Alcohol and Tobacco Tax and Trade Bureau 

Mission Statement 

To collect alcohol, tobacco, firearms and ammunition excise taxes, to ensure that alcohol 

beverages are labeled, advertised, and marketed in accordance with the law, and to 

administer the laws and regulations in a manner that protects the revenue, protects the 

consumer, and promotes voluntary compliance. 

Program Summary by Appropriations Account Dollars in Thousands 

Appropriation FY 2006 FY 2007 FY 2007 FY 2008

Salaries and Expenses Enacted

President's 

Budget CR-rate Request

$ from 

CR-rate 

% from

CR-rate

Collect the Revenue $49,618 $45,376 $46,010 $47,693 $1,683 3.66%

Protect the Public 40,597 47,228 44,205 45,822 1,617 3.66%

Total Appropriated Resources $90,215 $92,604 $90,215 $93,515 $3,300 3.66%

The activity pattern for FY 2007 should be reversed, in that Collect the Revenue should be $47,228 (51%) and Protect the Public $45,376 (49%). 

FY 2008 Priorities 

• Collect roughly $15 billion in excise taxes; 

• Process more than 6,700 original permit applications that allow for the 

commencement of new alcohol and tobacco businesses and 26,000 amended 

permits to accommodate changes to existing businesses; 

• Process over 125,000 applications for certificates of label approval that allow 

industry members to introduce new alcohol beverage products into the 

marketplace; 

• Collect excise taxes for the governments of Puerto Rico and the Virgin Islands 

under the “cover-over” imposed on rum and distilled spirits; 

• Process approximately 3,000 claims filed by manufacturers of non-beverage 

alcohol products resulting in drawback of $300 to $400 million; 

• Collect 98 percent of the federal excise tax receipts electronically; 

• Complete approximately 80 to 100 audits of large taxpayers who pay 

approximately $3 billion in annual federal excise taxes; and 

• Conduct over 700 field investigations of alcohol and tobacco industry 

members including permit application investigations, responding to consumer 

complaints, investigating Federal Alcohol Administration Act (FAA) trade 

practice violations, and conducting alcohol beverage product integrity 

verifications. 
Table of Contents 

Section 1 – Purpose ........................................................................................................... 2

1A – Description of Bureau Vision and Priorities.......................................................... 2 

1B – Program History and Future Outlook..................................................................... 3 

Section 2 – Budget Adjustments and Appropriation Language................................... 7

2.1 – Budget Adjustments Table..................................................................................... 7 

2A – Budget Increases and Decreases Description......................................................... 7 

2.2 – Operating Levels Table.......................................................................................... 9 

2B – Appropriation Language ...................................................................................... 10 

2C – Legislative Proposals............................................................................................ 10 

Section 3 – Budget and Performance Plan ................................................................... 11

3.1 – Appropriation Detail Table.................................................................................. 11 

3A – Collect the Revenue ............................................................................................ 11 

3.2.1 – Collect the Revenue Budget and Performance Plan ......................................... 12 

3B – Protect the Public ................................................................................................ 12 

3.2.2 – Protect the Public Budget and Performance Plan ............................................. 13 

Section 4 – Supporting Materials.................................................................................. 15

4.1 – Human Resources Table ...................................................................................... 15 

4A – Human Capital Strategy Description ................................................................... 15 

4.2 – Summary of IT Resources Table ......................................................................... 17 

4B – Information Technology Strategy ........................................................................ 18 

4.3 – PART Evaluation Table....................................................................................... 19 

 TTB - 1
Section 1 – Purpose

1A – Description of Bureau Vision and Priorities 

The Alcohol and Tobacco Tax and Trade Bureau (TTB) serves as the nation’s primary 

federal authority in the regulation of the alcohol and tobacco industries. TTB is 

responsible for the administration and enforcement of two major areas of federal law, 

namely: those sections 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 those engaged in the alcohol 

beverage industry and the protection of consumers of alcohol beverages. 

In Fiscal Year (FY) 2008, TTB will continue to focus efforts on helping industry 

members comply with alcohol and tobacco laws and regulations, thus ensuring that all the 

appropriate excise taxes are collected and that consumers are provided with alcohol 

beverages that meet all federal production, labeling, advertising and marketing standards. 

TTB’s priorities are directly linked to the following key strategic objectives: 

• Collect all the Revenue that is rightfully due: 

 Through partnership with industry, states, and other federal agencies, develop 

alternative methods of promoting voluntary tax compliance; 

 Ensure correct payment of taxes through audit of “major” and “at-risk” taxpayers; 

 Account accurately for the revenue assessed and collected; 

 Reduce the taxpayer paperwork burden associated with collection of the revenue 

by creating alternative electronic filing methods; 

 Ensure consistent tax administration; and 

 Prevent tax evasion and identify other criminal conduct in the regulated 

industries, including diversion and smuggling of taxable commodities. 

