Department of the Treasury

Alcohol and Tobacco Tax and 

Trade Bureau

Congressional Budget 

Justification and Annual 

Performance Report and Plan

FY 2019
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Table of Contents

Section I – Budget Request........................................................................................................... 3

A – Mission Statement................................................................................................................ 3

B – Summary of the Request ...................................................................................................... 3

1.1 – Appropriations Detail Table ............................................................................................................4

1.2 – Budget Adjustments Table ..............................................................................................................5

C – Budget Increases and Decreases Description....................................................................... 5

1.3 – Operating Levels Table ...................................................................................................................7

D – Appropriations Language and Explanation of Changes ...................................................... 8

E – Legislative Proposals............................................................................................................ 8

Section II – Annual Performance Plan and Report................................................................... 9

A – Strategic Alignment ............................................................................................................. 9

B – Budget and Performance by Budget Activity .................................................................... 10

2.1.1 Collect the Revenue Resources and Measures................................................................. 10

Collect the Revenue Budget and Performance ......................................................................... 10

2.1.2 Protect the Public Resources and Measures..................................................................... 14

Protect the Public Budget and Performance ............................................................................. 14

C – Changes in Performance Measures.................................................................................... 18

Section III – Additional Information ........................................................................................ 19

A – Summary of Capital Investments....................................................................................... 19
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Section I – Budget Request

A – Mission Statement

To collect the taxes on alcohol, tobacco, firearms, and ammunition; protect the consumer by 

ensuring the integrity of alcohol products; and prevent unfair and unlawful market activity for 

alcohol and tobacco products.

B – Summary of the Request 

Supporting the nation’s economic vitality is at the core of the work performed by the Alcohol 

and Tobacco Tax and Trade Bureau (TTB). The bureau’s role in permitting, regulating, and 

taxing the alcohol, tobacco, and firearms industries facilitates a compliant and fair marketplace

for those engaged in the manufacture and trade of these commodities, and ensures that the 

Federal Government has the resources needed to fund national priorities. TTB administers its 

mission according to two core strategic goals—“Collect the Revenue” and “Protect the Public”—

both of which serve Treasury’s Strategic Goal 1 (Boost U.S. Economic Growth), and conducts 

its operations in support of Treasury’s Strategic Goal 5 (Achieve Operational Excellence). 

TTB is the third largest tax collection agency in the U.S. Government, after the Internal Revenue 

Service and U.S. Customs and Border Protection, collecting nearly $22 billion in excise tax

revenues annually. As the most efficient means of tax administration, facilitating voluntary 

compliance will remain a priority for TTB in FY 2019, and will help TTB absorb staffing and 

contract reductions while sustaining core tax operations. To this end, TTB will enhance its 

guidance related to federal alcohol, tobacco, firearms, and ammunition laws and regulations, and 

explore opportunities to streamline regulations and requirements to reduce compliance burden. 

These strategies are critical for TTB to mitigate potential performance impacts as TTB redirects 

its resources to implement the Craft Beverage Modernization and Tax Reform provisions of P.L. 

115-97. Further, in FY 2019, to ensure the protection of sensitive taxpayer information, TTB 

will make critical investments in IT security to ensure that TTB remains at the forefront of 

cybersecurity.

Alcohol and tobacco diversion remain long-term tax enforcement challenges given the high 

profits to be gained from illegal activity, the relative ease of diversion, and the substantial 

revenue loss that it represents. Failure to address illicit trade not only deprives governments of 

revenue, but also gives non-compliant actors an unfair competitive advantage over their lawful 

counterparts. 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 (CCTA) from the Department of 

Justice’s (DOJ) Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) 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. Upon transfer of CCTA 

authority, and once fully resourced, TTB expects that its current enforcement model, which uses 

a data-driven approach and relies on teams of agents, auditors, and investigators, as well as state 

and local law enforcement partners, will provide positive returns in terms of increased revenues 

and reduced criminal activity.
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As demand for TTB services has grown in line with the expanding alcohol industries, TTB has 

responded through updated policies to reduce burden, improved systems, and streamlined 

processes to ensure the timely turnaround of applications for new and existing wineries, 

breweries, and distilleries. Delays can cause financial hardships for these businesses and create a 

barrier to compliant commerce. In FY 2019, TTB will focus on IT modernization investments to 

reduce filing burdens and accelerate approval times for permit applications. Further, at the 

FY 2019 funding level, TTB will review its service standards in line with anticipated staffing 

levels and ensure the new standards are clearly communicated to industry to manage 

expectations and allow appropriate operational planning. TTB will further adjust its strategy for 

systems modernization to align with resource levels, continuing to focus on clear and consistent 

guidance to industry to facilitate the submission of compliant applications. 

