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Alcohol and Tobacco Tax and Trade Bureau 

Mission Statement 

Our mission is to collect alcohol, tobacco, firearms, and ammunition excise taxes that are 

rightfully due, to protect the consumer of alcohol beverages through compliance programs that 

are based upon education and enforcement of the industry to ensure an effectively regulated 

marketplace; and to assist industry members to understand and comply with Federal tax, product, 

and marketing requirements associated with the commodities we regulate.

Program Summary by Budget Activity 

Dollars in Thousands 

Appropriation FY 2008 FY 2009 FY 2010

Enacted Enacted Request $ Change % Change

 Collect the Revenue $47,693 $50,523 $52,500 $1,976 3.9%

 Protect the Public $45,822 $48,542 $52,500 $3,959 8.2%

Total Appropriated Resources $93,515 $99,065 $105,000 $5,935 6.0%

Total FTE 544 525 537 12 2.3%

Note: FY 2010 Total Appropriated Resources includes $80 million in offsetting receipts collections from fee revenues. To the 

extent that these allocations differ from the Budget, the reader should refer to the figures presented in this document. 

FY 2010 Priorities 

• Collect the roughly $22 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 Certificates of Label Approval required to introduce alcohol 

beverage products into the marketplace. 

• Conduct 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. 

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

returns, as well as Certificate of Label Approval applications. 

• Detect counterfeit alcohol and tobacco products, as well as those industry products diverted 

from lawful channels, and collect the taxes rightfully due on these products. 

• Enhance the TTB Regulatory and TTB Tax System by adding new features, improving 

functionality, and streamlining the label approval process to enable industry members to 

bring their products to market sooner. 

 
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Table of Contents 

Alcohol and Tobacco Tax and Trade Bureau .......................................................................1

Section 1 – Purpose ..................................................................................................................3

1A – Description of Bureau Vision and Priorities.......................................................... 3 

1B – Program History and Future Outlook..................................................................... 4 

Section 2 – Budget Adjustments and Appropriation Language........................................10

2.1 – Budget Adjustments Table................................................................................... 10 

2A – Budget Increases and Decreases Description ...................................................... 10 

2.2 – Operating Levels Table........................................................................................ 12 

2.3 – Appropriations Detail Table ................................................................................ 13 

2B – Appropriations Language and Explanation of Changes....................................... 13 

2C – Legislative Proposals ........................................................................................... 16 

Section 3 – Budget and Performance Plan ..........................................................................19

3.1 – Budget by Strategic Outcome .............................................................................. 19 

3.2.1 – Collect the Revenue Budget and Performance Plan ......................................... 20 

3.2.2 – Protect the Public Budget and Performance Plan ............................................. 22 

Section 4 – Supporting Materials .........................................................................................24

4A – Human Capital Strategy Description ................................................................... 24 

4.1 – Summary of IT Resources Table ......................................................................... 26 

4B – Information Technology Strategy ........................................................................ 27 

4.2 – Program Assessment Table.................................................................................. 27 
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 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 

the alcohol beverage industry and the protection of consumers of alcohol beverages. 

In fiscal year (FY) 2010, TTB will continue to focus its efforts on helping industry members 

comply with federal alcohol, tobacco, firearms and ammunition laws and regulations, in the 

interest of collecting all appropriate excise taxes and promoting a marketplace for alcoholic 

beverages that complies fully with Federal production, labeling, advertising and marketing 

requirements. 

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

• Collect all Revenue that is rightfully due: 

 Through partnerships with industry, States, and other Federal agencies, develop methods 

of promoting voluntary tax compliance. 

 Ensure correct payment of taxes focusing on audits of “major” and “at-risk” taxpayers. 

 Account accurately for the tax assessed and collected. 

 Reduce the taxpayer paperwork burden associated with collection of revenue by creating 

alternative electronic filing methods. 

 Ensure consistent tax administration. 

 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 solutions to reduce taxpayer burden and improve service 

with online filing for permit applications and formula submissions, business activity 

reports, claims, applications, Certificates 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 Certificates of Label Approval. 

 Respond to industry and consumer complaints. 

 Investigate product contamination and adulteration incidents and allegations. 

 Investigate suspected cases of unfair trade practices and violations of labeling and 

advertising standards in the beverage alcohol industry. 

 Regulate the international import/export trade in beverage and industrial alcohol. 
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The total resources required to support TTB activities for FY 2010 are $109,234,000, including 

$25,000,000 from direct appropriations, $80,000,000 from special fund receipts (annual fees) 

and $4,234,000 from offsetting collections, mainly from the Puerto Rico cover-over program. 

1B – Program History and Future Outlook 

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

revenue rightfully due the federal government 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. With the passage of the Children’s 

Health Insurance Program Reauthorization Act legislation, the anticipated annual revenues will 

climb to $22 billion. 

The excise taxes collected by TTB come from approximately 8,500 businesses, and the taxes are 

imposed and collected at the producer and importer levels 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. Approximately 200 of the largest taxpayers account 

for 98 percent of the annual excise tax collected. In FY 2008, the majority of taxes collected 

were from alcohol (51 percent) and tobacco (47 percent), with the remainder from firearms and 

ammunition (2 percent). 

Strategies used to collect the revenue rightfully due the federal government 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 non-compliant 

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 2008: 

• Collected $14.6 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 2008, more 

than 98 percent of TTB’s tax receipts were collected and processed electronically. 

• Improved voluntary compliance among taxpayers with greater than $50,000 in annual excise 

tax obligations to a compliance rate of 94 percent in FY 2008, measured in terms of timely 

and accurate tax payments remitted without Agency intervention. 
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• Processed $381 million in cover-over payments to Puerto Rico and 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 $283 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. 

• Also analyzed 457 tobacco product samples for tax classification and rulemaking support. 

