WHOLESALE LIQUOR DEALERS' RECORDS AND REPORTS
Wholesale dealers in liquors
and others concerned
This industry circular is to remind you of the effect of
changes in the definitions of wholesale and retail dealers in
the statute and in 26 CFR Part 194, as it relates to your
Change in definitions.
As defined by law and regulations in effect before July 1,
1959, a "wholesale" sale of distilled spirits was any sale of
5 gallons or more to the same person at the same time, and a
"retail" sale was a sale of any quantity less than 5 gallons.
The law was amended, effective July 1,1959, so that a "whole-
sale" sale is now any sale of liquors by one dealer to another
dealer (no matter how small the quantity involved), and a
"retail" sale is any sale of liquors by a dealer to a person who
is not a dealer (usually a consumer or a person obtaining distilled
spirits for industrial use).
Effect on Recordkeeping Requirements.
Under prior law and regulations, wholesale dealers could
transfer spirits to their retail departments for the purpose of
making sales in quantities of less than 5 gallons, thus avoid-
ing entry on their wholesale records of sales in small quantities.
Because of the change in definitions of wholesale and retail
dealers, all sales of distilled spirits to dealers, no matter
how small the quantity, must now be entered on the wholesale
liquor dealer's records.
Under prior law and regulations, a wholesale dealer could
consider all distilled spirits as having been received in the
retail department, if 90 percent or more of the volume of dis-
tilled spirits was sold in quantities of less than 5 gallons;
then when a sale of 5 gallons or more of distilled spirits was made, the distilled spirits involved in the transaction were
considered as having been transferred to the wholesale depart-
ment at the time of sale. Under present law and regulations,
a wholesale dealer may consider all distilled spirits as having
been received in the retail department if 90 percent or more of
the volume of distilled spirits sold is sold to persons who are
not dealers (without regard to the quantity involved in the sale).
Under this procedure, if a sale of any quantity, no matter how
small, is made to a dealer, the distilled spirits involved in
the transaction must be considered as having been transferred to
the wholesale department at the time of sale, and the required
record of the wholesale sale must be made.
A wholesale dealer must continue to prepare and to keep
recapitulation records, render monthly reports, and file reports
on Forms 52A and 52B (if the assistant regional commissioner
has not waived the filing of the reports). However, under the
present law and regulations the recording and reporting require-
ments are based on whether the sale is made to a dealer, rather
than on the quantity sold. The wholesale dealer must also prepare
and keep the "record of disposition" prescribed by 26 CFR 194.226
covering each sale or disposition of distilled spirits to another
dealer. If the wholesale dealer had no wholesale transactions
during the month, he is still required to render a monthly report
on Form 338, showing "No transactions".
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
IRS - D. C. - 61934