RULINGS RELATING TO THE BREWING TRADE

REPORT OF THE ADVISORY COMMITTEE

(Presented at the United States Brewers' Convention, Cleveland, Ohio, November 21, 1916)

Many inquiries having been received from members as to the import of recent rulings of the Treasury Department concerning the character of packages or containers, in which malt beverages containing less than one-half of one per cent of alcohol could be removed from brewery premises, your Advisory Committee consulted the counsel of the association on this matter. The committee is advised by the counsel that the Commissioner of Internal Revenue has not ruled that such beverages, produced concurrently with the regular product, can be removed from the brewery in the ordinary beer keg.

BEER KEGS NOT TO BE USED

The prevailing instructions on this point are those contained in Treasury Decision 1360, which are to the effect that "the temperance beverage, when removed from the brewery premises, must be contained in packages unlike those ordinarily used for fermented regular beer cooperage may be remodeled or new packages may be removed in cans, whiskey or vinegar barrels, or in any other containers except the regular beer cooperage. If it is desirable to have packages of extra strength on account of the high pressure, the regular beer cooperage may be remodeled or new packages may be made out of materials similar to those employed in the manufacture of beer packages, the shape being so modified as to make them readily distinguishable from the latter. The mere painting of beer packages is not a sufficient distinction.

It is to be understood, of course, that the so-called temperance beverage can be removed to the bottling house by way of a pipe line, pursuant to the Act of September 8, 1916, amendatory of Section 3354, R. S., as amended by the Act of June 18, 1890, such

removal to be in compliance with Treasury Decision 2359, from which the following is quoted:

Such transfer is to be made under rules and regulations to be from time to time prescribed by the Commissioner of Internal Revenue, subject to the approval of the Secretary of the Treasury. Until the promulgation of such rules and regulations more in detail it is hereby prescribed that until further notice brewers having an established pipe line for the transfer of fermented liquors may set aside and utilize one or more cisterns pertaining thereto for containing the non-taxable liquor above referred to for transfer through the pipe line for the sole purpose of the bottling under the same conditions and restrictions as now apply to the transfer of fermented liquor, except that the deputy collector in attendance shall first satisfy himself that the liquid about to be transferred is of the nontaxable kind, in which case it will not be necessary for him to note the quantity or to require payment of tax thereon. He will, however, be required to see that the inlets and outlets of the various cisterns are so controlled by the Slaight seal locks provided therefor that there shall be no opportunity to utilize the pipe line for the transfer of fermented liquors except such as have been duly covered by the cancellation and delivery to him of the appropriate stamps.

RULING ON NON-ALCOHOLIC-BEVERAGES

There was also referred to your Committee by the Board of Trustees the question of obtaining a broader ruling relative to the taxation of non-alcoholic beers. The co-operation of the counsel of the association was likewise secured in this matter with the result that the Commissioner extended the scope of an earlier regulation, under which such beverages were taxed, if at any time during the process of manufacture, more than one half of one per cent of alcohol developed. Under the revised ruling, if the beer when finished and ready for sale, does not contain more than one-half of one per cent of alcohol, it will be regarded as non-taxable, irrespective

of whatever alcoholic content developed in the process of manufacture.

The Internal Revenue authorities have found occasion to issue warning that beverages, which may develop more than one-half of one per cent of alcohol after being placed on the market cannot be regarded as non-taxable.

The burden is on the brewer not only to know that the beverage which he sends out unstamped is within the limit, but also to know that the condition of the liquor is such that no increase in the alcoholic content can take place after the beverage leaves his premises sufficient to remove it from the non-taxable class. In all cases where beverages containing alcohol in excess of the limit are found on the market, the brewer who produced the same will be held liable to the tax thereon, the packages with their contents will be subject to seizure and forfeiture, and the brewer will be liable to prosecution.

STATE LAWS ON MALT BEVERAGES

It is thought proper to present herewith a complete statement of the limitations imposed upon malt beverages by prohibition States or those having large areas of dry territory.

