Transfer of Packages of Distilled Spirits in Bond
Proprietors of internal revenue bonded
warehouses; and others concerned:
1. Prior to March 27, 1956, effective
date of Treasury Decision 6165, storekeeper-gaugers weighed and examined
packages of distilled spirits to be transferred in bond between internal revenue
bonded warehouses. The storekeepergauger determined that such packages
were correctly recorded on Forms 236
and 1619, and that the packages were
actually loaded on the proper conveyance;
he also certified on Form 236 to the removal of the spirits from the consignor
premises. The packages were similarly
examined by a storekeeper-gauger on
receipt at an internal revenue bonded
warehouse, weighed (unless in a sealed
conveyance or from a warehouse in the
immediate vicinity), and a certificate of
receipt executed. Care was exercised to
insure complete accuracy and compliance
with provisions of the law and regulations.
2. In order to permit greater flexibility
in transfer operations and to afford warehousemen an opportunity to conduct their
activities with as little delay as possible,
while at the same time permitting Government supervision to be exercised efficiently and economically, certain duties
and responsibilities were transferred
from the storekeeper-gauger to the warehouseman. Such changes were effected by
Treasury Decision 6165. Briefly, the
changes discontinued the weighing of
packages prior to shipment in conveyances
sealed with Government cap seals, transferred to the warehouseman responsibility for weighing and recording the
weights of packages transferred in unsealed conveyances, both prior to
shipment and on receipt, and transferred
to warehousemen the responsibility of
certifying on Form 236 to such removals
and receipts.
3. Generally the changes have proven
beneficial. However, warehousemen have
not, in all cases, fully complied with the
law and regulations in effecting transfers
of packages of spirits. As a result certain
undesirable practices have developed
which cannot be tolerated. Some of the
conditions which have come to light recently are: shipments did not contain
the specific packages covered by the
transfer papers (other packages were
substituted); the number of packages
listed on the transfer papers did not
correspond with the actual count of
packages transferred; and, in at least
one instance, the transfer papers forwarded with a lot of spirits covered a
completely different lot. Such conditions
indicate that the warehousemen concerned
may not have developed and exercised
adequate control procedures and consequently have not properly discharged
their responsibilities.
4. This circular is intended to point
out that the transfer of packages in bond
is a major obligation and responsibility
of the warehouseman and demands the
personal attention of management. It is
imperative that packages be transferred
in accordance with the provision of law
and regulations and that each such transfer be covered by a complete and
accurate set of transfer papers. Section
5232(a), Internal Revenue Code, provides
that the warehouseman's bond shall be
conditioned on compliance with all provisions of law and regulations relating
to the business of warehousing distilled
spirits. Section 5246, Internal Revenue
Code, states that distilled spirits may
be transferred in bond between internal
revenue bonded warehouses in original
packages or in such other packages or
containers and under such regulations as
the Secretary or his delegate may by
regulations prescribe. Section 5631,
Internal Revenue Code, provides, that
if any distilled spirits deposited in any
internal revenue bonded warehouse shall
be taken therefrom without full compliance with the law and regulations and
with the terms of any bond given on such
removal, or if any distilled spirits which
have been deposited in an internal revenue
bonded warehouse shall be found elsewhere, not having been removed therefrom according to law, that any person
who shall be guilty of such failure, or
any person who shall in any manner
violate any provision of the chapter
relating to internal revenue bonded warehouses, shall be subject, on conviction,
to a fine of not more than $5,000 or to imprisonment for not more than 3 years
for each such failure or violation; and
the spirits as to which such failure or
violation or unlawful removal shall take
place shall be forfeited to the United
States. Further, section 7302, Internal
Revenue Code, provides, in part, that it
shall be unlawful to have or possess any
property intended for use in violating the
provisions of the internal revenue laws,
or regulations prescribed under such
laws, or which have been so used, and no
property rights shall exist in any such
property.
5. The Internal Revenue Service must
take action under the above provisions of
law when warehousemen transfer packages between warehouses in a manner
contrary to that prescribed. Any package
not covered by complete and accurate transfer papers at the time of transfer
will be considered to have been removed
and deposited contrary to law and regulations, and will be subject to the penalties
cited. The importance of this matter is
stressed in order to enlist your full cooperation in insuring that the advantages
which have accrued to you may not be
impaired. It is again emphasized that the
provisions of Treasury Decision 6165
significantly increased the degree of care
which is required to be exercised by
warehousemen to insure that packages
are properly transferred.
6. Inquiries regarding this circular
should refer to its number and be addressed to the office of your assistant
regional commissioner (alcohol and
tobacco tax).
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division
IRS-24943 |