[Federal Register Volume 61, Number 155 (Friday, August 9, 1996)]
[Rules and Regulations]
[Pages 41500-41505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20327]
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DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and Firearms
27 CFR Parts 252 and 290
[Notice No. 835; Re: Notice Numbers 752, 754, 761 and 764]
RIN 1512-AA98 and 1512-AB03
Exportation of Alcoholic Beverages, Denatured Alcohol, Tobacco
Products and Cigarette Papers and Tubes (95R-046P)
AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of
the Treasury.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: As part of a regulatory reform initiative, the Bureau of
Alcohol, Tobacco and Firearms (ATF) is proposing to revise and recodify
the regulations covering exportation of alcoholic beverages, beer
concentrate, specially denatured alcohol, tobacco products, and
cigarette papers and tubes. Proposed changes include: setting standards
for satisfactory evidence of exportation, streamlining export
procedures, and reducing the paperwork burden on exporters.
DATES: Written comments must be received by October 8, 1996.
ADDRESSES: Send written comments to: Chief, Wine, Beer and Spirits
Regulations Branch, Bureau of Alcohol, Tobacco and Firearms, P.O. Box
50221, Washington, DC 20091-0221, Attn: Notice No. 835. Copies of
written comments received in response to this advance notice of
proposed rulemaking will be available for public inspection during
normal business hours at: ATF Reference Library, Office of Public
Affairs and Disclosure, Room 6300, 650 Massachusetts Avenue, NW.,
Washington, DC 20226.
FOR FURTHER INFORMATION CONTACT: Marjorie D. Ruhf, Wine, Beer and
Spirits Regulations Branch, Bureau of Alcohol, Tobacco and Firearms,
650 Massachusetts Avenue, NW., Washington, DC 20226 (202-927-8230).
SUPPLEMENTARY INFORMATION:
Background
On February 21, 1995, President Clinton announced a regulatory
reform initiative. As part of this initiative, each Federal agency was
instructed to conduct a page by page review of all agency regulations
to identify those which are obsolete or burdensome and those whose
goals could be better achieved through the private sector, self-
regulation or state and local governments. In cases where the agency's
review disclosed regulations which should be revised or eliminated, the
agency would propose administrative changes to its regulations. In
addition, on April 13, 1995, the Bureau published Notice 809 (60 FR
18783) requesting comments from the public regarding which ATF
regulations could be improved or eliminated. No specific comments were
received from the public concerning 27 CFR parts 252 and 290, but the
Bureau wishes to substantially revise these parts of the regulations
for reasons discussed later in the supplementary information.
Statutory Basis for Regulations
Since ATF wishes to open all areas of the export regulations for
comment at this time, we will begin with a brief summary of the
underlying statutes. In particular, we note there are some areas where
the statutory treatment of different commodities varies widely. Any
future regulations will reflect these statutory differences.
Distilled spirits may be withdrawn without payment of tax for
exportation (after making such application, filing such bonds, and
complying with such other requirements as may by regulations be
prescribed), for transfer to foreign-trade zones, for use of certain
vessels and aircraft, or for transfer to a customs bonded warehouse for
exportation, storage pending exportation, or withdrawal and use by
eligible diplomatic personnel. See 26 U.S.C. 5175, 5214 and 5066.
Wine may be withdrawn from bonded premises without payment of tax
for export by the proprietor or by any authorized exporter (under such
regulations and bonds as the Secretary may deem necessary); for
transfer to any foreign-trade zone; for use of certain vessels and
aircraft as authorized by law; or for transfer to any customs bonded
warehouse. Wine entered into customs bonded warehouses may be withdrawn
free of tax by eligible diplomatic personnel. See 26 U.S.C. 5362.
