Department of the Treasury 

Alcohol and Tobacco Tax and 

Trade Bureau 

Congressional Budget 

Justification and Annual 

Performance Plan and Report 

FY 2021 
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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 Object Classification (Schedule O) Obligations ................................................................... 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 .................................................................... 11

2.1.1 – Collect the Revenue Resources and Measures .............................................................. 11

Collect the Revenue Budget and Performance ......................................................................... 11

2.1.2 – Protect the Public Resources and Measures .................................................................. 16

Protect the Public Budget and Performance ............................................................................. 16

C – Changes in Performance Measures .................................................................................... 22

D – Evidence-Building Activity ............................................................................................... 22

Section III – Additional Information ........................................................................................ 23

A – Summary of Capital Investments ....................................................................................... 23

 
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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; ensure only qualified businesses enter the alcohol and 

tobacco industries; 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. In FY 2019, TTB 

collected nearly $20 billion in excise taxes from the alcohol, tobacco, firearms, and ammunition 

industries. 

As the most efficient means of tax administration, facilitating voluntary compliance will remain 

a priority for TTB in FY 2021. To this end, TTB will make critical IT investments to modernize 

TTB’s tax system with the aim of increasing electronic submissions, improving timely filings, 

and supporting taxpayer compliance. Further, in FY 2021, TTB will enhance its guidance related 

to Federal alcohol, tobacco, firearms, and ammunition laws and regulations, and pursue 

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

strategies support the President’s Management Agenda and are critical for TTB to mitigate 

potential performance impacts as TTB continues to prioritize its enforcement of the Craft 

Beverage Modernization and Tax Reform provisions of P.L. 115-97, recently extended through 

December 31, 2020. In the first two years of enactment, Federal revenues have declined, with the 

full impact not yet known. TTB expects that administration and enforcement will continue to 

pose significant challenges, particularly given the multitude of tax rates and complexity of 

verifying their appropriate application, and will continue to coordinate with CBP to engage in 

data-driven enforcement with regard to imported products. 

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 2021 request supports an initial investment of $1.5 million in start-up funding 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 
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and local law enforcement partners, will provide positive returns in terms of increased revenue 

and reduced criminal activity. 

As demand for TTB services has grown in line with the expanding alcohol industries, TTB has 

responded through updated burden-reducing policies, improved systems, and streamlined 

processes to support 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 2021, TTB will continue to focus on providing timely 

service to businesses seeking permit, label, and formula approvals. At the FY 2021 funding level, 

TTB will prioritize improvements to its permitting and labeling online filing systems as part of 

its IT modernization strategy to develop an integrated online experience for all tax and regulatory 

transactions with TTB, resulting in improved usability across the bureau’s online platforms. As 

part of these improvements, TTB will also continue to focus on providing clear and consistent 

industry guidance to facilitate the submission of compliant filings. 

1.1 – Appropriations Detail Table 

Dollars in Thousands FY 2019 FY 2020 FY 2021 FY 2020 to FY 2021 

Appropriated Resources Operating Plan 1/ Enacted Request % Change 

New Appropriated Resources FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT 

Collect the Revenue 209 $58,856 220 $57,513 228 $62,086 3.6% 8.0% 

Protect the Public 253 $60,744 262 $62,087 260 $63,751 -0.8% 2.7% 

Subtotal New Appropriated Resources 462 $119,600 482 $119,600 488 $125,837 1.2% 5.2% 

Other Resources 

Unobligated Balances from Prior Years 2/ 23 $5,079 20 $4,601 20 $3,908 0.0% -15.1% 

Transfers In/Out 3/ 0 $597 0 $0 0 $0 NA NA 

Offsetting Collections and Reimbursables 4/ 10 $6,239 10 $7,437 10 $7,437 0.0% 0.0% 

Subtotal Other Resources 33 $11,915 30 $12,038 30 $11,345 0.0% -5.8% 

Total Budgetary Resources 495 131,515 512 $131,638 518 $137,182 1.2% 4.2% 

 Note: FY 2019 Other Resources and Full-time Equivalents (FTE) reflect actuals. 

1/ FY 2019 New Appropriated Resources by Budget Activity reflect levels appropriated in P.L. 116-6, the Consolidated Appropriations Act of 

2019. FY 2019 FTE and Other Resources are Actual Obligations. For further details on the execution of these resources see the 2021 Budget 

Appendix chapter for the Department of the Treasury. 

2/ Includes carryover of prior two-year set aside funding for trade practice enforcement and recoveries of 50 percent in unobligated balances 

from prior one-year funding. 

3/ Transfer from TEOAF Secretary's Enforcement Fund. 

4/ Includes reimbursements from the Treasury Executive Office of Asset Forfeiture (TEOAF) Mandatory Fund and Community Development 

Financial Institutions Fund (CDFI), and offsetting collections from Puerto Rico Cover-Over Program. 
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1.2 – Budget Adjustments Table 

Dollars in Thousands 

 FTE Amount 

FY 2020 Enacted 502 $119,600 

Changes to Base: 

Maintaining Current Levels (MCLs): 0 $2,748 

Pay Annualization (2020 3.1% pay raise) 0 $590 

Pay-Raise (1.0% average pay raise) 0 $575 

FERS Contribution Increase 0 $714 

Non-Pay 0 $869 

Other Adjustments: 6 $900 

Annualization of FY 2020 Hiring 6 $900 

Subtotal Changes to Base 6 $3,648 

FY 2021 Current Services 508 $123,248 

Program Changes: 

Program Decreases (6) ($1,500) 

Enforcement to Maintain a Level Playing Field (6) ($1,500) 

Program Increases: 6 $4,089 

MyTTB IT System Modernization 0 $2,589 

Consolidation of Federal Alcohol & Tobacco Tax Jurisdiction 6 $1,500 

FY 2021 President's Budget Request 508 $125,837 

C – Budget Increases and Decreases Description 

Maintaining Current Levels (MCLs) ........................................................+$2,748,000 / +0 FTE 

Pay Annualization (3.1%) +$590,000 / +0 FTE 

Funds are requested for annualization of the January 2020 3.1% average pay raise. 

