Time for Payment of Certain Excise Taxes, and Quarterly Excise Tax Payments for Small Alcohol Excise Taxpayers

AGENCY:

Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION:

Final rule; Treasury decision.

SUMMARY:

The Alcohol and Tobacco Tax and Trade Bureau (TTB) is adopting, as a final rule, regulations contained in a temporary rule pertaining to the semimonthly payments of excise tax on distilled spirits, wine, beer, tobacco products, and cigarette papers and tubes, and pertaining to the quarterly payment of alcohol excise tax by small taxpayers. This final rule action does not include those regulations contained in the temporary rule pertaining to part 19 of the TTB regulations, which were adopted as a final rule in a separate regulatory initiative.

DATES:

Effective Date: This final rule is effective August 24, 2011.

FOR FURTHER INFORMATION CONTACT:

For questions concerning tax payment procedures and quarterly filing procedures, contact Jackie Feinauer, National Revenue Center, Alcohol and Tobacco Tax and Trade Bureau (513-684-3442). For questions concerning this document, contact Jennifer Berry, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau (540-344-9333).

SUPPLEMENTARY INFORMATION:

Background

TTB Authority

The Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible for the administration and enforcement of chapters 51 and 52 of the Internal Revenue Code of 1986 (IRC). These provisions of the IRC concern the taxation of distilled spirits, wine, beer, tobacco products, and cigarette papers and tubes. TTB's responsibilities include promulgating regulations to implement the statutory provisions pertaining to the time and method for payment of the applicable excise taxes. See 26 U.S.C. 5061 pertaining to distilled spirits, wine, and beer and 26 U.S.C. 5703 pertaining to tobacco products and cigarette papers and tubes. Prior to January 24, 2003, TTB's predecessor agency, the Bureau of Alcohol, Tobacco and Firearms (ATF) administered these statutory provisions and the regulations thereunder. The regulations implementing the times and methods for payment of these Federal excise taxes are now found in the TTB regulations at 27 CFR parts 19, 24, 25, 26, 40, 41, and 70.

Semimonthly Reporting and Payment of Tax

Generally, the Federal excise taxes on distilled spirits, wine, beer, tobacco products, and cigarette papers and tubes are paid on the basis of a semimonthly tax return. The semimonthly periods covered by the tax return are from the 1st day to the 15th day of each month and from the 16th day to the last day of that month. The return must be filed and the tax payment must be made no later than the 14th day after the last day of each semimonthly period.

Accelerated Payment Requirements for the Second Semimonthly Period in September

Uruguay Round Agreements Act

Section 712 of the Uruguay Round Agreements Act (the URAA), Public Law 103-465, 108 Stat. 4809, enacted on December 8, 1994, amended sections 5061(d) and 5703(b)(2) of the IRC to accelerate the time for payment of taxes for most of the second semimonthly period of September. These amendments were adopted in order to ensure receipt of these taxes during the fiscal year to which they relate.

The amendments made by the URAA divided the second semimonthly period in September into two payment periods for distilled spirits, wine, beer, tobacco products, and cigarette papers and tubes. The first of these payment periods runs from September 16 through September 26, and the second of these payment periods runs from September 27 through September 30. The tax return and payment for the period September 16 through September 26 are due on or before September 29 except that, for taxpayers that are not required to pay taxes through electronic funds transfer (EFT), this first payment period ends on September 25 and taxes are due on or before September 28. The statutory amendments did not include an accelerated payment deadline for the second payment period (September 27 through 30) and therefore payment for it is due according to the general semimonthly payment rule (that is, on or before October 14).

The amendments made by the URAA also included a “safe harbor” rule covering the first (accelerated) payment period for taxes due for distilled spirits, wine, beer, tobacco products, and cigarette papers and tubes, which permits the taxpayer to meet its obligation to pay tax for that payment period based on payment of a proportion (11/15ths) of the tax liability incurred for the period September 1 through September 15. In addition to the above, the amendments made by the URAA added a special due date rule (that is, the following day) when the due date for the new first (accelerated) payment in September falls on a Sunday.

