80 FR 55246 - Return of Wine to Bonded Premises

DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau

Federal Register Volume 80, Issue 178 (September 15, 2015)

The Alcohol and Tobacco Tax and Trade Bureau is revising the wine regulations governing the return of wine to bonded wine premises in response to two statutory changes. First, to incorporate a provision contained in the Taxpayer Relief Act of 1997, TTB is removing a regulatory requirement that wine returned to bond must be unmerchantable. Second, to incorporate a provision contained in the Internal Revenue Service Restructuring and Reform Act of 1998, TTB is revising the regulations to clarify that the refund or credit of excise tax applies to any wine removed from a bonded wine cellar and subsequently returned to bond. The current regulatory text states that a refund or credit of tax is available only for wine produced in the United States.

[Federal Register Volume 80, Number 178 (Tuesday, September 15, 2015)]
[Rules and Regulations]
[Pages 55246-55249]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-23132]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 24 and 70

[Docket No. TTB-2015-0013; T.D. TTB-130]
RIN 1513-AB92


Return of Wine to Bonded Premises

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

ACTION: Final rule; Treasury decision.

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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau is revising the 
wine regulations governing the return of wine to bonded wine premises 
in response to two statutory changes. First, to incorporate a provision 
contained in the Taxpayer Relief Act of 1997, TTB is removing a 
regulatory requirement that wine returned to bond must be

[[Page 55247]]

unmerchantable. Second, to incorporate a provision contained in the 
Internal Revenue Service Restructuring and Reform Act of 1998, TTB is 
revising the regulations to clarify that the refund or credit of excise 
tax applies to any wine removed from a bonded wine cellar and 
subsequently returned to bond. The current regulatory text states that 
a refund or credit of tax is available only for wine produced in the 
United States.

DATES: This rule is effective on October 15, 2015.

FOR FURTHER INFORMATION CONTACT: Jennifer Berry, Alcohol and Tobacco 
Tax and Trade Bureau, Regulations and Rulings Division; telephone 202-
453-1039, ext. 275.

SUPPLEMENTARY INFORMATION:

Background

TTB Authority

    Chapter 51 of the Internal Revenue Code of 1986, as amended (IRC), 
26 U.S.C. chapter 51, sets forth excise tax collection and related 
provisions pertaining to, among other things, the production and 
importation of wine. Under 26 U.S.C. 5041(a), a Federal excise tax is 
imposed on all wine in bond in, produced in, or imported, into the 
United States, and such tax is determined at the time the wine is 
removed for consumption or sale. As a general matter, the tax is 
determined or paid at the time the product is removed from bonded 
premises in accordance with 26 U.S.C. 5041(a). Tax on imported wine, 
however, is imposed when the product is imported into the United 
States, and is generally determined or paid when the product is removed 
from bonded premises or from customs custody for consumption or sale in 
accordance with relevant statutory provisions and Treasury regulations 
and orders.
    Section 5361 of the IRC (26 U.S.C. 5361) provides that taxpaid wine 
may be returned to bonded wine premises, and section 5044(a) of the IRC 
(26 U.S.C. 5044(a)) states that, under regulations prescribed by the 
Secretary of the Treasury, when wine is removed from a bonded wine 
cellar and subsequently returned to bond, then: (1) If tax on wine 
returned to bond has been paid (taxpaid wine), that tax shall be 
refunded or credited, without interest, to the proprietor of the bonded 
wine cellar to which the wine is delivered; and (2) if tax on wine 
returned to bond has not been paid, the person liable for the tax may 
be relieved of liability.
    The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers 
chapter 51 of the IRC pursuant to section 1111(d) of the Homeland 
Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has 
delegated various authorities through Treasury Department Order 120-01, 
dated December 10, 2013, to the TTB Administrator to perform the 
functions and duties in the administration and enforcement of this law.

Current Regulatory Requirements

    Regulations implementing the provisions of chapter 51 of the IRC 
pertaining to the establishment and operation of wine premises are 
contained in 27 CFR part 24. Provisions regarding the return of wine to 
bonded premises are contained in 27 CFR 24.295. Section 24.295(a) 
states that when taxpaid wine produced in the United States has been 
removed from bonded premises and subsequently found to be 
unmerchantable, such wine may be returned to a bonded wine premises for 
reconditioning, reformulation, or destruction. When such wine is 
returned to bond, the tax paid on such wine may be refunded or credited 
without interest to the proprietor of the bonded premises to which the 
wine was delivered if a claim pursuant to 27 CFR part 70, subpart G has 
or will not be made. In the case of untaxpaid domestic wine that was 
removed from bonded premises and then found to be unmerchantable, the 
person liable for the tax may be relieved of that liability when such 
wine is returned to bond. Claims for relief, credit, or refund may be 
filed pursuant to Sec.  24.66.
    Section 24.66 (27 CFR 24.66) currently provides that a claim for 
credit or refund, or relief from liability, of tax on unmerchantable 
U.S. wine returned to bond will be filed with the appropriate TTB 
officer within six months after the date of the return of the wine to 
bond. A single claim may not be filed under this section for a quantity 
on which the credit or refund of tax would be less than $25. However, 
this limitation does not apply to any returned wine on which the six- 
month period for filing a claim will expire.

