Proposed Amendments of Parts 220, 221, and 225
Relating to Distilling Spirits
Proprietors of registered distilleries,
fruit distilleries, and internal revenue
bonded warehouses; and others concerned:
1. You were advised by Industry Circular No. 55-16, dated
July 14, 1955, of a number of amendments which it was proposed
to make in the regulations relating to distilleries and internal
revenue bonded warehouses. These proposals were contained in a
notice of proposed rulemaking published in the Federal Register
for August 24, 1955.
2. As a result of industry comments and further study by
this division a number of changes have been made in the proposed
amendments as discussed in Industry Circular No. 55-16 and published in the notice of proposed rulemaking. The changes are
either of a liberalizing nature, or of a technical nature not
affecting substantive requirements.
3. Changes of major interest are:
(a) 26 CFR Parts 220 and 221 will no longer require
distillers to measure and test distilling material immediately prior to distillation and to compute and report the
calculated yield. The regulations will, however, continue
to require that the alcoholic content of wine received as
distilling material and of spirits received for redistillation be determined and reported. Forms 15 and 1598 are not
now being revised to reflect this amendment to the regulations. Accordingly, the instructions and provisions of
Form 15 (Revised October 1955) and Form 1598 (Revised
November 1955), as they relate to calculated yield, will
not apply after the amendments become effective.
(b) 26 CFR Parts 220, 221, and 225 will not require
proprietors to mark the original tare, proof and proof
gallons on packages and barrels if in lieu thereof markings are provided to show the rated capacity of the container as determined by the specifications to which the
container was manufactured. The showing of the rated
capacity in lieu of the original tare, proof and proof gallons is optional with the proprietor filling the package.
The rated capacity, where used, is to be shown in whole
gallons; thus, if manufacturing specifications for a
barrel show it to have a capacity of 49 gallons, the
rated capacity would be shown as "RC 49 G". A rated
capacity of 51.5 gallons would be shown as "RC 52 G",
while a rated capacity of 51.4 gallons would be shown
as "RC 51 G". In any event the proprietor is required
to advise the storekeeper-gauger of any change in the
specifications as to the tare and capacity of the cooperage
to be filled.
(c) As published in the notice, the amendments to
26 CFR Parts 220 and 221 would have required a recording
meter in the water lines to unfinished spirits tanks if
it was desired to reduce the spirits during other than
regularly assigned hours of supervision. This proposal
has been modified to provide that where unfinished spirits
are reduced during other than regularly assigned hours of
supervision the water lines to the tanks shall be equipped
with either metering or measuring devices by which the
quantity of water added to a tank may be determined. Where
a meter or measuring device does not record the quantity
of water used, the arrangement must be such that the
storekeeper-gauger may determine the total quantity used
in the unsupervised operations. For example, a distiller
might install a tank in which water for use in reducing
spirits in the absence of the storekeeper-gauger would
be stored. The inlet to this tank would be secured by
a Government lock but the outlet would be unlocked. The
quantity of water withdrawn to each unfinished spirits
tank would be determined by the distiller by means of a
measuring device, such as a gauge glass or float, and
the storekeeper-gauger could compare the total quantity
of water withdrawn from the tank in unsupervised operations with the total of the quantities reported as used
in the various tanks of unfinished spirits. The proposed
regulations are not intended to require a separate meter
or measuring device for each unfinished spirits tank.
(d) In the notice, 26 CFR Part 221 was amended to
provide for conducting other businesses on fruit distillery
premises in the same manner as 26 CFR Part 220 has provided
since January 1, 1955. However, in preparing this change,
the existing provision of 26 CFR 221.60 authorizing the
use of fruit distillery buildings for miscellaneous storage
of unfermentable materials while the distillery is under
suspension was not deleted. As this provision is merely
one of the many kinds of "other businesses" which may be
authorized under the proposed amendments, it is deleted
in the Treasury decision.
4. In addition to the above, the proposed Treasury decision
will include the following changes:
(1) Discontinues the submission to the assistant
regional commissioner of parts 1 and 2 of Forms 15 and
1598. The required report will be made by proprietors
of fruit distilleries on Form 15 Part 3 (Revised October
1955) and by proprietors of registered distilleries on
Form 1598 Part 3 (Revised November 1955).
(2) Discontinues the reporting on Form 15 of
information as to name and address of the consignee
when distilled water and fusel oil are removed.
(3) Liberalizes proposed requirements for measuring
devices on cisterns and receiving tanks by eliminating
the proposed requirement that such devices be affixed
to the tanks.
(4) Revises proposed requirements for the distiller's
schedule of operations to more clearly indicate that the
schedule should show those activities which require
storekeeper-gauger supervision.
(5) Liberalizes requirements for sampling devices
by providing that such devices will not be required in
taking samples of unfinished spirits from tanks if it
can be shown that the supervision attendant on taking of
such samples will not be burdensome for storekeepergaugers.
(6) Provides for a verification of the total number
of barrels shown on Form 1520 to have been filled. This
verification can be by count of barrels removed, by
perpetual inventory of empty barrels, or by any other
means which will provide an independent verification of
the number of barrels filled.
5, The proposed Treasury decision provides that it shall be
effective on the date of its publication in the Federal Register,
except that the sections of 26 CFR Parts 220 and 221 relating to
the keeping of records and rendering of reports on Forms 15 and
1598 shall be effective on the first day of the first month which
begins not less than 30 days after publication in the Federal
Register.
6. This circular is being issued prior to publication of the
Treasury decision in order that you may have an opportunity to
discuss any questions which may arise with Government personnel
before the proposed amendments become effective. Probably most inquiries can be processed by your assistant regional commissioner
and should, accordingly, be addressed to him and refer to the number
of this circular. Correspondence with this office should similarly
refer to the number of this circular and, in addition, be marked:
Attention: O:AT:PP.
Dwight E. Avis,
Director, Alcohol and Tobacco Tax Division.
IRS-14395
|