Simplification of Multiple Bulk Gauges for Tax Determination
Proprietors of distilled spirits plants
and others concerned:
Purpose. The purpose of this circular is to obtain your reaction to a proposal to
simplify procedures for multiple bulk gauges of spirits from one storage tank. Only the
first daily withdrawal of bulk spirits from a storage tank would be subjected to a proofing gauge by the assigned officer for tax determination purposes. Subsequent withdrawals
during the day from the storage tank would only be weighed by the assigned officer, who
would use the first withdrawal proof as the basis of tax determination for these subsequent
Background. A month's study was recently completed in three regions covering the bulk
gauging simplification procedure described above. This study disclosed an extremely small
difference between the internal revenue tax collected under the present bulk gauging procedure versus the tax that would have been collected under the proposed procedure. At the
same time, a savings in time and manpower would have accrued to both government and industry because of this simplified gauging procedure. These savings could range from small to a
sizeable amount, depending upon the type of operations carried on by a plant. However,
assigned officers at some of the plants pointed out operational problems that would have to
be solved if this gauging concept were to operate satisfactorily. We would like to have
your comments regarding any operational or other problems that you foresee as a result of
its possible adoption.
Proposed Procedure. We visualize the following sequence of operations in conducting
multiple tax-determination gauge withdrawals from a storage tank.
(1) Agitate spirits in
(2) Proof, and take a sample in the weigh tank, of the first daily withdrawal
from the storage tank.
(3) Determine tax due, based on weight and proof for this first
withdrawal, and enter this information on a revised Form 179.
(4) Subsequent withdrawals
from the storage tank would only be weighed, using the proof established at the first withdrawal to determine the tax due, with the information relating to weight, tax gallons, and
distilled spirits tax due entered on the revised Form 179.
(5) The individual entries of
weight, tax gallons, and distilled spirits tax due as shown on the revised Form 179 would
be totaled at the end of the day's operations, and the totals entered on the revised Form
(6) One Form 179 would cover all tax determinations for one day for each storage tank
under the multiple gauge procedure.
Restrictions on use of multiple gauge withdrawals. All storage tanks from which you
desire to make withdrawals for tax determination purposes using this multiple gauging
concept would have to be equipped with suitable agitation devices. This would ensure that
a single proofing gauge made of a tank's contents daily (in the absence of any additions
thereto) would be representative of the contents. The addition of spirits to a storage
tank from which a multiple gauge withdrawal was being made would require another agitation
of the tank's contents. Additionally, on the next withdrawal, a new proof for the spirits
would be established by the assigned officer in the weigh tank, which would form the basis
for the start of a new multiple gauge withdrawal from the storage tank.
Inquiries. Any comments regarding the proposed multiple bulk gauging procedures outlined above should refer to the number of this circular and be addressed to the Director,
Alcohol, Tobacco, and Firearms Division (CP:AT:RP), Internal Revenue Service,
Washington, D. C. 20224.
Rex D. Davis,
Alcohol, Tobacco and Firearms Division