Alcohol and Tobacco Tax and Trade Bureau 

Mission Statement 

To collect alcohol, tobacco, firearms, and ammunition excise taxes that are rightfully due; 

to protect the public from adulterated product, and misleading or confusing marketing; 

and to assist industry members to understand and comply with Federal tax and regulatory 

requirements. 

Program Summary by Budget Activity 

Dollars in Thousands

Appropriation FY 2007 FY 2008 FY 2009

Salaries and Expenses Enacted Enacted Request $ Change % Change 

Collect the Revenue $46,215 $47,693 $49,420 $1,727 3.62%

Protect the Public 44,403 45,822 47,480 1,658 3.62%

Total Appropriated Resources $90,618 $93,515 $96,900 $3,385 3.62%

Total FTE 544 544 525 (19) -3.49%

FY 2009 Priorities 

• Collect roughly $15 billion in excise taxes rightfully due to the federal government; 

• Process permit applications that allow for the commencement of new alcohol and 

tobacco businesses; 

• Process applications for certificate of label approval required to introduce alcohol 

beverage products into the marketplace; 

• Conduct criminal investigations to effectively administer the Internal Revenue Code 

and Federal Alcohol Administration Act provisions with the objective to minimize 

tax fraud and diversion risks; 

• Complete audits of large and at risk taxpayers who pay federal excise taxes; 

• Conduct field investigations of alcohol and tobacco industry members regarding 

permit applications, consumer complaints, Federal Alcohol Administration Act trade 

practice violations, tax fraud, and alcohol beverage product integrity verifications. 

• Refresh information technology infrastructure to ensure technology is operating to 

support the tax collection and regulatory functions; and 

• Promote e-filing of industry member data, including taxpayer operational reports and 

tax returns, as well as certificate of label approval applications. 
Table of Contents

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

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

1B – Program History and Future Outlook..................................................................... 2 

Section 2 – Budget Adjustments and Appropriation Language................................... 8

2.1 – Budget Adjustments Table..................................................................................... 8 

2A – Budget Increases and Decreases Description ........................................................ 8 

2.2 – Operating Levels Table........................................................................................ 10 

2.3 – Appropriations Detail Table ................................................................................ 11 

2B – Appropriations Language and Explanation of Changes....................................... 11 

2C – Legislative Proposals ........................................................................................... 12 

Section 3 – Budget and Performance Plan ................................................................... 13

3.1 – Budget by Strategic Outcome .............................................................................. 13 

3A – Collect the Revenue ............................................................................................. 14 

3.2.1 – Collect the Revenue Budget and Performance Plan ......................................... 14 

3B – Protect the Public ................................................................................................. 16 

3.2.2 – Protect the Public Budget and Performance Plan ............................................. 16 

Section 4 – Supporting Materials.................................................................................. 17

4A – Human Capital Strategy Description ................................................................... 17 

4.1 – Summary of IT Resources Table ......................................................................... 19 

4B – Information Technology Strategy ........................................................................ 20 

4.2 – PART Evaluation Table....................................................................................... 21 
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 federal law, namely those 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 those engaged in the alcohol beverage industry and 

the protection of consumers of alcohol beverages. 

In Fiscal Year (FY) 2009, TTB will continue to focus efforts on helping industry 

members comply with alcohol, tobacco, firearms and ammunition laws and regulations, 

thus ensuring that all the appropriate excise taxes are collected and that alcohol beverages 

meet federal production, labeling, advertising and marketing requirements. 

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 focusing on 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 alcohol 

beverage 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, certificate of label approval, 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 certificate of label 

approval (COLA); 

 Respond to industry and consumer complaints; 

 Investigate product contamination and adulteration incidents or allegations; 

 Investigate violations concerning unfair trade practices, labeling, and advertising 

in the beverage alcohol industry; and 

 Regulate the international import/export trade in beverage and industrial alcohol. 

TTB – 1
The total resources required to support TTB activities for FY 2009 are $99,768,000 

including $96,900,000 from direct appropriations and $2,868,000 from offsetting 

collections, mainly from the Puerto Rico cover-over program. 

1B – Program History and Future Outlook 

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

revenue rightfully due and ensuring products meet regulatory standards. 

Collect the Revenue - This activity collects 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 8,500 businesses, and the 

taxes are 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 cigarette tubes, 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 2007, the majority of taxes collected were from tobacco (49 percent) and alcohol 

(49 percent), with the remainder from firearms and ammunition (2 percent). 

Strategies used to collect the revenue rightfully due focus on identifying any gaps in tax 

payment, any illegal entities, 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 2007: 

• Collected $14.7 billion in excise taxes, interest, and other revenues from alcohol, 

tobacco, firearms, and ammunition industries. 