1.1 – Appropriations Detail Table

Dollars in Thousands

Alcohol and Tobacco Tax and Trade 

Bureau

FY 2017 FY 2018 FY 2019 FY 2018 to FY 2019

Enacted 1/ Annualized CR Request $ Change % Change

 FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Collect the Revenue 219 $53,560 242 $53,127 250 $57,741 8 $4,614 3.31% 8.68%

Protect the Public 259 $57,879 265 $57,555 242 $56,686 (23) ($869) -8.68% -1.51%

Subtotal New Appropriated Resources 478 $111,439 507 $110,682 492 $114,427 (15) $3,745 -2.96% 3.38%

Other Resources:

Offsetting Collections – Reimbursables 2/ 10 $5,854 10 $6,912 10 $6,912 0 $0 0.00% 0.00%

Transfers 3/ 0 $197 0 $0 0 $0 0 $0 0.00% 0.00%

Subtotal Other Resources 10 $6,051 10 $6,912 10 $6,912 0 $0 0.00% 0.00%

Total Budgetary Resources 488 $117,490 517 $117,594 502 $121,339 (15) $3,745 -2.90% 3.18%

1/ FY 2017 FTE and Other Resources are Actuals. 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 TEOAF Mandatory Fund and CDFI, and offsetting collections from Puerto Rico Cover-Over Program.

3/ Transfer from the TEOAF Strategic Support Fund.
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1.2 – Budget Adjustments Table

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

C – Budget Increases and Decreases Description

Maintaining Current Levels (MCLs) ......................................................+$1,027,000 / +0 FTE

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 ...........................................................................................-$450,000 / -0 FTE

Reduce Infrastructure Footprint and Support Services -$450,000 / -0 FTE

TTB has implemented an aggressive telework program that has enabled the bureau to close half 

of its field offices, with the remaining field offices being vital to TTB’s mission. TTB has also 

reconfigured and reduced the amount of office space needed to operate its headquarters in 

Washington, D.C., and the National Revenue Center in Cincinnati. 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.
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Program Decreases ....................................................................................-$7,632,000 / -36 FTE

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 funding 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.

Program Increases ................................................................................... $10,800,000 / +21 FTE

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 for 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 custom-developed 

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, with backlogs for wineries, 

breweries, and distilleries at around 100 days at the end of FY 2017, well over the 75-day service 

standard. 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. 
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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. To meet security 

requirements, TTB currently maintains a robust cybersecurity architecture that requires increased 

operations and maintenance costs. In addition, TTB must continually ensure that its IT systems 

are modern, updated, and patched in a timely manner. 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 cybersecurity.

1.3 – Operating Levels Table

Dollars in Thousands

TTB FY 2017 FY 2018 FY 2019

Object Classification Enacted 1/ Annualized CR Request

11.1 - Full-time permanent 51,531 51,180 48,812

11.5 - Other personnel compensation 619 615 651

11.9 - Total personnel compensation 52,150 51,796 49,462

12.0 - Personnel benefits 15,671 15,565 14,926

13.0 - Benefits for former personnel 0 0 0

Total Personnel and Compensation Benefits $67,821 $67,360 $64,388

21.0 - Travel and transportation of persons 2,561 2,544 2,191

22.0 - Transportation of things 50 50 50

23.1 - Rental payments to GSA 4,400 4,370 4,170

23.3 - Communication, utilities, and misc charges 1,594 1,583 1,629

24.0 - Printing and reproduction 267 265 266

25.2 - Other services from non-Federal sources 24,395 24,229 28,803

25.3 - Other goods and services from Federal sources 7,715 7,663 9,451

26.0 - Supplies and materials 499 496 502

31.0 - Equipment 2,137 2,122 2,977

Total Non-Personnel $43,618 $43,322 $50,039

New Budgetary Resources $111,439 $110,682 $114,427

FTE 478 507 492

1/ FY17 Appropriated Resources are enacted and FTE 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.
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D – Appropriations Language and Explanation of Changes

Appropriations Language Explanation of Changes

DEPARTMENT OF THE TREASURY

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

Federal Funds

SALARIES AND EXPENSES

For necessary expenses of carrying out section 1111 of the 

Homeland Security Act of 2002, including hire of passenger motor 

vehicles, $114,427,000, of which $5,000,000 shall remain available 

until September 30, 2020; of which not to exceed $6,000 shall be 

available for official reception and representation expenses; and of 

which not to exceed $50,000 shall be available for cooperative 

research and development programs for laboratory services and 

provision of laboratory assistance to State and local agencies with 

or without reimbursement.

Note. – A full-year 2018 appropriation for this account was not 

enacted at the time the budget was prepared; therefore, the budget 

assumes this account is operating under the Continuing 

Appropriations Act, 2018 (Division D of P.L. 115-56, as amended). 

The amounts included for 2018 reflect the annualized level provided 

by the continuing resolution.

