Industry Circular Number: 65-36
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Office of the Commissioner of Internal Revenue Alcohol and Tobacco Tax Division |
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NOTICE OF PROPOSED RULE MAKING 26 CFR PART 240, WINE Proprietors of bonded wine cellars and others concerned: Purpose. This circular is issued to inform you of the provisions of a notice of proposed rule making which was published in the Federal Register for December 7, 1965 (30 F.R. 15099), and which would amend 26 CFR Part 240, Wine, to implement the provisions of sections 806(b) and (c) of the Excise Tax Reduction Act of 1965 (Public Law 89-44). The regulations will become effective January 1, 1966, in, it is anticipated, substantially the form in which published as a notice of proposed rule making. A reprint of the notice of proposed rule making is attached for your information and use in planning operations and records commencing January 1, 1966. Explanation of changes. Production. Present regulations require that the liquid in fermenters be reported as wine produced within 30 days after deposit therein, or be transferred to intermediate storage. In recognition of the fact that complete fermentation may require more than 30 days, the amended regulations will permit juice or wine to be retained in fermenters until fermentation is complete; however, the regulations will require that you report on Form 702 the quantity of juice in fermenters at the close of each month in a manner similar to that now used for reporting the quantity of juice in intermediate storage. Amelioration. The amended regulations will provide that high acid juice may be ameliorated before, during, and after fermentation, and discontinue the wine fermentation record, Form 2054; however, records of amelioration will be necessary and are prescribed. The records of amelioration will be required to be kept separately for each kind of fruit or berry, including grapes; however, such records may, if the winemaker desires, be further separated for each lot of wine ameliorated. At the close of each month, transactions with respect to ameliorating materials will be summarized and reported on Form 702 (Rev. 1-66). The records of amelioration will ordinarily be maintained on the basis of annual accounting periods commencing on each July 1 and running through June 30 of the following year, but any such record will remain open if the amelioration of the juice or wine included therein is incomplete on June 30. When amelioration of the wine included in any one record is complete, that record will be closed and any unused authorized ameliorating material will not thereafter be used. Wines included in the records of amelioration for different accounting periods cannot be mixed with each other until the amelioration of both wines is complete unless, pursuant to a written application filed by the winemaker, the assistant regional commissioner authorizes the winemaker to mix such wines. Where wine has been reported as produced on Form 2056, Record of Still Wine, and the amelioration of such wine (after fermentation) is to be completed in storage, the quantity of ameliorating material used in such wine in storage will be recorded in the appropriate record of amelioration, and the quantity of such wine before and after amelioration will be recorded on Form 2056. Sweetening. The amended regulations will continue to provide that natural wines produced with or without the use of sugar may be sweetened with the use of concentrated or unconcentrated juice, provided the total solids content does not exceed 21 percent by weight, and may be sweetened with pure dry sugar (or liquid sugar if the increase in volume does not exceed that which would result from the use of pure dry sugar only) provided the total solids of the finished wine after sweetening does not exceed 12 percent by weight and its alcohol content is less than 14 percent by volume. Any natural wine produced with the use of sugar (ameliorated) may be sweetened with the use of pure dry sugar or liquid sugar in an amount which will not increase the volume of the wine by more than 0.0675 gallon per gallon of juice and total allowable ameliorating material combined. The addition of sweetening material will also be subject to the present limitation on the total solids content and alcoholic content of the finished wine. The quantities of wine before and after the addition of sweetening material will be recorded on Form 2056. In addition, if pure dry sugar or liquid sugar is used for sweetening, this will be shown on Form 2056. Addition of wine spirits. Wine spirits may be added to wine of a winemaker's own production only after its removal from the fermenters. In the case of ameliorated wine, wine spirits may be added thereto only if such wine contains less than 14 percent of alcohol by volume at the time of such addition, unless wine spirits were previously added. Use of pure sugar and liquid sugar. The term "pure sugar" has been redefined to include, in addition to cane and beet sugar, pure sugars produced from fruit or grain or other sources of starch and which have a dextrose equivalent of not less than 95 percent on a dry basis. The term "liquid sugar" has also been redefined. Further, a new term "sugar" has been defined in the amended regulations. The amended regulations will provide that the pounds per gallon for commercial dextrose, as shown in Table IV, may be, but are not required to be, used in determining the quantity of such other pure dry sugars to be used to correct the juice of fruit or berries to 25 degrees Brix. The amended regulations will also provide a formula for determining the quantity of liquid sugar of any degree of Brix required to raise the Brix of juice to the desired degree. The amended regulations will provide a new table giving the specific gravity and pounds per gallon for each degree of Brix (0 25 and 60 90) and the pounds of sugar per gallon and quantity of water per gallon, calculated on the basis of sucrose solutions. This new table will be used with the formula in determining the quantity of liquid sugar (sucrose solutions) required to correct natural deficiencies in juice of fruit or berries, and may be used with the formula in determining the quantity of other liquid sugars required to correct natural deficiencies in juice of fruit or berries. Conforming changes. Other changes made in the amended regulations are conforming or editorial in nature and are in most instances self-explanatory. Examples of such changes are
Effect on forms. Effective January 1, 1966, the use of Forms 2054 and 2055 will be discontinued; Form 2056 will be revised to provide columns for reporting the amelioration of wine in storage; Form 702 will be revised to delete the reserve inventory and intermediate storage accountings and to provide for a summary of ameliorating material transactions and the report of wine in fermenters at the end of each month; and Form 703 will be revised to delete the column for the transfer of sugar credits where wine in reserve inventory was transferred in bond. Inquiries. Inquiries regarding this circular should refer to its number and should be addressed to your Assistant Regional Commissioner, Alcohol and Tobacco Tax. Harold A. Serr Director, Alcohol and Tobacco Tax Division Attachment (945 KB) |
