UNTIMELY FILING OF EXCISE TAX RETURNS
Proprietors of Distilled Spirits Plants,
Bonded Wine Cellars, Breweries, Manufacturers of
Tobacco Products and Others Concerned:
PURPOSE. The purpose of this circular is to
remind proprietors to file excise tax returns and to
pay excise taxes in a timely manner.
BACKGROUND. Inasmuch as there have been several
recent instances where industry members have failed
to timely file excise tax returns and pay taxes, this
is an appropriate time to inform proprietors of the
consequences of failing to meet their obligations in
this regard.
APPLICABLE LAWS. The untimely filing of excise
tax returns creates a liability for interest on the
unpaid amount of tax and may create liabilities for
penalties. These liabilities arise under various
statutes in the Internal Revenue Code of 1954, as
amended, and include, but are not limited to:
(1) a
penalty for failure to file a return (26 U.S.C.
6651(a)(1));
(2) a penalty for failure to pay the
amount of tax due in a timely manner (26 U.S.C.
5684(a), 5761(b), and 6651(a)(2)); and
(3) interest
on the unpaid amount of tax due (26 U.S.C. 6601(a)).
The impact of these penalties is illustrated by
the fact that over the past year proprietors have
incurred penalty liabilities ranging from $27,000 to
$180,000 on tax returns which were in default only
one to three days.
Enforcement of two of the penalty provisions
(6651(a)(1) and 6651(a)(2)) hinges on whether the pro-
prietor can show that he exercised ordinary business
care and prudence and yet was unable to file a return
on time or to pay the taxes on time. Ordinary business care and prudence is not exhibited by reasons such as
the following:
(1) the proprietor forgot to file the
return on time;
(2) the Post Office didn't postmark the
tax envelope at the time anticipated by the proprietor;
(3) regulations were misinterpreted; or other similar
reasons.
INQUIRIES. Proprietors who have questions about
the application of the aforementioned laws, the due
date of excise tax returns, or any other matter
concerning timely filing of such returns should not
hesitate to contact the appropriate ATF regional
regulatory administrator.
Director |