TTB laboratories review formulations and analyze alcohol and tobacco products to determine 

compliance with TTB tax and classification regulations. 

• Established a Tobacco Laboratory to support TTB’s tobacco rulemaking, diversion and 

counterfeit investigations, and tax classification efforts. The Tobacco Laboratory became a 

member of the World Health Organization’s Tobacco Laboratory Network, a global tobacco 

testing network of laboratories from more than 100 countries. 

• Completed audits and investigations that recovered almost $20 million in additional tax, 

penalties, and interest from industry members in FY 2008. 

This table displays the amount of Federal excise tax collections at the Bureau from 

FY 2004 – 2008 by revenue type. 

Revenue Type 2004 2005 2006 2007 2008

Alcohol $6,995,540,000 $7,074,145,000 $7,183,012,000 $7,232,154,000 $7,420,906,000

Tobacco $7,434,037,000 $7,409,689,000 $7,350,770,000 $7,194,097,000 $6,852,009,000

Firearms Ammunition Mfg $216,006,000 $225,818,000 $249,578,000 $287,835,000 $312,622,000

Special Occupational Taxes 1/ $100,562,000 $10,190,000 $2,895,000 $2,808,000 $448,000

 TOTALS $14,746,145,000 $14,719,842,000 $14,786,255,000 $14,716,894,000 $14,585,985,000

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 GDP. The beverage alcohol 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 2009 – 

FY 2010. 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.
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Firearms and Ammunition Excise 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 industry 

continues to grow. Federal excise tax collections on firearms and ammunition have increased 

from $193 million in FY 2003 to $313 million during FY 2008, an increase of $120 million over 

the past 6 years, or a 62 percent growth in federal FAET 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. 

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 46,200 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 2008: 

• Approved 105,000 of the 133,000 Certificate of Label Approval (COLA) applications 

received; the remaining 28,000 (21 percent) were either rejected, returned for correction, 

withdrawn, expired, or surrendered. About 62 percent of COLA applications were filed 

electronically through COLAs Online. This proprietary TTB system has been in operation 

since 2003. 

• Issued approximately 5,200 original and 21,700 amended permits in FY 2008. TTB 

averaged 64 days to process perfected permit applications. TTB protected consumers by 

screening permit applicants, analyzing market samples, reviewing labels for accuracy, and 

investigating unfair trade practices. 

• Evaluated more than 5,900 beverage alcohol formulas and processed 13,500 nonbeverage 

product formulas and samples. The laboratory also analyzed 2,500 beverage alcohol samples 

in support of audits and investigations, and the product integrity, pre-import, ABSP, 5010 tax 

credit, and consumer complaints programs. 

• Implemented the Alcohol Beverage Sampling Program (ABSP) to validate the proper 

labeling of distilled spirits products in order to better protect consumers. In the first year, the 

TTB Laboratory analyzed 54 products to determine if the contents of the bottle matched the 

label description. This program enables TTB to be proactive rather than reactive to potential 

threats to the food supply. 

• Tobacco Diversion: issued cease and desist letters to tobacco importers operating without 

permits. By comparing the Customs ACE database with TTB’s Integrated Revenue 

Information System (IRIS), TTB determined that 105 entities, or 22 percent of tobacco 

importers, were importing product illegally. These importations totaled more than 1.5 million 

kilograms of tobacco products and approximately $30 million in federal excise tax. 
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• Signed a Memorandum of Understanding (MOU) with China’s General Administration of 

Quality Supervision, Inspection, and Quarantine to ensure a long-term economic partnership 

with China. The MOU establishes a consistent channel for information exchange on 

imported and exported alcohol and tobacco products and facilitates compliance in trade. 

• Conducted about 900 field application investigations of industry members regarding 

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

labeling integrity verifications. Included in these investigations are roughly 400 field 

investigations on the most high-risk permit applications to ensure objectives of the AntiTerrorism Act of 2001 were met. 

Specific Challenges in FY 2010 

Increase in Federal Tobacco Excise Taxes 

On February 4, 2009, the Children’s Health Insurance Program Reauthorization Act was signed 

into law. The Act directly impacts TTB in that it raises the federal excise taxes on tobacco 

products and contains new tobacco permitting and enforcement provisions. Additionally, the Act 

directs the Secretary of the Treasury to conduct a study into the magnitude of tobacco smuggling 

in the United States and to submit to Congress recommendations on reducing tobacco smuggling. 

The Act raises the federal excise tax on all tobacco products. It is estimated that the new 

provisions will increase revenues collected by TTB by $31.3 billion over the 2009-2013 period. 

The January 2009 macroeconomic forecast from the Congressional Budget Office anticipates an 

FY 2010 increase in revenue of $7.1 billion. 

The new tax rates remove the discrepancy between small cigars and cigarettes at the federal 

level, but there is still incentive to misclassify cigarettes as small cigars in order to avoid 

payments under the Tobacco Master Settlement Agreement. Additionally, the large difference in 

rates between pipe and roll-your-own tobacco are likely to encourage diversion where there was 

none previously. The Act will also require manufacturers and importers of processed tobacco 

and blunts to obtain permits. The new permittees are subject to the all present-law permit, 

inventory, reporting and recordkeeping requirements. 

TTB’s enforcement of the floor stocks tax involves taxpayer education concerning the 

requirement and how to comply with it, evaluation and reconciliation of required report 

submissions with submitted floor stocks tax returns and payments, and field visits to verify that 

the payments are consistent with the floor stocks on hand. The bureau must conduct outreach to 

educate and provide guidance to roughly 400,000 businesses since the majority of those entities 

affected by the floor stock tax are not permittees, but retail operations subject to the tax.

