SEMIMONTHLY BEER TAX RETURN SYSTEM
Brewers and others concerned:
Purpose. The purpose of this industry circular is to give
you preliminary information that will help you to effectively plan
for a smooth transition from the payment of tax on beer by daily
return to the payment of such tax by semimonthly return.
Background. The Secretary of the Treasury has authorized the
payment of tax on beer by semimonthly return. This system of tax
payment will be mandatory, except where a brewer is in default of
any payment of the tax on beer or does not have on file a bond in
sufficient penal sum, in which instances the tax must be prepaid.
A preliminary draft of regulations for the payment of tax on beer
by semimonthly return has been prepared and, as the new system
is to be effective June 24, 1959, we are furnishing you a copy
so you may be as fully advised as possible at the earliest possible
General. The proposed regulations will contain requirements
for bonds and consents, procedures for filing returns, and other
provisions necessary to the semimonthly return system. Conferences
have been held with representatives of the Surety Association of
America, 6o John Street, New York 38, New York, to acquaint them
with the new bonding requirements. They have assured us that
they will issue instructions by June 4th so that all bonding companies will be prepared to act expeditiously on requests for bonds
conforming with the proposed regulations.
Bond requirements. If you intend to defer the payment of tax
on beer, you must file a new bond, or a strengthening bond, so that
the penal sum of your bond (or bonds) shall be in an amount equal
to the amount of the penal sum required on such bond by Part 245
plus an amount not less than the tax on the maximum quantity of
beer to be removed for consumption or sale during any semimonthly
return period. The maximum penal sum shall not be more than
$500,000. Where the penal sum of your present bond is not sufficient, you must file either a superseding bond or a strengthening
bond before June 24th. If you file a strengthening bond, you
must also file a consent of surety, Form 1533, on your present
bond. The wording of the consent is given in § 170.404 of the
Period of semimonthly return. The semimonthly periods for
the returns run from the 9th through the 23rd of one month and
from the 24th of one month through the 8th of the next month, but
are keyed to your business day (24-hour cycle). For example,
if your business day is other than a calendar day, your business
day beginning on the 9th day of the month will be the first day
covered by the return for the period from the 9th through the
23rd. You must file a return even though you do not remove beer
for consumption or sale during a return period and regardless of
whether any or all of the tax for the period has been prepaid.
The present return, Form 2034, has been revised for use under the
new regulations. The revised form will be filled out in much
the same manner as heretofore. The principal changes in the
form are the addition of schedule D for the entry of daily removals,
and amendment of the instructions. You will enter the totals of
each day's removals of keg and bottled beer subject to tax in
schedule D, and will enter the aggregate of such daily totals in
schedule A. Any beer on which the tax was prepaid during the
period covered by the return will be reported in schedule C as
an adjustment decreasing the tax. The serial numbers of the
prepayment returns will be shown in schedule C.
Time for filing semimonthly return. The semimonthly tax
return, Form 2034, shall be filed not later than the close of
the third calendar day next succeeding the 8th or 23rd calendar
day of the month, as the case may be, excluding any Saturday,
Sunday, or legal holiday. Thus, for example, returns for the
first period (June 24 through July 8) need not be filed until
July 13, as Saturday, July 11, and Sunday, July 12, would be
excluded. If your business day for July 8th ends on the 9th,
you will not be given additional filing time beyond July 13th
since, although the return period takes into account your business
day, the last day of filing must be the third calendar day.
Prepayment return. The regulations will require that the tax
on beer must be prepaid if the penal sum of your bond (or bonds) is
not sufficient, or if you are for any reason in default in your
payments of the tax on beer. To prepay the tax on beer, you will
use Form 2034, modifying the heading of the form by inserting the
word "PREPAYMENT" immediately before the title. When Form 2034 is
used to prepay the tax on beer, it must be filed, with remittance,
before beer is "removed for consumption or sale" as defined in
§ 170.403 of the attached draft. The remittance submitted under
the default provisions of the regulations must be in cash or in
the form of a money order or a certified, cashier's or treasurer's
Records of removals. The regulations will require you to keep
a record of beer removed for consumption or sale and of beer removed
without payment of tax to support the entries for each day shown
in your tax return, Form 2034. The details and requirements for
the record of removals are given in § 170.409 of the attached
Preparation and disposition of returns. Your returns on Form 2034
whether semimonthly or prepayment, will be prepared in quadruplicate.
