Rev. Ruling 70-387
The Internal Revenue Service has been asked whether, under internal revenue law, a person who operates a retail liquor dealer business on a seasonal basis, beginning in any month after July in each of two or more consecutive years, is required to pay occupational tax for the entire year beginning July 1, of the second and succeeding years in which such seasonal business is conducted.
In 26 CFR 194.23 a retail dealer in liquors (with certain exceptions) is defined as any dealer who sells or offers for sale, any distilled spirits, wines or beer, to any person other than a dealer.
Under the provisions of 26 CFR 194.21, no person shall be engaged in or carry on any trade or business subject to an occupational tax until he has filed a special tax return and paid the special tax for such business. Further, 26 CFR 194.103 provides that the special tax shall be reckoned for the fiscal year beginning July 1 and ending June 30 following, or, if a business is commenced subsequent to July, the tax shall be reckoned proportionately, from the first day of the month in which the liability to special tax commenced to June 30 following.
From the foregoing it appears that in every case the question of liability to special tax as a retail dealer in liquors must be separately considered for each year beginning with July 1, and where a person is neither offering for sale nor selling liquors at retail, no liability is incurred, irrespective of any liabilities that arose in the preceding year or years.
Held, the liability to special tax as a retail dealer in liquors only arises when a person first either offers for sale or sells liquors at retail during each year beginning with July 1 and ending the following June 30. Held further, that where a person is conducting business of a retail dealer in liquors and in each successive year he only engages in the business after July, liability to special tax is incurred only for that part of each year beginning the first day of the month in which he commences the business and ending the following June 30.
26 U.S.C. 5121; 27 CFR 194.103