Department of the Treasury – Budget in Brief 

Alcohol and Tobacco Tax and Trade Bureau 

Program Summary by Budget Activity 

Dollars in Thousands 

 FY 2017 FY 2018 FY 2019 FY 2018 TO FY 2019

Budget Activity Enacted 1/ Annualized CR Request $ Change % Change

Collect the Revenue $53,560 $53,127 $57,741 $4,614 8.68%

Protect the Public $57,879 $57,555 $56,686 ($869) -1.51%

Subtotal, TTB $111,439 $110,682 $114,427 $3,745 3.38%

Offsetting Collections - Reimbursables 2/ $5,854 $6,912 $6,912 $0 0.00%

Transfers In/Out 3/ $197 $0 $0 $0 NA

Total Program Operating Level $117,490 $117,594 $121,339 $3,745 3.18%

Direct FTE 478 507 492 (15) -2.96%

Reimbursable FTE 10 10 10 0 0.00%

Total FTE 488 517 502 (15) -2.90%

1/ FY 2017 FTEs and Other Resources (Offsetting Collections – Reimbursables and Transfers) are Actual. This column reflects 

levels appropriated in H.R. 255, the Consolidated Appropriations Act of 2017. For further details on the execution of these 

resources see the 2019 Budget Appendix chapter for the Department of the Treasury. 

2/ Includes reimbursements from the TEOAF Mandatory Fund and CDFI, and offsetting collections from the Puerto Rico Cover-Over 

Program. 

3/ Transfer from the TEOAF Strategic Support Fund. 

Summary 

The Alcohol and Tobacco Tax and Trade 

Bureau (TTB) serves as the Nation’s primary 

federal authority in the taxation and regulation 

of the alcohol and tobacco industries. TTB is 

responsible for the administration and 

enforcement of the Internal Revenue Code 

provisions for excise taxes on alcohol, 

tobacco, firearms, and ammunition, and the 

Federal Alcohol Administration (FAA) Act, 

which provides for the regulation of the 

alcohol beverage industry to protect U.S. 

consumers and ensure a fair and competitive 

marketplace for U.S. businesses. TTB 

supports Treasury Strategic Goal 1 (Boost U.S. 

Economic Growth) and Goal 5 (Achieve 

Operational Excellence). 

In FY 2019, TTB will continue to focus on 

enforcing compliance with alcohol, tobacco, 

firearms, and ammunition laws and regulations 

in the interest of collecting all appropriate 

excise taxes and promoting a marketplace for 

alcohol beverages that complies fully with 

federal production, labeling, advertising, and 

marketing standards. The FY 2019 President’s 

Budget request enables TTB to continue the 

programs and activities necessary to meet its 

strategic goals of collecting revenue and 

protecting the public, as well as redirect 

resources to implement the Craft Beverage 

Modernization and Tax Reform provisions of 

P.L. 115-97. To improve tax enforcement 

outcomes, and promote a more efficient 

Federal Government, the Administration is 

proposing the consolidation of federal alcohol 

and tobacco tax enforcement authorities within 

the Department of the Treasury, including 

transferring jurisdiction for the Contraband 

Cigarette Trafficking Act from the Department 

of Justice’s (DOJ) Bureau of Alcohol, 

Tobacco, Firearms, and Explosives to TTB. 

The FY 2019 request supports an initial 

investment of $5 million in start-up costs for 

TTB to initiate the transfer, and begin to 

implement this enforcement program. The full 

program costs will be higher and will be 

addressed in future budgets. 
Department of the Treasury – Budget in Brief 

Total resources required to support TTB 

activities for FY 2019 are $121,339,000, 

including $114,427,000 from direct 

appropriations, and $6,912,000 from other 

offsetting collections and reimbursable 

programs. 

