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SECTION 21, Act of March 1, 1879, provides

That the word "gallon," wherever used in the internal revenue law, relating to beer, lager beer, ale, porter, and other similar fermented liquors, shall be held and taken to mean a wine-gallon, the liquid measure containing two hundred and thirty-one cubic inches.


SECTION 3244, Revised Statutes, provides that—

** * Every person who manufactures fermented liquors of any name or description for sale, from malt, wholly or in part, or from any substitute therefor, shall be deemed a brewer. * *


SECTION 3335, Revised Statutes, provides that—

Every brewer shall, before commencing or continuing business, file with the collector, or proper deputy collector, of the district in which he designs to carry it on a notice in writing, stating the name of the person, company, corporation, or firm, the names of the members of any such company or firm, the places of residence of such persons, a description of the premises on which the brewery is situated, and of his or their title thereto, and the name of the owner thereof.


At the time of filing the above notice the brewer will pay the special tax required by law, which is $100 per annum, where he manufactures 500 barrels or more per year, and $50 per annum where he manufactures less than 500 barrels per year.

"Every person who sells, or offers for sale, malt liquors in less quantities than five gallons at one time, but who does not deal in spirituous liquors, shall be regarded as a retail dealer in malt liquors," and shall pay a special tax of twenty dollars.

"Every person who sells, or offers for sale, malt liquors in quantities of not less than five gallons at one time, but who does not deal in spirituous liquors at wholesale, shall be regarded as a wholesale dealer in malt liquors," and shall pay a special tax of fifty dollars: "Provided, That no brewer shall be required to pay a special tax as a dealer by reason of selling in the original stamped packages, whether at the place of manufacture or elsewhere, malt liquors manufactured by him or purchased and procured by him in his own casks or vessels, under the provisions of section thirty-three hundred and forty-nine of the Revised Statutes; but the quantity of malt liquors so purchased shall be included in calculating the liability to brewer's special tax of both the brewer who manufactures and sells the same and the brewer who purchases the same. And it is hereby provided, That no further collection of special tax as retail dealers in malt liquors shall be made from brewers for selling malt liquors of their own manufacture in the original stamped eighthbarrel package." (See Sec. 3244 Rev. Stat., as amended.)


SECTION 3336, Revised Statutes, as amended by act of April 29, 1886, provides that—

Every brewer, on filing notice as aforesaid of his intention to commence or continue business, shall execute a bond to the United States, to be approved by the collector of the district, in a sum equal to three times the amount of the tax which, in the opinion of the collector, said brewer will be liable to pay during any one month, and conditioned that he shall pay, or

cause to be paid, as herein provided, the tax required by law on all beer, lager-beer, ale, porter, and other fermented liquors made by or for him, before the same is sold or removed for consumption or sale, except as hereinafter provided; and that he shall keep, or cause to be kept, a book, in the manner and for the purposes hereinafter specified, which shall be open to inspection by the proper officers, as by law required; and that he shall in all respects faithfully comply, without fraud or evasion, with all requirements of law relating to the manufacture and sale of any malt liquors aforesaid; and he shall execute a new bond once in four years and whenever required so to do by said collector, in the amount above named and conditioned as above provided, which bond shall be in lieu of any former bond or bonds of such brewer in respect to all liabilities accruing after its approval by said collector


SECTION 3337, Revised Statutes, provides that—

Every person who owns or occupies any brewery, or premises used or intended to be used for the purpose of brewing or making such fermented liquors, or who has such premises under his control or superintendence, as agent for the owner or occupant, or has in his possession or custody any brewing materials, utensils, or apparatus, used or intended to be used on said premises in the manufacture of beer, lager-beer, ale, porter, or other similar fermented liquors, either as owner, agent, or superintendent, shall, from day to day, enter, or cause to be entered, in a book to be kept by him for that purpose, the kind of such malt liquors, the estimate quantity produced in barrels, and the actual quantity sold or removed for consumption or sale in barrels or fractional parts of barrels. He shall also from day to day, enter, or cause to be entered, in a separate book to be kept by him for that purpose, an account of all materials by him purchased for the purpose of producing such fermented liquors, including grain and malt. And he shall render to the collector, or the proper deputy collector, on or before the tenth day of each month, a true statement, in writing, in duplicate, taken from his books, of the estimated quantity in barrels of such malt liquors brewed, and the actual quantity sold or removed for consumption or sale during the preceding month; and shall verify or cause to be verified, the said statement, and the facts therein set forth, by oath, to be taken before the collector of the district, or proper deputy collector, according to the form required by law. Said books shall be open at all times for the inspection of any collector, deputy collector, inspector, or revenue agent, who may take memorandums and transcripts therefrom.

