Alcohol and Tobacco Tax and Trade Bureau

Program Summary by Budget Activity

Dollars in thousands

FY 2015 FY 2016 FY 2017 FY 2016 TO FY 2017

Budget Activity Enacted Enacted Request $ Change % Change

Collect the Revenue $52,721 $52,785 $53,560 $775 1.47%

Protect the Public $47,279 $53,654 $52,879 ($775) -1.44%

Subtotal, Alcohol and Tobacco Tax and 

Trade Bureau $100,000 $106,439 $106,439 $0 0.00%

Offsetting Collections - Reimbursables $7,022 $6,992 $6,912 ($80) -1.14%

Appropriations Transferred from IRS Program 

Integrity Cap Adjustment $0 $0 $5,000 $5,000 NA

Total Program Operating Level $107,022 $113,431 $118,351 $4,920 4.34%

Direct FTE 473 494 494 0 0.00%

Reimbursable FTE 10 10 10 0 0.00%

Appropriations Transferred from IRS Program 

Integrity Cap Adjustment FTE 0 0 35 35 NA

Total FTE 483 504 539 35 6.94%

Summary

The Alcohol and Tobacco Tax and Trade 

Bureau (TTB) serves as the Nation’s primary 

Federal authority in the taxation and regulation 

of the alcohol and tobacco industries. TTB is 

responsible for the administration and 

enforcement of the Internal Revenue Code 

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 to 

protect U.S. consumers and ensure a fair and 

competitive marketplace for U.S. businesses.

In FY 2017, TTB will continue to focus its 

efforts on enforcing compliance with alcohol, 

tobacco, firearms, and ammunition laws and 

regulations in the interest of collecting all 

appropriate excise taxes and promoting a 

marketplace for alcohol beverages that 

complies fully with Federal production, 

labeling, advertising, and marketing standards. 

The FY 2017 President’s Budget request 

enables TTB to continue the programs and 

activities necessary to meet its strategic goals 

of collecting revenue and protecting the 

public.

Total resources required to support TTB 

activities for FY 2017 are $118,351,000, 

including $106,439,000 from direct 

appropriations, $6,912,000 from other 

offsetting collections and reimbursable 

programs, and $5,000,000 in appropriations 

transferred from other accounts.

TTB FY 2017 Budget Highlights

Dollars in Thousands

Alcohol and Tobacco Tax and Trade 

Bureau FTE Amount

FY 2016 Enacted 494 $106,439

Changes to Base:

Maintaining Current Levels (MCLs): - $1,562

Pay-Raise - $598

Pay Annualization - $199

Non-Pay - $765

Other Adjustments: - ($1,562)

IT Investments in Application Systems - ($1,562)

Subtotal Changes to Base - $0

Total FY 2017 Base 494 $106,439

Program Changes:

Program Increases: 35 $5,000

Alcohol and Tobacco Enforcement 

Program 35 $5,000

Total FY 2017 Operating Level 529 $111,439

Program Integrity Cap Adjustment 

Included in IRS Budget Request - ($5,000)

Total FY 2017 Net Appropriation Request 529 $106,439
FY 2017 Budget Adjustments

Adjustments to Request

Maintaining Current Level (MCLs)

Pay-Raise +$598,000 / +0 FTE

Funds are requested for the proposed January 

2017 pay-raise.

Pay Annualization +$199,000 / +0 FTE

Funds are requested for annualization of the 

January 2016 pay-raise.

Non-Pay +$765,000 / +0 FTE

Funds are requested for inflation adjustments 

in non-labor costs such as travel, contracts, 

rent, supplies, and equipment.

Other Adjustments

IT Investments in Application Systems

-$1,562,000 / -0 FTE

TTB will defer additional IT enhancements for 

its labeling program modernization effort 

while continuing to retain the additional label 

specialists, formula specialists, and chemists 

hired to improve processing times of labels 

and formulas.

