05-21562. Suspension of Special (Occupational) Tax (2004R-778P)

AGENCY:

Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION:

Notice of proposed rulemaking; cross-reference to temporary rule.

SUMMARY:

Elsewhere in this issue of the Federal Register, the Alcohol and Tobacco Tax and Trade Bureau (TTB) is issuing a temporary rule amending the TTB regulations relating to special (occupational) tax, to reflect a 3-year tax suspension effected by section 246 of the American Jobs Creation Act of 2004. Section 246 amends the Internal Revenue Code of 1986 to provide that, during the period from July 1, 2005, through June 30, 2008, the rate of special (occupational) tax on certain occupations will be zero. The occupations affected by the 3-year tax suspension are: Manufacturers of nonbeverage products who claim tax drawback; proprietors of distilled spirits plants, alcohol fuel plants, bonded and taxpaid wine premises, and breweries; and wholesale and retail dealers in distilled spirits, wine, and beer. The requirements to register annually and keep prescribed records remain in effect. In this notice of proposed rulemaking, we are soliciting comments from all interested parties on these regulatory amendments. The text of the regulations in the temporary rule published in the Rules and Regulations section of this issue of the Federal Register serves as the text of the proposed regulations.

DATES:

Comments must be received on or before December 30, 2005.

ADDRESSES:

You may send comments to any of the following addresses—

• Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, Attn: Notice No. 52, P.O. Box 14412, Washington, DC 20044—4412.
• 202-927-8525 (facsimile).
• [e-mail] (e-mail).
• http://www.ttb.gov/​alcohol/​rules/​index.htm. An online comment form is posted with this notice on our Web site.
• http://www.regulations.gov. Federal e-rulemaking portal; follow instructions for submitting comments.

You may view copies of any comments we receive about this notice by appointment at the TTB Library, 1310 G Street, NW., Washington, DC 20220. To make an appointment, call 202-927-2400. You may also access copies of this notice and any comments online at http://www.ttb.gov/​alcohol/​rules/​index.htm.

See the Public Participation section of this document for specific instructions and requirements for submitting comments, and for information on how to request a public hearing.

FOR FURTHER INFORMATION CONTACT:

Steve Simon, Alcohol and Tobacco Tax and Trade Bureau, Regulations and Rulings Division, Suite 200E, 1310 G Street NW., Washington, DC 20220; telephone [phone].

SUPPLEMENTARY INFORMATION:

Background

In the Rules and Regulations section of this issue of the Federal Register, we are publishing a temporary rule implementing section 246 of the American Jobs Creation Act of 2004, Public Law 108-357, 118 Stat. 1418 (“the Act”), signed by President Bush on October 22, 2004. Section 246 of the Act, entitled “Suspension of Occupational Taxes Relating to Distilled Spirits, Wine, and Beer,” amended subpart G of part II of subchapter A of chapter 54 of the Internal Revenue Code of 1986 (IRC) by redesignating section 5148 as section 5149 and adding a new section 5148 (26 U.S.C. 5148) entitled “Suspension of Occupational Tax.” New section 5148 provides that, during the 3-year period from July 1, 2005, through June 30, 2008, the rate of special (occupational) tax imposed under sections 5081, 5091, 5111, 5121, and 5131 will be zero.

The effect of new section 5148 is that the following occupations are not subject to payment of special (occupational) tax during the suspension period: manufacturer of nonbeverage products, proprietor of distilled spirits plant, proprietor of alcohol fuel plant, proprietor of bonded wine cellar, proprietor of bonded wine warehouse, proprietor of taxpaid wine bottling house, brewer, wholesale dealer in liquors (distilled spirits, wines, and beer), wholesale dealer in beer, retail dealer in liquors (distilled spirits, wines, and beer), and retail dealer in beer. On the other hand, the following occupations, which are not covered by the IRC sections listed in new section 5148, are not affected by the suspension and remain subject to the special (occupational) tax during the suspension period: User of or dealer in specially denatured alcohol, user of tax-free alcohol, manufacturer of tobacco products (that is, cigars, cigarettes, smokeless tobacco, pipe tobacco, and roll-your-own tobacco), manufacturer of cigarette papers or tubes, and export warehouse proprietor (for the export of tobacco products, cigarette papers, or cigarette tubes).

Although the tax rate for the occupations affected by the suspension will be zero during the suspension period, new section 5148 further provides that persons engaging in those occupations must still register annually and comply with applicable recordkeeping requirements. Finally, section 246 of the Act amended section 5117 of the IRC (26 U.S.C. 5117) by adding a new subsection (d) to provide that during the suspension period a dealer may purchase distilled spirits, for resale, only from persons required to keep records as a wholesale liquor dealer, except as otherwise specifically provided by law or regulations. The Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible for the administration of the IRC provisions relating to special (occupational) tax.