Beer may be removed from brewery premises without payment of tax
for exportation, use as supplies for certain vessels and aircraft, or
deposit in a foreign trade zone for exportation or storage pending
exportation (in such containers and under such regulations, and on the
giving of such notices, entries, and bonds and other security, as the
Secretary may by regulations prescribe). The brewer may also withdraw
beer concentrate without payment of tax for exportation or for deposit
in a foreign trade zone. See 19 U.S. C. 81c, 26 U.S.C. 5053.
Distilled spirits may be withdrawn free of tax for exportation
after denaturation in the manner prescribed by law. See 26 U.S.C. 5214.
When taxpaid distilled spirits which have been manufactured,
produced, bottled, or packaged in the United States and marked
especially for export are exported, laden for use as supplies on
qualified vessels or aircraft, deposited in a foreign trade zone for
exportation or storage pending exportation, or deposited in a customs
bonded warehouse for tax free withdrawal and use by accredited foreign
diplomatic personnel, the bottler or packager of the spirits may claim
drawback of the taxes paid. The Secretary is authorized to prescribe
regulations governing the determination and payment or crediting of
drawback, including the requirements of such notices, bonds, bills of
lading, and other evidence indicating payment and determination of tax
and exportation as are deemed necessary. See 19 U.S.C. 81c and 1309, 26
U.S.C. 5062, 5066.
When taxpaid wine which has been manufactured, produced, bottled,
or packaged in the United States is exported, laden for use as supplies
on qualified vessels or aircraft, or deposited in a foreign trade zone
for exportation or storage pending exportation, drawback of tax may be
claimed by the proprietor of the bonded wine cellar, taxpaid wine
bottling house, or wholesale liquor dealer who withdrew the wine. The
Secretary is authorized to prescribe regulations governing the
determination and payment or crediting of drawback, including the
requirements of such notices, bonds, bills of lading, and other
evidence indicating payment and determination of tax and exportation as
are deemed necessary. See 19 U.S.C. 81c and 1309, 26 U.S.C. 5062, 5066.
On the exportation of beer which has been brewed or produced in the
United States, the brewer thereof shall be allowed a drawback equal in
amount to the tax found to have been paid on such beer, to be paid on
submission of such
[[Page 41501]]
evidence, records and certificates indicating exportation, as the
Secretary may by regulations prescribe. Exportation includes delivery
for use as supplies on certain vessels or aircraft, or deposit in a
foreign trade zone for exportation or for storage pending exportation.
See 19 U.S.C. 81c and 1309, 26 U.S.C. 5055.
A manufacturer or export warehouse proprietor may remove tobacco
products and cigarette papers and tubes, without payment of tax, for
shipment to a foreign country, Puerto Rico, the Virgin Islands, or a
possession of the United States, or for consumption beyond the
jurisdiction of the internal revenue laws of the United States. See 26
U.S.C. 5704(b).
Drawback of tax paid on tobacco products and cigarette papers and
tubes which have been exported will be allowed in accordance with the
regulations, upon the filing of a bond. See 26 U.S.C. 5706.
Rulemaking History
With minor exceptions, the export regulations for alcoholic
beverages and tobacco products date from 1960 and 1966, respectively.
The Internal Revenue Service, which administered these regulations at
the time, issued Revenue Rulings 71-208 (1971-1 C.B. 480) and 72-300
(1972-1 C.B. 425) to advise exporters that it would consider
applications for permission to submit alternative forms of
documentation of export. By 1982, ATF identified the need for a major
revision of the export regulations and set a policy of allowing such
variances as were needed from the existing regulations until the
revision could be accomplished. Numerous variances and pilot projects
were approved under this policy, at both the district and national
level. Revisions to the regulations were discussed and reviewed, but no
Federal Register documents were published until 1992.
On September 8, 1992, ATF published advance notices of proposed
rulemaking to solicit comments from interested persons on revision and
recodification of Part 252, Exportation of liquors (Notice No. 752, 57
FR 40887) and Part 290, Exportation of tobacco products and cigarette
papers and tubes, without payment of tax, or with drawback of tax
(Notice No. 754, 57 FR 40889). The comment periods, both originally
scheduled to close October 8, 1992, were subsequently extended until
December 7, 1992, for liquors and March 9, 1993, for tobacco products
and cigarette papers and tubes.
