[Federal Register Volume 63, Number 162 (Friday, August 21, 1998)]
[Rules and Regulations]
[Pages 44779-44784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22503]
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DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and Firearms
27 CFR Parts 4, 19, 24, 194, 250 and 251
[T.D. ATF-398]
RIN 1512-A71
Implementation of Public Law 105-34, Sections 908, 910 and 1415,
Related to Hard Cider, Semi-Generic Wine Designations, and Wholesale
Liquor Dealers' Signs (97-2523)
AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of
the Treasury.
ACTION: Temporary rule (Treasury decision).
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SUMMARY: This temporary rule implements some of the provisions of the
Taxpayer Relief Act of 1997. The new law made changes in the excise tax
on hard cider, clarified the authority to use semi-generic designations
on wine labels, and repealed the requirement for wholesale dealers in
liquors to post signs. The wine regulations are amended to incorporate
the new hard cider tax rate and to recognize the
[[Page 44780]]
labeling changes relative to the description of hard cider. These
regulations are also amended to incorporate the semi-generic wine
designations, and the liquor dealers' regulations are amended to
eliminate the requirement for posting a sign. Clarifying changes are
made to parts 19, 250 and 251. In the Proposed Rules section of this
Federal Register, ATF is also issuing a notice of proposed rulemaking
inviting comments on this temporary rule for a 60 day period following
the publication of this temporary rule.
DATES: Effective dates: Amendments to 27 CFR 4.24 and 4.257(c)
(temporary regulations related to semi-generic wine designations) and
the removal of 27 CFR 194.239 through 194.241 (temporary regulations
related to wholesale liquor dealers' signs) are effective retroactive
to August 5, 1997. Amendments to 27 CFR 4.21, 19.11, 24.10, 24.76,
24.257(a), 24.278, 250.11 and 251.11 (temporary regulations related to
cider) are effective October 20, 1998.
Compliance date: Compliance with the amendments to 27 CFR 4.21 and
24.257(a) is not mandatory until February 17, 1999.
FOR FURTHER INFORMATION CONTACT: Marjorie D. Ruhf, Regulations
Division, 650 Massachusetts Avenue, NW, Washington, DC 20226; (202)
927-8230; or mdruhf@atfhq.atf.treas.gov.
SUPPLEMENTARY INFORMATION:
Background
This temporary rule implements some of the provisions of the
Taxpayer Relief Act of 1997, Pub. L. 105-34 (``the Act''). These
provisions amended the Internal Revenue Code of 1986 (IRC) to create a
new excise tax category for hard cider, clarify the authority to use
semi-generic designations on wine labels, and repeal the requirement
for wholesale dealers in liquors to post signs.
Current Regulation of Fermented Cider
The Bureau of Alcohol, Tobacco and Firearms (ATF) regulates
production of all alcohol beverages under the IRC and the Federal
Alcohol Administration Act (FAA Act). The IRC covers taxes and
qualification requirements for producers, and the FAA Act regulates
labeling, advertising, permits and trade practices. Before the
enactment of the Act, fermented (``hard'') cider was subject to some of
the requirements of these laws, and exempt from others, depending on
how it was made.
Tax Exempt Cider
In the IRC (26 U.S.C. 5042), Congress exempted fermented cider from
Federal excise tax and the strict qualification requirements imposed on
producers of all other alcohol beverages, if it met the following
description:
* * * the noneffervescent product of the normal alcoholic
fermentation of apple juice only, which is produced at a place other
than a bonded wine cellar and without the use of preservative
methods or materials, and which is sold or offered for sale as cider
and not as wine or as a substitute for wine. * * *
The restriction on ingredients and prohibition of preservative methods
or materials effectively limit the sale of this product to farmstands
or other small-scale local enterprises. The Act made no change in 26
U.S.C. 5042. Therefore, no change has been made to 27 CFR 24.76,
relating to cider under 26 U.S.C. 5042, except to change the title of
that section to ``Tax exempt cider,'' to differentiate this cider from
hard cider subject to the new tax rate.
