Alcohol and Tobacco Tax and Trade Bureau

Program Summary by Budget Activity

Dollars in thousands

Appropriation FY 2011 FY 2012 FY 2013 FY 2012 TO FY 2013

 Enacted Enacted Request $ Change % Change

Collect the Revenue $50,399 $50,939 $47,893 ($3,046) -5.98%

Protect the Public $50,399 $48,939 $48,893 ($46) -0.09%

Subtotal, Alcohol and Tobacco Tax and 

Trade Bureau $100,798 $99,878 $96,786 ($3,092) -3.10%

Offsetting Collections - Reimbursables $3,958 $4,928 $4,928 $0 0.00%

Total Program Operating Level $104,756 $104,806 $101,714 ($3,092) -2.95%

Direct FTE 535 496 482 (14) -2.82%

Reimbursable FTE 15 15 15 0 0.00%

Total FTE 550 511 497 (14) -2.74%

Summary

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 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 FY 2013, 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 2013 President’s budget request 

enables TTB to continue its programs and 

activities necessary to meet the performance 

measures that support TTB’s strategic goals of 

collecting revenue and protecting the public.

Total resources required to support TTB 

activities for FY 2013 are $101,714,000, 

including $96,786,000 from direct 

appropriations, and $4,928,000 from other 

offsetting collections and reimbursable 

programs.

TTB FY 2013 Budget Highlights

Dollars in thousands

Alcohol and Tobacco Tax and 

Trade Bureau

FTE Amount

FY 2012 Enacted 496 $99,878

Changes to Base:

Maintaining Current Levels 

(MCLs):

- $987

Maintaining Current Levels - $987

Non-Recurring Costs: - ($2,000)

FY 2012 Funding for Special 

Agents

- ($2,000)

Efficiency Savings: (6) ($1,079)

Permits Online Efficiencies (6) ($550)

Data Center Consolidation - ($529)

Subtotal FY 2013 Changes to 

Base

(6) ($2,092)

Total FY 2013 Base 490 $97,786

Program Changes:

Program Decreases: (8) ($1,000)

Repeal Bond Requirement 

(Quarterly Filing)

(8) ($1,000)

Total FY 2013 Request 482 $96,786
FY 2013 Budget Adjustments

FY 2012 Enacted

The FY 2012 enacted direct appropriation for 

TTB is $99,878,000.

Maintaining Current Levels (MCLs) 

Maintaining Current Levels 

+$987,000 / +0 FTE

Funds are requested for inflation adjustments 

(1.7 percent) in non-labor expenses such as 

GSA rent adjustments, postage, supplies and 

equipment and health benefits and the increase 

in Federal Employees Retirement System 

participation. Funds are also requested for the 

proposed 2013 pay raise (0.5 percent)

Non-Recurring Costs

FY 2012 Funding for Special Agents 

-$2,000,000 / +0 FTE

Congress provided TTB with funding in FY 

2012 for the costs of special law enforcement 

agents to target tobacco smuggling and other 

criminal diversion activities which TTB is 

executing by reimbursing IRS for the use of its

special agents. In FY 2013 the Administration 

proposes to achieve this purpose by providing 

the IRS with authority to use its appropriation 

to work these cases at the discretion of the 

Commissioner of Internal Revenue and in 

coordination with TTB.

Efficiency Savings

Permits Online Efficiencies 

-$550,000 / -6 FTE

Savings realized from staffing reduction 

enabled by efficiencies gained from the 

Permits Online electronic filing system.

Data Center Consolidation 

-$529,000 / +0 FTE

Savings realized from the move of all IT 

equipment and TTB core business applications 

from data centers hosted in commercial 

facilities to TTB facilities.

Program Decreases

Repeal Bond Requirement (Quarterly Filing)

-$1,000,000 / -8 FTE

TTB proposes a statutory change to mandate 

quarterly excise tax filing and payment for 

certain beverage alcohol industry members, 

and to repeal the bond requirement for such 

taxpayers.

Explanation of Budget Activities

Collect the Revenue ($47,893,000 from direct 

appropriations, $2,464,000 from reimbursable 

resources)

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 FY 2011, excise tax 

collections reached $15.5 billion for tobacco 

products, $7.6 billion for alcohol beverage 

products, and $344 million for firearms and 

ammunition. This budget activity supports the 

TTB strategic goal of ensuring that industry 

remits the proper federal tax on these products.

Protect the Public ($48,893,000 from direct 

appropriations, $2,464,000 from reimbursable 

resources)

This budget activity funds the programs that 

ensure the integrity of the products and 

industry members in the marketplace, promote

compliance with federal laws and regulations 

by the 56,000 businesses that TTB regulates, 

facilitate fair and lawful commercial 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. This budget 

activity supports the TTB strategic goal of 

assuring that alcohol and tobacco industry 

operators meet permit qualifications, and 
alcohol beverage products comply with federal 

production, labeling, and marketing 

requirements.

Legislative Proposals

Extend Pay Demonstration Project

TTB proposes to continue the Pay 

Demonstration Project (Pay Demo) by 

amending the General Provision language to 

extend the project for one additional year. 

This project was established to enhance 

Treasury’s ability to effectively recruit and 

retain highly qualified employees. Pay Demo 

has been extended every year since it was first 

established in FY 1999, and has been a 

successful intervention tool in the recruitment 

and retention of critical staff positions. 

