82 FR 1108 - Changes to Certain Alcohol-Related Regulations Governing Bond Requirements and Tax Return Filing Periods
DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau Federal Register Volume 82, Issue 2 (January 4, 2017)
Alcohol and Tobacco Tax and Trade Bureau
Federal Register Volume 82, Issue 2 (January 4, 2017)
| Page Range | 1108-1137 | |
| FR Document | 2016-31417 |
[Federal Register Volume 82, Number 2 (Wednesday, January 4, 2017)] [Rules and Regulations] [Pages 1108-1137] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-31417] [[Page 1107]] Vol. 82 Wednesday, No. 2 January 4, 2017 Part V Department of the Treasury ----------------------------------------------------------------------- Alcohol and Tobacco Tax and Trade Bureau ----------------------------------------------------------------------- 27 CFR Parts 18, 19, 24, et al. Changes to Certain Alcohol-Related Regulations Governing Bond Requirements and Tax Return Filing Periods; Temporary Rule Federal Register / Vol. 82 , No. 2 / Wednesday, January 4, 2017 / Rules and Regulations [[Page 1108]] ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Alcohol and Tobacco Tax and Trade Bureau 27 CFR Parts 18, 19, 24, 25, 26, 27, 28, and 30 [Docket No. TTB-2016-0013; T.D. TTB-146; Re: Notice No. 167] RIN 1513-AC30 Changes to Certain Alcohol-Related Regulations Governing Bond Requirements and Tax Return Filing Periods AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury. ACTION: Temporary rule; Treasury decision; cross reference to notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is amending its regulations relating to alcohol excise taxes to implement certain changes made to the Internal Revenue Code of 1986 (IRC) by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). This rulemaking implements section 332 of the PATH Act, which amends the IRC to change tax return due dates and remove bond requirements for certain eligible taxpayers. Section 332 authorizes a new annual return period for taxpayers paying taxes imposed with respect to distilled spirits, wines, and beer on a deferred basis who reasonably expect to be liable for not more than $1,000 in such taxes imposed for the calendar year and who are liable for not more than $1,000 in such taxes in the preceding calendar year. Section 332 also removes bond requirements for taxpayers who are eligible to pay excise taxes on distilled spirits, wines, and beer using quarterly or annual return periods and who pay those taxes on a deferred basis. Under section 332, such taxpayers are exempt from bond requirements with respect to distilled spirits and wine only to the extent those products are for nonindustrial use. TTB is soliciting comments from all interested parties on these amendments through a notice of proposed rulemaking published elsewhere in this issue of the Federal Register. DATES: This rule is effective January 4, 2017. FOR FURTHER INFORMATION CONTACT: Ben Birkhill, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005; telephone 202-453-2265. SUPPLEMENTARY INFORMATION: Table of Contents I. The PATH Act II. TTB Authority A. Provisions Governing Tax Payment B. Provisions Governing Bonds C. Delegation of Authority III. The TTB Regulations IV. Overview of the Amendments to the Regulations V. Major Amendments Relating to Tax Returns A. Incorporation of Annual Return Filing Period B. Elimination of Non-Statutory Annual Return Period for Certain Wine Premises VI. Bond Exemption Eligibility A. Circumstances Where Section 5061(d)(4)(A) Applies to a Taxpayer B. Types of Alcohol Subject to the Exemption C. Summary of Eligibility Criteria for the Bond Exemption VII. Other Bond-Related Amendments A. Retention of Bond-Related Terms in the Regulations B. Incorporation of Cash Bond Requirements C. Brewers Holding Bonds with Flat $1,000 Penal Sums D. Qualification for the Bond Exemption by Applicants E. Qualification for the Bond Exemption by Existing Proprietors F. New Bonds for Previously Exempt Proprietors VIII. Miscellaneous and Technical Amendments A. Amendments to 27 CFR parts 18 and 30 B. Technical Amendments Relating to Surety and Collateral Bonds C. Updates to Form Numbers in 27 CFR parts 26 and 28 D. Obsolete Regulations in 27 CFR part 28 Relating to TTB Form 5110.68 IX. Public Participation X. Regulatory Analyses and Notices A. Regulatory Flexibility Act B. Executive Order 12866 C. Paperwork Reduction Act D. Inapplicability of Prior Notice and Comment and Delayed Effective Date Procedures XI. Drafting Information List of Subjects Amendments to the Regulations I. The PATH Act On December 18, 2015, the President signed into law the Consolidated Appropriations Act, 2016 (Public Law 114-113). Division Q of this Act is titled the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). Section 332 of the PATH Act amends the Internal Revenue Code of 1986 (IRC) to change tax return due dates and remove bond requirements for certain eligible taxpayers. These PATH Act amendments apply beginning January 1, 2017, to certain taxpayers who reasonably expect to be liable for not more than $50,000 in taxes imposed with respect to distilled spirits, wines, and beer for the calendar year and who were not liable for more than $50,000 in such taxes in the preceding calendar year. Section 332 of the PATH Act amends the IRC to authorize a new annual tax return period in addition to the semimonthly and quarterly tax return periods that were authorized for excise taxpayers under the IRC prior to the enactment of the PATH Act. Under the PATH Act, taxpayers must pay taxes imposed with respect to distilled spirits, wines, and beer on a deferred basis using semimonthly periods unless they meet the tax liability limits for the use of annual or quarterly deferred payment periods. As discussed further below, deferred payment of tax refers to payment using one of the three return periods prescribed under the IRC rather than payment each time the tax becomes due. To use the new annual deferred payment period, the taxpayer must reasonably expect to be liable for not more than $1,000 in excise taxes imposed with respect to distilled spirits, wines, and beer for the calendar year and must be liable for not more than $1,000 in such taxes in the preceding calendar year. To use quarterly deferred payment periods, the taxpayer must reasonably expect to be liable for not more than $50,000 in such taxes imposed for the calendar year and must be liable for not more than $50,000 in such taxes in the preceding calendar year. Section 332 also amends several provisions of the IRC to remove bond requirements for certain eligible taxpayers. To be exempt from bond requirements, taxpayers must be eligible to pay excise taxes imposed with respect to distilled spirits, wines, and beer using quarterly or annual return periods and must pay such taxes on a deferred basis. In addition, taxpayers are exempt from bond requirements with respect to distilled spirits and wine only to the extent those products are for nonindustrial use. These amendments are discussed further below. II. TTB Authority The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers provisions in chapter 51 of the IRC pertaining to the taxation of distilled spirits, wines, and beer (see title 26 of the United States Code (U.S.C.), chapter 51 (26 U.S.C. chapter 51)). Sections 5001, 5041, and 5051 of the IRC (26 U.S.C. 5001, 5041, and 5051) impose tax on distilled spirits, wines, and beer produced in or imported into the United States. Generally, such taxes are determined (i.e., become due for payment) when they are removed from qualified facilities in the United States [[Page 1109]] or imported as provided in sections 5006, 5043, and 5054 of the IRC (26 U.S.C. 5006, 5043, and 5054). In addition, section 7652 of the IRC (26 U.S.C. 7652) imposes tax upon distilled spirits, wines, and beer coming into the United States from Puerto Rico and the U.S. Virgin Islands under certain circumstances. The tax imposed on products under section 7652 is equal to the internal revenue tax imposed in the United States upon like articles of domestic manufacture. A. Provisions Governing Tax Payment Section 5061 of the IRC (26 U.S.C. 5061) governs the collection of excise tax on distilled spirits, wines, and beer. Section 5061(a) states that such taxes shall be collected on the basis of a return and gives the Secretary of the Treasury (the Secretary) the authority to prescribe regulations relating to such returns. Section 5061(d) prescribes the time periods and due dates for paying such taxes by return on a deferred basis. Section 5061(d)(1) provides that the last day for payment of such taxes shall be the 14th day after the last day of the semimonthly period during which the product is withdrawn for deferred payment of tax from certain qualified facilities in the United States. Sections 5061(d)(2) and 5061(d)(3) prescribe similar semimonthly periods and due dates for imported distilled spirits, wines, and beer and for such products brought into the United States from Puerto Rico. TTB collects excise tax paid under section 5061(d)(1) and 5061(d)(3), which govern, respectively, withdrawals of distilled spirits, wines, and beer from qualified facilities in the United States and certain shipments of distilled spirits, wines, and beer into the United States from Puerto Rico. In the latter case, section 7652(a)(2) provides authority for payment of the tax before shipment to the United States from Puerto Rico. In general, U.S. Customs and Border Protection (CBP) collects taxes paid under section 5061(d)(2) on removals of imported distilled spirits, wines, and beer. These taxes include those paid on distilled spirits, wines, and beer from foreign countries or from the U.S. Virgin Islands. Section 5061(d)(4), as amended by the PATH Act, authorizes eligible taxpayers to use annual or quarterly tax return periods instead of semimonthly periods, under certain circumstances. Section 5061(d)(4)(A)(ii) provides that, in the case of any taxpayer who reasonably expects to be liable for not more than $1,000 in excise taxes imposed for the calendar year and who was liable for not more than $1,000 in such taxes in the preceding calendar year, the last day for payment of tax is the 14th day after the last day of the calendar year. Section 5061(d)(4)(A)(i) provides that, in the case of any taxpayer who reasonably expects to be liable for not more than $50,000 in excise taxes imposed with respect to distilled spirits, wines, and beer for the calendar year and who was liable for not more than $50,000 in such taxes in the preceding calendar year, the last day for payment of tax is the 14th day after the last day of the calendar quarter. Section 5061(d)(4)(C) defines the term ``calendar quarter'' as the three-month period ending on March 31, June 30, September 30, or December 31. Taxpayers who use annual or quarterly return periods and exceed the $1,000 or $50,000 limits described in the previous paragraph must pay such taxes more frequently, as provided in section 5061(d)(4)(B). Taxpayers using quarterly periods must use semimonthly periods for any portion of the calendar year following the first date on which the aggregate amount of such tax due during such calendar year exceeds $50,000, and taxpayers using annual periods must use quarterly periods for any portion of the calendar year following the first date on which the aggregate amount of such tax due during such calendar year exceeds $1,000. Section 5061(d)(4)(B) also provides that any tax not paid on these dates is due either on the 14th day after the last day of the semimonthly period in which such date occurs (in the case of taxpayers who exceed the $50,000 limit) or on the 14th day after the last day of the calendar quarter in which such date occurs (in the case of taxpayers who exceed the $1,000 limit). Under some circumstances, the IRC authorizes the removal of distilled spirits, wines, and beer from facilities in the United States without paying the taxes imposed on such products. Examples of removals for which the IRC does not require payment of the tax include certain transfers of imported distilled spirits, wines, and beer to qualified facilities in the United States (see 26 U.S.C. 5232, 5364, and 5418), certain transfers between qualified facilities within the United States (see 26 U.S.C. 5212, 5362(b), and 5414), certain withdrawals for exportation from the United States (see 26 U.S.C. 5214(a)(4), 5362(c)(1), and 5053(a)), and certain withdrawals for use in the United States for other than alcohol beverage purposes (see 26 U.S.C. 5214(a)(1)-(3), 5364(d), and 5053(b)). In the last case, some IRC provisions refer to these nonbeverage purposes as the ``industrial use'' of alcohol (see, e.g., subchapter D of chapter 51 of the IRC, ``Industrial Use of Distilled Spirits''). The provisions of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. chapter 8, which TTB also administers, do not apply to distilled spirits and wine for industrial use (see 27 U.S.C. 211(a)(5) and (6), which define these types of alcohol as distilled spirits and wine for ``nonindustrial use''). The industrial and nonindustrial uses of distilled spirits and wine are discussed further below. B. Provisions Governing Bonds The IRC also contains provisions requiring certain persons who are liable for taxes imposed with respect to distilled spirits, wines, and beer to furnish bonds, which are formal guarantees to pay tax obligations under the IRC (see, e.g., 26 U.S.C. 5173, 5354, and 5401(b)). Subject to the exceptions discussed below, section 5551(a) of the IRC (26 U.S.C. 5551(a)) requires approval of such bonds for certain businesses as a condition of commencing operations. Generally, the producer or the importer of the distilled spirits, wines, and beer is liable for taxes imposed until that person either pays the tax or takes some other action for which the IRC relieves the person of the liability. In the latter case, the IRC may relieve persons from liability based on the transfer or withdrawal of the distilled spirits, wines, and beer under certain circumstances described in the preceding paragraph, such as withdrawal and exportation (see 26 U.S.C. 5005, 5043, 5054, and 5056). Bonds therefore protect the revenue by covering the excise tax liability associated with the distilled spirits, wines, and beer until that liability is relieved under the IRC. Section 332 of the PATH Act amends several provisions of the IRC to remove bond requirements for certain eligible taxpayers. The new bond exemption is set forth in new subsection (d) of section 5551 of the IRC. The taxpayer's eligibility for the bond exemption is based on whether section 5061(d)(4)(A) applies to the taxpayer. Section 5061(d)(4)(A) authorizes the use of quarterly and annual return periods for payment of excise taxes imposed with respect to distilled spirits, wines, and beer where the tax liability does not exceed the $1,000 and $50,000 limits discussed above. However, the bond exemption is limited to bonds ``covering operations or withdrawals of distilled spirits or wines for nonindustrial use or of beer.'' Specifically, section 5551(d)(1) provides that ``[d]uring any period to which subparagraph (A) of section 5061(d)(4) applies to a taxpayer (determined after application of [[Page 1110]] subparagraph (B) thereof), such taxpayer shall not be required to furnish any bond covering operations or withdrawals of distilled spirits or wines for nonindustrial use or of beer.'' In addition, section 5551(d)(2) provides that ``any taxpayer for any period described in [section 5551(d)(1)] shall be treated as if sufficient bond has been furnished for purposes of covering operations and withdrawals of distilled spirits or wines for nonindustrial use or of beer for purposes of any requirements relating to bonds under this chapter.'' Finally, section 332 of the PATH Act also amends other provisions of the IRC to reference the bond exemption in section 5551(d). These provisions are sections 5173, 5351, and 5401 of the IRC. C. Delegation of Authority TTB administers the provisions of the IRC and FAA Act discussed above, and their implementing regulations, 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 (superseding Treasury Department Order 120-01, dated January 24, 2003), to the TTB Administrator to perform the functions and duties in administration and enforcement of these laws. III. The TTB Regulations The TTB regulations implementing the IRC provisions discussed above relating to tax payment and bonds are in chapter I of title 27 of the Code of Federal Regulations (27 CFR). These regulations include provisions governing certain distilled spirits, wine, and beer facilities in the United States (27 CFR parts 19, 24, and 25), the shipment of distilled spirits, wines, and beer from Puerto Rico and the U.S. Virgin Islands to the United States (27 CFR part 26), the importation of distilled spirits, wines, and beer from foreign countries into the United States (27 CFR part 27), and the exportation of distilled spirits, wines, and beer from the United States (27 CFR part 28). The regulations in 27 CFR parts 19, 24, and 25 govern, respectively, the operations of distilled spirits plants (DSPs), certain wine premises, and breweries in the United States. Under 27 CFR part 24, bonded wine cellars (including bonded wineries) are wine premises that are authorized to engage in operations involving non- taxpaid wine. Proprietors of facilities subject to the regulations in 27 CFR parts 19, 24, and 25 must receive approval from TTB to operate (see 27 CFR 19.72, 24.105, and 25.61). Such operations may include production, receipt, and removal of distilled spirits, wines, and beer. When the proprietor of the facility removes distilled spirits, wines, or beer on which tax has been imposed but not paid, the proprietor must pay the tax unless the IRC authorizes the removal without paying the tax, as discussed above. If the tax must be paid for the removal, the proprietor of the facility must file an Excise Tax Return, TTB Form 5000.24, for prepayment or deferred payment of tax (see 27 CFR 19.229, 24.271, 24.275, 25.164, and 25.175). The term ``prepayment'' means that the proprietor pays the tax before the removal of the distilled spirits, wines, or beer from the facility. The term ``deferred payment'' means that the proprietor uses one of the return periods prescribed under section 5061(d) of the IRC to pay tax due for removals that occur during that period. Section 24.273 of the TTB regulations (27 CFR 24.273) also authorizes a bonded wine cellar to file an excise tax return annually if the proprietor paid wine excise taxes in an amount less than $1,000 during the previous calendar year or if the proprietor of a newly established premises expects to pay less than $1,000 in wine excise taxes before the end of the calendar year. As discussed further below, this annual return period was authorized under the regulations prior to the enactment of the PATH Act and is not considered to be a deferred payment period for purposes of section 5061(d). The TTB regulations in parts 19, 24, and 25 also prescribe requirements for bonds that DSPs, certain wine premises, and breweries must furnish to TTB. Bonds must be guaranteed by an approved corporate surety or by deposit of collateral, such as certain acceptable securities, with TTB (see, e.g., 27 CFR 19.153 and 19.154). The regulations also include requirements relating to the ``penal sums'' of these bonds. The term ``penal sum'' refers to the amount of money guaranteed to be paid under the bond for tax obligations imposed by the IRC if the proprietor does not satisfy those obligations, such as the payment of tax due. The penal sum of a bond is generally based on the proprietor's liability for excise taxes imposed but not paid (see 27 CFR 19.166, 24.148, and 25.93). In some cases involving distilled spirits and wine, the regulations require proprietors to furnish bonds that specifically cover the taxes on products removed for deferred payment of tax until the time the proprietor pays the tax (see 27 CFR 19.164 and 24.146(b)). The TTB regulations in 27 CFR part 26 pertain to shipment of distilled spirits, wines, and beer (as well as certain products manufactured using distilled spirits, wines, and beer) to the United States from Puerto Rico and the U.S. Virgin Islands. Generally, manufacturers of these products in Puerto Rico and the U.S. Virgin Islands are not required to receive approval from TTB to operate. However, if manufacturers in Puerto Rico ship the products to the United States, they must pay tax to TTB unless a specific provision authorizes the shipment without paying the tax (see discussion in the next paragraph for examples of such shipments). The regulations in 27 CFR part 26, subpart E, govern the payment of excise tax on products manufactured in Puerto Rico and shipped to the United States, and they contain bond requirements for persons who pay tax on a deferred basis using one of the tax periods prescribed under section 5061(d) the IRC. But because CBP (rather than TTB) collects taxes on products shipped to the United States from the U.S. Virgin Islands, the TTB regulations do not include provisions governing the payment of tax on products subject to 27 CFR part 26. The regulations in 27 CFR part 26 also include provisions governing the shipment to the United States of certain distilled spirits for industrial use, as well as certain products for industrial use made using distilled spirits. Persons in Puerto Rico and the U.S. Virgin Islands who manufacture these products may ship the products to the United States without incurring tax liability under the circumstances described in 27 CFR 26.36 and 26.201. Statutory authority relating to these types of tax-exempt shipments is set forth in section 5314 of the IRC (26 U.S.C. 5314). Under Sec. 26.36(b) and (c), distillers in Puerto Rico who ship tax-exempt distilled spirits to the United States under this authority are subject to the requirements in 27 CFR part 19 governing DSPs, including requirements relating to receiving approval to operate and furnishing bonds. Distillers in the U.S. Virgin Islands who ship tax-exempt distilled spirits under Sec. 26.201(b) and (c) are not subject to 27 CFR part 19 (and thus do not furnish bonds to TTB under 27 CFR part 19 covering such shipments), but these distillers must qualify under regulations issued by the Governor of the U.S. Virgin Islands as provided in Sec. 26.201(b) and (c). The TTB regulations in 27 CFR part 27 relate to the importation of distilled spirits, wines, and beer into the United States from foreign countries. Persons who pay taxes to CBP on such imported [[Page 1111]] products under section 5061(d)(2) are not required to furnish bonds to TTB. However, qualified facilities in the United States that receive transfers of the products without payment of tax from customs custody must furnish bonds to TTB as provided in 27 CFR parts 19, 24, and 25 (see 27 CFR part 27, subpart L; see also ATF Procedures 98-2 and 98-3 issued by the Bureau of Alcohol, Tobacco and Firearms, TTB's predecessor agency). The TTB regulations in 27 CFR part 28 govern the exportation of distilled spirits, wines, and beer from the United States, including the exportation of taxpaid and non-taxpaid distilled spirits, wines, and beer. As prescribed in 27 CFR part 28, subparts I, K, and L, distilled spirits, wines, and beer on which taxes have been paid may be exported with benefit of drawback (see also 26 U.S.C. 5055 and 5062). Exportation with benefit of drawback refers to a procedure under which a person may file a claim for a payment from TTB equal to the taxes paid on the product based on the exportation of the product in accordance with the IRC provisions and the TTB regulations cited in this paragraph. Non-taxpaid distilled spirits, wines, and beer may also be removed for export from DSPs, bonded wine cellars (including bonded wineries), and breweries subject to certain requirements specified in 27 CFR part 28. When the DSP, bonded wine cellar, or brewer acts as the exporter of the product for purposes of the TTB regulations, the bonds required under 27 CFR parts 19, 24, and 25, respectively, cover the tax liability associated with the alcohol (see 27 CFR 28.58-28.60, 28.92, 28.122, 28.142, and 28.152). Alternatively, a person other than a DSP or bonded wine cellar may act as the exporter of the product in some circumstances if the person furnishes a bond as provided in 27 CFR 28.61-28.64 (the regulations do not authorize persons other than brewers to act as exporters of non-taxpaid beer). In any case where non-taxpaid products are removed for export, the person acting as the exporter for purposes of the TTB regulations must also complete a TTB form documenting the exportation (TTB Form 5100.11 in the case of distilled spirits and wine, and TTB Form 5130.12 in the case of beer). IV. Overview of the Amendments to the Regulations This document amends the TTB regulations in 27 CFR parts 19, 24, 25, 26, 27, and 28 to implement the statutory provisions of section 332 of the PATH Act. In addition, this rulemaking makes minor amendments to certain bond-related regulations in 27 CFR parts 18 and 30 relating to these statutory changes. This document also includes several technical amendments to update certain bond-related regulations. These amendments are discussed further below. V. Major Amendments Relating to Tax Returns A. Incorporation of Annual Return Filing Period TTB is amending the regulations in 27 CFR parts 19, 24, 25, and 26 to incorporate the new annual tax return period provisions in section 5061(d)(4)(A)(ii) of the IRC, which provides that the last day for deferred payment of tax is the 14th day after the last day of the calendar year in the case of any taxpayer who reasonably expects to be liable for not more than $1,000 in excise taxes imposed on distilled spirits, wines, and beer for the calendar year and who was liable for not more than $1,000 in such taxes the preceding calendar year. TTB is also amending the regulations to reflect new section 5061(d)(4)(B)(ii), which provides that the annual tax return period provision does not apply to taxpayers for any portion of the calendar year following the first date on which the aggregate amount of excise tax due during such calendar year exceeds $1,000. As discussed above, the annual tax return period provision provides an exception to the general rule in section 5061(d) that requires deferred payment of such taxes using semimonthly periods. The specific regulations amended to reflect this new period are 27 CFR 19.235, 19.236, 24.271, 25.164, and 26.112. TTB is not amending any regulations in 27 CFR parts 27 and 28 to reflect this statutory change because these regulations do not contain provisions governing the deferred payment of taxes to TTB. In general, the amendments incorporating the new annual return period are modeled on existing provisions in Sec. Sec. 19.235, 19.236, 24.271, 25.164, and 26.112 governing quarterly return periods, which are used by taxpayers who reasonably expect to be liable for not more than $50,000 in taxes imposed on distilled spirits, wines, and beer for the calendar year and who were liable for not more than $50,000 in the preceding calendar year. The statutory authority for quarterly return periods in section 5061(d)(4)(A) of the IRC (now designated as section 5061(d)(4)(A)(i) under the PATH Act amendments) was originally enacted in 2005 as part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, Public Law 109-59, 119 Stat. 1144. In the 2006 temporary rule published in the Federal Register that originally implemented the quarterly return period procedure (T.D. TTB-41, 71 FR 5598 (2006)), TTB interpreted the statutory language in section 5061(d)(4)(A) as providing that the quarterly return period procedure was optional rather than mandatory, meaning that a taxpayer could choose to defer payment of excise tax using semimonthly return periods even if the taxpayer met the criteria for using quarterly periods. TTB noted that it was adopting this interpretation to provide flexibility for taxpayers, and TTB cited legislative history to show that the interpretation was a permissible construction of the statute. TTB subsequently finalized the regulations reflecting this interpretation (see T.D. TTB-94, 76 FR 52862 (2011)). Because the language in section 5061(d)(4)(A)(ii) providing for the annual return period procedure is identical in relevant respects to the language in 5061(d)(4)(A)(i) relating to quarterly returns, TTB interprets this language as also providing for the optional, rather than mandatory, use of annual return periods by taxpayers who meet the relevant criteria. TTB believes that adopting this interpretation will provide flexibility for taxpayers who are eligible to use annual return periods but who wish to pay taxes more frequently. This interpretation is reflected in the amendments to Sec. Sec. 19.235, 19.236, 24.271, 25.164, and 26.112, which provide that eligible taxpayers ``may choose to use an annual return period'' [emphasis added]. B. Elimination of Non-Statutory Annual Return Period for Certain Wine Premises Under current 27 CFR 24.273, a wine premises proprietor is authorized to file an excise tax return annually if the proprietor paid wine excise taxes in an amount less than $1,000 during the previous calendar year or if the proprietor of a newly established premises expects to pay less than $1,000 in wine excise taxes before the end of the calendar year. An eligible proprietor must file such returns within 30 days after the end of the calendar year. Historically, the regulations had authorized a proprietor to allocate up to $1,000 of the penal sum of the proprietor's wine bond to cover taxes on wine removed but not yet paid (see 27 CFR 24.146(a)). Because such removals up to $1,000 were not required to be covered by a tax deferral bond under Sec. 24.146(b), TTB previously took the position that the proprietor did not have [[Page 1112]] to pay taxes associated with the removals using one of the deferred payment periods (semimonthly or quarterly) authorized under section 5061(d) (see T.D. TTB-41, 71 FR 5598, 5599 (02/06/2006)). Since the PATH Act established a new annual tax return period for proprietors who are liable for not more than $1,000 in excise taxes annually and eliminated the requirement to hold a tax deferral bond (see bond-related discussion below), TTB has determined that it is no longer necessary to retain the annual return filing provisions found in Sec. 24.273. Accordingly, TTB is amending the regulations to remove Sec. 24.273. Proprietors who previously filed tax returns annually under this section may instead file tax returns annually when authorized under Sec. 24.271(b)(1)(ii). Because the PATH Act provisions do not become effective until January 1, 2017, TTB is amending Sec. 24.271(b)(2) to clarify that a proprietor filing an annual return covering the 2016 calendar year must file the return not later than January 30, 2017, which would have been the due date under now-removed Sec. 24.273. TTB is also amending Sec. Sec. 24.271 and 24.323 to eliminate references to Sec. 24.273, and TTB is amending Sec. 24.300 to remove the reference to Sec. 24.273 and replace it with a reference to the annual filing provision in Sec. 24.271(b)(1)(ii). VI. Bond Exemption Eligibility TTB is amending the regulations in 27 CFR parts 19, 24, 25, 26, and 28 to implement new section 5551(d)(1) of the IRC, which provides that a taxpayer is not required to obtain certain bonds ``during any period to which [section 5061(d)(4)(A)] applies to a taxpayer (determined after application of [section 5061(d)(4)(B)] thereof)[.]'' Section 5061(d)(4)(A) contains the quarterly and annual return filing provisions for taxpayers who are liable for not more than $50,000 per year in taxes imposed on distilled spirits, wines, and beer. The bond regulations amended in this temporary rule are 27 CFR 19.151, 24.146, 25.91, 25.274, 26.66-26.68, 28.58, and 28.60-28.64. TTB is not amending the regulations in 27 CFR part 27 in this respect because those regulations do not impose bond requirements. A. Circumstances Where Section 5061(d)(4)(A) Applies to a Taxpayer As discussed above, taxpayers may voluntarily choose to use semimonthly return periods for deferred payment of tax on distilled spirits, wines, and beer even if they meet the criteria in section 5061(d)(4)(A) to pay taxes using quarterly or annual tax returns. These criteria are that the taxpayer must reasonably expect to be liable for not more than $1,000 in taxes (in the case of annual returns) or $50,000 in taxes (in the case of quarterly returns) for the calendar year and must have been liable for not more than these respective quantities in the preceding calendar year. Section 7701(a)(14) of the IRC (26 U.S.C. 7701(a)(14)) defines the term ``taxpayer'' as ``any person subject to an internal revenue tax.'' The term therefore includes persons who are liable for excise taxes imposed but not necessarily due for payment, as well as persons who are liable for payment of the tax. For purposes of the tax return filing provisions, the TTB regulations define the term ``taxpayer'' as an individual, corporation, partnership, or other entity that is assigned a single Employer Identification Number as defined in 26 CFR 301.7701-12 (see Sec. Sec. 19.235(d), 24.271(b), 25.164(c), and 26.112(b)). Since section 5061(d)(4)(A) does not mandate that taxpayers who defer payment of excise tax must use quarterly or annual return periods if they meet the criteria to use them, section 5061(d)(4)(A) applies to those taxpayers even if they choose to use semimonthly return periods instead. Accordingly, TTB does not interpret section 5551(d)(1) as requiring that taxpayers deferring payment of tax must use quarterly or annual return periods in order to be exempt from bond requirements under that provision. Even if they choose to use semimonthly periods, the taxpayers qualify for the bond exemption if they meet the criteria to pay taxes quarterly or annually under section 5061(d)(4)(A) and if they otherwise meet the bond exemption requirements in section 5551(d) as discussed further below. This interpretation is reflected in the amended regulations, which include the requirement that the taxpayer be ``eligible to use an annual or quarterly return period'' to qualify for the bond exemption [emphasis added]. In addition, because section 5061(d)(4)(A) does not apply to taxpayers who pay no taxes on distilled spirits, wines, or beer on a deferred basis, TTB interprets the phrase ``applies to a taxpayer'' in section 5551(d)(1) as requiring a taxpayer to pay some tax on a deferred basis to be exempt from bond requirements. If a taxpayer prepays tax but never defers payment of tax, or if a taxpayer never removes distilled spirits, wines, or beer on which taxes must be paid, the taxpayer is not exempt from bond requirements under section 5551(d). This interpretation is also reflected in the regulations discussed above, which provide that the bond exemption only applies to a taxpayer who ``pays tax on a deferred basis[.]'' However, TTB also recognizes that taxpayers may not necessarily owe taxes during every deferred payment period that they choose to use. Therefore, the regulatory amendments also provide that a taxpayer is considered to be paying tax on a deferred basis for this purpose even if the taxpayer does not pay during every return period as long as the taxpayer intends to pay tax on a deferred basis in a future period. TTB also notes that section 5551(d)(1) ties a taxpayer's eligibility for the bond exemption to the taxpayer's liability for payment of taxes due rather than the taxpayer's liability for taxes imposed but not necessarily due. Under section 5551(d)(1), a taxpayer is eligible for the exemption only after application of section 5061(d)(4)(B), which governs when the quarterly and annual return provisions in section 5061(d)(4)(A) no longer apply to a taxpayer. Section 5061(d)(4)(B) provides that the provisions do not apply to taxpayers ``for any portion of the calendar year following the first date on which the aggregate amount of tax due'' on distilled spirits, wines, and beer during such calendar year exceeds $50,000, in the case of quarterly returns, or $1,000, in the case of annual returns. Because the bond exemption is premised on the quantity of such taxes due for payment (rather than on the taxes imposed but not necessarily due), a taxpayer who otherwise meets the bond exemption requirements in section 5551(d)(1) is not ineligible for the exemption solely based on the fact that the taxpayer's liability for taxes imposed but not due exceeds $50,000 annually. As discussed above, taxpayers may be liable for taxes imposed on distilled spirits, wines, and beer based on producing the products in the United States, importing the products into the United States from foreign countries, bringing the products into the United States from Puerto Rico and the U.S. Virgin Islands, or receiving certain transfers of non-taxpaid products. These taxpayers are liable for taxes imposed until they either pay the taxes due or take some other action for which the IRC relieves the taxpayer of the liability. B. Types of Alcohol Subject to the Exemption During any period described above for which 5061(d)(4)(A) applies to a taxpayer, section 5551(d)(1) provides that such taxpayer ``shall not be required to furnish any bond covering [[Page 1113]] operations or withdrawals of distilled spirits or wines for nonindustrial use or of beer.'' As described above, the IRC references the industrial use of certain types of alcohol. In addition, the FAA Act applies to distilled spirits and wine for nonindustrial use but does not apply to distilled spirits and wine for industrial use. The TTB regulations in 27 CFR part 1, subpart D define the nonindustrial and industrial uses of these two types of alcohol for purposes of the FAA Act. Under the regulations, the term ``nonindustrial use'' includes, but is not limited to, all uses of distilled spirits and wine for alcohol beverage purposes (see 27 CFR 1.70 and 1.71). Under Sec. 1.70, the term ``industrial use'' includes only those uses specifically enumerated as such in the regulations. These industrial uses include the use of distilled spirits free of tax under the IRC for certain nonbeverage purposes, the use of wine without payment of tax for the production of vinegar, and the use of distilled spirits and wine for experimental purposes and in the manufacture of specified products that are unfit for beverage purposes (see 27 CFR 1.60-1.62). TTB interprets the term ``nonindustrial use'' in section 5551(d)(1) as being synonymous with the same term in the FAA Act and the TTB regulations in 27 CFR part 1, subpart D. Therefore, a person is eligible for the bond exemption in section 5551(d)(1) with respect to distilled spirits and wine only to the extent the distilled spirits and wine are for nonindustrial use within the meaning of the FAA Act and these TTB regulations. The amendments to the bond regulations described above incorporate this interpretation by defining the terms ``nonindustrial use'' and ``industrial use'' with reference to the provisions in 27 CFR part 1, subpart D. TTB also recognizes that some proprietors engage in operations and withdrawals of distilled spirits and wine both for nonindustrial and industrial use. Because such proprietors must obtain bonds to cover such alcohol for industrial use as otherwise provided in the IRC, even if they are exempt from bond requirements under section 5551(d) with respect to distilled spirits and wine for nonindustrial use, the regulatory amendments prescribe rules for proprietors to determine the relevant use of these types of alcohol for this purpose. In the case of proprietors of DSPs and bonded wine cellars (including bonded wineries) who conduct both types of operations, the amendments in Sec. Sec. 19.151(d) and 24.146(d) provide that the alcohol is considered to be for industrial use unless the proprietor designates the alcohol as solely for nonindustrial use at a specified time after production of the alcohol or upon receiving the alcohol. TTB has not incorporated a similar rule in the regulations in 27 CFR parts 26 and 28 that impose bond requirements because those bonds apply to distilled spirits and wine shipped to the United States or removed for exportation, rather than to distilled spirits and wine produced or received at the premises. Therefore, the determination pertaining to industrial use, under 27 CFR parts 26 and 28, is made when the alcohol is shipped or removed. C. Summary of Eligibility Criteria for the Bond Exemption This section summarizes the discussion above regarding which taxpayers are eligible for the bond exemption under section 5551(d)(1) of the IRC. Taxpayers must meet the following requirements to be eligible for the bond exemption:Taxpayers must be eligible to pay taxes quarterly or annually under section 5061(d)(4)(A) of the IRC. A taxpayer is eligible to pay taxes quarterly or annually under this provision if the taxpayer reasonably expects to be liable for not more than $50,000 in excise taxes imposed with respect to distilled spirits, wines, and beer for the calendar year and was liable for not more than $50,000 in such taxes in the preceding calendar year. A taxpayer is eligible for the bond exemption if the taxpayer chooses to pay taxes using semimonthly return periods as long as the taxpayer is eligible to use quarterly or annual return periods and otherwise meets the criteria for the exemption. For purposes of this requirement, the taxpayer's liability is determined based on taxes due as a result of removals or shipments for which the IRC requires payment of the tax, rather than on taxes imposed but not necessarily due for payment. Taxpayers must pay tax on distilled spirits, wines, or beer on a deferred basis. A taxpayer who never pays tax on a deferred basis is not exempt from bond requirements. This category of taxpayers who are ineligible for the exemption includes taxpayers who solely prepay taxes or who never remove distilled spirits, wines, or beer on which taxes must be paid. Taxpayers are exempt from bond requirements with respect to distilled spirits and wine only to the extent those products are for nonindustrial use. The nonindustrial uses of distilled spirits and wine are defined in 27 CFR part 1, subpart D. The term ``nonindustrial use'' includes, but is not limited to, all uses of distilled spirits and wine for alcohol beverage purposes. VII. Other Bond-Related Amendments A. Retention of Bond-Related Terms in the Regulations Section 5551(d)(2) of the IRC, as amended by the PATH Act, provides that taxpayers exempt from bond requirements under section 5551(d)(1) ``shall be treated as if sufficient bond has been furnished for purposes of covering operations and withdrawals of distilled spirits or wines for nonindustrial use or of beer for purposes of any requirements relating to bonds under [chapter 51 of the IRC].'' The PATH Act amendments did not eliminate bond-related terms in chapter 51 of the IRC. Accordingly, TTB is not removing bond-related terms from the regulations. Instead, this temporary rule amends existing definitions of these terms or adds new definitions of them to provide that the terms apply to taxpayers even if they are exempt from bond requirements under section 5551(d)(1). First, TTB is amending definitions that identify certain premises as ``bonded'' so that the definitions include taxpayers who are exempt from bond requirements under section 5551(d)(1). These terms include the ``bonded premises'' of a distilled spirits plant, ``bonded winery,'' ``bonded wine cellar,'' and ``bonded wine warehouse.'' Therefore, these premises will still be described as ``bonded'' under the regulations even if the proprietor is not required to obtain a bond. The amended definitions are in 27 CFR 19.1, 24.10, 25.11, 26.11, 27.11, and 28.11. Second, TTB is amending or adding bond-related definitions in the regulatory sections cited above that pertain to removals and receipts of distilled spirits, wines, and beer from certain premises subject to TTB regulation. These terms include transfers of products ``in bond,'' removals of products ``from bond,'' and returns of products ``to bond.'' As discussed above, the IRC requires certain persons who are liable for tax to provide bonds, which cover the tax liability associated with the products until that liability is relieved under the IRC. Prior to the PATH Act amendments, these types of regulatory terms described transactions where a bond covered the tax liability associated with the distilled spirits, wines, or beer removed or received. For example, transfers in bond are transfers of non-taxpaid products between certain premises (see, e.g., 27 CFR 19.402 and 24.280); removals from bond are [[Page 1114]] removals of previously non-taxpaid products from certain premises, including withdrawals on determination of tax (see, e.g., Sec. Sec. 19.229, 24.271, and 25.164); and returns to bond include receipts of previously taxpaid products on certain premises for which the IRC authorizes the proprietor of the premises to file a claim for credit or refund of the tax (see, e.g., 27 CFR 19.452). Under the amended definitions, these terms describe removals and receipts for which the proprietor is liable for the tax, even if the proprietor is not required to obtain a bond under section 5551(d)(1). B. Incorporation of Cash Bond Requirements The current bond regulations in 27 CFR parts 19, 24, 25, 26, and 28 provide that bonds must be guaranteed by an approved corporate surety or by deposit of collateral, such as certain acceptable securities, with TTB. Historically, TTB has also authorized proprietors to submit ``cash bonds,'' which are bonds guaranteed by the deposit of cash or its equivalent as collateral. For this purpose, cash equivalents include money orders, cashier's checks, or personal checks. TTB policy has been that the cash (or its equivalent) deposited must be no less than the penal sums of the required bonds. The current regulation at 27 CFR 24.151 includes cash bond provisions applicable to certain wine premises, but other TTB regulations do not include such provisions. TTB believes it is appropriate to incorporate its existing cash bond policy into the regulations in 27 CFR parts 19, 25, 26, and 28. Accordingly, TTB is amending Sec. Sec. 19.154, 25.98, 26.63, 26.74, 28.53, and 28.74 to reflect this policy. Consistent with the provisions in the current regulations governing collateral bonds guaranteed by the deposit of certain acceptable securities (which are also in Sec. Sec. 19.154, 25.98, 26.63, 26.74, 28.53, and 28.74), the cash bond provisions provide that bonds may be released once liability under the bond is terminated. C. Brewers Holding Bonds With Flat $1,000 Penal Sums In 2012, TTB published a temporary rule in the Federal Register that authorized a flat penal sum of $1,000 for bonds held by certain brewers who reasonably expected to be liable for not more than $50,000 in excise taxes for the calendar year and who were liable for not more than $50,000 in such taxes for the preceding