PROPOSED CHANGES IN REGULATIONS
ISSUANCE OF AND ACCOUNTING FOR STRIP STAMPS
Importers and others concerned:
Purpose. This circular is to inform you of changes being made in regulations,
26 CFR Parts 250 and 251, to become effective December 1, 1972, and to discuss
steps which should be taken in order that importers will have an opening inventory
of red strip stamps as of that date.
Background. A notice of proposed rule making to amend regulations, primarily
as to the issuance of strip stamps and the accounting for red strip stamps by
importers, was published in the Federal Register for July 1, 1972. Under existing
regulations the accounting process involves the clearance of each individual
Form 428, Requisition for Bottle Strip Stamps, by the appropriate director of
customs, and for the accounting by customs personnel of the stamps, by requisition
and serial numbers, as the bottles of spirits to which they are attached clear
customs. This necessarily results in a number of delays in the accounting for stamps
which have actually cleared customs. The procedures being established by the amended
regulations to be issued pursuant to the notice will simplify greatly these requirements respecting the accounting for stamps and will place primary responsibility for
such accounting on the importer who requisitioned the stamps.
Procurement of Strip Stamps. In order to have the office which will under the
new procedures be charged with the responsibility for determining that red strip
stamps are properly used and accounted for, and to relieve customs from the
responsibility of approving requisitions and district directors of internal revenue
from the responsibility of stocking and issuing these stamps, requisitions filed on
and after December 1, 1972, shall be filed with the appropriate Regional Director,
Bureau of Alcohol, Tobacco and Firearms. These requisitions will be prepared
essentially in the same manner as at present, but it will not be necessary that a
separate requisition be prepared to cover stamps to be shipped to each supplier
abroad. Instead, the importer (or his agent) may requisition at one time a reasonable
quantity of stamps to cover his legitimate current needs. The Form 428 will be
prepared as provided in the instructions on the form (as revised). It will not be
accompanied by a Form 1627, Statement to Accompany Requisition for Red Strip Stamps to
be Sent Abroad (while there will continue to be a Form 1627, it is designed to serve
an entirely different purpose under the amended regulations, as discussed later in this
circular). The Form 428 will not be submitted to customs for approval before being filed
with the Regional Director.
Issuance of Red Strip Stamps by Regional Director. Upon receipt of a requisition on
Form 428 from an importer or his agent, the Regional Director will, if the quantity of
stamps requisitioned is reasonable and previously issued stamps are being properly accounted
for, approve the requisition and either issue the stamps from his stock or have the stamps
sent directly to the importer or his agent from the Bureau of Engraving and Printing
(under procedures similar to those now followed respecting stamps shipped directly to
proprietors of distilled spirits plants). On receipt of the stamps by the importer or his
agent, he shall follow applicable procedures covering the receipting for the stamps on
Form 428 and the disposition of the receipted copies of the form.
Accounting for Red Strip Stamps by Importer. The importer in whose name the
stamps are requisitioned is responsible for accounting for the stamps whether
actually ordered by him or by an agent for him. A new Form 1627 entitled "Report
of Use or Other Disposition of Red Strip Stamps," has been designed to serve as a
back-up record covering the disposition of all strip stamps to be accounted for.
In the case of bottled spirits released by customs, the Form 1627, executed by the
customs officer releasing the spirits, will be the authority for the importer to
take credit for the stamps on his inventory and quarterly report. In the case of
other dispositions, such as loss or mutilation, other entries on the Form 1627 will
serve as such back-up record. In other words, regardless of the disposition made
of the stamps which removes them from the importer's outstanding inventory, the
disposition will in all cases be supported by an entry on Form 1627. See the instructions on the form when received. For inventory and reporting purposes the
stamps will be accounted for on a first-in, first-out basis rather than by serial
numbers and by individual requisition. The new procedure will also eliminate the
need for Form 1627-A, Notice of Diversion of Red Strip Stamps for Imported Distilled
Spirits. Instead, when a shipment of spirits arrives in the United States, the Form
1627 (new), executed as to Part 1, including identification of containers of spirits
in the shipment, will be submitted to the customs officer at the port for certification
as to the presence of strip stamps on the containers. Upon receipt of the certified
report (which will be signed only by the customs officer at the port and immediately
placed in a window envelope for mailing to the importer in whose name the stamps were
requisitioned) the importer will take credit for the stamps.
Power of Attorney. Because the Forms 428 will be approved by the Regional
Director and reports, Form 96 (discussed later in this circular) will be filed with
him, a power of attorney on Form 1534 will be required where an agent or representative
prepares Form 428.
Customs Responsibilities Eliminated. The requirement that stamps to be affixed
under customs supervision and not so affixed within 48 hours be placed in customs
custody is eliminated. The importer will retain control of the stamps until they are
affixed to the bottles under customs supervision. Customs personnel presently use
their record of bottle strip stamps issued to and used by each importer to verify the
importer's annual report. Maintenance of the control record and verification of the
annual report by customs will be discontinued under the proposed regulations.