E – Legislative Proposals

Government Reform Initiative - Consolidation of Federal Alcohol & Tobacco Tax 

Jurisdiction

The Administration proposes to transfer primary jurisdiction over federal tobacco and alcohol 

anti-smuggling laws from the Department of Justice 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. 
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Section II – Annual Performance Plan and Report

A – Strategic Alignment

TTB is responsible for administering and enforcing the sections of the Internal Revenue Code of 

1986 associated with the collection of excise taxes on alcohol, tobacco, firearms, and 

ammunition, and the Federal Alcohol Administration Act, which provides for the regulation of 

the alcohol beverage industry for the protection of U.S. consumers. In essence, TTB administers 

its jurisdiction according to two strategic goals—“Collect the Revenue” and “Protect the 

Public”—both of which serve to support economic growth and stability. TTB’s strategic goal to 

collect the revenue ensures that the Federal Government has the resources needed to fund 

national priorities and supports the Treasury’s Strategic Goal 1 (Boost U.S. Economic Growth)

and Strategic Objective 1.1 (Tax Law Implementation) to administer tax laws to better enable all 

taxpayers to meet their obligations, while protecting the integrity of the tax system. TTB’s 

strategic goal to protect the public ensures that lawful U.S. alcohol businesses are competitive 

and thriving in the global marketplace and supports the Treasury’s Strategic Goal 1 (Boost U.S. 

Economic Growth) and Strategic Objective 1.3 (Trusted Currency and Services) to deliver

trusted currency and services that enable citizens and businesses to participate in the economy

and Strategic Objective 1.4 (Free and Fair Trade) to advance a free and fair trade environment 

for U.S. businesses). Various strategies and activities under TTB’s strategic objectives

contribute to the Treasury’s Strategic Goal 5 (Achieve Operational Excellence) through Strategic 

Objectives 5.1 (Workforce Management), 5.2 (Treasury Infrastructure), and 5.3 (Customer 

Value).

The Administration is proposing the consolidation of federal alcohol and tobacco tax jurisdiction 

within the Department of the Treasury to improve mission alignment and focus and, in turn, 

create tax enforcement efficiencies. This proposal calls for the transfer of enforcement authority 

for the CCTA and the Prevent All Cigarette Trafficking (PACT) Act from DOJ to Treasury. 

These federal statutes were intended, among other things, to stop criminal organizations from 

profiting by smuggling cigarettes from low-tax states to high-tax states, and protect state and 

local governments from revenue losses from interstate cigarette smuggling. ATF, which 

currently has primary jurisdiction for CCTA and PACT Act enforcement, has estimated that the 

sale of contraband cigarettes costs federal, state, and local governments close to $5 billion a year 

in revenue. The FY 2019 funding request represents the initial investment required to begin the 

transfer of these authorities, including preliminary hiring and contract actions to support 

investigations, as well as required rulemaking, IT, and data analytics efforts to support the 

program and generate leads for future investigations, as the program ramps up. The full program 

costs will be higher and will be addressed in future budgets. When fully implemented, TTB 

anticipates that the consolidation of CCTA and PACT Act enforcement with TTB’s existing 

tobacco enforcement authorities will result in increased federal and state tobacco excise tax 

revenues.
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B – Budget and Performance by Budget Activity

2.1.1 Collect the Revenue Resources and Measures

Resource Level FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 

Actual Actual Actual Actual Actual

Annualized 

CR

Request

Appropriated Resources $48,927 $51,721 $50,976 $53,385 $53,375 $53,127 $57,741

Reimbursables $3,277 $3,506 $3,681 $3,143 $3,217 $3,798 $3,798

Transfers In/Out 1/ $0 $468 $0 $0 $197 $0 $0

Budget Activity Total $52,204 $55,695 $54,657 $56,528 $56,789 $56,925 $61,539

FTE 2/ 235 224 223 234 223 247 255

1/ TEOAF Strategic Support Fund

2/ Includes 5 FTE from Puerto Rico cover-over reimbursables

Measure FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2017 FY 2018 FY 2019

Actual Actual Actual Actual Actual Target Target Target

Amount of Revenue Collected 

Per Program Dollar

457 457 437 414 406 400 350 350

Percent of Voluntary 

Compliance from Large 

Taxpayers in Filing Tax 

Payments Timely (In Terms of 

Revenue)

92 90 88 87 85 90 90 90

Collect the Revenue Budget and Performance

($57,741,000 from direct appropriations, $3,798,000 from reimbursable resources):

This budget activity includes all tax processing, verification, enforcement, and outreach efforts 

related to administering the federal tax code for alcohol, tobacco, firearms, and ammunition

products, and supports Treasury’s Strategic Objective 1.1 (Tax Law Implementation). TTB 

collects approximately $22 billion in federal tax revenue annually from more than 14,000

businesses. TTB’s tax base includes distilleries, breweries, and wineries, which have boomed in 

recent years, as well as manufacturers and importers of tobacco and firearms. TTB extends the 

reach of its enforcement resources through advanced analytics and risk-based audits and 

investigations. To ensure a level playing field for all those engaged in the trade of these strictly 

regulated commodities, TTB also takes appropriate enforcement action to detect and address 

diversion activity to ensure all products sold in the marketplace are properly taxpaid.