Also, the Act directs the Secretary of the Treasury to conduct a study into the magnitude of 

tobacco smuggling in the United States and to submit recommendations on reducing tobacco 

smuggling to Congress no later than February 4, 2010. The study is to include a review of federal 

tax receipts lost due to smuggling and the role of imported tobacco products in the illicit tobacco 

trade in the United States. Additionally, there is an expectation that problems arising from the 

disparity in the tax rates between pipe and roll-your-own tobacco will be included in the study. 
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Law Enforcement 

TTB has criminal enforcement authority, and is dependent upon the interest and availability of 

other agencies to supply law enforcement resources to pursue its criminal tax cases. The law 

enforcement challenges on the alcohol and tobacco industries revolve principally around tax 

fraud and label fraud. Tax fraud issues have also arisen in the firearms and ammunition industry. 

Tax fraud in these industries, through unlawful diversion or other means, represents an extremely 

high risk to federal revenue while at the same time presenting a lucrative funding source for 

organized crime and terrorists. In addition to the projected $1 billion in lost revenue attributable 

to tax fraud, domestic alcohol and tobacco trade label fraud also represents a serious threat to the 

economic stability of the alcohol trade. In particular, counterfeit alcohol beverages bearing 

legitimate domestic brand or trade names jeopardize domestic alcohol beverage commerce by 

trading on the brand reputation of authentic domestic producers. Likewise, label fraud deceives 

consumers as to the identity of the product being sold. Typically, the consumer deception 

involves counterfeit high end products. Unlawful trade practices present a similar threat to free 

commerce because such practices undermine healthy small business activity and limit consumer 

choices by allowing influential producers to unlawfully interference with the supply chain. 

Alcohol Fuel Plants (AFPs) 

TTB has issued approximately 1,600 active alcohol fuel plant permits. These developments 

present a serious concern for TTB because of the possibility for significant revenue losses that 

would result from unlawful diversion. The 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 about 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 few years. 

Succession Planning 

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 by 2010 due to retirements 

and other attrition. To mitigate these losses, TTB continues to use the personnel interventions 

identified in the Pay Demonstration Program 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. The FY 2010 budget proposes to continue this program for 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 generated over 
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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 2009, TTB 

will consider the feasibility of adopting mandatory allergen labeling requirements. 

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 beverage alcohol 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 beverage alcohol labels provide consumers with adequate information about the 

products they are consuming. A final rule on this matter has been prepared and is under review 

for approval prior to publication. 
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Section 2 – Budget Adjustments and Appropriation Language 

2.1 – Budget Adjustments Table 

Dollars in Thousands 

Alcohol and Tobacco Tax and Trade Bureau FTE Amount

FY 2009 Enacted 525 99,065 

Changes to Base: 

Base Realignment: - $0 

Base Realignment from Collect the Revenue - (990) 

Base Realignment to Protect the Public - 990 

Maintaining Current Levels (MCLs): -

Across the Board Program Reduction - (1,556) 

Pay Annualization - 556 

Pay Inflation Adjustment - 1,014 

Non-Pay Inflation Adjustment - 421 

Subtotal FY 2010 Changes to Base - $435 

Total FY 2010 Base 525 99,500 

Program Changes: 

Program Increases: 12 $5,500 

Annual Licensing and Registration Fee Program 12 5,500 

Subtotal FY 2010 Program Changes 12 $5,500 

Total FY 2010 President's Budget Request 537 105,000

Special Receipts (Annual Fees) (410) (80,000) 

Total FY 2010 President's Budget Request (Net) 127 25,000

2A – Budget Increases and Decreases Description 

Base Realignment .........................................................................................+$0 / +0 FTE 

Base Realignment from Collect the Revenue -$990,000 / +0 FTE 

Realignment of funds from the Collect the Revenue budget activity based on historical spending 

patterns. The funding realignment equally splits financial resources between TTB's budget 

activities. 

Base Realignment to Protect the Public +$990,000 / +0 FTE 

Realignment from Collect the Revenue to Protect the Public. 

Maintaining Current Levels (MCLs) ..............................................+$435,000 / +0 FTE 

Across the Board Program Reduction -$1,556,000 / +0 FTE 

TTB continues to focus on improving the efficiency of its operations through a disciplined 

process of productivity improvement. 

Non-Pay Inflation Adjustment +$421,000 / +0 FTE 

Funds are requested for non-related items such as contracts, travel, supplies, equipment and GSA 

rent. 

Pay Annualization +$556,000 / +0 FTE 

Funds are requested for the FY 2010 cost of the January 2009 pay raise. 

Pay Inflation Adjustment +$1,014,000 / +0 FTE 

Funds are requested for the January 2010 pay raise. 
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Program Increases .......................................................................+$5,500,000 / +12 FTE 

Annual Licensing and Registration Fee Program +$5,500,000 / +12 FTE 

Legislation will be proposed to establish a permanent program for fiscal year 2010 continuing 

each fiscal year thereafter, requiring resources to support labor and operating costs. TTB will be 

responsible for establishing and administering an annual fee proposal, including the collection of 

roughly $105 million in annual fee revenues from approximately 350,000 businesses. $5.5 

million is the estimated cost to set up this program. Much if not all of the initial investment costs 

are expected to be recurring to administer the program. The successful management of this 

activity will necessitate the long term investment in both government staff (12 FTE), contractor 

support, and other general and administrative costs, including information technology. 

Following are key business activities and details of the amount requested: 

1) Mailing and processing roughly 350,000 annual fee bills 

2) Processing approximately 60,000 to 80,000 non-compliance letters 

3) Maintaining the registry of the client database for the 350,000 businesses 

4) Responding to customer inquiries (claims, waiver requests, etc.) 

5) Accounting for the annual fee collections and processing of the revenues 

Program Operating Costs FY 2010 Requested

Salaries and Benefits (12 FTE) $1,200,000

Contractor Support $2,000,000

Printing and Postage of Annual Fee Bills $700,000

Information Technology, Lock Box Fees and General/Program

Administration $1,600,000

   TOTAL Implementation Costs $5,500,000

The roughly 350,000 annual fee payers include retailers and wholesale dealers in liquors and 

beer; every proprietor of distilled spirits plants, bonded wine cellars, bonded wine warehouses, 

and tax-paid wine bottling houses; every brewer; denatured spirits, recovery and tax free users 

(industrial alcohol); and nonbeverage domestic drawback claimants. 