• Protect the Public through education, inspection, and investigation: 

 Ensure the integrity of the products, people, and companies in the marketplace; 

 Enforce compliance with federal laws related to the issuance of permits to 

industry members and the production, labeling, advertising, and marketing of 

alcohol products; 

 Utilize electronic government to reduce taxpayer burden and improve service with 

online filing for permit applications and formula submissions, business activity 

reports, claims, applications, COLAs, and other forms; 

 Perform appropriate testing, laboratory analyses, and review documents of 

regulated commodities to ensure product safety and integrity; 

 Review and act on labels and formulas for domestic and imported beverage 

alcohol products and maintain public access to approved COLAs; 

 Respond to industry and consumer complaints. Investigate product contamination 

and adulteration incidents or allegations; and 

 Investigate violations of trade practices, labeling, and advertising in the beverage 

alcohol industry. 

The total resources required to support TTB activities for FY 2008 are $95,215,000, 

including $93,515,000 from direct appropriations and $1,700,000 from reimbursable fees. 

 TTB - 2
1B – Program History and Future Outlook 

Program History - TTB has two primary activities that focus on collecting all the 

revenue rightfully due and providing the public with products that meet industry 

standards set by federal law. 

Collect the Revenue - TTB is charged with collecting alcohol, tobacco, firearms, and 

ammunition excise taxes. These products generate nearly $15 billion in tax revenue 

annually, making TTB the third largest tax collection agency in the federal government. 

The excise taxes collected by TTB come from approximately 7,500 businesses, and the 

taxes are imposed and collected at the producer and importers level of operations. 

Members of the regulated industries paying excise taxes are distilleries, breweries, 

bonded wineries, bonded wine cellars, manufacturers of paper and tubes for tobacco 

products, manufacturers of tobacco products, and manufacturers and importers of 

firearms and ammunition. About 200 of the largest taxpayers account for 98 percent of

the annual excise tax collected. In FY 2006, the majority of taxes collected were from 

tobacco (50 percent) and alcohol (48 percent), with the remainder from firearms and 

ammunition (2 percent). 

Strategies used to collect all the revenue rightfully due include identifying any gaps in tax 

payment, any illegal entities, or individuals operating outside the excise tax system, 

developing a balanced field approach of audits and investigations that targets noncompliant industry members, and establishing an identifiable presence within the industry 

that encourages voluntary compliance. Alcohol and tobacco taxes collected by TTB are 

remitted to the Department of the Treasury General Fund. Firearms and ammunition 

excise taxes are remitted to the Fish and Wildlife Restoration Fund under provisions of

the Pittman-Robertson Act of 1937. 

The investments in this activity resulted in the following performance highlights and 

accomplishments during FY 2006: 

• TTB collected $14.8 billion in excise taxes, interest, and other revenues from

alcohol, tobacco, firearms, and ammunition industries from 7,500 excise 

taxpayers holding permits. 

• TTB expanded the e-filing program to allow all excise taxpayers to file and pay 

taxes and file monthly operational reports electronically through the Pay.Gov 

system. TTB has registered over 1,600 taxpayers to use Pay.Gov. In FY 2006, 98 

percent of TTB’s tax receipts were collected electronically. 

• Voluntary compliance – 76 percent of taxpayers filed payments on or before the 

scheduled due date. 

• TTB continued its multi-year effort to audit the largest taxpayers who are 

responsible for 98 percent of the annual $14.8 billion federal excise tax 

collections. The cumulative audit results include an additional $4.4 million in 

collections identifying $8.1 million in tax, penalties, and interest potentially due 

as result of audit work completed in FY 2006. 

• TTB processed $359 million in cover-over payments to Puerto Rico and $6

million to the Virgin Islands. Federal excise taxes collected on rum produced in 

Puerto Rico and the Virgin Islands and subsequently imported into the United 

 TTB - 3
States are “covered-over” (or paid into) the treasuries of Puerto Rico and the 

Virgin Islands. 

• TTB processed $338 million in drawback claims. Under current law, persons 

who use non-beverage alcohol in the manufacture of medicines, food products, 

flavors, extracts, or perfume and other non-potable products may be eligible to 

claim drawback of excise taxes paid on distilled spirits used in their products. 

The TTB laboratory analyzes and approves a product formula before a company 

can manufacture a product and file a claim. 

• TTB laboratories analyzed 2,259 beverage alcohol samples for product integrity, 

pre-import analysis, and 5010-tax credit determination. TTB also analyzed 312 

tobacco product samples for tax classification. TTB laboratories review 

formulations or analyze alcohol and tobacco products to ensure compliance with 

TTB tax and classification regulations. 

Protect the Public - TTB works to ensure the integrity of the alcohol and tobacco 

industries and of beverage alcohol products found in the marketplace, and regulates 

roughly 40,000 alcohol and tobacco businesses. Under this activity, TTB enforces 

federal laws related to the issuance of permits to industry members and the production, 

labeling, advertising, and marketing of alcohol products. TTB conducts these activities 

through investigations, application reviews, laboratory testing, and educational programs. 

TTB works with industry, foreign and state governments, and other interested parties to 

make it easier to comply with regulatory requirements and to maintain the appropriate 

level of oversight to ensure public safety. Education, partnerships, and open 

communication are paramount strategies in facilitating compliance with regulatory 

requirements. 

