate TTB officer may approve the registration of the plant where there are separations of the plant premises and all parts of the plant are in the same general location if:
(a) There is no jeopardy to revenue caused by the separation of premises; and
(b) The separation of premises does not create administrative problems for TTB.
(26 U.S.C. 5178)
§ 19.54
Use of distilled spirits plant premises.
(a)
General.
A person may not conduct any business or operation on
the premises of a distilled spirits plant unless the business or operation is authorized by the notice of registration on file with TTB or authorized under § 19.55.
(b)
Bonded premises.
The proprietor must use the bonded premises of a distilled spirits plant exclusively for distilled spirits operations. The proprietor must store packaged spirits, cases of spirits, or portable containers of spirits in a room or building on bonded premises. TTB may approve another method of storage as an alternate method or procedure. However, the proprietor must apply for, and receive approval for another method of storage from the appropriate TTB officer in accordance with § 19.27 before using that method.
(c)
General premises.
General premises are any portion of the distilled spirits plant described in the notice of registration other than bonded premises. A person may not use the general premises of a distilled spirits plant for any operation required under the provisions of this part to be conducted on bonded premises.
(26 U.S.C. 5178)
§ 19.55
Other businesses.
(a) The appropriate TTB officer may authorize the conduct of a business other than that of a distiller, warehouseman, or processor on the premises of a distilled spirits plant if:
(1) The business is not prohibited by 26 U.S.C. 5601(a)(6);
(2) The business will not jeopardize the revenue;
(3) The business will not hinder TTB's effective administration of this part; and
(4) The business will not be contrary to law.
(b) A person who wishes to conduct another business at a distilled spirits plant must apply for such authorization in accordance with §§ 19.73(b) or 19.120(b) and receive approval from the appropriate TTB officer before operating the other business. The approval will specify whether the other business may be conducted on the bonded premises or on the general premises.
(26 U.S.C. 5178)
§ 19.56
Bonded warehouses not on premises qualified for production of spirits.
(a)
Criteria for establishment.
As a general rule, if a person intends to establish a bonded warehouse, other than one established on the bonded premises of a distilled spirits plant qualified for the production of spirits or contiguous to such premises, the proposed warehouse must have a minimum capacity of 250,000 wine gallons of bulk spirits and the need for such a warehouse must be clearly shown. TTB may consider an application to establish a bonded warehouse with less capacity provided a need is clearly shown.
(b)
Application.
The applicant must submit a separate written request along with the application for registration explaining the need for the bonded warehouse. TTB may approve the application for registration if:
(1) The proposed location for the warehouse will not jeopardize the revenue; and
(2) The applicant provides evidence showing sufficient need for establishing such a warehouse.
(c)
Special conditions.
Based on the application and request, TTB may limit the type of operations that may be conducted at the bonded warehouse. The proprietor of a warehouse approved for a limited type of operation may not expand or change the operation to include any other type of operation without application to and approval of the appropriate TTB officer.
(26 U.S.C. 5171 and 5178)
Conveyance of Spirits or Wines on Plant Premises
§ 19.58
Taxpaid spirits or wines on bonded premises.
The proprietor may move tax paid or tax determined spirits or wines across bonded premises. However, tax paid or tax determined spirits or wines may not be stored or allowed to remain on the bonded premises. The proprietor must keep tax paid or tax determined spirits or wines separate from spirits or wines on which tax has not been paid or determined. Spirits returned to bonded premises under the provisions of 26 U.S.C. 5215 may remain on bonded premises.
(26 U.S.C. 5201 and 5612)
§ 19.59
Conveyance of untaxpaid spirits or wines within a distilled spirits plant.
(a) The proprietor may move untaxpaid spirits or wines:
(1) Between different portions of the bonded premises at the same distilled spirits plant or across any other premises of that plant;
(2) Over any public thoroughfare by uninterrupted transportation; or
(3) Over a private roadway by uninterrupted transportation. The owner or lessee of the private roadway must agree in writing to allow TTB officers access to the roadway to perform their duties.
