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Skip Navigation HomeHelpResourcesContact Us Advanced Search Start of Main Content Notice No. 131: Small Brewers Bond Reduction This Proposed Rule document was issued by the Alcohol and Tobacco Tax and Trade Bureau (TTB) For related information, Open Docket Folder Show agency attachment(s) DEPARTMENT OF THE TREASURY
SummaryElsewhere in this issue of theFederal Register, the Alcohol and Tobacco Tax and Trade Bureau (TTB) is publishing a temporary rule that for a period of three years modifies the penal sum for a brewer's bond where the excise tax liability of the brewer is reasonably expected to be not more than $50,000 in the current calendar year and the brewer was liable for not more than $50,000 in such taxes in the preceding calendar year. Under the temporary rule, for the next three years, the penal sum of the required bond is $1,000 for such brewers who file excise tax returns and remit taxes quarterly. In this document, TTB proposes to adopt the $1,000 penal sum amount for the brewer's bond for such brewers as a permanent regulatory change. This document also proposes amendments to the regulatory text to require that such brewers file Federal excise tax returns and payments quarterly, as well as submit reports of operations quarterly. Finally, TTB is soliciting comments on how the TTB regulations governing brewers' operations might be modified to reduce the burden on brewers and, at the same time, meet all statutory requirements and protect the revenue.
DatesTTB must receive comments on or before February 5, 2013.
AddressesYou may send comments on the proposals contained in this document to one of the following addresses:
Hand Delivery/Courier in Lieu of Mail: Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Suite 200-E, Washington, DC 20005.See the Public Participation section of this document for specific instructions and requirements for submitting comments, and for information on how to request a public hearing.
For Further Information ContactRamona Hupp, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005; telephone 202-453-1039, ext. 110 or email BeerRegs@ttb.gov. Supplementary InformationBackgroundTTB AuthorityChapter 51 of the Internal Revenue Code of 1986 (IRC), pertains to the taxation of distilled spirits, wines, and beer (see title 26 of the United StatesCode (U.S.C.), chapter 51 (26 U.S.C. chapter 51)). With regard to beer, IRC section 5051 (26 U.S.C. 5051) imposes a Federal excise tax on all beer brewed or produced, and removed for consumption or sale within the United States or imported into the United States. The rate of the Federal excise tax on beer is $18 for every barrel containing not more than 31 gallons, and a like rate for any other quantity or for fractional parts of a barrel, with an exception that the rate of tax is $7 a barrel for the first 60,000 barrels of beer for a domestic brewer that does not produce more than 2 million barrels in a calendar year. Section 5054 (26 U.S.C. 5054) provides that, in general, the tax imposed on beer under section 5051 shall be determined at the time the beer is removed for consumption or sale, and shall be paid by the brewer in accordance with section 5061 (26 U.S.C. 5061).
The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers chapter 51 of the IRC and its implementing regulations pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120-01 (Revised), dated January 21, 2003, to the TTB Administrator to perform the functions and duties in administration and enforcement of these laws. Regulations that implement the provisions of sections 5051, 5054, 5061, 5401, and 5415 of the IRC, as they relate to beer, are set forth in part 25 of title 27 of the Code of Federal Regulations (CFR).Reducing Burdens on Regulated IndustriesExecutive Order 13563, Improving Regulation and Regulatory Review (E.O. 13563), signed by the President on January 18, 2011, required Federal agencies to conduct retrospective analyses of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them as appropriate. E.O. 13563 also required each agency to develop plans to review its regulations. The Department of the Treasury (Treasury) issued its Plan for Retrospective Analysis of Existing Rules (the Plan) on August 22, 2011. In developing the Plan, Treasury requested input from its Bureaus and Offices to help identify regulations that should be modified or updated. TTB identified a number of rulemaking proposals that were specifically included in the Plan, one of which concerned revision to the beer regulations contained in 27 CFR part 25. The proposal included in the Plan states:
Accordingly, TTB is proposing to simplify its beer regulations for the more than 90 percent of brewers who were liable for not more than $50,000 in taxes with respect to beer imposed by 26 U.S.C. 5051 and 7652 in the preceding calendar year and reasonably expect to be liable for not more than $50,000 in such taxes during the current calendar year. As discussed in greater detail below, under the proposed regulations these brewers: Must obtain a bond with a penal sum of $1,000, the minimum amount of bond under our current regulations, with no required adjustments to the amount of the bond; and
Must file their tax returns, remit tax payments, and submit reports of operations on a quarterly basis.With regard to the bond requirement, TTB is issuing a temporary rule that, for a period of three years, sets the penal sum for a brewer's bond for small brewers at a flat $1,000 (see T.D. TTB-109 published in the rules section of this issue of theFederal Register). As discussed in greater detail below, TTB proposes in this document to adopt the $1,000 penal sum amount of the bond for small brewers as a permanent regulatory change.