The investments in this budget activity resulted in the following performance highlights 

and accomplishments during FY 2006: 

• TTB processed 114,000 Certificate of Label Approval (COLAs) applications, 37 

percent of which were filed electronically through COLAs Online. By FY 2008, 

TTB anticipates over 48 percent of all COLAs will be e-filed. The Federal 

Alcohol Administration Act requires importers and bottlers of alcoholic beverages 

to obtain a COLA prior to introduction of the product into commerce. 

• TTB issued 5,400 original and 21,000 amended permits. TTB issues original and 

amended permits to persons who are engaged in the alcohol and tobacco 

industries. Illicit activity in these industries has the potential to be highly 

lucrative so it is crucial that organized crime and terrorists are kept out of these 

industries. TTB conducted 473 field investigations on the most high-risk 

applications to ensure objectives of the Anti-Terrorism Act of 2001 were met. 

• TTB participated in negotiations between the United States and Mexico regarding 

cross-border trade in tequila, which resulted in an agreement that was signed on 

January 17, 2006. This agreement protects approximately $560 million per year 

of tequila imports in terms of gross revenues to major members of the distilled 

spirits industry. 

• TTB played a significant role in negotiating an agreement between the U.S. and 

the European Community regarding trade in wine, which was signed on March 

 TTB - 4
10, 2006. This agreement covers wine-making practices and labeling, and will 

facilitate bilateral trade in wine valued at $2.8 billion annually. The U.S. wine 

export figures for trade with the European Community in FY 2005 was $323 

million. Exports of U.S. wine for 2006 have already surpassed 2005 figures in 

terms of value, at $405 million for the Jan-Oct 2006 timeframe. Similarly, 2006 

bilateral trade totals are expected to exceed those of 2005 as both U.S. exports and 

EU imports are up (43 percent and 14.6 percent, respectively). 

• TTB’s international trade work also involved assistance in the labeling agreement 

with the World Wine Trade Group (WWTG). WWTG members include the U.S., 

Argentina, Australia, Canada, Chile, and New Zealand. The labeling agreement, 

which was initialed on September 20, 2006 and is scheduled to be signed in 

January 2007, will facilitate the export trade in wine from the U.S. to WWTG 

countries. The value of the 2005 U.S. wine export trade to WWTG countries (the 

latest data available) is as follows: 

o Canada - $128 million 

o Argentina - $.551 million 

o New Zealand - $.369 million 

o Australia - $4 million 

o Chile - $.183 million 

• TTB conducted 832 field application investigations of industry members 

regarding consumer complaints, trade practice violations, and product and 

labeling integrity verifications. 

Specific Challenges in FY 2008 – The alcohol beverage industry in the U.S. is over a 

$150 billion industry which pays over $7 billion in excise taxes each year. Economic 

forecasts predict continued modest growth in the alcohol industry. Total taxes collected 

on alcoholic beverages rose less than one percent for the period ended September 30, 

2006, to $7.1 billion from $7 billion in the year prior. TTB envisions that in the next few 

years the increase in new alcohol businesses will be most prominent in the number of 

new alcohol fuel plants (ethanol), wineries, craft breweries, and craft distilleries. 

TTB collected $7.3 billion in taxes on tobacco products in FY 2006, approximately equal 

to collections in FY 2005. US Customs and Border Protection’s collection of taxes on 

imported tobacco products declined, from $429 million in FY 2005 to $352 million in FY 

2006. While part of this decline represents a decrease in consumption of roughly 0.7 

percent, this decline is also attributable to a proliferation of the sale of illegal or smuggled 

cigarettes. There has also been a slight decline in the number of permitted tobacco 

importers in operation, from 685 tobacco importers in 2005 to 644 tobacco importers in 

2006. However, TTB has recently identified over 150 companies and individuals that 

have been importing tobacco products without permits. Other trends identified include 

the decrease in the internet sales of cigarettes, but an increase in the online sales of pipe 

tobacco, roll your own tobacco, cigars and little cigars in the past year. There is also an 

increase in the use and sale of water pipe tobacco, or shisha tobacco that is either 

imported from the Middle East or domestically manufactured. This type of tobacco is 

taxable as pipe tobacco. Recent investigations and audits have also reflected potential 

criminal violations within TTB permitted industry members operations. Some examples 

 TTB - 5
of these are: criminal recordkeeping violations and reimportation of previously exported 

tobacco products. 

TTB continually strives to make improvements to its processes, systems, and availability 

of information in order to enhance its ability to service TTB’s industry members. In 

terms of revenue collection in FY 2008, TTB plans to conduct 80 to 100 excise tax 

audits, and to promote voluntary compliance in the payment of federal excise taxes by 

maintaining a strong field presence. The audits are accomplished using a staff of 

approximately 80 professional auditors located throughout the United States. In April 

2006, the Tax Audit Division (TAD) developed a Strategic Audit Plan for its fiscal years 

2007 through 2009, and will go forward with focusing TTB’s resources on taxpayers 

paying more than 90 percent of the tax, as well as on taxpayers who meet other indicators 

(risk model rankings, referrals, and targeted risk areas).

TTB expects continued growth in the number of beverage alcohol samples analyzed by 

TTB laboratories. In addition, TTB anticipates a significantly larger increase in tobacco 

samples submitted to the laboratories because of the new standards of identity for 

classifying cigarettes and little cigars. In FY 2008, the TTB labs will work towards 

developing methods to support tax collection activities in the tobacco program. 

