Alcohol and Tobacco Tax and Trade Bureau 

Program Summary by Budget Activity 

(Dollars in thousands) 

Appropriation FY 2009 FY 2010 FY 2011 

Enacted Enacted Request $ Change % Change

$50,524 $51,500 $53,084 $1,584 3.1%

$48,541 $51,500 $53,084 $1,584 3.1% 

Subtotal, Alcohol and Tobacco Tax and Trade Bureau $99,065 $103,000 $106,168 $3,168 3.1% 

Offsetting Collections - Reimbursables $5,154 $4,234 $3,050 ($1,184) (28.0%) 

Total Program Operating Level $104,219 $107,234 $109,218 $1,984 1.9% 

Collect the Revenue 

 Protect the Public 

Note: FY 2011 Total Appropriated Resources includes $106,168 (dollars in thousands) in offsetting receipts collections from licensing and 

registration fee revenues. TTB's entire budget for FY 2011 is to be funded from licensing and registration fees, to cover both the Collect the 

Revenue and Protect the Public Budget Activities. The 547 FTE for FY 2011 excludes 15 FTE from the Puerto Rico reimbursable. 

Explanation of Request 

In FY 2011, the Alcohol and Tobacco Tax and 

Trade Bureau (TTB) will continue to focus its 

efforts on helping industry members comply 

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 2011 President’s budget request 

enables TTB to continue its programs and 

activities necessary to meet the performance 

measures supporting TTB’s strategic goals of 

collecting revenue and protecting the public. 

Total resources required to support TTB 

activities for FY 2011 are $109,218,000, 

including $106,168,000 in offsetting collections from annual fee receipts, and 

$3,050,000 from other offsetting collections 

and reimbursable programs. 

Purpose of Program 

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 affecting those industries, 

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. 

Collect the Revenue - TTB is charged with 

collecting alcohol, tobacco, firearms, and 

ammunition excise taxes. These products 

generate nearly $21 billion in tax revenue 

annually, making TTB the third largest tax 

collection agency in the federal government. 

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 excise taxes collected by TTB come from 

taxes imposed and collected at the producer 

and importer 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 2009, the majority of taxes collected were 

Department of the Treasury - Budget in Brief FY 2011 Page 47
Appropriation Amount 

FY 2010 Enacted 103,000 

Changes to Base: 

Maintaining Current Levels (MCLs): $1,790 

FERS % Change 128 

Non-Pay Inflation Adjustment 500 

Pay Annualization 325 

Pay Inflation Adjustment 837 

Non-Recurring Costs: ($3,500) 

Two Year Funding for Special Agents (3,500) 

Efficiencies Savings: ($622) 

Business Process Reengineering (213) 

Reconfiguration of Field Offices (112) 

Procurement Savings (includes VOIP) (297) 

Total FY 2011 Base 

Subtotal FY 2011 Changes to Base ($2,332) 

100,668

Program Changes: 

Program Increases: $5,500 

Implement Annual Licensing & 5,500 

Registration Fee 

Total FY 2011 Budget Request 

Subtotal FY 2011 Program Changes $5,500 

106,168 

Total FY 2011 Budget Request (Net) 

Annual Licensing and Registration Fees (106,168) 

from tobacco (62 percent) and alcohol (36 

percent), with the remainder from firearms and 

ammunition (2 percent). 

Strategies used to collect the revenue rightfully 

due include identifying any gaps in tax 

payment, identifying any illegal entities or 

individuals operating outside the excise tax 

system, developing a balanced field approach 

of audits and investigations that target noncompliant industry members, and establishing 

an identifiable presence within all of industry 

that encourages voluntary compliance. 

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 50,000 

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 

maintain the appropriate level of oversight to 

ensure public safety. Education, partnerships, 

and open communication are paramount 

strategies in facilitating compliance with 

regulatory requirements. 