• 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. In 

FY 2007, 98 percent of TTB’s tax receipts were collected electronically. 

• Improved voluntary compliance – 75 percent of taxpayers filed payments on or before 

the scheduled due date. 

• Processed $459 million in cover-over payments to Puerto Rico and $8 million to the 

Virgin Islands. Federal excise taxes collected on all imported rum and on rum

produced in Puerto Rico and the Virgin Islands and subsequently brought into the 

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

Virgin Islands. 

• Processed $336 million in drawback claims. Under current law, persons who use 

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

TTB – 2
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. The Non-Beverage Products Lab completed 

7,300 non-beverage drawback formulas and 1,623 specially denatured alcohol 

formulas. 

• Laboratories analyzed a total of 2,000 beverage alcohol samples for product integrity, 

pre-import analysis, and IRC section 5010-tax credit determination. TTB also 

analyzed 152 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. 

• Rulemaking initiatives included new regulatory guidance on the tax classification of 

cigars and cigarettes. The regulatory changes seek to provide industry with clearer 

and more objective classification criteria for tobacco products in order to reduce the 

risks of misclassification of cigarettes as little cigars. This regulatory change is in the 

comment and analysis stage. 

This table displays the amount of federal excise tax collections at the bureau from 

FY 2003 – 2007 by revenue type. 

Revenue Type 2003 2004 2005 2006 2007

Alcohol $6,857,456,528 $6,989,010,058 $7,075,430,170 $7,183,043,493 $7,232,154,000

Tobacco $7,435,494,644 $7,440,206,609 $7,408,285,850 $7,350,594,192 $7,194,097,000

Firearms Ammunition Mfg $193,414,143 $216,005,637 $225,817,132 $249,577,917 $287,835,000

Special Occupational Taxes 1/ $102,178,604 $100,573,837 $10,189,069 $2,895,164 $2,808,000

 TOTALS $14,588,543,918 $14,745,796,141 $14,719,722,221 $14,786,110,766 $14,716,894,000

1/ Special Occupational Taxes (SOT) were suspended on most alcohol taxpayers, effective July 1, 2005 and repealed for all alcohol taxpayers 

effective July 1, 2008. However, the SOT relating to tobacco permittees (manufacturers, importers, and export warehouses) remained intact.

Economic Impact and Tax Collections from the Alcohol Industry 

Studies of the wine,1

 distilled spirits,2 and beer industries 3 disclosed that the annual 

economic impact from those businesses on the U.S. domestic economy is rapidly 

approaching $500 billion (Wine - $162 billion; Beer - $189 billion; and Distilled Spirits - 

$103 billion) and represents 3 to 4 percent of the GNP. The alcohol beverage industry in 

the United States pays over $7 billion in federal excise taxes each year and also 

contributes tax revenues for state and local governments. Economic forecasts predict 

continued modest growth in the alcohol industry, and taxes collected on alcoholic 

beverages are expected to continue to rise throughout the period FY 2007 – FY 2009. 

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. 

 

1

 “The Impact of Wine, Grapes and Grape Products on the American Economy 2007,” MKF Research 

LLC. 

2

 “The National Trade Association Representing Producers and Marketers of American’s Favorite Brands 

of Distilled Spirits,” Distilled Spirits Council of the United States. 3

 “The Beer Industry Economic Contribution Study Prepared for The Beer Institute,” Guerrilla Economics, 

LLC, April 2007. 

TTB – 3
Tobacco Collections 

The federal excise tax collections from tobacco imports and domestic sales fell slightly in 

2007. TTB collects the federal excise tax only upon products from domestic 

manufacturers and U.S. Customs and Border Protection (CBP) collects the tax on 

imported tobacco products. The reduction of tobacco tax collections is likely attributable 

to an increased consumption of domestic cigarette alternatives (such as little cigars and 

roll your own tobacco), which are taxed at lower rates than cigarettes. Also, this decline 

in domestic sales may also be attributable to a proliferation of the sale of illegal or

smuggled cigarettes, which adversely impacts collections at TTB. Based upon the 

bureau’s own findings as well as recent Center of Disease Control findings,4

 TTB does 

not believe decreased collections are the result of an overall decrease in the use of 

tobacco products. 

Since many states increased their taxes on cigarettes following the Master Settlement 

Agreement 5

 (particularly premium brands), sales of domestic cigarettes have decreased, 

while sales of lower-taxed alternative tobacco products (such as little cigars and roll your 

own tobacco) have increased. Even so, the increases in lower-taxed alternative domestic 

tobacco product sales are too modest to fully compensate for the decrease in domestic 

cigarette sales.