Effective January 1, 2006, taxpayers under this category may pay their taxes and submit 

their returns on a quarterly basis, as provided under the Internal Revenue Code. The 

statutory provision authorizing the filing of quarterly rather than semi-monthly returns for 

certain qualified taxpayers has not resulted in a robust quarterly filing program because 

the statutorily prescribed bonding requirements create a financial disincentive for 

taxpayers to avail themselves of the quarterly filing option. In particular, in the case of 

brewers and distillers, the statutory bonding requirement is tied to the tax liability in a 

given return period. Since the use of a quarterly filing would trigger a higher tax liability 

for that period, the bonding requirement increases, causing additional bonding costs to 

the taxpayer that are not counterbalanced by the savings recognized by the extended 

return period. 

Preparing for the Future in FY 2008 - Succession planning is high on the list of TTB 

strategic priorities, especially regarding TTB’s investigative forces. TTB expects to lose 

40 percent of its workforce between 2006 and 2010 due to retirements and other attrition. 

To mitigate these losses, TTB continues to use the personnel interventions identified in 

the Pay Demonstration project to enable the Bureau to improve its capacity to recruit, 

develop, and retain high-caliber employees. TTB uses tailored approaches designed, 

developed, and implemented specifically for the Bureau’s continuing and evolving needs 

in order to meet mission requirements and remain competitive for highly skilled talent. 

Continuation of the Pay Demonstration authority is a key component in TTB’s ability to 

close skill gaps in mission critical occupations. In FY 2006, TTB contracted for a study 

to provide an independent evaluation of this program, and the results will be examined in 

2007. The FY 2008 budget seeks authority be granted for continuation of this program 

by one year. 

 TTB - 6
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Appropriation: TTB Salaries and Expenses FTE Amount

FY 2006 Appropriation (P.L. 109-115) 544 $91,126

Rescission (P.L. 109-148) 0 ($911)

FY 2006 Enacted 544 $90,215

FY 2007 President's Budget 544 $92,604

CR-rate Adjustment (2,389)

FY 2007 CR-rate 544 $90,215

Changes to Base: 

Technical Adjustment to FY 2007 Base due to CR:

Non-Pay Inflation Adjustment 404

Maintaining Current Levels (MCLs):

Non-Pay Inflation Adjustment 931

Pay Annualization 287

Pay Inflation Adjustment 1,678

Total FY 2008 Base 544 $93,515

Program Decreases:

Field Operations / National Revenue Center (441)

Program Reinvestment:

Field Operations / Tobacco Enforcement Division 441

Subtotal FY 2008 Program Changes 0 0

Total FY 2008 Request 544 $93,515

2A – Budget Increases and Decreases Description 

Adjustments .....................................................................................-$2,389,000 / +0 FTE 

CR-rate Adjustment -$2,389,000 / +0 FTE Adjustment from the FY 2007 President's 

Budget to reach the FY 2007 Continuing Resolution annualized rate (CR-rate). 

Technical Adjustment to FY 2007 Base due to CR ........................+$404,000 / +0 FTE 

Non-Pay Inflation Adjustment +$404,000 / +0 FTE Technical adjustment to FY 2007 

base due to CR. 

Maintaining Current Levels (MCLs) ...........................................+$2,896,000 / +0 FTE 

Non-Pay Inflation Adjustment +$931,000 / +0 FTE Funds are requested for non-labor 

related items such as contracts, travel, supplies, equipment and GSA rent adjustments. 

Pay Annualization +$287,000 / +0 FTE Funds are requested for the FY 2008 cost of the 

January 2007 pay increase. 

Pay Inflation Adjustment +$1,678,000 / +0 FTE Funds are requested for the proposed 

January 2008 pay raise. 

Program Decreases ............................................................................-$441,000 / +0 FTE 

Field Operations / National Revenue Center -$441,000 / +0 FTE TTB realigned its staff 

resources from the National Revenue Center to create the Tobacco Enforcement Division. 

 TTB - 7
Program Reinvestment .....................................................................+$441,000 / +0 FTE 

Field Operations / Tobacco Enforcement Division +$441,000 / +0 FTE TTB realigned 

its staff resources to create the Tobacco Enforcement Division to monitor domestic 

tobacco trade and act as the bureau's tobacco coordinator. This action will improve 

identification of potential targets for investigation, and TTB will be able to ensure that

only qualified applicants enter the tobacco trade, ensure compliance with the tax laws, 

and to facilitate voluntary compliance. 