Taxable Cider
Under the former law, taxable fermented cider was made at bonded
wine premises and technically could be taxpaid as either still wine at
$1.07 per gallon ($.17 for small producers), artificially carbonated
wine at $3.30 per gallon ($2.40 for small producers), or sparkling wine
at $3.40 per gallon (no special rate for small producers). Still wine
is wine which contains not more than 0.392 gram of carbon dioxide per
hundred milliliters and the information available to ATF indicates that
all domestic cider was produced as still wine, with few exceptions. If
any wine contains 7 percent or more of alcohol by volume, it is subject
to the full FAA Act wine labeling and basic permit requirements. Wine
which is under 7 percent alcohol is only subject to the FAA Act
requirement that a person who bottles any beverage which contains 0.5
percent or more alcohol by volume must place the Government Warning
Statement on the bottle. Minimal ATF marking requirements under the IRC
wine regulations, Sec. 24.257(a), apply to wine under 7 percent alcohol
and require the identification of the bottler and the brand, kind,
alcohol content, and quantity of wine. Otherwise, labeling of wine
(including fermented cider) under 7 percent alcohol by volume is within
the jurisdiction of the Food and Drug Administration.
Public Law 105-34
The Taxpayer Relief Act of 1997, Pub. L. 105-34, was enacted on
August 5, 1997. Section 908 of the Act added a new tax class for wine,
called ``hard cider,'' to 26 U.S.C. 5041 and imposed a new rate of tax
on hard cider as follows:
On hard cider derived primarily from apples or apple concentrate
and water, containing no other fruit product, and containing at
least one-half of 1 percent and less than 7 percent alcohol by
volume, 22.6 cents per wine gallon.
This new tax rate applies to hard cider removed from bond on or
after October 1, 1997.
Small domestic producers of wine are entitled to a credit of up to
90 cents per wine gallon on wine that is within the first 100,000
gallons of wine (other than champagne and other sparkling wines)
removed for consumption or sale during a calendar year. This credit may
be taken by a bonded wine premises proprietor who does not produce more
than 250,000 gallons of wine in a given calendar year. Since the full
small producer's wine tax credit allowed by 26 U.S.C. 5041(c) reduces
the rate of tax on still wine under 14 percent alcohol (a category
which included domestic ciders) to 17 cents instead of 22.6 cents, the
new hard cider tax rate would have resulted in an increase in the net
tax paid by small domestic wineries who make fermented cider.
Therefore, section 908 of the Act provides for a reduced amount of the
small producer's wine tax credit to apply to the hard cider tax rate
for eligible small producers. This reduced rate of credit, 5.6 cents
instead of 90 cents, has the effect of reducing the net tax paid on
hard cider by a small domestic producer to 17 cents, the equivalent of
the lowest tax available to domestic producers of still wine under 14
percent alcohol by volume. As with the 90 cent credit, the full credit
of 5.6 cents per gallon is reduced by 1 percent ($.00056 per gallon)
for each thousand gallons of wine over 150,000 gallons which are
produced in a year, until the full tax rate is reached at the 250,000
gallon annual production level. In view of the above, conforming
changes are made to 27 CFR 24.278, which implements the tax credit for
small domestic producers.
Definition of Hard Cider
The statutory language describes ``hard cider'' eligible for the
new tax rate as ``derived primarily from apples or apple concentrate
and water, containing no other fruit product, and containing at least
one-half of 1 percent and less than 7 percent alcohol by volume.''
In this temporary rule, ATF defines hard cider as wine derived
primarily from apples or apple concentrate and water (apple juice, or
the equivalent amount of concentrate reconstituted to the original brix
of the juice prior to concentration, must represent more than 50
percent of the volume of the finished product); containing no other
fruit
[[Page 44781]]
product nor any artificial product which imparts a fruit flavor other
than apple; containing at least one-half of 1 percent and less than 7
percent alcohol by volume; having the taste, aroma, and characteristics
generally attributed to hard cider, and sold or offered for sale as
hard cider and not as a substitute for any other alcohol product.
First, this definition specifies that hard cider is a still wine,
as required by a recent amendment to the IRC by section 6009 of the
Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L.
105-206.
Second, the Act specifically defines hard cider as ``containing no
other fruit product.'' We recognize that pear juice has been used as a
natural source of additional tannin, and that other wine treating
materials, such as citric acid, are derived from fruit. We also
recognize that the U.S. cider industry has been experimenting with
apple ciders flavored with other fruits. However, the statutory
language expressly precludes the addition of any other fruit product.