Finally, while consumers purchase less expensive cigarettes (generic) manufactured in 

the United States over their premium brand competitors, TTB has found an increased risk 

in underreporting related to tax liability for many generic products. To ensure that all 

taxes rightfully due are collected for generic products, TTB has deployed audit and 

investigation resources to investigate these cases and take appropriate action to resolve 

liability and associated compliance violations. 

Firearms, Ammunitions Tax (FAET) Collections 

Firearms and ammunition excise taxes are remitted to the Fish and Wildlife Restoration 

Fund under provisions of the Pittman-Robertson Act of 1937. The firearms and 

ammunition business industry continues to grow. Federal excise tax collections on 

firearms and ammunition has increased from $193 million in FY 2003 to $289 million 

during FY 2007, an increase of $96 million over the past four years, or 50 percent growth 

in federal revenues. The increase in reported tax revenue can be attributed to industry 

growth; effective outreach initiatives at the bureau; and the presence of field audits which 

continues to promote voluntary taxpayer compliance. 

 

4

 “Cigarette Smoking Among Adults – United States, 2006,” Morbidity and Mortality Weekly Reports, 

November 9, 2007. 

5

 In 1998, the Attorneys General of 46 states signed the Master Settlement Agreement (MSA) with the four 

largest tobacco companies in the United States to settle state suits to recover billions of dollars in costs 

associated with treating smoking-related illnesses. Four states - Florida, Minnesota, Mississippi, and Texas 

- settled their tobacco cases separately from the MSA states. 

TTB – 4
Protect the Public - This activity ensures the integrity of the alcohol and tobacco 

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

roughly 45,600 alcohol and tobacco businesses. Under this activity, TTB enforces 

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

importation, exportation, 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 have resulted in the following performance 

highlights and accomplishments during FY 2007: 

• Processed 125,117 Certificate of Label Approval (COLAs) applications, of which 

63,811 applications were filed electronically through COLAs Online, a total of 

51 percent. 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 4,600 original permits, approved 22,116 amended permits, and prepared 

related correspondence. 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. 

• The Scientific Services Division (SSD) received its accreditation from the 

International Organization for Standardization (ISO). 

• Conducted 467 field investigations on the most high-risk applications to ensure 

objectives of the Anti-Terrorism Act of 2001 were met. 

• Conducted 945 field application investigations of industry members regarding 

applications, consumer complaints, tax fraud, trade practice violations, and product 

and labeling integrity verifications. 

• Assisted 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 was signed in January 23, 2007, which will 

facilitate the export trade in wine from the U.S. to WWTG countries. 

Specific Challenges in FY 2009 

Law Enforcement 

TTB is dependent upon the availability of other agencies to supply law enforcement 

resources to pursue criminal cases. The law enforcement challenges on the alcohol and 

tobacco industries revolve around tax fraud, label fraud, unlawful diversion, and unlawful 

trade practices. Tax fraud issues have also arisen in the firearms and ammunition 

industry as well. 

TTB – 5
Tax fraud, through unlawful diversion or other means, represents an extremely high risk 

to the revenue as well as a funding source for organized crime and terrorists. The lost 

revenue from these illegal activities is estimated to be in the range of $1 billion, 

conservatively. The proliferation of alcohol fuel plants presents a serious concern for 

significant revenue loss that may result from unlawful diversion. Label fraud and 

unlawful trade practices also represent a serious threat to the economic stability of the 

alcohol trade. Label fraud deceives consumers as to what they are buying, but also 

threatens domestic producer’s ability to effectively trade in interstate commerce. 

Unlawful trade practices present a similar threat to free commerce because of their 

potential to undermine healthy small business activity and limit consumer choices. 

Alcohol Fuel Plants (AFPs) 

Another challenge is the accelerated growth of alcohol fuel production. In 2005, total 

U.S. production of alcohol for fuel use was approximately 4 billion gallons, and in 2006 

it was nearly 5 billion gallons. Current capacity is nearly 7 billion gallons per year, and 

plants under construction will make an additional 5 billion gallons annually. The recent 

Energy Independence and Security Act of 2007 mandates the use of 36 billion gallons of 

renewable fuel per year by 2022. In comparison, total U.S. consumption of beverage 

distilled spirits is only 420 million gallons per year – and beverage spirits contain less 

than half the ethanol that is in alcohol fuel. Most alcohol fuel production comes from

fewer than 150 large plants, but hundreds of smaller plants have applied for TTB permits 

in each of the last four fiscal years. TTB currently has 1,567 active alcohol fuel plants. 