(b) The conveyance of untaxpaid spirits or wines under paragraph (a) of this section is subject to the following conditions. The proprietor:
(1) May not store or allow the untaxpaid spirits or wines to remain on any premises other than the bonded premises;
(2) Must keep the untaxpaid spirits or wines separate from spirits on which the tax has been paid or determined;
(3) Must submit to the appropriate TTB officer a description of the means, route of the conveyance, and the areas of the distilled spirits plant, public thoroughfare or roadways across which spirits or wines will be conveyed, and a copy of any agreement with the owner or lessee of a private roadway. The appropriate TTB officer must approve the proposed means and route of conveyance and any agreement; and
(4) Must provide a consent of surety on the operations or unit bond (TTB Form 5000.18) extending the terms of the bond to cover the conveyance of the spirits or wines.
(26 U.S.C. 5201 and 5601)
§ 19.60
Spirits in customs custody.
A proprietor may move distilled spirits that are in customs custody across distilled spirits plant premises if the proprietor:
(a) Submits to the appropriate TTB officer a description of the means and route of the conveyance and the areas of the distilled spirits plant across which spirits will be conveyed and receives approval from the appropriate TTB officer for the method of movement;
(b) Does not store or allow the spirits to remain on the premises of the distilled spirits plant;
(c) Moves the spirits expeditiously, and keeps the spirits separate and apart from other spirits on the premises; and
(d) Provides a consent of surety on the operations or unit bond (TTB Form 5000.18) extending the terms of the bond to cover the conveyance of the spirits.
(26 U.S.C. 5201)
Subpart D—Registration of a Distilled Spirits Plant and Obtaining a Permit
§ 19.71
Registration and permits in general.
Except as otherwise provided in this part, a person may only conduct operations as a distiller, warehouseman, or processor of distilled spirits on the bonded premises of a distilled spirits plant. In order to establish a distilled spirits plant, a person must register the plant with TTB and obtain an operating permit and/or a basic permit. This subpart covers the requirements for registering a plant and obtaining an operating permit under the IRC. Part 1 of this chapter covers the requirements
for obtaining a basic permit under the Federal Alcohol Administration Act.
(26 U.S.C. 5171)
Requirements for Registering a Plant
§ 19.72
General requirements for registration.
(a)
Establishment.
A person who wishes to establish a distilled spirits plant must intend to conduct operations as a distiller, as a warehouseman, or both. A person cannot establish a distilled spirits plant solely for the processing of spirits.
(b)
Registration.
Before beginning operations as a distilled spirits plant, a person must submit an application for registration and receive approval from TTB. The following rules apply to an application for registration:
(1) The applicant must apply for registration on form TTB F 5110.41, Registration of Distilled Spirits Plant, and submit the application to the appropriate TTB officer;
(2) TTB will consider all written statements, affidavits, and other documents supporting the application as part of the application;
(3) If the appropriate TTB officer determines that the original application for registration cannot be approved because it contains incomplete or incorrect information, TTB may require that the applicant file an additional TTB F 5110.41, or submit other documentation to complete or correct the original application; and
(4) The applicant must file any additional forms or submit any other documentation within 60 days of the appropriate TTB officer's request.
(26 U.S.C. 5171, 5172)
§ 19.73
Information required in application for registration.
(a)
General.
The application for registration on form TTB F 5110.41, Registration of Distilled Spirits Plant, must include the following information:
(1) The serial number;
(2) The name, principal business address, and location of the distilled spirits plant if different from the applicant's business address;
(3) The operations that will be conducted;
(4) The purpose for filing the application;
(5) A statement describing the type of business organization and the persons involved in the business in accordance with § 19.93. However, if any of this information is already on file with the appropriate TTB officer, the applicant may advise TTB that the information on file is part of the application for registration;
(6) A list of any operating permits, basic permits, operations bonds, withdrawal bonds, and/or unit bonds, including the amount of any bond(s) and the name of the surety on the bond;
(7) In the case of a corporation, a list of the offices and officers authorized by the articles of incorporation or the board of directors to sign or act on behalf of the corporation;
(8) A description of the plant in accordance with § 19.74;
(9) A list of major equipment in accordance with § 19.75;
(10) A statement of the maximum number of proof gallons that will be produced in the distillery during a period of 15 days, stored on the bonded premises, and in transit to the bonded premises. This statement is not required if the operations or unit bond is in the maximum amount;
(11) A statement that accounting records will be maintained in accordance with generally accepted accounting principles;
(12) A statement of plant security measures in accordance with § 19.76;
(13) The following information if the applicant intends to operate as a distiller:
(i) Total proof gallons of spirits that can be produced daily;
(ii) A statement of production procedures in accordance with § 19.77; and
(iii) A statement as to whether spirits will be redistilled;
(14) The following information if the applicant intends to operate as a warehouseman:
(i) A description of the storage system; and
(ii) Total amount of bulk wine gallons that can be stored; and
(15) The following information if the applicant intends to operate as a processor:
(i) A statement whether spirits will or will not be bottled, denatured, redistilled, and whether articles will be manufactured; and
(ii) A description of the storage system for spirits bottled and cased or otherwise packaged and placed in approved containers for removal from bonded premises.