Pay-Raise (1.0% in 2021) +$575,000 / +0 FTE 

Funds are requested for a 1.0% average pay raise in January 2021. 

FERS Contribution Increase +$714,000 / +0 FTE 

Funds are requested for the Federal Employee Retirement System (FERS) contribution rates 

effective FY 2021. 

Non-Pay +$869,000 / +0 FTE 

Funds are requested for non-labor expenses such as travel, contracts, rent, supplies, 

and equipment. 

Other Adjustments .................................................................................+$900,000 / +6 FTE 

Annualization of FY 2020 Hiring +$900,000 / +6 FTE 

This adjustment reflects the annualization of new hires brought onboard during the second half of 

FY 2020. 

Program Decreases ....................................................................................-$1,500,000 / -6 FTE 

Enforcement to Maintain a Level Playing Field -$1,500,000 / -6 FTE 

TTB will reduce its investigators and support staff dedicated to the Trade Practice Enforcement 

program. TTB enforcement addresses unlawful trade practices in the marketplace and ensures a 
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level playing field for U.S. alcohol manufacturers and distributors. With two-year set aside 

funding provided in fiscal years 2017-2020, TTB added staffing to increase its capacity for trade 

practice investigations from approximately one each year to approximately 50 active cases 

annually. At the FY 2021 funding level, TTB will maintain fewer active cases and continue its 

process of evaluating and prioritizing the highest risk revenue and trade practice cases as part of 

its annual enforcement planning process. 

Program Increases ......................................................................................+$4,089,000 / +6 FTE 

MyTTB IT System Modernization +$2,589,000 / +0 FTE 

TTB will continue to invest in IT system modernization to transform the online experience for 

TTB industry members. The desired end-state, known as MyTTB, will provide an integrated and 

personalized online system to help industry members navigate the process of doing business with 

TTB. This initiative would transform the industry member experience with TTB incrementally, 

developing and delivering functional modules in phases to provide a seamless and consistent 

experience across all permitting, tax, and labeling interactions with TTB. MyTTB would also 

facilitate improved data integration across TTB programs and systems, enabling TTB to better 

detect noncompliance and fraud, validate application data, automate workflows, and increase 

data-driven decision making. 

Consolidation of Federal Alcohol & Tobacco Tax Jurisdiction +$1,500,000 / +6 FTE 

TTB requests start-up funding 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 to 

conduct the complex, multi-state investigations associated with contraband cigarette smuggling. 

The requested funding level supports 6 FTE, which will allow TTB to begin hiring auditors, 

investigators, and other program staff. Further, TTB will hire criminal enforcement agents under 

an expansion of its existing interagency agreement with the IRS. 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. 
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1.3 Object Classification (Schedule O) Obligations 

Dollars in Thousands

 FY 2019 FY 2020 FY 2021 

Object Classification 

Actual 

Obligations 

Estimated 

Obligations 

Estimated 

Obligations 

11.1 - Full-time permanent 53,475 57,092 60,195 

11.5 - Other personnel compensation 910 941 941 

11.5 - Overtime 671 650 639 

11.8 - Special personal services payments 0 0 0 

11.9 - Personnel Compensation (Total) 55,056 58,683 61,775 

12.0 - Personnel benefits 17,695 20,225 21,988 

13.0 - Benefits for former personnel 18 5 5 

Total Personnel and Compensation Benefits $72,769 $78,913 $83,768 

21.0 - Travel and transportation of persons 2,065 2,058 1,919 

22.0 - Transportation of things 28 30 30 

23.1 - Rental payments to GSA 4,098 4,293 4,342 

23.2 - Rental payments to others 8 0 0 

23.3 - Communications, utilities, and miscellaneous charges 841 1,175 1,193 

24.0 - Printing and reproduction 210 315 315 

25.1 - Advisory and assistance services 15,630 14,198 13,845 

25.2 - Other services from non-Federal sources 14,989 12,877 13,540 

25.3 - Other goods and services from Federal sources 9,153 8,750 8,882 

25.4 - Operation and maintenance of facilities 22 22 22 

25.7 - Operation and maintenance of equipment 3,265 2,515 2,565 

26.0 - Supplies and materials 381 350 352 

31.0 - Equipment 3,126 1,795 1,872 

32.0 - Land and structures 193 152 0 

Total Non-Personnel $54,009 $48,530 $48,877 

Total Obligations 1/ $126,778 $127,443 $132,645 

 

Total Full-time Equivalents (FTE) 2/ 495 512 518 

1/ FY 2019 reflect actual obligations totaling $126.8 million, of which $120.6 million was from direct resources (new appropriations, 

carryover from prior years, and a TEOAF transfer) and $6.2 million was from reimbursable resources/offsetting collections. FY 2020 reflects 

anticipated obligations totaling $127.4 million, of which $120.5 million is from direct resources (new appropriations and carryover from prior 

years) and $6.9 million is from reimbursable resources/offsetting collections. FY 2021 reflects anticipated obligations totaling $132.6 million, 

of which $125.7 million is from direct resources (new appropriations and carryover from prior years) and $6.9 million is from reimbursable 

resources/offsetting collections. 

2/ FY 2019 FTE reflects actual total FTE of 495, of which 485 FTE was from direct resources and 10 FTE was from reimbursable 

resources/offsetting collections. FY 2020 reflects anticipated total FTE of 512, of which 502 FTE is anticipated from direct resources and 10 

FTE is anticipated from reimbursable resources/offsetting collections. FY 2021 reflects anticipated total FTE of 518, of which 508 FTE is 

anticipated from direct resources and 10 FTE is anticipated from reimbursable resources/offsetting collections. 
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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 

SALARIES AND EXPENSES 

For necessary expenses of carrying out section 1111 of the 

Homeland Security Act of 2002, including hire of passenger 

motor vehicles, [$119,600,000] $125,837,000; of which 

$5,000,000 shall remain available until September 30, 2022, of 

which not to exceed $6,000 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 [: Provided, That of the amount appropriated 

under this heading, $5,000,000 shall be for the costs of 

accelerating the processing of formula and label applications: 

Provided further, That of the amount appropriated under this 

heading, $5,000,000, to remain available until September 30, 

2021, shall be for the costs associated with enforcement of the 

trade practice provisions of the Federal Alcohol Administration 

Act (27 U.S.C. 201 et seq.)]. (Department of the Treasury 

Appropriations Act, 2020.)

