§ 170.374 Meaning of terms. The terms "distilled spirits plant", "bonded premises", and "bottling premises", as they appear in this section, shall have the meanings ascribed in section 5002 (a) (1), (2), and (3), I.R.C., respectively. Any references, in the regulations prescribed and made applicable by this subpart, to industrial alcohol plants, registered distilleries, fruit distilleries, internal revenue bonded warehouses, industrial alcohol bonded warehouses, distillery denaturing bonded warehouses, and industrial alcohol denaturing plants shall, for the purpose of this subpart, be treated as references to the corresponding facilities of the bonded premises of a distilled spirits plant, and references to the proprietor of any such premises shall be treated as references to the proprietor of the bonded premises of a distilled spirits plant. Similarly, any references in the regulations prescribed and made applicable by this subpart to taxpaid bottling houses and rectifying plants shall, for the purpose of this subpart, be treated as references to the corresponding facilities of the bottling premises of distilled spirits plants, and references to the proprietors of such taxpaid bottling house and rectifying plant shall be treated as references to the proprietors of bottling premises of distilled spirits plants. Subparts R-T-[Reserved] Subpart U-Manufacture and Sale of Certain Compounds, Preparations, and Products Containing Alcohol SOURCE: The provisions of this Subpart U contained in T.D. 6484, 25 FR. 7101, July 27, 1960, unless otherwise noted. Redesignated at 40 FR 16835, Apr. 15, 1975. § 170.611 Scope of subpart. This subpart contains provisions relating to the special tax status of persons who compound, mix, manufacture, or sell compounds, mixtures, preparations, or products containing taxpaid distilled spirits or wines, and the commodity tax status of such compounds, mixtures, preparations, and products. § 170.612 Meanings of terms. When used in this subpart, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, terms shall have the meaning ascribed in this section. Words in the plural form shall include the singular, and vice versa, and words importing the masculine gender shall include the feminine. The terms "includes" and "including" do not exclude things not enumerated which are in the same general class. Assistant regional commissioner. An assistant regional commissioner (alcohol, tobacco and firearms) who is responsible to, and functions under the direction and supervision of, a regional commissioner of internal revenue. Commodity tax. The tax or taxes imposed by sections 5021 and 5022, I.R.C., on products of rectification. Director. The Director, Alcohol, Tobacco and Firearms Division, Internal Revenue Service, Treasury Department, Washington, D.C. 20224. Distilled spirits, or spirits. That substance known as ethyl alcohol, ethanol, or spirits of wine, including all dilutions and mixtures thereof. I.R.C. The Internal Revenue Code of 1954, as amended. Liquors. Distilled spirits and/or wines. Person. An individual, trust, estate, partnership, association, company, or corporation. Special tax. The special (occupational) tax imposed by sections 5081, 5111, and 5121, I.R.C., on rectifiers and dealers in liquors. Taxpaid distilled spirits, or wines. Distilled spirits or wines, as the case may be, on which the distilled spirits tax imposed by section 5001, I.R.C., or the wine taxes imposed by section 5041, I.R.C., have been paid or determined. This chapter. Chapter I of Title 26 of the Code of Federal Regulations. U.S.C. The United States Code. COMMODITY TAX STATUS OF PRODUCTS § 170.613 Products exempt from commodity taxes. (a) Products meeting requirements. Except as provided in § 170.616(b), apothecaries, pharmacists, and manufacturers are not required to pay commodity taxes on medicines, medicinal preparations, food products, flavors, and flavoring extracts manufactured or compounded by them, if the tax has been paid or determined on all of the distilled spirits and/or wines contained therein, as follows: (1) Medicines and medicinal preparations. Medicines and medicinal preparations (including such preparations manufactured in accordance with formulas prescribed by the United States Pharmacopoeia, the National Formulary, or the Homeopathic Pharmacopoeia of the United States) that are unfit for use for beverage purposes. (2) Patent medicines. Patented, patent, and proprietary medicines that are unfit for use for beverage purposes. (3) Toilet preparations. Toilet, medicinal, and antiseptic preparations and solutions that are unfit for use for beverage purposes. (4) Flavoring extracts. Flavoring extracts, sirups, and concentrates that are unfit for use for beverage purposes. (5) Laboratory reagents. Laboratory reagents, stains, and dyes that are unfit for use for beverage purposes. (6) Salted wines. Salted wines which contain not in excess of 21 percent alcohol by volume and not less than 1.5 grams of salt per 100 cubic centimeters. (7) Sauces. Sauces, or sirups consisting of sugar solutions and liquors, in which the alcohol content is not more than 12 percent by