QUALIFICATION OF USERS OF TAX-FREE SPIRITS
SECTION 5271 I. R. C., AS AMENDED BY PUBLIC LAW 85-859,
(72 STAT. 1370) PROVIDES THAT NO PERSON SHALL PROCURE
OR USE SPIRITS FREE OF TAX ON AND AFTER JULY 1, 1959,
UNTIL HE HAS FILED AN APPLICATION TO DO SO
Tax-free alcohol users and
What applications should you file? In order to procure and use spirits free
of tax (formerly called tax-free alcohol) on and after July, 1, 1959, you are
required to make application on Form 2600, copies included, for an industrial
use permit (formerly called a basic permit) to use spirits free of tax and an
application on Form 1450 (Revised April 1959), copies included, for a permit
to procure spirits free of tax.
What quantities should you show on your applications? Your application
for an industrial use permit, Form 2600, requires that you state the quantity
of tax-free spirits, including recovered tax-free spirits, that will be on hand,
in transit, and unaccounted for at any one time. This quantity will determine
the penal sum of your bond. It may be large enough to permit you to order
containers of the size that you usually purchase and have the spirits in transit
while you have a sufficient quantity on hand to care for your needs.
Your Form 1450 will require that you state the total quantity to be withdrawn during a calendar month and the quantity to be withdrawn during the term
of the permit, considered to be one year. The proposed regulations state that
the quantity to be withdrawn during any calendar month should not be more than
one-twelfth of the annual requirements but provides that where you desire to
withdraw more than one-twelfth of your annual quota during any month you
should state your needs and furnish sufficient information for the assistant
regional commissioner to determine whether such withdrawals should be
authorized. If one-twelfth of your annual quota is less than a 55 gallon drum
and you have sufficient reasons for desiring to purchase in a 55 gallon container, you should enter 55 gallons as the quantity to be withdrawn per calendar month
and furnish sufficient information for the assistant regional commissioner to
determine whether that portion of your application should be approved. The
same procedure would hold true if you have a seasonal business that requires
that you use tax-free spirits in only a few months during a year. You should
determine your annual quota and the need for each of the few months that you
expect to use the material and adequately explain your desires.
Period to be entered on Form 1450. Your entry for the beginning of the
period should be July 1, 1959, but the ending date should be left blank at this
What should be done about your bond? You shall submit a new bond, Form
1448, or you may continue your current bond in effect by filing a consent of
surety, Form 1533, copies attached, extending the terms of the bond to cover
tax-free spirits on hand, in transit, and unaccounted for on and after July 1,
1959. If you have submitted a strengthening bond, such bond shall also be
covered by a separate consent of surety. If you increase the quantity, you
should submit a strengthening bond or a new bond.
Where and when qualifying documents should be filed. The above described
applications and bond or consent of surety with the necessary supporting documents outlined in the accompanying excerpts from the proposed regulations
shall be filed in duplicate with your assistant regional commissioner (alcohol
and tobacco tax). They should be filed as soon as possible after you receive
the forms in order to expedite handling in the office of your assistant regional
Result if applications are not filed prior to July 1, 1959. If you do not file
the two applications and bond or the consent of surety on your bond or bonds
prior to July 1, 1959, you will not be entitled to use spirits free of tax on and
after July 1, 1959, and the vendor named on your current withdrawal permit
will be notified by the assistant regional commissioner that you may not continue to withdraw spirits free of tax.
Continuation of permits on and after July 1, 1959. The proposed regulations
provide that if you hold a permit as a user, have a valid withdrawal permit on
Form 1450 on June 30, 1959, and have filed the required applications, you may
continue to use and withdraw specially denatured spirits on and after July 1,
1959, under such permits until final action is taken on your applications.
Inquiries. Inquiries in regard to this industry circular should refer to its
number and be addressed to the office of your assistant regional commissioner
(alcohol and tobacco tax).
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
Industry Circular No. 59-12, Supp. No. 1 May 6, 1959
QUALIFICATION OF USERS OF TAX-FREE SPIRITS (ALCOHOL)
Tax-free alcohol users and
Purpose. The purpose of this supplement is to advise you of
certain changes to be made in the instructions furnished you with
Industry Circular No. 59-12.
Background. Reference was made in Industry Circular No. 59-12 to
proposed regulations, and the instructions furnished contained excerpts
from the proposed regulations. These proposed regulations were published
in Part II of the Federal Register for April 21, 1959, as a notice of
proposed rule making. During recent conferences with industry members
and personnel from our regional offices suggestions were made for simplifying these proposed regulations. We believe that some of the
suggestions are excellent, and we expect to propose their inclusion
in the regulations. Accordingly, we have anticipated these changes
and revised the earlier instructions. In filing your application you
may follow the revised instructions. If, upon further review, additional
information is found to be necessary, you will be so advised.
Information relative to changes in instructions and circular.
listing your equipment, as required by paragraph 1 (f), it will be sufficient
to list only the principal articles of equipment to be directly involved
in the recovery and restoration of tax-free alcohol.
(b) The information required in the first sentence of paragraph 1 (i)
need not be submitted except on the specific request of the assistant
(c) The second sentence of paragraph 1 (i) permits you to adopt,
by reference, items of information on file in the office of the assistant
regional commissioner and applies to all of the items of information
required under paragraphs (d) through (h). This provision also applies
to the documents listed under section 3, Organizational Documents.
(d) In lieu of the corporate documents listed in section 3 (a),
only the following documents need be submitted.
(1) Certified true copy of the certificate of
incorporation, or certified true copy of certificate
authorizing the corporation to operate in the State
where premises are located, if other than that in
2 (2) Certified list of the names and addresses
of the officers and directors.
(3) Statement showing the number of shares of
each class of stock or other evidence of ownership,
authorized and outstanding, the par value thereof, and
the voting rights of the respective owners or holders.
(e) You need not submit certified extracts or digests of minutes
of meetings of boards of directors, authorizing certain individuals to
sign for the corporation but your application must be accompanied by
evidence which will establish the authority of the officer or other
person who executes the application for permit to execute the same unless
such authority is already on file in the office of the assistant regional
(f) The names of the persons interested in a parent corporation,
mentioned in the second sentence of paragraph 3 (c)(1), need be submitted
only at the specific request of your assistant regional commissioner.
(g) In Industry Circular 59-12 in the paragraph entitled "Continuation
of permits on and after July 1,1959" the words "specially denatured" are
incorrect and should be changed to "tax-free."
Modification of Form 2600. The use of a more specific term
indicating the kind of spirits to be used is desired. Please modify
Form 2600 by changing the word "spirits" to "alcohol" in the statement
immediately above item 3.
Inquiries. If you have any questions regarding your qualification,
they should be addressed to your assistant regional commissioner (alcohol
and tobacco tax).
If you have already filed your application in accordance with the
first instructions furnished you, no further action is necessary.
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
IRS D. C. 48473