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 to effect the 

transfer and facilitate Federal enforcement against tobacco smuggling has been developed in 

consultation with the Secretary of the Treasury and with the Attorney General. 
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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 five strategic goals that support economic growth and stability: 1) 

Tax Compliance; 2) Cross-Border Tax Risk; 3) Business Qualification; 4) Labeling 

Modernization; and 5) Training Revitalization. TTB’s strategic goal of Training Revitalization 

directly contributes to Treasury’s Strategic Goal 5 (Achieve Operational Excellence) through 

Strategic Objective 5.1 (Workforce Management) and underpins TTB’s performance across all 

of its goals and objectives. 

TTB’s strategic goals to improve Tax Compliance and address Cross-Border Tax Risk ensure 

that the Federal government has the resources needed to fund national priorities and support 

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. The FY 2021 funding level continues 

the investment in a multi-year IT system modernization effort, leveraging technology to improve 

mission outcomes as called for by the President’s Management Agenda. The industries TTB 

regulates have grown significantly in recent years, which present workload and enforcement 

challenges, particularly in light of recent tax reform legislation. Funding is required to address 

outdated tax and regulatory systems to support efficient filing and processing as well as facilitate 

data analytics to timely detect fraud, tax evasion, and critical compliance issues that undermine a 

level playing field. 

Additionally, in support of effective tax administration, 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 protect state and local governments from revenue losses 

from interstate cigarette smuggling as well as stop criminal organizations from profiting by 

smuggling cigarettes across state borders from low-tax states to high-tax states. 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 2021 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 effectively 

implement the program and generate leads for future investigations. 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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These investments will require tradeoffs across TTB’s enforcement programs. TTB conducts 

trade practice enforcement in the alcohol beverage marketplace in support of the Treasury’s 

Strategic Goal 1 (Boost U.S. Economic Growth) and Strategic Objective 1.4 (Free and Fair 

Trade) to advance a free and fair trade environment for U.S. businesses. At the FY 2021 funding 

level, TTB will rebalance enforcement priorities to sustain an enforcement presence to deter 

prohibited trade practice activities while establishing a CCTA enforcement program, including 

the timely and effective transition of CCTA cases from ATF to TTB. 

TTB’s strategic goals to enhance Business Qualification and implement Labeling Modernization 

ensure that lawful U.S. alcohol businesses are competitive and thriving in the global marketplace 

and support 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. Timely service remains a priority 

for TTB and the businesses it regulates. As the demand for TTB services from these businesses 

continues to rise, and within the FY 2021 resources, TTB will aim to sustain improved service 

times for permit, label, and formula approvals. TTB will combine IT system modernization 

efforts with streamlined application requirements and enhanced guidance to achieve its 

performance goals for customer service. These strategies will help TTB maintain timely service 

by increasing the number of first-time approvals and reducing delays caused by extensive backand-forth with industry members to correct initial applications containing errors.

 
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B – Budget and Performance by Budget Activity 

2.1.1 – Collect the Revenue Resources and Measures 

Dollars in Thousands FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 

 Resource Level Actual Actual Actual Actual Actual Enacted Request 

Appropriated Resources $52,721 $52,785 $53,560 $53,560 $58,856 $57,513 $62,086 

Unobligated Balances from Prior Years $109 $170 $125 $112 $214 $125 $125 

Transfers In/Out $0 $0 $197 $902 $597 $0 $0 

Offsetting Collections and Reimbursables $3,681 $3,143 $3,217 $3,923 $3,573 $4,176 $4,176 

Collect the Revenue Total $56,511 $56,098 $57,099 $58,497 $63,240 $61,814 $66,387 

FTE Total (Direct and Reimbursable) 223 234 223 212 213 224 232 

The FY 2015 - FY 2019 appropriated resources represents the approved operating plan. The FY 2015 - FY 2019 columns represent realized 

resources for full-time equivalents, reimbursables, and user fees. 

Performance Measure FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021 

Actual Actual Actual Actual Actual Target Target Target 

Amount of Revenue Collected Per Program 

Dollar 437 414 406 369 339 N/A N/A N/A 

Percent of Voluntary Compliance from 

Large Taxpayers in Filing Tax 

Returns/Payments Timely (by filing) 1/ 

88 87 85 85 DISC N/A DISC DISC 

Percent of Voluntary Compliance from 

Large Taxpayers in Filing Tax 

Returns/Payments Timely (by taxpayer) 1/ 

- - 60 69 69 95 95 95 

Percent of Voluntary Compliance from 

Large Taxpayers in Filing Operational 

Reports Timely (by taxpayer) 1/ 

- - 66 74 76 95 95 95 

Percent of Electronically Filed Tax Returns 

- Pay.gov 2/ 33 33 35 37 41 50 50 60 

Percent of Electronically Filed Operational 

Reports - Pay.gov 38 39 40 42 46 50 50 60 

1/ TTB developed new measures to evaluate and monitor taxpayer compliance for FY 2019, which will calculate compliance rates on a 

taxpayer basis, rather than a per filing basis; TTB also formally added a measure of the compliance rate for operational reports. 

2/ Minor adjustments to prior year data based on data quality review. 

Collect the Revenue Budget and Performance 

($62,086,000 from new direct appropriations, $125,000 from unobligated balances from the 

prior year, and $4,176,000 from reimbursable sources): 

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 $20 billion in Federal tax revenue annually from a tax base of nearly 

32,000 businesses. TTB’s regulated taxpayers include 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 those engaged in the trade of these 

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...................................................................................$4,301,000 

Unobligated Balances from the Prior Year..............................................................$125,000 

Offsetting Collections/Reimbursables................................................................. $4,176,000 

Other resources that fund this budget activity include unobligated balances from the prior year 

appropriation; reimbursement for the operating costs of TTB’s Puerto Rico field office, which 

are offset against the roughly $450 million in taxes collected on the alcohol beverage products 
TTB - 12 

that are manufactured in Puerto Rico and imported to the United States; 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. 