volume and the sugar content is not less than 60 grams per 100 cubic centimeters. (8) Brandied fruits. Brandied fruits consisting of solidly packaged fruits, either whole or segmented, and liquors not exceeding the quantity and alcohol content necessary for flavoring and preserving. products (9) Food products. Food such as mincemeat, plum pudding, and fruit cake, where only sufficient liquor is used for flavoring and preserving; and ice cream and ices where only sufficient liquor is used for flavoring purposes. (b) Formulas and samples; when required. On request of the Director, or when in doubt as to the classification of his product, the manufacturer shall submit to the Director the formula for and a sample of his product for examination to verify the manufacturer's claim of exemption from tax. (72 Stat. 1328; 26 U.S.C. 5025) § 170.614 Other exempt U.S.P. and N.F. preparations. The following United States Pharmacopoeia and National Formulary preparations which are used by physicians and pharmacists principally as vehicles may be made with distilled spirits without incurring liability for rectification and special taxes for their manufacture and sale: Elixir aromaticum. Elixir aromaticum rubrum. Elixir aurantii amari. Elixir cardamom compositum. Elixir glycyrrhizae. Elixir taraxaci compositum. Spiritus myrciae compositus. § 170.615 Change of formula; when required. If the assistant regional commissioner finds at any time that any product manufactured under this subpart as an unfit product exempt from tax is being used for beverage purposes, or for mixing with beverage liquors other than by a rectifier, he shall notify the manufacturer to desist the manufacturing of such product until the formula is so changed as to render the product not susceptible of beverage use and such change is approved by the Director: Provided, That the provisions of this section shall not be so construed as to prohibit the use of such unfit products in small quantities for flavoring drinks at the time of serving for immediate consumption. Where, pursuant to notice, the manufacturer does not desist, or the formula is not so modified as to render the product unsusceptible of beverage use, the manufacturer shall immediately qualify as a rectifier and pay the rectification tax on such product. § 170.616 Products classed as rectified liquors. (a) Rectified liquors. United States Pharmacopoeia tincture of ginger is held to be rectified liquor. Bitters, patent medicines, and similar alcoholic preparations which are fit for beverage purposes, although held out as having certain medicinal properties, are also classed as rectified liquors. The commodity tax imposed by section 5021 or 5022, I.R.C., as the case may be, is required to be paid on alcoholic preparations classed as rectified liquors (including cordials or liqueurs). Such preparations are required to be manufactured in the rectifying facilities of a distilled spirits plant, taxpaid, bottled or packaged, stamped, recorded, and disposed of in accordance with the procedure prescribed in Part 201 of this chapter for other rectified spirits or products. Sellers of such preparations will be subject to the provisions of Part 194 of this chapter with respect to special taxes. (b) Products sold for beverage use. Any product described in §§ 170.613 and 170.614, or any other product declared by the Director to be unfit for use for beverage purposes, or any taxpaid distilled spirits recovered from any such product, which is sold for beverage purposes, or is sold under circumstances from which it might reasonably appear that it is the intention of the purchaser to procure the same for sale or use for beverage purposes, is subject to commodity tax. (72 Stat. 1328; 26 U.S.C. 5021, 5022) SPECIAL (OCCUPATIONAL) TAX STATUS OF APOTHECARIES AND MANUFACTURERS § 170.617 Apothecaries and manufac turers exempt. (a) Compounders or manufacturers. An apothecary, a pharmacist, or a manufacturer is not required to qualify as a rectifier, or pay special (occupational) tax as a rectifier or, except as provided in § 170.618, to qualify as a dealer in liquors in order to prepare, manufacture, or sell products described in §§ 170.613 and 170.614, or products declared by the Director to be unfit for use for beverage purposes. (b) Manufacturers recovering taxpaid alcohol. A manufacturer who recovers taxpaid distilled spirits from dregs or marc or percolation or extraction, or from medicines, medicinal preparations, food products, flavors, or flavoring extracts, which do not meet the manufacturer's standards, is not required to qualify or pay special tax as a rectifier, if such manufacturer uses the recovered distilled spirits exclusively in the manufacture of medicine, medicinal preparations, food products, flavors, or flavoring extracts, which are unfit for use for beverage purposes. (c) Records. Each manufacturer intending to recover taxpaid distilled spirits under the provisions of paragraph (b) of this section shall notify the assistant regional commissioner of his intention to do so and advise where such operations will be conducted. Such manufacturer shall keep a record of the