You will forward or deliver the original and two copies (with
remittance) to the district director and, at the same time, forward
one copy to your assistant regional commissioner.
Form of remittance, No change has been made in the rules governing
the form of remittances which must accompany your returns. Thus,
you will continue to be guided by the provisions of Part 245 in this
Return of deposits. If you have made a deposit with your district
director to obtain a one-day extension of time for filing your daily
return, such deposit will be returned to you after June 25. You
need not file a claim for return of the deposit.
Effective July 1, 1959, the law will provide that beer returned
to the brewery on the same day it was removed shall not be considered to have been "removed for consumption or sale." Therefore,
if your business day is not a calendar day, caution should be
exercised to exclude from the daily totals of tax determination
any beer which is returned on the same business day on which it
was removed. For example, if your business day begins at 10 a.m.,
beer which is removed after 10 a.m. one day and is returned before
10 a.m. the next day, is considered as returned on the same day
as removed and should not be included in the total amount of beer
on which tax is determined for that day.
Inquiries. Any inquiries regarding 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
IRS D.C. 49193
SUBPART R PAYMENT OF TAX ON BEER
170.401 Scope of subpart.
170.403 Meaning of terms.
170.404 Penal sum of bond, Form 1566: consent of surety.
170.405 Semimonthly return.
170.406 Brewer in default; tax to be prepaid.
170.407 Prepayment of tax.
170.408 Date of mailing and delivering of returns.
170.409 Records of removals, to support Form 2034.
170.410 Return of amounts deposited.
Authority: §§ 170.401 to 170.410 issued under
sec. 7805, I.R.C., 68A Stat. 917; 26 U.S.C. 7805.
Other statutory provisions interpreted or applied
are cited to text in parentheses.
§ 170.401 Scope of subpart.
This subpart provides temporary regulations for payment
by brewers qualified under chapter 51, I.R.C., of the internal
revenue tax imposed on beer, and temporary procedures relating
Notwithstanding any other provision of Part 245 of this
chapter relating to the payment of taxes on beer by breweries
qualified under chapter 51, I.R.C., such taxes determined, on
and after June 24, 1959, shall be paid and collected on the
basis of a semimonthly or prepayment return as provided in
§ 170.403 Meaning of terms.
When used in this subpart and in forms prescribed under
this subpart, where not otherwise distinctly expressed or
manifestly incompatible with the intent thereof, terms shall
have the meaning ascribed in Part 245 of this chapter, except
as otherwise specifically defined in this subpart.
Removed for Consumption or Sale. "Removed for consumption or sale" shall mean (a) the sale and transfer of
possession of beer for consumption at the brewery, or (b)
any removal of beer from the brewery (other than beer
removed without payment of tax as authorized by law),
except that such removal shall not include any beer which
is returned to the brewery on the same business day such
beer is removed therefrom for delivery: Provided, That as
to transactions prior to July 1, 1959, "removal for consumption or sale" shall mean the sale or removal for consumption or sale of beer from the brewery (other than beer
removed without payment of tax as authorized by law).
§ 170.404 Penal sum of bond, Form 1566: consent of surety.
Where the payment of tax on beer is to be deferred
under the provisions of this subpart, the maximum penal
sum of any bond, Form 1566 (or the total penal sums where
original and strengthening bonds are filed), shall be not
more than $500,000, and a new bond shall be given on
Form 1566 in a penal sum equal to the amount of the penal
sum required on such bond by Part 245 of this chapter plus
an amount not less than the tax on the maximum quantity of
beer to be removed for consumption or sale during any semimonthly return period, or a strengthening bond shall be
filed to so increase the total penal sum of the bond (or
bonds) in force on June 23, 1959. Where a strengthening
bond is so filed, a consent of surety, Form 1533, shall be
filed to extend the terms of the bond (or bonds) in force
on June 23, 1959, to cover transactions after that date.
Consent on the Form 1533 shall properly identify the bond
Form 1566 to which it applies and contain the following
statement of purpose:
To continue in effect said bond (including all
extensions or limitations of such terms and conditions
previously consented to and approved) on and after
June 24, 1959, notwithstanding that the time for
deferral of payment of the tax on beer removed for
consumption or sale will be changed from a period of
one day to a semimonthly period.
(68A Stat. 674; 26 U.S.C. 5401)
Payment of Tax
§ 170.405 Semimonthly return.