Alcohol Annual Licensing and Registration Fees—Regulatory Implementation

Amendments to the TTB regulations would be necessary to implement this statutory program. 

At a minimum, the regulations would cover payment procedures, including the use of a specified 

form to accompany the payment, and probably related registration, reporting, and recordkeeping 

requirements. 

Adjustments to Request .............................................................-$80,000,000 / -410 FTE 

Annual Fees -$80,000,000 / -410 FTE 

For 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. 
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2.2 – Operating Levels Table 

Bureau: Alcohol and Tobacco Tax 

and Trade Bureau

FY 2008 

Enacted

FY 2009 

President's 

Budget

Congressio

nal Action

Including 

Rescission

FY 2009 

Enacted 

Level

Proposed 

Reprogram

mings

FY 2009 

Proposed 

Operating 

Level

FY 2010 

Requested 

Level

% Change

FY 2009 

to FY 2010

 

FTE 544 525 0 525 0 525 537 2.29%

Object Classification: 

11.1 - Full-time permanent 43,640 44,940 0 44,940 0 44,940 47,008 4.60%

11.5 - Other personnel compensation 778 778 0 778 0 778 794 2.06%

11.8 - Special personal services 

payments 

0 0 0 0 0 0 0 0.0

12 - Personnel benefits 11,525 11,235 0 11,235 0 11,235 11,704 4.17%

21 - Travel and transportation of 

persons 

3,363 3,000 0 3,000 0 3,000 3,015 0.50%

22 - Transportation of things 101 101 0 101 0 101 102 0.99%

23.1 - Rental payments to GSA 4,981 5,219 0 5,219 (449) 4,770 4,796 0.55%

23.3 - Comm, utilities, and misc 

charges 

4,931 5,050 0 5,050 0 5,050 5,594 10.77%

24 - Printing and reproduction 378 386 0 386 0 386 567 46.89%

25.2 - Other services 21,733 22,131 165 22,296 (6,710) 15,586 18,886 21.17%

25.3 - Other purchases of goods and 

services from Govt. accounts 

0 0 0 0 7,159 7,159 7,459 4.19%

26 - Supplies and materials 670 670 0 670 0 670 673 0.45%

31 - Equipment 1,415 3,390 2,000 5,390 0 5,390 4,402 -18.33%

Total Budget Authority $93,515 $96,900 $2,165 $99,065 $0 $99,065 $105,000 5.99%

 

Budget Activities: 

Collect the Revenue 47,693 49,420 1,103 50,523 (990) 49,533 52,500 5.99%

Protect the Public 45,822 47,480 1,103 48,542 990 49,532 52,500 5.99%

Total Budget Authority $93,515 $96,900 $2,165 $99,065 $0 $99,065 $105,000 5.99%

 

0%
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2.3 – Appropriations Detail Table 

Dollars in Thousands 

FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT FTE AMOUNT

New Appropriated Resources:

Collect the Revenue 256 $46,758 277 $47,693 268 $50,523 64 $12,500 -76.10% -75.26%

Protect the Public 256 46,758 267 45,822 257 48,542 63 12,500 -75.49% -74.25%

Subtotal New Appropriated Resources 512 $93,515 544 $93,515 525 $99,065 127 $25,000 -75.80% -74.76%

Other Resources:

Offsetting Collections - (Annual Fees) 0 0 0 0 0 0 410 80,000 100.00% 100.00%

Offsetting Collections - Reimbursable 10 3,755 15 3,755 15 5,154 15 4,234 0.00% -17.85%

Available multi-year/no-year funds

Transfers In/Out

Subtotal Other Resources 10 $3,755 15 $3,755 15 $5,154 425 $84,234 2733.33% 1534.34%

Total Resources Available for Obligation 522 $97,270 559 $97,270 540 $104,219 552 $109,234 2.27% 4.81%

FY 2008 FY 2010

Obligations Enacted Budget Request to FY 2010

% Change

FY 2009 FY 2009

Resources Available for Obligation Enacted

FY 2008

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, [$99,065,000] $105,000,000; 

of which not to exceed $5,500,000 for administrative 

expenses related to implementation of the fees 

authorized by 27 U.S.C. Section 202, as amended by this 

Act, to remain available until September 30, 2011; 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 assista 

nce to State and local agencies with or without 

reimbursement: Provided, That [of the amount 

Legislation will be 

proposed to establish a 

permanent program for 

fiscal year 2010 and 

each fiscal year 

thereafter, requiring the 

payment of annual 

licensing and registration 

fees. 

appropriated under this heading, $2,000,000, to remain 

available until September 30, 2010, is for information 

technology management] the sum herein appropriated 

from the general fund shall be reduced as offsetting 

collections assessed and collected pursuant to the 

Federal Alcohol Administration Act (27 U.S.C. 201 et 

seq.), as amended by this Act, are received during fiscal 

 
TTB - 14 

year 2010, so as to result in a fiscal year 2010 

appropriation from the general fund estimated at 

$25,000,000: Provided further, That any amount 

received in excess of $80,000,000 in fiscal year 2010 

shall be available only to the extent provided in 

subsequent appropriations acts. (Department of the 

Treasury Appropriations Act, 2009.) 

Treasury General 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 [“10 years”] “12 years” and inserting [“11 

years”] “12 years”. 

TTB proposes to 

continue the Pay 

Demonstration Program 

by amending the 

language to extend the 

program for one 

additional year. 

Note: The following are corrections with reference to General Provision below that is found in 

the Budget: 

Section 303(b), line 3, refers to section 301(b); the correct reference is section 301(c). 