First, the advance notices outlined the underlying statutory
requirements for exportation of the various commodities they covered.
Second, the advance notices suggested liberalizing export documentation
rules. Proposals included:
--Using a continuing application and a record of individual withdrawals
to be maintained by the proprietor instead of applications or notices
covering individual export transactions;
--Having the proprietor submit a monthly summary of export transactions
with its monthly operation report instead of sending advance copies of
the individual transaction forms;
--Using commercial records in place of ATF forms;
--Accepting certain commercial transaction records in place of Customs
certification as evidence of exportation; and
--Allowing exporters to maintain evidence of exportation at their
premises rather than sending it to ATF.
The two notices also made suggestions specific to individual
commodities, such as permitting dealers in specially denatured spirits
to withdraw such spirits free of tax for export and allowing greater
flexibility in the export marks placed on tobacco products.
Finally, the two notices solicited general comments on ways to
reduce paperwork, simplify procedures, and eliminate unnecessary
regulations in this area while continuing to maintain adequate
safeguards to the revenue.
Public Comments on Previous ANPRMs
Notice No. 752 concerning liquors received seven comments from
alcoholic beverage industry members or their representatives. All
comments were generally supportive of the goal of liberalizing export
procedures as stated in the notices. However, the suggestion that a
monthly summary of exports be submitted to ATF was opposed by two
commenters. The Brandy Association of America and the National
Association of Beverage Importers, Inc. both commented that this
proposal was unnecessary and duplicative. Glen Ellen Winery supported
ATF's suggestion that proprietors maintain evidence of exportation at
their premises instead of sending such evidence to ATF. They further
noted that proprietors ``found to have a system lacking in controls
could be required to continue submitting documents each month.'' We
will discuss these issues in greater detail in the sections of this
document on monthly summaries of export removals and allowing
proprietors to maintain evidence of exportation at their own premises.
On another subject, Miller Brewing Company suggested allowing
brewers to take credit on their tax returns instead of waiting for ATF
to issue a refund check for drawback of tax on exported beer. This is
not something ATF can change through rulemaking, since the underlying
statute, 26 U.S.C. 5055, which authorizes payment of export drawback on
beer, does not authorize credit. Section 5062(b), which covers drawback
for wine and spirits, authorizes either credit or payment. Under
current law, ATF believes it would be possible to credit proceeds of an
allowed claim, pursuant to authorization of the claimant, against tax
owed by such claimant. We will propose a regulatory procedure to comply
with requests for credit of the proceeds of an allowed claim from
brewers. Finally, the alcoholic beverage industry commenters were
unanimous and enthusiastic in their endorsement of ATF's proposal to
substitute commercial records for ATF export forms.
Notice No. 754 on tobacco products received two comments from
tobacco product manufacturers. Both Brown & Williamson Tobacco
Corporation and R.J. Reynolds Tobacco Company supported continued use
of ATF Form 2149/2150, saying it provided the best method of
documenting export removals for both ATF and industry. R.J. Reynolds
went on to request clarification of export marking requirements and
procedures for shipments of domestic and export tobacco products to
Class 9 Customs Bonded Warehouses.
Diversion Problems
As ATF noted in Industry Circular 94-1, dated April 14, 1994, and
Industry Circular 95-1, dated January 19, 1995, we have encountered a
number of situations in which distilled spirits were withdrawn from
bond for exportation overseas, but were smuggled into Canada or
remained illegally in the United States. Although these circulars dealt
specifically with spirits, other commodities regulated by ATF are also
being found outside of legitimate export channels. As a result of these
findings, ATF is increasing its investigations of exports, and taking
appropriate action where it finds goods have been diverted. Industry
Circular 95-1 points out the tax and permit consequences of improperly
documenting exports, as well as the potential civil and criminal
penalties for violations of Titles 18 and 26 of the U.S. Code.