Temporary Rule T.D. ATF-365

On June 28, 1995, ATF published a temporary rule (T.D. ATF-365) in the Federal Register at 60 FR 33665, to implement the changes to sections 5061 and 5703 of the IRC made by section 712 of the URAA. Specifically in this regard, T.D. ATF-365 amended 27 CFR parts 19, 24, 25, 70, 250 (now part 26), 270 (now part 40), 275 (now part 41), and 285 (now part 40), primarily by adding various provisions to those parts relating to reporting and tax payment for distilled spirits, wine, beer, tobacco products, and cigarette papers and tubes.

In addition, T.D. ATF-365 made extensive amendments to the firearms and ammunition excise tax regulations in 27 CFR part 53, some of which were made in response to changes to the IRC by section 712 of the URAA. Subsequent legislation substantially changed the affected IRC provisions.

Quarterly Excise Tax Filing for Small Alcohol Excise Taxpayers

Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users

Section 11127 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (the SAFETEA), Public Law 109-59, 119 Stat. 1144, enacted on August 10, 2005, amended IRC section 5061(d) by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and adding a new paragraph (4), which allows certain small Federal alcohol excise taxpayers to pay taxes quarterly rather than on a semimonthly basis as provided in section 5061(d) before the amendment. Application of this new provision commenced with quarterly tax payment periods beginning on and after January 1, 2006.

Temporary Rule T.D. TTB-41

On February 2, 2006, TTB published in the Federal Register (71 FR 5598) a temporary rule, T.D. TTB-41, that amended 27 CFR parts 19, 24, 25, 26, and 70 to implement the new quarterly tax payment procedures of section 5061(d)(4) of the IRC. This temporary rule revised or otherwise amended regulatory texts concerning return or payment periods that had been adopted in T.D. ATF-365. The affected provisions were: Paragraph (a) of § 19.522, paragraph (a) of § 19.523, paragraph (b) and the heading of paragraph (c) of § 24.271, paragraphs (c) and (d) of § 25.164, the section heading and paragraph (a)(1) of § 25.164a, and paragraphs (b) and (d) of § 250.112 (now § 26.112).

Reissuance of T.D. ATF-365 and T.D. TTB-41 as a New Temporary Rule

When T.D. ATF-365 was published, a notice of proposed rulemaking was published in the same issue of the Federal Register inviting public comments on that temporary rule; TTB has no record of comments received by ATF in response to this comment solicitation, and no action was taken by ATF to adopt the T.D. ATF-365 temporary regulations as a final rule. A number of subsequent changes to the ATF/TTB regulations were made that affected the texts adopted in T.D. ATF-365, the most substantively significant of which were the changes to the alcohol excise tax payment provisions made by T.D. TTB-41, which included some revisions of the provisions implementing the URAA section 712 special September rule to accommodate the SAFETEA section 11127 quarterly payment procedure. When T.D. TTB-41 was published, a notice of proposed rulemaking was published in the same issue of the Federal Register inviting public comments on that temporary rule. Only one comment was received in response to that comment solicitation, and that commenter expressed support for the rulemaking.

In view of the fact that the regulatory amendments adopted in T.D. TTB-41 in part involved a revision of, and thus depended on, amendments previously made by T.D. ATF-365, TTB determined that it would not be practical to take final action on the T.D. TTB-41 regulations without first finalizing those earlier regulatory amendments. However, because of the significant period of time that had elapsed since T.D. ATF-365 was published, and because there is no record of comments received in response to the notice of proposed rulemaking published in connection with T.D. ATF-365, TTB decided that the best approach would be to publish one new temporary rule that reissued the regulatory texts adopted in T.D. ATF-365 and in T.D. TTB-41, with necessary changes to the T.D. ATF-365 texts to conform them to later amendments.