As noted above and stated in the Plan, TTB initially intended to publish an advance notice of proposed rulemaking (ANPRM) to solicit written comments from the public before proposing changes to its regulations in part 25. After discussions with industry groups and members, analyzing available data, and reviewing its existing regulations and requirements, TTB believes that it should propose for immediate consideration changes to its regulations that would reduce the excise tax return filing and operations reporting burdens on small brewers. Compared to publishing an ANPRM and awaiting comments before proposing specific changes to the regulations, the proposals in this document would accelerate change in the regulations and thus provide more immediate and significant relief from existing regulatory burdens. However, TTB does not intend that the proposed regulatory changes outlined in this rulemaking cover all the changes to part 25 regulations that may be appropriate. Therefore, in this document, TTB also is soliciting comments from the brewing industry and the public on other changes TTB could make to its part 25 beer regulations that could further reduce the regulatory burden on brewers and at the same time meet statutory requirements and regulatory objectives.Discussion of Proposed Regulatory ChangesPenal Sum of the Brewer's BondPenal sum amounts of the brewer's bond are set forth in the TTB regulations at 27 CFR 25.93. In the related temporary rule, T.D. TTB-109, published in the rules section of this issue of theFederal Register, TTB explains its reasons for modifying the bond amount to a flat $1,000 penal sum for small brewers. By doing so, TTB hopes to encourage such brewers to file tax returns and pay taxes quarterly rather than semimonthly without the need to obtain a bond with a greater penal sum. The temporary rule contains a discussion of how the previous bond requirements for these small brewers could require such brewers to increase their bond amount coverage when they file Federal excise tax returns and remit taxes quarterly rather than semimonthly. The modified bond amount set forth in the temporary rule is effective for three years from December 7, 2012.
Through this document, TTB seeks comments on the temporary rule, which modifies bond requirements for a period of three years, as well as the proposal outlined in this document that TTB permanently adopt the change in the required bond amount to a flat $1,000 for small brewers.Quarterly Tax Returns for Small BrewersIn 2005, section 11127 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, Public Law 109-59, 119 Stat. 1144 (“the Act”) amended section 5061(d) of the IRC to allow certain Federal alcohol excise taxpayers to pay taxes quarterly. Prior to the Act semimonthly tax returns were required. In a temporary rule, T.D. TTB-41, published in theFederal Registeron February 2, 2006 (71 FR 5598), TTB implemented the new quarterly tax payment procedures of IRC section 5061(d)(4) by amending its regulations, including 27 CFR 25.164(c) pertaining to brewers. Section 25.164(c) requires all brewers who defer payment of tax to file returns and pay tax semimonthly, with the exception that a brewer may choose to use a quarterly return period if the brewer was liable for not more than $50,000 in taxes imposed by 26 U.S.C. 5051 and 7652 with respect to beer in the preceding calendar year and if that brewer reasonably expects to be liable for not more than $50,000 in such taxes during the current calendar year. TTB adopted this regulatory change as a final rule in T.D. TTB-94, published in theFederal Registeron August 24, 2011 (76 FR 52862).
Section 5061(a) provides that “[t]he Secretary shall, by regulation, prescribe the period or event for which such return shall be filed, the time for filing such return, the information to be shown in such return, and the time for payment of such tax.” As discussed above, TTB is proposing to permanently remove the bond disincentive for filing Federal excise tax returns and remitting tax payments quarterly. In the interest of reducing regulatory burdens on small brewers, and creating reporting and administrative efficiencies for both small brewers and TTB, TTB also proposes to amend the regulatory text in § 25.164(c) to require quarterly filing of Federal excise tax returns and payments for all small brewers.Report of OperationsSection 25.297 of the TTB regulations (27 CFR 25.297) implements the statutory requirement in 26 U.S.C. 5415 that brewers file periodic reports of their brewing and associated operations. Under § 25.297, as a general rule, brewers are required to submit monthly a Brewer's Report of Operations (TTB Form 5130.9). Section 25.297(a) and (b), provide an exception to the monthly reporting requirement, allowing brewers who produce less than 10,000 barrels of beer per calendar year to submit their report of brewery operations quarterly instead of monthly.
Finally, TTB proposes to include a reference in § 25.297 to TTB Form 5130.26, which is available to certain brewers as an alternative to TTB Form 5130.9.Part 25 UpdateConsistent with the intent of the ANPRM described in the Plan, as discussed above, TTB also seeks comments on other changes regarding part 25 regulations that brewers and other interested parties believe TTB should consider. Because the Administrative Procedure Act (5 U.S.C. 553) generally requires that the public have notice of and an opportunity to comment on regulatory changes prior to their adoption as final rules, TTB may not be able to adopt in any final rule the recommended changes that are outside the scope of the changes proposed in this document. However, TTB will consider such comments to determine if it should propose additional regulatory changes and conduct separate rulemaking on those proposed changes.Public ParticipationComments InvitedTTB invites comments from interested members of the public on the proposed regulatory changes contained in this document. Please provide specific information in support of your comments. Comments that merely express a preference for or against the proposed regulation do not provide a basis for agency action.