calendar year (T.D. TTB- 109, 77 FR 72939 (12/07/2012)). Prior to the effective date of that temporary rule, the penal sums of bonds held by these brewers were based on a percentage of the brewer's expected maximum tax liability for the year, and the bond penal sums for a brewer were generally higher if the brewer paid taxes using quarterly return periods rather than semimonthly return periods. Because TTB concluded that authorizing a flat penal sum of $1,000 for these brewers did not pose a risk to the revenue, the temporary rule authorized this flat penal sum under Sec. 25.93 if the brewers paid taxes using quarterly return periods in order to reduce their tax return filing burdens. In the same issue of the Federal Register, TTB published a notice of proposed rulemaking that included a proposed amendment to Sec. 25.164 that incorporated the quarterly filing requirement for brewers holding bonds with flat $1,000 penal sums (Notice No. 131, 77 FR 72999 (2012)). TTB published a final rule in 2014 that adopted the flat $1,000 penal sum provision in Sec. 25.93 as a permanent regulatory change and that finalized the amendment to Sec. 25.164 that TTB proposed in the 2012 notice of proposed rulemaking. Section 5551(d)(1) of the IRC, as amended by the PATH Act, eliminates bond requirements for brewers who reasonably expect to be liable for not more than $50,000 in excise taxes for the calendar year and who were liable for not more than $50,000 in such taxes for the preceding calendar year. Therefore, brewers who were eligible to hold bonds with flat $1,000 penal sums under the rulemakings described in the previous paragraph are now eligible for the bond exemption under section 5551(d)(1). Accordingly, TTB is amending Sec. Sec. 25.93 and 25.164 to incorporate language relating to a brewer's eligibility for this bond exemption and to provide that such eligible brewers may choose to pay taxes using quarterly or annual return periods if they meet the criteria to use those periods. Since it is no longer necessary for such brewers to obtain a bond with a flat $1,000 penal sum because those brewers can instead qualify for the bond exemption, such brewers may choose to pay taxes quarterly or annually without having to obtain a bond with a higher penal sum. D. Qualification for the Bond Exemption by Applicants TTB is amending the regulations in 27 CFR parts 19, 24, and 25 to require that persons who apply to qualify as DSPs, bonded wine cellars (including bonded wineries), and breweries must state in their applications whether they are exempt from bond requirements under section 5551(d). TTB is not amending the regulations in 27 CFR parts 26, 27, and 28 in this respect because those regulations do not require persons to furnish bonds in order merely to qualify to operate with TTB. For example, although certain exporters who must provide bonds as provided in Sec. Sec. 28.61-28.64 may be required to obtain a basic permit as a wholesaler under the FAA Act and the TTB regulations (see 27 U.S.C. 203(c) and 27 CFR part 1), such exporters are not required to furnish a bond when they apply for this type of permit. TTB is amending 27 CFR 19.73, 24.109, and 25.62 to require a statement in each type of application whether or not the applicant is required to provide a bond. As discussed above, eligibility for the bond exemption is determined under amended Sec. Sec. 19.151, 24.146, and 25.91. TTB is also modifying the relevant application forms to include a new section where applicants specify whether they are eligible for the exemption. These forms are TTB Form 5110.41 (Registration of Distilled Spirits Plant), TTB Form 5120.25 (Application to Establish and Operate Wine Premises), and TTB Form 5130.10 (Brewer's Notice). Applicants may complete these forms using TTB's Permits Online system, which is TTB's electronic permit application system available at ttb.gov. The new sections in these forms spell out the criteria for eligibility for the bond exemption as provided in Sec. Sec. 19.151, 24.146, and 25.91. E. Qualification for the Bond Exemption by Existing Proprietors There are two circumstances where an existing proprietor who holds a bond required under 27 CFR parts 19, 24, and 25 may subsequently become exempt from those bond requirements under section 5551(d)(1) of the IRC. First, since the bond exemption does not apply until January 1, 2017 (see section 332(c) of the PATH Act), such proprietors who receive TTB approval to operate prior to that date will hold a bond even if the bond exemption provision applies to them starting on that date. Second, proprietors who receive TTB approval to operate no earlier than January 1, 2017 must hold a bond if they are ineligible for the bond exemption. For example, if a proprietor receives approval to operate in 2017 and reasonably expects to be liable for more than $50,000 in excise taxes for that year, the proprietor must furnish a bond. However, that proprietor may become exempt from bond requirements in the future if the proprietor meets the [[Page 1115]] requirements for the exemption under section 5551(d)(1). This may occur if the proprietor, in addition to meeting any other applicable requirements under section 5551(d)(1) (see ``Bond Exemption Eligibility'' section above), reasonably expects to be liable for not more than $50,000 in excise taxes for a calendar year and is liable for not more than $50,000 in the preceding calendar year. TTB is amending the regulations to provide procedures for such proprietors to terminate their bonds when they become exempt from these requirements. This temporary rule adds new regulations at 27 CFR 19.136, 24.132, and 25.79 to provide that, in order to terminate their bonds, proprietors must file amendments to their TTB approvals to operate using the application forms described above (TTB Forms 5110.41, 5120.25, and 5130.10). Under the current regulations, these forms are used both for filing original applications and for filing amendments. Proprietors who apply to terminate their bonds using this process will complete the same new sections of the forms that applicants use to select whether they are eligible for the exemption when they originally seek TTB approval to operate. TTB is also amending the existing bond termination regulation at 27 CFR 19.170, and adding new regulations at 24.160 and 25.106, to provide that proprietors may apply to terminate their bonds when they become exempt under these circumstances. F. New Bonds for Previously Exempt Proprietors TTB is also amending the regulations to provide new procedures for certain proprietors to furnish bonds if they were previously bond- exempt but later become required to furnish a bond. New Sec. Sec. 19.136, 24.132, and 25.79 (which were first discussed in the previous section) provide that existing proprietors must file amendments to their TTB approvals to operate using the aforementioned application forms if they become required to furnish a bond after having been exempt from such requirements. These procedures apply to proprietors of DSPs, bonded wine cellars (including bonded wineries), and breweries, all of whom must provide a bond to operate unless they are exempt under section 5551(d)(1). If any such proprietor is required to furnish a bond because the proprietor becomes liable for more than $50,000 in taxes with respect to distilled spirits, wines, and beer in a calendar year, the proprietor must obtain a bond to continue operating. Under the IRC, the proprietor must furnish the bond following the first date on which the aggregate amount of excise tax due during the calendar year exceeds $50,000, which is the date identified in section 5061(d)(4)(B) on which the proprietor must begin using semimonthly return periods to defer payment of tax. As discussed above, the bond exemption is linked to this requirement to use semimonthly periods for deferred payment of tax. In these circumstances, TTB believes it is appropriate to provide a grace period for ``operations'' bonds during which the previously bond- exempt proprietor may continue to operate until TTB takes action on the bond application. Under amended 27 CFR 19.168, 24.154, and 25.95, such proprietors will be treated as having furnished the required bond to operate if the proprietor submits the bond application to TTB no later than 30 days following the first date on which the aggregate amount of excise tax due from the proprietor during the relevant calendar year exceeds $50,000. If the proprietor submits the application for the bond no later than 30 days following the first date on which the aggregate amount of excise tax due from the proprietor during the relevant calendar year exceeds $50,000, the proprietor will be treated as having furnished the required bond until TTB approves or disapproves it. The grace period authorized in these regulations does not apply to ``withdrawal'' bonds required under 27 CFR parts 19, 24, and 25 that cover removals of distilled spirits, wines, or beer for deferred payment of tax. If a proprietor becomes required to furnish a bond covering such removals after having been exempt from such requirements, the proprietor may remove products on prepayment (rather than on deferred payment) of tax during the time TTB considers the bond application (see Sec. Sec. 19.229(b), 24.275, and 25.175). Because bonds covering tax-deferred removals are not required for such proprietors to continue operations while TTB considers the bond application, TTB believes that it is not necessary to provide a grace period under these circumstances. In the case of a proprietor of a bonded wine cellar using the grace period under Sec. 24.154, the proprietor may remove wine on which the tax has been determined, but not paid, to the extent that the proprietor's liability for tax on those removals does not exceed $1,000. As discussed above, TTB has historically authorized proprietors to allocate up to $1,000 of the penal sum of the proprietor's wine bond to cover taxes on wine removed but not yet paid. Since the regulations have not previously required such proprietors to pay taxes associated with these removals using one of the deferred payment periods specified in section 5061(d), TTB believes it is appropriate to extend the grace period provision to such removals if the proprietor's liability for payment does not exceed $1,000. Finally, TTB is not amending the regulations to provide grace periods for bonds required under 27 CFR parts 26 and 28 that cover, respectively, tax-deferred shipments from Puerto Rico and non-taxpaid exportations from the United States. In the case of shipments from Puerto Rico, the proprietor may ship the distilled spirits, wines, or beer to the United States upon prepayment of the tax during the time TTB considers the bond application (see 27 CFR 26.81, 26.96, and 26.105). In the case of bonds required under part 28, the exporter's transactions will be limited to taxpaid products while TTB considers the bond application. Because these bonds are not required for such proprietors to continue operations while TTB considers the bond application, TTB believes that it is not necessary to provide a grace period under these circumstances. VIII. Miscellaneous and Technical Amendments A. Amendments to 27 CFR Parts 18 and 30 This temporary rule amends several provisions in 27 CFR part 18 (``Production of Volatile Fruit-Flavor Concentrate'') and 27 CFR part 30 (``Gauging Manual'') to reflect the other regulatory amendments discussed above. TTB is amending 27 CFR 18.39(c) and 18.40(c) to provide that proprietors of DSPs and bonded wine cellars are not required to file bonds covering alternation of their premises for use as volatile fruit-flavor concentrate plants if the proprietors are not required to hold bonds under 27 CFR parts 19 and 24. Since 27 CFR part 18 does not impose bond requirements, no bond is required for the alternation if the proprietor is exempt under 27 CFR parts 19 and 24. In 27 CFR part 30, which governs the gauging of distilled spirits at DSPs, TTB is adding a definition of ``bonded premises'' in 27 CFR 30.11. Consistent with the amended definition of this term in Sec. 19.1 as discussed above, the new definition provides that the term includes the premises of a DSP even if the proprietor has not provided a bond as authorized under the exemption set forth in Sec. 19.151(d). Related to this amendment, TTB is also modifying the [[Page 1116]] phrase ``withdrawn from bond'' in 27 CFR 30.36 so that it instead reads ``from bonded premises'' in order to clarify that the regulation applies to distilled spirits withdrawn from the bonded premises of DSPs, including such premises of DSPs that are not required to provide a bond under Sec. 19.151(d). B. Technical Amendments Relating to Surety and Collateral Bonds TTB is amending regulations in 27 CFR parts 19, 24, 25, 26, and 28 to update information relating to surety and collateral bonds. First, TTB is amending 27 CFR 19.153, 19.168, 24.149, 25.98, 26.62, and 28.52 to update information on how to obtain copies of Treasury Department Circular 570, which contains a list of approved corporate sureties. TTB is also amending these regulations to update Web site address references for obtaining copies of this circular. Second, TTB is amending 27 CFR 19.154, 19.699, 24.4, 24.151, 25.4, and 26.63 to update information about obtaining collateral bonds guaranteed by acceptable securities. These amendments update the title of the agency currently responsible for publishing this information (the Treasury Department's Bureau of the Fiscal Service (BFS)), the Web site address references for certain BFS Web sites, and the title and citation for 31 CFR part 225 (which contains regulations governing such securities). C. Updates to Form Numbers in 27 CFR Parts 26 and 28 Certain regulations in 27 CFR parts 26 and 28 pertaining to tax payments and bonds impacted by this rulemaking contain references to outdated form numbers. TTB is amending these regulations so that they include the updated form numbers. The amended regulations are 27 CFR 24.152, 25.77, 25.92, 26.64, 26.67, 26.68, 26.68a, 26.75, 26.76, 28.54, 28.61, 28.62, 28.63, 28.64, 28.70, 28.71, 28.72, 28.73, 28.214, 28.215, 28.250, 28.303, 28.317, and 28.333. The updated form numbers are TTB Forms 5000.23 PR, 5100.12, 5000.18, 5100.21, 5100.25, 5100.30, 5110.67, 5120.20, 5120.24, 5120.25, 5120.32, 5130.6, 5130.16, 5170.7, and 5620.8. D. Obsolete Regulations in 27 CFR Part 28 Relating to TTB Form 5110.68 Current 27 CFR 28.65 requires a drawback claimant to file a bond on TTB Form 5110.68 where the claimant desires drawback of tax paid on exported distilled spirits or wines prior to TTB's receipt of a certified copy of TTB Form 5110.30 or 5120.24. These latter two forms are drawback claim forms that include certifications that the product was exported. The statutory authority for this type of drawback is section 5062(b) of the IRC (26 U.S.C. 5062(b)). Historically, the purpose of the requirement in Sec. 28.65 to file a bond on TTB Form 5110.68 was to protect the revenue associated with the drawback paid to the claimant until the distilled spirits or wines were certified to be exported. TTB has determined that it is no longer necessary for revenue protection purposes to require bonds on TTB Form 5110.68 to cover drawback paid for exported distilled spirits and wine. TTB currently approves claims submitted on TTB Form 5110.30 or 5120.24 when it receives adequate evidence that the product was exported and that the industry member is otherwise entitled to drawback based on the exportation. Therefore, it is no longer necessary to require bonds on TTB Form 5110.68 to cover drawback paid prior to certification that the product was exported. For this reason, TTB no longer maintains active approval from the Office of Management and Budget under the Paperwork Reduction Act of 1995 to require the filing of bonds on TTB Form 5110.68. Accordingly, TTB is amending the regulations to remove Sec. 28.65. TTB is also amending the regulations to remove 27 CFR 28.331 and 28.332, which apply solely to drawback claims supported by this type of bond. The regulations continue to include 27 CFR 28.333 governing such claims that are not supported by this type of bond. However, TTB is amending Sec. 28.333 to remove outdated references to TTB Form 5110.68. Finally, TTB is also removing other references to this bond form in 27 CFR 28.71, 28.72, and 28.250. IX. Public Participation To submit comments on the temporary regulations contained in this document, which TTB is proposing to make permanent, please refer to the related notice of proposed rulemaking, Notice No. 167, published in the Proposed Rules section of this issue of the Federal Register. X. Regulatory Analyses and Notices A. Regulatory Flexibility Act In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), TTB certifies that this temporary rule will not have a significant economic impact on a substantial number of small entities. The temporary rule will not impose, or otherwise cause, a significant increase in reporting, recordkeeping, or other compliance burdens on a substantial number of small entities. The temporary rule implements certain changes made to the Internal Revenue Code of 1986 by the Protecting Americans from Tax Hikes Act of 2015 (see Public Law 114- 113, Division Q, section 332). These statutory changes eliminate bond requirements and reduce tax return filing frequency for certain eligible taxpayers. The regulatory amendments provide for taxpayers to use TTB's existing qualification procedures to establish that they are exempt from bond requirements, and any increased burden associated with establishing eligibility for the exemption flows directly from the statutory changes that prescribe the criteria for eligibility for the exemption. Pursuant to section 7805(f) of the IRC (26 U.S.C. 7805(f)), TTB will submit the temporary regulations to the Chief Counsel for Advocacy of the Small Business Administration for comment on the impact of the temporary regulations on small businesses. B. Executive Order 12866 Certain TTB regulations issued under the IRC, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. C. Paperwork Reduction Act Regulations addressed in this temporary rule contain current collections of information that have been previously reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3507) and assigned control numbers 1513-0005, 1513-0009, 1513-0015, 1513-0031, 1513-0037, 1513-0038, 1513-0048, 1513-0050, 1513-0083, 1513-0123, 1513- 0125, and 1513-0135. 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. The temporary rule implements certain changes made to the Internal Revenue Code of 1986 by the Protecting Americans from Tax Hikes Act of 2015 (see Public Law 114-113, Division Q, section 332). These statutory changes eliminate bond requirements and reduce tax return filing frequency for certain eligible taxpayers. As described further below, the temporary rule alters some of these information collections. The regulations in this temporary rule do not include any alterations to control numbers 1513-0031, 1513-0050, and [[Page 1117]] 1513-0135. These information collections cover TTB Form 5100.12 (Specific Transportation Bond--Distilled Spirits or Wines Withdrawn for Transportation to Manufacturing Bonded Warehouse--Class Six), TTB Form 5100.25 (Continuing Export Bond for Distilled Spirits and Wine), TTB Form 5110.50 (Tax Deferral Bond--Distilled Spirits (Puerto Rico), and TTB Form 5110.67 (Continuing Transportation Bond--Distilled Spirits and Wines Withdrawn for Transportation to Manufacturing Bonded Warehouse-- Class Six). The temporary rule amends certain regulations that reference these forms (see 27 CFR 26.66, 26.80, 28.61, 28.63, 28.64, 28.70, 28.71, 28.72, and 28.73). However, TTB is not changing these bond forms as part of this regulatory action, and TTB does not estimate that this temporary rule will alter paperwork burdens associated with these forms. This temporary rule involves a non-substantive change to control number 1513-0037, which covers TTB Form 5100.11 (Withdrawal of Spirits, Specially Denatured Spirits, or Wines for Exportation). The temporary rule amends regulations that reference this form (see 27 CFR 28.22, 28.70, 28.95, 28.96, 28.116, 28.117, 28.131, 28.132, and 28.250). TTB does not estimate that this temporary rule will alter the paperwork burdens associated with this form, but TTB is making a non-substantive change to the form by modifying some of the text on the form's first page. This change will provide guidance to users of the form about applicable bond requirements. TTB has submitted this change to OMB for review, and OMB has approved this non-substantive change. The regulations in this temporary include substantive changes to control numbers 1513-0005, 1513-0009, 1513-0015, 1513-0038, 1513-0048, 1513-0083, 1513-0123, and 1513-0125. These changes are discussed further below. TTB has provided estimates to OMB regarding the burdens associated with the collections under this temporary rule, and OMB has reviewed and approved these estimates. Comments on the revisions should be sent to OMB at Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503 or by email to [email protected]. A copy should also be sent to TTB by any of the methods previously described. Comments on the information collections should be submitted no later than March 6, 2017. Comments are specifically requested concerning: Whether the collections of information submitted to OMB are necessary for the proper performance of the functions of the Alcohol and Tobacco Tax and Trade Bureau, including whether the information will have practical utility; The accuracy of the estimated burdens associated with the collections of information submitted to OMB; How to enhance the quality, utility, and clarity of the information to be collected; How to minimize the burden of complying with the proposed revisions of the collections of information, including the application of automated collection techniques or other forms of information technology; and Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. 1513-0005 The regulations in the temporary rule contain alterations to the information collection currently approved under OMB control number 1513-0005 (see 27 CFR 19.143, 25.62, 25.73, 25.77, 25.79, 25.81, 25.91, 25.95, and 25.106). This control number covers TTB Form 5130.10 (Brewer's Notice). The temporary rule includes regulations requiring that brewers who wish to apply for the bond exemption must file this form. In the case of existing brewers who wish to apply for the exemption beginning in 2017, these changes will result in a one-time increase in the filing of the form. These regulations are necessary for revenue protection purposes to ensure that bond-exempt brewers meet the legal criteria for the exemption. This information collection also covers other submissions by brewers unrelated to this rulemaking. Taking into account the regulatory amendments and other existing regulatory requirements, TTB estimates the burden associated with this information collection as follows: Estimated number of respondents: 6,298. Estimated annual frequency of responses: 6. Estimated average annual total burden hours: 32,091. 1513-0009 The regulations in the temporary rule contain alterations to the information collection currently approved under OMB control number 1513-0009 (see 27 CFR 18.40, 19.143, 24.105, 24.109, 24.135, 24.146, 24.154, 25.81, 28.70, and 28.73). This control number covers TTB Form 5120.25 (Application to Establish and Operate Wine Premises) and TTB Form 5120.36 (Wine Bond). The temporary rule includes regulations requiring that bonded wine cellars who wish to apply for the bond exemption must file this form to show they are eligible for the exemption. In the case of existing proprietors who wish to apply for the exemption beginning in 2017, these changes will result in a one- time increase in the filing of the form. These regulations are necessary for revenue protection purposes to ensure that bond-exempt proprietors meet the legal criteria for the exemption. TTB also estimates that submissions of TTB Form 5120.36 will decrease as a result of the new bond exemption, since proprietors who are exempt will no longer be required to file the form. Taking into account the regulatory amendments and other existing regulatory requirements, TTB estimates the burden associated with this information collection as follows: Estimated number of respondents: 4,495. Estimated annual frequency of responses: 1. Estimated average annual total burden hours: 3,345. 1513-0015 The regulations in the temporary rule contain alterations to the information collection currently approved under OMB control number 1513-0015 (see 27 CFR 25.73, 25.77, 25.91, 25.95, 25.274, 28.60, and 28.141). This control number covers TTB Form 5130.22 (Brewer's Bond), TTB Form 5130.23 (Brewer's Bond Continuation Certificate), TTB Form 5130.25 (Brewer's Collateral Bond), and TTB Form 5130.27 (Brewer's Collateral Bond Continuation Certificate). TTB estimates that submissions of these forms will decrease as a result of the new bond exemption, since brewers who are exempt will no longer be required to file the forms. Taking into account the regulatory amendments and other existing regulatory requirements, TTB estimates the burden associated with this information collection as follows: Estimated number of respondents: 1,657. Estimated annual frequency of responses: 652. Estimated average annual total burden hours: 363.5. 1513-0038 The regulations in the temporary rule contain alterations to the information collection currently approved under OMB control number 1513-0038 (see 27 CFR 19.403). This control number covers TTB Form 5100.16 (Application to Receive Spirits and/or Denatured [[Page 1118]] Spirits by Transfer in Bond). TTB does not estimate that this temporary rule will alter the paperwork burdens associated with this form, but TTB is amending the section of the form where the DSP proprietor describes the proprietor's bond coverage. These form amendments are necessary to reflect changes relating to the bond exemption for DSPs. TTB is also making a minor related change to one of the instructions on the form. Taking into account the regulatory amendments and other existing regulatory requirements, TTB estimates the burden associated with this information collection as follows: Estimated number of respondents: 250. Estimated annual frequency of responses: 6. Estimated average annual total burden hours: 228. 1513-0048 The regulations in the temporary rule contain alterations to the information collection currently approved under OMB control number 1513-0048 (see 27 CFR 18.39, 19.73, 19.116, 19.118, 19.136, 19.143, 19.168, and 19.170). This control number covers TTB Form 5110.41 (Registration of Distilled Spirits Plant). The temporary rule includes regulations requiring that DSP proprietors who wish to apply for the bond exemption must file this form to show they are eligible for the exemption. In the case of existing proprietors who wish to apply for the exemption beginning in 2017, these changes will result in a one- time increase in the filing of the form. These regulations are necessary for revenue protection purposes to ensure that bond-exempt proprietors meet the legal criteria for the exemption. Taking into account the regulatory amendments and other existing regulatory requirements, TTB estimates the burden associated with this information collection as follows: Estimated number of respondents: 1,515. Estimated annual frequency of responses: 1.84. Estimated average annual total burden hours: 5,932. 1513-0083 The regulations in the temporary rule contain alterations to the information collection currently approved under OMB control number 1513-0083. This control number covers TTB Form 5000.24 (Excise Tax Return). TTB estimates that the paperwork burden associated with this collection will decrease under the temporary rule due to the establishment of a new annual tax return period for deferred payment of taxes on distilled spirits, wines, and beer. The burden reduction will result from eligible taxpayers paying taxes annually rather than quarterly or semimonthly. TTB also expects that additional taxpayers who are eligible to use quarterly or annual return periods will begin using those periods in lieu of semimonthly or quarterly return periods, respectively, which will also result in a reduction in paperwork burden. Once these taxpayers establish their eligibility for the bond exemption, such taxpayers paying taxes less frequently will not have the disincentive of being required to hold withdrawal bonds of higher penal sums to cover tax liability associated with withdrawals of tax- determined product on which taxes have not yet been paid. This information collection also covers other submissions of TTB Form 5000.24 that are unrelated to this rulemaking. Taking into account the regulatory amendments and other existing regulatory requirements, TTB estimates the burden associated with this information collection as follows: Estimated number of respondents: 18,479. Estimated annual frequency of responses: 6.2. Estimated average annual total burden hours: 85,888. 1513-0123 The regulations in this temporary rule contain alterations to the information collection currently approved under OMB control number 1513-0123 (see 27 CFR 26.80, 26.95, and 26.104). This control number covers TTB Form 5100.21 (Application, Permit, and Report--Wine and Beer (Puerto Rico)) and TTB Form 5110.51 (Application, Permit, and Report-- Distilled Spirits Products (Puerto Rico)). TTB does not estimate that this temporary rule will alter the paperwork burdens associated with these forms, but TTB is amending several sections of the forms to reflect changes relating to the new bond exemption. Taking into account the regulatory amendments and other existing regulatory requirements, TTB estimates the burden associated with this information collection as follows: Estimated number of respondents: 35. Estimated annual frequency of responses: 1. Estimated average annual total burden hours: 35. 1513-0125 The regulations in the temporary rule contain alterations to the information collection currently approved under OMB control number 1513-0125. This control number covers TTB Form 5110.56 (Distilled Spirits Bond). TTB estimates that submissions of this form will decrease as a result of the new bond exemption, since DSP proprietors who are exempt will no longer be required to file the form. Taking into account the regulatory amendments and other existing regulatory requirements, TTB estimates the burden associated with this information collection as follows: Estimated number of respondents: 358. Estimated annual frequency of responses: 2. Estimated average annual total burden hours: 716. D. Inapplicability of Prior Notice and Comment and Delayed Effective Date Procedures TTB is issuing this temporary final rule without prior notice and comment pursuant to authority under 5 U.S.C. 553(b). This provision authorizes an agency to issue a rule without prior notice and comment when the agency for good cause finds that those procedures are ``impracticable, unnecessary, or contrary to the public interest.'' Because this document implements provisions of a law that are effective on January 1, 2017, and because immediate guidance is necessary to implement these statutory provisions, it is found to be impracticable to issue this temporary rule with prior notice and comment. The temporary rule implements statutory changes that eliminate bond requirements and reduce tax return filing frequency for certain eligible taxpayers. These statutory changes reduce regulatory burdens on affected industry members, and the regulations in this temporary rule will allow such industry members to benefit from such changes. Pursuant to the provisions of 5 U.S.C. 553(d)(1) and (d)(3), TTB is issuing this temporary rule without a delayed effective date. As provided for in section 553(d)(1), the regulatory amendments recognize a statutory exemption from bond requirements and authorize a new voluntary annual tax return period. TTB has also determined that good cause exists under section 553(d)(3) to provide industry members with immediate guidance on procedures to apply for and obtain the bond exemption authorized under provisions of a law that are effective on January 1, 2017. XI. Drafting Information Ben Birkhill of the Regulations and Rulings Division drafted this document with the assistance of other Alcohol and [[Page 1119]] Tobacco Tax and Trade Bureau personnel. List of Subjects 27 CFR Part 18 Alcohol and alcoholic beverages, Fruits, Reporting and recordkeeping requirements, Spices and flavorings. 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 25 Beer, Claims, Electronic funds transfers, Excise taxes, Exports, Labeling, Packaging and containers, Reporting and recordkeeping requirements, Research, Surety bonds. 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 27 Alcohol and alcoholic beverages, Beer, Cosmetics, Customs duties and inspection, Electronic funds transfers, Excise taxes, Imports, Labeling, Liquors, Packaging and containers, Reporting and recordkeeping requirements, Wine. 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. Amendments to the Regulations For the reasons discussed in the preamble, TTB amends 27 CFR chapter I as follows: PART 18--PRODUCTION OF VOLATILE FRUIT-FLAVOR CONCENTRATE 0 1. The authority citation for part 18 is revised to read as follows: Authority: 26 U.S.C. 5001, 5171-5173, 5178, 5179, 5203, 5351, 5354, 5356, 5511, 5552, 6065, 6109, 7805. Sec. 18.39 [Amended] 0 2. Section 18.39 is amended as follows: 0 a. In paragraph (c), by adding the words ``if the proprietor is required to hold a bond under Sec. 19.151 of this chapter to cover the distilled spirits plant premises subject to alternation'' before the period; and 0 b. By revising the Office of Management and Budget control number reference to read ``(Approved by the Office of Management and Budget under control number 1513-0006)''. Sec. 18.40 [Amended] 0 3. Section 18.40 is amended as follows: 0 a. In paragraph (c), by adding the words ``if the proprietor is required to hold a bond under Sec. 24.146 of this chapter to cover the bonded wine cellar premises subject to alternation'' after the words ``alternation of premises''; and 0 b. By revising the Office of Management and Budget control number reference to read ``(Approved by the Office of Management and Budget under control number 1513-0006)''. PART 19--DISTILLED SPIRITS PLANTS 0 4. The authority citation for part 19 continues to read as follows: 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, 5121-5124, 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. 0 5. Section 19.1 is amended as follows: 0 a. In the definition of ``Bonded premises'', by adding a second sentence; 0 b. By adding, in alphabetical order, a definition of ``From bond''; 0 c. In the definition of ``In bond'', by adding a second sentence; 0 d. By adding, in alphabetical order, a definition of ``To bond''; and 0 e. By removing the definition of ``TTB bond''. The additions read as follows: Sec. 19.1 Definitions. * * * * * Bonded premises. * * * This term includes premises described in the preceding sentence even if the proprietor, as authorized under the exemption set forth in Sec. 19.151(d), has not provided a bond for the premises. * * * * * From bond. When used with reference to withdrawals of distilled spirits, this phrase includes withdrawals from the premises of a distilled spirits plant even if the proprietor, as authorized under the exemption set forth in Sec. 19.151(d), has not provided a bond for the premises. * * * * * In bond. * * * Spirits, denatured spirits, articles, or wine are considered to be held under bond if they are held by a proprietor who is liable for the tax, even if the proprietor is not required to provide a bond under this chapter. * * * * * * * * To bond. When used with reference to returns of distilled spirits, this phrase includes returns to the premises of a distilled spirits plant even if the proprietor, as authorized under the exemption set forth in Sec. 19.151(d), has not provided a bond for the premises. * * * * * 0 6. Section 19.73 is amended as follows: 0 a. In paragraph (a)(14)(ii), by removing the word ``and''; 0 b. In paragraph (a)(15)(ii), by removing the period at the end of the text and adding in its place the word ``; and''; and 0 c. By adding paragraph (a)(16). The addition reads as follows: Sec. 19.73 Information required in application for registration. (a) * * * (16) A statement whether the applicant is required to furnish a bond under Sec. 19.151. * * * * * Sec. 19.116 [Amended] 0 7. In Sec. 19.116, paragraph (a)(2)(ii) is amended by adding the words ``, subject to the exemption provided in Sec. 19.151(d)'' before the semicolon. [[Page 1120]] Sec. 19.118 [Amended] 0 8. In Sec. 19.118, paragraph (a)(2) is amended by adding the words ``, subject to the exemption provided in Sec. 19.151(d)'' after the words ``TTB F 5000.18''. Sec. 19.132 [Amended] 0 9. In Sec. 19.132, paragraph (a)(2)(ii) is amended by adding the words ``, subject to the exemption provided in Sec. 19.151(d)'' after the words ``the required bonds''. Sec. 19.134 [Amended] 0 10. In Sec. 19.134, paragraph (b) is amended by adding the words ``, subject to the exemption provided in Sec. 19.151(d)'' after the words ``TTB F 5000.18''. 0 11. Section 19.136 is added immediately after Sec. 19.135 and before the undesignated center heading to read as follows: Sec. 19.136 Change in bond status. A proprietor must file TTB F 5110.41, Registration of Distilled Spirits Plant, to amend the registration relating to the proprietor's bond status if either of the following occurs: (a) A proprietor who has not furnished any bond becomes required to furnish a bond as provided under Sec. 19.168(b); or (b) A proprietor who has furnished a bond becomes exempt from bond requirements under Sec. 19.151(d) and chooses to terminate all bond coverage as provided under Sec. 19.170(e). Sec. 19.141 [Amended] 0 12. Section 19.141 is amended as follows: 0 a. In paragraph (d)(2), by removing the word ``Execute'' and adding, in its place, the words ``Except where no bond is required under Sec. 19.151(d), execute''; and 0 b. In paragraph (e)(2), by removing the words ``Must execute'' and adding, in their place, the words ``Except where no bond is required under Sec. 19.151(d), must execute''. Sec. 19.142 [Amended] 0 13. In Sec. 19.142, paragraph (e) is amended by removing the words ``TTB bond'' and adding, in their place, the words ``bonded premises''. 0 14. In Sec. 19.143, paragraph (b)(3) is amended by adding a second sentence to read as follows: Sec. 19.143 Alternation for other purposes. * * * * * (b) * * * (3) * * * This requirement does not apply if no bond is required under this chapter to cover the proposed alternation. * * * * * 0 15. Section 19.151 is amended as follows: 0 a. In the first sentence of paragraph (a), by removing the words ``Any person'' and adding, in their place, ``Except as provided in paragraph (d) of this section, any person''; and 0 b. By adding paragraph (d). The addition reads as follows: Sec. 19.151 General. * * * * * (d) Bonds covering distilled spirits for nonindustrial use and industrial use--(1) Nonindustrial use. A proprietor who pays tax on a deferred basis under Sec. 19.235 is not required to provide a bond or bonds to cover operations and withdrawals of distilled spirits for nonindustrial use during any portion of a calendar year for which the proprietor is eligible to use an annual or quarterly return period under Sec. 19.235(b) or (c). For purposes of the preceding sentence, a proprietor is considered to be paying tax on a deferred basis even if the proprietor does not pay tax during every return period as long as the proprietor intends to pay tax in a future period. See Sec. Sec. 19.73 and 19.136 for rules governing applying for this bond exemption. See Sec. 19.168(b) for rules governing when an existing proprietor who has not provided a bond under this paragraph must obtain bond coverage. (2) Industrial use. A proprietor is required to provide one or more bonds to cover operations and withdrawals of distilled spirits for industrial use even if the proprietor pays tax on a deferred basis under Sec. 19.235 and is eligible to use an annual or quarterly return period under Sec. 19.235(b) or (c). In the case of a proprietor whose operations involve distilled spirits for both nonindustrial and industrial use, distilled spirits are considered to be for industrial use for purposes of this paragraph unless the proprietor designates the spirits as being solely for nonindustrial use either upon taking the production gauge (see Sec. 19.304) or upon receiving the spirits and, in either case, does not thereafter mix the spirits with any spirits for industrial use. (3) Nonindustrial use and industrial use defined. See Sec. 19.472 for the provisions defining the nonindustrial and industrial uses of distilled spirits. 0 16. In Sec. 19.153, paragraph (b) is revised to read as follows: Sec. 19.153 Bonds guaranteed by a corporate surety. * * * * * (b) How to find an approved surety. The Department of the Treasury publishes a list of approved corporate surety companies in Treasury Department Circular 570, Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies. Treasury Department Circular 570 is published in the Federal Register annually on the first business day in July, and supplemental changes are published periodically thereafter. The most recent circular and any supplemental changes to it may be viewed on the Bureau of the Fiscal Service Web site at https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm. * * * * * 0 17. Section 19.154 is revised to read as follows: Sec. 19.154 Bond guaranteed by deposit of securities or cash (including cash equivalents). (a) Bond guaranteed by deposit of securities--(1) General. As an alternative to the corporate surety bond under Sec. 19.153, a person can file a bond that guarantees payment of the liability by pledging one or more acceptable negotiable securities. These securities must have a par value (face amount) equal to or greater than the penal sums of the required bonds. The pledged securities are held in the Federal Reserve Bank in a safekeeping account with TTB as the pledgee. Should the proprietor fail to pay one or more of the guaranteed liabilities, TTB can take action to sell the deposited securities to satisfy the debt. Pledged securities will be released if there are no outstanding liabilities when the bond is terminated. (See Sec. 19.170.) (2) Acceptable securities. Only public debt obligations of the United States, the principal and interest of which are unconditionally guaranteed by the United States Government, are acceptable for the purpose described in paragraph (a)(1) of this section. The Department of the Treasury and certain other United States Government agencies issue debt instruments that are acceptable as collateral, such as Treasury notes and Treasury bills. Savings bonds, certificates of deposit and letters of credit are not acceptable. A list of securities acceptable as collateral in lieu of surety bonds is available from the Bureau of the Fiscal Service. Current information and guidance from the Bureau of the Fiscal Service Web site may be found at https://www.fiscal.treasury.gov. (b) Bond guaranteed by deposit of cash or cash equivalent. As an [[Page 1121]] alternative to the corporate surety bond under Sec. 19.153, a person can file a bond that guarantees payment of the liability by submitting cash or its equivalent (including a money order, cashier's check, or personal check). Cash or its equivalent must be no less than the penal sums of the required bond. Cash equivalents must be payable to the Alcohol and Tobacco Tax and Trade Bureau. A bond described in this paragraph will be released if there are no outstanding liabilities when the bond is terminated. (See Sec. 19.170.) (31 U.S.C. 9301, 9303; 31 CFR part 380) Sec. 19.161 [Amended] 0 18. In Sec. 19.161, paragraph (a) is amended by removing the words ``Any person'' and adding, in their place, ``Except as provided in Sec. 19.151(d), any person''. 