SECTION 3338, Revised Statutes, provides that—

The entries made in such books shall, on or before the tenth day of each month, be verified by the oath of the person by whom they are made. The said oath shall be written in the book at the end of such entries, and be certified by the officer administering the same, and shall be in form as follows:

"I do swear (or affirm) that the foregoing entries were made by me; and that they state truly, according to the best of my knowledge and belief, the estimated quantity of the whole amount of such malt liquors brewed, and the actual quantity sold, and the actual quantity removed from the brewery owned by in the county of ...; and, further, that I have no knowledge of any matter or thing required by law to be stated in said entries which has been omitted therefrom."

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And the owner, agent, or superintendent aforesaid shall also, in case the original entries made in his book were not made by himself, subjoin thereto the following oath, to be taken in manner as aforesaid:

"I do swear (or affirm) that, to the best of my knowledge and belief, the foregoing entries fully set forth all the matters therein required by law; and that the same are just and true, and that I have taken all the means in my power to make them so."

SECTION 3340, Revised Statutes, as amended, provides that—

Every owner, agent, or superintendent of any brewery, vessels, or utensils used in making fermented liquors, who evades, or attempts to evade, the payment of the tax thereon, or fraudulently neglects or refuses to make true and exact entry and report of the same in the manner required by law, or to do, or cause to be done, any of the things by law required to be done by him * * * or who intentionally makes false entry in said book or in said statement, or knowingly allows or procures the same to be done, shall forfeit, for every such offense, all the liquors made by him or for him, and all the vessels, utensils, and apparatus used in making the same, and be liable to a penalty of not less than five hundred nor more than one thousand dollars, to be recovered with costs of suit, and shall be deemed guilty of a misdemeanor, and be imprisoned for a term not exceeding one year. And every brewer who neglects to keep books, or refuses to furnish the account and duplicate thereof as provided by law, or refuses to permit the proper officer to examine the books in the manner provided, shall, for every such refusal or neglect, forfeit and pay the sum of three hundred dollars.


SECTION 3349, Revised Statutes, provides that—

Every brewer shall, by branding, mark or cause to be marked upon every hogshead, barrel, keg, or other vessel containing the fermented liquor made by him, before it is sold or removed from the brewery or brewery warehouse, or other place of manufacture, the name of the person, firm, or corporation by whom such liquor was manufactured, and the place of manufacturer; and every person other than the owner thereof, or his agent authorized so to do, who intentionally removes or defaces such marks therefrom, shall be liable to a penalty of fifty dollars for each cask or other vessel from which the mark is so removed or defaced.

SECTION 3343, Revised Statutes, provides that—

Whenever any brewer, cartman, agent for transportation, or other person, sells, removes, receives, or purchases, or in any way aids in the sale, removal, receipt, or purchase, of any fermented liqour contained in any hogshead, barrel, keg, or other vessel from any brewery or brewery warehouse, upon which the stamp, or permit, in case of removal, required by law, has not been affixed, or on which a false or fraudulent stamp, or permit, in case of removal, is affixed, with knowledge that it is such, or on which a stamp, or permit, in case of removal, once canceled, is used a second time, he shall be fined one hundred dollars and imprisoned for not more than one year.

(T. D. 1360.)





WASHINGTON, D. C., May 19, 1908.

SIR-Referring to your conference with this office relative to the manufacture of so-called "temperance beer on the premises of a regular brewery, I have the honor to advise you that, as stated in T. D. 1345, this office has not approved the manufacture of soft drinks and untaxable beverages on the premises of a brewery producing taxable fermented liquors, for the reason that such practice would necessarily be subjected to close supervision, and would probably result in much annoyance both to the manufacturer

and to revenue officers.

There is, however, no provision of law or regulations which specifically prohibits such practice, and if brewers undertake to manufacture such a beverage, it is desirable that the position of this office be clearly understood.