(b)
Other business.
If the applicant intends to conduct any other business on the distilled spirits plant premises as authorized under § 19.55, the following information must be submitted with the application:
(1) A description of the business;
(2) A list of buildings and equipment that will be used; and
(3) A statement of the relationship of the business to the distilled spirits operations at the plant.
(c)
Additional information.
The applicant must furnish any additional information needed by TTB to determine if the application for registration should be approved.
(26 U.S.C. 5171, 5172, 6001)
§ 19.74
Description of the plant.
As required by § 19.73(a)(8), the application for registration must include a description of the distilled spirits plant. This information must:
(a) Describe each tract of land covered by distilled spirits plant;
(b) Clearly distinguish between the bonded premises and any general premises;
(c) Provide directions and distances in enough detail to enable the appropriate TTB officer to readily determine the boundaries of the plant;
(d) Describe each building and outside tank that will be used for production, storage, and processing of spirits and for denaturing spirits, articles, or wines. The description must include the location, size, construction, and arrangement with reference to each by a designated number or letter; and
(e) Specify when only a room or floor of a building will be used for plant operations and provide the location and description of the building, floor, and room.
(26 U.S.C. 5172)
§ 19.75
Major equipment.
As required by § 19.73(a)(9), the application for registration must include a list of the major plant equipment. If the equipment is set up and used for the production, storage, or processing of distilled spirits, wine, denatured spirits, or articles, the list must provide the following information:
(a) The serial number and capacity of each tank in the plant. The list does not need to include any bulk containers having a capacity of less than 101 wine gallons on the plant premises if those containers do not meet the criteria of a tank under § 19.182 (perks, small totes, etc.);
(b) The serial number, kind, capacity, and intended use of each still in the plant. The capacity is the estimated maximum proof gallons of spirits capable of being produced every 24 hours, or for column stills a statement of the diameter of the base and number of plates; and
(c) The serial number of each condenser.
(26 U.S.C. 5172, 5179)
§ 19.76
Statement of plant security.
As required by § 19.73(a)(12), the application for registration must include
a statement of plant security. This statement must include the following information:
(a) A general description of plant security, including methods used to secure buildings or plant operations located within a portion of a building and outdoor tanks;
(b) A statement regarding the use of guard personnel;
(c) A statement regarding the use of any electronic or mechanical alarm system;
(d) A statement certifying that locks used will meet the requirements of § 19.192(f); and
(e) A list of persons, by their position and title, who have the responsibility for the custody and access to keys for the locks.
(26 U.S.C. 5171, 5172)
§ 19.77
Statement of production procedure.
(a) As required by § 19.73(a)(13)(ii), the application for registration must include a statement of the step-by-step production procedure used to produce spirits from an original source. The statement must begin with the treating, mashing, or fermenting of the raw materials or substances and continue through each step of the distilling, purifying, and refining procedure to the production gauge. The statement must include the kind and approximate quantity of each material or substance used in producing, purifying, or refining each type of spirits that will be produced.
(b) If the applicant intends to redistill spirits in the production account, the applicant must submit and receive approval for such redistillation on form TTB F 5110.38, Formula for Distilled Spirits under the Federal Alcohol Administration Act.
(26 U.S.C. 5172, 5201, 5222, 5223, 5555)
§ 19.78
Power of attorney.
An applicant or proprietor of a distilled spirits plant must execute and submit to the appropriate TTB officer form TTB F 5000.8, Power of Attorney, for each person authorized to sign or to act on behalf of the applicant or proprietor unless the authority has been granted in the application for registration.
(26 U.S.C. 5172)
§ 19.79
Registry of stills.
Section 29.55 of this chapter requires that every person having possession, custody, or control of a still or distilling apparatus must register the still or distilling apparatus. When a person lists a still or distilling apparatus with the application for registration as required by § 19.75(b) and receives approval of the registration, that person has fulfilled the requirement to register the still or distilling apparatus. See § 29.55 of this chapter for additional provisions regarding stills and distilling apparatus.