TTB FY 2019 Budget Highlights 

Dollars in Thousands

Alcohol and Tobacco Tax and Trade 

Bureau FTE Amount

FY 2018 Annualized CR 507 $110,682

Changes to Base:

Maintaining Current Levels (MCLs): 0 $1,027

Pay Annualization 0 $295

Non-Pay 0 $732

Efficiency Savings: 0 ($450)

 Reduce Infrastructure Footprint and 

Support 

 Services 

0 ($450)

Subtotal Changes to Base 0 $577

Total FY 2019 Base 507 $111,259

Program Changes:

Program Decreases: (36) ($7,632)

Program Staff Attrition (14) ($1,960)

Trade Practice Enforcement (22) ($5,000)

Program Contract Reductions 0 ($672)

Program Increases: 21 $10,800

 Consolidation of Federal Alcohol & 

Tobacco 

 Tax Jurisdiction 

14 $5,000

IT Modernization/Permits System 5 $4,600

IT Modernization/Cybersecurity 2 $1,200

Total FY 2019 Request 492 $114,427

FY 2019 Budget Adjustments 

Adjustments to Request 

Maintaining Current Level (MCLs) 

Pay Annualization +$295,000 / +0 FTE 

Funds are requested for annualization of the 

January 2018 pay raise. 

Non-Pay +$732,000 / +0 FTE 

Funds are requested for non-labor expenses 

such as travel, contracts, rent, supplies and 

equipment. 

Efficiency Savings 

Reduce Infrastructure Footprint and 

Support Services -$450,000 / -0 FTE 

In an ongoing effort to improve space 

utilization, TTB has identified additional 

opportunities to reduce leased space, resulting 

in additional savings of $250,000. Also, TTB 

will reduce its operating costs by $200,000 

through savings in administrative overhead 

and decreased program support operations in 

line with anticipated program staff attrition. 

Program Decreases 

Program Staff Attrition 

-$1,960,000 / -14 FTE 

TTB will implement a hiring freeze to achieve 

a workforce reduction of 14 FTE. This 

reduction, which equates to 3 percent of TTB’s 

full-time positions, will be taken across 

multiple program areas. 

Trade Practice Enforcement 

-$5,000,000 / -22 FTE 

TTB will reduce its Trade Practice 

Enforcement program to the FY 2016 level. 

TTB enforcement addresses unlawful trade 

practices in the marketplace and ensures a 

level playing field for U.S. alcohol 

manufacturers and distributors. With two-year 

funding provided through FY 2018, TTB 

added staffing to increase its capacity for trade 

practice investigations from approximately 1 

each year to up to 15 active cases annually. At 

the FY 2019 funding level, TTB will need to 

bring closure to its active trade practice 

investigations and reevaluate the program.

Program Contract Reductions 

-$672,000 / -0 FTE 

TTB will reduce its contract services by 

reducing or re-scoping contracts for both its 

commercial vendors and government 

suppliers.
Department of the Treasury – Budget in Brief 

Program Increases 

Consolidation of Federal Alcohol & 

Tobacco Tax Jurisdiction 

+$5,000,000 / +14 FTE 

Start-up funding is requested to support the 

Administration’s proposal to consolidate 

federal alcohol and tobacco tax jurisdiction 

within the Department of the Treasury and 

TTB. This initial investment will enable TTB 

to begin hiring the necessary additional 

enforcement personnel, including agents, 

auditors, and investigators, to conduct the 

complex, multi-state investigations associated 

with contraband cigarette smuggling. The 14 

FTE will allow TTB to hire 28 positions 

including auditors, investigators, and other 

program staff for approximately the last six 

months of the fiscal year. Agents will be hired 

under an expansion of the existing interagency 

agreement with the IRS, with the FY 2019 

start-up funding covering the services of 12 

agents during the second half of the year. This 

initial investment would also enable TTB to 

initiate any needed rulemaking and guidance 

as well as support initial research into system 

requirements and data analytics to improve 

enforcement targeting. During this transition 

period, and at the proposed staffing level, TTB 

will also expand its outreach to state law 

enforcement partners and work closely with 

DOJ on the transfer and continuation of 

existing cases. 

IT Modernization/Permits System 

+$4,600,000 / +5 FTE 

Funding is requested to enable TTB to 

incrementally build and deploy a customdeveloped online permitting system. A 

modernized system is a key component to 

improving program performance because it 

would allow TTB to optimize its online permit 

applications and processes to support the 

timely review and approval of applications. A 

custom system would also reduce burden on 

industry by enabling the eventual integration 

of all online interactions that industry has with 

TTB: permit applications, tax returns, 

operational reports, label applications, and 

formula applications. 