The temporary regulations published elsewhere in this issue of the Federal Register involve amendments to parts 17, 19, 24, 25, 26, 27, and 31 of the TTB regulations (27 CFR parts 17, 19, 24, 25, 26, 27, and 31). The text of the temporary regulations serves as the text of these proposed regulations. The preamble to the temporary regulations explains the proposed regulations.

Public Participation

Comments Sought

We request comments from everyone interested. All comments must reference Notice No. 52 and must include your name and mailing address. They must be legible and written in language acceptable for public disclosure. Although we do not acknowledge receipt, we will consider your comments if we receive them on or before the closing date. We regard all comments as originals.

Confidentiality

All comments are part of the public record and subject to disclosure. Do not enclose any material in your comments that you consider confidential or inappropriate for public disclosure.

Submitting Comments

You may submit comments in any of five ways:

• Mail: You may send written comments to TTB at the address listed in the ADDRESSES section of this document.
• Facsimile: You may submit comments by facsimile transmission to 202-927-8525. Faxed comments must:

(1) Be on 8.5- by 11-inch paper;

(2) Contain a legible, written signature; and

(3) Be no more than five pages long. This limitation ensures electronic access to our equipment. We will not accept faxed comments that exceed five pages.

• E-mail: You may e-mail comments to [e-mail]. Comments transmitted by electronic mail must:

(1) Contain your e-mail address;

(2) Reference Notice No. 52 on the subject line; and

(3) Be legible when printed on 8.5- by 11-inch paper.

• Online form: We provide a comment form with the online copy of this document on our Web site at http://www.ttb.gov/​alcohol/​rules/​index.htm. Select the “Send comments via e-mail” link under Notice No. 52.
• Federal e-Rulemaking Portal: To submit comments to us via the Federal e-rulemaking portal, visit http://www.regulations.gov and follow the instructions for submitting comments.

You may also write to the Administrator before the comment closing date to ask for a public hearing. The Administrator reserves the right to determine, in light of all circumstances, whether to hold a public hearing.

Public Disclosure

You may view copies of the temporary rule, this document, and any comments we receive by appointment at the TTB Library at 1310 G Street, NW., Washington, DC 20220. You may also obtain copies at 20 cents per 8.5- x 11-inch page. Contact our librarian at the above address or telephone [phone] to schedule an appointment or to request copies of comments.

For your convenience, we will post the temporary rule, this document, and any comments we receive on the TTB Web site. We may omit voluminous attachments or material that we consider unsuitable for posting. In all cases, the full comment will be available in the TTB Library. To access the online copy of this document and the submitted comments, visit http://www.ttb.gov/​alcohol/​rules/​index.htm. Select the “View Comments” link under this document's number and title to view the posted comments.

Regulatory Flexibility Act

Although we are issuing this notice of proposed rulemaking, it has been determined that it is not subject to the provisions of 5 U.S.C. 553(b). Because this proposed rule contains no new collections of information, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply.

Executive Order 12866

We have determined that this notice of proposed rulemaking is not a significant regulatory action as defined by Executive Order 12866. Therefore, a regulatory assessment is not required.

Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The collections of information contained in the regulations amended by this temporary rule have been previously reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3504(h)) under control numbers 1513-0005, 1513-0088, 1513-0112, and 1513-0113. There is no new or revised collection of information imposed by this proposed rule, and there is no change in the reporting or recordkeeping burden. Thus, no new OMB control numbers will be obtained.

Drafting Information

The principal author of this document is Steve Simon, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau. However, other personnel participated in its development.

List of Subjects

27 CFR Part 17

• Administrative practice and procedure
• Claims
• Cosmetics
• Customs duties and inspection
• Drugs
• Excise taxes
• Exports
• Imports
• Liquors
• Packaging and containers
• Puerto Rico
• Reporting and recordkeeping requirements
• Spices and flavorings
• Surety bonds
• Virgin Islands

27 CFR Part 19

• Administrative practice and procedure
• Alcohol and alcoholic beverages
• Authority delegations (Government agencies)
• Chemicals
• Claims
• Customs duties and inspection
• Electronic fund 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
• Claims
• Electronic funds transfers
• Excise taxes
• Exports
• Food

27 CFR Part 25

• Beer
• Claims
• Electronic fund transfers
• Excise taxes
• Exports
• Labeling
• Liquors
• Packaging and containers
• Reporting and recordkeeping requirements
• Research
• Surety bonds

