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Industry Circular

Number: 79-18

Date: December 27, 1979

Department of the Treasury

Bureau of Alcohol, Tobacco and Firearms

Washington, DC 20226


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To proprietors of distilled spirits plants, breweries, taxpaid wine bottling houses, and bonded wine cellars; liquor dealers; and others concerned:

PURPOSE. This circular transmits a reprint of Treasury decision ATF-56, which amended Title 27, Code of Federal Regulations, Part 170; and answers some questions regarding the interpretation of these regulations and Public Law 95-423.

BACKGROUND. Public Law 95-423, effective February 1, 1979, amended 26 U.S.C. 5064 to permit refund of Federal excise tax and Customs duty paid on alcoholic beverages lost, rendered unmarketable, or condemned due to casualty, disaster, vandalism, and malicious mischief (excluding theft). Previously, 26 U.S.C. 5064 allowed refund of these taxes and duties only if the loss was the result of a Presidentially declared major disaster. Congress felt that certain other circumstances, although not considered "major disasters," could result in sub- stantial losses of alcoholic products and concluded that these losses should be treated in the same manner as losses caused by Presidentially declared major disasters. Thus, Pub. L. 95-423 extends the law to allow refund of taxes and duties on alcoholic products that are lost as the result of other types of disasters and casualties or as the result of damage or destruction (except theft) from vandalism or malicious mischief. Treasury decision ATF-56 prescribed regulations to implement the changes made by this public law. For more background information on Pub. L. 95-423 and Treasury decision ATF-56, see the introduction to the Treasury decision attached with this circular.


1. What is the definition of a casualty? For example, if a shelf turns over or a forklift drops a load of cases, has a casualty occurred within the intent of Public Law 95-423?

Answer: A casualty may be defined as a "serious accident." The "serious" aspect of this definition is recognized in the law by the $250 minimum amount for claims. The "accident" aspect must be decided on the facts of each individual case. However, it is clear that if a shelf turns over accidentally, there has been an accident and a claim may be filed if the $250 minimum amount is satisfied. The same analysis applies to forklifts dropping loads of cases, trucks overturning on the high- way, train derailments, and the like. Each of these events may constitute a casualty. The burden of proving that the loss was accidental lies with the claimant.

2. Does the exclusion for theft losses include situations where theft losses occurred or were made possible because of a natural event or a casualty?

Answer: The exclusion for theft covers all theft regardless of the cause. For example, suppose a windstorm damages a ware- house wall, allowing thieves to gain entry. In this case, although there would be coverage for any loss of alcoholic products caused directly by the windstorm, there would not be any coverage for theft.

3. Can an insurance company or common carrier which reimburses a wholesaler or retailer for loss of alcoholic beverages collect from the government under 26 U.S.C. 5064, as amended by Public Law 95-423?

Answer: No, these enti- ties cannot collect anything from the govern- ment, because they were not the owners of the alcoholic beverages at the time of the loss. The claim under section 5064 may only be filed by the person who was holding the alcoholic beverages for sale when the loss occurred.

4. What is the meaning of the phrase "held for sale" as used in Public Law 95-423?

Answer: "Held for sale" means held--i.e. owned--by any person who intends to sell the alcoholic bever- ages. The purpose of the phrase is to exclude consumers. It does not exclude the producer. "Held for sale" may apply to goods lost in transit as well as goods lost while stored in a warehouse or sitting on a retailer's shelves.

5. May producers of alcoholic products claim refund under the amendments made by Public Law 95-423?

Answer: They may do so only if there is no other provision of law under which refund may be claimed. Losses of distilled spirits at the site of production which are covered by 26 U.S.C. 5008, losses of beer covered by 26 U.S.C. 5056(b), and losses of wine in bond covered by 26 U.S.C. 5370 may not be made the subject of a claim under 26 U.S.C. 5064. On the other hand, it is possible for producers to file claims under section 5064 relating to duty paid on imported products, since neither 26 U.S.C. 5008, 5056, nor 5370 cover refund of Customs duty. If there is a loss of imported products coming within the scope of one of these three statutes, and this loss is due to casualty, disaster, vandalism, or malicious mischief (excluding theft), there would then have to be two claims: one for excise tax under the appropriate section of law, and another for refund of duty under section 5064. Under these circumstances the claim under section 5064 must meet the $250 minimum amount with respect to duty alone. (No claim under section 5064 may be paid in an amount less than $250 for any single loss-causing event, except for Presiden- tially declared major disasters. Normally, tax and duty can be combined to reach $250.) Pro- ducers may also file claim under section 5064 for excise tax, but only if this excise tax may not be claimed under any other law. A claim may be filed, for example, if loss occurs after removal from controlled stock when the producer still holds title to the goods.

6. How does Public Law 95-423 affect claims for losses caused by Presidentially declared major disasters?

Answer: There is no change in the claim procedure for losses caused by Presiden- tially declared major disasters. The time limit for filing claims relating to such major disasters is six months after the date on which the President declared the major disaster (rather than six months after the loss occurred, as is the case with other losses under section 5064). Also, the $250 minimum amount does not apply to claims filed under Presidentially declared major disasters.