 TTB - 8
2.2 – Operating Levels Table 

Dollars in Thousands 

Appropriation Title: TTB Salaries & Expenses FY 2006

Enacted

FY 2007

President's

Budget

Proposed 

Reprogrammings

CR-rate 

Adjustment

FY 2007 CRRateFY 2007 Proposed

Operating Level

FY 2008 

Requested Level

FTE 544 544 - - 544 544 544

Object Classification:

11.1 Full-Time Permanent Positions........................ $40,865 $40,693 $0 $1,608 $42,301 $42,301 $43,640

11.1 Other than Full-Time Permanent Positions...... 0 0 $0 0 $0 $0 0

11.5 Other Personnel Compensation....................... 0 718 $0 (20) $698 $698 778

11.8 Special Personal Services Payments.............. 0 0 $0 0 $0 $0 0

11.9 Personnel Compensation (Total).................. $40,865 $41,411 $0 $1,588 $42,999 $42,999 $44,418

12.0 Personnel Benefits........................................... 10,541 10,868 $0 111 $10,979 $10,979 11,525

13.0 Benefits to Former Personnel.......................... 0 0 $0 0 $0 $0 0

21.0 Travel.............................................................. 3,282 4,410 $0 $3,265 $3,265 3,363

22.0 Transportation of Thin

(1,145)

gs.................................. 136 104 $0 $98 $98 101

23.1 Rental Pa

(6)

yments to GSA................................. 4,775 4,725 $0 218 $4,943 $4,943 4,981

23.2 Rent Payments to Others................................ 314 0 $0 0 $0 $0 0

23.3 Communications, Utilities, & Misc.................... 5,043 4,806 $0 $4,787 $4,787 4,931

24.0 Printin

(19)

g and Reproduction............................... 408 0 $0 367 $367 $367 378

25.1 Advisory & Assistance Services....................... 0 0 $0 0 $0 $0 0

25.2 Other Services................................................. 21,761 23,959 $0 $20,753 $20,753 21,734

25.3 Purchase of Goods/Serv. from Govt. Accts...

(3,206)

... 0 0 $0 0 $0 $0 0

25.4 Operation & Maintenance of Facilities............. 0 0 $0 0 $0 $0 0

25.5 Research & Development Contracts................ 0 0 $0 0 $0 $0 0

25.6 Medical Care................................................... 0 0 $0 0 $0 $0 0

25.7 Operation & Maintenance of Equipment.......... 0 0 $0 0 $0 $0 0

25.8 Subsistence & Support of Persons.................. 0 0 $0 0 $0 $0 0

26.0 Supplies and Materials.................................... 621 682 $0 $650 $650 670

31.0 Equipment....................................................... 2,119 1,639 $0 $1,374 $1,374 1,415

32.0 Lands and Structures......................................

(32)

(265)

. 350 0 $0 0 $0 $0 0

33.0 Investments & Loans....................................... 0 0 $0 0 $0 $0 0

41.0 Grants, Subsidies............................................ 0 0 $0 0 $0 $0 0

42.0 Insurance Claims & Indemn............................. 0 0 $0 0 $0 $0 0

43.0 Interest and Dividends................................. 0 0 $0 0 $0 $0 0

44.0 Refunds........................................................... 0 0 $0 0 $0 $0 0

Total Budget Authority....................................... $90,215 $92,604 $0 $90,215 $90,215 $93,515

Budget Activities:

Protect the Public $40,597 $47,228 44,205 44,205 $45,822

Collect the Revenue 49,618 45,376 1,852 46,010 46,010 47,693

Total Budget Authority....................................... $90,215 $92,604 $0 $90,215 $90,215 $93,515

($2,389)

(1,852) ($1,171)

(1,218)

($2,389)

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2B – Appropriation Language 

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, $93,515,000 of which not to 

exceed $6,000 for official reception and 

representation expenses; not to exceed 

$50,000 for cooperative research and 

development programs for laboratory 

services; and provision of laboratory 

assistance to State and local agencies with 

or without reimbursement. 

Treasury General Provisions:

Sec 216. Section 122(g) (1) of Public Law 

105-119 as amended (5 U.S.C. 3104 note), 

is further amended by striking “8 years” 

and inserting “10 years”. 

TTB proposes to continue the Pay 

Demonstration Program (Pay Demo) by 

amending the administrative provision 

language to extend the program one 

additional year. This project was 

established to enhance Treasury’s ability 

to effectively recruit and retain highly 

qualified employees. It seeks to do so 

by implementing changes in personnel 

management practices for designated 

occupations. Pay Demo has been 

extended every year since it was first 

established in FY 1999. In FY 2006, 

TTB contracted for a study to provide 

an independent evaluation of this 

program. The results of the study will 

be examined in 2007.

2C – Legislative Proposals 

Extend Pay Demonstration Program one additional year. TTB proposes to continue the 

Pay Demonstration Program by amending the general provision language to extend the 

program one additional year.

 TTB - 10
Section 3 – Budget and Performance Plan

3.1 – Appropriation Detail Table 

Dollars in Thousands 

3A – Collect the Revenue ($47,693,000 from direct appropriations and $867,000 from 

reimbursable programs): The Collect the Revenue activity works toward providing the 

most effective and efficient systems for the collection of tax revenue, eliminating or 

preventing tax evasion and other criminal conduct, and providing high quality service 

while imposing the least regulatory burden on taxpayers. TTB will employ a number of 

strategies to ensure that the revenue that is rightfully due is collected. The Tax Audit 

Division (TAD) will focus its audit resources on taxpayers paying more than 90 percent 

of the tax, as well as on taxpayers who meet other risk indicators. The Office of Field 

Operations will continue to provide industry outreach to facilitate voluntary compliance, 

investigate allegations or indications of tax fraud, verify destruction of large quantities of 

taxable commodities, and conduct compliance investigations of non-taxpaying permittees 

who have substantial potential for tax liability. 