27 CFR Part 26

• Alcohol and alcoholic beverages
• Caribbean Basin initiative
• Claims
• Customs duties and inspection
• Electronic funds transfers
• Excise taxes
• Packaging and containers
• Puerto Rico
• Reporting and recordkeeping requirements
• Surety bonds
• Virgin Islands
• Warehouses

27 CFR Part 27

• Alcohol and alcoholic beverages
• Beer
• Cosmetics
• Customs duties and inspection
• Electronic funds transfers
• Excise taxes
• Imports
• Labeling
• Liquors
• Packaging and containers
• Reporting and recordkeeping requirements
• Wine

27 CFR Part 31

• Alcohol and alcoholic beverages
• Beer
• Claims
• Excise taxes
• Exports
• Labeling
• Liquors
• Packaging and containers
• Reporting and recordkeeping requirements
• Wine

Proposed Amendments to the Regulations

For the reasons discussed in the preamble, TTB proposes to amend 27 CFR parts 17, 19, 24, 25, 26, 27, and 31 as follows:

PART 17—DRAWBACK ON TAXPAID DISTILLED SPIRITS USED IN MANUFACTURING NONBEVERAGE PRODUCTS

1. The authority citation for part 17 is revised to read as follows:

Authority: 26 U.S.C. 5010, 5131-5134, 5143, 5146, 5148, 5206, 5273, 6011, 6065, 6091, 6109, 6151, 6402, 6511, 7011, 7213, 7652, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.

2. The proposed amendatory instructions and the proposed amended regulatory text for part 17 are the same as the amendatory instructions and the amended regulatory text set forth in the temporary rule on this subject published in the Rules and Regulations section of this issue of the Federal Register.

PART 19—DISTILLED SPIRITS PLANTS

3. The authority citation for part 19 is revised 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, 5148, 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.

4. The proposed amendatory instructions and the proposed amended regulatory text for part 19 are the same as the amendatory instructions and the amended regulatory text set forth in the temporary rule on this subject published in the Rules and Regulations section of this issue of the Federal Register.

PART 24—WINE

5. The authority citation for part 24 is revised 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, 5148, 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.

6. The proposed amendatory instructions and the proposed amended regulatory text for part 24 are the same as the amendatory instructions and the amended regulatory text set forth in the temporary rule on this subject published in the Rules and Regulations section of this issue of the Federal Register.

PART 25—BEER

7. The authority citation for part 25 is revised to read as follows:

Authority: 19 U.S.C. 81c; 26 U.S.C. 5002, 5051-5054, 5056, 5061, 5091, 5111, 5113, 5142, 5143, 5146, 5148, 5222, 5401-5403, 5411-5417, 5551, 5552, 5555, 5556, 5671, 5673, 5684, 6011, 6061, 6065, 6091, 6109, 6151, 6301, 6302, 6311, 6313, 6402, 6651, 6656, 6676, 6806, 7011, 7342, 7606, 7805; 31 U.S.C. 9301, 9303-9308.

8. The proposed amendatory instructions and the proposed amended regulatory text for part 25 are the same as the amendatory instructions and the amended regulatory text set forth in the temporary rule on this subject published in the Rules and Regulations section of this issue of the Federal Register.

PART 26—LIQUORS AND ARTICLES FROM PUERTO RICO AND THE VIRGIN ISLANDS

9. The authority citation for part 26 is revised 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, 5148, 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.

10. The proposed amendatory instructions and the proposed amended regulatory text for part 26 are the same as the amendatory instructions and the amended regulatory text set forth in the temporary rule on this subject published in the Rules and Regulations section of this issue of the Federal Register.

PART 27—IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEER

11. The authority citation for part 27 is revised 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, 5148, 5111, 5112, 5114, 5121, 5122, 5124, 5201, 5205, 5207, 5232, 5273, 5301, 5313, 5555, 6302, 7805.

12. The proposed amendatory instructions and the proposed amended regulatory text for part 27 are the same as the amendatory instructions and the amended regulatory text set forth in the temporary rule on this subject published in the Rules and Regulations section of this issue of the Federal Register.

PART 31—ALCOHOL BEVERAGE DEALERS

13. The authority citation for part 31 is revised to read as follows:

Authority: 26 U.S.C. 5001, 5002, 5111-5114, 5116, 5117, 5121-5124, 5142, 5143, 5145, 5146, 5148, 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.

14. The proposed amendatory instructions and the proposed amended regulatory text for part 31 are the same as the amendatory instructions and the amended regulatory text set forth in the temporary rule on this subject published in the Rules and Regulations section of this issue of the Federal Register.

Signed: July 6, 2005.

John J. Manfreda,

Administrator.

Approved: September 14, 2005.

Timothy E. Skud,

Deputy Assistant Secretary, (Tax, Trade, and Tariff Policy).