Program Increases

Alcohol and Tobacco Enforcement Program 

+$5,000,000 / +35 FTE

The FY 2017 President’s Budget includes a 

proposal to amend section 251 of the Balanced 

Budget and Emergency Deficit Control Act of 

1985, as amended, to provide a program 

integrity cap adjustment of $5 million for 

TTB’s tax enforcement and compliance 

program to narrow the tax gap in the tobacco 

and alcohol industries and reduce the deficit 

through increased revenue collections. This 

specific funding request is included under the 

IRS budget, which includes the tax 

enforcement and compliance program integrity 

cap adjustment for both the IRS and TTB.

Under the TTB budget, this item is being 

reported as “Appropriations Transferred from 

IRS Program Integrity Cap Adjustment.”

The proposed cap adjustment for TTB tax 

enforcement and compliance activities 

includes $5 million in new revenue-producing 

tax compliance initiatives in FY 2017 and $5 

million in additional new initiatives each fiscal 

year from 2018 through 2021. TTB will target 

known points in the supply chain that are 

susceptible to diversion activity and prioritize 

forensic audits and investigations of high-risk 

activity and entities in the alcohol and tobacco 

trade. Because these enforcement initiatives

must be sustained over time to maximize their 

potential taxpayer returns, the total above-base 

cap adjustment including inflation is $189

million over the 10-year period. Over this 

same time period, these investments will 

generate an estimated $338 million in 

additional tax revenue over the 10-year period.

The net savings from these investments is 

$149 million.

Program Integrity Cap Adjustment Included 

in IRS Budget Request -$5,000,000 / -0 FTE

This adjustment ensures that the program 

increase for TTB’s Alcohol and Tobacco 

Enforcement Program is reflected only once in 

the FY 2017 President’s Budget as part of the

IRS’s program integrity cap adjustment.

Explanation of Budget Activities

Collect the Revenue ($53,560,000 from direct 

appropriations, $3,594,000 from 

reimbursable resources, and a transfer of 

$5,000,000)

This budget activity includes all tax 

processing, verification, enforcement, and 

outreach efforts related to administering the 

Federal excise tax on alcohol, tobacco, 

firearms, and ammunition products. TTB 

regulates and collects taxes from distilleries, 

breweries, bonded wineries, bonded wine 

cellars, manufacturers of cigarette papers and 

tubes, manufacturers of tobacco products, and 

manufacturers and importers of firearms and 

ammunition. In ensuring a level playing field 

for all those engaged in the trade of these 

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

address diversion activity and ensure all 

products sold in the marketplace are properly 

taxpaid. In FY 2015, excise tax collections 

reached $13.6 billion for tobacco products, 

nearly $8 billion for alcohol beverage 

products, and $638 million for firearms and 

ammunition. This budget activity supports 

Treasury’s strategic objective to improve the 

execution of the tax code and TTB’s strategic 

goal of ensuring that industry remits the proper 

Federal tax on these products.

Protect the Public ($52,879,000 from direct 

appropriations, $3,318,000 from 

reimbursable resources)

This budget activity funds the programs that 

ensure the integrity of the products and 

industry members in the marketplace by 

promoting compliance with Federal alcohol 

and tobacco laws and regulations by the 

approximately 76,000 businesses that hold a 

TTB permit or registration. This budget 

activity supports Treasury’s strategic objective 

to facilitate commerce through trusted and 

secure U.S. currency, products, and services 

and TTB’s strategic goal of ensuring that 

alcohol and tobacco industry operators meet 

permit qualifications, and alcohol beverage 

products comply with Federal production, 

labeling, and marketing requirements.

Legislative Proposals

TTB has no legislative proposals.

