Importers and others concerned:
Purpose: This circular is to inform importers of
sake as to its tax classification under the Internal
Sake which contains alcohol produced solely by
fermentation is taxed as a malt beverage at the rate of
$9 per barrel of 31 gallons (26 U.S.C. 5051 and 5052).
Sake which contains any alcohol produced by distillation
is taxed as a distilled spirit at the rate of $10.50 per
It is the responsibility of the importer to determine the correct tax classification of the alcoholic
beverages imported by him.
It has come to the Bureau's attention that some
brands of imported sake which contain added distilled
spirits are entering the United States and are being
improperly classified and taxed as malt beverages. If
sake entering the United States is classified as a malt
beverage and is then later found to contain distilled
spirits, a tax liability is created which is equal to
the difference of the distilled spirits taxes due and
the malt beverage taxes paid. The importer is liable
for the additional taxes in such a situation. Addi-
tional penalty and interest liabilities may also be
Any importer found to have willfully imported sake
containing distilled spirits and, knowing such, nevertheless paid taxes at the malt beverage rate becomes
subject to the provisions of 26 U.S.C. 7201 which
"Any person who willfully attempts in any manner to
evade or defeat any tax imposed by this title or
the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony
and, upon conviction thereof, shall be fined not
more than $10,000, or imprisoned not more than 5
years, or both, together with the costs of
In addition to the collection of taxes due, any
underpayment of tax due to fraud is subject to the provisions of 26 U.S.C. 6653 which provides for a penalty
equal to 50% of the underpayment.
The Bureau will take appropriate action in all
instances where tax liabilities are disclosed.
Inquiries: Questions regarding this circular should
refer to its number and be addressed to the Assistant
Director (Regulatory Enforcement), Bureau of Alcohol,
Tobacco and Firearms, 1200 Pennsylvania Avenue, NW,
Washington, DC 20226.