0 19. In Sec. 19.164, the first sentence of paragraph (a) is revised to read as follows: Sec. 19.164 Withdrawal bond. (a) * * * Except as provided in Sec. 19.151(d), a person must provide TTB with a withdrawal bond for a distilled spirits plant if the person intends to withdraw spirits from the distilled spirits plant upon determination of the taxes due on the spirits but before payment of the tax. * * * * * * * * 0 20. Section 19.168 is amended as follows: 0 a. By revising the section heading; 0 b. By revising paragraph (a); 0 c. By redesignating paragraphs (b), (c), and (d) as paragraphs (a)(1), (a)(2), and (a)(3); 0 d. In the first sentence of redesignated paragraph (a)(1), by removing the words ``Circular 570'' and adding, in their place, the words ``Department Circular 570 (see Sec. 19.153)''; and 0 e. By adding a new paragraph (b). The revisions and addition read as follows: Sec. 19.168 Superseding bonds and new bonds for existing proprietors. (a) Superseding bonds. A new bond that replaces another bond is called a superseding bond. The proprietor must replace an existing bond with a superseding bond in any of the following circumstances: * * * * * (b) New bonds for existing proprietors--(1) General. Subject to paragraph (b)(2) of this section, if an existing proprietor has not furnished a bond or bonds covering operations and withdrawals of distilled spirits for nonindustrial use because the proprietor was exempt from bond requirements under Sec. 19.151(d), the proprietor must furnish a bond or bonds as provided in this subpart beginning in any portion of a calendar year following the first date on which the aggregate amount of tax due from the proprietor during the calendar year exceeds $50,000. When furnishing the bond or bonds, the proprietor must also file an amendment to TTB F 5110.41, Registration of Distilled Spirits Plant, as provided in Sec. 19.136 to change the proprietor's bond status. (2) Grace period for bonds covering operations. An existing proprietor who must furnish an operations bond as provided in paragraph (b)(1) of this section will be treated as having furnished the required bond if the proprietor submits the bond on TTB F 5110.56 no later than 30 days following the first date on which the aggregate amount of tax due from the proprietor during the relevant calendar year exceeds $50,000. The proprietor will be treated as having furnished the required operations bond for purposes of this paragraph until TTB approves or disapproves the bond. (3) Bonds covering withdrawals. Paragraph (b)(2) of this section does not apply to withdrawal bonds. If an existing proprietor must furnish a withdrawal bond as provided in paragraph (b)(1) of this section, the proprietor may not withdraw distilled spirits from the bonded premises on a tax deferred basis until TTB approves the withdrawal bond. * * * * * 0 21. In Sec. 19.169, the section heading and paragraphs (a) and (b) are revised to read as follows: Sec. 19.169 Effect of failure to furnish a superseding bond or a new bond. (a) Operations bond. Except as provided in Sec. 19.151(d), a person may not operate a distilled spirits plant without an operations bond. A person who does not submit an acceptable superseding operations bond when required to do so under Sec. 19.168(a) must immediately discontinue the activities to which the lapsed bond coverage relates upon lapse of the existing bond coverage. If a proprietor must furnish an operations bond under Sec. 19.168(b)(1) and does not submit an operations bond within the time prescribed in Sec. 19.168(b)(2), the proprietor must immediately discontinue the activities required to be covered by the operations bond. (b) Withdrawal bond. Except as provided in Sec. 19.151(d), a person may not defer payment of taxes on spirits withdrawn from a distilled spirits plant upon determination of tax without a withdrawal bond. If a person is required to submit a new or superseding withdrawal bond under Sec. 19.168, the person must submit the bond in accordance with that section. A person who does not submit and receive approval of an acceptable withdrawal bond when required to do so under Sec. 19.168 may not withdraw distilled spirits from the bonded premises on a deferred basis. Upon lapse of the existing bond coverage, or upon the date a new bond is required under Sec. 19.168(b), the person must pay the tax at the time of withdrawal, except in the case of distilled spirits withdrawn free of tax or withdrawn without payment of tax under 26 U.S.C. 5214 or withdrawn exempt from tax under 26 U.S.C. 7510. * * * * * 0 22. Section 19.170 is amended as follows: 0 a. In paragraph (c), by removing the word ``or'' at the end of the text; 0 b. In paragraph (d), by removing the period at the end of the text and adding in its place the word ``; and''; and 0 c. By adding paragraph (e). The addition reads as follows: Sec. 19.170 Termination of bonds. * * * * * (e) On application by an existing proprietor who becomes exempt from bond requirements. If a proprietor has held a bond or bonds covering operations or withdrawals of distilled spirits for nonindustrial use and becomes exempt from those bond requirements as provided under Sec. 19.151(d), the proprietor may apply to TTB to terminate the bond or bonds covering such operations or withdrawals. To apply, the proprietor must file an amendment to TTB F 5110.41, Registration of Distilled Spirits Plant, as provided in Sec. 19.136. The proprietor must accurately state in the submission that the proprietor: (1) Will withdraw distilled spirits for deferred payment of tax as provided in Sec. 19.235; (2) Reasonably expects to be liable for not more than $50,000 in taxes with respect to distilled spirits imposed by 26 U.S.C. 5001 and 7652 for the current calendar year (see definition of ``Reasonably expects'' in Sec. 19.235(e)); and (3) Was liable for not more than $50,000 in such taxes in the preceding calendar year. * * * * * Sec. 19.229 [Amended] 0 23. In Sec. 19.229, the third sentence of paragraph (a) is amended by adding [[Page 1122]] after the words ``unit bond'' the words ``unless the proprietor is exempt from furnishing such bond under Sec. 19.151(d)''. Sec. 19.230 [Amended] 0 24. Section 19.230 is amended as follows: 0 a. Paragraph (a) is amended by adding after the words ``unit bond'' the words ``and the proprietor is not exempt from furnishing such bond under Sec. 19.151(d)''; and 0 b. In paragraph (d), a new second sentence is added. The addition reads as follows: Sec. 19.230 Conditions requiring prepayment of taxes. * * * * * (d) * * * This condition does not apply to a proprietor who is exempt from furnishing a bond under Sec. 19.151(d). * * * * * * * * Sec. 19.231 [Amended] 0 25. In Sec. 19.231, the first sentence is amended by removing the words ``When a proprietor furnishes'' and adding, in their place, the words ``In cases where a proprietor must furnish''. 0 26. Section 19.235 is revised to read as follows: Sec. 19.235 Deferred payment return periods--annual, quarterly, and semimonthly. (a) Three types of return periods. The IRC provides for three different return periods for those taxpayers who pay their taxes on a deferred basis: Annual, quarterly, and semimonthly. Taxpayers who meet certain criteria are eligible to use annual or quarterly return periods and pay their taxes on an annual or quarterly basis as provided in paragraphs (b) and (c) of this section, respectively. Other taxpayers must use semimonthly return periods and pay their taxes on a semimonthly basis as provided in paragraph (e) of this section. (b) Annual return period. Subject to paragraph (d) of this section, a taxpayer who reasonably expects to be liable for not more than $1,000 in taxes with respect to distilled spirits imposed by 26 U.S.C. 5001 and 7652 for the current calendar year, and that was liable for not more than $1,000 in such taxes in the preceding calendar year, may choose to use an annual return period. However, the taxpayer may not use the annual return period procedure for any portion of the calendar year following the first date on which the aggregate amount of tax due from the taxpayer during the calendar year exceeds $1,000, and any tax which has not been paid on that date will be due on the 14th day after the last day of the quarterly or semimonthly period in which that date occurs. A taxpayer may choose to use either quarterly or semimonthly return periods as authorized under paragraph (c) or (e) of this section. (c) Quarterly return period. Except as provided in paragraph (b) of this section and subject to paragraph (d) of this section, a taxpayer who reasonably expects to be liable for not more than $50,000 in taxes with respect to distilled spirits imposed by 26 U.S.C. 5001 and 7652 for the current calendar year, and that was liable for not more than $50,000 in such taxes in the preceding calendar year, may choose to use a quarterly return period. However, the taxpayer may not use the quarterly return period procedure for any portion of the calendar year following the first date on which the aggregate amount of tax due from the taxpayer during the calendar year exceeds $50,000, and any tax which has not been paid on that date will be due on the 14th day after the last day of the semimonthly period in which that date occurs. (d) Additional rules for annual and quarterly return periods. The following additional rules apply to the annual and quarterly return period procedures under paragraphs (b) and (c) of this section: (1) A taxpayer with multiple locations must combine the distilled spirits tax liability for all locations to determine eligibility for the return procedures; (2) A taxpayer who has both domestic operations and import transactions must combine the distilled spirits tax liability on the domestic operations and the imports to determine eligibility for the return procedures; (3) The controlled group rules of 26 U.S.C. 5061(e), which concern treatment of controlled groups as one taxpayer, do not apply for purposes of determining eligibility for the return procedures. However, a taxpayer who is eligible for the return procedures, and that is a member of a controlled group that owes $5 million or more in distilled spirits excise taxes per year, is required to pay taxes by electronic fund transfer (EFT). Quarterly payments via EFT must be transmitted in accordance with section 5061(e); (4) A new taxpayer is eligible to use the return procedures the first year of business simply if the taxpayer reasonably expects to be liable for not more than $1,000, in the case of the annual return procedure, or $50,000, in the case of the quarterly return procedure, in distilled spirits taxes during that calendar year; and (5) If a taxpayer becomes ineligible to use a return procedure described in paragraph (b) or (c) of this section because the taxpayer's liability exceeds $1,000 or $50,000, respectively, during a taxable year, that taxpayer may resume using that return procedure only after a full calendar year has passed during which the taxpayer's liability did not exceed $1,000 or $50,000 as the case may be. A taxpayer may not use an annual or quarterly return procedure during any calendar year in which the taxpayer reasonably expects to be liable for more than $1,000, in the case of the annual return procedure, or $50,000, in the case of the quarterly return procedure, in distilled spirits taxes. (e) Semimonthly return period. Except in the case of a taxpayer who qualifies for, and chooses to use, annual or quarterly return periods as provided in paragraphs (b) or (c) of this section, all other taxpayers must use semimonthly return periods for deferred payment of tax. The semimonthly return periods will run from the 1st day through the 15th day of each month, and from the 16th day through the last day of each month, except as otherwise provided in Sec. 19.237. (f) Definitions. For purposes of this section, the following terms have the meanings indicated: Reasonably expects. When used with reference to a taxpayer, reasonably expects means that there is no existing or anticipated circumstances known to the taxpayer (such as an increase in production capacity) that would cause the taxpayer's tax liability to exceed the prescribed limit. Taxpayer. A taxpayer is an individual, corporation, partnership, or other entity that is assigned a single Employer Identification Number (EIN) as defined in 26 CFR 301.7702.12. (26 U.S.C. 5061) 0 27. Section 19.236 is amended as follows: 0 a. In paragraph (a), by removing the words ``a quarterly return as provided in paragraph (b)'' and adding, in their place, the words ``an annual or quarterly return as provided in paragraph (b) or (c)''; 0 b. In paragraph (b), by removing the citation ``Sec. 19.235(b)'' and adding, in its place, the citation ``Sec. 19.235(c)''; and 0 c. By adding paragraph (c). The addition reads as follows: Sec. 19.236 Due dates for returns. * * * * * (c) Annual returns. Where the proprietor of bonded premises has [[Page 1123]] withdrawn spirits from such premises on determination and before payment of tax, and the proprietor uses annual return periods as provided in Sec. 19.235(b), the proprietor must file an annual return covering such spirits on TTB F 5000.24, and remittance, as required by Sec. 19.238, Sec. 19.239, or Sec. 19.240, not later than the 14th day after the last day of the annual return period. If the due date falls on a Saturday, Sunday, or legal holiday, the return and remittance will be due on the immediately preceding day which is not a Saturday, Sunday, or legal holiday. * * * * * Sec. 19.263 [Amended] 0 28. In Sec. 19.263, paragraph (a)(4) is amended by removing the words ``TTB bond'' and adding, in their place, the words ``bonded premises''. Sec. 19.269 [Amended] 0 29. In Sec. 19.269, paragraph (a)(1) is amended by removing the word ``TTB''. Sec. 19.305 [Amended] 0 30. In Sec. 19.305, the second sentence is amended by removing the words ``bonded storage'' and adding, in their place, the words ``storage on bonded premises''. Sec. 19.403 [Amended] 0 31. In Sec. 19.403, the first sentence of paragraph (b) is amended by removing words ``TTB will'' and adding, in their place, the words ``Except to the extent the proprietor is not required to provide a bond under Sec. 19.151(d), TTB will''. Sec. 19.415 [Amended] 0 32. In Sec. 19.415, the first sentence of paragraph (c) is amended by removing the words ``premises bonded under this part'' and adding, in their place, the words ``bonded premises''. 0 33. Section 19.699 is amended as follows: 0 a. In the second sentence of paragraph (a), by removing the duplicate words ``fails to'' immediately after the words ``fails to''; 0 b. By revising paragraph (b); and 0 c. In paragraph (c), by revising the last two sentences. The revisions read as follows: Sec. 19.699 General bond requirements. * * * * * (b) Corporate surety. A company that issues bonds is called a ``corporate surety.'' Proprietors must obtain the surety bonds required by this subpart from a corporate surety approved by the Secretary of the Treasury. The Department of the Treasury publishes a list of approved corporate surety companies in Treasury Department Circular 570, Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies. Treasury Department Circular 570 is published in the Federal Register annually on the first business day in July, and supplemental changes are published periodically thereafter. The most recent circular and any supplemental changes to it may be viewed on the Bureau of the Fiscal Service Web site at https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm. (c) * * * A list of securities acceptable as collateral in lieu of surety bonds is available from the Bureau of the Fiscal Service. Current information and guidance from the Bureau of the Fiscal Service Web site may be found at https://www.fiscal.treasury.gov. * * * * * PART 24--WINE 0 34. The authority citation for part 24 continues to read as follows: Authority: 5 U.S.C. 552(a); 26 U.S.C. 5001, 5008, 5041, 5042, 5044, 5061, 5062, 5121, 5122-5124, 5173, 5206, 5214, 5215, 5351, 5353, 5354, 5356, 5357, 5361, 5362, 5364-5373, 5381-5388, 5391, 5392, 5511, 5551, 5552, 5661, 5662, 5684, 6065, 6091, 6109, 6301, 6302, 6311, 6651, 6676, 7302, 7342, 7502, 7503, 7606, 7805, 7851; 31 U.S.C. 9301, 9303, 9304, 9306. Sec. 24.4 [Amended] 0 35. Section 24.4 is amended by removing the words ``31 CFR Part 225-- Acceptance of Bonds, Notes, or Other Obligations Issued or Guaranteed by the United States as Security in Lieu of Surety or Sureties on Penal Bonds.'' and adding, in their place, the words ``31 CFR Part 225-- Acceptance of Bonds Secured by Government Obligations in Lieu of Bonds with Sureties.''. 0 36. Section 24.10 is amended as follows: 0 a. In the definition of ``Bonded wine cellar'', by adding a third sentence; 0 b. In the definition of ``Bonded wine premises'', by adding a second sentence; 0 c. In the definition of ``Bonded wine warehouse'', by adding a second sentence; 0 d. In the definition of ``Bonded winery'', by adding a second sentence; 0 e. By adding, in alphabetical order, a definition of ``From bond''; 0 f. In the definition of ``In bond'', by adding a new second sentence; and 0 g. By adding, in alphabetical order, a definition of ``To bond''. The additions read as follows: Sec. 24.10 Meaning of terms. * * * * * Bonded wine cellar. * * * This term includes premises described in the preceding sentence even if the proprietor, as authorized under the exemption set forth in Sec. 24.146(d), has not provided a bond for the premises. Bonded wine premises. * * * This term includes premises described in the preceding sentence even if the proprietor, as authorized under the exemption set forth in Sec. 24.146(d), has not provided a bond for the premises. Bonded wine warehouse. * * * This term includes facilities described in the preceding sentence even if the warehouse company or other person, as authorized under the exemption set forth in Sec. 24.146(d), has not provided a bond for the facility. Bonded winery. * * * This term includes premises described in the preceding sentence even if the proprietor, as authorized under the exemption set forth in Sec. 24.146(d), has not provided a bond for the premises. * * * * * From bond. When used with reference to withdrawals of wine, this phrase includes withdrawals from the premises established under the provisions of this part on which operations in untaxpaid wine are authorized to be conducted, even if the proprietor, as authorized under the exemption set forth in Sec. 24.146(d), has not provided a bond for the premises. * * * * * In bond. * * * Wine or spirits are considered to be possessed under bond if they are possessed by a proprietor who is liable for the tax, even if the proprietor is not required to provide a bond under this chapter. * * * * * * * * To bond. When used with reference to returns of wine, this phrase includes returns to premises established under the provisions of this part on which operations in untaxpaid wine are authorized to be conducted, even if the proprietor, as authorized under the exemption set forth in Sec. 24.146(d), has not provided a bond for the premises. * * * * * Sec. 24.100 [Amended] 0 37. In Sec. 24.100, the first sentence is amended by removing the words ``file bond'' and adding, in their place, the words ``file any required bond''. Sec. 24.101 [Amended] 0 38. In Sec. 24.101, paragraph (a) is amended as follows: [[Page 1124]] 0 a. In the first sentence, by adding the words ``any required'' before the word ``bond''; and 0 b. In the second sentence, by adding after the words ``the surety on the bond'' the words ``(if a bond is required)''. Sec. 24.105 [Amended] 0 39. In Sec. 24.105, the fifth sentence is amended by adding after the words ``In any instance where a bond is required to be given'' the words ``under Sec. 24.146''. 0 40. Section 24.109 is amended as follows: 0 a. In paragraph (j), by removing the word ``and''; 0 b. In paragraph (k), by removing the period at the end of the text and adding in its place the word ``; and''; and 0 c. By adding paragraph (l). The addition reads as follows: Sec. 24.109 Data for application. * * * * * (l) A statement whether the applicant is required to furnish a bond under Sec. 24.146. * * * * * Sec. 24.126 [Amended] 0 41. Section 24.126 is amended by adding after the words ``sufficient bond coverage'' the words ``, except where Sec. 24.146(d) does not require bond coverage''. 0 42. Section 24.132 is added immediately after Sec. 24.131 and before the undesignated center heading to read as follows: Sec. 24.132 Change in bond status. A proprietor must file an amended application if the proprietor's bond status changes in either of the following ways: (a) A proprietor who has not furnished any bond becomes required to furnish a bond as provided under Sec. 24.154(b); or (b) A proprietor who has furnished a bond becomes exempt from bond requirements under Sec. 24.146(d) and chooses to terminate all bond coverage as provided under Sec. 24.160. Sec. 24.135 [Amended] 0 43. In Sec. 24.135, paragraph (b)(2) is amended by adding after the words ``covering the alternation'' the words ``, except in cases where Sec. 24.146(d) does not require a bond or bonds''. Sec. 24.136 [Amended] 0 44. In Sec. 24.136, paragraph (c) is amended as follows: 0 a. In the first sentence, by adding after the words ``filed bond'' the words ``as required under Sec. 24.146''; and 0 b. In the second sentence, by removing the words ``the outgoing proprietor'' and adding, in their place, the words ``an outgoing proprietor who has filed bond as required under Sec. 24.146''. 0 45. Section 24.146 is amended as follows: 0 a. In the first sentence of paragraph (a), by removing the words ``The proprietor shall give bond'' and adding, in their place, ``Except as provided in paragraph (d) of this section, the proprietor must give bond''; 0 b. In paragraph (b), by revising the first sentence; and 0 c. By adding paragraph (d). The revision and addition read as follows: Sec. 24.146 Bonds. * * * * * (b) * * * Except as provided in paragraph (d) of this section, where the proprietor removes wine from bonded wine premises for consumption or sale, after determination and before payment of tax, the proprietor must, in addition to any other bond required by this part, furnish a tax deferral bond on TTB F 5120.36, Wine Bond, to ensure payment of the tax on the wine. * * * * * * * * (d) Bonds covering wine for nonindustrial use and industrial use-- (1) Nonindustrial use. A proprietor who pays tax on a deferred basis under Sec. 24.271 is not required to provide a bond or bonds to cover operations and withdrawals of wine for nonindustrial use during any portion of a calendar year for which the proprietor is eligible to use an annual or quarterly return period under Sec. 24.271(b)(1)(ii) or (b)(1)(iii). For purposes of the preceding sentence, a proprietor is considered to be paying tax on a deferred basis even if the proprietor does not pay tax during every return period as long as the proprietor intends to pay tax in a future period. See Sec. Sec. 24.109 and 24.132 for rules governing applying for this bond exemption. See Sec. 24.154(b) for rules governing when an existing proprietor who has not provided a bond under this paragraph must obtain bond coverage. (2) Industrial use. A proprietor is required to provide a bond or bonds to cover operations and withdrawals of wine for industrial use even if the proprietor pays tax on a deferred basis under Sec. 24.271 and is eligible to use an annual or quarterly return period under Sec. 24.271(b)(1)(ii) or (b)(1)(iii). In the case of a proprietor whose operations or withdrawals involve wine for both nonindustrial and industrial use, wine is considered to be for industrial use for purposes of this paragraph unless the proprietor designates the wine as solely for nonindustrial use upon production of the wine by fermentation or upon receiving the wine and, in either case, does not thereafter mix the wine with any wine for industrial use. (3) Nonindustrial use and industrial use defined. The nonindustrial and industrial uses of wine are defined in subpart D of part 1 of this chapter. Nonindustrial uses of wine include, but are not limited to, uses of wine for beverage purposes. Industrial uses of wine include the manufacture of wine or wine products not for beverage use as set forth in Sec. 24.215. * * * * * 0 46. In Sec. 24.147, a second sentence is added to read as follows: Sec. 24.147 Operations bond or unit bond. * * * See Sec. 19.151(d) of this chapter for circumstances under which a bond is not required with respect to operations and withdrawals of distilled spirits. * * * * * 0 47. Section 24.149 is amended as follows: 0 a. In paragraph (a), by removing the words ``Treasury Department Circular No. 570 (Companies Holding Certificates of Authority as Acceptable Sureties on Federal bonds and as Acceptable Reinsuring Companies)'' and adding, in their place, the words ``Treasury Department Circular 570, Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies''; and 0 b. By revising paragraph (b). The revision reads as follows: Sec. 24.149 Corporate surety. * * * * * (b) Department of the Treasury Circular 570 is published in the Federal Register annually on the first business day in July, and supplemental changes are published periodically thereafter. The most recent circular and any supplemental changes to it may be viewed on the Bureau of the Fiscal Service Web site at https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm. * * * * * 0 48. Section 24.151 is revised to read as follows: Sec. 24.151 Deposit of collateral security. Bonds or notes of the United States, or other obligations which are unconditionally guaranteed as to both interest and principal by the United States, may be pledged and deposited as collateral security in lieu of corporate sureties in accordance with the provisions of the Treasury Department regulations in 31 CFR part 225, [[Page 1125]] Acceptance of Bonds Secured by Government Obligations in Lieu of Bonds with Sureties. Cash, postal money orders, certified checks, cashiers' checks, or treasurers' checks may also be furnished as collateral security in lieu of corporate sureties. (July 30, 1947, Ch. 390, 61 Stat. 650 (6 U.S.C. 15); August 16, 1954, Ch. 736, 68A Stat. 847, as amended (26 U.S.C. 7101)) Sec. 24.152 [Amended] 0 49. Section 24.152 is amended by removing the words ``Form 1533'' and adding, in their place, the words ``TTB Form 5000.18''. 0 50. Section 24.154 is revised to read as follows: Sec. 24.154 Superseding bonds and new bonds for existing proprietors. (a) Superseding bonds. When, in the opinion of the appropriate TTB officer, the interests of the Government demand it, or in any case where the validity of the bond becomes impaired in whole or in part for any reason, the principal must give a new bond that supersedes the existing bond. A superseding bond will be required immediately in the case of the insolvency of a corporate surety. Executors, administrators, assignees, receivers, trustees, or other persons acting in a fiduciary capacity, to continue or to liquidate the business of the principal, must execute and file a superseding bond or obtain the consent of the surety or sureties on the existing bond or bonds. When under the provisions of Sec. 24.157 the surety has filed an application to be relieved of liability under any bond given under this part and the principal desires or intends to continue business or operations to which the bond relates, the principal must file a valid superseding bond to be effective on or before the date specified in the surety's notice. Superseding bonds will show the current date of execution and the effective date. (b) New bonds for existing proprietors--(1) General. Subject to paragraph (b)(2) of this section, if an existing proprietor has not furnished a bond or bonds covering operations and withdrawals of wine for nonindustrial use because the proprietor was exempt from bond requirements under Sec. 24.146(d), the proprietor must furnish a bond or bonds as provided in this subpart beginning in any portion of a calendar year following the first date on which the aggregate amount of tax due from the proprietor during the calendar year exceeds $50,000. When furnishing the bond or bonds, the proprietor must also file an amended application as provided in Sec. 24.132 to change the proprietor's bond status. (2) Grace period for wine bonds under Sec. 24.146(a). An existing proprietor who must furnish a wine bond under Sec. 24.146(a) as provided in paragraph (b)(1) of this section will be treated as having furnished the required bond if the proprietor submits the bond on TTB F 5120.36 no later than 30 days following the first date on which the aggregate amount of tax due from the proprietor during the relevant calendar year exceeds $50,000. The proprietor will be treated as having furnished the required wine bond for purposes of this paragraph until TTB approves or disapproves the bond. Until TTB takes action on a bond submission, a proprietor who complies with the requirements of this paragraph may remove wine on which the tax has been determined, but not paid, to the extent that the proprietor's liability for tax on those removals does not exceed $1,000. (3) Tax deferral bonds under Sec. 24.146(b). The grace period specified in paragraph (b)(2) of this section does not apply to tax deferral bonds under Sec. 24.146(b). Except to the extent authorized under paragraph (b)(2) of this section, a proprietor who must furnish a tax deferral bond under paragraph (b)(1) of this section may not withdraw wine from the bonded premises on which the tax has been determined, but not paid, until TTB approves the tax deferral bond. (Sec. 201, Pub. L. 85-859, 72 Stat. 1379, as amended, 1380, as amended, 1394, as amended (26 U.S.C. 5354, 5362, 5551)) (Approved by the Office of Management and Budget under control number 1513-0009) Sec. 24.156 [Amended] 0 51. Section 24.156 is amended by adding after the words ``as provided in Sec. 24.140(b);'' the words ``pursuant to an application by an existing proprietor who becomes exempt from bond requirements as provided in Sec. 24.160;''. 0 52. Section 24.160 is added to subpart D to read as follows: Sec. 24.160 Application to terminate bond by existing proprietor who becomes exempt from bond requirements. If a proprietor has held a bond or bonds covering operations or withdrawals of wine for nonindustrial use and becomes exempt from those bond requirements as provided under Sec. 24.146(d), the proprietor may apply to TTB to terminate the bond or bonds covering such operations or withdrawals. To apply, the proprietor must file an amended application as provided in Sec. 24.132. The proprietor must accurately state in the submission that the proprietor: (a) Will withdraw wine for deferred payment of tax under Sec. 24.271; (b) Reasonably expects to be liable for not more than $50,000 in taxes with respect to wine imposed by 26 U.S.C. 5041 and 7652 for the current calendar year (see definition of ``Reasonably expects'' in Sec. 24.271(b)(1)(iv)(B)); and (c) Was liable for not more than $50,000 in such taxes in the preceding calendar year. 0 53. In Sec. 24.271, the section heading and paragraphs (a) and (b) are revised to read as follows: Sec. 24.271 Deferred payment return periods--annual, quarterly, and semimonthly. (a) General. This section governs payment of tax on a deferred basis. The tax on wine is paid by an Excise Tax Return, TTB F 5000.24, which is filled with a remittance (check, cash, or money order) of the full amount of tax due. Prepayments of tax on wine during the period covered by the return are shown separately on the Excise Tax Return form. If no tax is due for the return period, the filing of a return is not required. (b) Return periods and due dates--(1) Return periods. (i) Semimonthly return period. Except in the case of a taxpayer who qualifies for, and chooses to use, an annual or quarterly return period as provided in paragraph (b)(1)(ii) or (b)(1)(iii) of this section, all taxpayers who defer payment of taxes must use semimonthly return periods. The semimonthly return periods run from the 1st day through the 15th day of each month, and from the 16th day through the last day of each month, except as otherwise provided in paragraph (c) of this section. (ii) Annual return period. Subject to paragraph (b)(1)(iv) of this section, a taxpayer may choose to use an annual return period if the taxpayer was not liable for more than $1,000 in taxes with respect to wine imposed by 26 U.S.C. 5041 and 7652 in the preceding calendar year and if that taxpayer reasonably expects to be liable for not more than $1,000 in such taxes during the current calendar year. Except as provided in paragraph (b)(2), the last day for paying the tax and filing the return will be the 14th day after the last day of the calendar year. However, the taxpayer may not use the annual return period procedure for any portion of the calendar year following the first date on which the aggregate amount of tax due from the taxpayer during the calendar year exceeds $1,000, and any tax that [[Page 1126]] has not been paid on that date will be due on the 14th day after the last day of the quarterly or semimonthly period in which that date occurs. (iii) Quarterly return period. Except as provided in paragraph (b)(1)(ii) of this section and subject to paragraph (b)(1)(iv) of this section, a taxpayer may choose to use a quarterly return period if the taxpayer was not liable for more than $50,000 in taxes with respect to wine imposed by 26 U.S.C. 5041 and 7652 in the preceding calendar year and if that taxpayer reasonably expects to be liable for not more than $50,000 in such taxes during the current calendar year. In such a case the last day for paying the tax and filing the return will be the 14th day after the last day of the calendar quarter. However, the taxpayer may not use the quarterly return period procedure for any portion of the calendar year following the first date on which the aggregate amount of tax due from the taxpayer during the calendar year exceeds $50,000, and any tax that has not been paid on that date will be due on the 14th day after the last day of the semimonthly period in which that date occurs. (iv) Additional rules for annual and quarterly return periods. The following additional rules apply to the annual and quarterly return period procedures under this section: (A) A ``taxpayer'' is an individual, corporation, partnership, or other entity that is assigned a single Employer Identification Number as defined in 26 CFR 301.7701-12; (B) ``Reasonably expects'' means that there is no existing or anticipated circumstance known to the taxpayer (such as an increase in production capacity) that would cause the taxpayer's tax liability to exceed the prescribed limit; (C) A taxpayer with multiple locations must combine the wine tax liability for all locations to determine eligibility for the return procedures; (D) A taxpayer who has both domestic operations and import transactions must combine the wine tax liability on the domestic operations and the imports to determine eligibility for the return procedures; (E) The controlled group rules of 26 U.S.C. 5061(e), which concern treatment of controlled groups as one taxpayer, do not apply for purposes of determining eligibility for the return procedures. However, a taxpayer who is eligible for the return procedures, and who is a member of a controlled group that owes $5 million or more in wine excise taxes per year, is required to pay taxes by electronic fund transfer (EFT). Payments via EFT must be transmitted in accordance with section 5061(e); (F) A new taxpayer is eligible to use the return procedures the first year of business simply if the taxpayer reasonably expects to be liable for not more than $1,000 (in the case of the annual return procedure) or $50,000 (in the case of the quarterly return procedure) in wine taxes during that calendar year; and (G) If a taxpayer becomes ineligible to use a return procedure described in paragraph (b)(1)(ii) or (iii) of this section because the taxpayer's liability exceeds $1,000 or $50,000, respectively, in tax liability during a taxable year, that taxpayer may resume using that return procedure only after a full calendar year has passed during which the taxpayer's liability did not exceed $1,000 or $50,000 as the case may be. A taxpayer may not use an annual or quarterly return procedure during any calendar year in which the taxpayer reasonably expects to be liable for more than $1,000, in the case of the annual return procedure, or $50,000, in the case of the quarterly return procedure, in wine taxes. (2) Semimonthly, quarterly, and annual tax return due dates. (i) General. Except as provided in paragraph (b)(2)(ii), the taxpayer must file the semimonthly, quarterly, or annual return, with remittance, for each return period not later than the 14th day after the last day of the return period. If the due date falls on a Saturday, Sunday, or legal holiday, the return and remittance are due on the immediately preceding day that is not a Saturday, Sunday, or legal holiday, except as otherwise provided in paragraph (c)(3) of this section. (ii) Due dates for 2016 annual returns. In the case of a taxpayer filing an annual return covering the 2016 calendar year, the taxpayer must file the return, with remittance, not later than January 30, 2017. * * * * * Sec. 24.273 [Removed and Reserved] 0 54. Section 24.273 is removed and reserved. 0 55. In Sec. 24.275, paragraph (a) is revised to read as follows: Sec. 24.275 Prepayment of tax. (a) General--(1) Circumstances where prepayment required. The proprietor must, before removal of wine for consumption or sale, file Excise Tax Return, TTB F 5000.24, with remittance, where: (i) The proprietor is required to prepay tax under Sec. 24.276; or (ii) The proprietor is required to obtain a tax deferral bond, the bond is not in the maximum penal sum, and the tax determined and unpaid at any one time exceeds the coverage of the wine bond. (2) Forwarding the return with remittance. The proprietor must forward the return with remittance pursuant to the instructions printed on the return. For the purpose of complying with this section, the term ``forwarding'' means the deposit in the United States mail properly addressed to TTB. * * * * * 0 56. In Sec. 24.283, the second sentence is revised to read as follows; Sec. 24.283 Reconsignment. * * * The proprietor to whom the wine is reconsigned will be liable for the tax on the wine while it is in transit after reconsignment. * * * * * * * * Sec. 24.300 [Amended] 0 57. Section 24.300 is amended as follows: 0 a. In paragraph (g)(2)(ii), by removing the citation ``Sec. 24.271'' and adding, in its place, the citation ``Sec. 24.271(b)(1)(iii)''; and 0 b. In paragraph (g)(2)(iii), by removing the citation ``Sec. 24.273'' and adding, in its place, the citation ``Sec. 24.271(b)(1)(ii)''. Sec. 24.323 [Amended] 0 58. In Sec. 24.323, the first sentence is amended by removing the words ``, unless exempted under the provisions of Sec. 24.273''. PART 25--BEER 0 59. The authority citation for part 25 continues to read as follows: Authority: 19 U.S.C. 81c; 26 U.S.C. 5002, 5051-5054, 5056, 5061, 5121, 5122-5124, 5222, 5401-5403, 5411-5417, 5551, 5552, 5555, 5556, 5671, 5673, 5684, 6011, 6061, 6065, 6091, 6109, 6151, 6301, 6302, 6311, 6313, 6402, 6651, 6656, 6676, 6806, 7342, 7606, 7805; 31 U.S.C. 9301, 9303-9308. Sec. 25.4 [Amended] 0 60. In Sec. 25.4, the list of related regulations is amended by removing the entry ``31 CFR Part 225--Acceptance of Bonds, Notes, or Other Obligations Issued or Guaranteed by the United States as Security in Lieu of Surety or Sureties on Penal Bonds'' and adding, in its place, the entry ``31 CFR Part 225--Acceptance of Bonds Secured by Government Obligations in Lieu of Bonds with Sureties''. 0 61. Section 25.11 is amended by adding, in alphabetical order, definitions of ``Bonded premises of a [[Page 1127]] distilled spirits plant'', ``Bonded wine premises'', and ``Bonded winery'' to read as follows: Sec. 25.11 Meaning of terms. * * * * * Bonded premises of a distilled spirits plant. The bonded premises of a distilled spirits plant as described in part 19 of this chapter. This term includes premises described in the preceding sentence even if the distilled spirits plant proprietor, as authorized under the exemption set forth in Sec. 19.151(d) of this chapter, has not provided a bond for the premises. Bonded wine premises. Bonded wine premises established under part 24 of this chapter. This term includes premises described in the preceding sentence even if the proprietor, as authorized under the exemption set forth in Sec. 24.146(d) of this chapter, has not provided a bond for the premises. Bonded winery. The premises of a bonded winery as described in part 24 of this chapter. This term includes premises described in the preceding sentence even if the proprietor, as authorized under Sec. 24.146(d) of this chapter, has not provided a bond for the premises. * * * * * 0 62. Section 25.62 is amended by adding paragraph (a)(13) to read as follows: Sec. 25.62 Data for notice. (a) * * * (13) A statement whether the brewer is required to furnish a bond under Sec. 25.91. * * * * * 0 63. Section 25.72 is amended as follows: 0 a. In the third sentence of paragraph (a), by adding after the words ``own name'' the words ``, except that the successor brewer is not required to file a bond if the brewer is exempt from bond requirements under Sec. 25.91(e)''; and 0 b. In paragraph (b)(1), by adding a second sentence. The addition reads as follows: Sec. 25.72 Change in proprietorship. * * * * * (b) * * * (1) * * * A fiduciary is not required to furnish a consent of surety under this paragraph if the brewer is exempt from bond requirements under Sec. 25.91(e). * * * * * 0 64. Section 25.73 is amended as follows: 0 a. In paragraph (b)(3), by removing the words ``A consent'' and adding, in their place, the words ``If the brewer has filed a bond, a consent''; and 0 b. By revising paragraph (c). The revision reads as follows: Sec. 25.73 Change in partnership. * * * * * (c) Settlement of partnership. If the surviving partner(s) acquires the business on completion of the settlement of the partnership, that partner(s) must qualify in his or her own name from the date of acquisition. The partner(s) must give a new brewer's notice on Form 5130.10 and a new bond on Form 5130.22, except that the partner(s) is not required to file a bond if the brewer is exempt from bond requirements under Sec. 25.91(e). * * * * * 0 65. Section 25.77 is amended as follows: 0 a. In the first sentence, by removing the words ``Form 1533 (5000.18) in accordance with'' and adding, in their place, the words ``Form 5000.18, as required under''; and 0 b. By adding a new second sentence. The addition reads as follows: Sec. 25.77 Change in location. * * * The brewer is not required to file a new bond or consent of surety if the brewer is exempt from bond requirements under Sec. 25.91(e). * * * * * * * * 0 66. Section 25.79 is added immediately after Sec. 25.78 and before the undesignated center heading to read as follows: Sec. 25.79 Change in bond status. A brewer must file an amended Brewer's Notice, Form 5130.10, if the brewer's bond status changes because either: (a) A brewer has not furnished any bond and has become required to furnish a bond as provided under Sec. 25.95(b); or (b) A brewer has furnished a bond, has become exempt from bond requirements under Sec. 25.91(e), and chooses to terminate all bond coverage as provided under Sec. 25.106. Sec. 25.81 [Amended] 0 67. In Sec. 25.81, paragraph (b)(3) is amended by adding after the words ``alternation of premises'' the words ``, except to the extent no bond is required under Sec. 24.146 of this chapter or Sec. 25.91(e)''. 0 68. Section 25.91 is amended as follows: 0 a. In the first sentence of paragraph (a), by removing the words ``Every person'' and adding, in their place, ``Except as provided in paragraph (e) of this section, every person''; and 0 b. By adding paragraph (e). The addition reads as follows: Sec. 25.91 Requirement for bond. * * * * * (e) Bond exemption. A brewer who pays tax on a deferred basis under Sec. 25.164 is not required to provide a bond to cover operations and withdrawals of beer during any portion of a calendar year for which the brewer is eligible to use an annual or quarterly return period under Sec. 25.164(c)(2) or (c)(3). A brewer is considered to be paying tax on a deferred basis for purposes of the preceding sentence even if the brewer does not pay tax during every return period as long as the brewer intends to pay tax in a future period. See Sec. Sec. 25.62 and 25.79 for rules governing applying for this bond exemption. See Sec. 25.95 for rules governing when an existing brewer who has not provided a bond under this paragraph must obtain bond coverage. * * * * * Sec. 25.92 [Amended] 0 69. Section 25.92 is amended by removing the words ``Form 1533 (5000.18)'' and adding, in their place, the words ``Form 5000.18''. 0 70. In Sec. 25.93, paragraph (a) is revised to read as follows: Sec. 25.93 Penal sum of bond. (a) General. Except as provided in paragraph (a)(3) of this section, a brewer must furnish a bond of a penal sum as prescribed in this section. (1) Brewers who pay taxes using semimonthly periods. In the case of a brewer who pays taxes using semimonthly return periods under Sec. 25.164(c)(1), the penal sum of the brewers bond must be equal to 10 percent of the maximum amount of tax calculated at the rates prescribed by law which the brewer will become liable to pay during a calendar year during the period of the bond on beer: (i) Removed for transfer to the brewery from other breweries owned by the same brewer; (ii) Removed without payment of tax for export or for use as supplies on vessels and aircraft; (iii) Removed without payment of tax for use in research, development, or testing; and (iv) Removed for consumption or sale. (2) Brewers who pay taxes using quarterly or annual return periods. In the case of a brewer who pays taxes using annual or quarterly return periods under Sec. 25.164(c)(2) or (c)(3), the penal sum of the brewers bond is $1,000 and covers the beer described in paragraph (a)(1)(i)-(iv) of this section. [[Page 1128]] (3) Brewers who are exempt from bond requirements. This section does not apply to a brewer who is exempt from bond requirements under Sec. 25.91(e). * * * * * 0 71. Section 25.95 is revised to read as follows: Sec. 25.95 Superseding bonds and new bonds for existing brewers. (a) Superseding bonds. The appropriate TTB officer may at any time, at his or her discretion, require a new bond that supersedes the existing bond. A superseding bond is required immediately in the case of insolvency of a surety. Executors, administrators, assignees, receivers, trustees, or other persons acting in a fiduciary capacity must execute a superseding bond or obtain a consent of surety on all bonds in effect. When the interests of the Government so demand, or in any case when the security of the bond becomes impaired for any reason, the principal will be required to give a superseding bond. When a bond is found to be not acceptable by the appropriate TTB officer, the principal will be required immediately to obtain a satisfactory superseding bond or discontinue business. (b) New bonds for existing brewers--(1) General. Subject to paragraph (b)(2) of this section, if an existing brewer has not furnished a bond covering operations and withdrawals of beer because the brewer was exempt from bond requirements under Sec. 25.91(e), the brewer must furnish a bond as provided in this subpart beginning in any portion of a calendar year following the first date on which the aggregate amount of tax due from the brewer during the calendar year exceeds $50,000. When furnishing the bond, the brewer must also file an amended Brewer's Notice, Form 5130.10, as provided in Sec. 25.79 to change the brewer's bond status. (2) Grace period for new bonds for existing brewers--(i) Bonds covering operations. Except as provided in paragraph (b)(2)(ii) of this section, an existing brewer who must furnish a bond as provided in paragraph (b)(1) of this section will be treated as having furnished the required bond if the brewer submits the bond on Form 5130.22 no later than 30 days following the first date on which the aggregate amount of tax due from the brewer during the relevant calendar year exceeds $50,000. Except as provided in paragraph (b)(2)(ii) of this section, the brewer will be treated as having furnished the required bond for the purposes of this paragraph until TTB approves or disapproves the bond. (ii) Bonds covering tax-deferred removals. The grace period specified in paragraph (b)(2)(i) of this section does not apply to beer removed for consumption or sale on deferred payment of tax. A brewer that must furnish a bond under paragraph (b)(1) of this section may not remove beer for consumption or sale on deferred payment of tax until TTB approves the bond. (Sec. 201, Pub. L. 85-859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) 0 72. Section 25.98 is amended as follows: 0 a. In paragraph (b), by removing the words ``Circular No. 570, Companies Holding Certificates of Authority as Acceptable Reinsuring Companies'' and adding, in their place, the words ``Circular 570, Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies''; 0 b. By revising paragraph (c); 0 c. In paragraph (e), by removing the citation ``Part 225'' and adding, in its place, the citation ``part 225''; and 0 d. By adding paragraph (f). The revision and addition read as follows: Sec. 25.98 Surety or security. * * * * * (c) Availability of Circular 570. Department of the Treasury Circular 570 is published in the Federal Register annually on the first business day in July, and supplemental changes are published periodically thereafter. The most recent circular and any supplemental changes to it may be viewed on the Bureau of the Fiscal Service Web site at https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm. * * * * * (f) Bond guaranteed by deposit of cash or cash equivalent. As an alternative to the corporate surety bond under paragraph (b) of this section, a person can file a bond that guarantees payment of the liability by submitting cash or its equivalent (including a money order, cashier's check, or personal check). Cash or its equivalent must be no less than the penal sums of the required bonds. Bonds described in this paragraph will be released if there are no outstanding liabilities when the bond is terminated. Cash equivalents must be payable to the Alcohol and Tobacco Tax and Trade Bureau. * * * * * 0 73. Section 25.102 is revised to read as follows: Sec. 25.102 Termination of surety's liability. The liability of a surety on a bond required by this part will be terminated only as to liability arising on or after: (a) The effective date of a superseding bond; (b) The date of approval of the discontinuance of business of the brewer; (c) Following the giving of notice by the surety; or (d) In the case of a brewer who applies to terminate a surety bond under Sec. 25.106, the date that TTB approves the brewer's application under that section. (Sec. 201, Pub. L. 85-859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) 0 74. Section 25.104 is revised to read as follows: Sec. 25.104 Termination of bonds. (a) General. Brewer's bonds may be terminated as to liability for future removals or receipts under the following circumstances: (1) Pursuant to application of the surety as provided in Sec. 25.103; (2) On approval of a superseding bond as provided in Sec. 25.95; (3) When a brewer discontinues business as provided in Sec. 25.85; or (4) When an existing brewer who becomes exempt from bond requirements terminates the bond as provided in Sec. 25.106. (b) Notification. On termination of the surety's liability under a bond, the appropriate TTB officer will notify the principal and sureties. (31 U.S.C. 9301, 9303) Sec. 25.105 [Amended] 0 75. In Sec. 25.105, the first sentence is amended by removing the citation ``31 CFR Part 225'' and adding, in their place, the citation ``31 CFR part 225''. 