[[Page 41502]]
Summary of Export Variances and Pilot Programs
ATF has approved numerous individual variances and pilot programs
for exporters of alcoholic beverages and tobacco products or cigarette
papers and tubes. Recently, the Bureau has begun evaluating the
component parts of these variances and pilot programs to determine
which have been successful for both exporters and the Bureau and which
have not. The variances and pilot programs that have been approved by
ATF are summarized below. We are requesting comments on whether these
procedures should be incorporated into the regulations in the manner
described below or with some modifications. While some of the
procedures dealt with alcoholic beverages and others with tobacco
products, we are interested in comments on whether the procedures
should apply to only some of these taxable commodities or should apply
equally to alcoholic beverages, denatured alcohol, tobacco products or
cigarette papers and tubes destined for exportation.
Substituting Commercial Documents for ATF Forms
Existing regulations require exporters to use ATF forms to record
shipments destined for export and obtain certification of export. Under
approved variances, some exporters substitute commercial documents
containing required minimum information for the ATF forms. This
variance has been generally successful. Exporters using this variance
have stamped certificate of receipt information on an empty area of the
commercial document and obtained appropriate certifications. ATF users
(inspectors, auditors, and specialists) found that the commercial
records met their needs, except that with a variety of different
documents covering different types of shipments, the benefit of
serially numbered export documents was no longer available. Since
invoices and bills of lading must be generated to cover export
shipments anyway, this variance has reduced the paperwork burden on
exporters. ATF is considering eliminating the ATF export forms in favor
of commercial transaction forms, with minimum information requirements
to be set forth in regulations. However, the two commenters on the
tobacco export proposals expressed a preference for continued
availability of ATF forms. We would like details of instances where ATF
forms work better than commercial documents, so that we may determine
if they should be retained for certain types of transactions.
Notice and Application Requirements
Under existing regulations, people who export alcoholic beverages,
tobacco products, or cigarette papers and tubes without payment of tax
file an advance copy (or copies) of the appropriate ATF form as either
a notice or an application. Proprietors of DSPs, wineries, breweries
and export warehouses, and tobacco product and cigarette paper and tube
manufacturers file a notice. Other exporters file an application and a
bond which must be approved before the export shipment can be made.
Some proprietors who are required by regulation to file a notice have
requested and received permission to maintain records of pending
exports at their premises, either on the ATF form or on an approved
substitute document. The terms and conditions of the individual
variances differ, but such variances are granted only to proprietors
with maximum bond coverage and good compliance history. Proprietors are
asked to submit a monthly summary of export shipments to ATF in lieu of
filing individual notices. These variances have generally worked well,
and most ATF users of this information feel the notice requirement can
be eliminated without jeopardy to the revenue. Exporters appear to
prefer maintaining the records of pending export shipments at their
premises. ATF is considering a proposal to eliminate the notice
requirement for proprietors with maximum bond coverage. The application
requirement would be retained, as would the notice requirement for
proprietors with less than maximum bond coverage. Comments are
solicited on this proposal.
Monthly Summaries of Export Removals
As noted above, two commenters on Notice No. 752 specifically
stated they believed the proposed monthly summary of export shipments
was an unnecessary burden on the industry. We do not agree such a
summary is an added burden, since the exporter must summarize and total
export shipments to arrive at the export figure shown in the monthly
report of operations. We simply propose that a copy of this workpaper
be filed with the report. Further, in ATF's experience, this summary
provides needed structure in the absence of notices and serially
numbered ATF export forms. Despite the commenters' claim that the
information is available elsewhere in the proprietor's records, we
believe the preparation of a summary gives both ATF and the exporter a
basis to determine if all exports are accounted for. If ATF proposes
amending the regulations to eliminate the notice requirement, allow use
of commercial documents as evidence of export, and allow proprietors to
maintain such evidence at their premises instead of mailing it to ATF,
we will also propose requiring submission of some sort of summary of
pending export shipments. Additionally, now that certain small wineries
are allowed to file annual operational reports and certain small
brewers are allowed to file quarterly operational reports, we must
consider whether proprietors who file less frequent operational reports
should also file less frequent summaries. Commenters who disagree with
the summary proposal are requested to provide specific alternative
suggestions for insuring that all exports are accounted for.