IT Modernization/Cybersecurity 

+$1,200,000 / +2 FTE 

Funding is requested to cover the increased 

operations and maintenance costs of 

cybersecurity tools and for additional staff to 

remediate IT system vulnerabilities. This 

funding will ensure all TTB systems are 

modernized to detect and protect against 

current threats and ensure that TTB remains a 

Treasury leader operating at the forefront of 

security. 

Explanation of Budget Activities 

Collect the Revenue 

This budget activity includes all tax 

processing, verification, enforcement, and 

outreach efforts related to administering the 

federal excise tax on alcohol, tobacco, 

firearms, and ammunition products. TTB 

regulates and collects taxes from distilleries, 

breweries, bonded wineries, bonded wine 

cellars, manufacturers of cigarette papers and 

tubes, manufacturers of tobacco products, and 

manufacturers and importers of firearms and 

ammunition. In ensuring a level playing field 

for all those engage in the trade of these 

strictly regulated commodities, TTB also takes 

appropriate enforcement action to detect and 

address diversion activity and ensure all 

products sold in the marketplace are properly 

taxpaid. In FY 2017, collected excise taxes 

totaling $13 billion for tobacco products, $8 

billion for alcohol beverage products, and 

$762 million for firearms and ammunition. 

This budget activity supports Treasury’s 

strategic goal of ensuring that industry remits 

the proper federal tax on these products. 

Protect the Public 

This budget activity funds the programs that 

ensure the integrity of the products and 

industry members in the marketplace by 

promoting compliance with federal alcohol 

and tobacco laws and regulations by more than 
Department of the Treasury – Budget in Brief 

92,700 businesses that hold a TTB permit or 

registration. This budget activity supports 

Treasury’s strategic objective 1.3 Trusted 

Currency and Services to ensure the delivery 

of trusted currency and services that enable 

citizens and businesses to participate in the 

economy and TTB’s strategic goal of ensuring 

that alcohol and tobacco industry operators 

meet permit qualifications, and alcohol 

beverage products comply with federal 

production, labeling, and marketing 

requirements. 

Legislative Proposals 

Consolidation of Federal Alcohol & 

Tobacco Tax Jurisdiction 

The Administration proposes to transfer 

primary jurisdiction over federal tobacco and 

alcohol anti-smuggling laws from DOJ and the 

Bureau of Alcohol, Tobacco, Firearms and 

Explosives to the Department of the Treasury 

and TTB. Under the proposal, TTB would be 

responsible for the administration and 

enforcement of the Jenkins Act of 1949 (as 

amended by the Prevent All Cigarette 

Trafficking Act of 2009), 15 U.S.C. Chapter 

10A, the Contraband Cigarette Trafficking Act 

of 1978, 18 U.S.C. Chapter 114, and the 

criminal statutes involving Liquor Trafficking, 

18 U.S.C. Chapter 59. Specific statutory 

language will be developed in consultation 

with the Secretary of the Treasury and with the 

Attorney General both to effect the transfer 

and to facilitate federal enforcement against 

tobacco smuggling. 

TTB Performance Highlights 

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019

Budget Activity Performance Measures Actual Actual Actual Target Target

Collect the Revenue Amount of Revenue Collected Per Program Dollar 437.0 414.0 406.0 350.0 350.0

Collect the Revenue

Percent of Voluntary Compliance from Large 

Taxpayers in Filing Tax Payments Timely (In Terms 

of Revenue)

88.0 87.0 85.0 90.0 90.0

Protect the Public Percent of Electronically Filed Permit Applications 81.0 81.0 85.0 87.0 90.0

Protect the Public Percentage of Permit Applications Processed within 

Service Standards 47.0 32.0 48.0 85.0 85.0

Protect the Public Initial Error Rate for Permit Applications 67.0 57.0 60.0 25.0 25.0

Protect the Public Customer Satisfaction Rate with TTB Permitting 

Process 76.0 71.0 80.0 80.0 80.0

Protect the Public Percent of Electronically Filed Label and Formula 

Applications 94.0 97.0 98.0 95.0 95.0

Protect the Public

Percentage of Alcohol Beverage Label and 

Formula Applications Processed within Service 

Standards 1/

80.0 80.0 62.0 85.0 85.0

Protect the Public Initial Error Rate for Label and Formula Applications 42.0 44.0 43.0 25.0 25.0