TTB FY 2011 Budget Highlights

(Dollars in thousands) 

FY 2011 Budget Adjustments 

FY 2010 Enacted 

The FY 2010 enacted direct appropriation for 

TTB is $103,000,000. 

Maintaining Current Levels (MCLs) 

Adjustments Necessary to Maintain Current 

Levels +$1,790,000 / +0 FTE 

Funds are requested for: A FERS percentage 

rate change of $128,000; non-labor related 

items such as contracts, travel, supplies, 

equipment and GSA rent adjustments of 

$500,000; FY 2011 cost of the January 2010 

pay increase of $325,000; and proposed 

January 2011 pay raise of $837,000. 

Non-Recurring Costs 

Two Year Funding for Special Agents -

$3,500,000 / +0 FTE 

Under the FY 2010 appropriation, two-year 

funding was designated for law enforcement 

agents and related support staff to target 

tobacco smuggling and diversion criminal 

activities. 

Department of the Treasury - Budget in Brief FY 2011 Page 48
The FY 2010 carry forward balance from this 

multi-year account will be used to cover this 

activity in FY 2011. 

Efficiencies Savings 

Business Process Reengineering -$213,000 / 

+0 FTE 

Savings realized by the introduction of 

automation and redesigned business processes 

to ensure bureau operations are efficiently 

and effectively managed. 

Reconfiguration of Field Offices -$112,000 / 

+0 FTE 

Savings from the reconfiguration of bureau 

field offices. 

Procurement Savings (VOIP) -$297,000 / +0 

FTE 

Resulting savings from the implementation of 

new technology (Voice Over Internet Protocol) that will lower the cost of communication 

services as compared to traditional phone 

services. 

Program Increases 

Implement Annual Licensing & Registration 

Fee +$5,500,000 / +12 FTE 

Funds are needed to implement the proposed 

legislation designed to establish a permanent 

program for FY 2011 and each fiscal year 

thereafter, requiring the payment of annual 

fees from alcohol and tobacco industry 

members. The $5.5 million in program costs 

are principally recurring costs, and will cover 

labor and other program operating costs. This 

program will conduct key business activities 

including the mailing and processing of 

returns, issuance of non compliance letters, 

maintaining a client registry, responding to 

customer inquiries, along with processing of 

collections and accounting for the revenues. 

Adjustments to Request Annual Fee 

Annual Licensing and Registration Fees -

$106,168,000 / +0 FTE 

Annual special receipts (annual fees) will 

reduce direct funding. The receipts from the 

annual fee program will be budgeted and 

accounted for as offsetting collections. 

Explanation of Budget Activities 

Salaries and Expenses 

Collect the Revenue ($53,084,000 from direct 

appropriations and $1,525,000 from 

reimbursable programs) 

The FY 2011 President’s Budget request is 

$53,084,000 from offsetting collections 

(annual fees) and $1,525,000 from 

reimbursable programs, for a total operating 

level of $54,609,000. 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. This program includes projects 

designed to allow taxpayers to report and pay 

excise taxes electronically. 

Protect the Public ($53,084,000 from direct 

appropriations and $1,525,000 from 

reimbursable programs) 

The FY 2011 President’s Budget request is 

$53,084,000 from offsetting collections 

(annual fees) and $1,525,000 from 

reimbursable programs, for a total operating 

level of $54,609,000. 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, importation, exportation, 

Department of the Treasury - Budget in Brief FY 2011 Page 49
labeling, advertising, and marketing of alcohol 

products. TTB conducts investigations, 

application reviews, laboratory testing, and 

educational programs in support of its mission. 

Legislative Proposals 

Extend Pay Demonstration Project: TTB 

proposes to continue the Pay Demonstration 

Project by amending the General Provision 

language to extend the program for one 

additional year. 