Allowing Proprietors To Maintain Evidence of Exportation at Their Own
Premises
Under variances approved by ATF, some proprietors are maintaining
evidence of exportation at their premises instead of sending it to ATF
Technical Services in support of export drawback claims or in order to
be relieved of liability for shipments withdrawn for export without
payment of tax. This variance has presented more administrative
problems than any other, but we believe this may be due to an
incomplete understanding of the exporter's responsibility under such
variances. When the export evidence is filed with ATF, ATF examines the
evidence, notes any discrepancies, and follows up with the exporter.
Post audits have revealed exporters sometimes rely on evidence which is
not approved by ATF, and some proprietors who export without payment of
tax do not follow up appropriately if they do not receive evidence of
exportation. Even in cases where exportation is ultimately documented,
ATF reviewers encounter substantial administrative difficulty in this
area.
When ATF examines documentation we receive on products withdrawn
without payment of tax for exportation, ATF follows up with the
exporter in cases where the evidence of exportation is not received
within 90 days of withdrawal for exportation. The exporter is usually
given another 45 days to obtain evidence of exportation or make a
voluntary payment of tax. After that, if no evidence of exportation is
received, ATF will enter an assessment for the tax due. Export
proprietors operating under variances
[[Page 41503]]
which allow maintenance of export documentation at their premises often
do not realize they have the same responsibility to voluntarily pay
taxes if evidence of exportation was not received in a reasonable
amount of time.
If we are to consider allowing proprietors to maintain their own
export documentation at their premises as part of this rulemaking, we
believe it will be necessary to include safeguards, such as very
specific time limits and instructions as to when tax becomes due on
undocumented exports. In addition, if such a liberalization is
proposed, we will also propose the delegation of authority to the
District Directors and Chiefs, Technical Services to require filing of
this documentation with ATF in cases where it is deemed necessary. One
further safeguard under consideration is a requirement that exporters
submit a summary of shipments withdrawn without payment of tax for
export during a given period with their operational reports for that
period (as discussed above) and, 90 days later, submit a second copy of
the summary showing by a check mark or other notation that each of the
summarized shipments has been documented. For those exports which are
not documented at the time, the 45-day notice and assessment process
would begin. We will also propose adding procedures for claiming refund
of any taxes paid in these circumstances (subject to the time limits in
26 U.S.C.6511) if exportation is subsequently documented. Comments on
these proposals and any alternative suggestions are solicited.
Alternate Evidence of Export
ATF has had mixed results from allowing alternatives to Customs
certification as evidence of export. We will discuss some of the major
categories below, and then give our proposals.
Export bills of lading signed by a representative of the export
carrier or certificates of landing signed by a representative of the
destination country have proven to be generally reliable, but there
have been exceptions which raise questions about the reliability of any
export documentation. One difficulty with these alternate
certifications is that there is no standardized way to verify that the
person signing is employed by and authorized to sign for the carrier or
the receiving country. We request input from industry members on
commercial safeguards available to assure the validity of such
receipts. ATF may be able to adapt any such safeguards for use in
verifying export certifications.
In some cases we approved variances allowing evidence of payment by
the foreign customer to be used as evidence of exportation, but we
found that this variance was not always successful. Some foreign
customers paid a foreign subsidiary of the U.S. exporter, and the
financial record offered as evidence of export was an internal company
document or, conversely, the U.S. exporter was paid by a U.S.
subsidiary of the foreign customer, or even by an unrelated broker
located in the U.S. The anticipated safeguard of a foreign source of
funds unrelated to the exporter was not present, so these forms of
documentation, by themselves, have not been adequate. If we propose to
accept evidence of payment at all, we will propose limitations on the
types of transactions where it can be used. We solicit comments on this
approach.