In addition to comments on the proposed regulatory amendments, TTB solicits comments on other changes to the beer regulations in part 25 that could further reduce the regulatory burden on brewers and at the same time meet statutory requirements and regulatory objectives. As indicated above, while such comments may not be the subject of the final rulemaking document on these proposed regulatory changes, TTB may use such comments for the purpose of proposing additional regulatory changes in a separate rulemaking action.Submitting CommentsPlease submit your comments by the closing date shown above in this document. You may submit comments in one of the following three ways:
Hand Delivery/Courier: You may hand-carry your comments or have them hand-carried to the Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Suite 200-E, Washington, DC 20005.Your comments must reference Notice No. 131 and include your name and mailing address. Your comments also must be made in English, be legible, and be written in language acceptable for public disclosure. TTB does not accept anonymous comments, does not acknowledge receipt of comments, and considers all comments as originals.
You may also write to the Administrator before the comment closing date to ask for a public hearing. The Administrator reserves the right to determine whether to hold a public hearing.ConfidentialityAll submitted comments and attachments are part of the public record and subject to public disclosure. Do not enclose any material in your comments that you consider confidential or inappropriate for public disclosure.Public DisclosureOn the Federal e-rulemaking portal, Regulations.gov, TTB will post, and the public may view, copies of this document, the related temporary rule, and any electronic or mailed comments we receive about these proposals. A direct link to the Regulations.gov docket containing this document and the posted comments received on it is available on the TTB Web site at http://www.ttb.gov/beer/beer-rulemaking.shtml under Notice No. 131. You may also reach the docket containing this document and its related comments through the Regulations.gov search page at http://www.regulations.gov. All posted comments will display the commenter's name, organization (if any), city, and State, and, in the case of mailed comments, all address information, including email addresses. TTB may omit voluminous attachments or material that the Bureau considers unsuitable for posting.
You and other members of the public may view copies of this document, the related temporary rule, and any electronic or mailed comments TTB receives about these proposals by appointment at the TTB Information Resource Center, 1310 G Street NW., Washington, DC 20005. You may also obtain copies at 20 cents per 8.5- x 11-inch page. Contact the TTB information specialist at the above address or by telephone at 202-453-2270 to schedule an appointment or to request copies of comments or other materials.Regulatory Flexibility ActPursuant to the requirements of the Regulatory Flexibility Act (5 U.S.C. chapter 6) TTB certifies that this notice of proposed rulemaking will not have a significant economic impact on a substantial number of small entities. As discussed below in the Paperwork Reduction Act section of this document, the changes TTB proposes in this rulemaking would have the effect of lessening current reporting requirements on small businesses. The proposal that small brewers submit their excise tax returns quarterly would reduce their current reporting burden from 18.75 hours per year to 3 hours per year and the proposal that small brewers submit their report of operations quarterly would reduce current reporting burdens from 12 hours per year to 4 hours. Accordingly, a regulatory flexibility analysis is not required.Executive Order 12866It has been determined that this document is not a significant regulatory action as defined in E.O. 12866. Therefore, a regulatory assessment is not necessary.Paperwork Reduction ActThere are two collections of information approved by the Office of Management and Budget (OMB) that would be affected by the adoption of these proposed regulatory changes. These collections of information, approved in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506), are the Excise Tax Return (TTB Form 5000.24) and the Brewer's Report of Operations and the Brewpub Report of Operations (TTB Form 5130.9 and TTB Form 5130.26), which are associated with OMB control numbers 1513-0083 and 1513-0007, respectively.OMB Control Number 1513-0083TTB bases the estimated reporting burdens submitted to OMB for the Excise Tax Return (OMB Control Number 1513-0083) on the total number of all TTB-regulated industry members who pay taxes, including beverage alcohol producers and tobacco products manufacturers. In order to estimate the burden-hour savings specific to brewers, we have based the estimates below solely on the current number of individuals holding Brewer's Notices. TTB estimates that it takes 45 minutes to complete TTB Form 5000.24. The proposed mandate that small brewers submit their excise tax returns quarterly would reduce their current reporting burden from 18.75 hours per year to just 3 hours per year. In addition, it would reduce the estimated annual reporting burden to 8,913 hours; this represents an estimated savings of 15,777 hours.