Other Resources (Offsetting Collections/Reimbursables).................................... $3,798,000

Other resources that fund this budget activity include reimbursement for the operating costs of 

the TTB Puerto Rico field office, which are offset against the roughly $400 million in taxes 

collected on the alcohol beverage products that are manufactured in Puerto Rico and imported to

the United States (cover-over payments); reimbursement from the Community Development 

Financial Institutions Fund (CDFI) for IT services provided by TTB; and funding from the 

Department of the Treasury’s Executive Office for Asset Forfeiture (TEOAF) mandatory 

account to cover investigative expenses, data systems, and training.
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Description of Performance – Collect the Revenue:

In FY 2017, TTB met one of its two annual targets for the performance measures under the 

Collect the Revenue budget activity. Taken together, TTB’s measures of the Amount of 

Revenue Collected per Program Dollar and the Percent of Voluntary Compliance from Large 

Taxpayers in Filing Payments Timely demonstrate the effectiveness and efficiency with which 

TTB operates its revenue collection function. TTB’s strategies for achieving results for both 

measures include applying technology to streamline internal and external processes and 

leveraging data sources to direct our outreach and enforcement efforts. At the FY 2019 funding 

level, TTB will review these strategies and their timelines in an effort to prevent diminished 

effectiveness in tax administration and to help ensure resources are deployed to maximize the

deterrent effect. 

Improve Efficiency of Tax Collection 

The Amount of Revenue Collected per Program Dollar measure uses annual collections figures 

and the actual expenditures and obligations for collection activities to quantify the efficiency of 

the TTB tax collection program. In FY 2017, TTB achieved a return on investment of $406 for 

every program dollar spent on collection activities, which exceeded its annual performance target 

of $400. The year-to-year decline in performance represents continued declines in tobacco 

revenue that, after peaking in FY 2010 following the tax rate increases enacted in 2009, have

steadily declined in line with shifts in consumption patterns, product manufacturing, and trade.

In setting its FY 2019 performance target, TTB examined historical collections trends across 

each of its regulated commodities, other predictors that influence consumer behaviors, and recent 

Craft Beverage Modernization and Tax Reform provisions enacted by the Tax Cuts and Jobs Act

of 2017. TTB used revenue impact estimates from the Joint Committee on Taxation to adjust its 

projected alcohol excise collections, which generally indicate reduced collections over the 

effective period of these provisions due, in part, to reduced tax rates for producers across all 

spirits, wine, and malt beverages based on production. Further, as illustrated by the below table, 

the 2009 changes to the federal tax rates on certain tobacco products have resulted in increased 

tobacco tax collections by TTB, although the amount of the increase has generally decreased 

since FY 2010, the first full fiscal year following the tax rate increases. In accounting for these 

factors, TTB established a targeted performance level of 350:1 for fiscal years 2018 – 2019. 
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Excise Tax and Other Collections by Fiscal Year

Dollars in Thousands

FAET – Firearms and Ammunition Excise Tax; SOT – Special Occupational Tax; FST – Floor Stocks Tax

In FY 2019, to meet its performance target of $350, TTB will continue to improve efficiencies 

and results in its tax enforcement program through systems and process improvements related to

tax verification. TTB will evaluate and develop options to increase automation in the detection, 

notification, assessment, and collection of excise taxes due to preserve staff time for substantive 

tax analysis. Additionally, TTB will continue to use data analytics and other intelligence to 

efficiently deploy its limited enforcement resources. A primary focus for TTB tax enforcement 

continues to be diversion schemes related to imported and exported alcohol and tobacco products

given the high profit potential and relative ease. Investigations to date have identified significant 

tax liabilities and remain an enforcement priority under the Craft Beverage Modernization and

Tax Reform provisions, effective through calendar year 2019, which include reduced rates for 

alcohol importers as well as domestic producers. 

TTB will review its plans to modernize its tax systems to increase automation and improve tax 

verification. TTB will also review planned enhancements to data analytics tools that support 

identification of high-risk activities for audit and the investigation and criminal prosecution of 

such identified activities. Further, TTB will review its enforcement plans to address potential 

vulnerabilities and new tax evasion schemes arising from both the new tax legislation and TTB’s 

expanded enforcement responsibilities in the interstate smuggling of cigarettes. The 

administration has proposed legislative changes to consolidate federal alcohol and tobacco tax 

authorities within Treasury, which will integrate ATF authorities into TTB’s federal excise tax 

enforcement program.