Section 303(g)(1), line 5, refers to section 305(c); the correct reference is section 305(d). 

Section 303(g)(2), line 4, refers to section 305(c); the correct reference is section 305(d). 

"§ 303. Exemptions and Exceptions. 

"(a) Exemption for small producers.—Section 

301(b) shall not apply 

with respect to any person who is a proprietor of 

an eligible distilled 

spirits plant. 

"(b) Sales by proprietors of controlled 

premises.—No proprietor of a 

distilled spirits plant, bonded wine cellar, 

taxpaid wine bottling house, 

or brewery, shall be required to pay the fee 

under section 301(b) on account 

of the sale at his principal business office as 

designated in writing 

to the Secretary, or at his distilled spirits plant, 

bonded wine cellar, 

taxpaid wine bottling house, or brewery, as the 

case may be, of distilled 

spirits, wines, or beer, which, at the time of sale, 

are stored at his distilled 

spirits plant, bonded wine cellar, taxpaid wine 

bottling house, or brewery, 

as the case may be, or had been removed from 

such premises to a taxpaid 

storeroom operated in connection therewith and 

are stored therein. 

However, no such proprietor shall have more 

than one place of sale, as 

to each distilled spirits plant, bonded wine 

cellar, taxpaid wine bottling 

house, or brewery, that shall be exempt from fee 

by reason of the sale of 

distilled spirits, wines, or beer stored at such 

premises (or removed 

therefrom and stored as provided in this 

section), by reason of this subsection. 

"(c) Sales by liquor stores operated by States, 

political subdivisions, 

etc.—No liquor store engaged in the business of 

selling to persons other 

than dealers, which is operated by a State, by a 

political subdivision of 

a State or by the District of Columbia, shall be 

required to pay any fee 

under this section 301(c), by reason of selling 

distilled spirits, wines, or 

beer to dealers qualified to do business as such 

in such State, subdivision, 

or District, if such State, political subdivision, or 

District has paid the 

applicable fee under section 301(d)(1) and 

301(d)(2) as appropriate, and 

if such State, political subdivision, or District 

has paid fee under section 

301(c)(1) and 301(c)(2) as appropriate, at its 

principal place of business. 
TTB - 15 

"(d) Casual sales.— 

"(1) Sales by creditors, fiduciaries, and officers 

of court.—No person 

shall be deemed to be a dealer by reason of the 

sale of distilled spirits, 

wines, or beer which have been received by him 

as security for or in 

payment of a debt, or as an executor, 

administrator, or other fiduciary, 

or which have been levied on by any officer 

under order or process of 

any court or magistrate, if such distilled spirits, 

wines, or beer are sold 

by such person in one parcel only or at public 

auction in parcels of not 

less than 20 wine gallons. 

"(2) Sales by retiring partners or representatives 

of deceased partners 

to incoming or remaining partners.—No person 

shall be deemed to be 

a dealer by reason of a sale of distilled spirits, 

wines, or beer made by 

such person as a retiring partner or the 

representative of a deceased 

partner to the incoming, remaining, or surviving 

partner or partners of 

a firm. 

"(3) Return of liquors for credit, refund, or 

exchange.—No person shall 

be deemed to be a dealer by reason of the bona 

fide return of distilled 

spirits, wines, or beer to the dealer from whom 

purchased (or to the 

successor of the vendor's business or line of 

merchandise) for credit, refund, 

or exchange. 

"(e) Dealers making sales on purchaser dealer's 

premises.— 

"(1) Wholesale dealers in liquors.—No 

wholesale dealer in liquors who 

has paid the fee as such dealer shall again be 

required to pay fee as such 

dealer on account of sales of wines or beer to 

wholesale or retail dealers 

in liquors, or to limited retail dealers, or of beer 

to wholesale or retail 

dealers in beer, consummated at the purchaser's 

place of business. 

"(2) Wholesale dealers in beer.—No wholesale 

dealer in beer who has 

paid the fee as such a dealer shall again be 

required to pay fee as such 

dealer on account of sales of beer to wholesale 

or retail dealers in liquors 

or beer, or to limited retail dealers, 

consummated at the purchaser's 

place of business. 

"(f) Sales by retail dealers in liquidation.—No 

retail dealer in liquors 

or retail dealer in beer, selling in liquidation his 

entire stock of liquors 

in one parcel or in parcels embracing not less 

than his entire stock of 

distilled spirits, of wines, or of beer to any other 

dealer, shall be deemed 

to be a wholesale dealer in liquors or a 

wholesale dealer in beer, as the 

case may be, by reason of such sale or sales. 

"(g) Sales to limited retail dealers.— 

"(1) Retail dealers in liquors.—No retail dealer 

in liquors who has 

paid the fee as such dealer under section 301(d) 

shall be required to pay 

additional fee under section 301(c) on account 

of the sale at his place of 

business of distilled spirits, wines, or beer to 

limited retail dealers as 

defined in section 305(c). 

"(2) Retail dealers in beer.—No retail dealer in 

beer who has paid the 

fee as such dealer under section 301(d) shall be 

required to pay additional 

fee under section 301(c) on account of the sale 

at his place of business of 

beer to limited retail dealers as defined in 

section 305(c). 

"(h) Coordination of fees under sections 

301(c).—No fee as a wholesale 

dealer in liquor shall be charged with respect to 

a person's activities at 

any place during a year if such person has paid 

the fee as a wholesale 

dealer in beer with respect to such place for 

such year. 

"(i) Wholesale dealers.— 

"(1) Wholesale dealers in liquors.—No fee shall 

be charged as a retail 

dealer in liquor or a retailer dealer in beer on 

any dealer by reason of 

the selling, or offering for sale, of distilled 

spirits, wines, or beer at any 
TTB - 16 

location where such dealer is required to pay 

the fee as a wholesale 

dealer in liquors. 