The quantities of keg and bottled beer sold or removed
daily for consumption or sale during the period covered by
the return, and the aggregate quantity thereof, shall be
reported in the tax return, Form 2034, prepared in quadruplicate. The brewer shall include for payment on his
return, Form 2034, the full amount of tax required to be
determined (and not prepaid) on all beer removed from the
brewery daily for consumption or sale, during the period
covered by the return. Prepayments made by the brewer
during the period covered by the return shall be separately shown thereon. The brewer shall file his tax return,
Form 2034, with remittance for the full amount of tax due,
semimonthly, covering the period from the brewer's business
day beginning on the 9th day of a month through his business
day beginning on the 23rd day of the same month and the
period from the brewer's business day beginning on the 24th
day of a month through his business day beginning on the
8th day of the next succeeding month. The tax return Form
2034, shall be filed not later than the close of the third
calendar day next succeeding the 8th or 23rd calendar day
of the month, as the case may be, excluding any Saturday,
Sunday, or legal holiday of the District of Columbia or
any statewide legal holiday of the State in which the
return is required to be filed: Provided, That the return
for the period ending at the close of the brewer's business
day which began on June 23rd of any year shall be filed not
later than the close of the second next succeeding calendar
day after June 23rd, excluding any Saturday, Sunday, or a
legal holiday of the District of Columbia or a statewide
legal holiday of the particular State in which the return
is required to be filed. A return, Form 2034, shall be
filed covering each return period even though no beer was
removed for consumption or sale during the period.
§ 170.406 Brewer in default; tax to be prepaid.
Where a check or money order tendered in payment of
taxes on beer is not paid on presentment, or where the
brewer is otherwise in default in payment of tax under
§ 170.405, no beer shall be removed from the brewery for
consumption or sale until the tax has been paid as provided in § 170.407, for the period of such default and
until the assistant regional commissioner finds the
revenue will not be jeopardized by payment of tax as
provided in § 170.405. Any remittance made during the
period of such default shall be in cash or in the form
of a certified, cashier's, or treasurer's check drawn
on any bank or trust company incorporated under the laws
of the United States, or under the laws of any State,
Territory, or possession of the United States, or a
money order as defined in § 301.6311-1 of this chapter.
§ 170.407 Prepayment of tax.
Where a brewer is required to prepay tax under
§ 170.406, or where the penal sum of any bond, Form 1566,
(or the total penal sums where original and strengthening
bonds are filed) is insufficient for deferral of payment
of tax on beer to be removed for consumption or sale, the
brewer shall, before removal of the beer, file with the
district director a beer tax return, Form 2034, with
remittance. The word "PREPAYMENT" shall be prefixed to
the title of such form. The return, with remittance,
shall be filed by forwarding or delivering it to the
district director before the beer is removed for consumption or sale. For the purpose of complying with this
section, the term "forwarding" shall mean deposit in the
United States mail, properly addressed to the district
(68A Stat. 614, 777; 26 U.S.C. 5061, 6311)
§ 170.408 Date of mailing and delivering of returns.
Where the return, Form 2034, and remittance are
delivered by United States mail to the office of the
district director, the date of the official postmark
of the United States Post Office stamped on the cover
in which the return and remittance were mailed shall be
deemed to be the date of delivery of such return and
§ 170.409 Records of removals, to support Form 2034.
Each brewer shall keep a record of the beer removed
from the brewery for consumption or sale, and of the beer
removed from the brewery without payment of tax, to
support the entries for each day shown in his tax return,
Form 2034. Such supporting record shall show, with
respect to each removal, (a) the date of removal, (b) the
identity of the person to whom the beer was shipped or
delivered (not required in the case of sales in quantities
of 1/2 barrel or less for delivery at the brewery), and
(c) the quantities of beer removed in kegs and bottles.
Where the brewer keeps, at the brewery, copies of invoices
or other commercial records containing the information
required as to each such removal, such copies may be used
in lieu of any other record required by this section, if
they are maintained in such manner that the assistant
regional commissioner is satisfied that the information
may be readily ascertained therefrom by internal revenue
officers. Such records shall, be retained for 3 years
following the close of the semimonthly return period
during which the beer was removed, and shall be available
for examination by internal revenue officers.
§ 170.410 Return of accounts deposited.
The provisions of section 245.116 relating to deposits
with district directors of an additional remittance equal
to or greater than the maximum tax liability to be incurred
during any business day on beer removed for consumption or
sale shall not be applicable on and after the effective
date of this subpart, and such deposits heretofore made
shall be returned without interest, by the district director
on application by the brewer making the deposits.