Increase Voluntary Compliance from Taxpayers

Fostering voluntary compliance among taxpayers is a primary tax administration strategy for 

TTB. The Percent of Voluntary Compliance from Large Taxpayers in Filing Tax Payments 

Timely is a key performance metric that shows the rate of compliance by large taxpayers (i.e., 

those that pay more than $50,000 in annual taxes) in voluntarily filing their tax payments on or 

before the scheduled due date. In FY 2017, TTB achieved a compliance rate of 85 percent from 

its large taxpayers, which fell below the performance target of 90 percent. The declining 

compliance rate in recent years is due, in part, to an increase in the universe of industry members 

paying more than $50,000 in annual taxes due to continued industry growth and expansion, 

Fiscal

Year Alcohol Tobacco FAET SOT FST Other Total

2008 $ 7,420,576 $ 6,851,705 $312,622 $ 448 $ - $ 634 $ 14,585,985

2009 7,424,292 11,548,504 452,693 272 1,192,375 970 20,619,106

2010 7,476,789 15,913,479 360,813 300 8,558 180 23,760,119

2011 7,594,330 15,515,073 344,262 268 5,220 2,257 23,461,410

2012 7,856,391 15,002,616 514,622 249 5,942 61 23,379,881

2013 7,851,953 14,321,017 762,836 280 1,521 38 22,937,645

2014 7,924,951 13,552,711 768,927 332 465 2 22,247,388

2015 7,997,467 13,620,497 638,518 288 2,444 7 22,259,221

2016 8,075,476 13,274,371 749,789 258 245 505 22,100,644

2017 8,103,714 12,966,317 761,630 227 69 521 21,832,478

Average $ 7,772,594 $ 13,256,629 $566,671 $ 292 $ 121,684 $ 518 $ 21,718,388
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which increasingly includes more recent permittees who may be less familiar with TTB’s 

statutory and regulatory requirements. Although TTB analysis indicates that this trend does not

represent a significant revenue risk, non-compliance undermines the level playing field, which is 

critical for small producers who comprise the majority of TTB taxpayers. 

In FY 2019, TTB will strive to meet its established performance target of a 90 percent voluntary 

compliance rate for its large taxpayers through complementary strategies that focus on promoting 

electronic filing options to enable taxpayers to file complete, accurate, and timely tax returns and 

payments; improving online guidance and industry outreach strategies, particularly for those 

industry members with expanding operations; and maintaining an enforcement presence to 

encourage voluntary compliance. Moving forward on all three fronts is required to ensure that 

TTB strikes the appropriate balance between supporting businesses in establishing compliant 

operations while ensuring adequate coverage of the high-risk activity that undermines lawful 

business activity. 

TTB will review its enforcement plans and workforce capacity to continue its mission’s 

execution. Enactment of the legislative proposal will expand TTB’s responsibilities to include 

enforcement of interstate cigarette smuggling laws. TTB will also implement significant 

changes to the tax rates and credits applicable to the alcohol industry under P.L. 115-97. TTB 

will also review its current criminal investigations given the proposed transfer of CCTA, 

particularly as the program ramps up, and work closely with DOJ to effectively transition active 

cases. Since TTB commenced its criminal enforcement program in FY 2011, these 

investigations have resulted in more than $600 million in tax liabilities (a 4:1 return on 

investment) and numerous criminal convictions, which are an essential component of tax 

enforcement. Consolidating federal alcohol and tobacco tax jurisdiction within Treasury, once 

enacted and fully funded, will result in a more effective and efficient enforcement approach for 

detecting and addressing tax evasion schemes that deny federal and state revenues and undercut 

legitimate businesses.
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2.1.2 Protect the Public Resources and Measures

Dollars in Thousands

Resource Level FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 

Actual Actual Actual Actual Actual

Annualized 

CR

Request

Appropriated Resources $45,727 $47,279 $47,451 $52,709 $53,527 $57,555 $56,686

Reimbursables $2,670 $3,236 $2,451 $2,577 $2,637 $3,114 $3,114

Transfers In/Out 1/ $0 $432 $0 $0 $0 $0 $0

Budget Activity Total $48,397 $50,947 $49,902 $55,286 $56,164 $60,669 $59,800

FTE 2/ 241 246 243 246 265 270 247

1/ TEOAF Strategic Support Fund

2/ Includes 5 FTE from Puerto Rico cover-over reimbursables

Measure FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2017 FY 2018 FY 2019

Actual Actual Actual Actual Actual Target Target Target

Percent of Electronically Filed 

Permit Applications 73 80 81 81 85 82 87 90

Percentage of Permit 

Applications Processed within 

Service Standards

50 58 47 32 48 85 85 85

Initial Error Rate for Permit 

Applications B 72 67 57 60 25 25 25

Customer Satisfaction Rate with 

TTB Permitting Process N/A B 76 71 80 80 80 80

Percent of Electronically Filed 

Label and Formula Applications 90 93 94 97 98 95 95 95

Percentage of Alcohol Beverage 

Label and Formula Applications 

Processed within Service 

Standards 1/

50 71 80 80 62 85 85 85

Initial Error Rate for Label and 

Formula Applications

B 39 42 44 43 25 25 25

Key: B - Baseline

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).