(26 U.S.C. 5172, 5179)
§ 19.80
Approved notice of registration.
A person may not operate a distilled spirits plant unless a notice of registration has been approved by TTB authorizing the businesses and operations to be conducted at such plant. When approved by the appropriate TTB officer, the application for registration constitutes the notice of registration of the distilled spirits plant. A distilled spirits plant will not be registered or reregistered under this subpart until the applicant has complied with all requirements of law and regulations relating to the qualification of the business or operations in which the applicant intends to engage. In any instance where a person is required to have a bond or permit and the bond or permit becomes invalid, then the notice of registration also becomes invalid. Another application for registration must be filed and a new notice of registration approved by TTB before the business or operation at such plant may be resumed. Reregistration of a plant is not required when a new bond or a strengthening bond is filed in accordance with § 19.167 or § 19.168.
(26 U.S.C. 5171, 5172)
§ 19.81
Maintenance of registration file.
The proprietor must maintain the registration documents on the plant premises in a loose-leaf file that is current, complete, and readily available for inspection by the appropriate TTB officer.
(26 U.S.C. 5172)
Requirements for an Operating Permit Under the IRC
§ 19.91
Operating permit.
(a) Except as provided in paragraph (b) of this section, a person must obtain an operating permit under the IRC in order to:
(1) Distill for industrial use;
(2) Warehouse spirits for industrial use;
(3) Denature spirits;
(4) Warehouse spirits (without bottling) for nonindustrial use;
(5) Bottle or package spirits for industrial use;
(6) Manufacture articles; or
(7) Engage in any other distilling, warehousing, or processing operation not required to be covered by a basic permit under the Federal Alcohol Administration Act (49 Stat. 978; 27 U.S.C. 203, 204).
(b)
Exception.
The requirement to obtain an operating permit does not apply to an agency of a State, or political subdivision of a State, or an officer or employee of, and acting for, such an agency.
(26 U.S.C. 5171, 5271)
§ 19.92
Information required in application for operating permit.
(a) In order to obtain an operating permit, a person must complete an application on form TTB F 5110.25, Application for Operating Permit Under 26 U.S.C. 5171(d). TTB will consider all written statements, affidavits and other documents submitted in support of the application as part of the application.
(b) The application on TTB F 5110.25 must include the following information:
(1) The name and principal address of the business;
(2) The address of the plant if different from the business address;
(3) A description of the operation(s) to be conducted;
(4) A statement of the business organization and the persons involved in the business as required under § 19.93; and
(5) A list of trade names as required under § 19.94.
(c) A TTB officer may request that any person listed under § 19.93(a)(1)(ii), (a)(3)(iii), (b)(1), or (b)(2) submit to TTB a statement as to whether that person has ever:
(1) Been convicted of a felony or misdemeanor under Federal or State law, other than a misdemeanor conviction for a traffic violation;
(2) Been arrested or charged with any violation of State or Federal law, other than an arrest or charge for a misdemeanor traffic violation; or
(3) Applied for, held, or been connected with a permit issued under Federal law to manufacture, distribute, sell or use spirits or products containing spirits, or held any financial interest in any business covered by any such permit, and if so, give the permit number, classification, period of operation and details regarding any denial, suspension, revocation or other termination.
(d) If any of the information required in paragraphs (b)(4) or (c)(3) of this section is on file with the appropriate TTB officer, the applicant may, by incorporation by reference, state that the information is made a part of the application for an operating permit.
(e) The applicant must provide any additional information that the
appropriate TTB officer may request in order to determine whether the application should be approved.
(26 U.S.C. 5171, 5271)
§ 19.93
Applicant organization documents.
(a)
Supporting information.
Sections 19.73(a)(5) and 19.92(a)(4) require that the application for registration and the application for an operating permit include information about the business organization of the applicant. The applicant must provide the following information as applicable:
(1) If the applicant is a corporation—
(i) The corporate charter or other documentation that provides proof of corporate existence or incorporation;
(ii) Names and addresses of directors and officers;
(iii) Certified minutes, or extracts of board of directors meetings, that authorize specific individuals to sign for the corporation; and
(iv) A statement showing the number of shares of each class of stock or other evidence of ownership, authorized and outstanding, and the voting rights of the respective owners or holders.
(2) If the applicant is a partnership, a copy of the articles of partnership or association, or certificate of partnership or association if required to be filed
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