DEPARTMENT OF THE TREASURY 

GENERAL PROVISIONS 53 

"(2) Wholesale dealers in beer.—No fee shall be 

charged as a retail 

dealer in beer on any dealer by reason of the 

selling, or offering for sale, 

of beer at any location where such dealer is 

required to pay the fee as a 

wholesale dealer in beer. 

"(j) Business conducted in more than one 

location.— 

"(1) Retail dealers at large.—Any retail dealer 

in liquors or retailer 

dealer in beer whose business is such as to 

require him to travel from 

place to place in different States of the United 

States may, under regulations 

prescribed by the Secretary, cover his activities 

throughout the 

United States with the payment of but one fee as 

a retail dealer in liquors 

or as a retail dealer in beer, as the case may be. 

"(2) Dealers on trains, aircraft, and boats.—

Nothing contained in this 

chapter shall prevent the payment, under such 

regulations as the Secretary 

may prescribe, of the fee by— 

"(A) persons carrying on the business of retail 

dealers in liquors, or 

retail dealers in beer, on trains, aircraft, boats 

or other vessels, engaged 

in the business of carrying passengers; or 

"(B) persons carrying on the business of retail 

dealers in liquors or 

retail dealers in beer on boats or other vessels 

operated by them, when 

such persons operate from a fixed address in a 

port or harbor and supply 

exclusively boats or other vessels, or persons 

thereon, at such port or 

harbor. 

"(3) Liquor stores operated by States, political 

subdivisions, etc.—A 

State, a political subdivision of a State, or the 

District of Columbia shall 

not be required to pay more than one fee as a 

retail dealer in liquors 

under section 301(d) regardless of the number of 

locations at which such 

State, political subdivision, or District carries 

on business as a retail 

dealer in liquors. 

"(k) Exception for the United States—Section 

301(d)(3) shall not apply 

to any permit issued to any agency or 

instrumentality of the United 

States. 

"(l) Exception for certain educational 

institutions—Section 301(d)(3) 

shall not apply with respect to any scientific 

university, college of 

learning, or institution of scientific research 

which is issued a permit 

under section 5271 of the Internal Revenue Code 

of 1986 and, with respect 

to any calendar year during which such permit 

is in effect, procures 

less than 25 gallons of distilled spirits free of tax 

for experimental or 

research use but not for consumption (other 

than organoleptic tests) or 

sale.

2C – Legislative Proposals 

Extend Pay Demonstration Program

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 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, 

and has been a successful intervention tool in the recruitment and retention of critical staff 

positions. 
TTB - 17 

Annual Licensing and Registration Fees

The Budget proposes language establishing a permanent program for FY 2010 and each fiscal 

year thereafter, requiring members of the alcohol industry to pay annual licensing and 

registration fees. In general, these fees will support the Bureau’s core mission and the funds will 

be used to continue to provide benefits to members of the regulated community, including 

retailers, wholesalers, breweries, wineries, distilleries, and industrial alcohol businesses. 

Benefits to Industry: In general, regulation of the beverage alcohol industry benefits retailers, 

wholesalers, breweries, wineries, distilleries, and industrial alcohol businesses under this 

legislative proposal. These industries would pay a fee for the benefits they receive from the 

Bureau’s regulatory and tax collection efforts. In particular, TTB’s efforts help ensure that 

alcohol products are not contaminated, misbranded, or illegally marketed, and prevent dishonest 

persons from entering into the alcohol 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. 

Benefits to industry members include: 

• Investigating applications and issuing permits or notices for the operation of distilleries, 

bonded wine premises, and breweries to ensure that only qualified persons operate in the 

industry. 

• Regulating the operations of various industrial users of distilled spirits, including 

manufacturers of nonbeverage products, and tax-free and denatured alcohols to ensure that 

all taxes due on alcohol are collected. 

• Regulating the production, packaging, and storage of alcohol products. 

• Regulating the labeling and bottling of alcohol beverages to both protect the revenue due and 

to ensure a safe, fair and even market in the alcohol trade. 

• Regulating the marketing and promotional practices concerning the sale of alcohol beverages 

by producers, importers, and wholesalers primarily through the investigation of allegations of 

unfair trade practices to promote fair competition among the industry. 

Legislative Proposal on Annual Licensing and Registration Fees 

The Budget proposes to amend U.S.C. Title 27 to allow TTB to establish a permanent program 

to collect annual fees from alcohol producers, distributors, and retailers that will be classified as 

offsetting receipts. In the first year, the annual estimated offsetting receipt collections will be 

less, but it is anticipated that the annual collections from this program will reach $105 million 

each year. 

Key provisions of this legislative proposal include: 

(1) Collected annual fees are authorized to cover the budget activities of the Alcohol and 

Tobacco Tax and Trade Bureau to the extent provided in annual appropriations acts.

(2) The Secretary shall provide for increased annual fees consistent with the annual rate of 

inflation as defined by the Consumer Price Index (CPI), and shall publish any such changes 

in the Federal Register. 
TTB - 18 

Annual Fee Requirement:

The annual fees to be charged under this program are as follows: 

Retailer Dealers in Liquors and Beer $300 

Wholesaler Dealers in Liquors and Beer $500 

Alcohol Producers: Distilled Spirits Plant 1/ 

 Bonded Wine Cellar 1/ 

 Bonded Wine Warehouse 1/ 

 Tax paid Wine Bottling House 1/ 

$1000

Every Brewer 1/ $1000

1/ Reduced Fees by substituting “$500” for “$1,000” if gross receipts are less than 

$500,000 for the most recent taxable year before the 1st day of the taxable period. 