Responsibilities on Importers. Each importer who requisitions stamps will be
required to maintain, on his premises, a daily record of stamp transactions for each
location to which he distributes stamps or at which he has stamps in his possession.
This record will be subject to periodic inspection by Bureau inspectors. Also, it must
include stamps requisitioned by an agent for him. The first-in, first-out method of
accounting for stamps will provide the importer with greater flexibility in the handling
of stamps. Because of the complete change in the method of accounting for the stamps,
the requirement that stamps be accounted for within an 18-month period (or an extension
of such period) is no longer necessary and will be eliminated from the regulations.
Importer's Report of Stamps. Form 96 will, under the amended regulations, be filed
quarterly instead of annually, and with the Regional Director, Bureau of Alcohol,
Tobacco and Firearms, instead of with the district director of customs. The form has
been revised to fit the new reporting requirements (first-in, first-out basis).
Because the regulations become effective as of December 1, 1972, the first report should
cover the month of December only. Subsequent reports should cover quarterly periods as
provided in the instructions on the form. A special opening report will be prepared as
provided later in this circular under the heading "Transition to New Accounting Procedure."
Verification of Overprinting of Stamps and Endorsement of Warehouse Entries.
The present requirement that importers have the overprinting of stamps verified by
a director of customs will be discontinued. Also, present requirements that
entries filed under Customs regulations, 19 CFR Chapter I, be endorsed with certain
information by the importer for use primarily as an aid to customs personnel in
crediting the stamp record of the importer will be discontinued. Customs will no
longer need this information.
Alternate Methods and Procedures. The amended regulations will provide
procedures under which the Director, Bureau of Alcohol, Tobacco and Firearms, may
approve an alternate method or procedure. This new provision is self-explanatory.
Transition to New Accounting Procedure. With one exception, importers should
have available to them from present records, requisitions, etc., all of the
information they need in order to establish an opening inventory as of the close of
business on November 30, 1972, in order to be in a position to assume full
responsibility thereafter for the accounting for all stamps. The one exception is
outstanding Forms 1627-A pending with customs and relating to spirits diverted from
an original port of entry to another port. It will be necessary to have this
information in the hands of importers at the close of business on November 30.
Therefore, each customs office handling Forms 1627-A for stamps on spirits which
have not been entered will send such forms, or reproduced copies thereof, to the
importer in whose name the stamps involved were requisitioned. The stamps on
spirits entered on and after December 1, 1972, will be accounted for under the new
procedures; that is, they will be accounted for by the importer pursuant to a (new)
Form 1627 prepared and processed as provided in the regulations. With the information
on the outstanding Forms 1627-A plus the information in the importer's records, he will
be in a position to prepare a special Form 96 (on the Form 96 being superseded), giving
a full and complete accounting for the stamps which are charged to him as of the close
of business on November 30, 1972. This special Form 96 will be prepared in triplicate
and marked "FINAL," and the original and one copy will be filed with the director of
customs for verification. After verification, the director of customs will forward the
original to the appropriate Regional Director, Bureau of Alcohol, Tobacco and Firearms,
where it will form the starting point for the importer's accounting with that office.
This report should include special entries reflecting stamps which have been outstanding
for a long period of time and which cannot be properly accounted for, if necessary.
Where such an entry is made on Form 96, the form should be accompanied by an attached
statement fully explaining the length and circumstances surrounding the unaccountability.
The stamps so identified will not be included in the opening inventory of the importer.
This will let the opening inventory represent an actual physical inventory of stamps on
hand and to be accounted for under the new procedures.
Status of Forms. Forms 428 and 96 are being revised and should be available shortly
before the December 1, 1972, effective date of the regulation amendments. The newly
designed Form 1627 should also be available before that date. Form 1627-A will be
discontinued and should not be prepared to cover transactions which will be accounted for
under the new procedures.
Reason for Advance Information of Amended Procedures. We do not ordinarily
establish a future effective date for an amendatory document as we have in this case,
nor do we ordinarily issue an industry circular so far in advance of the effective date
of the proposed regulations. However, in these circumstances, we want to (1) give ample
time to District Directors and Regional Directors to establish the necessary communication
to arrange for the transfer of stamps to Regional Directors and for Regional Directors to make the necessary determination of the quantity of stamps to have on hand on the
effective date of the regulations; (2) give the Bureau of Customs the needed lead
time to apprise its officers of the actions they must take in connection with the
transfer of responsibilities for the accounting for red strip stamps to importers,
and to acquaint them with other changes affecting their activities; (3) inform
importers of the proposed changes so that they will have taken all steps necessary
to establish an accurate inventory of stamps as of the effective date of the
regulation changes; and (4) allow the Headquarters Office sufficient time to
coordinate the document referred to above with another document involving strip
stamps which for many reasons should have the same effective date. We do not
anticipate the issuance of another industry circular covering these proposed changes
unless a specific need for one develops. Therefore, you should retain this circular
so that it will be available as the time for the change-over approaches.
Inquiries. Inquiries concerning this industry circular should refer to its
number and should be addressed to your Regional Director, Bureau of Alcohol, Tobacco
Rex D. Davis