Industry Circular

Number: 90-6

Date: November 26, 1990

Department of the Treasury

Alcohol, Tobacco, and Firearms Division

Washington, D.C. 20224

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INCREASE IN FEDERAL EXCISE TAX ON ALCOHOL AND ITS EFFECT ON MNBP BONDS

Manufacturers of Non-Beverage Products and Others Concerned:

Purpose. This Industry Circular is issued to advise manufacturers of non-beverage products (MNBPs) of certain provisions of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508, 104 Stat., 1388), and its impact on bond coverage and recordkeeping requirements.

Background. Public Law 101-508, 104 Stat., 1388, enacted on November 5, 1990, increased the rate of tax on distilled spirits by $1.00 from $12.50 to $13.50 per proof gallon. This tax increase is effective on January 1, 1991.

Effect on bond coverage. The change in tax rate may increase the liability which must be covered by the drawback bond. Therefore, manufacturers who have bonds in less than the maximum amount should recompute the coverage needed in accordance with 27 CFR 197.107 and, if necessary, file a strengthening or superseding bond to increase the coverage. This is important in order to ensure continued allowance of claims on a monthly basis by the Bureau of Alcohol, Tobacco, and Firearms (ATF). When the penal sum of the bond is reached before the end of the quarter, claims are allowed on a quarterly, rather than a monthly basis.

Recordkeepinq requirements for MNBP claimants. The supporting statement for each claim filed after January 1, 1991, should specify the rate of tax paid on the spirits which are the subject of the claim. In addition, the proprietor's product batch records supporting each claim should show whether the distilled spirits used in the product were taxpaid at the old or new tax rate.

Inquiries. If you have any questions, please contact the following ATF office in your area: Taxpayers in Illinois, Indiana, Kentucky, Michigan, Minnesota, North Dakota, Ohio, South Dakota, Wisconsin, West Virginia:

Bureau of Alcohol, Tobacco and Firearms 550 Main Street, Room 6519 Federal Office Bldg. Cincinnati, OH 45202 (513) 684-3335 FAX (513) 684-3168

Taxpayers in Connecticut, District of Columbia, Delaware, Massachusetts, Maryland, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont:

Bureau of Alcohol, Tobacco and Firearms 841 Chestnut Street Room 380 Philadelphia, PA 19107 (215) 597-2238 FAX (215) 597-7255

Taxpayers in Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee and Virginia:

Bureau of Alcohol, Tobacco and Firearms 2600 Century Parkway NE, Suite 305 Atlanta, GA 30345 (404) 679-5080 FAX (404) 679-5099

Taxpayers in Arkansas, Colorado, Iowa, Kansas, Louisiana, Missouri, Nebraska, New Mexico, Oklahoma, Texas, Wyoming:

Bureau of Alcohol, Tobacco and Firearms 1114 Commerce Street 7th Floor Dallas, TX 75242 (214) 767-2277 FAX (214) 767-2750

Taxpayers in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington:

Bureau of Alcohol, Tobacco and Firearms 221 Main Street 11th Floor San Francisco, CA 94105 (415) 744-7011 FAX (415) 744-9443

Director