7. What is the meaning of the phrase, "indemnified by a valid claim of insurance or otherwise"?

Answer: The meaning of this phrase is that if there is another way by which the claimant can be compensated for the tax and duty Paid on the lost products, then he cannot collect a refund for this tax and duty under 26 U.S.C.5064. The reason for this is that the law is designed to recompense only those who have no other way of getting relief. For example, if a valid insurance policy for the excise tax and duty is in force, then the person who experienced loss has some other way of relief. The term "indemnified" means "secured against loss." An insurance policy provides security against loss; consequently the existence of insurance coverage for a loss of tax and duty operates to remove the coverage of section 5064 with respect to the same tax and duty. Also excluded from coverage under section 5064 are transit losses that may be indemnified by a common carrier.

8. What will be the length of time that can be anticipated before a claim is paid?

Answer: On the basis of previous experience under the law dealing with Presidentially declared major disasters, it is estimated that, on the aver- age, it should take two months from the time a properly documented claim is submitted until the time when a refund is received.

9. Will the full tax paid on imported spirits bottled abroad at less than 100 proof be refunded, or will the refund be limited to $10.50 per proof gallon?

Answer: The language of Public Law 95-423 indicates that an amount equal to the entire Federal excise tax paid or determined on a lost product will be refunded. Consequently, if underproof products have been taxpaid at the rate of $10.50 per wine gallon, the person who held the products for sale at the time of loss may claim the full value of the tax (plus duty) that was actually paid.

10. Does the regulation in section 170.305a, requiring the supporting information to include case serial numbers of full cases of distilled spirits, apply to cases of imported spirits which are not required to bear serial numbers?

Answer: In this situation the regulatory requirement for case serial numbers is not applicable. The supporting information should, however, contain a brief explanation of why the case serial numbers are unavailable.

11. Is it possible for a claim to be approved if the casualty, disaster, vandalism or malicious mischief destroys some of the information required by the regulations in sections 170.305, 170.305a, and 170.308?

Answer: If this happens, the claimant should submit as much of the required information as possible, and indicate the reason for the absence of any information that was destroyed. The claim may still be approved if the claimant is able to sustain the burden, placed on him by Public Law 95-423, of proving to the government's satis- faction that he is entitled to the refund.


1. To obtain Internal Revenue Service Form 843, which is the form required to be used for making claims under 26 U.S.C. 5064, contact the ATF Distribution Center. The address is 3800 South Four Mile Run Drive, Arlington, Virginia 22206. The telephone number is 703-557-7851. Form 843 may also be obtained from Internal Revenue Service district offices and service centers, as well as from the ATF regional offices listed below.

2. Claims on Form 843 must be filed with the ATF regional regulatory administrator for the region where the loss occurred. The addresses and telephone numbers of the ATF regional offices are as follows:

North-Atlantic Region:
6 World Trade Center, 6th Floor New York, New York 10048
phone: 212-264-2106
toll free phone: 800-442-8275
in New York 800-223-2162, 2163
in Connecticut, Maine, Massachusetts, New Hampshire, Puerto Rico, Rhode Island, Vermont, and the Virgin Islands

Mid-Atlantic Region:
2 Penn Center Plaza Philadelphia, Pennsylvania 19102
phone: 215-597-2248
toll free phone: 800-462-1650
in Pennsylvania 800-523-0677, 0678
in Delaware, Maryland, New Jersey, Virginia, and the District of Columbia

Southeast Region:
3835 Northeast Expressway Atlanta, Georgia 30340
phone: 404-455-2670
toll free phone: 800-262-8878
in Georgia 800-241-3701
in Alabama, Florida, Mississippi, North Carolina, South Carolina, and Tennessee

Mid-West Region:
230 South Dearborn Street Chicago, Illinois 60604
phone: 312-353-3883
toll free phone: 800-572-3178
in Illinois 800-621-3211
in Iowa, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Kansas, and Wisconsin

Central Region:
550 Main Street Cincinnati, Ohio 45202
phone: 513-684-3334
toll free phone: 800-582-1880
in Ohio 800-543-1932
in Indiana, Kentucky, Michigan, and West Virginia

Southwest Region:
Main Tower Building 1200 Main Street Dallas, Texas 75202
phone: 214-767-2284
toll free phone: 800-442-7251
in Texas 800-527-9380
in Arkansas, Colorado, Louisiana, New Mexico, Oklahoma, and Wyoming

Western Region:
525 Market Street 34th Floor San Francisco, California 94105
phone: 415-556-2610
toll free phone: 800-792-9811
in California 800-227-4176, 4179
in Alaska, Arizona, Guam, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, and Washington

INQUIRIES CONCERNING THIS CIRCULAR. Inquiries concerning this circular should refer to it by number and be addressed to the Assistant Director, (Regulatory Enforcement), Bureau of Alcohol, Tobacco and Firearms, 1200 Pennsylvania Avenue NW, Washington, DC 20226. Telephone inquiries may be made to the Research and Regulations Branch at (202) 566-7626.

Q.R. Dickerson


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