Reducing taxpayer burden and improving service remain priorities at TTB. The ultimate 

goal is to allow permittees and taxpayers to file all payments, returns, and applications 

online with the National Revenue Center. The FY 2008 budget request enables the 

continuation of efforts to achieving the performance measures supporting TTB’s strategic 

goal of providing the most effective and efficient system for the collection of all revenue 

that is rightfully due, eliminating or preventing tax evasion and other criminal conduct, 

and providing high quality service while imposing the least regulatory burden. 

Offsetting Collections – Non Federal Sources (Puerto Rico)............................$867,000 

The reimbursable funds are to cover the costs associated with the functioning and support 

of the Puerto Rico office, and are paid from the “cover-over” (return) which is offset 

from the roughly $359 million in cover over taxes collected in the United States on 

products originating in Puerto Rico. TTB conducts annual audits / investigations of 

industry members regarding the collection of revenue, application processing and product 

integrity. Revenue inspections are used to conduct tax examinations on major producers 

of alcohol and tobacco. 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Re ources: s

Salaries & Expenses

Collect the Revenue

Protect the Public

299 49,618 267 45,938 277 45,376 277 $46,010 277 47,693 0.00% 3.66%

245 40,597 257 44,136 267 47,228 267 44,205 267 45,822 0.00% 3.66%

Subtotal New Appropriated Resources 544 $90,215 524 $90,074 544 $92,604 544 $90,215 544 $93,515 0.00% 3.66%

Other Resources:

Offsetting Collections - Reimbursable (Puerto Rico) 15 $1,700 10 $1,700 15 $1,700 15 $1,700 15 $1,700 0.00% 0.00%

Subtotal Other Resources 15 $1,700 10 $1,700 15 $1,700 15 $1,700 15 $1,700 0.00% 0.00%

Total Resources Available for Obligation 559 $91,915 534 $91,774 559 $94,304 559 $91,915 559 $95,215 0.00% 3.59%

FY 2006 FY 2008

Obligations President's Budget Request

FY 2007

Enacted CR Rate to FY 2008

FY 2007

% Change

Resources Available for Obligation

FY 2006 FY 2007

 TTB - 11
3.2.1 – Collect the Revenue Budget and Performance Plan 

Dollars in Thousands

Collect the Revenue Budget Activity Includes Strategic Objective F4A

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Enacted Enacted Enacted President's 

Budget

Request

Financial Resources

 Appropriated Resources $56,801 $45,285 $49,618 $45,376 $47,693

 Other Resources 1,700 935 935 867 867

Total Operating Level $58,501 $46,220 $50,553 $46,243 $48,560

Human Resources

 Appropriated FTE 363 299 299 277 277

 Other FTE 15 8 8 8 8

Total FTE (direct and reimbursable) 378 307 307 285 285

Collect the Revenue Budget Activity Includes Strategic Objective F4A

Measure FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Target 65% 90% 12% 74%

Actual 82% 93%

Cumulative percentage of excise tax revenue 

audited over 3 years (%) (Ot) 

Met Yes Yes

Target 70% 74% 74% 76%

Actual 70% 75.95%

Percentage of Voluntary Compliance in filing tax

payments timely and accurately (in terms of 

number of compliant industry members)(%) (Oe) Met Yes Yes

Target 82 84 86 86 87

Actual 81.2 86.3 87.2

Percentage of Voluntary Compliance in filing tax

payments timely and accurately (in terms of 

revenue) (%) (Oe) Met No Yes Yes

Target 98% 98% 98% 98% 98%

Actual 97.3% 98% 98%

Percentage of total tax receipts collected 

electronically (%) (E) 

Met No Yes Yes

Target 0.4% 0.34% 0.34% 0.34%

Actual 0.37% 0.31%

Resources as a percentage of revenue (%) (E) 

Met Yes Yes

Target Baseline $76 $76

Actual $76

Unit cost to process an excise tax return based 

on new legislation ($) (E) 

Met Yes

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and M - Management/Cust. 

Satisfaction 

Description of Performance: 

TTB met five of its five performance measures under the Collect the Revenue strategy. 

A sixth measure was a baseline measure. TTB collected $14.78 billion in excise taxes, 

interest, and other revenues from alcohol, tobacco, firearms, and ammunition industries. 

 

3B – Protect the Public ($45,822,000 from direct appropriations and $833,000 from 

reimbursable programs): The Protect the Public activity ensures the integrity of products 

and industry members in the marketplace, ensures compliance with laws and regulations

by regulated industries, and provides information to the public as a means to prevent 

consumer deception. Under this activity, TTB enforces compliance with federal laws 

related to the issuance of permits to industry members and the production, labeling, 

advertising, and marketing of alcohol products. TTB conducts investigations, application 

reviews, laboratory testing, and educational programs in support of its mission. TTB 

works with industry, other federal and state governments, and other interested parties to 

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make it easier to comply with regulatory requirements, while maintaining the appropriate 

level of oversight to ensure public safety. Innovation, partnerships, and open 

communication are paramount to achieving this strategic goal. 

