Liquors and Articles From Puerto Rico and the Virgin Islands (1512-AB50)

DEPARTMENT OF THE TREASURY

27 CFR Part 250

[Notice No. 825]

RIN: 1512-AB50

Liquors and Articles From Puerto Rico and the Virgin Islands

(1512-AB50)

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of

the Treasury.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: ATF is considering the revision and recodification of the

regulations regarding liquors and articles (hereinafter ``alcoholic

products'') which are brought into the United States from Puerto Rico

or the Virgin Islands. The purpose of the proposed revision/

recodification is to update and simplify the regulations in 27 CFR Part

250 and to reissue those regulations as part of the same chapter. ATF

is issuing this advance notice to solicit comments on its proposal to

eliminate application and transaction forms required to be submitted by

persons who bring alcoholic products into the United States from Puerto

Rico.

Comments are also being solicited on proposals to coordinate with

the U.S. Customs Service to reduce duplicate efforts involving

shipments of merchandise from Puerto Rico to the United States. ATF

would also like to receive comments regarding other suggestions for

reducing or eliminating unnecessary regulatory burdens on proprietors

in both Puerto Rico and the United States while continuing to provide

adequate protection to the revenue.

DATES: Written comments must be received on or before September 11,

1996.

ADDRESSES: Comments must be submitted to the Chief, Wine, Beer, and

Spirits Branch, P.O. Box 50221, Washington, DC 20091-0221. ATTN Notice

No. 825.

FOR FURTHER INFORMATION CONTACT: Tami Light, Wine, Beer and Spirits

Branch, Bureau of Alcohol, Tobacco and Firearms, Washington, DC 20226,

(202) 927-8210.

[[Page 30022]]

SUPPLEMENTARY INFORMATION:

Background

Pursuant to section 7652 of the Internal Revenue Code of 1986,

alcoholic products of Puerto Rican manufacture which are brought into

the United States for consumption or sale, and alcoholic products

coming into the United States from the Virgin Islands, are subject to a

tax equal to the tax imposed on similar products of domestic

manufacturer.

Under section 5232, distilled spirits brought into the United

States in bulk containers from Puerto Rico or the Virgin Islands may be

withdrawn from Customs custody and transferred to the bonded premises

of a distilled spirits plant without payment of tax.

On September 8, 1992, ATF published in the Federal Register an

advanced notice of proposed rulemaking, Notice No. 751, 57 FR 40885, in

order to solicit comments on its proposal to review and update the

regulations pertaining to shipments of alcoholic products from Puerto

Rico or the Virgin Islands to the United States, and plans to recodify

and reissue such regulations now in 27 CFR part 250 as part 26 of the

same chapter. In response to Notice No. 751, two favorable comments

were received from the Jim Beam Co. (Beam) and the National Association

of Beverage Importers, Inc. In general, both of these comments

supported ATF's proposed simplification of application and

recordkeeping requirements. In addition, Beam supported ATF's proposed

coordination with the U.S. Customs Service to streamline regulation of

Puerto Rican products. Given ATF's continued interest in these

proposals, the relative lack of comments received during its initial

airing, and the length of time since these issues were first

considered, ATF is reairing its proposal in its entirety to give

industry and concerned citizens another opportunity to comment.

Proposals

ATF would like to reorganize the regulations to eliminate often

lengthy duplication of requirements that apply equally to operations in

Puerto Rico and the Virgin Islands. We are considering deleting many

regulatory requirements which may be unnecessary.

In updating the regulations, primary emphasis will be given to the

simplification of procedures for the taxpayment and shipment of

alcoholic products from Puerto Rico to the United States. ATF is also

considering proposals to coordinate with the U.S. Customs Service to

reduce duplicate efforts at the port of arrival in the United States

when such products are shipped from Puerto Rico, however, the

responsibilities of Customs with respect to shipments from the Virgin

Islands would remain unchanged.