We interpret this prohibition to include natural and artificial flavors
which give any fruit character other than apple to the product. Any
such flavored ciders will be subject to the appropriate tax rate under
26 U.S.C. 5041(b) (1) through (5).
Third, we recognize that one traditional method of making hard
cider involves diluting a higher-alcohol apple wine with juice,
concentrate and water, or some other liquid. Wines made in this way are
formula wines, in either the special natural wine or other than
standard wine category. Formula wines may be classified as hard cider,
provided they also meet the statutory definition of hard cider. In the
temporary rule, we are interpreting the statutory phrase ``derived
primarily from apples or apple concentrate and water'' to mean that
apple juice, or the equivalent amount of concentrate reconstituted to
the original brix of the juice prior to concentration, must represent
more than 50 percent of the volume of the finished product.
Finally, we include in the definition the requirement that hard
cider must have the taste, aroma and characteristics generally
attributed to hard cider, and that it must be sold or offered for sale
as hard cider. These requirements are added to insure that the tax
class of hard cider is properly identified, so that it will not be
confused with other types of beverages which are subject to different
tax classifications.
Labeling of Hard Cider
Since the term ``hard cider'' now has tax significance, no wine may
be designated as ``hard cider'' unless it conforms to the definition of
cider in Sec. 24.10 and is eligible for the tax category of hard cider.
The reference to cider in the FAA labeling regulations at
Sec. 4.21(e)(5) is amended to show that the term ``hard cider'' is
reserved for use in wine eligible for the tax category of hard cider. A
new Sec. 24.257(a)(3)(iv) has been added to the IRC wine labeling
requirements for wine under 7 percent alcohol by volume to show that
wine eligible for the tax category of hard cider will be marked ``hard
cider'' rather than simply ``wine'' under that section.
Forms Affected By New Tax Class for Hard Cider
The Report of Operations, ATF F 5120.17, has been revised to show a
new column reflecting the new tax category of hard cider. If a Formula
and Process for Wine, ATF F 5120.29, is submitted for a hard cider, the
applicant should specify ``hard cider'' in addition to the designation
``special natural wine'' or ``other than standard wine.'' The Excise
Tax Return, ATF F 5000.24, requires only a total amount of wine tax,
without any breakdown by tax class, so that form will not be affected
by this change.
Conforming Changes on Hard Cider
We are amending the definition of ``eligible wine'' which appears
in parts 19, 250 and 251 to clarify that wine in the new tax category
of hard cider is not eligible for wine and flavor credit if used in a
distilled spirits product. Section 5010 of the Internal Revenue Code,
which gives the rules for wine and flavor credit, specifically limits
the credit to ``wine on which tax would be imposed by paragraph (1),
(2), or (3) of section 5041(b) but for its removal to bonded premises''
of a distilled spirits plant. These three categories are the still
wines containing not more than 14 percent, more than 14 to not more
than 21 percent, and more than 21 percent alcohol by volume,
respectively. In the past, this meant the two remaining categories,
both effervescent wines, were ineligible for credit, and the
definitions of ``eligible wine'' in 27 CFR 19.11, 250.11 and 251.11
state simply that still wine is eligible for wine and flavor credit.
Since 26 U.S.C. 5041(b)(6) was added to create a tax category of wine
called hard cider, and 26 U.S.C. 5010 was not amended to include
5041(b)(6) in the list of wines eligible for wine credit when used in
distilled spirits, the existing regulatory definition of eligible wine
as still wine is no longer appropriate. We are amending the definition
of eligible wine to reflect more closely the wording of the statute.
Transition to New Rules
Hard cider makers already qualified as wineries will not need to
change any aspect of their qualification. Removals of eligible hard
cider made after October 1, 1997, may be taxpaid at the new rate. Some
hard cider producers may find that the new tax rate reduces their tax
liability to the point where they could reduce their bond coverage if
they choose to file a superseding bond. While no change was made to the
recordkeeping regulations in subpart O of part 24, such records, when
kept by tax class, should include records of hard cider after October
1, 1997. Small domestic producers will continue to count production of
hard cider as part of their total production for purposes of
establishing the level of eligibility for wine tax credit.