These developments present a serious concern for TTB because of the possibility for 

significant revenue losses that would result from unlawful diversion. 

Succession Planning 

Succession planning is high on the list of TTB strategic priorities, especially regarding 

TTB’s investigative forces. TTB expects to lose forty percent of its workforce by 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. The FY 2009 budget seeks authority to continue 

this program an additional year. 

Rulemaking 

Over the next few years TTB anticipates continued industry and interest group petitions, 

inquiries, and other expressions of interest in more detailed beverage labeling. An 

advance notice of proposed rulemaking published in mid-2005 on the labeling and 

advertising of wines, distilled spirits, and malt beverages sought comments on various 

labeling issues including, among others, information panels, alcohol content, and allergen 

labeling; this notice generated over 19,000 comments. In July 2006, TTB published in 

the Federal Register an interim rule setting forth standards for voluntary allergen labeling 

of alcohol beverages concurrently with a notice of proposed rulemaking for mandatory 

allergen labeling for alcohol beverages. In FY 2008 and 2009, the bureau will consider 

TTB – 6
the feasibility of regulatory changes in response to the comments received on the 2005 

advance notice. 

In July 2007, TTB published in the Federal Register for public comment proposed 

regulatory changes which would require a statement of alcohol content for all alcohol 

beverage products, expressed as a percentage of alcohol by volume and appearing on any 

label affixed to the container. Also included in the proposed regulatory changes is a 

requirement for a Serving Facts panel on alcohol beverage labels, which would include a 

content statement covering calories, carbohydrates, fat, and protein. Under the proposals, 

industry members may also disclose on the serving facts panel the number of U.S. fluid 

ounces of pure alcohol per serving as part of a statement that includes alcohol content 

expressed as a percentage of alcohol by volume. The new regulations would also specify 

reference serving sizes for wines, distilled spirits, and malt beverages based on the 

amount of beverage customarily consumed as a single serving rather than based on a 

definition of a standard drink. The purpose of these proposed regulatory changes is to 

ensure that alcohol beverage labels provide consumers with adequate information about 

the products they are consuming. 

TTB – 7
Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands

Salaries and Expenses FTE Amount

FY 2008 Enacted 544 $93,515

Base Realignment:

 Base Realignment from Collect the Revenue (935)

 Base Realignment to Protect the Public 935

 Increased Reimbursable Payments from PR Gov't (11) (1,149)

Maintaining Current Levels (MCLs):

 Non-Pay Inflation Adjustment 752

 Pay Annualization 402

 Pay Inflation Adjustment 1,075

Total FY 2009 Base 533 $94,595

Program Decreases:

 Efficiency Savings (8) (685)

Program Increases:

 IT Infrastructure (Hardware Refresh) 2,990

Subtotal FY 2009 Program Changes (8) 2,305

Total FY 2009 Request 525 $96,900

2A – Budget Increases and Decreases Description 

Base Realignment ...........................................................................-$1,149,000 / -11 FTE 

Base Realignment from Collect the Revenue -$935,000 / +0 FTE 

Realignment of funds from the Collect the Revenue Budget Activity based on historical 

spending patterns. 

Base Realignment to Protect the Public +$935,000 / +0 FTE 

Realignment to Protect the Public Budget Activity. 

Increased Reimbursable Payments from Puerto Rican Government -$1,149,000 / -11 FTE 

Recovery for indirect costs for general administrative, information technology, legal, and 

other enforcement bureau activities which support the Puerto Rico cover over program. 

The cost model which was adopted by the bureau was determined to be in full 

compliance with the guidelines promulgated by the Office of Management and Budget, 

the CFO Act, and Statements of Federal Financial Accounting Standards. These 

reimbursable funds have been used to supplant the direct appropriations. 

Maintaining Current Levels (MCLs) ...........................................+$2,229,000 / +0 FTE 

Non-Pay Inflation Adjustment +$752,000 / +0 FTE 

Non-labor related items such as contracts, travel, supplies, equipment, and GSA rent 

adjustments.

Pay Annualization +$402,000 / +0 FTE 

Funds are requested for the FY 2009 cost of the January 2008 pay increase. 

Pay Inflation Adjustment +$1,075,000 / +0 FTE 

Funds are requested for the January 2009 pay raise. 

TTB – 8
Program Decreases .............................................................................-$685,000 / -8 FTE 

Efficiency Savings -$685,000 / -8 FTE 

Reduction in funding due to anticipated savings to be realized from improvements in 

business processes, systems, and operations at the bureau. 

