INTERIM EXTENSION OF BONDING PERIOD FOR DISTILLED
SPIRITS UNDER THE EXCISE TAX TECHNICAL CHANGES
ACT OF 1958 (H. R. 7125 85TH CONGRESS)
To proprietors of internal revenue
bonded warehouses, and others
concerned:
Purpose. It now appears that the Excise Tax Technical Changes
Act of 1958 (H. R. 7125 85th Congress) has a very good chance of
being enacted into law. The purpose of this circular is to advise
you of the action you must promptly take to obtain extension of the
bonding period for distilled spirits as permitted under the provisions of the act, in the event it does become law. The following
instructions are accordingly supplied in anticipation of its probable
enactment. On enactment a Treasury decision on the subject will be
promulgated.
Background. The Internal Revenue Code of 1954 provides an 8-year
bonding period for distilled spirits. The proposed new legislation
would amend the Internal Revenue Code in this respect by providing
an over-all 20-year bonding period effective July 1, 1959. The
proposed legislation will further provide for the extension of the
bonding period for distilled spirits stored in, or in transit to,
internal revenue bonded warehouses on the date of enactment if
proper consent is filed, and it is with this phase that the Treasury
decision mentioned above and this circular are concerned.
Procedure to Obtain Interim Extension. The Treasury decision
will provide that where a proprietor desires to have the bonding
period covering distilled spirits in his warehouse changed from an
8-year to a 20-year period (for periods on and after the date of
enactment of the act), he shall file a proper consent of surety,
Form 1533, to change the conditions of his warehousing and transportation bond, Form 1571, in that respect, or file a new bond,
Form 1571, effective on the date of enactment of the act, with
such consent. If the 8-year bonding period on any distilled spirits
on deposit in, or in transit to, his warehouse expires at any time
during the 10-day period which begins on the date of enactment of
the act, the force-out provisions of existing law with respect to
such spirits may be stayed if, and only if, before the close of such
10-day period, the proprietor files with his assistant regional
commissioner a consent on his existing bond or files a new bond with consent as described above. After this 10-day period, spirits
becoming 8 years of age before such a consent or bond and consent
is filed will have no period of grace and will be required to be
withdrawn within the 8 years as specified by existing law. It
is accordingly important that proprietors understand the conditions
which they must meet if they desire to retain spirits in bond beyond
the 8-year limitation.
When filing a consent, or a new bond and consent, the procedures prescribed in 26 CFR Part 225 will be followed. Such consents
or bonds must have an effective date which would cover the anniversary
dates of any spirits for which it is desired to extend the 8-year bonding period. The consent must properly identify the bond affected and
contain the following statement:
"To change, for periods on and after the date of
enactment into law of the Excise Tax Technical Changes
Act of 1958 (H. R. 7125 85th Congress), the condition
of said bond based on the withdrawal of distilled spirits
from the internal revenue bonded warehouse within 8 years from
the date of the first entry thereof in any internal revenue
bonded warehouse to a condition based on the withdrawal of
spirits from the internal revenue bonded warehouse within 20
years from the date of the original entry for deposit."
Since we may not be able to issue a Treasury decision coincident
with the date of enactment, it is suggested that you may wish to
anticipate the passage of the proposed legislation and initiate steps
leading to the securing and filing of the necessary consent or bond
and consent.
Spirits Not Affected. These procedures will not be necessary
with respect to spirits which on July 26, 1936, were 8 years of age
or older and which were in bonded warehouses on that date, or with
respect to alcohol produced at an industrial alcohol plant operated
under 26 CFR Part 182.
Inquiries. Inquiries regarding this industry circular should
refer to its number and be addressed to your assistant regional
commissioner (alcohol and tobacco tax).
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division.
IRS-D.C.-40968 |