Offsetting Collections – Non Federal Sources (Puerto Rico)............................$833,000 

The reimbursable funds are to cover the costs associated with the functioning and support 

of the Puerto Rico office, and are paid from the “cover-over” (return) which is offset 

from the roughly $359 million in cover over taxes collected in the United States on 

products originating in Puerto Rico. TTB conducts annual audits / investigations of 

industry members regarding the collection of revenue, application processing and product 

integrity. Revenue inspections are used to conduct tax examinations on major producers 

of alcohol and tobacco. 

3.2.2 – Protect the Public Budget and Performance Plan 

Dollars in Thousands 

Protect the Public Budget Activity Includes Strategic Objective E2A

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Resource Level Enacted Enacted Enacted President's 

Budget

Request

Financial Resources 

 Appropriated Resources $22,727 $37,051 $40,597 $47,228 $45,822

 Other Resources 0 765 765 833 833

Total Operating Level $22,727 $37,816 $41,362 $48,061 $46,655

Human Resources 

 Appropriated FTE 181 245 245 267 267

 Other FTE 0 7 7 7 7

Total FTE (direct and reimbursable) 181 252 252 274 274

Protect the Public Budget Activity Includes Strategic Objective E2A

Measure FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

Target Baseline TBD

Actual 

Compliance Level of New Industry Members 

Met 

Target 7% 16% 27% 47% 48%

Actual 10% 25% 38%

Percent of electronically filed Certificate of Label 

Approval applications (%) (E) 

Met Yes Yes Yes

Target 60% 30% 55% 45% 0%

Actual 23% 50% 44%

Percentage of COLA approval applications 

processed within 9 calendar days of receipt (%) 

(E) (This measure will become inactive 

beginning in FY 2008.) 

Met No Yes No

Target Baseline TBD

Actual 

Percentage of current industry members that 

were found to have links to criminal or terrorist 

organizations or were otherwise a prohibited 

person 

Met 

Target 67% 80% 80% 82%

Actual 81% 86%

Percentage of permit application (original and 

amended) processed by the National Revenue 

Center within 60 days (%) (E) Met Yes Yes

Target Baseline TBD

Actual 

The unit cost to process a Certificate of Label 

Approval 

Met 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, and M - Management/Cust. 

Satisfaction 

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Description of Performance: 

TTB met two of its three performance measures under the Protect the Public Strategy. 

The one measure not met is the “Percentage of Certificates of Label Approval 

applications processed within nine calendar days following receipt.” This measure is 

difficult to achieve because the Certificate of Label Approval workloads are expected to 

continue to rise while staff will remain at a constant level. In FY 2008, the “Percentage

of COLA approval applications processed within 9 calendar days of receipt” measure will 

be inactivated and replaced with a new efficiency measure “The unit cost of producing a 

Certificate of Label Approval.” 

TTB proposes to add three new measures under Protect the Public: “The unit cost to 

process a wine COLA”; “Compliance level of new industry members”; and “Current 

industry members linked to terrorist organizations.” 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

http://www.treas.gov/offices/management/dcfo/accountability-reports/2006-

par/Part_IV_Appendices.pdf

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Section 4 – Supporting Materials 

4.1 – Human Resources Table 

Changes in Full Time Equivalents

Direct FTE FY 2006 FY 2007 FY 2008

Base: Year-end Actual from Prior Year 514 524 544

Increases:

 Recruitment of Auditors and Investigators 10 20

Subtotal, Increases 10 20 0

Decreases:

Subtotal, Decreases 0 0 0

Year-end Actual/Estimated FTEs 524 544 544

1/

Net Change from prior year SOY to budget year EOY 0

1/ Reason: TTB was established in January 2003 as a result of the Homeland Security Act of 2002. At the end of FY 2006 TTB had 537 

staff on board, an equivalent direct FTE level of 524. TTB is authorized to fill 544 direct FTEs.

4A – Human Capital Strategy Description 

By properly managing its human capital needs, TTB supports the Department of the 

Treasury’s strategic goals: 

 

• Increase Citizens’ Economic Security, and; 

• Manage the U.S. Government’s Finances Effectively, 

To accomplish and fulfill both TTB’s and the Department of the Treasury’s strategic 

plans, TTB has taken several steps in order to not only maintain its current professional 

workforce but also improve it. TTB has completed its first Human Capital Strategic Plan 

that is aligned with the Bureau Strategic Plan. The plan documents strategies to improve 

skill and competency gaps, demographics, workforce management and performance 

measurement efforts, and succession planning. The model for strategically assessing 

TTB’s skills gap outlook for future years is predicated on assumptions regarding future 

changes in the workforce, including retirement eligibility rules and rates of attrition. The 

skills gap forecast will be developed by assessing and modeling the changing nature of 

TTB’s mission critical occupations and the bureau’s mission. 