In some post-audits, exporters presented facsimile transmitted
copies of signed export bills of lading or copies of unsigned computer
printouts of bills of lading from shipping companies as evidence of
exportation where the original document was unavailable. We are
considering what circumstances would warrant the use of such forms, and
what evidence might be available to assure that these facsimile records
represent true copies of the original documents. ATF must be able to
rely on any documents accepted. We solicit comments on both the need
for facsimile copies and computer generated forms to document
exportation, and any appropriate safeguards.
Proposals on Export Documentation
As discussed above, we have found problems with some of the forms
of export documentation which we allowed under variances. As we analyze
the reports of investigation, we have tried to define the features or
characteristics we want to see in future export documentation. Here is
a list of proposed standards:
--The document should clearly relate to the goods in question;
--Certification should come from someone other than the exporter or its
affiliate; and
--Certification should come from someone with firsthand knowledge that
the goods were exported.
Exporters have offered such items as the Commerce Department's
Shipper's Export Declaration or inland bills of lading with export
shipping instructions attached, both of which are prepared by the
exporter alone, or a freight bill from the export carrier, which may
not identify the merchandise well enough for our purposes, or a
broker's certification, which may not be based on firsthand knowledge.
In addition to ATF's revenue protection interest in assuring these
goods were actually exported, exporters have their own commercial
reasons for wanting reliable shipping documents. We request examples or
descriptions of documents or records generated as part of export
transactions which may meet the standards proposed above or otherwise
provide assurance that goods destined for export did, in fact, leave
the country. Finally, we solicit comments on whether exporters would
prefer a list of specific documents which would be acceptable (with the
option of applying for permission to use other specific documents), or
a more general statement of standards which must be met by any document
used as evidence of export.
Export Transportation, Consignment and Ownership
Another important safeguard built into the requirement that ATF
receive and review copies of all export transaction forms was our
ability to screen export shipments to insure that the export
transaction warranted such status. As we review records retained at
their premises by exporters operating under a variance, we find that
there are misunderstandings in two areas: eligibility for exportation
without payment of tax, and need for permits and special taxes on the
part of some purchasers. We believe that clarification of the
regulations in these areas will improve compliance.
Eligibility for Export Without Payment of Tax
Some exporters were found to be making withdrawals of merchandise
without payment of tax for export, and then failing to transport the
merchandise directly to the foreign destination or place it under
Customs supervision. In addition, ATF has received applications for
permission to store, repack or consolidate shipments of products
withdrawn without payment of tax for export while such products were in
transit to the point of export. ATF's main concern in reviewing these
arrangements is that the locations where the storage, repacking or
consolidation occur are not covered by an ATF bond, and are not under
the supervision of the Customs Service. ATF is concerned that these
arrangements do not afford adequate protection to the revenue and they
present administrative problems, in that ATF would have to regulate
many temporary storage facilities.
[[Page 41504]]
Under the current law and regulations, the storage, repacking or
consolidation of taxable products withdrawn for exportation without
payment of tax can only occur on ATF bonded premises, in a customs
bonded warehouse, in a foreign trade zone, or at the port of export
under the supervision of the District Director of the Customs Service.
However, there is no such restriction on storage, repacking or
consolidation of taxpaid export shipments in transit.
If commenters wish to request that ATF reconsider its position on
this matter, we request suggestions as to appropriate safeguards to
assure protection to the revenue without placing undue restrictions on
persons transporting taxable merchandise in bond. Should there be
limitations on allowable location, responsible persons, or time spent
in storage? Are records generated during repacking or consolidation
which would permit positive identification of the shipment and a
``paper trail'' for both commercial and regulatory purposes? What sort
of permit or bonding requirement should be imposed on facilities where
untaxpaid merchandise is stored, repacked or consolidated while in
transit?