TTB Performance by Budget Activity

Budget Activity Performance Measure FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Actual Actual Actual Target Target

Collect the Revenue Amount of Revenue Collected Per 

Program Dollar

457.0 457.0 437.0 400.0 400.0

Collect the Revenue Percent of Voluntary Compliance from 

Large Taxpayers in Filing Tax Payments 

Timely (In Terms of Revenue)

92.0 90.0 88.0 92.0 94.0

Protect the Public Percent of Electronically Filed Permit 

Applications

70.0 79.0 84.0 87.0 89.0

Protect the Public Percentage of Permit Applications 

Processed with Service Standards

50.0 58.0 47.0 85.0 85.0

Protect the Public Customer Satisfaction Rate with TTB 

Permitting Process

N/A B 76.0 80.0 80.0

Protect the Public Percent of Electronically Filed Label and 

Formula Applications

90.0 93.0 94.0 95.0 95.0

Protect the Public Percentage of Alcohol Beverage Label 

and Formula Applications Processed 

within Service Standards

49.0 67.0 75.0 85.0 85.0

Key: DISC - Discontinued and B - Baseline

Description of Performance

The bureau continues to collect the Federal

excise taxes due on its regulated commodities 

in a highly efficient manner, and continues to 

enforce compliance with alcohol and tobacco 

laws and regulations. During FY 2015, TTB 

met three out of seven of its targeted 

performance goals, and made substantial 

progress in its initiatives intended to improve

performance in all other performance metrics. 

The bureau plans to continue to monitor its 

performance, and will use performance 

information to improve the effectiveness of its 

programs.
The investments in the Collect the Revenue 

activity resulted in the following performance 

highlights and accomplishments during FY 

2015:

• TTB collected $22.3 billion in excise taxes 

and other revenues from nearly 11,700

taxpayers in the alcohol, tobacco, firearms, 

and ammunition industries. The return on 

investment for the Collect the Revenue 

program was $437 for every $1 expended 

on collection activities.

• In four years of operating, TTB’s Criminal 

Enforcement program has opened a total of 

91 criminal cases, with identified liabilities 

of over $551 million in estimated alcohol, 

tobacco, firearms, and ammunition excise 

taxes and approximately $124 million in 

criminal seizures. Further, TTB has 

maintained a 100 percent conviction rate 

on cases fully resolved through the legal 

system.

• TTB completed approximately 400 audits, 

examinations, and revenue investigations, 

which contributed to the identification of 

additional tax revenue of more than $57

million.

• TTB processed $350 million in cover-over 

payments to Puerto Rico and the U.S. 

Virgin Islands. Federal excise taxes 

collected on rum produced in Puerto Rico 

and the Virgin Islands that are 

subsequently imported into the United 

States are “covered-over,” or paid into the 

treasuries of Puerto Rico and the U.S. 

Virgin Islands.

• TTB processed $307 million in drawback 

claims. Under current law, persons who 

use nonbeverage alcohol in the 

manufacture of medicines, food products, 

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

drawback of excise taxes paid on distilled 

spirits used in their products.

The investments in the Protect the Public 

activity resulted in the following performance 

highlights and accomplishments during

FY 2015:

• TTB issued nearly 136,000 Certificate of 

Label Approvals (COLAs) to ensure 

compliance with the FAA Act provisions 

that prevent consumer deception. TTB also 

achieved a 94 percent electronic filing rate 

for alcohol beverage label and formula 

applications. Federal law prohibits the 

import or domestic bottling of an alcohol 

beverage without an approved COLA, 

making this TTB service integral to U.S. 

business operations.

• TTB issued over 5,450 Federal permits, 

primarily to new alcohol beverage 

producers, importers, and wholesalers. A 

TTB permit or registration is required 

before a business can lawfully operate in 

the alcohol and tobacco industries. TTB 

ensures a fair and lawful marketplace and 

protects consumers by screening permit 

applicants to ensure only qualified persons 

engage in operations in the alcohol and 

tobacco industries.

• TTB completed more than 580 field 

investigations of industry members in the 

areas of permit qualification, consumer 

complaints, trade practice violations, and 

product integrity verifications, all of which 

serve the bureau’s dual mission of revenue 

collection and consumer protection.