RECODIFICATION OF NONBEVERAGE DRAWBACK REGULATIONS
TO: Manufacturers of Nonbeverage Products and Others Concerned:
PURPOSE: This Industry Circular announces the publication of
Treasury Decision (T.D.) ATF-379, "Taxpaid Distilled Spirits Used
in Manufacturing Products Unfit for Beverage Use." This Treasury
decision, which was published on June 20, 1996, and took effect
on August 19, 1996, rewrote the regulations on nonbeverage
drawback. A copy of T.D. ATF-379 is attached to this Circular.
It includes the text of the new regulations and an explanation
of the major changes.
In conjunction with the new regulations, three ATF forms relating
to nonbeverage drawback have been issued. The formula form,
formerly numbered as ATF F 1678 (5530.5), has been revised and
renumbered as ATF F 5154.1. The supporting data form, which was
an optional form published originally with Revenue Procedure
64-32, has been issued as an official ATF form, ATF F 5154.2.
The bond form for monthly claimants, formerly numbered as ATF
F 1730 (5530.3), has been renumbered as ATF F 5154.3. Copies of
each of these new forms are attached.
A. REGULATIONS: The new regulations are thoroughly discussed
in the preamble to T.D. ATF-379 (attached). The changes are
extensive and substantive, but they do not alter the basic
structure of the nonbeverage drawback program. Claimants should
familiarize themselves with the regulations, because a penalty of
up to $1,000 per violation may be imposed under 26 U.S.C. 5134.
B. FORMS: (1) FORMULA FORM. The new formula form (ATF F 5154.1) supersedes ATF F 1678. Drawback claimants should begin immediately to use the new form. However, in order to provide a
reasonable transition, the ATF Laboratory will continue to accept
formulas submitted on Form 1678 through the end of January 1997.
All approvals on Form 1678 will remain in effect.
The introduction of the new Form 5154.1 will have no adverse
effect on the "Partnership Formula Approval Process" (PFAP)
program for alcoholic beverages. Users of PFAP will extract
the same data for their "Flavor Ingredient Data Sheet" (FIDS)
from Form 5154.1 as they do from Form 1678. References in PFAP
instructions and data fields to "Form 1678" will now be understood as referring to "Form 1678 or 5154.1."
(2) SUPPORTING DATA. The new supporting data form (ATF F 5154.
is much simpler than the old form. Nevertheless, as discussed
in T.D. ATF-379 (page 31401), claimants may continue to use the
old supporting data form if they wish. However, in that case,
certain information required by the new form must be added, as
follows: (a) Claimants must indicate in the supporting data
whether the quarterly physical inventory required by 27 CFR
17.167 has been taken. (Monthly claimants using the old form
would need to make this certification only once per quarter.)
(b) The Distilled Spirits Account ("Part IV" of the old form)
must show separate data for spirits of different effective tax
rates, for spirits from Puerto Rico and the U.S. Virgin Islands,
and for other imported rum. Likewise in Part III (titled
"Distilled Spirits Used" in the old supporting data form), these
categories must be employed, if applicable, to allocate the proof
gallons of spirits used in each nonbeverage product. (c) Gains
deducted from the amount claimed (see 27 CFR 17.162 and 17.167),
and total usage of Puerto Rican spirits and Virgin Islands
spirits (see 27 CFR 17.147), must be shown. (d) Any other
information required by applicable regulations to appear in the
supporting data must also be shown.
(3) BOND FORM. Because of legal requirements of the Paperwork
Reduction Act, it will not be possible to provide a transition
period for the new bond form. Now that the new ATF F 5154.3 has
become available, bonds may no longer be submitted on the old
ATF F 1730 (5530.3). However, bonds previously submitted and
approved on the old form, ATF F 1730 (5530.3), will remain in
(4) OTHER FORMS. Other forms used by nonbeverage drawback
claimants, e.g. the special tax return (ATF F 5630.5) and the
claim form (ATF F 2635 (5620.8)), have not been changed.
INQUIRIES: Inquiries concerning this circular should refer to
its number and be addressed to the Chief, Alcohol and Tobacco
Programs Division, Bureau of Alcohol, Tobacco and Firerarms,
650 Massachusetts Avenue NW, Washington, DC 20226.
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