Wholesaler's Basic Permits and Special Tax Requirements for
Purchasers
A second issue noted during ATF review of documentation retained at
exporters' premises is the need for wholesalers' permits and payment of
special (occupational) tax when someone other than the producer exports
alcoholic beverages. Revenue Ruling 60-299 (1960-2 C.B. 619) stated:
A ship chandler who engages in the domestic purchase of
distilled spirits, wine or beer for sale (even though he sells them
exclusively to vessels engaged in foreign trade) for use as ships
supplies must obtain a basic permit as a wholesaler. * * *
A ship chandler who withdraws alcoholic beverages for sale to a
ship which is engaged in foreign trade and which uses them as ships'
supplies solely outside the jurisdictional limits of the United
States, is not subject to special tax as a wholesale dealer since
such vessel is not considered a dealer within the meaning of section
5112(a) of the Code, and the sale of spirits to such vessel is not a
sale to another dealer as provided in section 5112(b) and (c) of the
Code. Such a ship chandler is, however, subject to the special tax
as a retail dealer.
ATF believes information on this requirement should be incorporated
into the revised regulations.
Other Changes Under Consideration
ATF is considering allowing exporters to claim drawback on ATF Form
5620.8 (2635), a general-purpose claim form, using commercial documents
to show exportation instead of the ATF export drawback claim forms.
There are several variances in place to permit exporters to maintain
full evidence of exportation at their premises and submit a summary of
the export shipments covered by a given claim. ATF is evaluating the
success of these variances from its own point of view, and solicits
industry comments on this subject. As with evidence of exports without
payment of tax, if ATF decides to propose allowing exporters to
maintain export documentation at their premises, we will propose
authority for the District Director and Chief, Technical Services to
require submission of the forms where it is deemed necessary. Where the
export drawback claimant is also a taxpayer, we are considering
allowing the claimant the option of requesting that the proceeds of an
approved claim be credited against tax owed by such claimant.
Under existing regulations, all wine exporters must prepare two
documents, an export form, and a certificate of tax determination, Form
2605. ATF plans to eliminate the certificate requirement for exports by
the bottler who makes the tax determination, and only require such a
certificate when the exporter is not the bottler.
Under current alcohol and tobacco export regulations and approved
variances, the marks showing that goods are destined for export are
sometimes required and sometimes not. The only statutory requirement
for export marks applies to taxpaid distilled spirits exported subject
to drawback, but many sections of the regulations require export marks.
The marking requirements have historically been viewed as a useful
enforcement tool. For instance, a consumer may report finding products
marked for export on domestic retail shelves. Such ``leads'' may result
in the government's apprehension of a smuggler or enhance a producer's
ability to identify an individual who is selling returned goods which
should have been destroyed for quality control reasons. ATF is
considering whether export marks should be mandatory in all situations
and whether any product so marked that is found in domestic commerce
should be subject to forfeiture as property used in violation of the
internal revenue laws. Accordingly, we solicit comments from interested
persons concerning the advantages or disadvantages of export markings.
In ATF's review of its own regulations, we noted that there was
considerable duplication of regulatory language because there are
separate parts of the regulations which cover exportation of
``liquors'' (alcoholic beverages and denatured alcohol) and tobacco
products and cigarette papers and tubes. Since the concepts of tax
liability, bond coverage and need for evidence of exportation are the
same for all these commodities, and some exporters handle both
alcoholic beverages and tobacco products, we solicit comments on the
idea of merging the export provisions for alcoholic beverages and
denatured alcohol, currently in part 252, and those for tobacco
products and cigarette papers and tubes, currently in part 290, into a
single part. The export warehouse qualification and operation
requirements, which are also in part 290, may then be retained as a
separate part or merged into part 270, Manufacture of Tobacco Products,
since the qualification, bonding and operational requirements for these
activities are closely related and derived from the same or similar
sections of the law. Interested persons are invited to comment on these
alternatives.