$500 

Denatured Spirits, Recovery and Tax Free Users (Industrial Alcohol) $300 

Non-beverage Domestic Drawback Claimants $500 

Certain exemptions and exceptions of the annual fee may apply to certain business as outlined 

under the legislative proposal. 
TTB - 19 

Section 3 – Budget and Performance Plan

This table lists all FY 2010 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 Outcome FY 2009 

Enacted

FY 2010 

Request Percent Change

 Economic competitiveness 51,119 54,617 6.84%

 Revenue collected 53,100 54,617 2.86%

Total $104,219 $109,234 4.81%

3A – Collect the Revenue ($12,500,000 from direct appropriations, $40,000,000 from special 

fund receipts (annual fees), and $2,117,000 from reimbursable programs): 

 This 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 collect revenue that is rightfully due. The Tax Audit Division 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 2010 budget request enables the continuation of efforts to 

achieve the performance targets 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 $2,117,000 

Non-Federal Sources (Puerto Rico).........................................$1,408,000 

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

Federal Sources (Departmental Offices- OFS/OTI)......................$682,000 

. 

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 $381 million in cover-over taxes collected in the United States. Also, the bureau 

collects a nominal amount of reimbursable funding for lab services performed to support 
TTB - 20 

criminal investigations at the Alcohol Tobacco Firearms and Explosives Agency, and agreements 

with the Department of the Treasury Office of Financial Stability, and Office of Technical 

Assistance. 

Special Receipts Fund (Annual Fees)..................................................$40,000,000 

The Budget proposes to establish a permanent program requiring alcohol industry participants to 

pay annual fees to TTB, and permitting the bureau to use those fees to cover the costs of its 

operation to the extent provided in appropriation acts. 

3.2.1 – Collect the Revenue Budget and Performance Plan 

Collect the Revenue Budget Activity

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $49,618 $46,215 $46,758 $50,523 $52,500 

 Reimbursable Resources $935 $1,512 $1,878 $2,577 $2,117 

Total Resources $50,553 $47,727 $48,636 $53,100 $54,617

Budget Activity Total $50,553 $47,727 $48,636 $53,100 $54,617

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Budget Activity Performance Measure Actual Actual Actual Target Target

Collect the 

Revenue

Amount of revenue collected per program 

dollar (E) 

N/A N/A 313 300 260 

Collect the 

Revenue

Percentage of voluntary compliance from 

large taxpayers in filing tax payments 

timely and accurately (in terms of revenue) 

(Oe) 

N/A N/A 940 92 92

Collect the 

Revenue

Cumulative percentage of excise tax 

revenue audited over 3 years (%) (Oe) 

93 16 Discontinued N/A N/A 

Collect the 

Revenue

Percentage of voluntary compliance in filing 

tax payments timely and accurately (in 

terms of number of compliant industry 

members) (%) (Oe) 

75.95 75.00 Discontinued N/A N/A 

Collect the 

Revenue

Percentage of voluntary compliance in filing 

tax payments timely and accurately (in 

terms of revenue) (%) 

87.20 86.00 Discontinued N/A N/A 

Collect the Percentage of total tax receipts collected 98.00 98.00 Discontinued N/A N/A 

Revenue electronically (%) (E) 

Collect the 

Revenue

Resources as a percentage of revenue (%) 

(E) 

0.31 0.31 Discontinued N/A N/A 

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

Description of Performance: 

In FY 2008, TTB met all of its performance measures under Collect the Revenue, while showing 

continued improvements in performance scores. TTB continues to collect nearly $15 billion in 

Federal excise taxes in a highly efficient manner. Key performance metrics show that 94 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. The “amount of revenue 

collected per program dollar” measure shows that the benchmark $313 collected for every dollar 

spent on Collect the Revenue activities continues to showcase TTB as one of the most efficient 

tax collection agencies in the world. 

 
TTB - 21 

3B – Protect the Public ($12,500,000 from direct appropriations, $40,000,000 from special 

fund annual receipts, and $2,117,000 from reimbursable programs): This activity ensures the 

integrity of products and industry members in the marketplace, promotes 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 are required to submit a formula to TTB’s 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. This is 

done by testing samples of beverage alcohol sold at the retail level and obtained directly from 

producers. The purpose of this testing is to ensure that beverage alcohol products 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 $2,117,000 

Non-Federal Sources (Puerto Rico)..........................................$1,408,000 

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

Federal Sources (Departmental Offices- OFS/OTI)......................$682,000 

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 $381 million in cover-over taxes collected in the United States. 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, and agreements with the Department of the Treasury Office of Financial Stability, and 

Office of Technical Assistance. 
TTB - 22 

Special Receipts Fund (Fees)..................................................$40,000,000 

The Budget proposes to establish a permanent program requiring alcohol industry participants to 

pay annual fees to TTB, and permitting the Bureau to use those fees to cover the costs of its 

operation to the extent provided in appropriation acts. 

3.2.2 – Protect the Public Budget and Performance Plan 

Protect the Public Budget Activity

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010

Resource Level Obligated Obligated Obligated Enacted Request

 Appropriated Resources $40,597 $44,403 $46,757 $48,542 $52,500 

 Reimbursable Resources $765 $1,512 $1,877 $2,577 $2,117 

Total Resources $41,362 $45,915 $48,634 $52,119 $54,617

Budget Activity Total $41,362 $45,915 $48,634 $52,119 $54,617

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 Budget Activity Performance Measure Actual Actual Actual Target Target

Protect the Public Percent of electronically filed Certificate 

of Label Approval applications (%) (E) 

38.00 51.00 62.00 53.00 54.00 

Protect the Public National Revenue Center customer 

service results (Oe) 

N/A N/A 90.00 85.00 85.00 

Protect the Public Average number of days to process an 

original permit application at the 

National Revenue Center (E) 

N/A N/A 64.00 72.00 78.00 

Protect the Public Percentage of importers identified by 

TTB as illegally operating without a 

federal permit 

N/A N/A 22.00 20.00 19.00 

Protect the Public Percentage of permit applications 

(original and amended) processed by the 

National Revenue Center within 60 days 

(%) (E) 

86.00 85.00 Discontinued N/A N/A 

Protect the Public Percentage of COLA applications 

processed within nine calendar days of 

receipt 

44.00 42.00 Discontinued N/A N/A 

Protect the Public Unit cost to process a Wine COLA N/A 34 Discontinued N/A N/A 

Protect the Public Percentage of instances where the 

utilization of International Trade 

Database System (ITDS) results in 

identifying importers without permits as 

a percentage of total permits on file at 

TTB’s National Revenue Center (Oe) 

N/A N/A 15 Discontinued N/A 

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

Description of Performance: 

In revising its suite of performance measures, TTB added two original measures in FY 2008 to 

indicate the bureau’s level of success in meeting its consumer protection mission goals. 