Program Increases .........................................................................+$2,990,000 / +0 FTE 

IT Infrastructure (Hardware Refresh) +$2,990,000 / +0 FTE 

The funding will be used to refresh the information technology hardware and 

infrastructure in order to facilitate mission critical functions in support of departmental 

and bureau strategic goals and objectives of collecting the revenue and protecting the 

public. TTB has two core business applications to support this mission: Integrated 

Revenue Information System (IRIS) and Certification/Exception of Label/Bottle 

Approval (COLAs) Online. IRIS supports the collection of nearly $15 billion in federal 

excise taxes per year by automating the examination of industry member tax accounts. 

COLAs Online provides industry members with an internet-based application to submit, 

track, and review applications for label approval, thereby expediting TTB business 

processes and improving customer service. 

Based on internal systems reviews and industry best practices, TTB has determined that 

by FY 2009 a significant portion of the current infrastructure will become technically 

obsolete and that the risk of business disruption from malfunctioning equipment will 

negatively impact basic tax and regulatory services. TTB has identified significant 

impacts of an obsolete infrastructure including, but not limited to, risks to excise tax 

collection, public safety concerns, decreased customer satisfaction, management 

reporting issues, staff productivity inefficiencies and impacts to the compliance with 

federal mandates. Meeting federal mandates such as Internet Protocol Version 6, 

HSPD-12, GPEA, FISMA, and e-government initiatives will be facilitated with this 

infrastructure refresh. 

TTB – 9
 2.2 – Operating Levels Table 

Dollars in Thousands

Bureau: Salaries and Expenses

FY 2007 Enacted

FY 2008 

President's 

Budget

Cong. Action 

including 

Recission

FY 2008 Enacted 

Level

FY 2009 

Requested Level

FTE 544 544 544 525

Object Classification:

 11.1 - Full-time permanent 42,695 43,640 0 43,640 44,940

 11.3 - Other than full-time permanent 0 0 0 0 0

 11.5 - Other personnel compensation 698 778 0 778 778

 11.8 - Special personal services payments 0 0 0 0 0

 12 - Personnel benefits 10,979 11,525 0 11,525 11,235

 13 - Benefits for former personnel 0 0 0 0 0

 21 - Travel and transportation of persons 3,265 3,363 0 3,363 3,000

 22 - Transportation of things 98 101 0 101 101

 23.1 - Rental payments to GSA 4,943 4,981 0 4,981 5,219

 23.2 - Rental payments to others 0 0 0 0 0

 23.3 - Comm, utilities, and misc charges 4,787 4,931 0 4,931 5,049

 24 - Printing and reproduction 367 378 0 378 387

 25 - Other contractual Services 0 0 0 0 0

 25.1 - Advisory and assistance services 0 0 0 0 0

 25.2 - Other services 20,762 21,733 0 21,733 22,131

 25.3 - Other purchases of goods and services from

Govt. accounts 

0 0 0 0 0

 25.4 - Operation and maintenance of facilities 0 0 0 0 0

 25.5 - Research and development contracts 0 0 0 0 0

 25.6 - Medical care 0 0 0 0 0

 25.7 - Operation and maintenance of equip 0 0 0 0 0

 25.8 - Subsistence and support of persons 0 0 0 0 0

 26 - Supplies and materials 650 670 0 670 670

 31 - Equipment 1,374 1,415 0 1,415 3,390

 31.6 - ADP Equipment 0 0 0 0 0

 32 - Land and structures 0 0 0 0 0

 33 - Investments and loans 0 0 0 0 0

 41 - Grants, subsidies, and contributions 0 0 0 0 0

 42 - Insurance claims and indemnities 0 0 0 0 0

 43 - Interest and dividends 0 0 0 0 0

 44 - Refunds 0 0 0 0 0

Total Budget Authority $90,618 $93,515 $0 $93,515 $96,900

Budget Activities:

 Collect the Revenue 46,215 47,693 0 47,693 49,420

 Protect the Public 44,403 45,822 0 45,822 47,480

Total Budget Authority $90,618 $93,515 $0 $93,515 $96,900

TTB – 10
2.3 – Appropriations Detail Table 

Dollars in Thousands

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Collect the Revenue 277 $46,215 277 $46,215 277 $47,693 268 $49,420 -3.25% 3.62%

Protect the Public 267 44,403 267 44,403 267 45,822 257 47,480 -3.75% 3.62%

Subtotal New Appropriated Resources 544 $90,618 544 $90,618 544 $93,515 525 $96,900 -3.49% 3.62%

Other Resources:

Recoveries

Offsetting Collections - Reimbursable 15 3,024 15 3,024 15 3,755 15 2,868 0.00% -23.62%

