TAXPAYMENT OF UNEXPLAINED SHORTAGES OF BEER
Brewers and others concerned:
This circular is issued to remind brewers of their responsibility
to account for bottle and keg beer produced, and to caution them
that taxes may be due on shortages of such beer that are not
explained or accounted for.
Several instances have recently been brought to the attention of
the National Office where beer has been removed from breweries
without being properly recorded, and consequently without being
taxpaid. In each of the instances mentioned, the untaxpaid
removal resulted in a shortage of record in the keg or bottled
In each case, when the shortage was first discovered, no adequate
explanation was apparent. On investigation, however, it developed
that it was due, at least in part, to untaxpaid removals, and it
thereupon became necessary for the Internal Revenue Service to
assert the tax.
It is the position of the Service that beer in kegs and cases is
subject to rather precise accounting controls, in that quantities
produced, consumed, lost, removed, or otherwise disposed of can be
precisely determined by appropriate instruments and procedures
which are available and in use throughout industry generally.
It is the responsibility of each brewer to maintain complete and
adequate records of his operations, including quantities of keg
and case beer on hand, produced, removed, or otherwise disposed
of. Any shortage of finished products is an indication that
removals have occurred unlawfully without payment of tax and
that an assessment to collect the tax may be justified. The
burden of proof to the contrary rests upon the brewer.
In any instance where the Service proposes to assert additional tax
because of apparent removal of more beer than has been recorded by
the brewer, the brewer will be furnished every reasonable opportunity
to explain and account for the shortage before the tax is asserted,
and only after full consideration of all the known facts will action
be taken to require payment. It is not the intent of the Service to
require the taxpayment of more, or less, beer than has been removed
subject to tax. In the interest of protecting the revenue, it will,
however, be necessary to assert the tax unless the brewer can
satisfactorily account for the shortage.
Inquiries regarding this circular should refer to its number and
should be addressed to the office of your Assistant Regional
Commissioner, Alcohol and Tobacco Tax.
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division