Evaluation also resulted in the discontinuation of three performance measures that represented 

outdated operating conditions, one of which was replaced with a new customer-oriented measure 

and another that was updated with revised methodology. 

In FY 2008, the TTB National Revenue Center (NRC) initiated a customer survey to measure 

satisfaction with processing times and the level of service provided to the industry. The survey 

solicits feedback in two areas: 1) how well specialists assist applicants in filing for an original or 
TTB - 23 

amended permit, and 2) service to industry members who file claims to recover taxes paid on 

nonbeverage alcohol or overpayments of tax. Based on responses captured by the NRC through 

telephone interviews, TTB earned a composite score of 90 percent on customer satisfaction for 

permits and claims processing. 

The bureau met its performance measure on the percent of electronically filed certificate of label 

approval (COLA) applications, which in FY 2008 reached 62 percent of all applications. TTB 

also chose to discontinue the measure, “Percentage of COLA applications processed within nine 

calendar days of receipt,” in FY 2008. The nine-day standard for processing COLA applications, 

set in the 1990's, is no longer representative of staffing or workload levels, given that the number 

of COLA applications has risen 25 percent in the past three years alone. 

 

For detailed information about each performance measure, including definition, verification and 

validation, please go to: http://www.treasury.gov/offices/management/dcfo/accountabilityreports/
TTB - 24 

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. 

• United States 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 40 percent of its 

workforce between 2009 and 2013 due to retirements and other attrition. To mitigate these 

losses, it is vital that TTB continue to have the use of the personnel interventions identified in the 

Pay Demonstration Project (Pay Demo) to enable the bureau to improve its ability to recruit, 

develop, and retain high-caliber employees in mission critical positions. TTB has roughly 132 

participants in the Pay Demo project that function in mission critical positions such as chemists, 

industry analysts, auditors, and information technology specialists. 

During FY 2008, TTB: 

• Developed and executed an FY 2008 Federal Human Capital Survey Action Plan. Actions 

included the establishment of a Partnership Council with the National Treasury Employees 

Union (NTEU), implementation of a new performance management system for General 

Schedule (GS) employees, and initiation of a new Emerging Leaders Program. Also, 

preliminary feedback from the joint Treasury/Office of Personnel Management (OPM) 

evaluation of our human resources program was positive and indicated an overall effective 

program rating. 

• Played a crucial role in Treasury’s testing and roll out of the Treasury Learning Management 

System (TLMS). TTB implemented TLMS by providing training to all TTB staff to ensure 

all internal and external training is tracked and recorded, and supervisors are able to create ad 

hoc reports of training. 

• Finalized a comprehensive Pay Demo policy order for TTB and negotiated with NTEU prior 

to publication. 

• Administered the 2008 Federal Human Capital Survey for TTB in coordination with 

Treasury and the Office of Personnel Management. 
TTB - 25 

• Underwent the Department of the Treasury’s first audit of the Treasury Bureau’s Equal 

Employment Opportunity (EEO) Programs. Preliminary feedback indicated positive results 

and an overall effective EEO/Diversity Program. 

• Completed the OPM 2008 Performance Appraisal Assessment Tool (PAAT) evaluation and 

reporting. Overall feedback from Treasury on TTB’s GS performance management program 

was very positive. 

• Continued to exceed the Treasury hiring goal of 45 days with an annual overall average of 33 

days to hire. 
TTB - 26 

4.1 – Summary of IT Resources Table Dollars in Thousands 

Dollars in Thousands

Information Technology Investments

FY 2007 FY 2008 FY 2009 FY 2010

Major IT Investments / Funding Source Budget Activity Enacted Enacted Enacted

Requested 

Funding

Subtotal, Major IT Investments 0 0 0.0% 0 0.0% 0 Non-Major IT Investments

Collect the Revenue/Protect

the Public 2.850 3.980 39.6% 4.480 12.6% 4.480 

Infrastructure Investments

Collect the Revenue/Protect

the Public 15.514 14.915 -3.9% 17.258 15.7% 16.260 

EITIO 11.483 13.826 12.828WCF 3.432 3.432 3.432Enterprise Architecture

Collect the Revenue/Protect

the Public 0.477 0.491 2.9% 0.644 31.2% 0.644 

Total IT Investments

Collect the Revenue/Protect

the Public 18.841 19.386 2.9% 22.382 15.5% 21.384 

% Change from 

FY07 to FY08

% Change from 

FY08 to FY09

% 

F
TTB - 27 

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. 

4.2 – Program Assessment Table 

Program Name: Collect the Revenue

OMB Major Findings/Recommendations

Bureau Actions Planned or Underway

1. TTB is updating its Web site to enhance search and navigation; improve content and format; employ plain 

language principles; and redesign the TTB.gov homepage.

2. TTB is analyzing the results of the first comprehensive TTB-sponsored seminar and implementing changes and 

improvements to subsequent seminars.

1. The Collect the Revenue program has a clear purpose and is well designed to achieve its goals.

2. The program has developed adequate long-term performance measures with ambitious targets and timeframes.

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

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