Description of Performance: 

TTB combines measures and indicators to demonstrate the effectiveness and efficiency with 

which TTB operates its tax administration function, including through facilitating voluntary 

compliance as well as field enforcement efforts to address critical threats to Federal revenues. 

Through FY 2021, TTB’s plans to improve tax compliance include updating its tax filings, 

processes, and technologies; enhancing its capacity to timely identify and address noncompliance through analytics and other detection tools; and continuing to improve taxpayer 

education and outreach. 

The Amount of Revenue Collected per Program Dollar indicator 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 2019, TTB achieved a return on investment of $339 for 

every program dollar spent on collection activities. The year-to-year decline represents continued 

decreases in tobacco revenue that, after peaking in FY 2010 following the significant tax rate 

increases enacted in 2009, have steadily declined in line with shifts in consumption patterns, 

product manufacturing, and trade. Annual alcohol revenue is also trending down, likely due to 

the recent tax reform legislation that lowered effective tax rates across all commodities and 

expanded eligibility for reduced rates and credits, currently in effect through December 31, 2020. 

In total, revenue collections are down 4 percent between FY 2018 and FY 2019; however, the 

full impact of these provisions may not yet be known. Going forward, TTB will continue to 

monitor its return on investment for its Collect the Revenue activities as a key indicator, with the 

negative collections trend likely to continue into FY 2020 based on historical data and other 

external factors. 

As the most efficient means of tax collection, fostering voluntary compliance among taxpayers is 

a primary tax administration strategy for TTB. The Percent of Voluntary Compliance from Large 

Taxpayers in Filing Tax Returns and 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 required tax returns and payments on or before the scheduled due date. 

In FY 2019, TTB revised its method for this metric and added a new measure of the Percent of 

Voluntary Compliance from Large Taxpayers in Filing Operational Reports Timely. Under the 
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new measure methodology, TTB evaluates filing compliance at the taxpayer level, rather than on 

a per filing basis, using multiple compliance factors and strict tolerances based on revenue 

exposure. A taxpayer must meet all factors to be considered compliant for the year. TTB plans to 

use this information to take a risk-driven enforcement approach based on significant patterns of 

non-compliance with filing requirements. 

In FY 2019, TTB achieved a compliance rate of 69 percent from its large taxpayers in filing 

required tax returns and payments, and a compliance rate of 76 percent from its large taxpayers 

in filing required operational reports, both of which fell below the performance target of 95 

percent. Results for FY 2019 are actual values through Q3 FY 2019 (due to data latency issues 

resulting from the high volume of paper filings). Although TTB analysis indicates that this trend 

does not represent a significant revenue risk, as late filings represent the majority of the 

compliance violations, non-compliance undermines the level playing field, which is particularly 

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

Improving voluntary compliance rates has proven challenging given the recent growth in the 

industries TTB regulates. In the last five years, the number of TTB taxpayers has increased over 

60 percent, which has created additional workload and enforcement challenges in maintaining 

industry compliance, particularly in light of recent tax reforms. This growth has cut across 

industry types, with the most significant increases in small businesses entering the alcohol 

industry. Over time, with resource challenges, TTB outreach efforts to educate industry members 

on tax requirements have also decreased. More recently, TTB has also faced competing 

enforcement priorities, including renewed efforts to address illicit trade practice activity in the 

alcohol industry, with directed funding for this purpose enacted in TTB’s budgets in FY 2017 – 

FY 2019. 

In fiscal years 2020-2021, improving compliance rates will remain a priority for TTB. At the 

requested funding level, plans through FY 2021 include refining TTB’s procedures for riskbased reviews of taxpayer accounts, which will include the integration of new analytics tools into 

internal processes to address identified non-compliance. Over the next several years, TTB also 

plans to improve its education and outreach strategies to drive compliant behavior across TTB 

taxpayers, including publishing new online guidance and tools. 

*Estimated result based on data through Q3 FY 2019 due to data latency issues with paper filings 

Large Taxpayer Compliance Rate –  

Returns/Payments (by taxpayer)

Large Taxpayer Compliance Rate –  

Operational Reports (by taxpayer)
TTB - 14 

In FY 2019, to facilitate the alcohol industry’s understanding of and compliance with new tax 

provisions signed into law under the TCJA, TTB maintained a dedicated section on TTB.gov to 

provide Frequently Asked Questions to respond to questions received from industry. As part of a 

coordinated outreach strategy, TTB updated the website on a rolling basis as additional guidance 

was available, which was also promoted through the TTB newsletter, feature articles on 

TTB.gov, and interviews with industry press and trade associations. In FY 2020, to support 

industry compliance, TTB will continue to actively manage its online guidance to provide 

current information on rules and requirements in response to any Congressional action to extend 

the craft beverage modernization provisions beyond December 31, 2020. 

TTB will also focus on improving tax compliance through developing the integrated, modernized 

system supported by the FY 2021 budget request. TTB relies on Pay.gov, a Bureau of the Fiscal 

Service system designed for government payments, for the electronic filing of tax returns and 

operational reports. TTB’s two measures to monitor the Electronic Filing Rates for Tax Returns 

and Operational Reports in Pay.gov support ongoing efforts to reduce paper filings. E-filing 

rates for tax returns and operational reports remain well below target, especially compared to 

other TTB e-filing systems. These low rates – which ended the year at 41 percent of tax returns 

and 46 percent of operational reports submitted electronically – impede TTB’s ability to timely 

and effectively detect and address non-compliance and add costs to making the data available for 

routine reconciliation and advanced analytics. Additional Pay.gov promotion may improve efiling rates in the near term to achieve its FY 2020 target of 50 percent, although more significant 

tax system modernization is likely required for TTB to reach its FY 2021 target of 60 percent. 