Available multi-year/no-year funds

Transfers In/Out

Subtotal Other Resources 15 $3,024 15 $3,024 15 $3,755 15 $2,868 0.00% -23.62%

Total Resources Available for Obligation 559 $93,642 559 $93,642 559 $97,270 540 $99,768 -3.40% 2.57%

% Change

Obligations Enacted to FY 2009

FY 2008

Resources Available for Obligation

FY 2007 FY 2007 FY 2008 FY 2009

Enacted Request

2B – Appropriations Language and Explanation of Changes 

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] $96,900,000 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 Administrative Provisions:

Sec. 115. Section 122(g) (1) of Public Law 105-

119 as amended (5 U.S.C. 3104 note), is further 

amended by striking [“8 years”] “10 years” and 

inserting [“10 years”] “11 years”. 

TTB proposes to continue the Pay 

Demonstration Program by 

amending the language to extend the 

program for one additional year. 

TTB - 11 
2C – Legislative Proposals 

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

the Pay Demonstration Program (Pay Demo) by amending the general provision language 

to extend the program for one additional year. This project was established to enhance 

TTB’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. In FY 2006, TTB 

contracted for a study to provide an independent evaluation of this program. The results 

of the study are being examined. 

TTB - 12 
Section 3 – Budget and Performance Plan

This table lists all FY 2009 resources by strategic goal, objective, and outcome outlined 

in the FY 2007-2012 Treasury Department Strategic Plan. The Treasury Strategic Plan 

is a corporate level plan for the Department that provides a description of what the 

agency intends to accomplish over the next five years. 

For detailed information about the FY 2007-2012 Treasury Strategic Plan, please go to: 

http://www.treas.gov/offices/management/budget/strategic-plan/

3.1 – Budget by Strategic Outcome 

Dollars in Thousands

TREASURY Strategic Goal FY 2008 FY 2009 Percent

 TREASURY Strategic Objective Enacted Request Change

TREASURY Strategic Outcome AMOUNT AMOUNT AMOUNT 

 Economic competitiveness 47,662 48,885 2.6%

 Revenue collected 49,608 50,883 2.6%

Total $97,270 $99,768 2.6%

3A – Collect the Revenue ($49,420,000 from direct appropriations and $1,463,000 

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 large and at risk taxpayers. 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 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 2009 budget request enables the 

continuation of efforts to achieve 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............................................................Total $1,463,000 

Federal Sources (Laboratory Services)..........................................................$27,000 

Non Federal Sources (Puerto Rico)............................................................1,436,000 

The non- federal reimbursable funds 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 $459 million in cover-over taxes collected in the United States on 

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products originating in Puerto Rico. Also, the bureau collects a nominal amount of 

reimbursable funding for lab services performed to support criminal investigations being 

conducted at the Alcohol Tobacco Firearms and Explosives Agency (ATFE). 

3.2.1 – Collect the Revenue Budget and Performance Plan 

Collect the Revenue Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $45,285 $49,618 $46,215 $47,693 $49,420

 Reimbursable Resources $935 $935 $1,512 $1,915 $1,463

Total Resources $46,220 $50,553 $47,727 $49,608 $50,883

Budget Activity Total $46,220 $50,553 $47,727 $49,608 $50,883

Collect the Revenue Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percentage of Voluntary Compliance in filing

tax payments timely and accurately (in terms 

of revenue) (Revenue %) (Oe) 

 86 87 86 87 87

Cumulative percentage of excise tax revenue 

audited over 3 years (%) (Ot) 

 82% 93% 16% 74% 90%

Percentage of Voluntary Compliance in filing

tax payments timely and accurately (in terms 

of number of compliant industry members)(%)

(Oe) 

 70% 76% 75% 75% 75%

Percentage of total tax receipts collected

electronically (%) (E) 

 98% 98% 98% 98% 98%

Resources as a percentage of revenue (%) (E) .37% .31% .31% .34% .34%

Unit cost to process an excise tax return based 

on new legislation ($) (E) 

 Baseline 76 61 76 76

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

Description of Performance: 

In FY 2007, TTB met all of its performance measures under the Collect the Revenue 

strategy, while showing continued improvements in performance scores. TTB continues 

to collect nearly $15 billion in federal excise taxes in a highly efficient manner. Also, 

key performance metrics show that 98 percent of the federal excise tax receipts are 

collected electronically at the bureau and that 75 percent of industry members voluntarily 

file their tax and operational reports on or before the scheduled due date and the filing 

information is both accurate and reliable. TTB’s audit strategy is to audit regulated 

businesses based on its risk model, and continue its audits of the largest taxpayers, with 

its goal of 90 percent revenue audited in its second cycle by FY 2009. TTB’s “Resources 

as a percentage of revenue (%)” measure continues to benchmark as one of the most 

efficient tax collection agencies or bureaus in the world. 