0 76. Section 25.106 is added to subpart H to read as follows: Sec. 25.106 Application to terminate bond by existing brewer who becomes exempt from bond requirements. If a brewer has held a bond and becomes exempt from bond requirements under Sec. 24.91(e), the brewer may apply to TTB to terminate the bond. To apply, the brewer must file an amendment to the Brewer's Notice, Form 5130.10, as provided in Sec. 25.79. The brewer must accurately state in the submission to TTB that the brewer: (a) Will withdraw beer for deferred payment of tax under Sec. 25.164; (b) Reasonably expects to be liable for not more than $50,000 in taxes with respect to beer imposed by 26 U.S.C. 5051 and 7652 for the current calendar year (see definition of ``Reasonably expects'' in Sec. 25.164(c)(4)(ii)); and [[Page 1129]] (c) Was liable for not more than $50,000 in such taxes in the preceding calendar year. 0 77. Section 25.164 is revised to read as follows: Sec. 25.164 Deferred payment return periods--annual, quarterly, and semimonthly. (a) Requirement for filing. This section governs payment of tax on a deferred basis. Each brewer must pay the tax on beer (unless prepaid) by return on Form 5000.24. The brewer must file Form 5000.24 as a return regardless of whether tax has been prepaid as provided in Sec. 25.175 during the return period. The brewer must file a return on Form 5000.24 for each return period even though no beer was removed for consumption or sale. (b) Payment of tax. The brewer must include for payment with the return the full amount of tax required to be determined (and which has not been prepaid) on all beer removed for consumption or sale during the period covered by the return. (c) Return periods--(1) Semimonthly return period. Except in the case of a taxpayer who qualifies for annual or quarterly return periods as provided in paragraphs (c)(2) or (c)(3) of this section, all taxpayers must use semimonthly return periods for deferred payment of tax. The semimonthly return periods run from the brewer's business day beginning on the first day of each month through the brewer's business day beginning on the 15th day of that month, and from the brewer's business day beginning on the 16th day of the month through the brewer's business day beginning on the last day of the month, except as otherwise provided in Sec. 25.164a. (2) Annual return period. Subject to paragraph (b)(4) of this section, a taxpayer who reasonably expects to be liable for not more than $1,000 in taxes with respect to beer imposed by 26 U.S.C. 5051 and 7652 in the current calendar year, and that was liable for not more than $1,000 in such taxes in the preceding calendar year, may choose to use an annual return period. However, the taxpayer may not use the annual return period procedure for any portion of the calendar year following the first date on which the aggregate amount of tax due from the taxpayer during the calendar year exceeds $1,000, and any tax which has not been paid on that date will be due on the 14th day after the last day of the quarterly or semimonthly period in which that date occurs. (3) Quarterly return period. A taxpayer may choose to use a quarterly return period if the taxpayer was not liable for more than $50,000 in taxes with respect to beer imposed by 26 U.S.C. 5051 and 7652 in the preceding calendar year and if that taxpayer reasonably expects to be liable for not more than $50,000 in such taxes during the current calendar year. In such a case the last day for paying the tax and filing the return will be the 14th day after the last day of the calendar quarter. However, the taxpayer may not use the quarterly return period procedure for any portion of the calendar year following the first date on which the aggregate amount of tax due from the taxpayer during the calendar year exceeds $50,000, and any tax that has not been paid on that date will be due on the 14th day after the last day of the semimonthly period in which that date occurs. (4) Additional rules for annual and quarterly return periods. The following additional rules apply to the annual and quarterly return period procedure under this section: (i) A ``taxpayer'' is an individual, corporation, partnership, or other entity that is assigned a single Employer Identification Number as defined in 26 CFR 301.7701-12; (ii) ``Reasonably expects'' means that there is no existing or anticipated circumstance known to the taxpayer (such as an increase in production capacity) that would cause the taxpayer's tax liability to exceed the prescribed limit; (iii) A taxpayer with multiple locations must combine the beer tax liability for all locations to determine eligibility for the return procedures; (iv) A taxpayer who has both domestic operations and import transactions must combine the beer tax liability on the domestic operations and the imports to determine eligibility for the return procedures; (v) The controlled group rules of 26 U.S.C. 5061(e), which concern treatment of controlled groups as one taxpayer, do not apply for purposes of determining eligibility for the return procedures. However, a taxpayer who is eligible for the return procedures, and who is a member of a controlled group that owes $5 million or more in beer excise taxes per year, is required to pay taxes by electronic fund transfer (EFT). Payments via EFT must be transmitted in accordance with section 5061(e); (vi) A new taxpayer is eligible to use the return procedures in the first year of business simply if the taxpayer reasonably expects to be liable for not more than $1,000 (in the case of the annual return procedure) or $50,000 (in the case of the quarterly return procedure) in beer taxes during that calendar year; and (vii) If a taxpayer becomes ineligible to use a return procedure prescribed in paragraph (c)(2) or (c)(3) of this section because the taxpayer's liability exceeds $1,000 or $50,000, respectively, during a taxable year, that taxpayer may resume using that return procedure only after a full calendar year has passed during which the taxpayer's liability did not exceed $1,000 or $50,000, as the case may be. A taxpayer may not use an annual or quarterly return procedure during any calendar year in which the taxpayer reasonably expects to be liable for more than $1,000, in the case of the annual return procedure, or $50,000, in the case of the quarterly return procedure, in beer taxes. (d) Time for filing returns and paying tax. Except as otherwise provided in Sec. 25.164a for semimonthly tax returns, the brewer must file the tax return, TTB F 5000.24, for each return period, and make remittance as required by this section, not later than the 14th day after the last day of the return period. If the due date falls on a Saturday, Sunday, or legal holiday, the return and remittance are due on the immediately preceding day that is not a Saturday, Sunday, or legal holiday, except as otherwise provided in Sec. 25.164a(c). (e) Timely filing. (1) When the brewer sends the semimonthly, quarterly, or annual tax return, Form 5000.24, by U.S. mail, in accordance with the instructions on the form, as required by this section, with remittance as provided for in this section, or without remittance as provided for in Sec. 25.165, the date of the official postmark of the United States Postal Service stamped on the cover in which the return and remittance were mailed is considered the date of delivery of the return and the date of delivery of the remittance, if enclosed with the return. When the postmark on the cover is illegible, the burden is on the brewer to prove when the postmark was made. (2) When the brewer sends the semimonthly, quarterly, or annual return with or without remittance by registered mail or by certified mail, the date of registry or the date of the postmark on the sender's receipt of certified mail will be treated as the date of delivery of the return and of the remittance, if enclosed with the return. (Approved by the Office of Management and Budget under control number 1513-0083) (Aug. 16, 1954, ch. 736, 68A Stat. 775, as amended (26 U.S.C. 6302); sec. 201, Pub. L. 85-859, 72 Stat. 1335, as amended (26 U.S.C. 5061)) [[Page 1130]] Sec. 25.174 [Amended] 0 78. In Sec. 25.174, the first sentence of paragraph (a) is amended by adding after the word ``When'' the words ``a brewer has filed a bond and''. 0 79. In Sec. 25.184, paragraph (a) is revised to read as follows: Sec. 25.184 Losses in transit. (a) Liability for losses. The brewery to which beer is transferred is liable for the tax on beer lost in transit. If beer is reconsigned while in transit or returned to the shipping brewery, the brewery to which the beer is reconsigned or returned is liable for the tax on beer lost in transit. * * * * * 0 80. Section 25.274 is amended as follows: 0 a. In the first sentence of paragraph (a), by removing the words ``Any person'' and adding, in their place, ``Except as provided in paragraph (d) of this section, any person''; and 0 b. By adding paragraph (d). The addition reads as follows: Sec. 25.274 Bond. * * * * * (d) Bond exemption. A person is not required to provide a bond under this section if the person is a brewer qualified under this part and if, under Sec. 25.91(e), the person is exempt from bond requirements applicable to brewers. * * * * * Sec. 25.276 [Amended] 0 81. In Sec. 25.276, paragraph (a) is amended by adding the words ``any required'' before the word ``bond''. PART 26--LIQUORS AND ARTICLES FROM PUERTO RICO AND THE VIRGIN ISLANDS 0 82. The authority citation for part 26 is revised to read as follows: Authority: 19 U.S.C. 81c; 26 U.S.C. 5001, 5007, 5008, 5010, 5041, 5051, 5061, 5111-5114, 5121, 5122-5124, 5131-5132, 5207, 5232, 5271, 5275, 5301, 5314, 5555, 6001, 6109, 6301, 6302, 6804, 7101, 7102, 7651, 7652, 7805; 27 U.S.C. 203, 205; 31 U.S.C. 9301, 9303, 9304, 9306. 0 83. Section 26.11 is amended by adding, in alphabetical order, the definition of ``Bonded premises of a distilled spirits plant'' to read as follows: Sec. 26.11 Meaning of terms. * * * * * Bonded premises of a distilled spirits plant. The bonded premises of a distilled spirits plant as described in part 19 of this chapter. This term includes premises described in the preceding sentence even if the distilled spirits plant proprietor, as authorized under the exemption set forth in Sec. 19.151(d) of this chapter, has not provided a bond for the premises. * * * * * 0 84. Section 26.62 is amended as follows: 0 a. In paragraph (a), by removing the words ``Circular No. 570'' and adding, in their place, the words ``Circular 570''; and 0 b. By revising paragraph (b). The revision reads as follows: Sec. 26.62 Corporate surety. * * * * * (b) Department of the Treasury Circular 570 is published in the Federal Register annually on the first business day in July, and supplemental changes are published periodically thereafter. The most recent circular and any supplemental changes to it may be viewed on the Bureau of the Fiscal Service Web site at https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm. * * * * * 0 85. Section 26.63 is amended as follows: 0 a. By revising the section heading; 0 b. By redesignating the existing text as paragraph (a) and adding a paragraph heading; 0 c. In redesignated paragraph (a), by removing the words ``Acceptance of Bonds, Notes or Other Obligations Issued or Guaranteed by the United States as Security in Lieu of Surety or Sureties on Penal Bonds'' and adding, in their place, the words ``Acceptance of Bonds Secured by Government Obligations in Lieu of Bonds with Sureties''; and 0 d. By adding paragraph (b). The revision and additions read as follows: Sec. 26.63 Deposit of securities or cash (including cash equivalents) in lieu of corporate surety. (a) Deposit of securities. * * * (b) Deposit of cash or cash equivalent. In lieu of corporate surety, a person can file a bond that guarantees payment of the liability by submitting cash or its equivalent (including a money order, cashier's check, or personal check). Cash or its equivalent must be no less than the penal sums of the required bonds. Cash equivalents must be payable to the Alcohol and Tobacco Tax and Trade Bureau. * * * * * Sec. 26.64 [Amended] 0 86. Section 26.64 is amended by removing the words ``Form 1533'' and adding, in their place, the words ``TTB Form 5000.18''. 0 87. Section 26.66 is amended as follows: 0 a. By revising paragraph (a); and 0 b. By adding paragraph (c). The revision and addition read as follows: Sec. 26.66 Bond, TTB Form 5110.50--Distilled spirits. (a) General. Except as provided in paragraph (c) of this section, if any person intends to ship to the United States, distilled spirits products of Puerto Rican manufacture from bonded storage in Puerto Rico on computation, but before payment, of the tax imposed by 26 U.S.C. 7652(a), equal to the tax imposed in the United States by 26 U.S.C. 5001(a)(1), the person must, before making any such shipment, furnish a bond. The person must furnish a bond on TTB Form 5110.50 for each premises from which shipment will be made, to secure payment of such tax, at the time and in the manner prescribed in this subpart, on all distilled spirits products shipped. The bond must be executed in a penal sum not less than the amount of unpaid tax which, at any one time, is chargeable against the bond. The penal sum of such bond must not exceed $1,000,000, but in no case will the penal sum be less than $1,000. * * * * * (c) Bonds covering spirits for nonindustrial use and industrial use--(1) Nonindustrial use. A person who pays tax on a deferred basis under Sec. 26.112 is not required to furnish a bond under this section to cover shipments of distilled spirits for nonindustrial use during any portion of a calendar year for which the person is eligible to use an annual or quarterly return period under Sec. 26.112(b)(2) or (b)(3). For purposes of the preceding sentence, a person is considered to be paying tax on a deferred basis even if the person does not pay tax during every return period as long as the person intends to pay tax in a future period. TTB may require a person who has defaulted on any payment to prepay tax as provided in Sec. 26.112(e). (2) Industrial use. A person is required to furnish a bond under this section to cover shipments of distilled spirits for industrial use even if the person pays tax on a deferred basis under Sec. 26.112 and is eligible to use an annual or quarterly return period under Sec. 26.112(b)(2) or (b)(3). For bond requirements governing industrial spirits and other products brought into the United States without incurring tax liability, see Sec. 26.36. [[Page 1131]] (3) Nonindustrial use and industrial use defined. The nonindustrial and industrial uses of distilled spirits are defined in subpart D of part 1 of this chapter. * * * * * 0 88. Section 26.67 is revised to read as follows: Sec. 26.67 Bond, TTB Form 5120.32--Wine. (a) General. Except as provided in paragraph (b) of this section, where a proprietor intends to withdraw, for purpose of shipment to the United States, wine of Puerto Rican manufacture from bonded storage in Puerto Rico on computation, but before payment, of the tax imposed by 26 U.S.C. 7652(a), equal to the tax imposed in the United States by 26 U.S.C. 5041, the proprietor must, before making any such withdrawal, furnish a bond. The proprietor must furnish the bond on TTB Form 5120.32, to secure payment of such tax, at the time and in the manner prescribed in this subpart, on all wine so withdrawn. The bond must be executed in a penal sum not less than the amount of unpaid tax which, at any one time, is chargeable against the bond. The penal sum of such bond must not exceed $250,000, but in no case will the penal sum be less than $500. (b) Bonds covering wine for nonindustrial use and industrial use-- (1) Nonindustrial use. A proprietor who pays tax on a deferred basis under Sec. 26.112 is not required to furnish a bond under this section to cover shipments of wine for nonindustrial use during any portion of a calendar year for which the proprietor is eligible to use an annual or quarterly return period under Sec. 26.112(b)(2) or (b)(3). For purposes of the preceding sentence, the proprietor is considered to be paying tax on a deferred basis even if the proprietor does not pay tax during every return period as long as the proprietor intends to pay tax in a future period. TTB may require a proprietor who has defaulted on any payment to prepay tax as provided in Sec. 26.112(e). (2) Industrial use. A proprietor is required to furnish a bond under this section to cover shipments of wine for industrial use even if the proprietor pays tax on a deferred basis under Sec. 26.112 and is eligible to use an annual or quarterly return period under Sec. 26.112(b)(2) or (b)(3). (3) Nonindustrial use and industrial use defined. The nonindustrial and industrial uses of wine are defined in subpart D of part 1 of this chapter. (Aug. 16, 1954, Chapter 736, 68A Stat. 775, as amended, 847, as amended, 906, 907, as amended (26 U.S.C. 6302, 7101, 7102, 7651(2)(B), 7652(a))) 0 89. Section 26.68 is revised to read as follows: Sec. 26.68 Bond, TTB Form 5130.16--Beer. (a) General. Except as provided in paragraph (b) of this section, where a brewer intends to withdraw, for purpose of shipment to the United States, beer of Puerto Rican manufacture from bonded storage in Puerto Rico on computation, but before payment, of the tax imposed by 26 U.S.C. 7652(a), equal to the tax imposed in the United States by 26 U.S.C. 5051, the brewer must, before making any such withdrawal, furnish a bond. The brewer must furnish the bond on TTB Form 5130.16, to secure payment of such tax, at the time and in the manner prescribed in this subpart, on all beer so withdrawn. The bond must be executed in a penal sum not less than the amount of unpaid tax which, at any one time, is chargeable against the bond. The penal sum of such bond must not exceed $500,000, but in no case will the penal sum be less than $1,000. (b) Bond exemption for certain brewers based on tax liability. A brewer who pays tax on a deferred basis under Sec. 26.112 is not required to furnish a bond under this section to cover shipments of beer during any portion of a calendar year for which the brewer is eligible to use an annual or quarterly return period under Sec. 26.112(b)(2) or (b)(3). For purposes of the preceding sentence, the brewer is considered to be paying tax on a deferred basis even if the brewer does not pay tax during every relevant period as long as the brewer intends to pay tax in a future period. TTB may require a brewer who has defaulted on any payment to prepay tax as provided in Sec. 26.112(e). (Aug. 16, 1954, Chapter 736, 68A Stat. 775, as amended, 847, as amended, 906, 907, as amended (26 U.S.C. 6302, 7101, 7102, 7651(2)(B), 7652(a))) Sec. 26.68a [Amended] 0 90. In Sec. 26.68a, the second sentence is amended as follows: 0 a. By removing the words ``TTB Form 5110.51 or 2900'' and adding, in their place, the words ``TTB Form 5110.51 or 5100.21''; and 0 b. By removing the words ``, TTB Form 5110.32, 2927, or 2929,''. 0 91. Section 26.70 is revised to read as follows: Sec. 26.70 Superseding bonds and new bonds for previously exempt persons. (a) Superseding bonds. Superseding bonds will be required in case of insolvency or removal of any surety, and may, at the discretion of the appropriate TTB officer, be required in any other contingency affecting the validity or impairing the efficiency of an existing bond. Executors, administrators, assignees, receivers, trustees, or other persons acting in a fiduciary capacity, continuing or liquidating the business of the principal, must execute and file a superseding bond or obtain the consent of the surety or sureties on the existing bond or bonds. Where, under the provisions of Sec. 26.72, the surety on any bond given under this subpart has filed an application to be relieved of liability under said bond and the principal desires or intends to continue the operations to which such bond relates, he must file a valid superseding bond to be effective on or before the date specified in the surety's notice. Superseding bonds must show the current date of execution and the effective date. (b) New bonds for previously exempt persons. If a person has not furnished a bond as provided in this subpart because the person was exempt from bond requirements under Sec. Sec. 26.66(c), 26.67(b), or 26.68(b), the person must furnish a bond to cover shipments following the first date on which the aggregate amount of tax due from the person during the calendar year exceeds $50,000. If a person has not furnished the required bond for shipments under this subpart, the person must prepay tax on those shipments as provided in Sec. 26.112(e). Sec. 26.71 [Amended] 0 92. In Sec. 26.71, paragraph (c) is amended by adding after the words ``under the bond'' the words ``(including for the reason that the principal is exempt from bond requirements under Sec. Sec. 26.66(c), 26.67(b), or 26.68(b))''. 0 93. Section 26.74 is revised to read as follows: Sec. 26.74 Release of pledged securities or cash (including cash equivalents). Securities of the United States pledged and deposited as provided in Sec. 26.63(a), will be released only in accordance with the provisions of 31 CFR part 225. Securities and cash (including cash equivalents) will not be released by the appropriate TTB officer until the liability under the bond for which they were pledged has been terminated. When the appropriate TTB officer is satisfied that they may be released, the appropriate TTB officer will fix the date or dates on which a part or all of such securities and cash (including cash equivalents) may be released. At any time prior to the release, the appropriate TTB officer may extend the date of release for such [[Page 1132]] additional length of time as the appropriate TTB officer deems necessary. (61 Stat. 650; 6 U.S.C. 15) 0 94. Section 26.75 is amended as follows: 0 a. By revising the section heading; and 0 b. By removing the words ``Form 1490'' and adding, in their place, the words ``TTB Form 5000.23 PR''. The revision reads as follows: Sec. 26.75 TTB Form 5000.23 PR, Notice of Termination of Bond. * * * * * Sec. 26.76 [Amended] 0 95. Section 26.76 is amended as follows: 0 a. By removing the words ``Form 2900'' and adding, in their place, the words ``TTB Form 5100.21''; and 0 b. By removing the words ``Form 487B'' and adding, in their place, the words ``TTB Form 5170.7''. 0 96. Section 26.80 is amended as follows: 0 a. By revising paragraph (a); and 0 b. By revising the Office of Management and Budget control number reference at the end of the section. The revisions read as follows: Sec. 26.80 Deferred payment of tax--release of spirits. (a) Action by proprietor. Where the proprietor wishes to defer payment of tax, he must execute an agreement on TTB Form 5110.51 to pay the amount of tax which has been computed and entered on the form. If a bond is required under Sec. 26.66, he must certify, under the penalties of perjury, that he is not in default of any payment of tax chargeable against his bond, and that his bond is in the maximum penal sum, or that it is sufficient to cover the amount of tax on the distilled spirits described on the form in addition to all other amounts chargeable against this bond. If the proprietor deferring payment of tax is not required to provide a bond under Sec. 26.66, the proprietor must certify under the penalties of perjury that the proprietor was liable for not more than $50,000 in taxes in the preceding calendar year, reasonably expects to be liable for not more than $50,000 during the current calendar year, and is not using the TTB Form 5100.21 for any shipment of distilled spirits for industrial use. The proprietor must deliver all copies of TTB Form 5110.51 and any package gauge record as provided in Sec. 26.164a to the revenue agent. * * * * * (Approved by the Office of Management and Budget under control number 1513-0056) Sec. 26.87 [Amended] 0 97. Section 26.87 is amended by removing the words ``Form 487B'' and adding, in their place, the words ``TTB Form 5170.7''. 0 98. Section 26.93 is amended as follows: 0 a. By revising the section heading; and 0 b. By removing the words ``Form 2900'' and adding, in their place, the words ``TTB Form 5100.21''. The revision reads as follows: Sec. 26.93 Application and permit, TTB Form 5100.21. * * * * * 0 99. Section 26.95 is amended as follows: 0 a. By revising paragraph (a); 0 b. In paragraph (b), by removing the words ``Form 2900'' each place they appear and adding, in their place, the words ``TTB Form 5100.21''; and 0 c. In paragraph (b), by removing the words ``Form 2897'' and adding, in their place, the words ``TTB Form 5120.32''. The revision reads as follows: Sec. 26.95 Deferred payment of tax--release of wine. (a) Action by proprietor. Where the proprietor wishes to defer payment of tax, he must execute the agreement on TTB Form 5100.21 to pay the amount of tax which has been computed and entered on the form. If a bond is required under Sec. 26.67, he must certify under the penalties of perjury that he is not in default of any payment of tax chargeable against his bond, and that his bond is in the maximum penal sum, or that it is sufficient to cover the amount of tax on the wine described on the form in addition to all other amounts chargeable against his bond. If the proprietor deferring payment of tax is not required to provide a bond under Sec. 26.67, the proprietor must certify under the penalties of perjury that the proprietor was liable for not more than $50,000 in taxes in the preceding calendar year, reasonably expects to be liable for not more than $50,000 during the current calendar year, and is not using the TTB Form 5100.21 for any shipment of wine for industrial use. The proprietor must deliver all copies of TTB Form 5100.21 to the revenue agent. * * * * * Sec. 26.97 [Amended] 0 100. Section 26.97 is amended as follows: 0 a. By removing the words ``Form 487B'' and adding, in their place, the words ``TTB Form 5170.7''; and 0 b. By removing the word ``487B-61-3'' and adding, in its place, the words ``5170.7-17-1''. 0 101. Section 26.102 is amended as follows: 0 a. By revising the section heading; and 0 b. By removing the words ``Form 2900'' each place they appear and adding, in their place, the words ``TTB Form 5100.21''. The revision reads as follows: Sec. 26.102 Application and permit, TTB Form 5100.21. * * * * * Sec. 26.103 [Amended] 0 102. Section 26.103 is amended by removing the words ``Form 2900'' and adding, in their place, the words ``TTB Form 5100.21''. 0 103. Section 26.104 is amended as follows: 0 a. By revising paragraph (a); 0 b. In paragraph (b), by removing the words ``Form 2900'' each place they appear and adding, in their place, the words ``TTB Form 5100.21''; and 0 c. In paragraph (b), by removing the words ``Form 2898'' and adding, in their place, the words ``TTB Form 5130.16''. The revision reads as follows: Sec. 26.104 Deferred payment of tax--release of beer. (a) Action by brewer. Where the brewer will defer payment of tax, he must execute the agreement on TTB Form 5100.21 to pay the amount of tax which has been computed and entered on the form. If a bond is required under Sec. 26.68, he must certify under the penalties of perjury that he is not in default of any payment of tax chargeable against his bond, and that his bond is in the maximum penal sum, or that it is sufficient to cover the amount of tax on the beer described on the form in addition to all other amounts chargeable against his bond. If the brewer deferring payment of tax is not required to provide a bond under Sec. 26.68, the brewer must certify under the penalties of perjury that the brewer was liable for not more than $50,000 in taxes in the preceding calendar year and reasonably expects to be liable for not more than $50,000 during the current calendar year. The brewer must deliver all copies of Form 5100.21 to the revenue agent. * * * * * Sec. 26.106 [Amended] 0 104. Section 26.106 is amended as follows: 0 a. By removing the words ``Form 487B'' and adding, in their place, the words ``TTB Form 5170.7''; and [[Page 1133]] 0 b. By removing the word ``487B-61-3'' and adding, in its place, the words ``5170.7-17-1''. 0 105. Section 26.108 is amended as follows: 0 a. By revising the section heading; and 0 b. By removing the words ``Form 2900'' from paragraph (b) and adding, in their place, the words ``TTB Form 5100.21''. The revision reads as follows: Sec. 26.108 Application for permit, TTB Form 5100.51 and/or 5100.21. * * * * * Sec. 26.110 [Amended] 0 106. Section 26.110 is amended by removing the words ``Form 2900'' each place they appear and adding, in their place, the words ``TTB Form 5100.21''. 0 107. Section 26.112 is amended as follows: 0 a. By revising paragraph (b); 0 b. In paragraph (d), by removing the words ``TTB F 5000.24'' each place they appear and adding, in their place, the words ``TTB Form 5000.25''; and 0 c. In paragraph (e), by removing the word ``bonded''. The revision reads as follows: Sec. 26.112 Returns for deferred payment of tax. * * * * * (b) Return periods--(1) Semimonthly return period. Except in the case of a taxpayer who qualifies for, and chooses to use, annual or quarterly return periods as provided in paragraph (b)(2) or (b)(3) of this section, all taxpayers must use semimonthly return periods for deferred payment of tax. The semimonthly return periods run from the 1st day through the 15th day of each month, and from the 16th day through the last day of each month, except as otherwise provided in paragraph (d) of this section. (2) Annual return period. Subject to paragraph (b)(4) of this section, a taxpayer may choose to use an annual return period if the taxpayer was not liable for more than $1,000 in taxes imposed by 26 U.S.C. 7652 in the preceding calendar year and if that taxpayer reasonably expects to be liable for not more than $1,000 in such taxes during the current calendar year. In such a case the last day for paying the tax and filing the return will be the 14th day after the last day of the calendar year. However, the taxpayer may not use the annual return period procedure for any portion of the calendar year following the first date on which the aggregate amount of tax due from the taxpayer during the calendar year exceeds $1,000, and any tax that has not been paid on that date will be due on the 14th day after the last day of the quarterly or semimonthly period in which that date occurs. (3) Quarterly return period. Except as provided in paragraph (b)(2) of this section and subject to paragraph (b)(4) of this section, a taxpayer may choose to use a quarterly return period if the taxpayer was not liable for more than $50,000 in taxes imposed by 26 U.S.C. 7652 in the preceding calendar year and if that taxpayer reasonably expects to be liable for not more than $50,000 in such taxes during the current calendar year. In such a case the last day for paying the tax and filing the return will be the 14th day after the last day of the calendar quarter. However, the taxpayer may not use the quarterly return period procedure for any portion of the calendar year following the first date on which the aggregate amount of tax due from the taxpayer during the calendar year exceeds $50,000, and any tax that has not been paid on that date will be due on the 14th day after the last day of the semimonthly period in which that date occurs. (4) The following additional rules apply to the annual and quarterly return period procedures under this section: (i) A ``taxpayer'' is an individual, corporation, partnership, or other entity that is assigned a single Employer Identification Number as defined in 26 CFR 301.7701-12; (ii) ``Reasonably expects'' means that there is no existing or anticipated circumstance known to the taxpayer (such as an increase in production capacity) that would cause the taxpayer's tax liability to exceed the prescribed limit; (iii) A taxpayer with multiple locations must combine the tax liability for all locations with respect to distilled spirits, wine, or beer tax liability to determine eligibility for the return procedures; (iv) A taxpayer who has both domestic operations and import transactions must combine the tax liability on the domestic operations and the imports with respect to distilled spirits, wine, or beer tax liability to determine eligibility for the return procedures; (v) The controlled group rules of 26 U.S.C. 5061(e), which concern treatment of controlled groups as one taxpayer, do not apply for purposes of determining eligibility for the return procedures. However, a taxpayer who is eligible for the return procedures, and who is a member of a controlled group that owes $5 million or more in distilled spirits, wine, or beer excise taxes per year, is required to pay taxes by electronic fund transfer (EFT). Quarterly payments via EFT must be transmitted in accordance with section 5061(e); (vi) A new taxpayer is eligible to use the return procedures in the first year of business simply if the taxpayer reasonably expects to be liable for not more than $1,000 (in the case of the annual return procedure) or $50,000 (in the case of the quarterly return procedure) in distilled spirits, wine, or beer taxes during that calendar year; and (vii) If a taxpayer becomes ineligible to use a return procedure described in paragraph (b)(2) or (3) of this section because the taxpayer's liability exceeds $1,000 or $50,000, respectively, during a taxable year, that taxpayer may resume that return procedure only after a full calendar year has passed during which the taxpayer's liability did not exceed $1,000 or $50,000 as the case may be. A taxpayer may not use an annual or quarterly return procedure during any calendar year in which the taxpayer reasonably expects to be liable for more than $1,000 (in the case of the annual return procedure) or $50,000 (in the case of the quarterly return procedure) in distilled spirits, wine, or beer taxes. * * * * * 0 108. In Sec. 26.113, paragraph (a) is amended by adding a new first sentence immediately after the paragraph heading to read as follows: Sec. 26.113 Returns for prepayment of taxes. (a) * * * Except as provided in Sec. Sec. 26.66(c), 26.67(b), or 26.68(b), a proprietor must have an approved bond to defer payment of taxes. * * *. * * * * * 0 109. Section 26.115 is amended as follows: 0 a. By revising the section heading; and 0 b. By removing the words ``Form 487B'' each place they appear and adding, in their place, the words ``TTB Form 5170.7''. The revision reads as follows: Sec. 26.115 Application, TTB Form 5170.7. * * * * * 0 110. Section 26.116 is amended as follows: 0 a. By revising the section heading; 0 b. In the first sentence, by removing the words ``, pursuant to a sufficient bond,''; and 0 c. By removing the words ``Form 487B'' each place they appear and adding, in their place, the words ``TTB Form 5170.7''. The revision reads as follows: Sec. 26.116 Issuance of permit, TTB Form 5170.7, and customs inspection. * * * * * [[Page 1134]] Sec. 26.117 [Amended] 0 111. Section 26.117 is amended by removing the words ``Form 487B'' and adding, in their place, the words ``TTB Form 5170.7''. Sec. 26.118 [Amended] 0 112. Section 26.118 is amended by removing the words ``Form 487B'' each place they appear and adding, in their place, the words ``TTB Form 5170.7''. Sec. 26.119 [Amended] 0 113. Section 26.119 is amended by removing the words ``Form 487B'' and adding, in their place, the words ``TTB Form 5170.7''. Sec. 26.165 [Amended] 0 114. In Sec. 26.165, paragraph (a) introductory text is amended by removing the words ``TTB bond'' and adding, in their place, the words ``the bonded premises of a distilled spirits plant''. 0 115. The heading for subpart Ib is revised to read as follows: Subpart Ib--Shipment of Bulk Distilled Spirits From Puerto Rico, Without Payment of Tax, for Transfer From Customs Custody to the Bonded Premises of a Distilled Spirits Plant Sec. 26.199 [Amended] 0 116. Section 26.199 is amended by removing the words ``internal revenue bond'' and adding, in their place, the words ``the bonded premises of a distilled spirits plant''. Sec. 26.199d [Amended] 0 117. In Sec. 26.199d, paragraph (b) is amended by removing the words ``internal revenue bond'' and adding, in their place, the words ``the bonded premises of a distilled spirits plant''. 0 118. The heading for subpart Oa is revised to read as follows: Subpart Oa--Shipment of Bulk Distilled Spirits From the Virgin Islands, Without Payment of Tax, for Transfer From Customs Custody to the Bonded Premises of a Distilled Spirits Plant PART 27--IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEER 0 119. The authority citation for part 27 is revised to read as follows: Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C. 5001, 5007, 5008, 5010, 5041, 5051, 5054, 5061, 5121, 5122-5124, 5201, 5205, 5207, 5232, 5273, 5301, 5313, 5555, 6109, 6302, 7805. 0 120. Section 27.11 is amended as follows: 0 a. In the definition of ``Bonded premises--distilled spirits plant'', by adding a second sentence; and 0 b. In the definition of ``Eligible wine'', by adding a second sentence. The additions read as follows: Sec. 27.11 Meaning of terms. * * * * * Bonded premises--distilled spirits plant. * * * This term includes premises described in the preceding sentence even if the distilled spirits plant proprietor, as authorized under the exemption set forth in Sec. 19.151(d) of this chapter, has not provided a bond for the premises. * * * * * Eligible wine. * * * For purposes of this definition, the phrase ``receipt in bond'' applies to wine on which tax has not been determined or paid that is received by the proprietor of a distilled spirits plant, even if the proprietor, as authorized under the exemption set forth in Sec. 19.151(d) of this chapter, is not required to provide a bond for the premises where the wine is received. * * * * * Sec. 27.40 [Amended] 0 121. In Sec. 27.40, paragraph (a) is amended by removing the words ``entered into bond'' and adding, in their place, the words ``transferred to the bonded premises of a distilled spirits plant''. Sec. 27.43 [Amended] 0 122. Section 27.43 is amended by removing the words ``entered into bond'' and adding, in their place, the words ``transferred to the bonded premises of a distilled spirits plant''. Sec. 27.171 [Amended] 0 123. Section 27.171 is amended by removing the words ``internal revenue bond'' and adding, in their place, the words ``the bonded premises of a distilled spirits plant''. 0 124. Section 27.175 is amended by adding a new second sentence immediately after the first sentence to read as follows: Sec. 27.175 Receipt by consignee. * * * Proprietors of distilled spirits plants may receive such imported spirits even if they are exempt from bond requirements under Sec. 19.151(d) of this chapter. * * * PART 28--EXPORTATION OF ALCOHOL 0 125. The authority citation for part 28 is revised to read as follows: Authority: 5 U.S.C. 552(a); 19 U.S.C. 81c, 1202; 26 U.S.C. 5001, 5007, 5008, 5041, 5051, 5054, 5061, 5121, 5122, 5201, 5205, 5207, 5232, 5273, 5301, 5313, 5555, 6109, 6302, 7805; 27 U.S.C. 203, 205; 44 U.S.C. 3504(h). Sec. Sec. 28.61, 28.62, 28.63, 28.64, 28.70, 28.72, 28.160, and 28.214 [Amended] 0 126. For each section indicated in the left-hand column of the table below, the section is amended by removing the text indicated in the middle column, and adding, in its place, the text indicated in the right-hand column: ------------------------------------------------------------------------ Section Remove Add ------------------------------------------------------------------------ 28.61, section heading.......... Bond, Form 2734 Bond, Form (5100.25). 5100.25. 28.61, text..................... 2734 (5100.25).... 5100.25. 28.62, section heading.......... Bond, Form 2735 Bond, Form (5100.30). 5100.30. 28.62(a)........................ 2735 (5100.30).... 5100.30. 28.62(c)........................ 2735 (5100.30).... 5100.30. 28.62(c)........................ 1533 (5000.18).... 5000.18. 28.62(d)........................ 2735 (5100.30).... 5100.30. 28.62(d)........................ 1533 (5000.18).... 5000.18. 28.63, section heading.......... Bond, Form 2736 Bond, Form (5100.12). 5100.12. 28.63, text..................... 2736 (5100.12).... 5100.12. 28.64, section heading.......... Bond, Form 2737... Bond, Form 5110.67. 28.64(a), first sentence........ 2737 (5110.67).... 5110.67. 28.64(a), twice in the fourth 2737 (5110.67).... 5110.67. sentence. 28.64(b)........................ 2737 (5110.67).... 5110.67. 28.64(b)........................ 1533.............. 5000.18. [[Page 1135]] 28.70, section heading.......... Termination of Termination of Bonds, Forms 2734 Bonds, Forms (5120.25) and 5120.25 and 2736 (5100.12). 5100.12. 28.70, text..................... 2734 (5120.25) and 5120.25 and 27.36 (5100.12). 5100.12. 28.72........................... 2735 (5100.30), 5100.30 or 2737 (5110.67), 5110.67. or 2738 (5110.68). 28.160(b)....................... 1533.............. 5000.18. 28.214, section heading......... Notice and claim, Notice and claim, Form 1582-A Form 5120.24. (5120.24). 28.214, first sentence.......... 1582-A (5120.24).. 5120.24. 28.214, second sentence......... 1582-A (5120.24).. 5120.24. ------------------------------------------------------------------------ Sec. 28.3 [Amended] 0 127. In Sec. 28.3, the list of related regulations is amended by removing the entry ``31 CFR Part 225--Acceptance of Bonds, Notes, or Other Obligations Issued or Guaranteed by the United States as Security in Lieu of Surety or Sureties on Penal Bonds'' and adding, in its place, the entry ``31 CFR part 225--Acceptance of Bonds Secured by Government Obligations in Lieu of Bonds with Sureties''. 0 128. Section 28.11 is amended as follows: 0 a. In the definition of ``Bonded premises--distilled spirits plant'', by adding a second sentence; and 0 b. In the definition of ``Bonded wine cellar'', by adding a second sentence. The additions read as follows: Sec. 28.11 Meaning of terms. * * * * * Bonded premises--distilled spirits plant. * * * This term includes premises described in the preceding sentence even if the distilled spirits plant proprietor, as authorized under the exemption set forth in Sec. 19.151(d) of this chapter, has not provided a bond for the premises. Bonded wine cellar. * * * This term includes premises described in the preceding sentences even if the proprietor, as authorized under the exemption set forth in Sec. 24.146(d), has not provided a bond for the premises. * * * * * Sec. 28.22 [Amended] 0 129. Section 28.22 is amended by adding after the words ``principal on the bond'' the words ``or, if no bond is required, against the person liable for the tax''. 0 130. Section 28.51 is amended as follows: 0 a. By redesignating the existing text as paragraph (a) and adding a paragraph heading; and 0 b. By adding paragraphs (b) and (c). The additions read as follows: Sec. 28.51 General. (a) Bond requirements. * * * (b) Exemption from bond requirements. If a taxpayer described in this paragraph exports distilled spirits, wine, or beer for which a bond is otherwise required under this part, the taxpayer is not required to file a bond for the exportation if all the following are true: (1) In the case of exportation of distilled spirits or wine, the distilled spirits or wine is for nonindustrial use; and (2) The taxpayer: (i) Reasonably expects to be liable for not more than $50,000 in taxes described in 26 U.S.C. 5061(d)(4) during the current calendar year; (ii) Was liable for not more than $50,000 in such taxes in the preceding calendar year; and (iii) Pays such taxes on a deferred basis using a semimonthly, quarterly, or annual return period as described in 26 U.S.C. 5061(d). (c) Definitions. For purposes of paragraph (b) of this section, the following terms have the meanings indicated: Nonindustrial use. The nonindustrial uses of distilled spirits and wine are defined in subpart D of part 1 of this chapter. Reasonably expects. When used with reference to a taxpayer, reasonably expects means that there is no existing or anticipated circumstances known to the taxpayer (such as an increase in production capacity) that would cause the taxpayer's tax liability to exceed the prescribed limit. Taxpayer. A taxpayer is an individual, corporation, partnership, or other entity that is assigned a single Employer Identification Number (EIN) as defined in 26 CFR 301.7701-12. 