 The continuation of the Pay Demo 

authority has proven to be an effective 

recruitment strategy that enables the 

bureau to timely fill its positions with the 

right people, with the right skills, and to 

minimize loss and skill gaps caused by an 

aging workforce and employee turnover;

 The Pay Demo authority fosters a resultsoriented organizational culture since 

compensation is based upon the 

employees’ level of performance, thus 

improving the bureau’s overall 

performance; and

 The Pay Demo authority has resulted in a 

more diverse workforce, with increased 

representation of various groups (e.g., 

women, persons with disabilities, veterans, 

and persons from different age groups) 

across occupations and band/grade 

groupings under the authority.

Repeal Bond Requirement

The proposal, which is presented as part of the 

Administration’s overall tax agenda, would 

require any distilled spirits, wine, and beer 

taxpayer who reasonably expects to be liable 

for not more than $50,000 per year in alcohol 

excise taxes (and who was liable for not more 

than $50,000 in such taxes in the preceding 

calendar year) to file and pay such taxes 

quarterly, rather than semi-monthly. The 

proposal would also create an exemption from 

the bond requirement in the Internal Revenue 

Code of 1986 (IRC) for these small taxpayers. 

The proposal includes conforming changes to 

the other sections of the IRC describing bond 

requirements.

Additionally, the proposal would allow any 

distilled spirits, wine, or beer taxpayer with a 

reasonably expected alcohol excise tax 

liability of not more than $1,000 per year to 

file and pay such taxes annually rather than on 

a quarterly basis. The proposal will create 

parity among alcohol taxpayers by allowing 

eligible distilled spirits and beer taxpayers to 

file annually as well.

The proposal would be effective 90 days after 

the date of enactment.

Internal Revenue Service/Enforcement 

(Special Agent Support)

Congress vested in TTB exclusive authority to 

enforce the criminal provisions of the IRC 

related to alcohol and tobacco excise taxes. In 

FY 2010 and FY 2012 Congress provided 

TTB with resources to hire special agents to 

work these criminal cases, which TTB has 

accomplished by reimbursing IRS for the use 

of their special agents. In FY 2013 the 

Administration proposes to achieve this 

purpose by providing the IRS with authority to 

use its appropriation to work these cases at the 

discretion of the Commissioner and in 

coordination with TTB.
TTB Performance by Budget Activity

Budget Activity Performance Measure FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Actual Actual Actual Target Target

Collect the Revenue Amount of Revenue Collected Per 

Program Dollar 

427.0 478.0 468.0 410.0 400.0

Collect the Revenue Percent of Voluntary Compliance 

from Large Taxpayers in Filing Tax 

Payments Timely and Accurately 

(In Terms of Revenue) 

94.0 94.0 95.0 94.0 94.0

Protect the Public Average Number of Days to 

Process an Original Permit 

Application at the National 

Revenue Center 

64.0 65.0 74.0 75.0 75.0

Protect the Public National Revenue Center (NRC) 

Customer Satisfaction Survey 

Results (%) 

89.0 89.0 90.0 85.0 85.0

Protect the Public Percent of Electronically Filed 

Certificate of Label Approval 

Applications 

74.0 79.0 88.0 88.0 88.0

Protect the Public Percentage of Importers Identified 

by TTB as Illegally Operating 

without a Federal Permit (%) 

15.0 15.0 14.0 14.0 14.0

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 2011, TTB 

met all but one of its targeted performance 

goals, while showing continued improvements 

in all other performance metrics. The bureau 

plans to continue to monitor its performance, 

and will use performance information to both 

measure and improve the effectiveness of its 

programs.

The investments in the Collect the Revenue 

activity resulted in the following performance 

highlights and accomplishments during FY 

2011:

 TTB collected nearly $24 billion in 

excise taxes and other revenues from 

7,800 taxpayers in the alcohol, tobacco, 

firearms, and ammunition industries. 

The return on investment for the 

Collect the Revenue program was $468 

for every $1 expended on collection 

activities.

 TTB initiated 21 criminal 

investigations involving diversion of 

alcohol and tobacco products having an 

estimated tax liability of more than $20 

million.

 TTB identified 47 business entities 

who imported tobacco products into 

the U.S. without a federal permit. All 

entities either ceased their illegal 

operations or obtained a permit to 

import tobacco products.

 TTB completed 540 audits, 

examinations, and revenue 

investigations, which contributed to the 

identification of additional tax revenue 

of more than $35 million. These tax 

enforcement efforts also serve to deter 
fraud and other criminal activity in the 

industries TTB regulates. 

 TTB processed $462 million in coverover 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 non-potable products may be 

eligible to claim drawback of excise 

taxes paid on distilled spirits used in 

their products.

The investments in Protect the Public 

activity resulted in the following 

performance highlights and 

accomplishments during FY 2011:

 TTB processed 145,300 COLA 

applications, 88 percent of which were 

filed through the bureau’s COLAs 

Online system for electronic filing of 

label 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 processed nearly 6,000 original 

permits and 19,700 amended permits. 

A TTB permit is required before a 

business can operate in the alcohol and 

tobacco industries.

 TTB completed more than 800 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.