Redistillation or Destruction of Distilled
Spirits Pursuant to a Timely Application
Proprietors of registered distilleries,
fruit distilleries, and bonded
warehouses, and others concerned:
1. The purpose of this circular is to clarify the procedure to be observed in disposing, either through redistillation or destruction, of distilled spirits in bond which are
approaching the age of eight years.
2. Form 1577, "Destruction of Distilled Spirits", is to
be used solely to cover the destruction of distilled spirits.
Destruction must be accomplished by running the spirits into
the sewer or by other suitable means of completely destroying
the spirits as required by the law. Redistillation does not
constitute destruction of the spirits within the law, it merely
changes their condition or character; the use of Form 1577
for this purpose is improper.
3. In cases where the spirits are approaching the age of
eight years and the warehouseman (a) desires to have the spirits
redistilled, he will present an application on Form 236 (which
must be filed by the receiving distiller) to the storekeepergauger to cover the transfer, (b) desires to destroy the
spirits, he will present an application on Form 1577 to the
Assistant Regional Commissioner, through the storekeeper-gauger,
and (c) is undecided whether spirits will be redistilled or
destroyed, two applications may be presented, one on Form 236,
as described in (a) above, for transfer of the spirits for redistillation, the other on Form 1577, as described in (b) above,
for destruction of the spirits. These documents will be filed
and disposed of in the manner prescribed by the applicable provisions of 26 CFR Parts 220, 221, and 225. If circumstances
are such that the proprietor may not be able to complete removal
of the spirits for redistillation or the destruction before the
end of the eight-year period, he will notify the Assistant
Regional Commissioner of the reasons for failure to so remove
or destroy the spirits and state his planned schedule for
disposition of the spirits.
4. Prompt action must be taken to effect the destructtion or redistillation of the spirits pursuant to such documents. If any of the spirits remain on hand in the warehouse
at the end of the eight-year period they will be gauged for
the purpose of determination of tax and subsequent assessment,
if required, in the manner provided by 26 CFR Part 225. This,
however, will not preclude the destruction or redistillation
of the spirits if the warehouseman acts in good faith, and
promptly, in the matter of redistilling or destroying the
spirits. It is necessary that the applications, referred to
in paragraph 3, be filed prior to the expiration of the eighth
anniversary of storage. The filing of a timely application
will not preclude taxpayment and withdrawal of the spirits
covered by the application, if before destruction or redistillation is actually effected it is desired to taxpay and withdraw
the spirits. Applications timely filed would enable the warehouseman to hold the spirits temporarily, if necessary, in
order to complete removal for redistillation or the destruction
of the spirits. If timely applications are filed, as indicated,
for destruction or redistillation of the spirits, partial
disposition may be made under either method, or the spirits may
be completely disposed of under one method. Failure to effect
destruction or redistillation of spirits covered by a timely
application within a reasonable time after expiration of the
eight-year period will result in assessment of tax on the
spirits and the consequent loss of the privilege of voluntary
destruction or redistillation.
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
IRS-18823
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