Statutory Changes and Conforming Regulatory Amendments

Public Law 105-34

    Section 1416 of the Taxpayer Relief Act of 1997, Public Law 105-34, 
111 Stat. 788, amended section 5044 of the IRC to remove a previous 
requirement that wine returned to bond must be unmerchantable. 
Accordingly, TTB is amending its regulatory provisions to conform the 
regulations to the statute by removing the word ``unmerchantable'' from 
where it appears in Sec. Sec.  24.66(a), 24.295, and 24.312, and from 
the undesignated center heading that precedes Sec.  24.295. TTB is also 
removing the definition of unmerchantable wine from 27 CFR 24.10 since 
that definition is no longer relevant with respect to the part 24 
regulations. In addition, TTB is removing the word ``unmerchantable'' 
in the four instances where it appears in Part 70, Procedure and 
Administration (see Sec. Sec.  70.411(c)(10), 70.413(c)(2)(ii) 
(removing the phrase ``as unmerchantable''), 70.413(d)(2), and 
70.414(d)(3)).

Public Law 105-206

    Section 6014(b)(2) of the Internal Revenue Service Restructuring 
and Reform Act of 1998, Public Law 105-206, 112 Stat. 685, amended 
section 5044 of the IRC by removing a prior requirement that wine 
returned to bond must have been produced in the United States and 
instead required only that the wine first have been removed from a 
bonded wine cellar. To conform the regulations to the statute, TTB is 
removing references to ``United States'' or ``produced in the United 
States'' when it modifies the term ``wine'' in Sec. Sec.  24.66(a) and 
24.295, respectively. TTB is also removing the word ``domestic'' in the 
two instances where it modifies ``wine'' in part 70, Procedure and 
Administration (see Sec. Sec.  70.413(d)(2) and 70.414(d)(3)).

OMB Information Collection Control Numbers

    In addition, TTB is removing obsolete references to Office of 
Management and Budget (OMB) control numbers for information collection 
requests used by the former Bureau of Alcohol, Tobacco and Firearms 
(ATF) and replacing them with the OMB control numbers assigned to TTB. 
Specifically, in the second parenthetical statement at the end of Sec.  
24.66, OMB control number ``1512-0492'' is updated to ``1513-0030''; in 
the second parenthetical statement at the end of Sec.  24.295, OMB 
control numbers ``1512-0216,'' ``1512-0298,'' and ``1512-0492'' are 
updated to ``1513-0053,'' ``1513-0115,'' and ``1513-0030'' 
respectively; in the second parenthetical statement at the end of Sec.  
24.312, OMB control number ``1512-0298'' is updated to ``1513-0115''; 
and in the first parenthetical statement at the end of Sec.  70.413, 
OMB control number ``1512-0141'' is updated to ``1513-0030.'' The 
changes to these OMB control numbers are technical in nature and do not 
change any TTB information collection or recordkeeping requirement.

[[Page 55248]]

Inapplicability of Prior Notice and Comment

    TTB is issuing this final rule without prior notice and comment 
pursuant to authority under section 4(a) of the Administrative 
Procedure Act (5 U.S.C. 553(b)(3)(B)). This provision authorizes an 
agency to issue a rule without prior notice and comment when the agency 
for good cause finds that those procedures are ``impracticable, 
unnecessary, or contrary to the public interest.'' TTB finds that prior 
notice and comment for this rule is unnecessary because the rule is 
limited to conforming TTB regulations to statutory amendments that TTB 
lacks discretion to change.

Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do 
not apply. Accordingly, a regulatory flexibility analysis is not 
required. Pursuant to section 7805(f) of the IRC, TTB submitted this 
final rule to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on the impact of the regulations, and no 
comments were received.

Paperwork Reduction Act

    The collections of information in the regulations contained in this 
final rule have been previously reviewed and approved by the Office of 
Management and Budget (OMB) in accordance with the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3507), and assigned control numbers 1513-0030, 
1513-0053, and 1513-0115. 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. There is no 
new collection of information imposed by this final rule.

Executive Order 12866

    This final rule is not a significant regulatory action as defined 
by Executive Order 12866 of September 30, 1993. Therefore, it requires 
no regulatory assessment.

Drafting Information

    Jennifer Berry of the Regulations and Rulings Division, Alcohol and 
Tobacco Tax and Trade Bureau, drafted this document.

List of Subjects

27 CFR Part 24

    Administrative practice and procedure, Claims, Electronic fund 
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 70

    Administrative practice and procedure, Claims, Excise taxes, 
Freedom of information, Law enforcement, Penalties, Reporting and 
recordkeeping requirements, Surety bonds.

