CLAIMS FOR UNMERCHANTABLE WINE
RETURN TO BONDED WINE CELLAR FOR DESTRUCTION
Proprietors of bonded wine cellars
and others concerned:
Purpose. This circular is issued to inform proprietors of bonded
wine cellars of the provisions of Revenue Ruling 62-25, published in
Internal Revenue Bulletin No. 9, February 26, 1962. This ruling concerns claims for refund or credit of tax on unmerchantable wine
received at a bonded winery for destruction under section 5361, Internal
Background. Section 5044 of the Code provides, in part, that in
the case of any wine produced in the United States and returned to bond
as unmerchantable under section 5361 of the Code, any tax imposed by
section 5041 of the Code shall, if paid, be refunded or credited,
without interest, to the proprietor of the bonded wine cellar to which
such wine is delivered.
Section 5361 provides, in part, that the proprietor of a bonded
wine cellar may receive unmerchantable taxpaid wine for destruction.
Section 5371 provides that any refund or credit of, or other relief
from, taxes on wines or wine spirits authorized by law shall be allowed
only to the extent that the claimant is not indemnified or recompensed
for the tax.
Any claim for credit or refund of tax on unmerchantable wine
returned to a bonded wine cellar must be filed by the proprietor of the
bonded wine cellar to which the wine has been returned. The proprietor
filing the claim need not be the one who paid the tax on the wine.
However, the burden of proof that the wine has been taxpaid lies with
the claimant proprietor. The claim may be allowed only to the extent
that the claimant is not indemnified or recompensed for the tax.
In a somewhat similar case, Revenue Ruling 60-201, C.B. 1960-1,
712, precludes the allowance of a claim for refund or credit of tax
to a brewer who does not give a credit allowance to his customer for
beer removed from the market. The brewer is considered indemnified
for the tax by the customer through payment for the beer.
Effects of Ruling. Under Revenue Ruling 62-25, the proprietor of
the bonded wine cellar to which the unmerchantable wine was returned
was not the taxpayer and did not purchase the wine at a price reflecting
the tax; neither did he allow to the person returning the wine a credit
in an amount equal to the tax paid on such wine. To allow the proprietor
credit or refund of tax would constitute unjust enrichment since he
neither directly nor indirectly bore the burden of the tax. Accordingly,
since it is not the intent of the statute to provide relief to a person
who did not bear the burden of the tax, claims for credit or refund in
such cases are not allowable.
Inquiries. Inquiries concerning this 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