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3B – Protect the Public ($47,480,000 from direct appropriations and $1,405,000 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, importation, 

exportation, 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 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. 

TTB monitors trade practices of the alcohol industry and takes enforcement actions on 

violations or discrepancies, monitors and reviews international trade in alcohol beverages 

to identify trade barriers and incidents of international fraud and contaminated products; 

and to promote international agreements on product integrity. 

Users of specially denatured alcohol (SDA) are required to submit a formula to the TTB 

Laboratory. Likewise, those using alcohol for non-beverage purposes, such as in the 

manufacture of flavorings or medicines, must also gain approval of their formula in order 

to file a claim for drawback of excise taxes previously paid. In both cases, the TTB Lab 

reviews the formula and analyzes samples to grant or deny the action requested by the 

applicant. 

TTB also protects the consumer by monitoring alcohol products and investigating 

incidents of suspected unsafe conditions or product deficiencies related to production and 

labeling. TTB does this by testing samples of alcohol beverages sold at the retail level 

and obtained directly from producers. The purpose of this testing is to ensure that alcohol 

beverages marketed in the United States meet formulation and labeling requirements, do 

not contain unauthorized substances or contaminants, and are properly classified for tax 

purposes. 

Offsetting Collections............................................................Total $1,405,000 

Federal Sources (Laboratory Services)..........................................................$26,000 

Non-Federal Sources (Puerto Rico)....................................................... $1,379,000 

The non-federal reimbursable funds 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. Also, the bureau collects a nominal amount of 

reimbursable funding for lab services performed to support criminal investigations being 

conducted at ATFE. 

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3.2.2 – Protect the Public Budget and Performance Plan 

Protect the Public Budget Activity

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $37,051 $40,597 $44,403 $45,822 $47,480

 Reimbursable Resources $765 $765 $1,512 $1,840 $1,405

Total Resources $37,816 $41,362 $45,915 $47,662 $48,885

Budget Activity Total $37,816 $41,362 $45,915 $47,662 $48,885

Protect the Public Budget Activity

 Measure FY 2005 FY 2006 FY 2007 FY 2008 FY 2009

Actual Actual Actual Target Target

Percent of electronically filed Certificate of

Label Approval applications (%) (E) 

 25% 38% 51% 48% 48%

Percentage of COLA approval applications 

processed within 9 calendar days of receipt 

(%) (E) (This measure will become inactive 

beginning in FY 2008.)

 50% 44% 42% 35% Discontinued

Percentage of permit application (original and 

amended) processed by the National Revenue 

Center within 60 days (%) (E) 

 81% 86% 85% 80% 80%

Unit cost to process a Wine Certificate of 

Label Approval

null% null% 34% 34% 85%

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

Description of Performance: 

In FY 2007, TTB met all but one of its performance measures under the Protect the 

Public budget activity. The results from the metrics, along with program performance 

during the year, demonstrate that the bureau administered the laws and regulations in a 

manner that protects the consumer, promotes voluntary compliance, and facilitates import 

and export trade in beverage and industrial alcohols. The performance measure not met 

was the “Percentage of certificate of label applications (COLA) processed within 

9 calendar days of receipt.” TTB examines all alcohol labels prior to their use and issues 

a certificate of label approval (COLA) to ensure alcohol beverage labels adequately 

identify the product and do not contain misleading information. The performance metric 

target was 45 percent and the final result was 42 percent. This measure was difficult to 

achieve because the complexity and volume of this COLA workload, which is driven

from industry members, has continued to increase for several years. Since 1999, COLA 

applications have risen over 84 percent, while the available staff dedicated to this 

operation has remained constant. While this challenge will continue, the bureau fully 

expects to gain efficiency of operations from encouraging industry members to file their 

COLA applications electronically versus paper. The number of electronic submissions 

has increased from 25 percent in FY 2005 to over 50 percent in FY 2007. 

For detailed information about each performance measure, including definition, 

verification and validation, please go to: 

http://www.treasury.gov/offices/management/dcfo/accountability-reports/2007-par.shtml

TTB - 16 
Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

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

Treasury’s strategic goals: 

 

• Effectively managed U.S. government finances; 

• U.S. and world economies perform at full economic potential, 

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

plans, TTB has taken several steps to maintain and improve its current professional 

workforce. TTB’s Human Capital Strategic Plan, which is aligned with the Bureau 

Strategic 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. 