Temporary Rule T.D. TTB-89 and Notice No. 115

Accordingly, on January 20, 2011, TTB published in the Federal Register (76 FR 3502) a temporary rule, T.D. TTB-89, which updated and reissued the alcohol and tobacco regulations contained in T.D. ATF-365 and T.D. TTB-41. We note that T.D. ATF-365 included amendments to the firearms and ammunition excise tax regulations. Due to the passage of the Firearms Excise Tax Improvement Act of 2010 on August 16, 2010, the part 53 regulations were not addressed in T.D. TTB-89, and will be addressed in a separate rulemaking document rather than in this final rule document. In conjunction with the publication of T.D. TTB-89, TTB published a notice of proposed rulemaking, Notice No. 115, in the same issue of the Federal Register (76 FR 3584) inviting comments on T.D. TTB-89. TTB received no comments during the comment period, which closed on March 21, 2011.

The temporary regulations published in T.D. TTB-89 included, with updates, the changes to part 19 of the TTB regulations that were contained in T.D. ATF-365 and T.D. TTB-41. However, on February 16, 2011, TTB published a final rule (T.D. TTB-92) in the Federal Register at 76 FR 9080, which completely revised the distilled spirits plant regulations in 27 CFR part 19 and which took effect on April 18, 2011. This revision of part 19 included the substance of the changes to part 19 contained in T.D. TTB-89, with the only differences involving the reorganization of the regulatory sections in question and editorial wording changes to enhance the clarity of the texts. In view of the adoption of those texts in the T.D. TTB-92 final rule, it is not necessary to include them in this final rule action.

TTB Determination

Accordingly, TTB has determined that, with the exception of the amendments to part 19, the temporary regulations published as T.D. TTB-89 should be adopted as a final rule without change.

Regulatory Flexibility Act

Pursuant to the requirements of the Regulatory Flexibility Act (5 U.S.C. chapter 6), we certify that these regulations will not have a significant economic impact on a substantial number of small entities. Any revenue effects of this rulemaking on small businesses flow directly from the underlying statutes. Accordingly, a regulatory flexibility analysis is not required.

Executive Order 12866

This is not a significant regulatory action as defined in E.O. 12866. Therefore, it requires no regulatory assessment.

Paperwork Reduction Act

The collections of information in the regulations contained in this final rule have been previously reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506) and assigned control numbers 1513-0009, 1513-0053, 1513-0083, 1513-0090, and 1513-0104. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB. There is no new collection of information imposed by this final rule.

Inapplicability of the Delayed Effective Date Requirement

Because this final rule document implements provisions of law that were effective on January 1, 1995, and January 1, 2006, and the regulations adopted in this final rule are already in effect as temporary regulations, it has been determined, pursuant to 5 U.S.C. 553(d)(3), that good cause exists to issue these regulations without a delayed effective date.

Drafting Information

Kara T. Fontaine and Jennifer Berry of the Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this document.

List of Subjects

27 CFR Part 24

• Administrative practice and procedure
• Claims
• Electronic funds transfers
• Excise taxes
• Exports
• Food additives
• Fruit juices
• Labeling
• Liquors
• Packaging and containers
• Reporting and recordkeeping requirements
• Research
• Scientific equipment
• Spices and flavorings
• Surety bonds
• Vinegar
• Warehouses
• Wine

27 CFR Part 25

• Beer
• Claims
• Electronic funds transfers
• Excise taxes
• Exports
• Labeling
• 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 40

• Cigars and cigarettes
• Claims
• Electronic fund transfers
• Excise taxes
• Labeling
• Packaging and containers
• Reporting and recordkeeping requirements
• Surety bonds
• Tobacco

27 CFR Part 41

• Cigars and cigarettes
• Claims
• Customs duties and inspection
• Electronic funds transfers
• Excise taxes
• Imports
• Labeling
• Packaging and containers
• Puerto Rico
• Reporting and recordkeeping requirements
• Surety bonds
• Tobacco
• Virgin Islands
• Warehouses

27 CFR Part 70

• Administrative practice and procedure
• Claims
• Excise taxes
• Freedom of Information
• Law enforcement
• Penalties
• Surety bonds

Amendments to the Regulations

For the reasons set forth in the preamble, those portions of the temporary rule published as T.D. TTB-89 in the Federal Register at 76 FR 3502 on January 20, 2011, that amended 27 CFR parts 24, 25, 26, 40, 41, and 70 are adopted as a final rule without change.