0 131. Section 28.52 is amended as follows: 0 a. In paragraph (a), by removing the words ``Circular No. 570'' and adding, in their place, the words ``Circular 570''; and 0 b. By revising paragraph (b). The revision reads as follows: Sec. 28.52 Corporate surety. * * * * * (b) Department of the Treasury Circular 570 is published in the Federal Register annually on the first business day in July, and supplemental changes are published periodically thereafter. The most recent circular and any supplemental changes to it may be viewed on the Bureau of the Fiscal Service Web site at https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm. * * * * * 0 132. Section 28.53 is amended as follows: 0 a. By revising the section heading; 0 b. By redesignating the existing text as paragraph (a) and adding a paragraph heading; and 0 c. By adding paragraph (b). The revision and additions read as follows: Sec. 28.53 Deposit of securities or cash (including cash equivalent) in lieu of corporate surety. (a) Deposit of securities. * * * (b) Deposit of cash (including cash equivalent). In lieu of corporate surety, a person may file a bond that guarantees payment of the liability by submitting cash or its equivalent (including a money order, cashier's check, or personal check). Cash or its equivalent must be no less than the penal sums of the required bonds. Cash equivalents must be payable to the Alcohol and Tobacco Tax and Trade Bureau. * * * * * Sec. 28.54 [Amended] 0 133. Section 28.54 is amended by removing the words ``Form 1533'' and adding, in their place, the words ``TTB Form 5000.18''. 0 134. In Sec. 28.58, paragraphs (a) and (b) are revised to read as follows: Sec. 28.58 Operations or unit bond--distilled spirits. (a) Spirits. Where, as authorized in Sec. 28.91, spirits are withdrawn without payment of tax, from the bonded premises of a distilled spirits plant on notice of the proprietor thereof, the approved operations or unit bond must cover such withdrawals if the proprietor is required to give a bond under part 19 of this chapter. [[Page 1136]] (b) Wine. Where the provisions of part 19 of this chapter require an operations or unit bond to be given and approved to cover the operations of a distilled spirits plant and an adjacent bonded wine cellar, such bond will cover the withdrawal of wine without payment of tax, as authorized in Sec. 28.121, from such bonded wine cellar on application for such withdrawal by the proprietor. * * * * * 0 135. Section 28.60 is revised to read as follows: Sec. 28.60 Brewer's bond, Form 5130.22. When beer or beer concentrate is removed from a brewery without payment of tax for any of the purposes authorized in Sec. 28.141, the brewer's bond, Form 5130.22, will cover the removals if a bond is required to be furnished under the provisions of part 25 of this chapter. (49 Stat. 999, as amended (19 U.S.C. 81c); sec. 201, Pub. L. 85-859, 72 Stat. 1334, as amended, 1388, as amended (26 U.S.C. 5053, 5401)) Sec. 28.65 [Removed and Reserved] 0 136. Section 28.65 is removed and reserved. 0 137. Section 28.67 is revised to read as follows: Sec. 28.67 Superseding bonds and new bonds for previously exempt persons. (a) Superseding bonds. Superseding bonds will be required in case of insolvency or removal of any surety, and may, at the discretion of the appropriate TTB officer, be required in any other contingency affecting the validity or impairing the efficiency of such bond. Executors, administrators, assignees, receivers, trustees, or other persons acting in a fiduciary capacity, continuing or liquidating the business of the principal, must execute and file a superseding bond or obtain the consent of the surety or sureties on the existing bond or bonds. Where, under the provisions of Sec. 28.72, the surety on any bond given under this subpart has filed an application to be relieved of liability under said bond and the principal desires or intends to continue the business or operations to which such bond relates, he must file a valid superseding bond to be effective on or before the date specified in the surety's notice. If the principal does not file a superseding bond when required, he must discontinue the operations intended to be covered by such bond forthwith. Superseding bonds must show the date of execution and the effective date. (b) New bonds for previously exempt persons. If a person has not furnished a bond as provided in this subpart because the person was exempt from bond requirements under Sec. 28.51(b), the person must furnish the required bond for any exportation that occurs during any period to which any of the exemption criteria in Sec. 28.51(b) do not apply to the person. (72 Stat. 1336, 1362; 26 U.S.C. 5062, 5214) 0 138. Section 28.71 is revised to read as follows: Sec. 28.71 Termination of bonds, Forms 5100.30 and 5110.67. (a) General. Continuing bonds, Forms 5100.30 and 5110.67, covering distilled spirits and/or wines withdrawn from time to time without payment of tax under this part, may be terminated as to liability for future withdrawals under the following circumstances: (1) Pursuant to application of surety as provided in Sec. 28.72; (2) On approval of a superseding bond as provided in Sec. 28.67; or (3) On written notification to the appropriate TTB officer by the principal of the discontinuance of withdrawals under the bond (including discontinuance of withdrawals under the bond because the proprietor has become exempt from bond requirements under Sec. 28.51(b)). (b) Cancellation. When no further withdrawals are to be made under a bond on Form 5100.30 or 5110.67 under the circumstances specified in paragraph (a), the bond will be canceled by the appropriate TTB officer in the manner and subject to the conditions provided in Sec. 28.70. (Sec. 201, Pub. L. 85-859, 72 Stat. 1336, as amended, 1352, as amended, 1353, as amended (26 U.S.C. 5062, 5175, 5176)) 0 139. Section 28.73 is revised to read as follows: Sec. 28.73 Relief of surety from bond. (a) Bonds, Forms 5120.25 and 5100.12. The surety on a bond given on Form 5120.25 or Form 5100.12 will be relieved from his liability under the bond when the bond has been canceled as provided for in Sec. 28.70. (b) Bonds, Forms 5100.30 and 5110.67. Where the surety on a bond given on Form 5100.30 or Form 5110.67 has filed application for relief from liability, as provided in Sec. 28.72, the surety will be relieved from liability for withdrawals made wholly subsequent to the date specified in the notice, or on the effective date of a superseding bond, if one is given. Notwithstanding such relief, the liability of the surety will continue until the spirits and/or wines withdrawn without payment of tax under the bond have been properly accounted for. (Sec. 201, Pub. L. 85-859, 72 Stat. 1336, as amended, 1352, as amended, 1353, as amended (26 U.S.C. 5062, 5175, 5176)) 0 140. Section 28.74 is revised to read as follows: Sec. 28.74 Release of pledged securities or cash (including cash equivalents). Securities of the United States, pledged and deposited as provided in Sec. 28.53, will be released only in accordance with the provisions of 31 CFR part 225. Securities and cash (including cash equivalents) will not be released by the appropriate TTB officer until liability under the bond for which they were pledged has been terminated. When the appropriate TTB officer is satisfied that they may be released, he will fix the date or dates on which a part or all of such securities and cash (including cash equivalents) may be released. At any time prior to the release, the appropriate TTB officer may extend the date of release for such additional length of time as he deems necessary. (61 Stat. 650; 6 U.S.C. 15) Sec. 28.80 [Amended] 0 141. Section 28.80 is amended by removing the last sentence. Sec. 28.91 [Amended] 0 142. In Sec. 28.91, paragraph (b) is amended by removing the words ``All withdrawals'' and adding, in their place, the words ``Except as provided in Sec. 28.51(b), all withdrawals''. Sec. 28.95 [Amended] 0 143. Section 28.95 is amended by removing the words ``in internal revenue bond'' and adding, in their place, the words ``on the bonded premises of a distilled spirits plant''. Sec. 28.96 [Amended] 0 144. Section 28.96 is amended by removing the words ``required bond'' and adding, in their place, the words ``bond (if required)''. Sec. 28.116 [Amended] 0 145. In Sec. 28.116, paragraph (d) is amended by removing the words ``principal on the bond under which the spirits were withdrawn'' and adding, in their place, the words ``person who withdrew the spirits''. Sec. 28.117 [Amended] 0 146. Section 28.117 is amended as follows: 0 a. In the first sentence, by removing the words ``principal on the bond under which the spirits were withdrawn'' and adding, in their place, the words ``person who withdrew the spirits''; and [[Page 1137]] 0 b. By removing the word ``principal'' in every other place it appears and adding, in its place, the word ``person''. Sec. 28.121 [Amended] 0 147. Section 28.121 is amended in the undesignated concluding paragraph by removing the words ``All such withdrawals'' and adding, in their place, the words ``Except as provided in Sec. 28.51(b), all such withdrawals''. Sec. 28.131 [Amended] 0 148. In Sec. 28.131, paragraph (b) is amended by removing the words ``principal on the bond under which the wines were withdrawn'' and adding, in their place, the words ``person who withdrew the wines''. Sec. 28.132 [Amended] 0 149. Section 28.132 is amended as follows: 0 a. In the first sentence, by removing the words ``principal on the bond under which the wines were withdrawn'' and adding, in their place, the words ``person who withdrew the wines''; 0 b. In the second sentence, by removing the words ``principal on the bond'' and adding, in their place, the word ``person''; and 0 c. By removing the word ``principal'' in every other place it appears and adding, in its place, the word ``person''. Sec. 28.141 [Amended] 0 150. In Sec. 28.141, paragraph (c) is amended by removing the words ``All removals'' and adding, in their place, the words ``Except where the brewer is not required to hold a bond under Sec. 25.91(e) of this chapter, all removals''. Sec. 28.215 [Amended] 0 151. Section 28.215 is amended as follows: 0 a. In the first sentence, by removing the words ``from bond'' and adding, in their place, the words ``from bonded premises''; 0 b. By removing the words ``Form 1582-A (5120.24)'' and adding, in their place, the words ``Form 5120.24''; and 0 c. By removing the words ``Form 2605 (5120.20)'' each place they appear and adding, in their place, the words ``Form 5120.20''. Sec. 28.250 [Amended] 0 152. Section 28.250 is amended as follows: 0 a. In the introductory text, by removing the words ``, and the principal has filed bond, Form 2738 (5110.68)''; and 0 b. In paragraph (a)(4), by removing the words ``1582-A (5120.24)'' and adding, in their place, the word ``5120.24''. Sec. 28.303 [Amended] 0 153. Section 28.303 is amended as follows: 0 a. In the introductory text, by removing the words ``Form 2635 (5620.8)'' and adding, in their place, the word ``5620.8''; and 0 b. In paragraph (e), by adding after the word ``bond'' the words ``(as applicable)''. Sec. 28.317 [Amended] 0 154. Section 28.317 is amended as follows: 0 a. In the introductory text, by removing the words ``Form 2635 (5620.8)'' and adding, in their place, the words ``Form 5620.8''; and 0 b. In paragraph (c), by adding after the word ``bond'' the words ``(as applicable)''. Sec. 28.331 [Removed and Reserved] 0 155. Section 28.331 is removed and reserved. Sec. 28.332 [Removed and Reserved] 0 156. Section 28.332 is removed and reserved. 0 157. Section 28.333 is amended as follows: 0 a. By revising the section heading; 0 b. By removing the words ``1582-A (5120.24)'' in every place it appears and adding, in its place, the word ``5120.24''; 0 c. By removing the words ``, is not supported by a bond on Form 2738 (5110.68)'' and adding, in their place, the words ``is made''; and 0 d. By removing the words ``Form 1582-B (5130.6)'' and adding, in their place, the words ``Form 5130.6''. The revision reads as follows: Sec. 28.333 Claims for drawback. * * * * * PART 30--GAUGING MANUAL 0 158. The authority citation for part 30 continues to read as follows: Authority: 26 U.S.C. 7805. 0 159. Section 30.11 is amended by adding a definition of ``Bonded premises'' in alphabetical order to read as follows: Sec. 30.11 Meaning of terms. * * * * * Bonded premises. The bonded premises of a distilled spirits plant as described in part 19 of this chapter. This term includes premises described in the preceding sentence even if the distilled spirits plant proprietor has not provided a bond for the premises as authorized under the exemption set forth in Sec. 19.151(d) of this chapter. * * * * * Sec. 30.36 [Amended] 0 162. Section 30.36 is amended by removing the words ``from bond'' and adding, in their place, the words ``from bonded premises''. Signed: December 7, 2016. John J. Manfreda, Administrator. Approved: December 21, 2016. Timothy E. Skud, Deputy Assistant Secretary (Tax, Trade and Tariff Policy). [FR Doc. 2016-31417 Filed 1-3-17; 8:45 am] BILLING CODE 4810-31-P
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DEPARTMENT OF THE TREASURY Table of Contents were not liable for more than $50,000 in
I. The PATH Act such taxes in the preceding calendar
Alcohol and Tobacco Tax and Trade II. TTB Authority year.
Bureau A. Provisions Governing Tax Payment Section 332 of the PATH Act amends
B. Provisions Governing Bonds the IRC to authorize a new annual tax
27 CFR Parts 18, 19, 24, 25, 26, 27, 28, C. Delegation of Authority return period in addition to the
and 30 III. The TTB Regulations semimonthly and quarterly tax return
IV. Overview of the Amendments to the periods that were authorized for excise
[Docket No. TTB–2016–0013; T.D. TTB–146; Regulations taxpayers under the IRC prior to the
Re: Notice No. 167] V. Major Amendments Relating to Tax
enactment of the PATH Act. Under the
Returns
RIN 1513–AC30 A. Incorporation of Annual Return Filing PATH Act, taxpayers must pay taxes
Period imposed with respect to distilled spirits,
Changes to Certain Alcohol-Related B. Elimination of Non-Statutory Annual wines, and beer on a deferred basis
Regulations Governing Bond Return Period for Certain Wine Premises using semimonthly periods unless they
Requirements and Tax Return Filing VI. Bond Exemption Eligibility meet the tax liability limits for the use
A. Circumstances Where Section of annual or quarterly deferred payment
Periods 5061(d)(4)(A) Applies to a Taxpayer periods. As discussed further below,
AGENCY: Alcohol and Tobacco Tax and B. Types of Alcohol Subject to the
deferred payment of tax refers to
Exemption
Trade Bureau, Treasury. payment using one of the three return
C. Summary of Eligibility Criteria for the
ACTION: Temporary rule; Treasury Bond Exemption periods prescribed under the IRC rather
decision; cross reference to notice of VII. Other Bond-Related Amendments than payment each time the tax becomes
proposed rulemaking. A. Retention of Bond-Related Terms in the due. To use the new annual deferred
Regulations payment period, the taxpayer must
SUMMARY: The Alcohol and Tobacco Tax B. Incorporation of Cash Bond reasonably expect to be liable for not
and Trade Bureau (TTB) is amending its Requirements more than $1,000 in excise taxes
regulations relating to alcohol excise C. Brewers Holding Bonds with Flat $1,000 imposed with respect to distilled spirits,
taxes to implement certain changes Penal Sums
wines, and beer for the calendar year
D. Qualification for the Bond Exemption by
made to the Internal Revenue Code of Applicants and must be liable for not more than
1986 (IRC) by the Protecting Americans E. Qualification for the Bond Exemption by $1,000 in such taxes in the preceding
from Tax Hikes Act of 2015 (PATH Act). Existing Proprietors calendar year. To use quarterly deferred
This rulemaking implements section F. New Bonds for Previously Exempt payment periods, the taxpayer must
332 of the PATH Act, which amends the Proprietors reasonably expect to be liable for not
IRC to change tax return due dates and VIII. Miscellaneous and Technical more than $50,000 in such taxes
remove bond requirements for certain Amendments imposed for the calendar year and must
eligible taxpayers. Section 332 A. Amendments to 27 CFR parts 18 and 30 be liable for not more than $50,000 in
B. Technical Amendments Relating to
authorizes a new annual return period such taxes in the preceding calendar
Surety and Collateral Bonds
for taxpayers paying taxes imposed with C. Updates to Form Numbers in 27 CFR year.
respect to distilled spirits, wines, and parts 26 and 28 Section 332 also amends several
beer on a deferred basis who reasonably D. Obsolete Regulations in 27 CFR part 28 provisions of the IRC to remove bond
expect to be liable for not more than Relating to TTB Form 5110.68 requirements for certain eligible
$1,000 in such taxes imposed for the IX. Public Participation taxpayers. To be exempt from bond
calendar year and who are liable for not X. Regulatory Analyses and Notices requirements, taxpayers must be eligible
more than $1,000 in such taxes in the A. Regulatory Flexibility Act to pay excise taxes imposed with
B. Executive Order 12866 respect to distilled spirits, wines, and
preceding calendar year. Section 332 C. Paperwork Reduction Act
also removes bond requirements for beer using quarterly or annual return
D. Inapplicability of Prior Notice and
taxpayers who are eligible to pay excise Comment and Delayed Effective Date
periods and must pay such taxes on a
taxes on distilled spirits, wines, and Procedures deferred basis. In addition, taxpayers are
beer using quarterly or annual return XI. Drafting Information exempt from bond requirements with
periods and who pay those taxes on a List of Subjects respect to distilled spirits and wine only
deferred basis. Under section 332, such Amendments to the Regulations to the extent those products are for
taxpayers are exempt from bond nonindustrial use. These amendments
I. The PATH Act
requirements with respect to distilled are discussed further below.
spirits and wine only to the extent those On December 18, 2015, the President
signed into law the Consolidated II. TTB Authority
products are for nonindustrial use. TTB
is soliciting comments from all Appropriations Act, 2016 (Public Law The Alcohol and Tobacco Tax and
interested parties on these amendments 114–113). Division Q of this Act is titled Trade Bureau (TTB) administers
through a notice of proposed the Protecting Americans from Tax provisions in chapter 51 of the IRC
rulemaking published elsewhere in this Hikes Act of 2015 (PATH Act). Section pertaining to the taxation of distilled
issue of the Federal Register. 332 of the PATH Act amends the spirits, wines, and beer (see title 26 of
Internal Revenue Code of 1986 (IRC) to the United States Code (U.S.C.), chapter
DATES: This rule is effective January 4,
change tax return due dates and remove 51 (26 U.S.C. chapter 51)). Sections
2017. bond requirements for certain eligible 5001, 5041, and 5051 of the IRC (26
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FOR FURTHER INFORMATION CONTACT: Ben taxpayers. These PATH Act U.S.C. 5001, 5041, and 5051) impose tax
Birkhill, Regulations and Rulings amendments apply beginning January 1, on distilled spirits, wines, and beer
Division, Alcohol and Tobacco Tax and 2017, to certain taxpayers who produced in or imported into the United
Trade Bureau, 1310 G Street NW., Box reasonably expect to be liable for not States. Generally, such taxes are
12, Washington, DC 20005; telephone more than $50,000 in taxes imposed determined (i.e., become due for
202–453–2265. with respect to distilled spirits, wines, payment) when they are removed from
SUPPLEMENTARY INFORMATION: and beer for the calendar year and who qualified facilities in the United States
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or imported as provided in sections preceding calendar year, the last day for ‘‘Industrial Use of Distilled Spirits’’).
5006, 5043, and 5054 of the IRC (26 payment of tax is the 14th day after the The provisions of the Federal Alcohol
U.S.C. 5006, 5043, and 5054). In last day of the calendar year. Section Administration Act (FAA Act), 27
addition, section 7652 of the IRC (26 5061(d)(4)(A)(i) provides that, in the U.S.C. chapter 8, which TTB also
U.S.C. 7652) imposes tax upon distilled case of any taxpayer who reasonably administers, do not apply to distilled
spirits, wines, and beer coming into the expects to be liable for not more than spirits and wine for industrial use (see
United States from Puerto Rico and the $50,000 in excise taxes imposed with 27 U.S.C. 211(a)(5) and (6), which
U.S. Virgin Islands under certain respect to distilled spirits, wines, and define these types of alcohol as distilled
circumstances. The tax imposed on beer for the calendar year and who was spirits and wine for ‘‘nonindustrial
products under section 7652 is equal to liable for not more than $50,000 in such use’’). The industrial and nonindustrial
the internal revenue tax imposed in the taxes in the preceding calendar year, the uses of distilled spirits and wine are
United States upon like articles of last day for payment of tax is the 14th discussed further below.
domestic manufacture. day after the last day of the calendar
B. Provisions Governing Bonds
quarter. Section 5061(d)(4)(C) defines
A. Provisions Governing Tax Payment The IRC also contains provisions
the term ‘‘calendar quarter’’ as the three-
Section 5061 of the IRC (26 U.S.C. month period ending on March 31, June requiring certain persons who are liable
5061) governs the collection of excise 30, September 30, or December 31. for taxes imposed with respect to
tax on distilled spirits, wines, and beer. Taxpayers who use annual or distilled spirits, wines, and beer to
Section 5061(a) states that such taxes quarterly return periods and exceed the furnish bonds, which are formal
shall be collected on the basis of a $1,000 or $50,000 limits described in guarantees to pay tax obligations under
return and gives the Secretary of the the previous paragraph must pay such the IRC (see, e.g., 26 U.S.C. 5173, 5354,
Treasury (the Secretary) the authority to taxes more frequently, as provided in and 5401(b)). Subject to the exceptions
prescribe regulations relating to such section 5061(d)(4)(B). Taxpayers using discussed below, section 5551(a) of the
returns. Section 5061(d) prescribes the quarterly periods must use semimonthly IRC (26 U.S.C. 5551(a)) requires
time periods and due dates for paying periods for any portion of the calendar approval of such bonds for certain
such taxes by return on a deferred basis. year following the first date on which businesses as a condition of
Section 5061(d)(1) provides that the last the aggregate amount of such tax due commencing operations. Generally, the
day for payment of such taxes shall be during such calendar year exceeds producer or the importer of the distilled
the 14th day after the last day of the $50,000, and taxpayers using annual spirits, wines, and beer is liable for
semimonthly period during which the periods must use quarterly periods for taxes imposed until that person either
product is withdrawn for deferred any portion of the calendar year pays the tax or takes some other action
payment of tax from certain qualified following the first date on which the for which the IRC relieves the person of
facilities in the United States. Sections aggregate amount of such tax due during the liability. In the latter case, the IRC
5061(d)(2) and 5061(d)(3) prescribe such calendar year exceeds $1,000. may relieve persons from liability based
similar semimonthly periods and due Section 5061(d)(4)(B) also provides that on the transfer or withdrawal of the
dates for imported distilled spirits, any tax not paid on these dates is due distilled spirits, wines, and beer under
wines, and beer and for such products either on the 14th day after the last day certain circumstances described in the
brought into the United States from of the semimonthly period in which preceding paragraph, such as
Puerto Rico. such date occurs (in the case of withdrawal and exportation (see 26
TTB collects excise tax paid under taxpayers who exceed the $50,000 limit) U.S.C. 5005, 5043, 5054, and 5056).
section 5061(d)(1) and 5061(d)(3), or on the 14th day after the last day of Bonds therefore protect the revenue by
which govern, respectively, withdrawals the calendar quarter in which such date covering the excise tax liability
of distilled spirits, wines, and beer from occurs (in the case of taxpayers who associated with the distilled spirits,
qualified facilities in the United States exceed the $1,000 limit). wines, and beer until that liability is
and certain shipments of distilled Under some circumstances, the IRC relieved under the IRC.
spirits, wines, and beer into the United authorizes the removal of distilled Section 332 of the PATH Act amends
States from Puerto Rico. In the latter spirits, wines, and beer from facilities in several provisions of the IRC to remove
case, section 7652(a)(2) provides the United States without paying the bond requirements for certain eligible
authority for payment of the tax before taxes imposed on such products. taxpayers. The new bond exemption is
shipment to the United States from Examples of removals for which the IRC set forth in new subsection (d) of section
Puerto Rico. In general, U.S. Customs does not require payment of the tax 5551 of the IRC. The taxpayer’s
and Border Protection (CBP) collects include certain transfers of imported eligibility for the bond exemption is
taxes paid under section 5061(d)(2) on distilled spirits, wines, and beer to based on whether section 5061(d)(4)(A)
removals of imported distilled spirits, qualified facilities in the United States applies to the taxpayer. Section
wines, and beer. These taxes include (see 26 U.S.C. 5232, 5364, and 5418), 5061(d)(4)(A) authorizes the use of
those paid on distilled spirits, wines, certain transfers between qualified quarterly and annual return periods for
and beer from foreign countries or from facilities within the United States (see payment of excise taxes imposed with
the U.S. Virgin Islands. 26 U.S.C. 5212, 5362(b), and 5414), respect to distilled spirits, wines, and
Section 5061(d)(4), as amended by the certain withdrawals for exportation beer where the tax liability does not
PATH Act, authorizes eligible taxpayers from the United States (see 26 U.S.C. exceed the $1,000 and $50,000 limits
to use annual or quarterly tax return 5214(a)(4), 5362(c)(1), and 5053(a)), and discussed above. However, the bond
periods instead of semimonthly periods, certain withdrawals for use in the exemption is limited to bonds ‘‘covering
mstockstill on DSK3G9T082PROD with RULES4
under certain circumstances. Section United States for other than alcohol operations or withdrawals of distilled
5061(d)(4)(A)(ii) provides that, in the beverage purposes (see 26 U.S.C. spirits or wines for nonindustrial use or
case of any taxpayer who reasonably 5214(a)(1)–(3), 5364(d), and 5053(b)). In of beer.’’ Specifically, section 5551(d)(1)
expects to be liable for not more than the last case, some IRC provisions refer provides that ‘‘[d]uring any period to
$1,000 in excise taxes imposed for the to these nonbeverage purposes as the which subparagraph (A) of section
calendar year and who was liable for not ‘‘industrial use’’ of alcohol (see, e.g., 5061(d)(4) applies to a taxpayer
more than $1,000 in such taxes in the subchapter D of chapter 51 of the IRC, (determined after application of
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subparagraph (B) thereof), such taxpayer to operate (see 27 CFR 19.72, 24.105, The TTB regulations in 27 CFR part
shall not be required to furnish any and 25.61). Such operations may 26 pertain to shipment of distilled
bond covering operations or include production, receipt, and spirits, wines, and beer (as well as
withdrawals of distilled spirits or wines removal of distilled spirits, wines, and certain products manufactured using
for nonindustrial use or of beer.’’ In beer. When the proprietor of the facility distilled spirits, wines, and beer) to the
addition, section 5551(d)(2) provides removes distilled spirits, wines, or beer United States from Puerto Rico and the
that ‘‘any taxpayer for any period on which tax has been imposed but not U.S. Virgin Islands. Generally,
described in [section 5551(d)(1)] shall paid, the proprietor must pay the tax manufacturers of these products in
be treated as if sufficient bond has been unless the IRC authorizes the removal Puerto Rico and the U.S. Virgin Islands
furnished for purposes of covering without paying the tax, as discussed are not required to receive approval
operations and withdrawals of distilled above. from TTB to operate. However, if
spirits or wines for nonindustrial use or If the tax must be paid for the manufacturers in Puerto Rico ship the
of beer for purposes of any requirements removal, the proprietor of the facility products to the United States, they must
relating to bonds under this chapter.’’ must file an Excise Tax Return, TTB pay tax to TTB unless a specific
Finally, section 332 of the PATH Act Form 5000.24, for prepayment or provision authorizes the shipment
also amends other provisions of the IRC deferred payment of tax (see 27 CFR without paying the tax (see discussion
to reference the bond exemption in 19.229, 24.271, 24.275, 25.164, and in the next paragraph for examples of
section 5551(d). These provisions are 25.175). The term ‘‘prepayment’’ means such shipments). The regulations in 27
sections 5173, 5351, and 5401 of the that the proprietor pays the tax before CFR part 26, subpart E, govern the
IRC. the removal of the distilled spirits, payment of excise tax on products
wines, or beer from the facility. The manufactured in Puerto Rico and
C. Delegation of Authority term ‘‘deferred payment’’ means that the shipped to the United States, and they
TTB administers the provisions of the proprietor uses one of the return periods contain bond requirements for persons
IRC and FAA Act discussed above, and prescribed under section 5061(d) of the who pay tax on a deferred basis using
their implementing regulations, IRC to pay tax due for removals that one of the tax periods prescribed under
pursuant to section 1111(d) of the occur during that period. Section 24.273 section 5061(d) the IRC. But because
Homeland Security Act of 2002, of the TTB regulations (27 CFR 24.273) CBP (rather than TTB) collects taxes on
codified at 6 U.S.C. 531(d). The also authorizes a bonded wine cellar to products shipped to the United States
Secretary has delegated various file an excise tax return annually if the from the U.S. Virgin Islands, the TTB
authorities through Treasury proprietor paid wine excise taxes in an regulations do not include provisions
Department Order 120–01, dated amount less than $1,000 during the governing the payment of tax on
December 10, 2013 (superseding previous calendar year or if the products subject to 27 CFR part 26.
Treasury Department Order 120–01, proprietor of a newly established The regulations in 27 CFR part 26 also
dated January 24, 2003), to the TTB premises expects to pay less than $1,000 include provisions governing the
Administrator to perform the functions in wine excise taxes before the end of shipment to the United States of certain
and duties in administration and the calendar year. As discussed further distilled spirits for industrial use, as
enforcement of these laws. below, this annual return period was well as certain products for industrial
III. The TTB Regulations authorized under the regulations prior use made using distilled spirits. Persons
to the enactment of the PATH Act and in Puerto Rico and the U.S. Virgin
The TTB regulations implementing is not considered to be a deferred Islands who manufacture these products
the IRC provisions discussed above payment period for purposes of section may ship the products to the United
relating to tax payment and bonds are in 5061(d). States without incurring tax liability
chapter I of title 27 of the Code of The TTB regulations in parts 19, 24, under the circumstances described in 27
Federal Regulations (27 CFR). These and 25 also prescribe requirements for CFR 26.36 and 26.201. Statutory
regulations include provisions bonds that DSPs, certain wine premises, authority relating to these types of tax-
governing certain distilled spirits, wine, and breweries must furnish to TTB. exempt shipments is set forth in section
and beer facilities in the United States Bonds must be guaranteed by an 5314 of the IRC (26 U.S.C. 5314). Under
(27 CFR parts 19, 24, and 25), the approved corporate surety or by deposit § 26.36(b) and (c), distillers in Puerto
shipment of distilled spirits, wines, and of collateral, such as certain acceptable Rico who ship tax-exempt distilled
beer from Puerto Rico and the U.S. securities, with TTB (see, e.g., 27 CFR spirits to the United States under this
Virgin Islands to the United States (27 19.153 and 19.154). The regulations also authority are subject to the requirements
CFR part 26), the importation of include requirements relating to the in 27 CFR part 19 governing DSPs,
distilled spirits, wines, and beer from ‘‘penal sums’’ of these bonds. The term including requirements relating to
foreign countries into the United States ‘‘penal sum’’ refers to the amount of receiving approval to operate and
(27 CFR part 27), and the exportation of money guaranteed to be paid under the furnishing bonds. Distillers in the U.S.
distilled spirits, wines, and beer from bond for tax obligations imposed by the Virgin Islands who ship tax-exempt
the United States (27 CFR part 28). IRC if the proprietor does not satisfy distilled spirits under § 26.201(b) and
The regulations in 27 CFR parts 19, those obligations, such as the payment (c) are not subject to 27 CFR part 19
24, and 25 govern, respectively, the of tax due. The penal sum of a bond is (and thus do not furnish bonds to TTB
operations of distilled spirits plants generally based on the proprietor’s under 27 CFR part 19 covering such
(DSPs), certain wine premises, and liability for excise taxes imposed but not shipments), but these distillers must
breweries in the United States. Under 27 paid (see 27 CFR 19.166, 24.148, and qualify under regulations issued by the
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CFR part 24, bonded wine cellars 25.93). In some cases involving distilled Governor of the U.S. Virgin Islands as
(including bonded wineries) are wine spirits and wine, the regulations require provided in § 26.201(b) and (c).
premises that are authorized to engage proprietors to furnish bonds that The TTB regulations in 27 CFR part
in operations involving non-taxpaid specifically cover the taxes on products 27 relate to the importation of distilled
wine. Proprietors of facilities subject to removed for deferred payment of tax spirits, wines, and beer into the United
the regulations in 27 CFR parts 19, 24, until the time the proprietor pays the States from foreign countries. Persons
and 25 must receive approval from TTB tax (see 27 CFR 19.164 and 24.146(b)). who pay taxes to CBP on such imported
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products under section 5061(d)(2) are rulemaking makes minor amendments Transportation Equity Act: A Legacy for
not required to furnish bonds to TTB. to certain bond-related regulations in 27 Users, Public Law 109–59, 119 Stat.
However, qualified facilities in the CFR parts 18 and 30 relating to these 1144. In the 2006 temporary rule
United States that receive transfers of statutory changes. This document also published in the Federal Register that
the products without payment of tax includes several technical amendments originally implemented the quarterly
from customs custody must furnish to update certain bond-related return period procedure (T.D. TTB–41,
bonds to TTB as provided in 27 CFR regulations. These amendments are 71 FR 5598 (2006)), TTB interpreted the
parts 19, 24, and 25 (see 27 CFR part 27, discussed further below. statutory language in section
subpart L; see also ATF Procedures 98– 5061(d)(4)(A) as providing that the
2 and 98–3 issued by the Bureau of V. Major Amendments Relating to Tax quarterly return period procedure was
Alcohol, Tobacco and Firearms, TTB’s Returns optional rather than mandatory,
predecessor agency). A. Incorporation of Annual Return meaning that a taxpayer could choose to
The TTB regulations in 27 CFR part Filing Period defer payment of excise tax using
28 govern the exportation of distilled semimonthly return periods even if the
TTB is amending the regulations in 27
spirits, wines, and beer from the United taxpayer met the criteria for using
CFR parts 19, 24, 25, and 26 to
States, including the exportation of quarterly periods. TTB noted that it was
incorporate the new annual tax return
taxpaid and non-taxpaid distilled adopting this interpretation to provide
period provisions in section
spirits, wines, and beer. As prescribed flexibility for taxpayers, and TTB cited
5061(d)(4)(A)(ii) of the IRC, which
in 27 CFR part 28, subparts I, K, and L, legislative history to show that the
provides that the last day for deferred
distilled spirits, wines, and beer on interpretation was a permissible
payment of tax is the 14th day after the
which taxes have been paid may be construction of the statute. TTB
exported with benefit of drawback (see last day of the calendar year in the case
subsequently finalized the regulations
also 26 U.S.C. 5055 and 5062). of any taxpayer who reasonably expects
reflecting this interpretation (see T.D.
Exportation with benefit of drawback to be liable for not more than $1,000 in
TTB–94, 76 FR 52862 (2011)).
refers to a procedure under which a excise taxes imposed on distilled spirits, Because the language in section
person may file a claim for a payment wines, and beer for the calendar year 5061(d)(4)(A)(ii) providing for the
from TTB equal to the taxes paid on the and who was liable for not more than annual return period procedure is
product based on the exportation of the $1,000 in such taxes the preceding identical in relevant respects to the
product in accordance with the IRC calendar year. TTB is also amending the language in 5061(d)(4)(A)(i) relating to
provisions and the TTB regulations regulations to reflect new section quarterly returns, TTB interprets this
cited in this paragraph. 5061(d)(4)(B)(ii), which provides that language as also providing for the
Non-taxpaid distilled spirits, wines, the annual tax return period provision optional, rather than mandatory, use of
and beer may also be removed for export does not apply to taxpayers for any annual return periods by taxpayers who
from DSPs, bonded wine cellars portion of the calendar year following meet the relevant criteria. TTB believes
(including bonded wineries), and the first date on which the aggregate that adopting this interpretation will
breweries subject to certain amount of excise tax due during such provide flexibility for taxpayers who are
requirements specified in 27 CFR part calendar year exceeds $1,000. As eligible to use annual return periods but
28. When the DSP, bonded wine cellar, discussed above, the annual tax return who wish to pay taxes more frequently.
or brewer acts as the exporter of the period provision provides an exception This interpretation is reflected in the
product for purposes of the TTB to the general rule in section 5061(d) amendments to §§ 19.235, 19.236,
regulations, the bonds required under that requires deferred payment of such 24.271, 25.164, and 26.112, which
27 CFR parts 19, 24, and 25, taxes using semimonthly periods. The provide that eligible taxpayers ‘‘may
respectively, cover the tax liability specific regulations amended to reflect choose to use an annual return period’’
associated with the alcohol (see 27 CFR this new period are 27 CFR 19.235, [emphasis added].
28.58–28.60, 28.92, 28.122, 28.142, and 19.236, 24.271, 25.164, and 26.112. TTB
28.152). Alternatively, a person other is not amending any regulations in 27 B. Elimination of Non-Statutory Annual
than a DSP or bonded wine cellar may CFR parts 27 and 28 to reflect this Return Period for Certain Wine Premises
act as the exporter of the product in statutory change because these Under current 27 CFR 24.273, a wine
some circumstances if the person regulations do not contain provisions premises proprietor is authorized to file
furnishes a bond as provided in 27 CFR governing the deferred payment of taxes an excise tax return annually if the
28.61–28.64 (the regulations do not to TTB. proprietor paid wine excise taxes in an
authorize persons other than brewers to In general, the amendments amount less than $1,000 during the
act as exporters of non-taxpaid beer). In incorporating the new annual return previous calendar year or if the
any case where non-taxpaid products period are modeled on existing proprietor of a newly established
are removed for export, the person provisions in §§ 19.235, 19.236, 24.271, premises expects to pay less than $1,000
acting as the exporter for purposes of 25.164, and 26.112 governing quarterly in wine excise taxes before the end of
the TTB regulations must also complete return periods, which are used by the calendar year. An eligible proprietor
a TTB form documenting the taxpayers who reasonably expect to be must file such returns within 30 days
exportation (TTB Form 5100.11 in the liable for not more than $50,000 in taxes after the end of the calendar year.
case of distilled spirits and wine, and imposed on distilled spirits, wines, and Historically, the regulations had
TTB Form 5130.12 in the case of beer). beer for the calendar year and who were authorized a proprietor to allocate up to
liable for not more than $50,000 in the $1,000 of the penal sum of the
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IV. Overview of the Amendments to the preceding calendar year. The statutory proprietor’s wine bond to cover taxes on
Regulations authority for quarterly return periods in wine removed but not yet paid (see 27
This document amends the TTB section 5061(d)(4)(A) of the IRC (now CFR 24.146(a)). Because such removals
regulations in 27 CFR parts 19, 24, 25, designated as section 5061(d)(4)(A)(i) up to $1,000 were not required to be
26, 27, and 28 to implement the under the PATH Act amendments) was covered by a tax deferral bond under
statutory provisions of section 332 of originally enacted in 2005 as part of the § 24.146(b), TTB previously took the
the PATH Act. In addition, this Safe, Accountable, Flexible, Efficient position that the proprietor did not have
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![1112 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Rules and Regulations
to pay taxes associated with the quarterly or annual tax returns. These This interpretation is also reflected in
removals using one of the deferred criteria are that the taxpayer must the regulations discussed above, which
payment periods (semimonthly or reasonably expect to be liable for not provide that the bond exemption only
quarterly) authorized under section more than $1,000 in taxes (in the case applies to a taxpayer who ‘‘pays tax on
5061(d) (see T.D. TTB–41, 71 FR 5598, of annual returns) or $50,000 in taxes a deferred basis[.]’’ However, TTB also
5599 (02/06/2006)). (in the case of quarterly returns) for the recognizes that taxpayers may not
Since the PATH Act established a calendar year and must have been liable necessarily owe taxes during every
new annual tax return period for for not more than these respective deferred payment period that they
proprietors who are liable for not more quantities in the preceding calendar choose to use. Therefore, the regulatory
than $1,000 in excise taxes annually and year. Section 7701(a)(14) of the IRC (26 amendments also provide that a
eliminated the requirement to hold a tax U.S.C. 7701(a)(14)) defines the term taxpayer is considered to be paying tax
deferral bond (see bond-related ‘‘taxpayer’’ as ‘‘any person subject to an on a deferred basis for this purpose even
discussion below), TTB has determined internal revenue tax.’’ The term if the taxpayer does not pay during
that it is no longer necessary to retain therefore includes persons who are every return period as long as the
the annual return filing provisions liable for excise taxes imposed but not taxpayer intends to pay tax on a
found in § 24.273. Accordingly, TTB is necessarily due for payment, as well as deferred basis in a future period.
amending the regulations to remove persons who are liable for payment of TTB also notes that section 5551(d)(1)
§ 24.273. Proprietors who previously the tax. For purposes of the tax return ties a taxpayer’s eligibility for the bond
filed tax returns annually under this filing provisions, the TTB regulations exemption to the taxpayer’s liability for
section may instead file tax returns define the term ‘‘taxpayer’’ as an payment of taxes due rather than the
annually when authorized under individual, corporation, partnership, or taxpayer’s liability for taxes imposed
§ 24.271(b)(1)(ii). Because the PATH Act other entity that is assigned a single but not necessarily due. Under section
provisions do not become effective until Employer Identification Number as 5551(d)(1), a taxpayer is eligible for the
January 1, 2017, TTB is amending defined in 26 CFR 301.7701–12 (see exemption only after application of
§ 24.271(b)(2) to clarify that a proprietor §§ 19.235(d), 24.271(b), 25.164(c), and section 5061(d)(4)(B), which governs
filing an annual return covering the 26.112(b)). when the quarterly and annual return
2016 calendar year must file the return Since section 5061(d)(4)(A) does not provisions in section 5061(d)(4)(A) no
not later than January 30, 2017, which mandate that taxpayers who defer longer apply to a taxpayer. Section
would have been the due date under payment of excise tax must use 5061(d)(4)(B) provides that the
now-removed § 24.273. TTB is also quarterly or annual return periods if provisions do not apply to taxpayers
amending §§ 24.271 and 24.323 to they meet the criteria to use them, ‘‘for any portion of the calendar year
eliminate references to § 24.273, and section 5061(d)(4)(A) applies to those following the first date on which the
TTB is amending § 24.300 to remove the taxpayers even if they choose to use aggregate amount of tax due’’ on
reference to § 24.273 and replace it with semimonthly return periods instead. distilled spirits, wines, and beer during
a reference to the annual filing Accordingly, TTB does not interpret such calendar year exceeds $50,000, in
provision in § 24.271(b)(1)(ii). section 5551(d)(1) as requiring that the case of quarterly returns, or $1,000,
taxpayers deferring payment of tax must in the case of annual returns. Because
VI. Bond Exemption Eligibility
use quarterly or annual return periods the bond exemption is premised on the
TTB is amending the regulations in 27 in order to be exempt from bond quantity of such taxes due for payment
CFR parts 19, 24, 25, 26, and 28 to requirements under that provision. Even (rather than on the taxes imposed but
implement new section 5551(d)(1) of the if they choose to use semimonthly not necessarily due), a taxpayer who
IRC, which provides that a taxpayer is periods, the taxpayers qualify for the otherwise meets the bond exemption
not required to obtain certain bonds bond exemption if they meet the criteria requirements in section 5551(d)(1) is not
‘‘during any period to which [section to pay taxes quarterly or annually under ineligible for the exemption solely based
5061(d)(4)(A)] applies to a taxpayer section 5061(d)(4)(A) and if they on the fact that the taxpayer’s liability
(determined after application of [section otherwise meet the bond exemption for taxes imposed but not due exceeds
5061(d)(4)(B)] thereof)[.]’’ Section requirements in section 5551(d) as $50,000 annually.