At the FY 2021 funding level, and informed by ongoing process improvement efforts, TTB 

intends to continue implementing phased releases to its tax system, including developing a 

custom external interface for electronic tax filings to increase e-filing rates and enhancing 

internal workflows to support TTB tax administration. In FY 2019, TTB deployed system 

releases to increase automation and address inefficiencies related to posting paper tax filings and 

amended tax returns, which are time-intensive, manual processes. Combined, these releases 

allow for more timely detection of non-compliance and enable TTB specialists to focus on higher 

priority, analytical work rather than manual processes. 

In addition, in FY 2019, due to the labor-intensive nature of TTB’s current tax administration 

processes, and to ensure that the resources dedicated to tax administration are commensurate 

with revenue risk, TTB initiated a broad-based evaluation of its tax return and operational report 

requirements. The evaluation generated recommendations to significantly decrease the amount of 

information collected as well as the frequency with which it is collected, reducing burden on 

industry and TTB in line with the President’s Management Agenda. The evaluation also included 

recommendations to address increased underreporting risks created by new tax reform 

provisions, which have been extended through December 31, 2020. This multi-year initiative 

will continue through FY 2021 to fully implement the required form and regulatory updates to 

achieve substantial burden reductions. These efforts should also boost overall tax compliance, 

particularly if developed in tandem with the planned modernization of TTB’s tax systems. 

Effective TTB tax administration also requires taking a data-driven approach to timely 

identifying potential tax evasion and fraud, which is even more critical in light of recent tax 
TTB - 15 

reform legislation. At present, resource-intensive manual analysis and reconciliation of multiple 

reports and returns, in combination with other data sources, by specialists, auditors, and 

investigators are required to detect and address high-risk activity. In fiscal years 2020 and 2021, 

TTB will focus on enhancing its analytics tools to facilitate TTB’s use of its tax information, in 

combination with other data sources such as import and export data, to more effectively target its 

limited resources to known evasion schemes, particularly those involving the cross-border trade 

in alcohol and tobacco products, which poses a significant risk to Federal revenues. 

Given the amount of import-related data that has become available in recent years through the 

International Trade Data System (ITDS) – and the new revenue risks posed by the import-related 

provisions of the recent tax reform legislation – TTB focused its data-driven enforcement efforts 

in FY 2019 on imported alcohol and tobacco products. In FY 2019, TTB made progress in 

mining this data and enhancing its analytics tools to detect illicit activity, such as importers 

operating without a TTB permit and importers misclassifying or underreporting entries of 

alcohol and tobacco products to CBP to evade excise taxes. 

In fiscal years 2020-2021, TTB will continue its efforts to improve import enforcement using 

ITDS data, including in conjunction with CBP’s Commercial Targeting and Analysis Center 

(CTAC), to detect and address the misclassification of imports to evade taxes. CTAC is an 

interagency center that provides access to a wide range of data sources about imports and 

exports, including real-time data on the cross-border trade of TTB-regulated products. Through 

FY 2021, TTB also plans to ensure continued coordination with CBP, including through the 

exchange and use of the data needed by both agencies to ensure that domestic and foreign 

producers are not improperly paying reduced tax rates or receiving credits on quantities 

exceeding those allowed by law. 

 
TTB - 16 

2.1.2 – Protect the Public Resources and Measures 

Dollars in Thousands 

 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 

 Resource Level Actual Actual Actual Actual Actual Enacted Request 

Appropriated Resources $47,279 $53,654 $57,879 $57,879 $60,744 $62,087 $63,751 

Unobligated Balances from Prior Years $109 $170 $125 $4,166 $4,865 $4,476 $3,783 

Transfers In/Out $0 $0 $0 $87 $0 $0 $0 

Offsetting Collections and Reimbursables $2,451 $2,577 $2,637 $2,366 $2,666 $3,261 $3,261 

Protect the Public Total $49,839 $56,401 $60,641 $64,498 $68,275 $69,824 $70,795 

FTE Total (Direct and Reimbursable) 243 246 265 273 282 288 286 

The FY 2015 - FY 2019 appropriated resources represents the approved operating plan. The FY 2015 - FY 2019 columns represent realized 

resources for full-time equivalents, reimbursables, and user fees. 

Performance Measure FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2019 FY 2020 FY 2021 

Actual Actual Actual Actual Actual Target Target Target 

Percentage of Permit Applications 

Processed within Service Standards 

(75 days) 

47 32 48 71 58 85 85 85 

Initial Error Rate for Permit Applications 

1/ 77 81 83 80 71 25 25 25 

Percent of Electronically Filed Permit 

Applications 2/ 85 81 85 87 89 87 90 90 

Customer Satisfaction Rate with eGov 

Systems - Permits Online 64 54 68 77 68 80 80 80 

Percentage of Alcohol Beverage Label and 

Formula Applications Processed within 

Service Standards (15 days) 3/ 

80 80 62 84 48 85 85 85 

Initial Error Rate for Label and Formula 

Applications 42 44 43 40 37 25 25 25 

Percent of Electronically Filed Label and 

Formula Applications 94 97 98 98 99 95 95 95 

Customer Satisfaction Rate with eGov 

Systems - COLAs Online 71 74 82 81 77 80 80 80 

Customer Satisfaction Rate with eGov 

Systems - Formulas Online 4/ 48 58 70 79 70 80 80 80 

1/ Result for FY 2019 likely lower than reported due to a data quality issue in Q4 based on the incorrect application of “corrections” status on 

certain permit applications. 

2/ Revised actuals for prior years due to data quality review and cleanup of data source. 

3/ Service standards are set annually based on TTB analysis of submission volume, error rates, and resource levels. For FY 2018, TTB 

established new service standards of 15 days for both labels and formulas based on a significant spike in submissions. In FY 2017, the service 

standard was 10 days for both labels and formulas. Between FY 2014 - 2016, the service standard was 30 days for labels and 45 days for 

formulas. 