Protect the Public Budget and Performance

($56,686,000 from direct appropriations, and $3,114,000 from reimbursable resources): 

This budget activity funds the programs that ensure the integrity of the products and industry 

members in the marketplace; promote compliance with federal laws and regulations by the more 

than 92,700 businesses that TTB regulates; facilitate fair and lawful domestic and international 

trade in the alcohol and tobacco commodities; and provide full and accurate alcohol beverage 

product information to the public as a means to prevent consumer deception. These activities 

support Treasury’s Strategic Goal 1 (Boost U.S. Economic Growth) and Strategic Objective 1.3 

(Trusted Currency and Services) to deliver trusted currency and services that enable citizens and 
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businesses to participate in the economy and Strategic Objective 1.4 (Free and Fair Trade) to 

advance a free and fair trade environment for U.S. businesses. 

Other Resources (Offsetting Collections/Reimbursables).................................... $3,114,000

Other resources that support this budget activity include reimbursement for the operating costs of 

the TTB Puerto Rico field office, which are offset against the roughly $400 million in taxes 

collected on the alcohol beverage products that are manufactured in Puerto Rico and imported 

into the United States (cover-over payments); reimbursement by the Community Development 

Financial Institutions Fund (CDFI) for TTB’s IT services; and funding from the Department of 

the Treasury’s Executive Office for Asset Forfeiture (TEOAF) mandatory account to cover 

investigative expenses, data systems, and training.

Description of Performance – Protect the Public:

In FY 2017, TTB met three of its seven annual targets for the performance measures under its 

Protect the Public budget activity. TTB reports on its success in meeting Treasury’s objective 

1.3 Trusted Currency and Services to deliver trusted currency and services that enables citizens 

and businesses to participate in the economy and TTB’s goal to protect U.S. businesses and 

consumers through five principal performance measures. These measures help TTB monitor the 

degree to which it is meeting the service standards it establishes for permit, label, and formula 

applications; the impact that electronic filing initiatives are having on improved service delivery; 

and the level of satisfaction that prospective industry members have with TTB’s permitting 

process. In FY 2019, TTB is introducing two new measures that track the error rate on permit 

applications and label and formula applications, as applications submitted with errors 

significantly add to TTB’s overall workload and present a critical risk to TTB achieving its 

service standards. TTB’s strategies to achieve its performance targets for these measures include 

a combination of streamlining internal processes, implementing enhancements to online filing 

systems, modernizing application requirements, and providing clearer guidance to industry 

members.

Improve Efficiency and Effectiveness of Permitting Process

TTB protects consumers by screening permit applicants to ensure only qualified persons engage 

in the alcohol, tobacco, firearms, and ammunition industries. For this purpose, in FY 2017, TTB 

processed approximately 8,000 original permit applications, performing investigations into highrisk applicants to meet TTB’s business integrity objective. TTB monitors its timeliness in 

approving permit applications through its measure of the Percentage of Permit Applications 

Processed within Service Standards. As businesses rely on accurate information related to TTB 

service delivery in their operational planning, this measure provides important data related to a 

key outcome for TTB and its stakeholders. 

In FY 2017, TTB met its 75-day service standard for 48 percent of original permit applications, a 

significant year-to-year improvement but still well below the 85 percent performance target. In 

recent years, the increased volume of submissions, particularly in the more complex application 

types related to producing alcohol beverage products, has caused approval times to increase. 

Approval times spiked to over 200 days in FY 2016 for alcohol producer applications, creating 

potential financial hardships for these applicants. In FY 2017, TTB realized the benefits of 

several crosscutting initiatives to update its permitting business process instituted over the last 
TTB - 16

two years. The initiatives included policy, workflow, and system changes that, by year-end, 

combined to result in a dramatic reduction in the backlog of applications and average approval 

times below 100 days. 

At the FY 2019 funding level, TTB expects to meet its 75-day standard for 85 percent of permit 

applications through a combination of industry education efforts and ongoing enhancements to 

Permits Online. Additionally, TTB intends to complete a comprehensive review of its 

qualification requirements, informed by public comment, to streamline TTB’s permit 

applications and further reduce burdens related to the filing process. This review, combined with 

the FY 2019 investment in TTB’s permitting system, will support TTB in reaching its current 

service standard as well as its long-term goal of reducing service times to 60 days or less across 

alcohol application types.