5061(d)(4)(A) contains the quarterly and discussed further below. This As discussed above, taxpayers may be
annual return filing provisions for interpretation is reflected in the liable for taxes imposed on distilled
taxpayers who are liable for not more amended regulations, which include the spirits, wines, and beer based on
than $50,000 per year in taxes imposed requirement that the taxpayer be producing the products in the United
on distilled spirits, wines, and beer. The ‘‘eligible to use an annual or quarterly States, importing the products into the
bond regulations amended in this return period’’ to qualify for the bond United States from foreign countries,
temporary rule are 27 CFR 19.151, exemption [emphasis added]. bringing the products into the United
24.146, 25.91, 25.274, 26.66–26.68, In addition, because section States from Puerto Rico and the U.S.
28.58, and 28.60–28.64. TTB is not 5061(d)(4)(A) does not apply to Virgin Islands, or receiving certain
amending the regulations in 27 CFR part taxpayers who pay no taxes on distilled transfers of non-taxpaid products. These
27 in this respect because those spirits, wines, or beer on a deferred taxpayers are liable for taxes imposed
regulations do not impose bond basis, TTB interprets the phrase until they either pay the taxes due or
requirements. ‘‘applies to a taxpayer’’ in section take some other action for which the
5551(d)(1) as requiring a taxpayer to pay IRC relieves the taxpayer of the liability.
A. Circumstances Where Section some tax on a deferred basis to be
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5061(d)(4)(A) Applies to a Taxpayer exempt from bond requirements. If a B. Types of Alcohol Subject to the
As discussed above, taxpayers may taxpayer prepays tax but never defers Exemption
voluntarily choose to use semimonthly payment of tax, or if a taxpayer never During any period described above for
return periods for deferred payment of removes distilled spirits, wines, or beer which 5061(d)(4)(A) applies to a
tax on distilled spirits, wines, and beer on which taxes must be paid, the taxpayer, section 5551(d)(1) provides
even if they meet the criteria in section taxpayer is not exempt from bond that such taxpayer ‘‘shall not be
5061(d)(4)(A) to pay taxes using requirements under section 5551(d). required to furnish any bond covering
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operations or withdrawals of distilled unless the proprietor designates the of distilled spirits and wine for alcohol
spirits or wines for nonindustrial use or alcohol as solely for nonindustrial use at beverage purposes.
of beer.’’ As described above, the IRC a specified time after production of the
VII. Other Bond-Related Amendments
references the industrial use of certain alcohol or upon receiving the alcohol.
types of alcohol. In addition, the FAA TTB has not incorporated a similar rule A. Retention of Bond-Related Terms in
Act applies to distilled spirits and wine in the regulations in 27 CFR parts 26 the Regulations
for nonindustrial use but does not apply and 28 that impose bond requirements Section 5551(d)(2) of the IRC, as
to distilled spirits and wine for because those bonds apply to distilled amended by the PATH Act, provides
industrial use. The TTB regulations in spirits and wine shipped to the United that taxpayers exempt from bond
27 CFR part 1, subpart D define the States or removed for exportation, rather requirements under section 5551(d)(1)
nonindustrial and industrial uses of than to distilled spirits and wine ‘‘shall be treated as if sufficient bond
these two types of alcohol for purposes produced or received at the premises. has been furnished for purposes of
of the FAA Act. Under the regulations, Therefore, the determination pertaining covering operations and withdrawals of
the term ‘‘nonindustrial use’’ includes, to industrial use, under 27 CFR parts 26
distilled spirits or wines for
but is not limited to, all uses of distilled and 28, is made when the alcohol is
nonindustrial use or of beer for
spirits and wine for alcohol beverage shipped or removed.
purposes of any requirements relating to
purposes (see 27 CFR 1.70 and 1.71).
C. Summary of Eligibility Criteria for the bonds under [chapter 51 of the IRC].’’
Under § 1.70, the term ‘‘industrial use’’
Bond Exemption The PATH Act amendments did not
includes only those uses specifically
This section summarizes the eliminate bond-related terms in chapter
enumerated as such in the regulations.
discussion above regarding which 51 of the IRC. Accordingly, TTB is not
These industrial uses include the use of
taxpayers are eligible for the bond removing bond-related terms from the
distilled spirits free of tax under the IRC
exemption under section 5551(d)(1) of regulations. Instead, this temporary rule
for certain nonbeverage purposes, the
use of wine without payment of tax for the IRC. Taxpayers must meet the amends existing definitions of these
the production of vinegar, and the use following requirements to be eligible for terms or adds new definitions of them
of distilled spirits and wine for the bond exemption: to provide that the terms apply to
experimental purposes and in the • Taxpayers must be eligible to pay taxpayers even if they are exempt from
manufacture of specified products that taxes quarterly or annually under bond requirements under section
are unfit for beverage purposes (see 27 section 5061(d)(4)(A) of the IRC. A 5551(d)(1).
taxpayer is eligible to pay taxes First, TTB is amending definitions
CFR 1.60–1.62).
TTB interprets the term quarterly or annually under this that identify certain premises as
‘‘nonindustrial use’’ in section provision if the taxpayer reasonably ‘‘bonded’’ so that the definitions include
5551(d)(1) as being synonymous with expects to be liable for not more than taxpayers who are exempt from bond
the same term in the FAA Act and the $50,000 in excise taxes imposed with requirements under section 5551(d)(1).
TTB regulations in 27 CFR part 1, respect to distilled spirits, wines, and These terms include the ‘‘bonded
subpart D. Therefore, a person is eligible beer for the calendar year and was liable premises’’ of a distilled spirits plant,
for the bond exemption in section for not more than $50,000 in such taxes ‘‘bonded winery,’’ ‘‘bonded wine
5551(d)(1) with respect to distilled in the preceding calendar year. A cellar,’’ and ‘‘bonded wine warehouse.’’
spirits and wine only to the extent the taxpayer is eligible for the bond Therefore, these premises will still be
distilled spirits and wine are for exemption if the taxpayer chooses to described as ‘‘bonded’’ under the
nonindustrial use within the meaning of pay taxes using semimonthly return regulations even if the proprietor is not
the FAA Act and these TTB regulations. periods as long as the taxpayer is required to obtain a bond. The amended
The amendments to the bond eligible to use quarterly or annual return definitions are in 27 CFR 19.1, 24.10,
regulations described above incorporate periods and otherwise meets the criteria 25.11, 26.11, 27.11, and 28.11.
this interpretation by defining the terms for the exemption. For purposes of this Second, TTB is amending or adding
‘‘nonindustrial use’’ and ‘‘industrial requirement, the taxpayer’s liability is bond-related definitions in the
use’’ with reference to the provisions in determined based on taxes due as a regulatory sections cited above that
27 CFR part 1, subpart D. result of removals or shipments for pertain to removals and receipts of
TTB also recognizes that some which the IRC requires payment of the distilled spirits, wines, and beer from
proprietors engage in operations and tax, rather than on taxes imposed but certain premises subject to TTB
withdrawals of distilled spirits and not necessarily due for payment. regulation. These terms include
wine both for nonindustrial and • Taxpayers must pay tax on distilled transfers of products ‘‘in bond,’’
industrial use. Because such proprietors spirits, wines, or beer on a deferred removals of products ‘‘from bond,’’ and
must obtain bonds to cover such alcohol basis. A taxpayer who never pays tax on returns of products ‘‘to bond.’’ As
for industrial use as otherwise provided a deferred basis is not exempt from discussed above, the IRC requires
in the IRC, even if they are exempt from bond requirements. This category of certain persons who are liable for tax to
bond requirements under section taxpayers who are ineligible for the provide bonds, which cover the tax
5551(d) with respect to distilled spirits exemption includes taxpayers who liability associated with the products
and wine for nonindustrial use, the solely prepay taxes or who never until that liability is relieved under the
regulatory amendments prescribe rules remove distilled spirits, wines, or beer IRC. Prior to the PATH Act
for proprietors to determine the relevant on which taxes must be paid. amendments, these types of regulatory
use of these types of alcohol for this • Taxpayers are exempt from bond terms described transactions where a
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purpose. In the case of proprietors of requirements with respect to distilled bond covered the tax liability associated
DSPs and bonded wine cellars spirits and wine only to the extent those with the distilled spirits, wines, or beer
(including bonded wineries) who products are for nonindustrial use. The removed or received. For example,
conduct both types of operations, the nonindustrial uses of distilled spirits transfers in bond are transfers of non-
amendments in §§ 19.151(d) and and wine are defined in 27 CFR part 1, taxpaid products between certain
24.146(d) provide that the alcohol is subpart D. The term ‘‘nonindustrial use’’ premises (see, e.g., 27 CFR 19.402 and
considered to be for industrial use includes, but is not limited to, all uses 24.280); removals from bond are
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Tobacco Tax and Trade Bureau requirements, Surety bonds, Vessels, ■ b. By adding, in alphabetical order, a
personnel. Warehouses, Wine. definition of ‘‘From bond’’;
■ c. In the definition of ‘‘In bond’’, by
List of Subjects 27 CFR Part 30
adding a second sentence;
27 CFR Part 18 Liquors, Scientific equipment. ■ d. By adding, in alphabetical order, a
Amendments to the Regulations definition of ‘‘To bond’’; and
Alcohol and alcoholic beverages, ■ e. By removing the definition of ‘‘TTB
Fruits, Reporting and recordkeeping For the reasons discussed in the bond’’.
requirements, Spices and flavorings. preamble, TTB amends 27 CFR chapter The additions read as follows:
27 CFR Part 19 I as follows:
§ 19.1 Definitions.
Administrative practice and PART 18—PRODUCTION OF * * * * *
procedure, Alcohol and alcoholic VOLATILE FRUIT-FLAVOR Bonded premises. * * * This term
beverages, Authority delegations CONCENTRATE includes premises described in the
(Government agencies), Caribbean Basin preceding sentence even if the
initiative, Chemicals, Claims, Customs ■ 1. The authority citation for part 18 is
proprietor, as authorized under the
duties and inspection, Electronic funds revised to read as follows:
exemption set forth in § 19.151(d), has
transfers, Excise taxes, Exports, Gasohol, Authority: 26 U.S.C. 5001, 5171–5173, not provided a bond for the premises.
Imports, Labeling, Liquors, Packaging 5178, 5179, 5203, 5351, 5354, 5356, 5511,
5552, 6065, 6109, 7805. * * * * *
and containers, Puerto Rico, Reporting From bond. When used with reference
and recordkeeping requirements, § 18.39 [Amended] to withdrawals of distilled spirits, this
Research, Security measures, Spices and phrase includes withdrawals from the
flavorings, Stills, Surety bonds, ■ 2. Section 18.39 is amended as
follows: premises of a distilled spirits plant even
Transportation, Vinegar, Virgin Islands, if the proprietor, as authorized under
■ a. In paragraph (c), by adding the
Warehouses, Wine. the exemption set forth in § 19.151(d),
words ‘‘if the proprietor is required to
27 CFR Part 24 hold a bond under § 19.151 of this has not provided a bond for the
chapter to cover the distilled spirits premises.
Administrative practice and
procedure, Claims, Electronic funds plant premises subject to alternation’’ * * * * *
transfers, Excise taxes, Exports, Food before the period; and In bond. * * * Spirits, denatured
■ b. By revising the Office of spirits, articles, or wine are considered
additives, Fruit juices, Labeling,
Management and Budget control to be held under bond if they are held
Liquors, Packaging and containers,
number reference to read ‘‘(Approved by by a proprietor who is liable for the tax,
Reporting and recordkeeping
the Office of Management and Budget even if the proprietor is not required to
requirements, Research, Scientific
under control number 1513–0006)’’. provide a bond under this chapter.
equipment, Spices and flavorings,
Surety bonds, Vinegar, Warehouses, * * *
§ 18.40 [Amended]
Wine. * * * * *
■ 3. Section 18.40 is amended as To bond. When used with reference to
27 CFR Part 25 follows: returns of distilled spirits, this phrase
■ a. In paragraph (c), by adding the
Beer, Claims, Electronic funds includes returns to the premises of a
words ‘‘if the proprietor is required to distilled spirits plant even if the
transfers, Excise taxes, Exports, hold a bond under § 24.146 of this
Labeling, Packaging and containers, proprietor, as authorized under the
chapter to cover the bonded wine cellar exemption set forth in § 19.151(d), has
Reporting and recordkeeping premises subject to alternation’’ after the
requirements, Research, Surety bonds. not provided a bond for the premises.
words ‘‘alternation of premises’’; and
■ b. By revising the Office of * * * * *
27 CFR Part 26
Management and Budget control ■ 6. Section 19.73 is amended as
Alcohol and alcoholic beverages, number reference to read ‘‘(Approved by follows:
Caribbean Basin initiative, Claims, the Office of Management and Budget ■ a. In paragraph (a)(14)(ii), by removing
Customs duties and inspection, under control number 1513–0006)’’. the word ‘‘and’’;
Electronic funds transfers, Excise taxes, ■ b. In paragraph (a)(15)(ii), by
Packaging and containers, Puerto Rico, PART 19—DISTILLED SPIRITS removing the period at the end of the
Reporting and recordkeeping PLANTS text and adding in its place the word ‘‘;
requirements, Surety bonds, Virgin and’’; and
Islands, Warehouses. ■ 4. The authority citation for part 19 ■ c. By adding paragraph (a)(16).
continues to read as follows: The addition reads as follows:
27 CFR Part 27
Authority: 19 U.S.C. 81c, 1311; 26 U.S.C.
Alcohol and alcoholic beverages, 5001, 5002, 5004–5006, 5008, 5010, 5041, § 19.73 Information required in application
Beer, Cosmetics, Customs duties and 5061, 5062, 5066, 5081, 5101, 5111–5114, for registration.
inspection, Electronic funds transfers, 5121–5124, 5142, 5143, 5146, 5148, 5171– (a) * * *
Excise taxes, Imports, Labeling, Liquors, 5173, 5175, 5176, 5178–5181, 5201–5204, (16) A statement whether the
5206, 5207, 5211–5215, 5221–5223, 5231, applicant is required to furnish a bond
Packaging and containers, Reporting
5232, 5235, 5236, 5241–5243, 5271, 5273, under § 19.151.
and recordkeeping requirements, Wine.
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5301, 5311–5313, 5362, 5370, 5373, 5501–
5505, 5551–5555, 5559, 5561, 5562, 5601, * * * * *
27 CFR Part 28
5612, 5682, 6001, 6065, 6109, 6302, 6311,
Aircraft, Alcohol and alcoholic § 19.116 [Amended]
6676, 6806, 7011, 7510, 7805; 31 U.S.C. 9301,
beverages, Armed forces, Beer, Claims, 9303, 9304, 9306. ■ 7. In § 19.116, paragraph (a)(2)(ii) is
Excise taxes, Exports, Foreign trade ■ 5. Section 19.1 is amended as follows: amended by adding the words ‘‘, subject
zones, Labeling, Liquors, Packaging and ■ a. In the definition of ‘‘Bonded to the exemption provided in
containers, Reporting and recordkeeping premises’’, by adding a second sentence; § 19.151(d)’’ before the semicolon.
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§ 19.118 [Amended] chapter to cover the proposed (b) How to find an approved surety.
■ 8. In § 19.118, paragraph (a)(2) is alternation. The Department of the Treasury
amended by adding the words ‘‘, subject * * * * * publishes a list of approved corporate
to the exemption provided in surety companies in Treasury
■ 15. Section 19.151 is amended as
§ 19.151(d)’’ after the words ‘‘TTB F Department Circular 570, Companies
follows:
5000.18’’. Holding Certificates of Authority as
■ a. In the first sentence of paragraph
Acceptable Sureties on Federal Bonds
§ 19.132 [Amended] (a), by removing the words ‘‘Any
and as Acceptable Reinsuring
person’’ and adding, in their place,
■ 9. In § 19.132, paragraph (a)(2)(ii) is Companies. Treasury Department
‘‘Except as provided in paragraph (d) of
amended by adding the words ‘‘, subject Circular 570 is published in the Federal
this section, any person’’; and
to the exemption provided in Register annually on the first business
■ b. By adding paragraph (d).
§ 19.151(d)’’ after the words ‘‘the day in July, and supplemental changes
The addition reads as follows: are published periodically thereafter.
required bonds’’.
§ 19.151 General. The most recent circular and any
§ 19.134 [Amended] supplemental changes to it may be
* * * * *
■ 10. In § 19.134, paragraph (b) is (d) Bonds covering distilled spirits for viewed on the Bureau of the Fiscal
amended by adding the words ‘‘, subject nonindustrial use and industrial use— Service Web site at https://
to the exemption provided in (1) Nonindustrial use. A proprietor who www.fiscal.treasury.gov/fsreports/ref/
§ 19.151(d)’’ after the words ‘‘TTB F pays tax on a deferred basis under suretyBnd/c570.htm.
5000.18’’. § 19.235 is not required to provide a * * * * *
■ 11. Section 19.136 is added bond or bonds to cover operations and ■ 17. Section 19.154 is revised to read
immediately after § 19.135 and before withdrawals of distilled spirits for as follows:
the undesignated center heading to read nonindustrial use during any portion of § 19.154 Bond guaranteed by deposit of
as follows: a calendar year for which the proprietor securities or cash (including cash
is eligible to use an annual or quarterly equivalents).
§ 19.136 Change in bond status.
return period under § 19.235(b) or (c). (a) Bond guaranteed by deposit of
A proprietor must file TTB F 5110.41, For purposes of the preceding sentence,
Registration of Distilled Spirits Plant, to securities—(1) General. As an
a proprietor is considered to be paying alternative to the corporate surety bond
amend the registration relating to the tax on a deferred basis even if the
proprietor’s bond status if either of the under § 19.153, a person can file a bond
proprietor does not pay tax during every that guarantees payment of the liability
following occurs: return period as long as the proprietor
(a) A proprietor who has not by pledging one or more acceptable
intends to pay tax in a future period. negotiable securities. These securities
furnished any bond becomes required to See §§ 19.73 and 19.136 for rules
furnish a bond as provided under must have a par value (face amount)
governing applying for this bond equal to or greater than the penal sums
§ 19.168(b); or exemption. See § 19.168(b) for rules
(b) A proprietor who has furnished a of the required bonds. The pledged
governing when an existing proprietor securities are held in the Federal
bond becomes exempt from bond
who has not provided a bond under this Reserve Bank in a safekeeping account
requirements under § 19.151(d) and
paragraph must obtain bond coverage. with TTB as the pledgee. Should the
chooses to terminate all bond coverage
(2) Industrial use. A proprietor is proprietor fail to pay one or more of the
as provided under § 19.170(e).
required to provide one or more bonds guaranteed liabilities, TTB can take
§ 19.141 [Amended] to cover operations and withdrawals of action to sell the deposited securities to
■ 12. Section 19.141 is amended as distilled spirits for industrial use even satisfy the debt. Pledged securities will
follows: if the proprietor pays tax on a deferred be released if there are no outstanding
■ a. In paragraph (d)(2), by removing the basis under § 19.235 and is eligible to liabilities when the bond is terminated.
word ‘‘Execute’’ and adding, in its use an annual or quarterly return period (See § 19.170.)
place, the words ‘‘Except where no bond under § 19.235(b) or (c). In the case of (2) Acceptable securities. Only public
is required under § 19.151(d), execute’’; a proprietor whose operations involve debt obligations of the United States, the
and distilled spirits for both nonindustrial principal and interest of which are
■ b. In paragraph (e)(2), by removing the and industrial use, distilled spirits are unconditionally guaranteed by the
words ‘‘Must execute’’ and adding, in considered to be for industrial use for United States Government, are
their place, the words ‘‘Except where no purposes of this paragraph unless the acceptable for the purpose described in
bond is required under § 19.151(d), proprietor designates the spirits as being paragraph (a)(1) of this section. The
must execute’’. solely for nonindustrial use either upon Department of the Treasury and certain
taking the production gauge (see other United States Government
§ 19.142 [Amended] § 19.304) or upon receiving the spirits agencies issue debt instruments that are
■ 13. In § 19.142, paragraph (e) is and, in either case, does not thereafter acceptable as collateral, such as
amended by removing the words ‘‘TTB mix the spirits with any spirits for Treasury notes and Treasury bills.
bond’’ and adding, in their place, the industrial use. Savings bonds, certificates of deposit
words ‘‘bonded premises’’. (3) Nonindustrial use and industrial and letters of credit are not acceptable.
■ 14. In § 19.143, paragraph (b)(3) is use defined. See § 19.472 for the A list of securities acceptable as
amended by adding a second sentence provisions defining the nonindustrial collateral in lieu of surety bonds is
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to read as follows: and industrial uses of distilled spirits. available from the Bureau of the Fiscal
■ 16. In § 19.153, paragraph (b) is Service. Current information and
§ 19.143 Alternation for other purposes. revised to read as follows: guidance from the Bureau of the Fiscal
* * * * * Service Web site may be found at
(b) * * * § 19.153 Bonds guaranteed by a corporate https://www.fiscal.treasury.gov.
(3) * * * This requirement does not surety. (b) Bond guaranteed by deposit of
apply if no bond is required under this * * * * * cash or cash equivalent. As an
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alternative to the corporate surety bond was exempt from bond requirements upon determination of tax without a
under § 19.153, a person can file a bond under § 19.151(d), the proprietor must withdrawal bond. If a person is required
that guarantees payment of the liability furnish a bond or bonds as provided in to submit a new or superseding
by submitting cash or its equivalent this subpart beginning in any portion of withdrawal bond under § 19.168, the
(including a money order, cashier’s a calendar year following the first date person must submit the bond in
check, or personal check). Cash or its on which the aggregate amount of tax accordance with that section. A person
equivalent must be no less than the due from the proprietor during the who does not submit and receive
penal sums of the required bond. Cash calendar year exceeds $50,000. When approval of an acceptable withdrawal
equivalents must be payable to the furnishing the bond or bonds, the bond when required to do so under
Alcohol and Tobacco Tax and Trade proprietor must also file an amendment § 19.168 may not withdraw distilled
Bureau. A bond described in this to TTB F 5110.41, Registration of spirits from the bonded premises on a
paragraph will be released if there are Distilled Spirits Plant, as provided in deferred basis. Upon lapse of the
no outstanding liabilities when the bond § 19.136 to change the proprietor’s bond existing bond coverage, or upon the date
is terminated. (See § 19.170.) status. a new bond is required under
(2) Grace period for bonds covering § 19.168(b), the person must pay the tax
(31 U.S.C. 9301, 9303; 31 CFR part 380)
operations. An existing proprietor who at the time of withdrawal, except in the
§ 19.161 [Amended] must furnish an operations bond as case of distilled spirits withdrawn free
provided in paragraph (b)(1) of this of tax or withdrawn without payment of
■ 18. In § 19.161, paragraph (a) is
section will be treated as having tax under 26 U.S.C. 5214 or withdrawn
amended by removing the words ‘‘Any
furnished the required bond if the exempt from tax under 26 U.S.C. 7510.
person’’ and adding, in their place,
proprietor submits the bond on TTB F
‘‘Except as provided in § 19.151(d), any * * * * *
5110.56 no later than 30 days following
person’’. the first date on which the aggregate ■ 22. Section 19.170 is amended as
■ 19. In § 19.164, the first sentence of amount of tax due from the proprietor follows:
paragraph (a) is revised to read as during the relevant calendar year ■ a. In paragraph (c), by removing the
follows: exceeds $50,000. The proprietor will be word ‘‘or’’ at the end of the text;
treated as having furnished the required ■ b. In paragraph (d), by removing the
§ 19.164 Withdrawal bond. period at the end of the text and adding
operations bond for purposes of this
(a) * * * Except as provided in in its place the word ‘‘; and’’; and
paragraph until TTB approves or
§ 19.151(d), a person must provide TTB ■ c. By adding paragraph (e).
disapproves the bond.
with a withdrawal bond for a distilled (3) Bonds covering withdrawals. The addition reads as follows:
spirits plant if the person intends to Paragraph (b)(2) of this section does not
withdraw spirits from the distilled § 19.170 Termination of bonds.
apply to withdrawal bonds. If an
spirits plant upon determination of the existing proprietor must furnish a * * * * *
taxes due on the spirits but before withdrawal bond as provided in (e) On application by an existing
payment of the tax. * * * paragraph (b)(1) of this section, the proprietor who becomes exempt from
* * * * * proprietor may not withdraw distilled bond requirements. If a proprietor has
spirits from the bonded premises on a held a bond or bonds covering
■ 20. Section 19.168 is amended as
tax deferred basis until TTB approves operations or withdrawals of distilled
follows:
■ a. By revising the section heading; the withdrawal bond. spirits for nonindustrial use and
■ b. By revising paragraph (a);
becomes exempt from those bond
* * * * * requirements as provided under
■ c. By redesignating paragraphs (b), (c), ■ 21. In § 19.169, the section heading
and (d) as paragraphs (a)(1), (a)(2), and § 19.151(d), the proprietor may apply to
and paragraphs (a) and (b) are revised to TTB to terminate the bond or bonds
(a)(3); read as follows:
■ d. In the first sentence of redesignated covering such operations or
paragraph (a)(1), by removing the words § 19.169 Effect of failure to furnish a withdrawals. To apply, the proprietor
‘‘Circular 570’’ and adding, in their superseding bond or a new bond. must file an amendment to TTB F
place, the words ‘‘Department Circular (a) Operations bond. Except as 5110.41, Registration of Distilled Spirits
570 (see § 19.153)’’; and provided in § 19.151(d), a person may Plant, as provided in § 19.136. The
■ e. By adding a new paragraph (b). not operate a distilled spirits plant proprietor must accurately state in the
The revisions and addition read as without an operations bond. A person submission that the proprietor:
follows: who does not submit an acceptable (1) Will withdraw distilled spirits for
superseding operations bond when deferred payment of tax as provided in
§ 19.168 Superseding bonds and new required to do so under § 19.168(a) must § 19.235;
bonds for existing proprietors. (2) Reasonably expects to be liable for
immediately discontinue the activities
(a) Superseding bonds. A new bond to which the lapsed bond coverage not more than $50,000 in taxes with
that replaces another bond is called a relates upon lapse of the existing bond respect to distilled spirits imposed by
superseding bond. The proprietor must coverage. If a proprietor must furnish an 26 U.S.C. 5001 and 7652 for the current
replace an existing bond with a operations bond under § 19.168(b)(1) calendar year (see definition of
superseding bond in any of the and does not submit an operations bond ‘‘Reasonably expects’’ in § 19.235(e));
following circumstances: within the time prescribed in and
* * * * * § 19.168(b)(2), the proprietor must (3) Was liable for not more than
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(b) New bonds for existing immediately discontinue the activities $50,000 in such taxes in the preceding
proprietors—(1) General. Subject to required to be covered by the operations calendar year.
paragraph (b)(2) of this section, if an bond. * * * * *
existing proprietor has not furnished a (b) Withdrawal bond. Except as
bond or bonds covering operations and provided in § 19.151(d), a person may § 19.229 [Amended]
withdrawals of distilled spirits for not defer payment of taxes on spirits ■ 23. In § 19.229, the third sentence of
nonindustrial use because the proprietor withdrawn from a distilled spirits plant paragraph (a) is amended by adding
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after the words ‘‘unit bond’’ the words $1,000, and any tax which has not been procedure, in distilled spirits taxes
‘‘unless the proprietor is exempt from paid on that date will be due on the during that calendar year; and
furnishing such bond under 14th day after the last day of the (5) If a taxpayer becomes ineligible to
§ 19.151(d)’’. quarterly or semimonthly period in use a return procedure described in
which that date occurs. A taxpayer may paragraph (b) or (c) of this section
§ 19.230 [Amended] choose to use either quarterly or because the taxpayer’s liability exceeds
■ 24. Section 19.230 is amended as semimonthly return periods as $1,000 or $50,000, respectively, during
follows: authorized under paragraph (c) or (e) of a taxable year, that taxpayer may resume
■ a. Paragraph (a) is amended by adding this section. using that return procedure only after a
after the words ‘‘unit bond’’ the words (c) Quarterly return period. Except as full calendar year has passed during
‘‘and the proprietor is not exempt from provided in paragraph (b) of this section which the taxpayer’s liability did not
furnishing such bond under and subject to paragraph (d) of this exceed $1,000 or $50,000 as the case
§ 19.151(d)’’; and section, a taxpayer who reasonably may be. A taxpayer may not use an
■ b. In paragraph (d), a new second expects to be liable for not more than annual or quarterly return procedure
sentence is added. $50,000 in taxes with respect to distilled during any calendar year in which the
The addition reads as follows: spirits imposed by 26 U.S.C. 5001 and taxpayer reasonably expects to be liable
§ 19.230 Conditions requiring prepayment 7652 for the current calendar year, and for more than $1,000, in the case of the
of taxes. that was liable for not more than annual return procedure, or $50,000, in
$50,000 in such taxes in the preceding the case of the quarterly return
* * * * *
(d) * * * This condition does not calendar year, may choose to use a procedure, in distilled spirits taxes.
apply to a proprietor who is exempt quarterly return period. However, the (e) Semimonthly return period. Except
from furnishing a bond under taxpayer may not use the quarterly in the case of a taxpayer who qualifies
§ 19.151(d). * * * return period procedure for any portion for, and chooses to use, annual or
of the calendar year following the first quarterly return periods as provided in
* * * * * date on which the aggregate amount of paragraphs (b) or (c) of this section, all
§ 19.231 [Amended] tax due from the taxpayer during the other taxpayers must use semimonthly
calendar year exceeds $50,000, and any return periods for deferred payment of
■ 25. In § 19.231, the first sentence is tax. The semimonthly return periods
tax which has not been paid on that date
amended by removing the words ‘‘When will run from the 1st day through the
will be due on the 14th day after the last
a proprietor furnishes’’ and adding, in 15th day of each month, and from the
day of the semimonthly period in which
their place, the words ‘‘In cases where 16th day through the last day of each
that date occurs.
a proprietor must furnish’’. month, except as otherwise provided in
(d) Additional rules for annual and
■ 26. Section 19.235 is revised to read § 19.237.
quarterly return periods. The following
as follows: additional rules apply to the annual and (f) Definitions. For purposes of this
§ 19.235 Deferred payment return quarterly return period procedures section, the following terms have the
periods—annual, quarterly, and under paragraphs (b) and (c) of this meanings indicated:
semimonthly. section: Reasonably expects. When used with
(a) Three types of return periods. The (1) A taxpayer with multiple locations reference to a taxpayer, reasonably
IRC provides for three different return must combine the distilled spirits tax expects means that there is no existing
periods for those taxpayers who pay liability for all locations to determine or anticipated circumstances known to
their taxes on a deferred basis: Annual, eligibility for the return procedures; the taxpayer (such as an increase in
quarterly, and semimonthly. Taxpayers (2) A taxpayer who has both domestic production capacity) that would cause
who meet certain criteria are eligible to operations and import transactions must the taxpayer’s tax liability to exceed the
use annual or quarterly return periods combine the distilled spirits tax liability prescribed limit.
and pay their taxes on an annual or on the domestic operations and the Taxpayer. A taxpayer is an
quarterly basis as provided in imports to determine eligibility for the individual, corporation, partnership, or
paragraphs (b) and (c) of this section, return procedures; other entity that is assigned a single
respectively. Other taxpayers must use (3) The controlled group rules of 26 Employer Identification Number (EIN)
semimonthly return periods and pay U.S.C. 5061(e), which concern treatment as defined in 26 CFR 301.7702.12.
their taxes on a semimonthly basis as of controlled groups as one taxpayer, do (26 U.S.C. 5061)
provided in paragraph (e) of this not apply for purposes of determining ■ 27. Section 19.236 is amended as
section. eligibility for the return procedures. follows:
(b) Annual return period. Subject to However, a taxpayer who is eligible for ■ a. In paragraph (a), by removing the
paragraph (d) of this section, a taxpayer the return procedures, and that is a words ‘‘a quarterly return as provided in
who reasonably expects to be liable for member of a controlled group that owes paragraph (b)’’ and adding, in their
not more than $1,000 in taxes with $5 million or more in distilled spirits place, the words ‘‘an annual or quarterly
respect to distilled spirits imposed by excise taxes per year, is required to pay return as provided in paragraph (b) or
26 U.S.C. 5001 and 7652 for the current taxes by electronic fund transfer (EFT). (c)’’;
calendar year, and that was liable for Quarterly payments via EFT must be ■ b. In paragraph (b), by removing the
not more than $1,000 in such taxes in transmitted in accordance with section citation ‘‘§ 19.235(b)’’ and adding, in its
the preceding calendar year, may choose 5061(e); place, the citation ‘‘§ 19.235(c)’’; and
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to use an annual return period. (4) A new taxpayer is eligible to use ■ c. By adding paragraph (c).
However, the taxpayer may not use the the return procedures the first year of The addition reads as follows:
annual return period procedure for any business simply if the taxpayer
portion of the calendar year following reasonably expects to be liable for not § 19.236 Due dates for returns.
the first date on which the aggregate more than $1,000, in the case of the * * * * *
amount of tax due from the taxpayer annual return procedure, or $50,000, in (c) Annual returns. Where the
during the calendar year exceeds the case of the quarterly return proprietor of bonded premises has
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withdrawn spirits from such premises list of approved corporate surety § 24.10 Meaning of terms.
on determination and before payment of companies in Treasury Department * * * * *
tax, and the proprietor uses annual Circular 570, Companies Holding Bonded wine cellar. * * * This term
return periods as provided in Certificates of Authority as Acceptable includes premises described in the
§ 19.235(b), the proprietor must file an Sureties on Federal Bonds and as preceding sentence even if the
annual return covering such spirits on Acceptable Reinsuring Companies. proprietor, as authorized under the
TTB F 5000.24, and remittance, as Treasury Department Circular 570 is exemption set forth in § 24.146(d), has
required by § 19.238, § 19.239, or published in the Federal Register not provided a bond for the premises.
§ 19.240, not later than the 14th day annually on the first business day in Bonded wine premises. * * * This
after the last day of the annual return July, and supplemental changes are term includes premises described in the
period. If the due date falls on a published periodically thereafter. The preceding sentence even if the
Saturday, Sunday, or legal holiday, the most recent circular and any proprietor, as authorized under the
return and remittance will be due on the supplemental changes to it may be exemption set forth in § 24.146(d), has
immediately preceding day which is not viewed on the Bureau of the Fiscal not provided a bond for the premises.
a Saturday, Sunday, or legal holiday. Service Web site at https://
www.fiscal.treasury.gov/fsreports/ref/ Bonded wine warehouse. * * * This
* * * * * term includes facilities described in the
suretyBnd/c570.htm.
§ 19.263 [Amended] (c) * * * A list of securities preceding sentence even if the
acceptable as collateral in lieu of surety warehouse company or other person, as
■ 28. In § 19.263, paragraph (a)(4) is authorized under the exemption set
amended by removing the words ‘‘TTB bonds is available from the Bureau of
the Fiscal Service. Current information forth in § 24.146(d), has not provided a
bond’’ and adding, in their place, the bond for the facility.
words ‘‘bonded premises’’. and guidance from the Bureau of the
Fiscal Service Web site may be found at Bonded winery. * * * This term
§ 19.269 [Amended] https://www.fiscal.treasury.gov. includes premises described in the
preceding sentence even if the
■29. In § 19.269, paragraph (a)(1) is * * * * *
proprietor, as authorized under the
amended by removing the word ‘‘TTB’’.
PART 24—WINE exemption set forth in § 24.146(d), has
§ 19.305 [Amended] not provided a bond for the premises.