4/ Revised actual for FY 2018 due to error in calculation; results represent beverage alcohol formula filers only (nonbeverage alcohol formula 

filers are excluded) 

Protect the Public Budget and Performance 

($63,751,000 from new direct appropriations, $3,783,000 from unobligated balances from the 

prior year, and $3,261,000 from reimbursable sources): 

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 more 
TTB - 17 

than 100,000 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 

businesses to participate in the economy as well as Strategic Objective 1.4 (Free and Fair Trade) 

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

Other Resources...................................................................................$7,044,000 

Unobligated Balances from the Prior Year...........................................................$3,783,000 

Offsetting Collections/Reimbursables................................................................. $3,261,000 

Other resources that support this budget activity include unobligated balances from the prior year 

appropriation; reimbursement for the operating costs of the TTB Puerto Rico field office, which 

are offset against the roughly $450 million in taxes collected on the alcohol beverage products 

that are manufactured in Puerto Rico and imported into the United States; 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: 

TTB uses a combination of measures to monitor the degree to which the bureau is meeting its 

established service standards for permit, label, and formula applications; its effectiveness in 

reducing error rates on applications to address processing delays caused by incomplete or noncompliant submissions; and the level of satisfaction that industry members have with TTB’s 

online systems. TTB’s strategies to achieve its performance targets for these measures include a 

combination of improving internal processes, modernizing its IT systems, streamlining 

application requirements, and providing clearer guidance to industry members. 

TTB monitors its timeliness in processing 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 recent years, 

the 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 an average of 122 days in FY 2016, and over 200 days for alcohol producer 

applications, creating potential financial hardships for these applicants. TTB started to reduce 

approval times in FY 2017 and, to build on these performance improvements, TTB and Treasury 

established a two-year Agency Priority Goal (APG) for FY 2018 – 2019 to improve the 

timeliness and consistency of service levels by reducing average processing times for new permit 

applications by 20 percent and achieving its service standard for 85 percent of applicants. 

TTB met one of its two APG targets by the end of FY 2019, reducing average approval times by 

20 percent from 96 days in FY 2017 to 75 days in FY 2019. However, TTB fell short of its 

second target to achieve the 75-day service standard for 85 percent of permit applicants. During 

the 35-day partial government shutdown, with industry continuing to file for Federal permit 

approval, the backlog of pending applications continued to increase and age. As a result, for 

FY 2019, TTB issued 58 percent of permit applications within its 75-day service standard. 
TTB - 18 

Through focused recovery efforts, TTB made significant progress in the second half of the fiscal 

year in reducing the backlog of pending applications, from a high of nearly 3,000 applications in 

February 2019 to approximately 1,500 at year-end. These improvements brought down original 

application processing times for alcohol manufacturers from post-shutdown peaks of over 100 

days, with TTB achieving an average of 84 days for FY 2019 for wineries, breweries, and 

distilleries. TTB ended the fiscal year with 68 percent of applications issued within 75 days in 

September 2019, which positions TTB to achieve this priority goal target in FY 2020. 

Achieving and sustaining these performance improvements in FY 2020 and beyond will remain a 

challenge. With priority attention placed on reducing backlogs, TTB had to delay many of its 

crosscutting initiatives in FY 2019 to improve its permitting business processes. These initiatives 

will continue into next year and, through FY 2021, TTB will focus on achieving its performance 

target through Permits Online system enhancements and continued process improvements. These 

include implementing new permit application dashboards that display key metrics on the status 

and age of pending applications to support effective management of pending applications. TTB 

will also continue to update its procedures to screen permit applicants, refining the risk criteria, 

tools, and procedures used to vet applicants for suitability to hold a Federal permit. In fiscal 

years 2020 and 2021, TTB will continue to use the results of its field investigations to inform its 

risk factors to improve the timeliness and effectiveness of its business qualification process. 

TTB measures the Initial Error Rate on Permit Applications, which tracks how many 

applications are submitted either incomplete or with errors, to develop directed strategies to 

maintain timely service by increasing the number of first-time permit application approvals. 

Errors increase the overall workload volume, requiring extensive back-and-forth with applicants 

to ensure the application is complete and verified, which adds to the total processing time. 

Over the last five years, TTB’s ability to meet its service standard for new permit applications 

has been challenged by high error rates, which had persistently remained around 80 percent. 

Error rates are much higher for prospective breweries, wineries, and distilleries, which have 

more complex applications compared to non-manufacturers (i.e., wholesalers and importers). 

With the release of the redesigned Permits Online system and publication of extensive online 

guidance in FY 2018, as well as the permit application changes implemented to date, TTB was 

able to bend the curve on the high volume of applications submitted with errors. For FY 2019, 

the error rate on permit applications decreased to 71 percent, with improvements achieved across 

most application types. 

Further, to improve both error rates and approval times, TTB continued to work with experts in 

Treasury to implement recommendations from a Lean Six Sigma review of its process for 

returning permit applications for corrections. In FY 2019, TTB piloted new tools and procedures 

to streamline the application return process and standardize internal procedures. In fiscal years 

2020 and 2021, to continue making progress toward its target of 25 percent, TTB will finalize 

implementation of the identified process improvements, including increased standardization, 

effective workload balancing, and system enhancements, to provide greater consistency in 

reviews and improve industry interactions with TTB. 

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

tracks the electronic filing rate for new business applications, TTB received 89 percent of permit 
TTB - 19 

applications via Permits Online in FY 2019. TTB attributes the year-to-year increase to TTB.gov 

improvements following the July 2018 release of the redesigned Permits Online system, which 

provided improved guidance for first-time filers to help them navigate the application process. 

These system changes, combined with the extensive outreach and online training for industry 

provided with the release, will support TTB in achieving its FY 2020 and FY 2021 targets of 

achieving and sustaining an electronic filing rate of 90 percent or greater and reducing the initial 

error rate on permit applications to 25 percent. 