Verification of Evidence Presented
ATF is developing methods of verifying the accuracy of any piece of
export documentation presented in support of an export without payment
of tax or an export drawback claim by confirming that such shipment was
received through legitimate channels at the stated destination. Such
confirmation will be done by contacting appropriate officials at the
stated destination, either under a bilateral agreement with the
destination country under 26 U.S.C. 6103(k)(4) or pursuant to new
regulations which ATF is considering adding to the export regulations
under the provisions of 26 U.S.C. 6103(k)(6). This section allows
disclosure of tax information for investigative purposes in such
situations and under such conditions as the Secretary may prescribe by
regulations.
Administrative Provisions
The tobacco export regulations at 27 CFR part 290 clearly noted
ATF's right of entry and examination and assessment authority, but the
liquor export regulations in 27 CFR part 252 do not. We plan to propose
such provisions as a part of the revised regulations, along with a
reference to the criminal penalties imposed by Titles 18 and 26 of the
U.S. Code for falsification or fraudulent execution of export
documentation.
[[Page 41505]]
Transition to New Rules
When new export rules are implemented, they will supersede existing
regulations and all variances under those regulations. Since there are
so many different arrangements in place, we understand that a period of
transition will be needed. We believe that allowing two months from
publication of the final rule to its effective date should provide
adequate time for exporters to change to the new procedures. We solicit
comments on this subject.
Public Participation
ATF requests comments from all interested persons on the proposals
presented in this advance notice. We particularly request statements
from exporters on the significance and reliability of available
commercial documentation. We also solicit comments on any additional
issues related to exportation of alcoholic beverages, denatured
alcohol, tobacco products, or paper tubes.
Comments received on or before the closing date will be carefully
considered. Comments received after the closing date will be given the
same consideration if it is practical to do so, but assurance of
consideration cannot be given except as to comments received on or
before the closing date. ATF will not recognize any material or
comments as confidential. All comments submitted in response to this
notice will be available for public inspection. Any material that the
commenter considers confidential or inappropriate for disclosure to the
public should not be included in the comment. The name of the person
submitting the comment is not exempt from disclosure.
Executive Order 12866
It has been determined that this document is not a major regulation
as defined in E.O. 12866; therefore, a regulatory impact analysis is
not required. The proposals discussed in this advance notice of
proposed rulemaking, if adopted in regulations, will not have an annual
effect on the economy of $100 million or more, will not result in a
major increase in costs or prices for consumers, individual industries,
Federal, State, or local government agencies or geographical regions,
and will not have significant adverse effects on competition,
employment, investment, productivity, innovation, or on the ability of
the United States-based enterprises to compete with foreign-based
enterprises in domestic or export markets.
Drafting Information: The principal author of this document is
Marjorie D. Ruhf of the Wine, Beer and Spirits Regulations Branch,
Bureau of Alcohol, Tobacco and Firearms.
List of Subjects
27 CFR Part 252
Aircraft, Alcohol and alcoholic beverages, Armed Forces, Authority
delegations (government agencies), Beer, Claims, Excise taxes, Exports,
Fishing vessels, Foreign trade zones, Labeling, Liquors, Packaging and
containers, Reporting and recordkeeping requirements, Surety bonds,
Vessels, Warehouses, Wine.
27 CFR Part 290
Administrative practice and procedure, Aircraft, Authority
delegations (government agencies), Cigarette papers and tubes, Claims,
Customs duties and inspection, Excise taxes, Exports, Foreign trade
zones, Labeling, Packaging and containers, Penalties, Surety bonds,
Vessels, Warehouses.
Authority: This advance notice of proposed rulemaking is issued
under the authority in 26 U.S.C. 7805.
Signed: May 13, 1996.
John W. Magaw,
Director.
Approved: June 5, 1996.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 96-20327 Filed 8-8-96; 8:45 am]
BILLING CODE 4810-31-P