Succession planning is a strategic priority for TTB’s future transitioning, especially as it 

relates to the bureau’s mission critical positions. TTB expects to lose approximately 

forty percent of its workforce between 2008 and 2010 due to retirements and other 

attrition. To mitigate these losses, it is vital that TTB continue to recruit, develop, and 

retain high-caliber employees in mission critical positions. 

Other HR Highlights 

During FY 2007, TTB: 

• Completed an independent evaluation of the TTB Pay Demonstration Project over a 

three year period. This included conducting an Attitude Survey and Survey Followup Focus Groups with Pay Demo Project employees and supervisors and an analysis 

of cost comparisons with General Schedule and other Pay Demonstration Programs. 

As a result of the evaluation, TTB chartered a Labor/Management Workgroup that 

developed cost containment options for future Pay Demo Project Performance 

Payouts that were implemented for the FY 2007 performance cycle. 

• Achieved a top five percent of agency subcomponents ranking according to the 

Partnership for Public Service’s report on “The Best Places to Work in the Federal 

Government”. The ranking was based on employee responses to the 2006 Federal 

Human Capital Survey. TTB’s response rate on the survey was the highest within the 

Department of the Treasury (78 percent). 

• Designed, developed, tested, and deployed a new performance management program 

and automated performance management system that provides a clear line of sight for 

each employee to the overall Bureau strategic plan. In addition, conducted related 

Performance Management Training for both General Schedule and Pay 

Demonstration Project employees. 

• Negotiated the first Master Labor Agreement exclusively for TTB with the National 

Treasury Employees Union (NTEU). 

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• Established an Early Conflict Prevention and Resolution (CPR) Program to assist 

TTB employees in seeking fair, equitable solutions to work-related concerns through 

an informal confidential process apart and separate from both the Equal Employment 

Opportunity (EEO) Complaints and the Administrative Grievance processes. The 

CPR Program assists with maintaining a harmonious and productive workplace for 

our employees. 

• Implemented a Mentoring Program to provide guidance and motivation, strengthen 

relationships, and ensure that all the talents and skills of Bureau employees are 

maximized in accomplishing the Bureau’s mission. The Mentoring Program supports 

workforce and succession planning by developing employees to be future leaders. 

• Established three Leadership Development Programs (LDPs) based on grade level 

and supervisory level. These programs consist of short-term executive, management, 

leadership and supervisory programs to prepare employees for the next level in their 

career progression and professional development and create a cadre of employees 

prepared to compete for positions with greater leadership responsibility to meet the 

bureau’s needs. 

• Published the first TTB recruitment brochure featuring TTB’s mission critical 

positions. 

• Continued to exceed the Treasury hiring goal of 45 days with an annual overall 

average of 33 days time to hire. 
TTB - 19 

4.1 – Summary of IT Resources Table Dollars in Thousands

Information Technology Investments(Dollars in Thousands) FY 2006 FY 2007 FY 2008 Major IT Investments / Funding Source Budget Activity

& Earlier 

Enacted Enacted

President's 

Budget Re

Subtotal, Major IT Investments

Collect the Revenue/Protect the 

Public $ - $ - $ - 0.0% $ 

Non-Major IT Investments

Collect the Revenue/Protect the 

Public $ 2,780 $ 2,850 $ 2,925 2.6% $ 

Infrastructure Investments

Collect the Revenue/Protect the 

Public $ 15,111 $ 15,514 $ 15,915 2.6% $ 

Enterprise Architecture

Collect the Revenue/Protect the 

Public $ 464 $ 477 $ 491 2.9% $ 

Total IT Investments

Collect the Revenue/Protect the 

Public $ 18,355 $ 18,841 $ 19,331 2.6% $ 

% Change from

FY07 to FY08
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 and to Treasury? 

• 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 (OMB 

Circular A-130, Management of Federal Information Resources and Clinger Cohen Act 

of 1996). 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. 
4.2 – PART Evaluation Table

PART Name: Collect the Revenue

Year PARTed: FY 2004

Rating: Effective

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

3. TTB has completed several economic impact studies which provide incremental cost and social net 

benefits of regulations. TTB has only collected several cost/social net benefit studies (e.g. economic impact 

studies which support TTB's impact study positions). 

2. Improve 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. Develop a baseline to compare the incremental cost and net benefits of regulation.

1. Develop baseline for annual performance measures .

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

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

funds. In FY 2008 TTB introduced a new account code structure to capture and measure costs by strategic 

goals, programs, projects and budget activities.

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

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

TTB - 21