 

In alignment with its strategy to optimize its electronic filing systems, TTB measures Customer 

Satisfaction with the Permits Online eGov System through an e-mail survey to assess how 

satisfied businesses are in applying for a permit or registration through Permits Online. In FY 

2019, system satisfaction rates decreased 9 percent, from 77 percent in FY 2018 to 68 percent in 

FY 2019. Notably, satisfaction rebounded significantly in Q4 FY 2019 to 73 percent, which 

correlates with improved permit approval times later in the year. Although still below the annual 

target of 80 percent, TTB expects the positive trend to continue in line with overall 

improvements in service levels, and as TTB initiates broader IT system modernization efforts in 

FY 2020 and FY 2021 to provide applicants with an integrated online filing experience. TTB 

will also focus on improving the level of service provided to customers seeking live assistance 

with the permit application process via TTB’s call center. 

Broader changes to TTB’s application requirements, some of which will require rulemaking, are 

underway and may need to be fully implemented before TTB can achieve and sustain its targeted 

performance levels for FY 2020 and 2021. These actions are being informed by industry 

proposals submitted in response to the Department of the Treasury’s June 2017 Request for 

Information, which asked the public to submit views and recommendations for Treasury 

regulations that can be eliminated, modified, or streamlined to reduce burdens. In FY 2019, TTB 

continued to make progress towards simplifying and streamlining its permit applications. Using a 

multi-disciplinary team, TTB evaluated its permit requirements and developed recommendations 

to modernize and streamline applications based on TTB’s statutory responsibilities and 

enforcement needs. In FY 2019, TTB continued to implement application changes to reduce 

filing burden and, to date, has significantly shortened the Personnel Questionnaire and eliminated 

a number of application questions and required supporting documentation for many permit types. 

These efforts will carry forward into FY 2020, with ongoing evaluation of options to simplify the 

Federal permitting and registration process by reducing open text fields and requirements to 

upload supporting documentation, including those changes that can be implemented in advance 

of rulemaking. TTB intends to propose rulemaking in FY 2020 for more significant 

modifications to the permit application process, with the aim of substantial burden reductions 

both for industry and TTB in FY 2021. In addition to reducing compliance burdens, a key 

priority on the President’s Management Agenda, simplifying and clarifying TTB’s regulatory 

requirements should also result in a reduced volume of initial permit applications submitted with 

errors, which would contribute to improved approval times. 

Given the importance of timely TTB approvals for alcohol beverage product labeling 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 
TTB - 20 

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

applications in this measure given the interdependent nature of these approvals. 

Significant increases in label and formula submissions that began late in FY 2017 continued in 

FY 2019, with TTB receiving nearly 199,000 label applications and well over 20,000 formula 

applications, reflecting the ongoing expansion and product innovation within the alcohol 

beverage industry. In just the last two years, submission volume has increased nearly 20 percent 

for labels and nearly 40 percent for formulas. Innovation in the craft beer and spirits sectors 

continues to drive growth in label applications, with an increase of approximately 10 percent for 

malt beverage and distilled spirits applications in FY 2019. Although all alcohol beverage 

commodities contributed to the increase in formula submissions, wine and malt beverage 

submissions increased at the fastest rate, up roughly 35 percent compared to last year, based on 

the use of innovative ingredients and market trends toward flavored products including cider, 

mead, and malt beverages. 

 

In light of customer expectations, as well as planned process improvements supported by funding 

enacted in the FY 2019 budget directed toward accelerating approval times, TTB maintained its 

service standards for beverage alcohol labels and formulas at 15 days in FY 2019. Despite 

increased submission volume, the formulation area rebounded quickly from the government 

shutdown to reach targeted performance levels, and ended the year at 84 percent of formula 

applications meeting the 15‐day standard, nearly meeting the target of 85 percent. This was 

achieved through effective monitoring and management of the application backlog combined 

with strategic workforce management to efficiently deploy staffing. However, despite employing 

similar strategies, label performance fell short of target in FY 2019. While TTB began the fiscal 

year with 85 percent of label 

applications meeting the 15‐day 

service standard, results in 

subsequent quarters fell well below 

target and trended negatively quarter‐

to‐quarter, with just 45 percent 

meeting the 15‐day service standard 

as of year-end. Staffing turnover in 

labeling specialists coupled with the 

year‐over‐year increase in 

application submissions contributed 

to the challenges in recovering from 

the government shutdown. TTB 

expects results to trend positively in FY 2020 as backlogs are cleared through continuous queue 

management and strategic resource alignment. As a result, TTB expects to maintain its 15-day 

service standard for label and formula applications, and will work toward its FY 2020 and FY 

2021 targets of meeting this standard for 85 percent of applications through strategic initiatives 

*Es tima ted val ues

24 27

8 12 18

53

35

5 6

10

30

29

13 7

4

FY 2015* FY 2016 FY 2017 FY 2018 FY 2019

Total Average Review Time(in calendar days)

Labels Formulas Lab Analysis

107

91

26 25 32

Total Average Review Time (in calendar days)
TTB - 21 

to upgrade online systems and guidance, with particular focus on reducing application errors that 

increase total workload and challenge timely processing. 

Application errors are a key driver of label and formula processing times, as additional review is 

required for each resubmitted application. TTB relies on its 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 2019, approximately 37 percent of label 

and formula applications were submitted incomplete or with errors, falling short of the targeted 

performance level of 25 percent, although demonstrating year-to-year progress. TTB has 

continued to use a data-driven strategy to address frequent application errors, with the goal of 

increasing the number of applications that do not need to be returned for correction. In FY 2019, 

TTB implemented a new “conditionally approved” status in COLAs Online, enabling industry to 

accept minor technical changes to a label application without requiring a resubmission. Results 

indicate that the changes implemented to date have proven effective, with error rates dropping 

below 40 percent, and down 7 percent for formulas and 6 percent for labels since Q1 FY 2018. 

In FY 2020 and FY 2021, at the requested funding level, TTB intends to reduce error rates by 

expanding and improving system-based validations and online guidance features. These include 

detailed examples of compliant label and formula submissions by commodity as well as webbased tools to make it easier for industry members to determine if their products require TTB 

formula approval. TTB also plans to continue to engage with industry trade associations to 

enhance its strategies for reducing targeted application errors. Further, TTB intends to update the 

information on processing times available to industry on TTB.gov, which will publish TTB’s 

service standards to external customers and provide data on how error rates negatively affect 

processing times to incentivize correct submissions. 

