Rev. Ruling 56-203
Storage of Brandy in an Internal Revenue Bonded Warehouse
Advice has been requested whether oak tanks or puncheons, from 100 to several thousand gallons in capacity, may be used in an internal revenue bonded warehouse for the storage and aging of brandy.
Under the law and regulations, containers used for the storage of brandy in bulk in an internal revenue bonded warehouse are restricted to (1) original packages filled in a distillery, (2) packages filled from storage tanks, and (3) storage tanks.
Since wood is not a suitable material for the construction of storage tanks under section 225.111 of the Regulations relating to the Warehousing of Distilled Spirits, oak ovals or puncheons can not be qualified as storage tanks.
Historically, casks or packages for the storage of distilled spirits range in capacity up to 210 tax gallons, as evidenced by tax stamps provided in the past for such packages. Age may be claimed on brandy stored in new or reused cooperage in accordance with the provisions of section 39(b) of the Regulations relating to the Labeling and Advertising of Distilled Spirits. Such authority does not extend to oak ovals of large capacity since the contact of the brandy with the wood surface would be too limited in comparison with the quantity of brandy for the brandy to obtain proper characteristics of age. Accordingly, oak ovals or puncheons (cask or packages), limited in capacity to not more than 210 tax gallons (or equivalent of 210 wine gallons), may be used for storing brandy as original packages or packages filled from storage tanks. Where such containers are used, appropriate facilities must be provided for proper gauging and handling of the packages. Oak ovals of a capacity in excess of 210 tax gallons can not be used either as brandy storage tanks, or as original packages or packages filled from storage tanks.
26 U.S.C. 5552; 26 CFR 225.400 (27 CFR 201.291)