According to its measure of the Percent of Electronically Filed Permit Applications, which tracks 

the electronic filing rate for new business applications, TTB received approximately 85 percent 

of permit applications via Permits Online in FY 2017. This year-to-year increase is attributed to 

TTB.gov improvements to better direct applicants to the online filing system. TTB expects this 

trend to continue following the release of the redesigned Permits Online system, targeted for 

FY 2018, which will include improved guidance for first-time filers to reduce errors on 

applications that delay processing times as well as a simplified method for amending an existing 

permit that replaces the current paper-based process. These system changes, combined with 

effective outreach and training for industry, will support TTB in achieving its targeted electronic 

filing rate of 90 percent in FY 2019.

The Permits Online enhancements should also contribute to improved outcomes for TTB’s new 

measure of the Initial Error Rate on Permit Applications, which tracks how many applications 

are submitted either incomplete or with errors. This measure is critical to timely processing, as 

the error rate significantly influences total approval time, given the necessary back-and-forth 

with applicants to obtain additional documentation or accurate information. In FY 2017, the 

error rate trended negatively, with 60 percent of original permit applications submitted with 

errors. This rate is well above the target of 25 percent, and reflects the need for improved 

guidance and system validations to ensure applicants are able to submit correctly the first time. 

Following the FY 2018 system release, and planned TTB.gov enhancements, TTB expects to 

draw closer to its target by year-end. Broader changes to streamline permit application 

requirements, most of which will require rulemaking to fully implement, are underway and may 

be required before TTB can achieve its targeted performance level.

Increase Customer Satisfaction with TTB Service Delivery 

TTB also measures its performance in its permitting function by surveying the businesses that 

apply for a TTB permit. TTB monitors the Customer Satisfaction Rate with TTB’s Permitting 

Process by using an e-mail survey to assess how satisfied businesses are when applying for a

permit through Permits Online. Satisfaction rates in FY 2017 met the annual target of 80 

percent, driven in large part by improvements in the level of service received and timeliness of 

TTB’s response. TTB expects satisfaction rates to remain at or above target in FY 2019, based 

on planned initiatives to streamline the application and filing process, beginning with new 

features planned for release in Permits Online in FY 2018 that will improve the overall customer 
TTB - 17

experience with the system. TTB will also implement process changes to improve the level of 

service provided to customers seeking live assistance with the permit application process via 

TTB’s call center.

Improve Efficiency and Effectiveness of Alcohol Beverage Label Processing

TTB protects U.S. consumers by ensuring that the alcohol beverage products sold at retail outlets 

are properly labeled and comply with federal production standards. In FY 2017, TTB received 

approximately 170,000 Certificate of Label Approval (COLA) applications and 14,500 formula 

applications, which reflect levels at or above the prior year and indicate the ongoing expansion of 

the alcohol beverage industry. Given the importance of timely TTB approvals and the negative 

impact that delays have on U.S. businesses, TTB monitors its ability to provide timely and 

consistent service through its measure of the Percentage of Alcohol Beverage Label and Formula 

Applications Processed within Service Standards. TTB combines label and formula applications 

in this measure given the interdependent nature of these approvals. 

In FY 2016, under its service standards of 30 days for a label approval and 45 days for a formula 

approval, many businesses were waiting nearly three months on average from the time they filed 

for a formula approval to being able to bottle and distribute a new product. In FY 2017, with 

additional staffing resources hired using directed funding to accelerate these approvals, TTB 

established new service standards of 10 days for both label and formula applications. Following 

a period of onboarding and training, which affected performance in the first half of FY 2017, 

TTB significantly reduced approval times and, by September 2017, achieved the 10-day standard 

for 85 percent of labels and formulas. At the FY 2019 funding level, based on anticipated 

staffing levels and recent spikes in label and formula submissions driven by imported products, 

TTB expects to revise its service standard from 10 days to 15 days for 85 percent of applicants. 

In recent years, to help address processing delays, TTB has used its authority to implement riskbased policy changes to reduce the volume of label and formula applications without 

compromising TTB’s market protection role. These changes successfully reduced the volume of 

label and formula submissions in the short-term; however, in FY 2017, industry growth 

combined with market trends toward products that require an approved formula prior to 

production have resulted in increased submissions that have offset these reductions. At the same 

time, TTB has employed a complementary strategy to reduce total workload volume through 

initiatives to reduce label and formula application errors. Application errors are a key driver of 

processing times, as additional review is required for each resubmitted application. TTB has 

established a new measure of the Initial Error Rate of Label and Formula Applications to 

monitor error trends and evaluate the effect of system and guidance enhancements on first-time 

approvals. In FY 2017, the initial error rate was 43 percent, falling short of the targeted 

performance level of 25 percent, indicating that TTB will need to expand and improve on the 

system-based help and online guidance features that it implemented this year. 