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The Pay Demonstration program (PAY DEMO) will continue to be used by the bureau to 

develop and retain high caliber employees. TTB expects to lose 40 percent of its 

workforce between 2007 and 2010 due to retirements and other attrition. To 

accommodate these losses from the baseline, TTB continues to use personnel 

interventions identified in the PAY DEMO project to enable the bureau to improve its 

capacity to recruit, develop, and retain high-caliber employees. TTB uses tailored 

approaches designed, developed, and implemented specifically for the bureau’s 

continuing and evolving needs in order to meet mission requirements and remain 

competitive with private industry and other federal agencies for highly skilled talent. 

TTB has roughly 120 participants in the PAY DEMO that function in mission critical 

occupations such as chemists, industry analysts, auditors, and information technology 

specialists. 

HR Highlights 

• TTB developed a Federal Employment Opportunity Recruitment Plan (FEORP) for 

FY 2005 – FY 2008 to promote the employment and advancement of minorities and 

women within the bureau. 

• TTB established its FY 2005 – FY 2008 Disabled Veterans Affirmative Action Plan 

to promote the hiring and advancement of disabled veterans within the bureau. 

• TTB revised its Senior Executive Service performance plans to document the linkage 

with the bureau’s strategic objectives and cascaded to the next lower level of

management. 

• TTB implemented Career Connector for use in filling supervisory/managerial jobs as 

a tool to improve the hiring process. 

• TTB established a telework program that covers all TTB offices and most employees, 

and implemented a hoteling program at certain field offices. These initiatives save 

the bureau valuable dollars that were invested in improved services to stakeholders. 

• Beginning in June 2004, TTB outsourced all of its human resource functions to the 

Bureau of Public Debt (BPD). The human resource services provided by BPD 

include staffing and recruitment, personnel/payroll actions, employee benefits and 

retirement, time and attendance, official personnel records, classification, training, 

employee/labor relations, and performance management. Performance benchmarks 

and measures have been established to monitor contract performance. 

• TTB is in the process of developing succession plans for mission critical occupations 

and a comprehensive Human Capital Plan. The successful implementation of these 

two initiatives will contribute to TTB obtaining a green score. 

• TTB finalized its human capital strategic plan which is aligned with TTB’s mission. 

TTB documented strategies for improving skill and competency gaps, improving 

demographics, workforce management and performance measurement efforts, and 

succession management planning. The plan has been posted to the TTB intra-web 

and is accessible to all employees. 

 TTB - 16
4.2 – Summary of IT Resources Table 

Dollars in Millions

Information Technology Investments(in $ Millions) FY 2006 FY 2007 Major IT Investments Budget Activity Operating Plan Obligations Operating Plan

President's

Budget 

Total - - - - - 

Non-Major IT Investments

FET/IRIS Collect Revenue/Protect Public All - - 1.7 100.0% -10Total - - 1.7 100.0% - -10

Infrastructure Investments

TTB Infrastructure base Collect Revenue/Protect Public All 14.8 14.8 18.0 21.6% 17.2 -4

Salaries & Benefits (5 FTEs) Collect Revenue/Protect Public All 0.65 0.65 0.80 23.1% 0.81 1

Total 15.5 15.5 18.8 21.3% 18.0 -

Total IT Investments - Prosight Numbers 15.5 15.5 20.5 32.3% 18.0 -1

% Change fr

FY06 to FY0

Identify program

that system is 

aligned to

FY 2005 % Change from

FY05 Obligations to 

FY06

 TTB - 17
4B – Information Technology Strategy 

TTB has a modernization blueprint that focuses information technology (IT) investments 

on important bureau functions and defines how those functions will be measurably 

improved. All TTB systems and projects have business cases that have been approved by 

the Department of the Treasury’s Office of the Chief Information Officer, and 100 

percent of IT systems have certification and accreditation. The bureau will aggressively 

pursue all e-Gov opportunities that will reduce taxpayer burden for tax filing and increase 

all regulatory compliance. TTB has established its own investment review board that 

evaluates and makes preliminary selection decisions by addressing high level questions: 

• Does the initiative have value to TTB? 

• Is there a balance of benefits against costs and risks?

• Is TTB eliminating duplication and stovepipe projects?

TTB’s investment review board ensures compliance with guidance and legislation. A 

scoring criterion was developed to help ensure that only sound and viable initiatives that 

support the bureau’s mission and strategic goals are included in the portfolio. 

 TTB - 18
4.3 – PART Evaluation Table 

PART Name: Collect the Revenue

Year PARTed: FY 2004

Rating: Effective 

Score: 93%

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

2. TTB currently uses the BPD ARC accounting system, which allows for the allocation and tracking of 

distribution of the funds. This system had not been in service for a full year's data when the PART study was

in process.

3. TTB is in the process of completing a major business reengineering study on its Protect the Publlic 

Mission. However, the work that has been performed on this study will impact how TTB performs cost 

benefit studies in the future. The impact should be noticeable in the coming year. 

2. Improving estimates of how funds are distributed across TTB's two lines of business to ensure that funds 

are obligated in accordance with planned schedules

3. Developing a baseline to compare the incremental cost and net benefits of regulation.

Table 4.3

PART Evaluation

1. Developing baselines for annual performance measures .

1. TTB is in the process of completing the baselines for its annual performance measures in FY 2006.

For a complete list of PART results visit the following website: 

http://www.whitehouse.gov/omb/expectmore/all.html

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