While the labeling changes requiring the use of the term ``hard
cider'' on wine eligible for the hard cider tax rate, and prohibiting
the use of the term ``hard cider'' on any wine not eligible for such
rate, are effective October 20, 1998, we recognize that it is not
practical to enforce the new requirements immediately. Therefore, while
the labeling regulations are effective on October 20, 1998, we will
allow a six-month period to change labels as necessary. The new
requirements will become mandatory on February 17, 1999.
Request for Comments on Cider Regulations
ATF encourages comments, supported by historical or technical data,
on the definition of hard cider established in this temporary rule. The
Technology of Winemaking, Fourth Edition, Amerine et al., AVI
Publishing Company, Inc., describes numerous traditional ways of making
fermented cider, some of which may not fit the definition of hard cider
provided in this temporary rule. We invite comments, including
citations of standard references on cider making, on whether
adjustments to the definition of hard cider are warranted. For example,
is the requirement that more than 50 percent of the volume of the
finished product be apple juice or reconstituted apple concentrate
adequate to ensure the product has the characteristics of hard cider?
Given the prohibition on fruit flavors other than apple, should wine
treating and sweetening materials derived from other fruit products
(such as citric acid or high fructose liquid sugars) be prohibited in
cider?
The proposals discussed in this background material may be modified
due to comments and suggestions received.
[[Page 44782]]
Other Changes Made by the Taxpayer Relief Act of 1997
Section 910 of the Act amended 26 U.S.C. 5388 by adding a new
subsection (c), Use of semigeneric designations, which generally
parallels the language of 27 CFR 4.24 on the same subject, but places
the existing list of semi-generic designations outside the discretion
of the Secretary.
Since the IRC regulations concerning wine labeling appear in 27 CFR
24.257, already modified as discussed above, that regulation has been
further modified to incorporate the wording of 26 U.S.C. 5388,
concerning the use of semi-generic wine designations. Additionally, the
standard of identity for wines under 27 U.S.C. 205 are incorporated by
reference in this section. Finally, a cross reference has been placed
in Sec. 4.24.
We note that the placement of the rules for use of semi-generic
designations in the IRC makes them applicable to wines which contain
less than 7 percent alcohol by volume and to wines sold only in
intrastate commerce. In this temporary rule, the rules governing the
use of semi-generic designations are in both part 4 and part 24, but we
request comments on whether there is a need to retain them in part 4
or, alternatively, whether any additional changes are needed to
Sec. 4.24 as a result of the amendment to the IRC.
Section 1415 of the Act repealed the requirement for wholesale
dealers in liquor to post signs identifying their premises and made
conforming changes to sections of the law which referenced that
requirement. In this document, ATF is amending the Liquor Dealers'
regulations by removing Secs. 194.239 through 194.241, which relate to
this requirement.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required, the
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do
not apply. Moreover, any revenue effects of this rulemaking on small
businesses flow directly from the underlying statute. Likewise, any
secondary or incidental effects, and any reporting, recordkeeping, or
other compliance burdens flow directly from the statute. Pursuant to 26
U.S.C. 7805(f), this temporary regulation will be submitted to the
Chief Counsel for Advocacy of the Small Business Administration for
comment on its impact on small business.
Executive Order 12866
It has been determined that this temporary rule is not a
significant regulatory action as defined by Executive Order 12866.
Therefore, a regulatory assessment is not required.
Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1995 (44 U.S.C.
3507) and its implementing regulations, 5 CFR part 1320, do not apply
to this final rule because no new collection of information is
contained in these regulations. Some of the regulatory sections amended
by this temporary rule contain collections of information which were
previously approved by the Office of Management and Budget (OMB).
Although these sections are being amended, the changes are not
substantive or material.
Administrative Procedure Act
Because this document merely implements sections of the law which
are effective on August 5, 1997 and October 1, 1997, and because
immediate guidance is necessary to implement the provisions of the law,
it is found to be impracticable to issue this Treasury decision with
notice and public procedure under 5 U.S.C. 553(b), or subject to the
effective date limitation in section 553(d).
