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Industry Circular

Number: 58-17
Date: August 14, 1958

Office of the Commissioner of Internal Revenue Alcohol and Tobacco Tax Division


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To proprietors of internal revenue bonded warehouses, and others concerned:

Purpose. It now appears that the Excise Tax Technical Changes Act of 1958 (H. R. 7125 85th Congress) has a very good chance of being enacted into law. The purpose of this circular is to advise you of the action you must promptly take to obtain extension of the bonding period for distilled spirits as permitted under the provisions of the act, in the event it does become law. The following instructions are accordingly supplied in anticipation of its probable enactment. On enactment a Treasury decision on the subject will be promulgated.

Background. The Internal Revenue Code of 1954 provides an 8-year bonding period for distilled spirits. The proposed new legislation would amend the Internal Revenue Code in this respect by providing an over-all 20-year bonding period effective July 1, 1959. The proposed legislation will further provide for the extension of the bonding period for distilled spirits stored in, or in transit to, internal revenue bonded warehouses on the date of enactment if proper consent is filed, and it is with this phase that the Treasury decision mentioned above and this circular are concerned.

Procedure to Obtain Interim Extension. The Treasury decision will provide that where a proprietor desires to have the bonding period covering distilled spirits in his warehouse changed from an 8-year to a 20-year period (for periods on and after the date of enactment of the act), he shall file a proper consent of surety, Form 1533, to change the conditions of his warehousing and transportation bond, Form 1571, in that respect, or file a new bond, Form 1571, effective on the date of enactment of the act, with such consent. If the 8-year bonding period on any distilled spirits on deposit in, or in transit to, his warehouse expires at any time during the 10-day period which begins on the date of enactment of the act, the force-out provisions of existing law with respect to such spirits may be stayed if, and only if, before the close of such 10-day period, the proprietor files with his assistant regional commissioner a consent on his existing bond or files a new bond with consent as described above. After this 10-day period, spirits becoming 8 years of age before such a consent or bond and consent is filed will have no period of grace and will be required to be withdrawn within the 8 years as specified by existing law. It is accordingly important that proprietors understand the conditions which they must meet if they desire to retain spirits in bond beyond the 8-year limitation.

When filing a consent, or a new bond and consent, the procedures prescribed in 26 CFR Part 225 will be followed. Such consents or bonds must have an effective date which would cover the anniversary dates of any spirits for which it is desired to extend the 8-year bonding period. The consent must properly identify the bond affected and contain the following statement:

"To change, for periods on and after the date of enactment into law of the Excise Tax Technical Changes Act of 1958 (H. R. 7125 85th Congress), the condition of said bond based on the withdrawal of distilled spirits from the internal revenue bonded warehouse within 8 years from the date of the first entry thereof in any internal revenue bonded warehouse to a condition based on the withdrawal of spirits from the internal revenue bonded warehouse within 20 years from the date of the original entry for deposit."

Since we may not be able to issue a Treasury decision coincident with the date of enactment, it is suggested that you may wish to anticipate the passage of the proposed legislation and initiate steps leading to the securing and filing of the necessary consent or bond and consent.

Spirits Not Affected. These procedures will not be necessary with respect to spirits which on July 26, 1936, were 8 years of age or older and which were in bonded warehouses on that date, or with respect to alcohol produced at an industrial alcohol plant operated under 26 CFR Part 182.

Inquiries. Inquiries regarding this industry circular should refer to its number and be addressed to your assistant regional commissioner (alcohol and tobacco tax).


Dwight E. Avis
Director, Alcohol and Tobacco Tax Division.


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