I
105TH CONGRESS
1ST SESSION
H. R. 1620
To amend the Internal Revenue Code of 1986 to repeal the special taxes
on wholesale and retail dealers in liquor and beer, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 15, 1997
Mr. RADANOVICH (for himself, Mr. BUNNING, and Mr. ROHRABACHER) intro-
duced the following bill; which was referred to the Committee on Ways
and Means
A BILL
To amend the Internal Revenue Code of 1986 to repeal
the special taxes on wholesale and retail dealers in liquor
and beer, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. REPEAL OF SPECIAL TAX ON RETAIL DEALERS
IN LIQUOR AND BEER, AND ON RECTIFIERS,
BREWERS, AND MANUFACTURERS OF STILLS.
(a) IN GENERAL.—Part II of subchapter A of chap-
ter 51 of the Internal Revenue Code of 1986 (relating to
occupational tax) is amended by striking the following
subparts:
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(1) Subpart A (relating to rectifier).
(2) Subpart B (relating to brewer).
(3) Subpart C (relating to manufacturers of
stills).
(4) Subpart D (relating to wholesale dealers).
(5) Subpart E (relating to retail dealers).
(b) CLERICAL AND CONFORMING AMENDMENTS.—
(1) The table of subparts for part II of sub-
chapter A of chapter 51 of such Code is amended by
striking items relating to subparts A, B, C, D, and
E.
(2) Subchapter B of chapter 51 of such Code
is amended by striking section 5182 (relating to
cross references).
(3) The table of sections for subchapter B of
chapter 51 of such Code is amended by striking the
item relating to section 5182.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 2. PROHIBITION OF ASSESSMENT AND COLLECTION
OF OUTSTANDING TAXES.
Notwithstanding any other provision of law—
(1) no assessment of any tax imposed by sub-
part A, B, C, D, or E of part II of subchapter A
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of chapter 51 of the Internal Revenue Code of 1986
may be made after the date of the enactment of this
Act, and
(2) if such tax was assessed (but not collected)
on or before such date, such assessment shall be
abated.
SEC. 3. SIMPLIFICATION OF TAX ON CERTAIN DISTILLED
SPIRITS USED IN NONBEVERAGE PRODUCTS.
(a) IN GENERAL.—Subpart F of part II of sub-
chapter A of chapter 51 of the Internal Revenue Code of
1986 (relating to nonbeverage domestic drawback claim-
ants) is amended to read as follows:
‘‘Subpart F—Special Rules for Nonbeverage Domestic Products
‘‘Sec. 5131. Eligibility and rate of tax.
‘‘Sec. 5132. Registration and regulation.
‘‘Sec. 5133. Investigation.
‘‘Sec. 5134. Penalty.
‘‘SEC. 5131. ELIGIBILITY AND RATE OF TAX.
‘‘(a) IN GENERAL.—In the case of distilled spirits on
which a tax would be determined under this subchapter
(other than this subpart) but for this section, used in the
manufacture or production of medicines, medicinal prep-
arations, food products, flavors, flavoring extracts, or per-
fume, which are unfit for beverage purposes, in lieu of the
tax so determined there is hereby imposed a tax at the
rate of $1 on each proof gallon of distilled spirits, or a
proportionate tax at the like rate on all fractional parts
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of a proof gallon of distilled spirits withdrawn for the man-
ufacture of such nonbeverage products.
‘‘(b) BOND OR OTHER SECURITY.—The Secretary
may require persons eligible for the application of this sub-
part to file with him a bond or other security in such
amount such conditions as he shall by regulations pre-
scribe.
‘‘(c) ALLOWANCE
OF SPECIAL TAX RATE EVEN
WHERE CERTAIN REQUIREMENTS NOT MET.—Applica-
tion of this shall not be denied in the case of a failure
to comply with any requirement imposed under this sub-
part, or any rule or regulation issued thereunder, upon
the person manufacturing or producing the nonbeverage
product set forth in subsection (a) that distilled spirits on
which the tax has been paid or determined were in fact
used in the manufacture or production of medicines, me-
dicinal preparations, food products, flavors, flavoring ex-
tracts, or perfume which were unfit for beverage purposes.
‘‘SEC. 5132. REGISTRATION AND REGULATION.
‘‘Every person subject to the application of this sub-
part shall register annually with the Secretary; keep such
books and records as may be necessary to establish the
fact that distilled spirits received by him and on which
the tax has been determined were used in the manufacture
or production of medicines, medicinal preparations, food
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products, flavors, flavoring extracts, or perfume which
were unfit for beverage purposes and be subject to such
rules and regulations in relations to such books and
records as the Secretary shall prescribe to secure the
Treasury against frauds.
‘‘SEC. 5133. INVESTIGATION.
‘‘For the purpose of ascertaining the correctness of
the application of this subpart, the Secretary is authorized
to examine any books, papers, records, or memoranda as
may be necessary to establish the fact that distilled spirits
received were used in the manufacture or production of
medicines, medicinal preparations, food products, flavors,
flavoring extracts, or perfume which were unfit for bev-
erage purposes, to require the attendance of the person
or of any officer or employee of such person or the attend-
ance of any other person having knowledge in the prem-
ises, to take testimony with reference to any matter cov-
ered by the claim, and to administer oaths to any person
giving such testimony.
‘‘SEC. 5134. PENALTY.
‘‘(a) IN GENERAL.—In the case of a failure to comply
with any requirement imposed under this subpart or any
rule or regulation issued thereunder, the taxpayer shall be
liable for a penalty of $1,000 for each failure to comply
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unless it is shown that the failure to comply was due to
reasonable cause.
‘‘(b) PENALTY MAY NOT EXCEED AMOUNT OF TAX
REDUCTION.—The aggregate amount of the penalties im-
posed under subsection (a) for failures described in section
5131(c) shall not exceed the difference between the
amount of tax which would be determined under section
5131 and the amount of tax which would be determined
under this subchapter without regard to section 5131 (de-
termined without regard to subsection (a)).
‘‘(c) PENALTY TREATED AS TAX.—The penalty im-
posed by subsection (b) shall be assessed, collected, and
paid in the same manner as taxes, as provided in section
6665(a).’’
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 5010(c)(2) is
amended by striking ‘‘type for which’’ and all that
follows and inserting the following: ‘‘type with re-
spect to which section 5131 applies.’’
(2) Subsections (a) and (b) of section 5142 of
such Code are each amended by striking ‘‘(except
the tax imposed by section 5131)’’.
(3) Subsection (g) of section 7652 of such Code
is amended to read as follows:
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‘‘(g) TREATMENT OF MEDICINAL ALCOHOL, ETC.—
In the case of medicines, medicinal preparations, food
products, flavors, flavoring extracts, or perfume which
were unfit for beverage purposes and which are brought
into the United States from Puerto Rico or the Virgin Is-
lands—
‘‘(1) subpart F of part II of subchapter A of
chapter 51 shall be applied as if—
‘‘(A) the use and tax determined described
in section 5131(a) had occurred in the United
States by a United States person at the time
the article is brought into the United States,
and
‘‘(B) the rate of tax so determined were
the rate applicable under subsection (f) of this
section, and
‘‘(2) no amount shall be covered into the treas-
uries of Puerto Rico or the Virgin Islands.’’
(4) The table of subparts for part II of sub-
chapter A of chapter 51 of such Code is amended by
striking the item relating to subpart F and inserting
the following new item:
‘‘Subpart F—Special rules for nonbeverage domestic products.’’
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(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
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