Drafting Information
The principal author of this document is Marjorie Ruhf, of the
Regulations Division, Bureau of Alcohol, Tobacco and Firearms. However,
other personnel of ATF and the Treasury Department participated in
developing the document.
List of Subjects
27 CFR Part 4
Advertising, Consumer protection, Customs duties and inspection,
Imports, Labeling, Packaging and containers, Wine.
27 CFR Part 19
Administrative practice and procedure, Alcohol and alcoholic
beverages, Authority delegations, Chemicals, Claims, Customs duties and
inspections, Electronic funds transfers, Excise taxes, Exports,
Gasohol, Imports, Labeling, Liquors, Packaging and containers, Puerto
Rico, Reporting and recordkeeping requirements, Research, Security
measures, Spices and flavorings, Stills, Surety bonds, Transportation,
Vinegar, Virgin Islands, Warehouses, Wine.
27 CFR Part 24
Administrative practice and procedure, Authority delegations,
Claims, Electronic fund transfers, Excise taxes, Exports, Food
additives, Fruit juices, Labeling, Liquors, Packaging and containers,
Reporting and recordkeeping requirements, Research, Scientific
equipment, Spices and flavoring, Surety bonds, Taxpaid wine bottling
house, Transportation, Vinegar, Warehouses, Wine.
27 CFR Part 194
Alcohol and alcoholic beverages, Authority delegations, Beer,
Claims, Excise taxes, Exports, Labeling, Liquors, Packaging and
containers, Penalties, Reporting requirements, Wine.
27 CFR Part 250
Administrative practice and procedure, Alcohol and alcoholic
beverages, Authority delegations (Government agencies), Beer, Claims,
Customs duties and inspections, Drugs, Electronic funds transfers,
Excise taxes, Foods, Liquors, Packaging and containers, Puerto Rico,
Reporting and recordkeeping requirements, Spices and flavorings, Surety
bonds, Transportation, Wine.
27 CFR Part 251
Administrative practice and procedure, Alcohol and alcoholic
beverages, Authority delegations, Beer, Customs duties and inspections,
Excise taxes, Imports, Labeling, Liquors, Packaging and containers,
Perfume, Reporting and recordkeeping requirements, Transportation,
Wine.
Authority and Issuance
Accordingly, chapter I of title 27, Code of Federal Regulations is
amended as follows:
PART 4--LABELING AND ADVERTISING OF WINE
Paragraph 1. The authority citation for 27 CFR part 4 continues to
read as follows:
Authority: 27 U.S.C. 205, unless otherwise noted.
Par. 2. Section 4.21 is amended by revising the third sentence of
paragraph (e)(5) to read as follows:
Sec. 4.21 The standards of identity.
* * * * *
(e) Class 5; fruit wine. * * *
(5) * * * Fruit wines which are derived wholly (except for sugar,
water, or added alcohol) from apples or pears may be designated
``cider'' and ``perry,'' respectively, and shall be so designated if
lacking in vinous taste, aroma, and characteristics; however, the term
``hard cider'' may not be used to designate any fruit wine; it may only
be used to
[[Page 44783]]
designate hard cider as defined in part 24 of this chapter. * * *
* * * * *
Par. 3. Section 4.24 is amended by adding a new sentence to the end
of paragraph (b)(1) to read as follows:
Sec. 4.24 Generic, semi-generic, and nongeneric designations of
geographic significance.
* * * * *
(b)(1) * * * See Sec. 24.257(c) of this chapter for exceptions to
the Director's authority to remove names from paragraph (b)(2) of this
section.
* * * * *
PART 19--DISTILLED SPIRITS PLANTS
Par. 4. The authority citation for part 19 continues to read as
follows:
Authority: 19 U.S.C. 81c, 1311; 26 U.S.C. 5001, 5002, 5004-5006,
5008, 5010, 5041, 5061, 5062, 5066, 5081, 5101, 5111-5113, 5142,
5143, 5146, 5171-5173, 5175, 5176, 5178-5181, 5201-5204, 5206, 5207,
5211-5215, 5221-5223, 5231, 5232, 5235, 5236, 5241-5243, 5271, 5273,
5301, 5311-5313, 5362, 5370, 5373, 5501-5505, 5551-5555, 5559, 5561,
5562, 5601, 5612, 5682, 6001, 6065, 6109, 6302, 6311, 6676, 6806,
7011, 7510, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.