T. D. 1307, holding that a beverage containing less than one-half of one per cent. of alcohol is not taxable as a fermented liquor, is based upon the belief, reached after careful examination of numerous samples submitted to this office, that such a beverage, made from a wort in which such a small quantity of malt or other material is used that the product when fully fermented does not contain one-half of one per cent. of alcohol, or made from a wort containing ordinary amounts of malt or other material and only slightly fermented, does not resemble any of the fermented liquors enumerated in the statute imposing a tax on such liquors sufficiently closely to be classified as


The manufacture of any fermented mash, wort, or wash and the separation of any process of the alcoholic content therefrom, except upon the premises of a registered distillery, is prohibited by Section 3282, Revised Statutes; but a proviso to the section expressly exempts fermented liquors from its provisions.

It is therefore held that the manufacture of an ordinary beer, and the reduction of the alcoholic content to less than one-half of one per cent. by boiling in the open air, or by any other process, is prohibited, unless the product is brought within the exemption of the proviso by being tax-paid as a fermented liquor, regardless of its alcoholic content, but such product, containing less than one-half of one per cent. of alcohol, may be sold by retailers without the payment of special tax.

Brewers who manufacture a beverage by this process should treat it in all respects as a fermented liquor, taking up on their records the material from which it is made.

Brewers who also manufacture a beverage which does not at any process of manufacture contain more than one-half of one per cent. of alcohol should credit themselves, by separate red-ink entries, on their material book with the quantity of materials used for this specific purpose; and should use the utmost care to keep the processes, as well as the materials used in the production of the two classes of beverages, separate, and to keep the taxable and untaxable articles separate and distinct from the other. The temperance beverage, when removed from the brewery premises, must be contained in packages unlike those ordinarily used for containing fermented liquor.


JOHN G. CAPERS, Commissioner.

(T. D. 1426.)




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WASHINGTON, D. C., October 16, 1908.

SIR: This office is in receipt of your letter of the 1st instant, transmitting an inquiry from Mr... freight traffic manager of the. Railroad, as to whether a Prohibition State or district has the right to prohibit railroads accepting intoxicating liquors billed to "shipper's order" when forwarded from other States.

While this office cannot undertake to answer the precise question asked, which is not within the scope of the Internal Revenue Laws, in view of the fact that the right is claimed on the ground that when shipments are so billed the sale is practically made at destination, it may not be amiss to restate the ruling of this office as to the circumstances under which sale is held to be made at the point of original shipment, especially as the published decisions bearing on the question are inharmonious, the decision in question being T. D. 938, T. D. 977, T. D. 982 and T. D. 1369.

Shipments to "shipper's order" may be divided into two classes, those where the purchase price accompanies the order, or is charged to the purchaser's account, and those where the bill of lading is attached to draft which must be accepted by the purchaser in order to secure the bill of lading, without which the common carrier will not surrender the goods.

With regard to the first class mentioned, when the shipper has charged the goods on his 52 b and, in the event that the cash does not accompany the order, on his books to the purchaser and mails him an invoice and the bill of lading indorsed either to the purchaser or in blank, he has completely divested himself of title to, or control over, the goods shipped, and the sale is held to have been completed at the place where the shipment originated. In the case of shipments where the bill of lading is attached to draft, a more difficult problem is presented. In that case the shipper retains a qualified control over the goods until the draft is settled. Such shipments, however, appear to be similar in principle to cash on delivery shipments, in regard to which the courts have held that the carrier is the agent of the purchaser for transportation and of the shipper for collection.

But to establish the bona fides of the transaction and to provide against the exercise without notice of the control retained by the shipper to divert the shipment to another than the original person for whom intended, the goods must be labeled "Notify (purchaser's name)," and the bill of lading must be endorsed, not in blank, but specifically to the purchaser on whom draft is drawn and whose name appears on the shipping tag, in order that the identity of the purchaser and the goods intended for him may both be clearly determined.

Where these conditions are fully complied with, this office holds that the sale is completed at the point of shipment, notwithstanding the qualified control retained by the shipper until the draft is settled.

It is necessary, of course, in order to avoid liability to special tax at the place of delivery, that there should be in every case a bona fide order received and accepted at the place where the special-tax stamp to cover sales is held. All previous rulings or decisions in conflict with the position herein taken are hereby revoked.




Collector Internal Revenue, Cincinnati, Ohio.


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