■ 34. The authority citation for part 24 * * * * *
■ 30. In § 19.305, the second sentence is
continues to read as follows: From bond. When used with reference
amended by removing the words
‘‘bonded storage’’ and adding, in their Authority: 5 U.S.C. 552(a); 26 U.S.C. 5001, to withdrawals of wine, this phrase
place, the words ‘‘storage on bonded 5008, 5041, 5042, 5044, 5061, 5062, 5121, includes withdrawals from the premises
premises’’. 5122–5124, 5173, 5206, 5214, 5215, 5351, established under the provisions of this
5353, 5354, 5356, 5357, 5361, 5362, 5364– part on which operations in untaxpaid
§ 19.403 [Amended] 5373, 5381–5388, 5391, 5392, 5511, 5551, wine are authorized to be conducted,
5552, 5661, 5662, 5684, 6065, 6091, 6109,
■ 31. In § 19.403, the first sentence of 6301, 6302, 6311, 6651, 6676, 7302, 7342,
even if the proprietor, as authorized
paragraph (b) is amended by removing 7502, 7503, 7606, 7805, 7851; 31 U.S.C. 9301, under the exemption set forth in
words ‘‘TTB will’’ and adding, in their 9303, 9304, 9306. § 24.146(d), has not provided a bond for
place, the words ‘‘Except to the extent the premises.
the proprietor is not required to provide § 24.4 [Amended] * * * * *
a bond under § 19.151(d), TTB will’’. ■ 35. Section 24.4 is amended by In bond. * * * Wine or spirits are
removing the words ‘‘31 CFR Part 225— considered to be possessed under bond
§ 19.415 [Amended]
Acceptance of Bonds, Notes, or Other if they are possessed by a proprietor
■ 32. In § 19.415, the first sentence of Obligations Issued or Guaranteed by the who is liable for the tax, even if the
paragraph (c) is amended by removing United States as Security in Lieu of proprietor is not required to provide a
the words ‘‘premises bonded under this Surety or Sureties on Penal Bonds.’’ and bond under this chapter. * * *
part’’ and adding, in their place, the adding, in their place, the words ‘‘31 * * * * *
words ‘‘bonded premises’’. CFR Part 225—Acceptance of Bonds
To bond. When used with reference to
■ 33. Section 19.699 is amended as Secured by Government Obligations in
returns of wine, this phrase includes
follows: Lieu of Bonds with Sureties.’’.
returns to premises established under
■ a. In the second sentence of paragraph ■ 36. Section 24.10 is amended as the provisions of this part on which
(a), by removing the duplicate words follows: operations in untaxpaid wine are
‘‘fails to’’ immediately after the words ■ a. In the definition of ‘‘Bonded wine
authorized to be conducted, even if the
‘‘fails to’’; cellar’’, by adding a third sentence; proprietor, as authorized under the
■ b. By revising paragraph (b); and ■ b. In the definition of ‘‘Bonded wine
exemption set forth in § 24.146(d), has
■ c. In paragraph (c), by revising the last premises’’, by adding a second sentence; not provided a bond for the premises.
two sentences. ■ c. In the definition of ‘‘Bonded wine
warehouse’’, by adding a second * * * * *
The revisions read as follows:
sentence; § 24.100 [Amended]
§ 19.699 General bond requirements. ■ d. In the definition of ‘‘Bonded
* * * * * winery’’, by adding a second sentence; ■ 37. In § 24.100, the first sentence is
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(b) Corporate surety. A company that ■ e. By adding, in alphabetical order, a amended by removing the words ‘‘file
issues bonds is called a ‘‘corporate definition of ‘‘From bond’’; bond’’ and adding, in their place, the
surety.’’ Proprietors must obtain the ■ f. In the definition of ‘‘In bond’’, by words ‘‘file any required bond’’.
surety bonds required by this subpart adding a new second sentence; and § 24.101 [Amended]
from a corporate surety approved by the ■ g. By adding, in alphabetical order, a
Secretary of the Treasury. The definition of ‘‘To bond’’. ■38. In § 24.101, paragraph (a) is
Department of the Treasury publishes a The additions read as follows: amended as follows:
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■ a. In the first sentence, by adding the proprietor’’ and adding, in their place, of the wine by fermentation or upon
words ‘‘any required’’ before the word the words ‘‘an outgoing proprietor who receiving the wine and, in either case,
‘‘bond’’; and has filed bond as required under does not thereafter mix the wine with
■ b. In the second sentence, by adding § 24.146’’. any wine for industrial use.
after the words ‘‘the surety on the bond’’ ■ 45. Section 24.146 is amended as (3) Nonindustrial use and industrial
the words ‘‘(if a bond is required)’’. follows: use defined. The nonindustrial and
■ a. In the first sentence of paragraph industrial uses of wine are defined in
§ 24.105 [Amended] (a), by removing the words ‘‘The subpart D of part 1 of this chapter.
■ 39. In § 24.105, the fifth sentence is proprietor shall give bond’’ and adding, Nonindustrial uses of wine include, but
amended by adding after the words ‘‘In in their place, ‘‘Except as provided in are not limited to, uses of wine for
any instance where a bond is required paragraph (d) of this section, the beverage purposes. Industrial uses of
to be given’’ the words ‘‘under proprietor must give bond’’; wine include the manufacture of wine
§ 24.146’’. ■ b. In paragraph (b), by revising the or wine products not for beverage use as
■ 40. Section 24.109 is amended as first sentence; and set forth in § 24.215.
follows: ■ c. By adding paragraph (d).
■ a. In paragraph (j), by removing the The revision and addition read as * * * * *
word ‘‘and’’; ■ 46. In § 24.147, a second sentence is
follows:
■ b. In paragraph (k), by removing the added to read as follows:
period at the end of the text and adding § 24.146 Bonds.
§ 24.147 Operations bond or unit bond.
in its place the word ‘‘; and’’; and * * * * *
■ c. By adding paragraph (l). (b) * * * Except as provided in * * * See § 19.151(d) of this chapter
The addition reads as follows: paragraph (d) of this section, where the for circumstances under which a bond
proprietor removes wine from bonded is not required with respect to
§ 24.109 Data for application.
wine premises for consumption or sale, operations and withdrawals of distilled
* * * * * after determination and before payment spirits.
(l) A statement whether the applicant of tax, the proprietor must, in addition * * * * *
is required to furnish a bond under to any other bond required by this part, ■ 47. Section 24.149 is amended as
§ 24.146. furnish a tax deferral bond on TTB F follows:
* * * * * ■ a. In paragraph (a), by removing the
5120.36, Wine Bond, to ensure payment
of the tax on the wine. * * * words ‘‘Treasury Department Circular
§ 24.126 [Amended] No. 570 (Companies Holding
■ 41. Section 24.126 is amended by * * * * * Certificates of Authority as Acceptable
adding after the words ‘‘sufficient bond (d) Bonds covering wine for
Sureties on Federal bonds and as
coverage’’ the words ‘‘, except where nonindustrial use and industrial use—
Acceptable Reinsuring Companies)’’ and
§ 24.146(d) does not require bond (1) Nonindustrial use. A proprietor who
adding, in their place, the words
coverage’’. pays tax on a deferred basis under
‘‘Treasury Department Circular 570,
■ 42. Section 24.132 is added § 24.271 is not required to provide a
Companies Holding Certificates of
immediately after § 24.131 and before bond or bonds to cover operations and
Authority as Acceptable Sureties on
the undesignated center heading to read withdrawals of wine for nonindustrial
Federal Bonds and as Acceptable
as follows: use during any portion of a calendar
Reinsuring Companies’’; and
year for which the proprietor is eligible ■ b. By revising paragraph (b).
§ 24.132 Change in bond status. to use an annual or quarterly return The revision reads as follows:
A proprietor must file an amended period under § 24.271(b)(1)(ii) or
application if the proprietor’s bond (b)(1)(iii). For purposes of the preceding § 24.149 Corporate surety.
status changes in either of the following sentence, a proprietor is considered to * * * * *
ways: be paying tax on a deferred basis even (b) Department of the Treasury
(a) A proprietor who has not if the proprietor does not pay tax during Circular 570 is published in the Federal
furnished any bond becomes required to every return period as long as the Register annually on the first business
furnish a bond as provided under proprietor intends to pay tax in a future day in July, and supplemental changes
§ 24.154(b); or period. See §§ 24.109 and 24.132 for are published periodically thereafter.
(b) A proprietor who has furnished a rules governing applying for this bond The most recent circular and any
bond becomes exempt from bond exemption. See § 24.154(b) for rules supplemental changes to it may be
requirements under § 24.146(d) and governing when an existing proprietor viewed on the Bureau of the Fiscal
chooses to terminate all bond coverage who has not provided a bond under this Service Web site at https://
as provided under § 24.160. paragraph must obtain bond coverage. www.fiscal.treasury.gov/fsreports/ref/
§ 24.135 [Amended] (2) Industrial use. A proprietor is suretyBnd/c570.htm.
required to provide a bond or bonds to * * * * *
■ 43. In § 24.135, paragraph (b)(2) is
cover operations and withdrawals of ■ 48. Section 24.151 is revised to read
amended by adding after the words
wine for industrial use even if the as follows:
‘‘covering the alternation’’ the words ‘‘,
proprietor pays tax on a deferred basis
except in cases where § 24.146(d) does § 24.151 Deposit of collateral security.
under § 24.271 and is eligible to use an
not require a bond or bonds’’.
annual or quarterly return period under Bonds or notes of the United States,
§ 24.136 [Amended] § 24.271(b)(1)(ii) or (b)(1)(iii). In the case or other obligations which are
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■ 44. In § 24.136, paragraph (c) is of a proprietor whose operations or unconditionally guaranteed as to both
amended as follows: withdrawals involve wine for both interest and principal by the United
■ a. In the first sentence, by adding after nonindustrial and industrial use, wine States, may be pledged and deposited as
the words ‘‘filed bond’’ the words ‘‘as is considered to be for industrial use for collateral security in lieu of corporate
required under § 24.146’’; and purposes of this paragraph unless the sureties in accordance with the
■ b. In the second sentence, by proprietor designates the wine as solely provisions of the Treasury Department
removing the words ‘‘the outgoing for nonindustrial use upon production regulations in 31 CFR part 225,
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Acceptance of Bonds Secured by provided in § 24.132 to change the provided in § 24.132. The proprietor
Government Obligations in Lieu of proprietor’s bond status. must accurately state in the submission
Bonds with Sureties. Cash, postal (2) Grace period for wine bonds under that the proprietor:
money orders, certified checks, cashiers’ § 24.146(a). An existing proprietor who (a) Will withdraw wine for deferred
checks, or treasurers’ checks may also must furnish a wine bond under payment of tax under § 24.271;
be furnished as collateral security in § 24.146(a) as provided in paragraph (b) Reasonably expects to be liable for
lieu of corporate sureties. (b)(1) of this section will be treated as not more than $50,000 in taxes with
(July 30, 1947, Ch. 390, 61 Stat. 650 (6 U.S.C. having furnished the required bond if respect to wine imposed by 26 U.S.C.
15); August 16, 1954, Ch. 736, 68A Stat. 847, the proprietor submits the bond on TTB 5041 and 7652 for the current calendar
as amended (26 U.S.C. 7101)) F 5120.36 no later than 30 days year (see definition of ‘‘Reasonably
following the first date on which the expects’’ in § 24.271(b)(1)(iv)(B)); and
§ 24.152 [Amended] aggregate amount of tax due from the (c) Was liable for not more than
■ 49. Section 24.152 is amended by proprietor during the relevant calendar $50,000 in such taxes in the preceding
removing the words ‘‘Form 1533’’ and year exceeds $50,000. The proprietor calendar year.
adding, in their place, the words ‘‘TTB will be treated as having furnished the ■ 53. In § 24.271, the section heading
Form 5000.18’’. required wine bond for purposes of this and paragraphs (a) and (b) are revised to
■ 50. Section 24.154 is revised to read paragraph until TTB approves or read as follows:
as follows: disapproves the bond. Until TTB takes § 24.271 Deferred payment return
action on a bond submission, a periods—annual, quarterly, and
§ 24.154 Superseding bonds and new proprietor who complies with the semimonthly.
bonds for existing proprietors. requirements of this paragraph may (a) General. This section governs
(a) Superseding bonds. When, in the remove wine on which the tax has been payment of tax on a deferred basis. The
opinion of the appropriate TTB officer, determined, but not paid, to the extent tax on wine is paid by an Excise Tax
the interests of the Government demand that the proprietor’s liability for tax on Return, TTB F 5000.24, which is filled
it, or in any case where the validity of those removals does not exceed $1,000. with a remittance (check, cash, or
the bond becomes impaired in whole or (3) Tax deferral bonds under money order) of the full amount of tax
in part for any reason, the principal § 24.146(b). The grace period specified due. Prepayments of tax on wine during
must give a new bond that supersedes in paragraph (b)(2) of this section does the period covered by the return are
the existing bond. A superseding bond not apply to tax deferral bonds under shown separately on the Excise Tax
will be required immediately in the case § 24.146(b). Except to the extent Return form. If no tax is due for the
of the insolvency of a corporate surety. authorized under paragraph (b)(2) of return period, the filing of a return is
Executors, administrators, assignees, this section, a proprietor who must not required.
receivers, trustees, or other persons furnish a tax deferral bond under (b) Return periods and due dates—(1)
acting in a fiduciary capacity, to paragraph (b)(1) of this section may not Return periods. (i) Semimonthly return
continue or to liquidate the business of withdraw wine from the bonded period. Except in the case of a taxpayer
the principal, must execute and file a premises on which the tax has been who qualifies for, and chooses to use, an
superseding bond or obtain the consent determined, but not paid, until TTB annual or quarterly return period as
of the surety or sureties on the existing approves the tax deferral bond. provided in paragraph (b)(1)(ii) or
bond or bonds. When under the (Sec. 201, Pub. L. 85–859, 72 Stat. (b)(1)(iii) of this section, all taxpayers
provisions of § 24.157 the surety has 1379, as amended, 1380, as amended, who defer payment of taxes must use
filed an application to be relieved of 1394, as amended (26 U.S.C. 5354, 5362, semimonthly return periods. The
liability under any bond given under 5551)) semimonthly return periods run from
this part and the principal desires or (Approved by the Office of the 1st day through the 15th day of each
intends to continue business or Management and Budget under control month, and from the 16th day through
operations to which the bond relates, number 1513–0009) the last day of each month, except as
the principal must file a valid § 24.156 [Amended] otherwise provided in paragraph (c) of
superseding bond to be effective on or this section.
before the date specified in the surety’s ■ 51. Section 24.156 is amended by
(ii) Annual return period. Subject to
notice. Superseding bonds will show adding after the words ‘‘as provided in
paragraph (b)(1)(iv) of this section, a
the current date of execution and the § 24.140(b);’’ the words ‘‘pursuant to an
taxpayer may choose to use an annual
effective date. application by an existing proprietor
return period if the taxpayer was not
who becomes exempt from bond
(b) New bonds for existing liable for more than $1,000 in taxes with
requirements as provided in § 24.160;’’.
proprietors—(1) General. Subject to ■ 52. Section 24.160 is added to subpart
respect to wine imposed by 26 U.S.C.
paragraph (b)(2) of this section, if an D to read as follows: 5041 and 7652 in the preceding
existing proprietor has not furnished a calendar year and if that taxpayer
bond or bonds covering operations and § 24.160 Application to terminate bond by reasonably expects to be liable for not
withdrawals of wine for nonindustrial existing proprietor who becomes exempt more than $1,000 in such taxes during
use because the proprietor was exempt from bond requirements. the current calendar year. Except as
from bond requirements under If a proprietor has held a bond or provided in paragraph (b)(2), the last
§ 24.146(d), the proprietor must furnish bonds covering operations or day for paying the tax and filing the
a bond or bonds as provided in this withdrawals of wine for nonindustrial return will be the 14th day after the last
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subpart beginning in any portion of a use and becomes exempt from those day of the calendar year. However, the
calendar year following the first date on bond requirements as provided under taxpayer may not use the annual return
which the aggregate amount of tax due § 24.146(d), the proprietor may apply to period procedure for any portion of the
from the proprietor during the calendar TTB to terminate the bond or bonds calendar year following the first date on
year exceeds $50,000. When furnishing covering such operations or which the aggregate amount of tax due
the bond or bonds, the proprietor must withdrawals. To apply, the proprietor from the taxpayer during the calendar
also file an amended application as must file an amended application as year exceeds $1,000, and any tax that
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![1126 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Rules and Regulations
has not been paid on that date will be via EFT must be transmitted in (ii) The proprietor is required to
due on the 14th day after the last day accordance with section 5061(e); obtain a tax deferral bond, the bond is
of the quarterly or semimonthly period (F) A new taxpayer is eligible to use not in the maximum penal sum, and the
in which that date occurs. the return procedures the first year of tax determined and unpaid at any one
(iii) Quarterly return period. Except as business simply if the taxpayer time exceeds the coverage of the wine
provided in paragraph (b)(1)(ii) of this reasonably expects to be liable for not bond.
section and subject to paragraph more than $1,000 (in the case of the (2) Forwarding the return with
(b)(1)(iv) of this section, a taxpayer may annual return procedure) or $50,000 (in remittance. The proprietor must forward
choose to use a quarterly return period the case of the quarterly return the return with remittance pursuant to
if the taxpayer was not liable for more procedure) in wine taxes during that the instructions printed on the return.
than $50,000 in taxes with respect to calendar year; and For the purpose of complying with this
wine imposed by 26 U.S.C. 5041 and (G) If a taxpayer becomes ineligible to section, the term ‘‘forwarding’’ means
7652 in the preceding calendar year and use a return procedure described in the deposit in the United States mail
if that taxpayer reasonably expects to be paragraph (b)(1)(ii) or (iii) of this section properly addressed to TTB.
liable for not more than $50,000 in such because the taxpayer’s liability exceeds * * * * *
taxes during the current calendar year. $1,000 or $50,000, respectively, in tax ■ 56. In § 24.283, the second sentence is
In such a case the last day for paying the liability during a taxable year, that revised to read as follows;
tax and filing the return will be the 14th taxpayer may resume using that return
day after the last day of the calendar procedure only after a full calendar year § 24.283 Reconsignment.
quarter. However, the taxpayer may not has passed during which the taxpayer’s * * * The proprietor to whom the
use the quarterly return period liability did not exceed $1,000 or wine is reconsigned will be liable for
procedure for any portion of the $50,000 as the case may be. A taxpayer the tax on the wine while it is in transit
calendar year following the first date on may not use an annual or quarterly after reconsignment. * * *
which the aggregate amount of tax due return procedure during any calendar * * * * *
from the taxpayer during the calendar year in which the taxpayer reasonably
year exceeds $50,000, and any tax that § 24.300 [Amended]
expects to be liable for more than
has not been paid on that date will be $1,000, in the case of the annual return ■ 57. Section 24.300 is amended as
due on the 14th day after the last day procedure, or $50,000, in the case of the follows:
of the semimonthly period in which that quarterly return procedure, in wine ■ a. In paragraph (g)(2)(ii), by removing
date occurs. taxes. the citation ‘‘§ 24.271’’ and adding, in
(iv) Additional rules for annual and (2) Semimonthly, quarterly, and its place, the citation
quarterly return periods. The following annual tax return due dates. (i) General. ‘‘§ 24.271(b)(1)(iii)’’; and
■ b. In paragraph (g)(2)(iii), by removing
additional rules apply to the annual and Except as provided in paragraph
quarterly return period procedures (b)(2)(ii), the taxpayer must file the the citation ‘‘§ 24.273’’ and adding, in
under this section: semimonthly, quarterly, or annual its place, the citation
(A) A ‘‘taxpayer’’ is an individual, return, with remittance, for each return ‘‘§ 24.271(b)(1)(ii)’’.
corporation, partnership, or other entity period not later than the 14th day after § 24.323 [Amended]
that is assigned a single Employer the last day of the return period. If the ■ 58. In § 24.323, the first sentence is
Identification Number as defined in 26 due date falls on a Saturday, Sunday, or amended by removing the words ‘‘,
CFR 301.7701–12; legal holiday, the return and remittance unless exempted under the provisions
(B) ‘‘Reasonably expects’’ means that are due on the immediately preceding of § 24.273’’.
there is no existing or anticipated day that is not a Saturday, Sunday, or
circumstance known to the taxpayer legal holiday, except as otherwise PART 25—BEER
(such as an increase in production provided in paragraph (c)(3) of this
capacity) that would cause the section. ■ 59. The authority citation for part 25
taxpayer’s tax liability to exceed the (ii) Due dates for 2016 annual returns. continues to read as follows:
prescribed limit; In the case of a taxpayer filing an annual Authority: 19 U.S.C. 81c; 26 U.S.C. 5002,
(C) A taxpayer with multiple locations return covering the 2016 calendar year, 5051–5054, 5056, 5061, 5121, 5122–5124,
must combine the wine tax liability for the taxpayer must file the return, with 5222, 5401–5403, 5411–5417, 5551, 5552,
all locations to determine eligibility for remittance, not later than January 30, 5555, 5556, 5671, 5673, 5684, 6011, 6061,
6065, 6091, 6109, 6151, 6301, 6302, 6311,
the return procedures; 2017. 6313, 6402, 6651, 6656, 6676, 6806, 7342,
(D) A taxpayer who has both domestic * * * * * 7606, 7805; 31 U.S.C. 9301, 9303–9308.
operations and import transactions must
combine the wine tax liability on the § 24.273 [Removed and Reserved] § 25.4 [Amended]
domestic operations and the imports to ■ 54. Section 24.273 is removed and ■ 60. In § 25.4, the list of related
determine eligibility for the return reserved. regulations is amended by removing the
procedures; ■ 55. In § 24.275, paragraph (a) is entry ‘‘31 CFR Part 225—Acceptance of
(E) The controlled group rules of 26 revised to read as follows: Bonds, Notes, or Other Obligations
U.S.C. 5061(e), which concern treatment Issued or Guaranteed by the United
of controlled groups as one taxpayer, do § 24.275 Prepayment of tax. States as Security in Lieu of Surety or
not apply for purposes of determining (a) General—(1) Circumstances where Sureties on Penal Bonds’’ and adding, in
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eligibility for the return procedures. prepayment required. The proprietor its place, the entry ‘‘31 CFR Part 225—
However, a taxpayer who is eligible for must, before removal of wine for Acceptance of Bonds Secured by
the return procedures, and who is a consumption or sale, file Excise Tax Government Obligations in Lieu of
member of a controlled group that owes Return, TTB F 5000.24, with remittance, Bonds with Sureties’’.
$5 million or more in wine excise taxes where: ■ 61. Section 25.11 is amended by
per year, is required to pay taxes by (i) The proprietor is required to adding, in alphabetical order,
electronic fund transfer (EFT). Payments prepay tax under § 24.276; or definitions of ‘‘Bonded premises of a
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distilled spirits plant’’, ‘‘Bonded wine place, the words ‘‘If the brewer has filed ■ b. By adding paragraph (e).
premises’’, and ‘‘Bonded winery’’ to a bond, a consent’’; and The addition reads as follows:
read as follows: ■ b. By revising paragraph (c).
The revision reads as follows: § 25.91 Requirement for bond.
§ 25.11 Meaning of terms. * * * * *
* * * * * § 25.73 Change in partnership. (e) Bond exemption. A brewer who
Bonded premises of a distilled spirits * * * * * pays tax on a deferred basis under
plant. The bonded premises of a (c) Settlement of partnership. If the § 25.164 is not required to provide a
distilled spirits plant as described in surviving partner(s) acquires the bond to cover operations and
part 19 of this chapter. This term business on completion of the withdrawals of beer during any portion
includes premises described in the settlement of the partnership, that of a calendar year for which the brewer
preceding sentence even if the distilled partner(s) must qualify in his or her own is eligible to use an annual or quarterly
spirits plant proprietor, as authorized name from the date of acquisition. The return period under § 25.164(c)(2) or
under the exemption set forth in partner(s) must give a new brewer’s (c)(3). A brewer is considered to be
§ 19.151(d) of this chapter, has not notice on Form 5130.10 and a new bond paying tax on a deferred basis for
provided a bond for the premises. on Form 5130.22, except that the purposes of the preceding sentence even
Bonded wine premises. Bonded wine partner(s) is not required to file a bond if the brewer does not pay tax during
premises established under part 24 of if the brewer is exempt from bond every return period as long as the
this chapter. This term includes requirements under § 25.91(e). brewer intends to pay tax in a future
premises described in the preceding * * * * * period. See §§ 25.62 and 25.79 for rules
sentence even if the proprietor, as ■ 65. Section 25.77 is amended as governing applying for this bond
authorized under the exemption set follows: exemption. See § 25.95 for rules
■ a. In the first sentence, by removing governing when an existing brewer who
forth in § 24.146(d) of this chapter, has
not provided a bond for the premises. the words ‘‘Form 1533 (5000.18) in has not provided a bond under this
Bonded winery. The premises of a accordance with’’ and adding, in their paragraph must obtain bond coverage.
bonded winery as described in part 24 place, the words ‘‘Form 5000.18, as * * * * *
of this chapter. This term includes required under’’; and
■ b. By adding a new second sentence. § 25.92 [Amended]
premises described in the preceding
The addition reads as follows: ■ 69. Section 25.92 is amended by
sentence even if the proprietor, as
authorized under § 24.146(d) of this § 25.77 Change in location. removing the words ‘‘Form 1533
chapter, has not provided a bond for the * * * The brewer is not required to (5000.18)’’ and adding, in their place,
premises. file a new bond or consent of surety if the words ‘‘Form 5000.18’’.
■ 70. In § 25.93, paragraph (a) is revised
* * * * * the brewer is exempt from bond
■ 62. Section 25.62 is amended by requirements under § 25.91(e). * * * to read as follows:
adding paragraph (a)(13) to read as * * * * * § 25.93 Penal sum of bond.
follows: ■ 66. Section 25.79 is added (a) General. Except as provided in
immediately after § 25.78 and before the paragraph (a)(3) of this section, a brewer
§ 25.62 Data for notice.
undesignated center heading to read as must furnish a bond of a penal sum as
(a) * * * follows: prescribed in this section.
(13) A statement whether the brewer (1) Brewers who pay taxes using
is required to furnish a bond under § 25.79 Change in bond status.
semimonthly periods. In the case of a
§ 25.91. A brewer must file an amended
brewer who pays taxes using
* * * * * Brewer’s Notice, Form 5130.10, if the
semimonthly return periods under
■ 63. Section 25.72 is amended as brewer’s bond status changes because
§ 25.164(c)(1), the penal sum of the
follows: either:
(a) A brewer has not furnished any brewers bond must be equal to 10
■ a. In the third sentence of paragraph percent of the maximum amount of tax
(a), by adding after the words ‘‘own bond and has become required to
furnish a bond as provided under calculated at the rates prescribed by law
name’’ the words ‘‘, except that the which the brewer will become liable to
successor brewer is not required to file § 25.95(b); or
(b) A brewer has furnished a bond, pay during a calendar year during the
a bond if the brewer is exempt from period of the bond on beer:
has become exempt from bond
bond requirements under § 25.91(e)’’; (i) Removed for transfer to the
requirements under § 25.91(e), and
and brewery from other breweries owned by
chooses to terminate all bond coverage
■ b. In paragraph (b)(1), by adding a the same brewer;
as provided under § 25.106.
second sentence. (ii) Removed without payment of tax
The addition reads as follows: § 25.81 [Amended] for export or for use as supplies on
■ 67. In § 25.81, paragraph (b)(3) is vessels and aircraft;
§ 25.72 Change in proprietorship.
amended by adding after the words (iii) Removed without payment of tax
* * * * * ‘‘alternation of premises’’ the words ‘‘, for use in research, development, or
(b) * * * except to the extent no bond is required testing; and
(1) * * * A fiduciary is not required under § 24.146 of this chapter or (iv) Removed for consumption or sale.
to furnish a consent of surety under this § 25.91(e)’’. (2) Brewers who pay taxes using
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paragraph if the brewer is exempt from ■ 68. Section 25.91 is amended as quarterly or annual return periods. In
bond requirements under § 25.91(e). follows: the case of a brewer who pays taxes
* * * * * ■ a. In the first sentence of paragraph using annual or quarterly return periods
■ 64. Section 25.73 is amended as (a), by removing the words ‘‘Every under § 25.164(c)(2) or (c)(3), the penal
follows: person’’ and adding, in their place, sum of the brewers bond is $1,000 and
■ a. In paragraph (b)(3), by removing the ‘‘Except as provided in paragraph (e) of covers the beer described in paragraph
words ‘‘A consent’’ and adding, in their this section, every person’’; and (a)(1)(i)–(iv) of this section.
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(3) Brewers who are exempt from (ii) Bonds covering tax-deferred § 25.102 Termination of surety’s liability.
bond requirements. This section does removals. The grace period specified in The liability of a surety on a bond
not apply to a brewer who is exempt paragraph (b)(2)(i) of this section does required by this part will be terminated
from bond requirements under not apply to beer removed for only as to liability arising on or after:
§ 25.91(e). consumption or sale on deferred (a) The effective date of a superseding
* * * * * payment of tax. A brewer that must bond;
■ 71. Section 25.95 is revised to read as furnish a bond under paragraph (b)(1) of (b) The date of approval of the
follows: this section may not remove beer for discontinuance of business of the
consumption or sale on deferred brewer;
§ 25.95 Superseding bonds and new payment of tax until TTB approves the (c) Following the giving of notice by
bonds for existing brewers. the surety; or
bond.
(a) Superseding bonds. The (d) In the case of a brewer who
appropriate TTB officer may at any (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as applies to terminate a surety bond under
amended (26 U.S.C. 5401))
time, at his or her discretion, require a § 25.106, the date that TTB approves the
new bond that supersedes the existing ■ 72. Section 25.98 is amended as brewer’s application under that section.
bond. A superseding bond is required follows: (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as
immediately in the case of insolvency of ■ a. In paragraph (b), by removing the amended (26 U.S.C. 5401))
a surety. Executors, administrators, words ‘‘Circular No. 570, Companies
assignees, receivers, trustees, or other ■ 74. Section 25.104 is revised to read
Holding Certificates of Authority as as follows:
persons acting in a fiduciary capacity Acceptable Reinsuring Companies’’ and
must execute a superseding bond or adding, in their place, the words § 25.104 Termination of bonds.
obtain a consent of surety on all bonds ‘‘Circular 570, Companies Holding (a) General. Brewer’s bonds may be
in effect. When the interests of the Certificates of Authority as Acceptable terminated as to liability for future
Government so demand, or in any case Sureties on Federal Bonds and as removals or receipts under the following
when the security of the bond becomes Acceptable Reinsuring Companies’’; circumstances:
impaired for any reason, the principal (1) Pursuant to application of the
■ b. By revising paragraph (c);
will be required to give a superseding surety as provided in § 25.103;
bond. When a bond is found to be not ■ c. In paragraph (e), by removing the
(2) On approval of a superseding bond
acceptable by the appropriate TTB citation ‘‘Part 225’’ and adding, in its
as provided in § 25.95;
officer, the principal will be required place, the citation ‘‘part 225’’; and (3) When a brewer discontinues
immediately to obtain a satisfactory ■ d. By adding paragraph (f). business as provided in § 25.85; or
superseding bond or discontinue The revision and addition read as (4) When an existing brewer who
business. follows: becomes exempt from bond
(b) New bonds for existing brewers— requirements terminates the bond as
(1) General. Subject to paragraph (b)(2) § 25.98 Surety or security.
provided in § 25.106.
of this section, if an existing brewer has * * * * * (b) Notification. On termination of the
not furnished a bond covering (c) Availability of Circular 570. surety’s liability under a bond, the
operations and withdrawals of beer Department of the Treasury Circular 570 appropriate TTB officer will notify the
because the brewer was exempt from is published in the Federal Register principal and sureties.
bond requirements under § 25.91(e), the annually on the first business day in (31 U.S.C. 9301, 9303)
brewer must furnish a bond as provided July, and supplemental changes are
in this subpart beginning in any portion published periodically thereafter. The § 25.105 [Amended]
of a calendar year following the first most recent circular and any
date on which the aggregate amount of ■ 75. In § 25.105, the first sentence is
supplemental changes to it may be amended by removing the citation ‘‘31
tax due from the brewer during the viewed on the Bureau of the Fiscal
calendar year exceeds $50,000. When CFR Part 225’’ and adding, in their
Service Web site at https:// place, the citation ‘‘31 CFR part 225’’.
furnishing the bond, the brewer must www.fiscal.treasury.gov/fsreports/ref/ ■ 76. Section 25.106 is added to subpart
also file an amended Brewer’s Notice, suretyBnd/c570.htm.
Form 5130.10, as provided in § 25.79 to H to read as follows:
* * * * *
change the brewer’s bond status. § 25.106 Application to terminate bond by
(2) Grace period for new bonds for (f) Bond guaranteed by deposit of
existing brewer who becomes exempt from
existing brewers—(i) Bonds covering cash or cash equivalent. As an bond requirements.
operations. Except as provided in alternative to the corporate surety bond
If a brewer has held a bond and
paragraph (b)(2)(ii) of this section, an under paragraph (b) of this section, a
becomes exempt from bond
existing brewer who must furnish a person can file a bond that guarantees
requirements under § 24.91(e), the
bond as provided in paragraph (b)(1) of payment of the liability by submitting
brewer may apply to TTB to terminate
this section will be treated as having cash or its equivalent (including a
the bond. To apply, the brewer must file
furnished the required bond if the money order, cashier’s check, or
an amendment to the Brewer’s Notice,
brewer submits the bond on Form personal check). Cash or its equivalent
Form 5130.10, as provided in § 25.79.
5130.22 no later than 30 days following must be no less than the penal sums of
The brewer must accurately state in the
the first date on which the aggregate the required bonds. Bonds described in
submission to TTB that the brewer:
amount of tax due from the brewer this paragraph will be released if there (a) Will withdraw beer for deferred
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during the relevant calendar year are no outstanding liabilities when the payment of tax under § 25.164;
exceeds $50,000. Except as provided in bond is terminated. Cash equivalents (b) Reasonably expects to be liable for
paragraph (b)(2)(ii) of this section, the must be payable to the Alcohol and not more than $50,000 in taxes with
brewer will be treated as having Tobacco Tax and Trade Bureau. respect to beer imposed by 26 U.S.C.
furnished the required bond for the * * * * * 5051 and 7652 for the current calendar
purposes of this paragraph until TTB ■ 73. Section 25.102 is revised to read year (see definition of ‘‘Reasonably
approves or disapproves the bond. as follows: expects’’ in § 25.164(c)(4)(ii)); and
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![1130 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Rules and Regulations
§ 25.174 [Amended] includes premises described in the adding, in their place, the words ‘‘TTB
■ 78. In § 25.174, the first sentence of preceding sentence even if the distilled Form 5000.18’’.
paragraph (a) is amended by adding spirits plant proprietor, as authorized ■ 87. Section 26.66 is amended as
after the word ‘‘When’’ the words ‘‘a under the exemption set forth in follows:
brewer has filed a bond and’’. § 19.151(d) of this chapter, has not ■ a. By revising paragraph (a); and
■ 79. In § 25.184, paragraph (a) is provided a bond for the premises. ■ b. By adding paragraph (c).
revised to read as follows: * * * * * The revision and addition read as
■ 84. Section 26.62 is amended as follows:
§ 25.184 Losses in transit. follows:
(a) Liability for losses. The brewery to ■ a. In paragraph (a), by removing the § 26.66 Bond, TTB Form 5110.50—Distilled
which beer is transferred is liable for the words ‘‘Circular No. 570’’ and adding, spirits.
tax on beer lost in transit. If beer is in their place, the words ‘‘Circular 570’’; (a) General. Except as provided in
reconsigned while in transit or returned and paragraph (c) of this section, if any
to the shipping brewery, the brewery to ■ b. By revising paragraph (b). person intends to ship to the United
which the beer is reconsigned or The revision reads as follows: States, distilled spirits products of
returned is liable for the tax on beer lost Puerto Rican manufacture from bonded
§ 26.62 Corporate surety.
in transit. storage in Puerto Rico on computation,
* * * * * but before payment, of the tax imposed
* * * * * (b) Department of the Treasury
■ 80. Section 25.274 is amended as by 26 U.S.C. 7652(a), equal to the tax
Circular 570 is published in the Federal
follows: imposed in the United States by 26
Register annually on the first business
■ a. In the first sentence of paragraph U.S.C. 5001(a)(1), the person must,
day in July, and supplemental changes
(a), by removing the words ‘‘Any before making any such shipment,
are published periodically thereafter.
person’’ and adding, in their place, furnish a bond. The person must furnish
The most recent circular and any
‘‘Except as provided in paragraph (d) of a bond on TTB Form 5110.50 for each
supplemental changes to it may be
this section, any person’’; and premises from which shipment will be
viewed on the Bureau of the Fiscal
■ b. By adding paragraph (d). made, to secure payment of such tax, at
Service Web site at https://
The addition reads as follows: www.fiscal.treasury.gov/fsreports/ref/ the time and in the manner prescribed
suretyBnd/c570.htm. in this subpart, on all distilled spirits
§ 25.274 Bond. products shipped. The bond must be
* * * * * * * * * * executed in a penal sum not less than
■ 85. Section 26.63 is amended as
(d) Bond exemption. A person is not the amount of unpaid tax which, at any
follows:
required to provide a bond under this one time, is chargeable against the bond.
■ a. By revising the section heading;
section if the person is a brewer ■ b. By redesignating the existing text as
The penal sum of such bond must not
qualified under this part and if, under paragraph (a) and adding a paragraph exceed $1,000,000, but in no case will
§ 25.91(e), the person is exempt from heading; the penal sum be less than $1,000.
bond requirements applicable to ■ c. In redesignated paragraph (a), by * * * * *
brewers. removing the words ‘‘Acceptance of (c) Bonds covering spirits for
* * * * * Bonds, Notes or Other Obligations nonindustrial use and industrial use—
Issued or Guaranteed by the United (1) Nonindustrial use. A person who
§ 25.276 [Amended]
States as Security in Lieu of Surety or pays tax on a deferred basis under
■ 81. In § 25.276, paragraph (a) is Sureties on Penal Bonds’’ and adding, in § 26.112 is not required to furnish a
amended by adding the words ‘‘any their place, the words ‘‘Acceptance of bond under this section to cover
required’’ before the word ‘‘bond’’. Bonds Secured by Government shipments of distilled spirits for
Obligations in Lieu of Bonds with nonindustrial use during any portion of
PART 26—LIQUORS AND ARTICLES Sureties’’; and a calendar year for which the person is
FROM PUERTO RICO AND THE VIRGIN ■ d. By adding paragraph (b). eligible to use an annual or quarterly
ISLANDS The revision and additions read as return period under § 26.112(b)(2) or
■ 82. The authority citation for part 26 follows: (b)(3). For purposes of the preceding
is revised to read as follows: § 26.63 Deposit of securities or cash sentence, a person is considered to be
Authority: 19 U.S.C. 81c; 26 U.S.C. 5001, (including cash equivalents) in lieu of paying tax on a deferred basis even if
5007, 5008, 5010, 5041, 5051, 5061, 5111– corporate surety. the person does not pay tax during
5114, 5121, 5122–5124, 5131–5132, 5207, (a) Deposit of securities. * * * every return period as long as the
5232, 5271, 5275, 5301, 5314, 5555, 6001, (b) Deposit of cash or cash equivalent. person intends to pay tax in a future
6109, 6301, 6302, 6804, 7101, 7102, 7651, In lieu of corporate surety, a person can period. TTB may require a person who
7652, 7805; 27 U.S.C. 203, 205; 31 U.S.C. file a bond that guarantees payment of has defaulted on any payment to prepay
9301, 9303, 9304, 9306. the liability by submitting cash or its tax as provided in § 26.112(e).
■ 83. Section 26.11 is amended by equivalent (including a money order, (2) Industrial use. A person is
adding, in alphabetical order, the cashier’s check, or personal check). required to furnish a bond under this
definition of ‘‘Bonded premises of a Cash or its equivalent must be no less section to cover shipments of distilled
distilled spirits plant’’ to read as than the penal sums of the required spirits for industrial use even if the
follows: bonds. Cash equivalents must be person pays tax on a deferred basis
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payable to the Alcohol and Tobacco Tax under § 26.112 and is eligible to use an
§ 26.11 Meaning of terms. and Trade Bureau. annual or quarterly return period under
* * * * * * * * * * § 26.112(b)(2) or (b)(3). For bond
Bonded premises of a distilled spirits requirements governing industrial
plant. The bonded premises of a § 26.64 [Amended] spirits and other products brought into
distilled spirits plant as described in ■ 86. Section 26.64 is amended by the United States without incurring tax
part 19 of this chapter. This term removing the words ‘‘Form 1533’’ and liability, see § 26.36.
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![Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Rules and Regulations 1131
(3) Nonindustrial use and industrial ■ 89. Section 26.68 is revised to read as any other contingency affecting the
use defined. The nonindustrial and follows: validity or impairing the efficiency of an
industrial uses of distilled spirits are existing bond. Executors,
defined in subpart D of part 1 of this § 26.68 Bond, TTB Form 5130.16—Beer. administrators, assignees, receivers,
chapter. (a) General. Except as provided in trustees, or other persons acting in a
* * * * * paragraph (b) of this section, where a fiduciary capacity, continuing or
■ 88. Section 26.67 is revised to read as brewer intends to withdraw, for purpose liquidating the business of the principal,
follows: of shipment to the United States, beer of must execute and file a superseding
Puerto Rican manufacture from bonded bond or obtain the consent of the surety
§ 26.67 Bond, TTB Form 5120.32—Wine. storage in Puerto Rico on computation, or sureties on the existing bond or
(a) General. Except as provided in but before payment, of the tax imposed bonds. Where, under the provisions of
paragraph (b) of this section, where a by 26 U.S.C. 7652(a), equal to the tax § 26.72, the surety on any bond given
proprietor intends to withdraw, for imposed in the United States by 26 under this subpart has filed an
purpose of shipment to the United U.S.C. 5051, the brewer must, before application to be relieved of liability
States, wine of Puerto Rican making any such withdrawal, furnish a under said bond and the principal
manufacture from bonded storage in bond. The brewer must furnish the bond desires or intends to continue the
Puerto Rico on computation, but before on TTB Form 5130.16, to secure operations to which such bond relates,
payment, of the tax imposed by 26 payment of such tax, at the time and in he must file a valid superseding bond to
U.S.C. 7652(a), equal to the tax imposed the manner prescribed in this subpart, be effective on or before the date
in the United States by 26 U.S.C. 5041, on all beer so withdrawn. The bond specified in the surety’s notice.
the proprietor must, before making any must be executed in a penal sum not Superseding bonds must show the
such withdrawal, furnish a bond. The less than the amount of unpaid tax current date of execution and the
proprietor must furnish the bond on which, at any one time, is chargeable effective date.