Under current regulations, before distilled spirits, wine or beer

may be shipped from Puerto Rico to the United States, an application on

ATF Form 5110.51, Application, Permit and Report-Wine and Beer (Puerto

Rico), must be submitted and a permit received to verify computation of

the internal revenue tax. After tax determination, a second application

and permit on ATF Form 487-B (5170.5) Application and Permit to Ship

Liquors and Articles of Puerto Rican Manufacturer Taxpaid to the United

States, is required in order to ship the taxpaid or tax determined

products to the United States.

ATF is considering ways to reduce paperwork and simplify the

procedures for shipping distilled spirits, beer or wine from Puerto

Rico to the United States. We would like comments on the following

proposals:

(1) Should the regulations be amended to permit the proprietor of

qualified premises in Puerto Rico to maintain a record of tax

determination in lieu of the application and permit to compute the tax?

ATF is proposing that, in lieu of the initial application and permit

currently required to compute the tax, a record of tax determination be

kept by the proprietor containing sufficient information to allow an

ATF officer to verify the tax liability represented by the document.

(2) Should the regulations be amended to allow such record of tax

determination to be an invoice, bill of lading, or other commercial

document which would contain the necessary data elements?

(3) If ATF adopts the above proposals what additional safeguards to

the revenue would be necessary?

(4) Do the current provisions in part 250 adequately address the

bulk shipment of distilled spirits from Puerto Rico to the United

States? ATF is interested in whether or not the regulations reflect the

current technology or shipment and distribution practices in this area.

(5) In this advance notice, ATF would like to solicit comments on

specific ways in which it could reduce paperwork, simplify existing

procedures and eliminate unnecessary regulations in any area concerning

Puerto Rico or the Virgin Islands that is currently covered in part

250, while continuing to maintain adequate safeguards to the revenue.

(6) ATF would like specific comments on the experience of the

industry with respect to any duplicative regulatory efforts by ATF and

the U.S. Customs Service on shipments of distilled spirits from Puerto

Rico to the United States.

(7) Finally, under the current regulations, ATF may grant an

industry member's request for an alternate method or procedure as a

variance from some regulatory requirements. ATF is interested in

comments from industry members concerning their experience with such

variances and whether these regulations should be revised to

incorporate some of the practices authorized by existing variances.

Public Participation

ATF requests comments from all interested persons. All comments

received on or before the closing date will be carefully considered.

Comments received after the closing date will be given the same

consideration if it is practical to do so, but assurance of

consideration cannot be given except as to comments received on or

before the closing date.

ATF will not recognize any material or comments as confidential.

All comments submitted in response to this advance notice will be

available for public inspection during normal business hours at: ATF

Public Reading Room, room 6480, 650 Massachusetts Avenue NW.,

Washington, DC. Any material that the commenter considers confidential

or inappropriate for disclosure to the public should not be included in

the comment. The name of the person submitting a comment is not exempt

from disclosure.

Executive Order 12866

It has been determined that this proposed regulation is not a

significant regulatory as defined by Executive Order 12866.

Accordingly, this proposal is not subject to the analysis required by

this Executive Order.

Drafting Information: The principal author of this document is

Tami Light of the Wine, Beer and Spirits Branch, Bureau of Alcohol,

Tobacco and Firearms.

List of Subjects in 27 CFR Part 250

Administrative practice and procedure, Alcohol and alcoholic

beverages, Authority delegations, Beer, Customs duties and inspection,

Electronic fund transfers, Excise taxes, Liquors, Packaging and

containers, Puerto Rico, Reporting and recordkeeping requirements,

Surety bonds, Transportation, Virgin Islands, Warehouses, Wine.

[[Page 30023]]

Authority: This advance notice of proposed rulemaking is issued

under the authority in 26 U.S.C. 7805.

Signed: May 17, 1996.

Bradley A. Buckles,

Acting Director.

Approved: May 24, 1996.

John P. Simpson.

Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).

[FR Doc. 96-14852 Filed 6-12-96; 8:45 am]

BILLING CODE 4810-31-U