In addition, TTB continued its initiative to modernize Federal alcohol beverage labeling 

regulations to reflect current TTB policy and modern industry practices. In FY 2019, TTB 

published a notice of proposed rulemaking intended to consolidate, clarify, and simplify labeling 

requirements, which received approximately 1,200 industry comments. Through this rulemaking, 

*Adjusted historic data to reflect the 15-day service standard for FY 2018 to support trend analysis; 

 see Part II, Goal 2 performance table for performance levels at annual service standards

Labels & Formulas Meeting Service Standard (<15 days)
TTB - 22 

TTB is seeking to provide additional guidance to industry that, combined with proposed burdenreducing measures, should contribute to more complete and accurate label and formula 

applications. TTB anticipates proceeding with final rulemaking in FY 2020 to codify certain 

proposals that are liberalizing and received broad industry consensus. 

To be successful in these strategies, TTB must maintain high rates of electronic filing for label 

and formula applications. According to its measure of the Percent of Electronically Filed Label 

and Formula Applications, TTB now receives 99 percent of applications via COLAs Online and 

Formulas Online, indicating that continued focus on system validations is warranted and will 

support performance goals in increasing accurate applications and accelerating approval times. 

Going forward, at the FY 2021 requested funding level, TTB will continue to make iterative 

enhancements to COLAs Online and Formulas Online, informed by user testing and feedback, 

which will support advanced help features and system-based validations to reduce application 

errors. 

System updates released in FY 2019 appear to have had limited influence on user satisfaction 

with TTB’s electronic filing systems. Through its new measures of Customer Satisfaction with 

COLAs Online and Customer Satisfaction with Formulas Online, TTB monitors user satisfaction 

with the process of submitting an application through its eGov systems, collecting responses via 

e-mail survey to assess factors such as ease of access, guidance, and overall experience. In FY 

2019, satisfaction rates decreased significantly, from 81 percent to 77 percent for COLAs Online 

users and 79 percent to 70 percent for Formulas Online users. TTB attributes these declines to 

industry dissatisfaction with increased processing times and other service challenges following 

the partial government shutdown, and anticipates that performance will improve through FY 

2020 in line with service improvements. Further, TTB expects that planned system 

improvements and regular review of survey feedback in FY 2020 and FY 2021 will help TTB 

reach and sustain its user satisfaction target of 80 percent and continue to attract users to its 

online systems to maintain electronic filing rates above its target of 95 percent. 

C – Changes in Performance Measures 

TTB has no proposed changes to its performance measures. 

D – Evidence-Building Activity 

Through its Balanced Scorecard strategic management framework, TTB maintains a culture of 

continuous improvement that employs data to direct strategy, inform policy, and drive innovation 

to improve program delivery. 

Implementation of Craft Beverage Modernization Tax Reform Provisions: Since the Craft 

Beverage Modernization and Tax Reform provisions of the TCJA took effect in January 2018, 

TTB has engaged in a data-driven enforcement approach, in coordination with CBP, to address 

the near-term revenue risk posed by the tax reform import-related provisions. In FY 2019, TTB 

focused its efforts on developing analytic tools using its tax data in conjunction with the 

information available through the International Trade Data System to timely detect imports 

improperly taking reduced rates or tax credits at the time of entry. 
TTB - 23 

In FY 2020, with the extension of the craft beverage modernization provisions to December 31, 

2020, TTB plans to further improve cooperation and information sharing with CBP to identify 

methods to timely detect and address potential issues, with a particular emphasis on maintaining 

oversight of controlled groups containing both domestic and foreign producers to ensure that the 

applicable reduced rate and tax credit limitations are not exceeded. TTB will also continue to 

leverage interagency partnerships, such as CBP’s Commercial Targeting and Analysis Center, to 

increase the number and effectiveness of its analytics-driven cases, including through use of realtime data on the cross-border trade of TTB-regulated products to identify potential tax evasion 

and flag shipments for inspection by CBP at the ports. 

Federal Permit/Registration/Notice Requirements: In FY 2019, TTB continued its evaluation of 

Federal application requirements for alcohol importers, wholesalers, and manufacturers and 

tobacco wholesalers and manufacturers. TTB used a multi-disciplinary team to conduct an 

internal evaluation of current permit application requirements to determine areas that could be 

eliminated or modified to reduce burden on industry and TTB without impeding effective 

screening and qualification processes to protect Federal revenues. Throughout the evaluation, 

TTB relied on interviews with subject matter experts as well as data, including application error 

rates and areas of frequent noncompliance in field investigations, to inform its analysis and 

recommendations. To date, several burden-reducing measures have already been implemented, 

with additional interim updates planned for FY 2020 until more significant changes can be made 

following the completion of planned rulemaking. 

Federal Alcohol and Tobacco Tax Requirements: In FY 2019, TTB completed an initial 

evaluation of its tax return and operational report filing requirements. At present, resourceintensive manual analyses and reconciliation of multiple reports and returns, in combination with 

other data sources, are required to detect and address high-risk activity. TTB used a multidisciplinary team to review its tax filings to lessen burden on industry while improving the 

information available to TTB for tax administration and incorporation into advanced analytics 

and other tools. The evaluation generated recommendations to significantly reduce requirements 

to decrease both the amount of information collected as well as the frequency with which it is 

collected. The evaluation also included recommendations to address increased risks to 

underreporting caused by recent tax reform provisions, recently extended to December 31, 2020. 

This multi-year initiative, which TTB will continue through FY 2021, will require form and 

regulatory updates to fully implement. 

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 
TTB - 24 

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 continue 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 instruments require periodic replacement, as they have finite lifecycles due to use and 

as advances in scientific technology 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 investments, including major information technology and non-technology 

investments, can be accessed at: https://home.treasury.gov/about/budget-financial-reportingplanning-and-performance/budget-requestannual-performance-plan-and-reports/summary-ofcapital-investments.