Par. 5. Section 19.11 is amended by revising the definition of
Eligible wine to read as follows:
Sec. 19.11 Meaning of terms.
* * * * *
Eligible wine. Wine on which tax would be imposed by paragraph (1),
(2), or (3) of 26 U.S.C. 5041(b) but for its removal to distilled
spirits plant premises and which has not been subject to distillation
at a distilled spirits plant after receipt in bond.
* * * * *
PART 24--WINE
Par. 6. The authority citation for 27 CFR part 24 continues to read
as follows:
Authority: 5 U.S.C. 552(a); 26 U.S.C. 5001, 5008, 5041, 5042,
5044, 5061, 5062, 5081, 5111-5113, 5121, 5122, 5142, 5143, 5173,
5206, 5214, 5215, 5351, 5353, 5354, 5356, 5357, 5361, 5362, 5364-
5373, 5381-5388, 5391, 5392, 5511, 5551, 5552, 5661, 5662, 5684,
6065, 6091, 6109, 6301, 6302, 6311, 6651, 6676, 7011, 7302, 7342,
7502, 7503, 7606, 7805, 7851; 31 U.S.C. 9301, 9303, 9304, 9306.
Par. 7. Section 24.10 is amended by adding definitions for Cider,
Hard cider, and Tax exempt cider, to read as follows:
Sec. 24.10 Meaning of terms.
* * * * *
Cider. See definitions for hard cider and tax exempt cider. For a
description of an additional product which may be called cider, see
Sec. 4.21(e)(5) of this chapter.
* * * * *
Hard cider. Still wine derived primarily from apples or apple
concentrate and water (apple juice, or the equivalent amount of
concentrate reconstituted to the original brix of the juice prior to
concentration, must represent more than 50 percent of the volume of the
finished product) containing no other fruit product nor any artificial
product which imparts a fruit flavor other than apple; containing at
least one-half of 1 percent and less than 7 percent alcohol by volume;
having the taste, aroma, and characteristics generally attributed to
hard cider; and sold or offered for sale as hard cider.
* * * * *
Tax exempt cider. Cider produced in accordance with Sec. 24.76
* * * * *
Par. 8. The heading of Sec. 24.76 is revised to read as follows:
Sec. 24.76 Tax exempt cider.
* * * * *
Par. 9. Section 24.257 is amended by revising paragraph
(a)(3)(iii), adding a new paragraph (a)(3)(iv), and adding a new
paragraph (c) to read as follows:
Sec. 24.257 Labeling wine containers.
(a) * * *
(3) * * *
(iii) For any wine with less than 7 percent alcohol by volume
(except hard cider as defined in Sec. 24.10), the word ``wine'' or the
words ``carbonated wine'' if the wine contains more than 0.392 grams of
carbon dioxide per 100 milliliters, will appear as part of the brand
name or in a phrase in direct conjunction with the brand name;
(iv) For hard cider as defined in Sec. 24.10, the words ``hard
cider'';
* * * * *
(c) Use of semi-generic designations.--(1) In general. Semi-generic
designations may be used to designate wines of an origin other than
that indicated by such name only if--
(i) There appears in direct conjunction therewith an appropriate
appellation of origin, as defined in part 4 of this chapter, disclosing
the true place of origin of the wine, and
(ii) The wine so designated conforms to the standard of identity,
if any, for such wine contained in part 4 of this chapter or, if there
is no such standard, to the trade understanding of such class or type.
(2) Determination of whether a name is semi-generic.--(i) In
general. Except as provided in paragraph (c)(2)(ii) of this section, a
name of geographic significance, which is also the designation of a
class or type of wine, shall be deemed to have become semi-generic only
if so found by the Director.