TTB Form 5120.32, to secure payment against the bond. The penal sum of such (b) New bonds for previously exempt
of such tax, at the time and in the bond must not exceed $500,000, but in persons. If a person has not furnished a
manner prescribed in this subpart, on no case will the penal sum be less than bond as provided in this subpart
all wine so withdrawn. The bond must $1,000. because the person was exempt from
be executed in a penal sum not less than (b) Bond exemption for certain bond requirements under §§ 26.66(c),
the amount of unpaid tax which, at any brewers based on tax liability. A brewer 26.67(b), or 26.68(b), the person must
one time, is chargeable against the bond. who pays tax on a deferred basis under furnish a bond to cover shipments
The penal sum of such bond must not § 26.112 is not required to furnish a following the first date on which the
exceed $250,000, but in no case will the bond under this section to cover aggregate amount of tax due from the
penal sum be less than $500. shipments of beer during any portion of person during the calendar year exceeds
(b) Bonds covering wine for a calendar year for which the brewer is $50,000. If a person has not furnished
nonindustrial use and industrial use— eligible to use an annual or quarterly the required bond for shipments under
(1) Nonindustrial use. A proprietor who return period under § 26.112(b)(2) or this subpart, the person must prepay tax
pays tax on a deferred basis under (b)(3). For purposes of the preceding on those shipments as provided in
§ 26.112 is not required to furnish a sentence, the brewer is considered to be § 26.112(e).
bond under this section to cover paying tax on a deferred basis even if
shipments of wine for nonindustrial use the brewer does not pay tax during § 26.71 [Amended]
during any portion of a calendar year for every relevant period as long as the ■ 92. In § 26.71, paragraph (c) is
which the proprietor is eligible to use an brewer intends to pay tax in a future amended by adding after the words
annual or quarterly return period under period. TTB may require a brewer who ‘‘under the bond’’ the words ‘‘(including
§ 26.112(b)(2) or (b)(3). For purposes of has defaulted on any payment to prepay for the reason that the principal is
the preceding sentence, the proprietor is tax as provided in § 26.112(e). exempt from bond requirements under
considered to be paying tax on a §§ 26.66(c), 26.67(b), or 26.68(b))’’.
deferred basis even if the proprietor (Aug. 16, 1954, Chapter 736, 68A Stat. 775,
■ 93. Section 26.74 is revised to read as
as amended, 847, as amended, 906, 907, as
does not pay tax during every return amended (26 U.S.C. 6302, 7101, 7102, follows:
period as long as the proprietor intends 7651(2)(B), 7652(a)))
to pay tax in a future period. TTB may § 26.74 Release of pledged securities or
require a proprietor who has defaulted § 26.68a [Amended] cash (including cash equivalents).
on any payment to prepay tax as ■ 90. In § 26.68a, the second sentence is Securities of the United States
provided in § 26.112(e). amended as follows: pledged and deposited as provided in
(2) Industrial use. A proprietor is ■ a. By removing the words ‘‘TTB Form § 26.63(a), will be released only in
required to furnish a bond under this 5110.51 or 2900’’ and adding, in their accordance with the provisions of 31
section to cover shipments of wine for place, the words ‘‘TTB Form 5110.51 or CFR part 225. Securities and cash
industrial use even if the proprietor 5100.21’’; and (including cash equivalents) will not be
pays tax on a deferred basis under ■ b. By removing the words ‘‘, TTB released by the appropriate TTB officer
§ 26.112 and is eligible to use an annual Form 5110.32, 2927, or 2929,’’. until the liability under the bond for
or quarterly return period under ■ 91. Section 26.70 is revised to read as which they were pledged has been
§ 26.112(b)(2) or (b)(3). follows: terminated. When the appropriate TTB
(3) Nonindustrial use and industrial officer is satisfied that they may be
mstockstill on DSK3G9T082PROD with RULES4
use defined. The nonindustrial and § 26.70 Superseding bonds and new released, the appropriate TTB officer
industrial uses of wine are defined in bonds for previously exempt persons. will fix the date or dates on which a part
subpart D of part 1 of this chapter. (a) Superseding bonds. Superseding or all of such securities and cash
(Aug. 16, 1954, Chapter 736, 68A Stat. 775, bonds will be required in case of (including cash equivalents) may be
as amended, 847, as amended, 906, 907, as insolvency or removal of any surety, released. At any time prior to the
amended (26 U.S.C. 6302, 7101, 7102, and may, at the discretion of the release, the appropriate TTB officer may
7651(2)(B), 7652(a))) appropriate TTB officer, be required in extend the date of release for such
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![1132 Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Rules and Regulations
additional length of time as the (Approved by the Office of Management and ■ b. By removing the word ‘‘487B–61–
appropriate TTB officer deems Budget under control number 1513–0056) 3’’ and adding, in its place, the words
necessary. § 26.87 [Amended]
‘‘5170.7–17–1’’.
(61 Stat. 650; 6 U.S.C. 15) ■ 101. Section 26.102 is amended as
■ 97. Section 26.87 is amended by
follows:
■ 94. Section 26.75 is amended as removing the words ‘‘Form 487B’’ and
■ a. By revising the section heading; and
follows: adding, in their place, the words ‘‘TTB
■ a. By revising the section heading; and ■ b. By removing the words ‘‘Form
Form 5170.7’’.
■ b. By removing the words ‘‘Form ■ 98. Section 26.93 is amended as
2900’’ each place they appear and
1490’’ and adding, in their place, the follows: adding, in their place, the words ‘‘TTB
words ‘‘TTB Form 5000.23 PR’’. ■ a. By revising the section heading; and
Form 5100.21’’.
The revision reads as follows: ■ b. By removing the words ‘‘Form
The revision reads as follows:
2900’’ and adding, in their place, the § 26.102 Application and permit, TTB Form
§ 26.75 TTB Form 5000.23 PR, Notice of
Termination of Bond.
words ‘‘TTB Form 5100.21’’. 5100.21.
The revision reads as follows: * * * * *
* * * * *
§ 26.93 Application and permit, TTB Form § 26.103 [Amended]
§ 26.76 [Amended] 5100.21.
■ 95. Section 26.76 is amended as ■ 102. Section 26.103 is amended by
* * * * *
follows: removing the words ‘‘Form 2900’’ and
■ 99. Section 26.95 is amended as
■ a. By removing the words ‘‘Form adding, in their place, the words ‘‘TTB
follows:
2900’’ and adding, in their place, the Form 5100.21’’.
■ a. By revising paragraph (a);
words ‘‘TTB Form 5100.21’’; and ■ 103. Section 26.104 is amended as
■ b. In paragraph (b), by removing the
■ b. By removing the words ‘‘Form follows:
words ‘‘Form 2900’’ each place they
487B’’ and adding, in their place, the ■ a. By revising paragraph (a);
appear and adding, in their place, the
words ‘‘TTB Form 5170.7’’. words ‘‘TTB Form 5100.21’’; and ■ b. In paragraph (b), by removing the
■ 96. Section 26.80 is amended as ■ c. In paragraph (b), by removing the words ‘‘Form 2900’’ each place they
follows: words ‘‘Form 2897’’ and adding, in their appear and adding, in their place, the
■ a. By revising paragraph (a); and place, the words ‘‘TTB Form 5120.32’’. words ‘‘TTB Form 5100.21’’; and
■ b. By revising the Office of The revision reads as follows: ■ c. In paragraph (b), by removing the
Management and Budget control words ‘‘Form 2898’’ and adding, in their
number reference at the end of the § 26.95 Deferred payment of tax—release place, the words ‘‘TTB Form 5130.16’’.
section. of wine. The revision reads as follows:
The revisions read as follows: (a) Action by proprietor. Where the
proprietor wishes to defer payment of § 26.104 Deferred payment of tax—release
§ 26.80 Deferred payment of tax—release tax, he must execute the agreement on of beer.
of spirits. TTB Form 5100.21 to pay the amount of (a) Action by brewer. Where the
(a) Action by proprietor. Where the tax which has been computed and brewer will defer payment of tax, he
proprietor wishes to defer payment of entered on the form. If a bond is must execute the agreement on TTB
tax, he must execute an agreement on required under § 26.67, he must certify Form 5100.21 to pay the amount of tax
TTB Form 5110.51 to pay the amount of under the penalties of perjury that he is which has been computed and entered
tax which has been computed and not in default of any payment of tax on the form. If a bond is required under
entered on the form. If a bond is chargeable against his bond, and that his § 26.68, he must certify under the
required under § 26.66, he must certify, bond is in the maximum penal sum, or penalties of perjury that he is not in
under the penalties of perjury, that he that it is sufficient to cover the amount default of any payment of tax chargeable
is not in default of any payment of tax of tax on the wine described on the form against his bond, and that his bond is in
chargeable against his bond, and that his in addition to all other amounts the maximum penal sum, or that it is
bond is in the maximum penal sum, or chargeable against his bond. If the sufficient to cover the amount of tax on
that it is sufficient to cover the amount proprietor deferring payment of tax is the beer described on the form in
of tax on the distilled spirits described not required to provide a bond under addition to all other amounts chargeable
on the form in addition to all other § 26.67, the proprietor must certify against his bond. If the brewer deferring
amounts chargeable against this bond. If under the penalties of perjury that the payment of tax is not required to
the proprietor deferring payment of tax proprietor was liable for not more than provide a bond under § 26.68, the
is not required to provide a bond under $50,000 in taxes in the preceding brewer must certify under the penalties
§ 26.66, the proprietor must certify calendar year, reasonably expects to be of perjury that the brewer was liable for
under the penalties of perjury that the liable for not more than $50,000 during not more than $50,000 in taxes in the
proprietor was liable for not more than the current calendar year, and is not preceding calendar year and reasonably
$50,000 in taxes in the preceding using the TTB Form 5100.21 for any expects to be liable for not more than
calendar year, reasonably expects to be shipment of wine for industrial use. The $50,000 during the current calendar
liable for not more than $50,000 during proprietor must deliver all copies of year. The brewer must deliver all copies
the current calendar year, and is not TTB Form 5100.21 to the revenue agent. of Form 5100.21 to the revenue agent.
using the TTB Form 5100.21 for any * * * * * * * * * *
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shipment of distilled spirits for
industrial use. The proprietor must § 26.97 [Amended] § 26.106 [Amended]
deliver all copies of TTB Form 5110.51 ■ 100. Section 26.97 is amended as ■ 104. Section 26.106 is amended as
and any package gauge record as follows: follows:
provided in § 26.164a to the revenue ■ a. By removing the words ‘‘Form ■ a. By removing the words ‘‘Form
agent. 487B’’ and adding, in their place, the 487B’’ and adding, in their place, the
* * * * * words ‘‘TTB Form 5170.7’’; and words ‘‘TTB Form 5170.7’’; and
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■ b. By removing the word ‘‘487B–61– been paid on that date will be due on transfer (EFT). Quarterly payments via
3’’ and adding, in its place, the words the 14th day after the last day of the EFT must be transmitted in accordance
‘‘5170.7–17–1’’. quarterly or semimonthly period in with section 5061(e);
■ 105. Section 26.108 is amended as which that date occurs. (vi) A new taxpayer is eligible to use
follows: (3) Quarterly return period. Except as the return procedures in the first year of
■ a. By revising the section heading; and provided in paragraph (b)(2) of this business simply if the taxpayer
■ b. By removing the words ‘‘Form section and subject to paragraph (b)(4) reasonably expects to be liable for not
2900’’ from paragraph (b) and adding, in of this section, a taxpayer may choose more than $1,000 (in the case of the
their place, the words ‘‘TTB Form to use a quarterly return period if the annual return procedure) or $50,000 (in
5100.21’’. taxpayer was not liable for more than the case of the quarterly return
The revision reads as follows: $50,000 in taxes imposed by 26 U.S.C. procedure) in distilled spirits, wine, or
7652 in the preceding calendar year and beer taxes during that calendar year; and
§ 26.108 Application for permit, TTB Form if that taxpayer reasonably expects to be
5100.51 and/or 5100.21.
(vii) If a taxpayer becomes ineligible
liable for not more than $50,000 in such to use a return procedure described in
* * * * * taxes during the current calendar year. paragraph (b)(2) or (3) of this section
In such a case the last day for paying the because the taxpayer’s liability exceeds
§ 26.110 [Amended]
tax and filing the return will be the 14th $1,000 or $50,000, respectively, during
■ 106. Section 26.110 is amended by day after the last day of the calendar
removing the words ‘‘Form 2900’’ each a taxable year, that taxpayer may resume
quarter. However, the taxpayer may not that return procedure only after a full
place they appear and adding, in their use the quarterly return period
place, the words ‘‘TTB Form 5100.21’’. calendar year has passed during which
procedure for any portion of the the taxpayer’s liability did not exceed
■ 107. Section 26.112 is amended as calendar year following the first date on
follows: $1,000 or $50,000 as the case may be.
which the aggregate amount of tax due A taxpayer may not use an annual or
■ a. By revising paragraph (b); from the taxpayer during the calendar
■ b. In paragraph (d), by removing the
quarterly return procedure during any
year exceeds $50,000, and any tax that calendar year in which the taxpayer
words ‘‘TTB F 5000.24’’ each place they has not been paid on that date will be
appear and adding, in their place, the reasonably expects to be liable for more
due on the 14th day after the last day than $1,000 (in the case of the annual
words ‘‘TTB Form 5000.25’’; and of the semimonthly period in which that
■ c. In paragraph (e), by removing the
return procedure) or $50,000 (in the
date occurs. case of the quarterly return procedure)
word ‘‘bonded’’. (4) The following additional rules
The revision reads as follows: in distilled spirits, wine, or beer taxes.
apply to the annual and quarterly return
period procedures under this section: * * * * *
§ 26.112 Returns for deferred payment of ■ 108. In § 26.113, paragraph (a) is
(i) A ‘‘taxpayer’’ is an individual,
tax. amended by adding a new first sentence
corporation, partnership, or other entity
* * * * * that is assigned a single Employer immediately after the paragraph heading
(b) Return periods—(1) Semimonthly Identification Number as defined in 26 to read as follows:
return period. Except in the case of a CFR 301.7701–12;
taxpayer who qualifies for, and chooses § 26.113 Returns for prepayment of taxes.
(ii) ‘‘Reasonably expects’’ means that
to use, annual or quarterly return there is no existing or anticipated (a) * * * Except as provided in
periods as provided in paragraph (b)(2) circumstance known to the taxpayer §§ 26.66(c), 26.67(b), or 26.68(b), a
or (b)(3) of this section, all taxpayers (such as an increase in production proprietor must have an approved bond
must use semimonthly return periods capacity) that would cause the to defer payment of taxes. * * *.
for deferred payment of tax. The taxpayer’s tax liability to exceed the * * * * *
semimonthly return periods run from prescribed limit; ■ 109. Section 26.115 is amended as
the 1st day through the 15th day of each (iii) A taxpayer with multiple follows:
month, and from the 16th day through locations must combine the tax liability ■ a. By revising the section heading; and
the last day of each month, except as for all locations with respect to distilled ■ b. By removing the words ‘‘Form
otherwise provided in paragraph (d) of spirits, wine, or beer tax liability to 487B’’ each place they appear and
this section. determine eligibility for the return adding, in their place, the words ‘‘TTB
(2) Annual return period. Subject to procedures; Form 5170.7’’.
paragraph (b)(4) of this section, a (iv) A taxpayer who has both The revision reads as follows:
taxpayer may choose to use an annual domestic operations and import
return period if the taxpayer was not transactions must combine the tax § 26.115 Application, TTB Form 5170.7.
liable for more than $1,000 in taxes liability on the domestic operations and * * * * *
imposed by 26 U.S.C. 7652 in the the imports with respect to distilled ■ 110. Section 26.116 is amended as
preceding calendar year and if that spirits, wine, or beer tax liability to follows:
taxpayer reasonably expects to be liable determine eligibility for the return ■ a. By revising the section heading;
for not more than $1,000 in such taxes procedures; ■ b. In the first sentence, by removing
during the current calendar year. In (v) The controlled group rules of 26 the words ‘‘, pursuant to a sufficient
such a case the last day for paying the U.S.C. 5061(e), which concern treatment bond,’’; and
tax and filing the return will be the 14th of controlled groups as one taxpayer, do ■ c. By removing the words ‘‘Form
day after the last day of the calendar not apply for purposes of determining 487B’’ each place they appear and
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year. However, the taxpayer may not use eligibility for the return procedures. adding, in their place, the words ‘‘TTB
the annual return period procedure for However, a taxpayer who is eligible for Form 5170.7’’.
any portion of the calendar year the return procedures, and who is a The revision reads as follows:
following the first date on which the member of a controlled group that owes
aggregate amount of tax due from the $5 million or more in distilled spirits, § 26.116 Issuance of permit, TTB Form
taxpayer during the calendar year wine, or beer excise taxes per year, is 5170.7, and customs inspection.
exceeds $1,000, and any tax that has not required to pay taxes by electronic fund * * * * *
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§ 26.117 [Amended] Subpart Oa—Shipment of Bulk § 27.40 [Amended]
■ 111. Section 26.117 is amended by Distilled Spirits From the Virgin ■ 121. In § 27.40, paragraph (a) is
removing the words ‘‘Form 487B’’ and Islands, Without Payment of Tax, for amended by removing the words
adding, in their place, the words ‘‘TTB Transfer From Customs Custody to the ‘‘entered into bond’’ and adding, in their
Form 5170.7’’. Bonded Premises of a Distilled Spirits place, the words ‘‘transferred to the
Plant bonded premises of a distilled spirits
§ 26.118 [Amended] plant’’.
PART 27—IMPORTATION OF
■ 112. Section 26.118 is amended by DISTILLED SPIRITS, WINES, AND § 27.43 [Amended]
removing the words ‘‘Form 487B’’ each BEER ■ 122. Section 27.43 is amended by
place they appear and adding, in their removing the words ‘‘entered into
place, the words ‘‘TTB Form 5170.7’’. ■ 119. The authority citation for part 27 bond’’ and adding, in their place, the
§ 26.119 [Amended]
is revised to read as follows: words ‘‘transferred to the bonded
Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, premises of a distilled spirits plant’’.
■ 113. Section 26.119 is amended by 1202; 26 U.S.C. 5001, 5007, 5008, 5010, 5041,
removing the words ‘‘Form 487B’’ and 5051, 5054, 5061, 5121, 5122–5124, 5201, § 27.171 [Amended]
adding, in their place, the words ‘‘TTB 5205, 5207, 5232, 5273, 5301, 5313, 5555, ■ 123. Section 27.171 is amended by
Form 5170.7’’. 6109, 6302, 7805. removing the words ‘‘internal revenue
■ 120. Section 27.11 is amended as bond’’ and adding, in their place, the
§ 26.165 [Amended]
follows: words ‘‘the bonded premises of a
■ 114. In § 26.165, paragraph (a) distilled spirits plant’’.
■ a. In the definition of ‘‘Bonded
introductory text is amended by ■ 124. Section 27.175 is amended by
premises—distilled spirits plant’’, by adding a new second sentence
removing the words ‘‘TTB bond’’ and
adding a second sentence; and immediately after the first sentence to
adding, in their place, the words ‘‘the
bonded premises of a distilled spirits ■ b. In the definition of ‘‘Eligible wine’’, read as follows:
plant’’. by adding a second sentence.
§ 27.175 Receipt by consignee.
■ 115. The heading for subpart Ib is The additions read as follows:
* * * Proprietors of distilled spirits
revised to read as follows: § 27.11 Meaning of terms. plants may receive such imported
Subpart Ib—Shipment of Bulk Distilled * * * * * spirits even if they are exempt from
Spirits From Puerto Rico, Without Bonded premises—distilled spirits bond requirements under § 19.151(d) of
Payment of Tax, for Transfer From plant. * * * This term includes this chapter. * * *
Customs Custody to the Bonded premises described in the preceding PART 28—EXPORTATION OF
Premises of a Distilled Spirits Plant sentence even if the distilled spirits ALCOHOL
plant proprietor, as authorized under
§ 26.199 [Amended] the exemption set forth in § 19.151(d) of ■ 125. The authority citation for part 28
■ 116. Section 26.199 is amended by this chapter, has not provided a bond is revised to read as follows:
removing the words ‘‘internal revenue for the premises. Authority: 5 U.S.C. 552(a); 19 U.S.C. 81c,
bond’’ and adding, in their place, the * * * * * 1202; 26 U.S.C. 5001, 5007, 5008, 5041, 5051,
words ‘‘the bonded premises of a Eligible wine. * * * For purposes of 5054, 5061, 5121, 5122, 5201, 5205, 5207,
distilled spirits plant’’. this definition, the phrase ‘‘receipt in 5232, 5273, 5301, 5313, 5555, 6109, 6302,
7805; 27 U.S.C. 203, 205; 44 U.S.C. 3504(h).
§ 26.199d [Amended] bond’’ applies to wine on which tax has
not been determined or paid that is §§ 28.61, 28.62, 28.63, 28.64, 28.70, 28.72,
■ 117. In § 26.199d, paragraph (b) is received by the proprietor of a distilled 28.160, and 28.214 [Amended]
amended by removing the words spirits plant, even if the proprietor, as ■ 126. For each section indicated in the
‘‘internal revenue bond’’ and adding, in authorized under the exemption set left-hand column of the table below, the
their place, the words ‘‘the bonded forth in § 19.151(d) of this chapter, is section is amended by removing the text
premises of a distilled spirits plant’’. not required to provide a bond for the indicated in the middle column, and
■ 118. The heading for subpart Oa is premises where the wine is received. adding, in its place, the text indicated
revised to read as follows: * * * * * in the right-hand column:
Section Remove Add
28.61, section heading ...................................... Bond, Form 2734 (5100.25) ............................. Bond, Form 5100.25.
28.61, text .......................................................... 2734 (5100.25) ................................................. 5100.25.
28.62, section heading ...................................... Bond, Form 2735 (5100.30) ............................. Bond, Form 5100.30.
28.62(a) ............................................................. 2735 (5100.30) ................................................. 5100.30.
28.62(c) .............................................................. 2735 (5100.30) ................................................. 5100.30.
28.62(c) .............................................................. 1533 (5000.18) ................................................. 5000.18.
28.62(d) ............................................................. 2735 (5100.30) ................................................. 5100.30.
28.62(d) ............................................................. 1533 (5000.18) ................................................. 5000.18.
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28.63, section heading ...................................... Bond, Form 2736 (5100.12) ............................. Bond, Form 5100.12.
28.63, text .......................................................... 2736 (5100.12) ................................................. 5100.12.
28.64, section heading ...................................... Bond, Form 2737 ............................................. Bond, Form 5110.67.
28.64(a), first sentence ...................................... 2737 (5110.67) ................................................. 5110.67.
28.64(a), twice in the fourth sentence ............... 2737 (5110.67) ................................................. 5110.67.
28.64(b) ............................................................. 2737 (5110.67) ................................................. 5110.67.
28.64(b) ............................................................. 1533 .................................................................. 5000.18.
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Section Remove Add
28.70, section heading ...................................... Termination of Bonds, Forms 2734 (5120.25) Termination of Bonds, Forms 5120.25 and
and 2736 (5100.12). 5100.12.
28.70, text .......................................................... 2734 (5120.25) and 27.36 (5100.12) ............... 5120.25 and 5100.12.
28.72 .................................................................. 2735 (5100.30), 2737 (5110.67), or 2738 5100.30 or 5110.67.
(5110.68).
28.160(b) ........................................................... 1533 .................................................................. 5000.18.
28.214, section heading .................................... Notice and claim, Form 1582–A (5120.24) ...... Notice and claim, Form 5120.24.
28.214, first sentence ........................................ 1582–A (5120.24) ............................................. 5120.24.
28.214, second sentence .................................. 1582–A (5120.24) ............................................. 5120.24.
§ 28.3 [Amended] this paragraph exports distilled spirits, Register annually on the first business
■ 127. In § 28.3, the list of related wine, or beer for which a bond is day in July, and supplemental changes
regulations is amended by removing the otherwise required under this part, the are published periodically thereafter.
entry ‘‘31 CFR Part 225—Acceptance of taxpayer is not required to file a bond The most recent circular and any
Bonds, Notes, or Other Obligations for the exportation if all the following supplemental changes to it may be
Issued or Guaranteed by the United are true: viewed on the Bureau of the Fiscal
States as Security in Lieu of Surety or (1) In the case of exportation of Service Web site at https://
Sureties on Penal Bonds’’ and adding, in distilled spirits or wine, the distilled www.fiscal.treasury.gov/fsreports/ref/
its place, the entry ‘‘31 CFR part 225— spirits or wine is for nonindustrial use; suretyBnd/c570.htm.
Acceptance of Bonds Secured by and * * * * *
Government Obligations in Lieu of (2) The taxpayer: ■ 132. Section 28.53 is amended as
Bonds with Sureties’’. (i) Reasonably expects to be liable for follows:
■ 128. Section 28.11 is amended as not more than $50,000 in taxes ■ a. By revising the section heading;
follows: described in 26 U.S.C. 5061(d)(4) during ■ b. By redesignating the existing text as
■ a. In the definition of ‘‘Bonded the current calendar year; paragraph (a) and adding a paragraph
premises—distilled spirits plant’’, by (ii) Was liable for not more than heading; and
adding a second sentence; and $50,000 in such taxes in the preceding ■ c. By adding paragraph (b).
■ b. In the definition of ‘‘Bonded wine calendar year; and The revision and additions read as
cellar’’, by adding a second sentence. (iii) Pays such taxes on a deferred
The additions read as follows: follows:
basis using a semimonthly, quarterly, or
§ 28.11 Meaning of terms. annual return period as described in 26 § 28.53 Deposit of securities or cash
U.S.C. 5061(d). (including cash equivalent) in lieu of
* * * * * (c) Definitions. For purposes of corporate surety.
Bonded premises—distilled spirits
paragraph (b) of this section, the (a) Deposit of securities. * * *
plant. * * * This term includes
following terms have the meanings (b) Deposit of cash (including cash
premises described in the preceding
indicated: equivalent). In lieu of corporate surety,
sentence even if the distilled spirits
Nonindustrial use. The nonindustrial a person may file a bond that guarantees
plant proprietor, as authorized under
uses of distilled spirits and wine are payment of the liability by submitting
the exemption set forth in § 19.151(d) of
defined in subpart D of part 1 of this cash or its equivalent (including a
this chapter, has not provided a bond
chapter. money order, cashier’s check, or
for the premises.
Bonded wine cellar. * * * This term Reasonably expects. When used with personal check). Cash or its equivalent
includes premises described in the reference to a taxpayer, reasonably must be no less than the penal sums of
preceding sentences even if the expects means that there is no existing the required bonds. Cash equivalents
proprietor, as authorized under the or anticipated circumstances known to must be payable to the Alcohol and
exemption set forth in § 24.146(d), has the taxpayer (such as an increase in Tobacco Tax and Trade Bureau.
not provided a bond for the premises. production capacity) that would cause * * * * *
the taxpayer’s tax liability to exceed the
* * * * * prescribed limit. § 28.54 [Amended]
§ 28.22 [Amended] Taxpayer. A taxpayer is an ■ 133. Section 28.54 is amended by
■ 129. Section 28.22 is amended by individual, corporation, partnership, or removing the words ‘‘Form 1533’’ and
adding after the words ‘‘principal on the other entity that is assigned a single adding, in their place, the words ‘‘TTB
bond’’ the words ‘‘or, if no bond is Employer Identification Number (EIN) Form 5000.18’’.
required, against the person liable for as defined in 26 CFR 301.7701–12. ■ 134. In § 28.58, paragraphs (a) and (b)
■ 131. Section 28.52 is amended as are revised to read as follows:
the tax’’.
■ 130. Section 28.51 is amended as follows:
■ a. In paragraph (a), by removing the § 28.58 Operations or unit bond—distilled
follows: spirits.
■ a. By redesignating the existing text as words ‘‘Circular No. 570’’ and adding,
paragraph (a) and adding a paragraph in their place, the words ‘‘Circular 570’’; (a) Spirits. Where, as authorized in
and § 28.91, spirits are withdrawn without
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heading; and
■ b. By adding paragraphs (b) and (c). ■ b. By revising paragraph (b). payment of tax, from the bonded
The additions read as follows: The revision reads as follows: premises of a distilled spirits plant on
notice of the proprietor thereof, the
§ 28.51 General. § 28.52 Corporate surety. approved operations or unit bond must
(a) Bond requirements. * * * * * * * * cover such withdrawals if the proprietor
(b) Exemption from bond (b) Department of the Treasury is required to give a bond under part 19
requirements. If a taxpayer described in Circular 570 is published in the Federal of this chapter.
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(b) Wine. Where the provisions of part bond as provided in this subpart (Sec. 201, Pub. L. 85–859, 72 Stat. 1336, as
19 of this chapter require an operations because the person was exempt from amended, 1352, as amended, 1353, as
or unit bond to be given and approved bond requirements under § 28.51(b), the amended (26 U.S.C. 5062, 5175, 5176))
to cover the operations of a distilled person must furnish the required bond ■ 140. Section 28.74 is revised to read
spirits plant and an adjacent bonded for any exportation that occurs during as follows:
wine cellar, such bond will cover the any period to which any of the
exemption criteria in § 28.51(b) do not § 28.74 Release of pledged securities or
withdrawal of wine without payment of
cash (including cash equivalents).
tax, as authorized in § 28.121, from such apply to the person.
bonded wine cellar on application for Securities of the United States,
(72 Stat. 1336, 1362; 26 U.S.C. 5062, 5214)
such withdrawal by the proprietor. ■ 138. Section 28.71 is revised to read pledged and deposited as provided in
as follows: § 28.53, will be released only in
* * * * *
■ 135. Section 28.60 is revised to read
accordance with the provisions of 31
as follows: § 28.71 Termination of bonds, Forms CFR part 225. Securities and cash
5100.30 and 5110.67. (including cash equivalents) will not be
§ 28.60 Brewer’s bond, Form 5130.22. (a) General. Continuing bonds, Forms released by the appropriate TTB officer
When beer or beer concentrate is 5100.30 and 5110.67, covering distilled until liability under the bond for which
removed from a brewery without spirits and/or wines withdrawn from they were pledged has been terminated.
payment of tax for any of the purposes time to time without payment of tax When the appropriate TTB officer is
authorized in § 28.141, the brewer’s under this part, may be terminated as to satisfied that they may be released, he
bond, Form 5130.22, will cover the liability for future withdrawals under will fix the date or dates on which a part
removals if a bond is required to be the following circumstances: or all of such securities and cash
furnished under the provisions of part (1) Pursuant to application of surety (including cash equivalents) may be
25 of this chapter. as provided in § 28.72; released. At any time prior to the
(2) On approval of a superseding bond release, the appropriate TTB officer may
(49 Stat. 999, as amended (19 U.S.C. 81c); as provided in § 28.67; or
sec. 201, Pub. L. 85–859, 72 Stat. 1334, as extend the date of release for such
(3) On written notification to the additional length of time as he deems
amended, 1388, as amended (26 U.S.C. 5053, appropriate TTB officer by the principal
5401)) necessary.
of the discontinuance of withdrawals
under the bond (including (61 Stat. 650; 6 U.S.C. 15)
§ 28.65 [Removed and Reserved]
■ 136. Section 28.65 is removed and discontinuance of withdrawals under § 28.80 [Amended]
reserved. the bond because the proprietor has
become exempt from bond requirements ■ 141. Section 28.80 is amended by
■ 137. Section 28.67 is revised to read removing the last sentence.
as follows: under § 28.51(b)).
(b) Cancellation. When no further § 28.91 [Amended]
§ 28.67 Superseding bonds and new withdrawals are to be made under a
bonds for previously exempt persons. ■ 142. In § 28.91, paragraph (b) is
bond on Form 5100.30 or 5110.67 under
amended by removing the words ‘‘All
(a) Superseding bonds. Superseding the circumstances specified in
withdrawals’’ and adding, in their place,
bonds will be required in case of paragraph (a), the bond will be canceled
the words ‘‘Except as provided in
insolvency or removal of any surety, by the appropriate TTB officer in the
§ 28.51(b), all withdrawals’’.
and may, at the discretion of the manner and subject to the conditions
appropriate TTB officer, be required in provided in § 28.70. § 28.95 [Amended]
any other contingency affecting the (Sec. 201, Pub. L. 85–859, 72 Stat. 1336, as ■ 143. Section 28.95 is amended by
validity or impairing the efficiency of amended, 1352, as amended, 1353, as removing the words ‘‘in internal
such bond. Executors, administrators, amended (26 U.S.C. 5062, 5175, 5176)) revenue bond’’ and adding, in their
assignees, receivers, trustees, or other ■ 139. Section 28.73 is revised to read place, the words ‘‘on the bonded
persons acting in a fiduciary capacity, as follows: premises of a distilled spirits plant’’.
continuing or liquidating the business of
the principal, must execute and file a § 28.73 Relief of surety from bond. § 28.96 [Amended]
superseding bond or obtain the consent (a) Bonds, Forms 5120.25 and ■ 144. Section 28.96 is amended by
of the surety or sureties on the existing 5100.12. The surety on a bond given on removing the words ‘‘required bond’’
bond or bonds. Where, under the Form 5120.25 or Form 5100.12 will be and adding, in their place, the words
provisions of § 28.72, the surety on any relieved from his liability under the ‘‘bond (if required)’’.
bond given under this subpart has filed bond when the bond has been canceled
an application to be relieved of liability as provided for in § 28.70. § 28.116 [Amended]
under said bond and the principal (b) Bonds, Forms 5100.30 and ■ 145. In § 28.116, paragraph (d) is
desires or intends to continue the 5110.67. Where the surety on a bond amended by removing the words
business or operations to which such given on Form 5100.30 or Form 5110.67 ‘‘principal on the bond under which the
bond relates, he must file a valid has filed application for relief from spirits were withdrawn’’ and adding, in
superseding bond to be effective on or liability, as provided in § 28.72, the their place, the words ‘‘person who
before the date specified in the surety’s surety will be relieved from liability for withdrew the spirits’’.
notice. If the principal does not file a withdrawals made wholly subsequent to
superseding bond when required, he the date specified in the notice, or on § 28.117 [Amended]
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must discontinue the operations the effective date of a superseding bond, ■ 146. Section 28.117 is amended as
intended to be covered by such bond if one is given. Notwithstanding such follows:
forthwith. Superseding bonds must relief, the liability of the surety will ■ a. In the first sentence, by removing
show the date of execution and the continue until the spirits and/or wines the words ‘‘principal on the bond under
effective date. withdrawn without payment of tax which the spirits were withdrawn’’ and
(b) New bonds for previously exempt under the bond have been properly adding, in their place, the words
persons. If a person has not furnished a accounted for. ‘‘person who withdrew the spirits’’; and
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■ b. By removing the word ‘‘principal’’ ■ b. By removing the words ‘‘Form adding, in its place, the word
in every other place it appears and 1582–A (5120.24)’’ and adding, in their ‘‘5120.24’’;
adding, in its place, the word ‘‘person’’. place, the words ‘‘Form 5120.24’’; and ■ c. By removing the words ‘‘, is not
■ c. By removing the words ‘‘Form 2605 supported by a bond on Form 2738
§ 28.121 [Amended] (5120.20)’’ each place they appear and (5110.68)’’ and adding, in their place,
■ 147. Section 28.121 is amended in the adding, in their place, the words ‘‘Form the words ‘‘is made’’; and
undesignated concluding paragraph by 5120.20’’. ■ d. By removing the words ‘‘Form
removing the words ‘‘All such 1582–B (5130.6)’’ and adding, in their
withdrawals’’ and adding, in their place, § 28.250 [Amended]
place, the words ‘‘Form 5130.6’’.
the words ‘‘Except as provided in ■ 152. Section 28.250 is amended as The revision reads as follows:
§ 28.51(b), all such withdrawals’’. follows:
■ a. In the introductory text, by § 28.333 Claims for drawback.
§ 28.131 [Amended] removing the words ‘‘, and the principal * * * * *
■ 148. In § 28.131, paragraph (b) is has filed bond, Form 2738 (5110.68)’’;
amended by removing the words and PART 30—GAUGING MANUAL
‘‘principal on the bond under which the ■ b. In paragraph (a)(4), by removing the
words ‘‘1582–A (5120.24)’’ and adding, ■ 158. The authority citation for part 30
wines were withdrawn’’ and adding, in continues to read as follows:
their place, the words ‘‘person who in their place, the word ‘‘5120.24’’.
withdrew the wines’’. Authority: 26 U.S.C. 7805.
§ 28.303 [Amended] ■ 159. Section 30.11 is amended by
§ 28.132 [Amended] ■ 153. Section 28.303 is amended as adding a definition of ‘‘Bonded
follows: premises’’ in alphabetical order to read
■ 149. Section 28.132 is amended as ■ a. In the introductory text, by
follows: as follows:
removing the words ‘‘Form 2635
■ a. In the first sentence, by removing (5620.8)’’ and adding, in their place, the § 30.11 Meaning of terms.
the words ‘‘principal on the bond under word ‘‘5620.8’’; and * * * * *
which the wines were withdrawn’’ and ■ b. In paragraph (e), by adding after the Bonded premises. The bonded
adding, in their place, the words word ‘‘bond’’ the words ‘‘(as premises of a distilled spirits plant as
‘‘person who withdrew the wines’’; applicable)’’. described in part 19 of this chapter. This
■ b. In the second sentence, by term includes premises described in the
removing the words ‘‘principal on the § 28.317 [Amended]
preceding sentence even if the distilled
bond’’ and adding, in their place, the ■ 154. Section 28.317 is amended as spirits plant proprietor has not provided
word ‘‘person’’; and follows: a bond for the premises as authorized
■ c. By removing the word ‘‘principal’’ ■ a. In the introductory text, by
under the exemption set forth in
in every other place it appears and removing the words ‘‘Form 2635 § 19.151(d) of this chapter.
adding, in its place, the word ‘‘person’’. (5620.8)’’ and adding, in their place, the
words ‘‘Form 5620.8’’; and * * * * *
§ 28.141 [Amended] ■ b. In paragraph (c), by adding after the § 30.36 [Amended]
■ 150. In § 28.141, paragraph (c) is word ‘‘bond’’ the words ‘‘(as
■ 162. Section 30.36 is amended by
amended by removing the words ‘‘All applicable)’’.
removing the words ‘‘from bond’’ and
removals’’ and adding, in their place, § 28.331 [Removed and Reserved] adding, in their place, the words ‘‘from
the words ‘‘Except where the brewer is bonded premises’’.
■ 155. Section 28.331 is removed and
not required to hold a bond under
reserved. Signed: December 7, 2016.
§ 25.91(e) of this chapter, all removals’’.
John J. Manfreda,
§ 28.332 [Removed and Reserved]
§ 28.215 [Amended] Administrator.
■ 156. Section 28.332 is removed and
■ 151. Section 28.215 is amended as Approved: December 21, 2016.
reserved.
follows: ■ 157. Section 28.333 is amended as Timothy E. Skud,
■ a. In the first sentence, by removing follows: Deputy Assistant Secretary (Tax, Trade and
the words ‘‘from bond’’ and adding, in ■ a. By revising the section heading; Tariff Policy).
their place, the words ‘‘from bonded ■ b. By removing the words ‘‘1582–A [FR Doc. 2016–31417 Filed 1–3–17; 8:45 am]
premises’’; (5120.24)’’ in every place it appears and BILLING CODE 4810–31–P
mstockstill on DSK3G9T082PROD with RULES4
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Document Created: 2017-01-04 00:29:35
Document Modified: 2017-01-04 00:29:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Temporary rule; Treasury decision; cross reference to notice of proposed rulemaking. | |
| Dates | This rule is effective January 4, 2017. | |
| Contact | Ben Birkhill, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005; telephone 202-453-2265. | |
| FR Citation | 82 FR 1108 | |
| RIN Number | 1513-AC30 | |
| CFR Citation | 27
CFR
18 27 CFR 19 27 CFR 24 27 CFR 25 27 CFR 26 27 CFR 27 27 CFR 28 27 CFR 30 | |
| CFR Associated | Alcohol and Alcoholic Beverages; Fruits; Reporting and Recordkeeping Requirements; Spices and Flavorings; Administrative Practice and Procedure; 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; Research; Security Measures; Stills; Surety Bonds; Transportation; Vinegar; Virgin Islands; Warehouses; Wine; Food Additives; Fruit Juices; Scientific Equipment; Beer; Cosmetics; Aircraft; Armed Forces; Foreign Trade Zones and Vessels |
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