Alabama.-New Prohibition Law effective January 1, 1916, includes in the term "Prohibited liquors and beverages," malt, fermented or brewed liquors of any name or description manufactured wholly or in part or from any substitute therefor; such as near beers or malt tonics by whatever name called.

Arizona.-Prohibits the introduction into the State of any malt liquors or imitation malt liquors under any circumstances. However, by a Supreme Court decision, liquors may be introduced for the personal use of the consignee. An affidavit is required from the shipper at the shipping point and an affidavit from the consignee at destination showing that the shipments are intended for lawful personal use.

Colorado.-Defines "intoxicating liquors" as including all fermented or malt liquors. No limitation on shipments for personal

use.

Georgia.-Law effective May 1, 1916, similar to the Alabama prohibitory law given above.

Idaho.-Malt and fermented liquors are declared as a matter of law to be intoxicating, and for which no proof is required, that they come under the head of prohibited liquors, except to show that they come within the enumeration. It is conceded that "near-beer" is a malt liquor; it follows therefore that it falls within the prohibitory law and cannot be sold in the State. The only liquor that may be shipped into the State is pure alcohol for scientific and mechanical purposes, under permit, and sacramental wine for religious purposes.

Pro

Iowa.-Construes "intoxicating liquors" to mean, ale, beer and malt liquors. No limitations on shipments for personal use. hibits the collection of liquor bills within the State.

Louisiana.-Prohibits the sale of near beer in dry territory; effective August 1, 1916.

Mississippi.-House Bill No. 264, effective April 15, 1916, prohibits, among other things, any form of liquor advertising, and allows the shipments of three gallons of malt liquors every 15 days.

Oregon.-Construes "intoxicating liquors" to embrace all malt or fermented liquors; and dry compounds which may, by the addition of water, produce any fermentation, or intoxicating liquor. Twenty-four quarts of malt liquor may be shipped into the State for personal use within four successive weeks. (Indications are that at the recent election a law forbidding the importation of any alcoholic beverages whatsoever, was adopted by referendum vote.)

South Carolina.-The words "alcoholic liquors and beverages" as used in the new prohibition law, include any beer or beverage, whether fermented or otherwise, by whatsoever name known or called which will produce intoxication, or which contains in excess of one percentum of alcohol. Shipments of one gallon of malt liquors are permitted in any calendar month.

Virginia. The legislature enacted a prohibitory law, which exceeded in its drastic measures the provision of the Enabling Act,

adopted by popular vote. The Enabling Act provided for the manufacture of malt liquors containing not more than 32 per centum of alcohol for sale outside of the State. Under Chapter 146, of the Laws of 1916, the manufacture and sale of all malt liquors is forbidden as well as advertising of any kind of liquors, and statements concerning the liquor traffic are not allowed if compensation is given unless marked "paid advertisement." Shipments of beer for personal use must be confined to three gallons once a month. Cider may be sold only if it contains less than I per centum of alcohol, and Jamaica Ginger only by druggists upon a physician's prescription. The law became effective November Ist.

Washington.—The phrase "intoxicating liquor" as used in the prohibitory Act, includes ale, beer and any fermented or malt liquor. Twenty-four pints of beer may be shipped into the State in any 20-day period. Effective January 1, 1916.

DEVELOPMENT OF THE BOTTLED BEER TRADE

In the last twelve months the sale of beer in bottles has increased extensively, particularly in the East, due in the main to publicity. Stress has been laid on the food value, healthful qualities, temperance character, and scientifically clean process of manufacture with gratifying results.

Little shipping is done into "dry" States, for the reason that the amount of beer allowed a person each month in most of such jurisdictions, is too small to make it worth while to go after the business. Bulk shipments are made to distributing points near "dry" States and districts, but the amount actually intended for such States and districts is difficult to determine accurately.

RETURN OF BOTTLES

Your committee has been active during the year, as opportunity presented, in endeavoring to develop among the brewers of the country the practice of charging for bottles and while the custom is not as generally observed as is desirable we feel that the brewers are coming more and more to recognize the impressive saving that it