(ii) Certain names treated as semi-generic. The following names
shall be treated as semi-generic: Angelica, Burgundy, Claret, Chablis,
Champagne, Chianti, Malaga, Marsala, Madeira, Moselle, Port, Rhine Wine
or Hock, Sauterne, Haut Sauterne, Sherry, Tokay. (See: 26 U.S.C. 5368,
5388, 5662)
(Approved by the Office of Management and Budget under control
number 1512-0503)
Par. 10. Section 24.278 is amended by revising paragraph (d) to
read as follows:
Sec. 24.278 Tax credit for certain small domestic producers.
* * * * *
(d) Computation of credit. The credit which may be taken on the
first 100,000 gallons of wine (other than champagne and other sparkling
wine) removed for consumption or sale by an eligible person during a
calendar year shall be computed as follows:
(1) For persons who produce 150,000 gallons or less of wine during
the calendar year, the credit is $0.90 per gallon for wine ($0.056 for
hard cider) eligible for such credit at the time it is removed for
consumption or sale;
(2) For persons who produce more than 150,000 gallons but not more
than 250,000 gallons during the calendar year, the credit shall be
reduced by 1 percent for every 1,000 gallons produced in excess of
150,000 gallons. For example, the credit which would be taken by a
person who produced 160,500 gallons of wine and hard cider during a
calendar year would be reduced by 10 percent, for a net credit against
the tax of $0.81 per gallon for wine or $0.0504 for hard cider, as long
as the wine or hard cider was among the first 100,000 gallons removed
for consumption or sale during the calendar year.
* * * * *
PART 194--LIQUOR DEALERS
Par. 11. The authority citation for 27 CFR part 194 is revised to
read as follows:
Authority: 26 U.S.C. 5001, 5002, 5111-5114, 5116, 5117, 5121-
5124, 5142, 5143, 5145, 5146, 5206, 5207, 5301, 5352, 5555, 5613,
5681, 5691, 6001, 6011, 6061, 6065, 6071, 6091, 6109, 6151, 6311,
6314, 6402, 6511, 6601, 6621, 6651, 6657, 7011, 7805.
[[Page 44784]]
Undesignated Centerheading and Secs. 194.239 through 194.241 [Removed
and reserved]
Par. 12. The undesignated centerheading preceding Sec. 194.239 is
removed, and Secs. 194.239, 194.240 and 194.241 are removed and
reserved.
PART 250--LIQUOR AND ARTICLES FROM PUERTO RICO AND THE VIRGIN
ISLANDS
Par. 13. The authority citation for part 250 continues to read as
follows:
Authority: 19 U.S.C. 81c; 26 U.S.C. 5001, 5007, 5008, 5010,
5041, 5051, 5061, 5081, 5111, 5112, 5114, 5121, 5122, 5124, 5131-
5134, 5141, 5146, 5207, 5232, 5271, 5276, 5301, 5314, 5555, 6001,
6301, 6302, 6804, 7101, 7102, 7651, 7652, 7805; 27 U.S.C. 203, 205;
31 U.S.C. 9301, 9303, 9304, 9306.
Par. 14. Section 250.11 is amended by revising the definition of
eligible wine to read as follows:
Sec. 250.11 Meaning of terms.
* * * * *
Eligible wine. Wine on which tax would be imposed by paragraph (1),
(2), or (3) of 26 U.S.C. 5041(b) but for its removal to distilled
spirits plant premises and which has not been subject to distillation
at a distilled spirits plant after receipt in bond.
* * * * *
PART 251--IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEER
Par. 15. The authority citation for part 251 continues to read as
follows:
Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C. 5001,
5007, 5008, 5010, 5041, 5051, 5054, 5061, 5111, 5112, 5114, 5121,
5122, 5124, 5201, 5205, 5207, 5232, 5273, 5301, 5313, 5555, 6302,
7805.
Par. 16. Section 251.11 is amended by revising the definition of
eligible wine to read as follows:
Sec. 251.11 Meaning of terms.
* * * * *
Eligible wine. Wine on which tax would be imposed by paragraph (1),
(2), or (3) of 26 U.S.C. 5041(b) but for its removal to distilled
spirits plant premises and which has not been subject to distillation
at a distilled spirits plant after receipt in bond.
* * * * *
Signed: July 23, 1998.
John W. Magaw,
Director.
Approved: July 23, 1998.
John P. Simpson
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 98-22503 Filed 8-20-98; 8:45 am]
BILLING CODE 4810-31-P
