ACCELERATED PAYMENTS OF CERTAIN EXCISE TAXES
To: All Distilled Spirits, Wine, Beer, Tobacco Products,
and Cigarette Papers and Tubes Taxpayers.
Purpose. This industry circular advises all
alcohol and tobacco excise taxpayers of legislation which requires
an accelerated tax payment during the month of September.
Background. The Uruguay Round Agreements Act
enacted on December 8, 1994, amended the law relating to the payment
of certain excise taxes. The new law permanently accelerates the
payment of taxes due on distilled spirits, wine, beer, tobacco products,
and cigarette papers and tribes for the second semimonthly period
of September. The new law splits the second semimonthly period of
September into two payment periods and requires receipt of payment
as described below.
The new requirement does not apply to wine excise
taxes that are remitted on an annual basis.
TAXPAYERS REQUIRED TO FILE BY EFT
For those taxpayers required to file their payments
by electronic fund transfer (EFT), the accelerated payment period
is from September 16 - September 26. Payment of taxes and a return
for the accelerated period is due on or before September 29. If
September 29 is a Saturday, the payment of taxes is due on Friday,
September 28. If September 29 is a Sunday, the payment of taxes
is due on Monday, September 30.
Tax payment and a return for the remaining four days
of the semimonthly period, September 27-30, is due on October 14.
Safe harbor. Under a safe harbor, the accelerated
payment requirement is satisfied if the taxpayer pays an amount
equal to 11/15th (73.3 percent) of the taxpayer's liability for
the first semimonthly period in September and any underpayment of
tax for the accelerated period is paid by October 14. Taxpayers
should show any increasing or decreasing adjustments for the accelerated
period in schedule A or B of the tax return due on October 14.
Example: Payment of tax for the month of September.
- Facts. X, a taxpayer required to pay taxes by electronic
fund transfer, incurred tax liability in the amount of $30,000
for the first semimonthly period of September. For the period
September 16-26, X incurred tax liability in the amount of $45,000,
and for the period September 27-30, X incurred tax liability in
the amount of $2,000.
- Payment requirement. X's payment of tax in the amount of
$30,000 for the first semimonthly period of September is due no
later than September 29. X's payment of tax for the period September
16-26 is also due no later than September 29. X may use the safe
harbor rule to determine the amount of payment due for the period
of September 16-26. Under the safe harbor rule, X's payment of
tax must equal $21,990.00, 11/15ths of the tax liability incurred
during the first semimonthly period of September.
Additionally, X's payment of tax in the amount of $2,000 for
the period September 27-30 must be paid no later than October
14. X must also pay the underpayment of tax, $23,010.00, for the
period September 16-26, no later than October 14.
Return Periods and Due Dates:
Return Period |
Due Date |
Safe Harbor |
100% Tax Payment |
Sept. 1-15, 1995
Sept. 16-26, 1995
Sept. 27-30, 1995 |
Sept. 29, 1995
Sept. 29, 1995
Oct. 13, 1995(a) |
$30,000 (b)
$21, 990
$25,010 (c) |
$30,000
$45,000
$2,000 |
(a) The actual due date is Oct. 14, but since Oct. 14 falls
on a Saturday, the return and tax payment is due on Friday,
Oct. 13, the preceding day.
(b) The safe harbor rule is not applicable to Sept. l-15; 100%
tax payment must be made.
(c) This amount includes the underpayment of $23,010 plus $2,000
for the period Sept. 27-30.
TAXPAYERS NOT REQUIRED TO FILE BY EFT
Special rules apply to taxpayers who are not required
to remit taxes by electronic fund transfer for the calendar year.
For these taxpayers, the accelerated payment period is from September
16 - September 25. Payment of taxes and a return for the period
is due on or before September 28. If September 28 is a Saturday,
the payment of taxes is due on Friday, September 27. If September
28 is a Sunday, the payment of taxes is due on Monday, September
29.
Tax payment and a return for the remaining five days
of the semimonthly period, September 26-30, is due on October 14.
Safe Harbor. Under a safe harbor, the accelerated
payment requirement is satisfied if the taxpayer pays an amount
equal to 2/3rds (66.7 percent) of the taxpayer's liability for the
first semimonthly period in September and any underpayment of tax
for the accelerated period is paid by October 14. Taxpayers should
show any increasing or decreasing adjust:ments for the accelerated
period in schedule A or B of the tax return due on October 14.
Example: Payment of tax for the month of September.
- Facts. X, a taxpayer who pays taxes by check,
cash or money order, incurred tax liability in the amount of $5,000
for the first semimonthly period of September. For the period of
September 16-25, X incurred tax liability in the amount of $6,000,
and for the period September 26-30, X incurred tax liability in
the amount of $1,000.
- Payment requirement. X's payment of tax in the
amount of $5,000 for the first semimonthly period of September is
due no later than September 29. X's payment of tax for the period
September 16-25 is due no later than September 28. X may use the
safe harbor rule to determine the amount of payment due for the
period September 16-25. Under the safe harbor rule, X's payment
of tax must equal $3,335, 2/3rds of the tax liability incurred during
the first semimonthly period of September.
Additionally, X's payment of tax in the amount of
$1,000 for the period September 26-30 must be paid no later than
October 14. X must also pay the underpayment of tax, $2,665, for
the period September 16-25, no later than October 14.
Return Periods and Due Dates.
Return Period |
Due Date |
Safe Harbor |
100% Tax Payment |
Sept. 1-15, 1995
Sept. 16-25, 1995
Sept. 26-30, 1995 |
Sept. 29, 1995
Sept. 28, 1995
Oct. 13, 1995 (a) |
$5,000 (b)
$3,335
$3,665 (c) |
$5,000
$6,000
$1,000 |
(a) The actual due date is Oct. 14, but since Oct.
14 falls on a Saturday, the return and tax payment is due on Friday,
Oct. 13, the preceding day.
(b) The safe harbor rule is not applicable to Sept.
l-15; 100% tax payment must be made.
(c) This amount includes the underpayment of $2,665
and $1,000 for the period of Sept. 26-30, 1995.
Questions regarding this industry circular should
be directed to your District Technical Services Office.
John W. Magaw
Director
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