Amendments to the Regulations

    For the reasons discussed in the preamble, TTB amends 27 CFR, 
chapter I, parts 24 and 70 as set forth below:

PART 24--WINE

0
1. The authority citation for 27 CFR part 24 continues to read as 
follows:

    Authority: 5 U.S.C. 552(a); 26 U.S.C. 5001, 5008, 5041, 5042, 
5044, 5061, 5062, 5121, 5122-5124, 5173, 5206, 5214, 5215, 5351, 
5353, 5354, 5356, 5357, 5361, 5362, 5364-5373, 5381-5388, 5391, 
5392, 5511, 5551, 5552, 5661, 5662, 5684, 6065, 6091, 6109, 6301, 
6302, 6311, 6651, 6676, 7302, 7342, 7502, 7503, 7606, 7805, 7851; 31 
U.S.C. 9301, 9303, 9304, 9306.


Sec.  24.10  [Amended]

0
2. Section 24.10 is amended by removing the definition of 
``Unmerchantable wine''.


Sec.  24.66  [Amended]

0
3. In Sec.  24.66:
0
a. The first sentence of paragraph (a) is amended by removing the words 
``unmerchantable United States''; and
0
b. The second parenthetical phrase at the end of the section is amended 
by removing the Office of Management and Budget control number ``1512-
0492'' and adding, in its place, the number ``1513-0030''.

Subpart N--[Amended]

0
4. In subpart N, the undesignated center heading located before Sec.  
24.295 is revised to read as follows:

Return of Wine to Bond

0
5. In Sec.  24.295:
0
a. The section heading and paragraph (a) are revised;
0
b. The first sentences of paragraph (b) and paragraph (c) are amended 
by removing the word ``unmerchantable'';
0
c. Paragraph (b) is amended by removing the term ``United States'' 
where it occurs in two instances; and
0
d. The second parenthetical phrase at the end of the section is amended 
by removing the Office of Management and Budget control numbers ``1512-
0216, 1512-0298, and 1512-0492'' and adding, in their place, the 
numbers ``1513-0053, 1513-0115, and 1513-0030''.
    The revisions read as follows:


Sec.  24.295  Return of wine to bond.

    (a) General. Wine, domestic or imported, which has been taxpaid and 
removed from bonded wine premises, may be received by the proprietor of 
a bonded wine premises for return to bond. The proprietor may, when 
such taxpaid wine is returned to bond, make a claim for refund or 
credit, without interest. However, tax will not be refunded or credited 
for any wine for which a claim has been or will be made under 27 CFR 
part 70, subpart G. If the tax has been determined but not paid, the 
person liable for the tax may, when such wine is returned to bond, be 
relieved of the liability. Claims for refund or credit, or relief from 
tax paid or determined on wine returned to bond, are filed in 
accordance with Sec.  24.66.
* * * * *

0
6. In Sec.  24.312:
0
a. The section heading is revised, and the introductory text is amended 
by removing the word ``unmerchantable''; and
0
b. The second parenthetical phrase at the end of the section is amended 
by removing the Office of Management and Budget control number ``1512-
0298'' and adding, in its place, the number ``1513-0115''.
    The revision reads as follows:


Sec.  24.312  Wine returned to bond record.

* * * * *

PART 70--PROCEDURE AND ADMINISTRATION

0
7. The authority citation for part 70 continues to read as follows:

    Authority: 5 U.S.C. 301 and 552; 26 U.S.C. 4181, 4182, 5123, 
5203, 5207, 5275, 5367, 5415, 5504, 5555, 5684(a), 5741, 5761(b), 
5802, 6020, 6021, 6064, 6102, 6155, 6159, 6201, 6203, 6204, 6301, 
6303, 6311, 6313, 6314, 6321, 6323, 6325, 6326, 6331-6343, 6401-
6404, 6407, 6416, 6423, 6501-6503, 6511, 6513, 6514, 6532, 6601, 
6602, 6611, 6621, 6622, 6651, 6653, 6656-6658, 6665, 6671, 6672, 
6701, 6723, 6801, 6862, 6863, 6901, 7011, 7101, 7102, 7121, 7122, 
7207, 7209, 7214, 7304, 7401, 7403, 7406, 7423, 7424, 7425, 7426, 
7429, 7430, 7432, 7502, 7503, 7505, 7506, 7513, 7601-7606, 7608-
7610, 7622, 7623, 7653, 7805.


Sec.  70.411  [Amended]

0
8. Section 70.411 is amended by removing the word ``unmerchantable'' 
from paragraph (c)(10).

[[Page 55249]]

Sec.  70.413  [Amended]

0
9. In Sec.  70.413:
0
a. Paragraph (c)(2)(ii) is amended by removing the words ``as 
unmerchantable,'';
0
b. Paragraph (d)(2) is amended by removing the words ``unmerchantable 
domestic''; and
0
c. The first parenthetical phrase at the end of the section is amended 
by removing the Office of Management and Budget control number ``1512-
0141'' and adding, in its place, the number ``1513-0030''.


Sec.  70.414  [Amended]

0
10. Section 70.414 is amended by removing the words ``unmerchantable 
domestic'' from paragraph (d)(3).

    Signed: June 11, 2015.
John J. Manfreda,
Administrator.
    Approved: June 19, 2015.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 2015-23132 Filed 9-14-15; 8:45 am]
BILLING CODE 4810-31-P