Proposed Amendments of Parts 220,221,and 225
Relating Primarily to Operations at Internal
Revenue Bonded Warehouse
Proprietors of internal revenue bonded
warehouses, registered distilleries,
and fruit distilleries, and others
1. You were advised by Industry Circular No. 55-31, dated
September 20, 1955, of a number of amendments which it was proposed
to make in the regulations relating primarily to operations at
internal revenue bonded warehouses. These proposals were contained
in a notice of proposed rule making published in the Federal Register
for October 13, 1955.
2. Further study by this division has resulted in several
changes in the proposed amendments as discussed in Industry Circular
No. 55-31 and published in the notice of proposed rule making. The
changes are either of a liberalizing nature, or of a technical nature
not affecting substantive requirements.
3. Changes of major interest are:
(a) As published in the notice, the amendments to
26 CFR Parts 220, 221, and 225, would eliminate requirements
for the weighing, prior to shipment, of packages transferred
in sealed conveyances between internal revenue bonded warehouses and would transfer to proprietors the responsibility
for determining and recording the weights of all packages
transferred, whether in sealed or unsealed conveyances.
This proposal has been further amended to provide that the
assistant regional commissioner, with the approval of the
Director, Alcohol and Tobacco Tax Division, may waive the
weighing of packages of spirits upon receipt subsequent to
transfer in unsealed conveyances, where the proximity of
the premises or other conditions are such that jeopardy to
the revenue would not be incurred.
(b) It is proposed to revise the requirements for
plats and plans (26 CFR Parts 220, 221, and 225) to require
less detailed information thereon. A plat and flow diagrams
would be required for distilleries. A plat and floor plans
for each floor where the warehouse consists of, or includes,
only a portion of a building would be required for internal
revenue bonded warehouses. The regulations will continue to
require floor plans of the bottling-in-bond department.
Additional plans may be required from time to time where
(c) The notice provided that the warehouseman maintain
commercial records covering the physical removal of each lot
of spirits which would support the monthly summaries to be
reported on Form 52C. Since the publication of the notice
it has been found practicable and desirable to substitute
commercial records for detailed monthly reports presently
required to be prepared by proprietors of various other
premises. A Treasury decision effecting such procedures
is scheduled for early issuance. In order that the change
over to commerical records may be complete, and be accomplished in an orderly manner, the new Form 52C procedure
will be included in that Treasury decision which relates
solely to commercial records.
4. The proposed Treasury decision will make other changes from
the proposals contained in the notice of proposed rule making, as
(a) to retain the present requirement that the proof
of spirits be adjusted to a whole degree prior to the
filling of packages from storage tanks.
(b) to provide for the affixing to bottles of brand
labels and State stampe in the storage portion of the warehouse, regardless of there being a bottling-in-bond
department, where the need therefor is established, space
and facilities are available, and the necessary supervision
can be performed without the assignment of additional
internal revenue officers.
(c) to provide for the removal of packages of wine
spirits from an internal revenue bonded warehouse for use
in wine production on the basis of the original gauge made
by the distiller or gauge made by the warehouseman.
(d) to authorize the assistant regional commissioner to
approve communicating doors between the bottling-in-bond
department and the storage portion of the warehouse and any
openings between such department and the empty container
storeroom, which will not constitute a jeopardy to the
(e) to permit the Director, Alcohol and Tobacco Tax
Division, to authorize the establishment of an internal
revenue bonded warehouse with less than a 5,000 barrel
capacity where the need therefor is fully established.
(f) to discontinue the marking of storage tanks of
spirits at warehouses.
(g) to remove the requirement for arranging cases of
bottled-in-bond spirits in serial order when storing such
cases in stacks or blocks.
(h) to permit the bottling alternately on one
bottling line in the bottling-in-bond department, of
spirits from more than one tank or lot.
5. The amendments of 26 CFR Part 225 will provide that the
warehouseman shall make a report of gauge on Form 1698 where a
package or other container is found on warehouse inspection to
have sustained an unusual loss from obvious cause other than
theft or unauthorized voluntary destruction or where an unusual
loss is determined at the time of recoopering. The instructions.
on Form 1698, revised January 1956, differ somewhat from the
regulations. The instructions in the regulations should be
6. The proposed Treasury decision provides that it shall be
effective on the date of its publication in the Federal Register.
7. This circular is being issued prior to publication of the
Treasury decision in order to afford you an opportunity to plan for the
transition to the new procedures and to discuss any questions which may
arise with Government personnel before the proposed amendments become
effective. Probably most inquiries can be satisfactorily answered by
your assistant regional commissioner; accordingly, they should be
addressed to him and should refer to the number of this circular.
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division