1/ TTB established new service standards of 10 days for both labels and formulas in FY 2017 following an infusion of dedicated 

resources in the FY16/17 enacted budgets. The standards were 30-days for labels and 45-days for formulas in fiscal years 2013 - 

2016. Though annual results are below target, TTB met its target in September 2017, as projected. In FY18 and FY19, TTB 

expects to revise its service standard from 10 days to 15 days for both labels and formulas based on anticipated staff erosion and 

spikes in submissions driven by imported products. All data has been revised to reflect a methodology update to exclude label 

applications deemed abandoned by the applicant (i.e., no action after 30 days).
Department of the Treasury – Budget in Brief 

Description of Performance 

The bureau continues to collect the federal 

excise taxes due on its regulated commodities 

in a highly efficient manner, and continues to 

enforce compliance with alcohol and tobacco 

laws and regulations. During FY 2017, TTB 

met four out of nine of its targeted 

performance goals, and made substantial 

progress in its initiatives intended to improve 

performance in all other performance metrics. 

The bureau will continue to monitor its annual 

business plan and use performance 

information to improve the effectiveness of its 

programs. 

The investments in the Collect the Revenue 

activity resulted in the following performance 

highlights and accomplishments during 

FY 2017: 

 TTB collected $22 billion in excise taxes 

and other revenues from more than 14,000 

taxpayers in the alcohol, tobacco, firearms, 

and ammunitions industries. The return on 

investment for the Collect the Revenue 

program was $406 for every $1 expended 

on collection activities. 

 Since TTB commenced its criminal 

enforcement program in 2011, TTB has 

opened a total of 150 cases that have 

resulted in more than $600 million in 

identified tax liabilities (a 4:1 return on 

investment) and criminal convictions, 

which are an essential component of tax 

enforcement. Further, TTB has maintained 

a 100 percent conviction rate on cases fully 

resolved through the legal system. 

 TTB completed approximately 400 audits, 

examinations, and revenue investigations, 

which contributed to the identification of 

additional tax revenue of more than $91 

million. 

 TTB processed $370 million in cover-over 

payments to Puerto Rico and the U.S. 

Virgin Islands (USVI). Federal excise 

taxes collected on rum produced in Puerto 

Rico and USVI that are subsequently 

imported into the United States are 

“covered-over,” or paid into the treasuries 

of Puerto Rico and the USVI. After 

December 31, 2017, and before January 1, 

2020, the cover-over payment associated 

with any particular proof gallon of rum, 

may exceed the taxes collected on such 

proof gallon, depending on the applicable 

distilled spirits rate. 

 TTB processed $350 million in drawback 

claims. Under current law, persons who 

use nonbeverage alcohol in the 

manufacture of medicines, food products, 

flavors, extracts, or perfume and other nonpotable products may be eligible to claim 

drawback of excise taxes paid on distilled 

spirits used in their products. 

The investments in the Protect the Public 

Activity resulted in the following performance 

highlights and accomplishments during 

FY 2017: 

 TTB processed more than 272,000 

Certificate of Label Approvals (COLAs) to 

ensure compliance with the FAA Act 

provisions that prevent consumer 

deception. TTB also achieved a 98 percent 

electronic filing rate for alcohol beverage 

label and formula applications. Federal 

law prohibits the import or domestic 

bottling of an alcohol beverage without an 

approved COLA, making this TTB service 

integral to U.S. business operations. 

 TTB issued approximately 8,100 federal 

permits, primarily to new alcohol beverage 

producers, importers, and wholesalers. A 

TTB permit or registration is required 

before a business can lawfully operate in 

the alcohol and tobacco industries. TTB 

ensures a fair and lawful marketplace and 

protects consumers by screening permit 

applicants to ensure only qualified persons 

engage in operations in the alcohol and 

tobacco industries. 

 TTB completed nearly 550 field 

investigations of industry members in the 
Department of the Treasury – Budget in Brief 

areas of permit qualification, consumer 

complaints, trade practice violations, and 

product integrity verifications, all of which 

serve the bureau’s dual mission of revenue 

collection and consumer protection.