Annual Licensing and Registration Fee 

Program: Legislation will be proposed to 

allow TTB to establish a permanent program 

for FY 2011 and for future fiscal years 

requiring the payment of annual fees from its 

industry members. The annual fees will be 

collected from approximately 400,000 

businesses each year. This includes retailers 

and wholesale dealers in liquors and beer; 

every proprietor of distilled spirits plants, 

bonded wine cellars, bonded wine warehouses, 

TTB Performance by Budget Activity 

and tax-paid wine bottling houses; every 

brewer; denatured spirits, recovery, and taxfree users (industrial alcohol); and nonbeverage domestic drawback claimants. 

Tobacco importers, retailers, and wholesalers 

are also included. These fees will support the 

bureau’s core mission and the funds will be 

used to continue to provide benefits to 

retailers, wholesalers, breweries, wineries, 

distilleries, and industrial alcohol businesses. 

In particular, TTB’s efforts help ensure that 

alcohol and tobacco products are not 

contaminated, misbranded or illegally 

marketed, and prevent dishonest persons from 

entering into the alcohol and tobacco 

distribution system. This promotes fair 

competition among all industry members. 

Regulation of these industries also protects the 

public against adulterated alcohol products, 

and misleading labels and advertisements. 

Budget Activity Performance Measure 

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 

Actual Actual Target Actual Target 

Met? Target Target 

Collect the Revenue Amount of revenue collected per 

program dollar (E) 

0 313 300 427 Yes 400 400 

Collect the Revenue Percent of voluntary compliance 

from large taxpayers in filing tax 

payments timely and accurately (in 

terms of revenue)(Oe) 

0 94 85 94 Yes 92 92 

Protect the Public Average number of days to process 

an original permit application at the 

National Revenue Center (E) 

0 64 72 64 Yes 72 72 

Protect the Public National Revenue Center (NRC) 

customer satisfaction survey results 

(%)(Oe) 

0 90 85 89 Yes 85 85 

Protect the Public Percent of electronically filed 

Certificate of Label Approval 

applications (%) (E) 

51 62 53 74 Yes 78 85 

Protect the Public Percentage of importers identified 

by TTB as illegally operating 

without a Federal permit (%)(Oe 

0 22 19 15 Yes 19 18 

Key: Oe - Outcome Measure, E - Efficiency Measure, Ot - Output/Workload Measure, DISC - 

discontinued, and B - baseline 

Department of the Treasury - Budget in Brief FY 2011 Page 50
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 

help industry members comply with alcohol 

and tobacco laws and regulations. During FY 

2009, TTB met all of its targeted performance 

goals, while showing continued improvements 

in performance scores. The bureau plans to 

continue to monitor its performance, and will 

continue to capture performance information 

on program operations 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 2009: 

•	 Collected $21 billion in excise taxes, 

interest, and other revenues from alcohol, 

tobacco, firearms, and ammunition 

industries from 6,800 excise taxpayers 

having operations that resulted in tax 

payments during the year. 

•	 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. The 

number of Pay.gov registrants is over 

4,900. 

•	 Processed $473 million in cover-over 

payments to Puerto Rico and $8 million to 

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 Virgin 

Islands. 

•	 Processed $269 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 nonpotable 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. 

The investments in Protect the Public activity 

have resulted in the following performance 

highlights and accomplishments during 

FY 2009: 

•	 Processed 124,966 Certificate of Label 

Approval (COLAs) applications through 

the bureau’s COLAs Online system for 

electronic filing of label applications. 

About 74 percent of the applications were 

filed electronically. The Federal Alcohol 

Administration Act requires importers and 

bottlers of alcoholic beverages to obtain a 

COLA prior to introduction of the product 

into commerce. 

•	 Issued 5,533 original permits and approved 

17,755 amended permits. TTB issues 

original and amended permits to persons 

who are engaged in the alcohol and 

tobacco industries. TTB screens 

applications to prevent unqualified persons 

from engaging in operations. 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. 

•	 Initiated more than 1,300 field application 

investigations of industry members 

regarding applications, consumer complaints, tax fraud, trade practice violations, 

and product and labeling integrity 

verifications. 

Department of the Treasury - Budget in Brief FY 2011 Page 51