TTB estimates that, as a result of the proposed regulatory amendments (and reflecting the estimated number of monthly and quarterly tax return filers),the total annual burden for tax return submissions will be as follows: Estimated number of respondents: 2,026 (180 filing semi-monthly; 1,846 filing quarterly).
Estimated annual burden hours per respondent: 18.75 hours for semi-monthly filing; 3 hours for quarterly filing.OMB Control Number 1513-0007TTB estimates that it takes 1 hour to complete the Brewer's Report of Operations or the Brewpub Report of Operations (TTB Form 5130.9 and TTB Form 5130.26). Therefore, the proposed mandate that small brewers submit their report of operations quarterly would reduce their current reporting burdens from 12 hours to 4 hours per year. That is a savings of 8 hours for each small brewer not currently filing these reports quarterly. In addition, it would reduce the estimated annual reporting burden to 9,544 hours, which is an estimated savings of 2,608 hours.
Based on the current number of individuals holding Brewer's Notices, TTB estimates that, as a result of the proposed regulatory amendments (and reflecting the estimated number of brewers filing monthly and quarterly operations reports), the total annual burden for the brewers operations reporting will be as follows: Estimated number of respondents: 180 reporting monthly; 1,846 reporting quarterly.
Estimated annual burden hours per respondent: 12 hours for monthly reporting; 4 hours for quarterly reporting.Comments on the two collections of information should be sent to OMB to Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503; or email to OIRA_submission@omb.eop.gov. A copy also should be sent to the Alcohol and Tobacco Tax and Trade Bureau by any of the methods previously described. Comments on the information collection should be submitted not later than February 5, 2013. Comments are specifically requested concerning: Whether the two collections of information submitted to OMB are necessary for the proper performance of the functions of the Alcohol and Tobacco Tax and Trade Bureau, including whether the information will have practical utility;
Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.Drafting InformationGerald M. Isenberg and Ramona Hupp of the Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this document.
List of Subjects in 27 CFR Part 25Beer, Excise taxes, Reporting and recordkeeping requirements, Surety bonds.
Amendments to the RegulationsAccordingly, for the reasons set forth in the preamble, TTB proposes to amend 27 CFR, chapter I, part 25 as set forth below.Part 25 Beer1. The authority citation for part 25 continues to read as follows:
§ 25.93
(2) Brewers filing quarterly tax returns. For brewers who were liable for not more than $50,000 in taxes with respect to beer imposed by 26 U.S.C. 5051 and 7652 in the preceding calendar year, who reasonably expect to be liable for not more than $50,000 in such taxes during the current calendar year, and who file tax returns and remit taxes quarterly under § 25.164(c)(3), the penal sum of the brewers bond is $1,000 on beer:
§ 25.297
[FR Doc. 2012-29487 Filed 12-6-12; 8:45 am]BILLING CODE 4810-31-P
Attachments View All (0) View document: No documents available. Attachments View All (0) Comment Now! Comment Period Closed Feb 5 2013, at 11:59 PM ET ID: TTB-2012-0006-0002 Tracking Number: View original printed format: Document Information Date Posted: Dec 7, 2012RIN: 1513-AB94CFR: 27 CFR Part 25Federal Register Number: 2012-29487 Show More Details Submitter Information Comments44 Comments Received* This comment was sent by e-mail directly to a TTB staff member. See the attached document for the text of the comment. View Comment As the owner and head brewer for our small craft brewery, I do all of our accounting and taxes as well. Submitting bimonthly taxes to the TTB is a strain, as... View Comment As a small craft brewery, which began operations last year, and with a projected production of just 500 bbls this year, Zipline Brewing Company strongly... View Comment Docket Information This document is contained in TTB-2012-0006 Related Dockets: NoneRelated RINs: NoneRelated Documents: T.D. TTB-123: Small Brewers Bond Reduction and Requirement...T.D. TTB-109: Small Brewers Bond Reduction (Temporary Rule) Related Comments: View all * This count refers to the total comment/submissions received on this document, as of 11:59 PM yesterday. Note: Agencies review all submissions, however some agencies may choose to redact, or withhold, certain submissions (or portions thereof) such as those containing private or proprietary information, inappropriate language, or duplicate/near duplicate examples of a mass-mail campaign. This can result in discrepancies between this count and those displayed when conducting searches on the Public Submission document type. For specific information about an agency’s public submission policy, refer to its website or the Federal Register document. Document text and images courtesy of the Federal Register Home Search Advanced Search Browse By Category Learn About Us eRulemaking Program Media Toolkit Agencies Awards & Recognition Enhancements & Fixes Resources Site Data Regulatory Agenda Agency Reports Required by Statute API Overview Developers Help How to use Regulations.gov FAQs Glossary Connect With Contact Us Privacy and Security Notice User Notice Accessibility Statement Partner Sites We the People Federal Register Reginfo Congress.gov USA.gov E-Gov Opengov Participate Today!