In FY 2019, TTB will continue to make iterative enhancements to COLAs Online and Formulas 

Online, informed by user testing and feedback, which will include additional help features and 

system-based validations to reduce application errors. According to its measure of the Percent of 

Electronically Filed Label and Formula Applications, TTB receives 98 percent of applications 

via COLAs Online and Formulas, indicating that continued focus on system validations is 
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warranted and will support performance goals in increasing accurate applications and 

accelerating approval times. TTB expects that these ongoing improvements will help TTB 

continue to attract users to its online systems and maintain performance above its 95 percent

target in FY 2019.

Further, in FY 2019, TTB will also continue initiatives to improve industry guidance, including 

the labeling modernization project, which will update and streamline the labeling regulations to 

reflect current TTB policy and industry practices, and increasing the guidance on TTB.gov 

related to obtaining label and formula approval for alcohol beverage products.

C – Changes in Performance Measures

With the publication of Treasury’s Strategic Plan for FY 2018-2022, TTB will work this year to 

baseline its performance against the new strategic objectives. This could result in additional 

changes to performance measures in the FY 2020 budget.

Performance Measure or 

Indicator Change and Justification

1. Initial Error Rate for Permit 

Applications (New)

Initial error rate is defined as the total percentage of 

electronic permit applications received that required 

TTB to return to the applicant for corrections (missing or 

incomplete application fields) or additional information 

(missing or incomplete documentation to support the 

application). The data will come from Permits Online. 

This measure provides information on the volume and 

type of errors on applications and informs TTB 

initiatives to address them, a critical strategy given that a 

high volume of errors impedes timely review and 

approval as the total processing time includes all backand-forth with applicants.

2. Initial Error Rate for Label and 

Formula Applications (New)

Initial error rate is defined as the total percentage of 

electronic label and formula applications received that

required TTB to return to the applicant for corrections 

(missing or incomplete application fields) or revisions 

(noncompliance with federal labeling and/or production 

requirements). The data will come from COLAs Online 

and Formulas Online. This measure provides 

information on the volume and type of errors on 

applications and informs TTB initiatives to address 

them, a critical strategy given that a high volume of 

errors impedes timely review and approval as the total 

processing time includes all back-and-forth with 

applicants.
TTB - 19

Section III – Additional Information

A – Summary of Capital Investments

Information Technology

TTB’s Strategic Plan establishes the vision and objectives for the bureau in the business context. 

TTB’s Information Technology (IT) Strategic Plan is a five-year plan based on its business 

strategy, which includes the bureau’s mission, vision, goals, and objectives from an IT 

perspective. This plan charts the course the bureau will follow in the coming years to develop 

and implement IT solutions that are aimed at streamlining the collection of data, leveraging web 

technologies, and continuing to make the Internet the method of choice for the reporting and 

exchanging of information between businesses and TTB. By aligning business and technical 

strategy, TTB is able to leverage technology to enable the bureau to meet its objectives in the 

most efficient and cost-effective manner while identifying ways to minimize system redundancy. 

TTB has no major IT investments based on the OMB and the Department of Treasury criteria. 

Several non-major investments, however, directly support the mission, strategy, and day-to-day 

operations of the bureau. These include:

TTB Tax System: This investment consists of several component applications that ensure fair 

and proper collection of revenue from the industry members for alcohol, tobacco, firearms, and 

ammunition excise taxes and to ensure compliance with the excise tax regulations.

TTB Regulatory System: This investment includes applications that streamline the beverage 

and nonbeverage alcohol formula approval process and COLA issuance for tax and regulatory 

compliance.

TTB General Support Services: This investment provides TTB users with the infrastructure 

applications necessary to conduct daily business.

TTB Enterprise Architecture: This investment supports strategic management of IT operations 

(e.g., business process redesign efforts not part of an individual investment, enterprise 

architecture development, capital planning and investment control processes, procurement 

management, and IT policy development and implementation) and costs for Chief Information 

Officer functions.

In addition to leveraging IT to support the mission, strategy, and day-to-day operations of the 

bureau, TTB supports and maintains strategy alignment with OMB and Treasury through 

enterprise-wide IT initiatives. These include: Cyber Security; IT Infrastructure; Electronic 

Identity and Access Management (HSPD-12); Enterprise-wide Contracts and Services; and 

Program Metrics and Milestones.

Scientific Equipment for Laboratories

This investment will enable TTB’s chemists to provide accurate and reproducible scientific data 

and laboratory results to support regulatory compliance, tax enforcement, tax classification, 

rulemaking, and investigations for both the alcohol and tobacco commodities. Laboratory 
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instruments require periodic replacement, as they have finite lifecycles due to use and as 

scientific technology advances render older instruments obsolete. Periodic replacement of the 

existing technologies is essential for TTB laboratories to remain state-of-the-art and effective to 

support the bureau’s mission, strategy, and day-to-day operations.

A summary of capital investment resources, including major information technology and nontechnology investments can be found at:

http://www.treasury.gov/about/budget-performance/Pages/summary-of-capital-investments.aspx

This website also contains a digital copy of this document.