distilled spirits recovered and the subsequent use to which they are put. The records shall show, (1) the date of recovery, (2) the commodity from which the spirits were recovered, (3) the amount of distilled spirits recovered, (4) the amount of recovered distilled spirits reused, (5) the commodity in which the recovered distilled spirits were reused, and (6) the date of such reuse. Such records shall be retained at the premises where the recovery operations are conducted for not less than two years, and shall be available during regular business hours for examination by internal revenue officers. (72 Stat. 1328; 26 U.S.C. 5025) § 170.618 Sale of products for beverage use; special tax. Any person (including the manufacturer) who sells for beverage purposes any of the products described in §§ 170.613 and 170.614, or any other product declared by the Director to be unfit for use for beverage purposes, or any distilled spirits recovered as provided in § 170.617(b), or who sells any such substance under circumstances from which it might reasonably appear that it is the intention of the purchaser to procure the same for sale or use for beverage purposes, is required to pay special tax as a wholesale dealer in liquors or a retail dealer in liquors, as the case may be, and, in the case of a manufacturer, may also be required to pay special tax as a rectifier (plus any penalties and interest due). (72 Stat. 1338, 1340, 1343; 26 US.C. 5081, 5111, 5113, 5121) Subpart V-[Reserved] Subpart W-Temporary Regulations Respecting the Filing of Tax Returns by Proprietors of Distilled Spirits Plants SOURCE: The provisions of this Subpart W contained in T.D. 6848, 30 F.R. 11599, Sept. 10, 1965, unless otherwise noted. Redesignated at 40 FR 16835, Apr. 15, 1975. § 170.641 Scope of regulations. This subpart provides temporary regulations respecting (a) the periods to be covered by returns filed by proprietors of distilled spirits plants on Form 2522 for the deferred payment of taxes or distilled spirits, and on Form 2527 for the deferred payment of taxes on rectified products and wines, and (b) the times for filing such returns, with remittances. § 170.642 Meaning of terms. When used in this subpart, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, terms shall have the meanings ascribed in Part 201 of this chapter. § 170.643 General. Notwithstanding any provision of Part 201 of this chapter relating to (a) the periods to be covered by returns on Form 2522 for the deferred payment of taxes on distilled spirits, and on Form 2527 for the deferred payment of taxes on rectified products and wines, and (b) the times for filing returns on such forms, for the deferred payment of taxes, proprietors of distilled spirits plants shall file returns for deferred payment of taxes with remittances, for the periods and by the times, provided in this subpart. § 170.644 Return periods. The first (transitional) return period under the provisions of this subpart shall commence on September 24 and run through September 30, 1965; thereafter, the return periods shall run from the 1st day of each month through the 15th day of that month, and from the 16th day of each month through the last day of that month. § 170.645 Times for filing. (a) General. Returns on Forms 2522 and 2527, with remittances, shall, unless the proprietor is qualified for extended deferral, be filed not later than the third business day next succeeding the last day of each return period. The provisions of § 201.383 of this chapter regarding (1) the 2 p.m. time of filing the return and remittance, (2) the person with whom the return and remittance shall be filed, and (3) the date of delivery when delivery is by United States mail, shall be applicable to the filing of returns, with remittances, under this subpart. Also, the provisions of Part 201 of this chapter relating to default in deferred payment of taxes shall be applicable to default in deferred payment of taxes under this subpart. A return on Form 2522 shall be executed and filed to cover each return period notwithstanding that no tax is due for payment for such period. (b) Extended deferral. A proprietor who is qualified as provided in § 170.646 for extended deferral shall file returns with remittances, for return periods to and including the return period ending June 30, 1966, as follows: (1) For return periods ending on the 15th day of the month, not later than the 25th day of the same month; and (2) For return periods ending on the last day of a month not later than the 10th day of the next succeeding month. Commencing with the return for the period beginning July 1, 1966, and for each subsequent return period, a proprietor who is qualified as provided in § 170.646 for extended deferral shall file returns, with remittances, for each such return period, not later than the last day of the return period next succeeding that period. § 170.646 Qualification for extended deferral. (a) Returns on Form 2522. A proprietor who desires to file returns, Form 2522, with remittances, with benefit of the extended deferral periods, prescribed by § 170.645(b), and whose bond then in force on Form 2613, 2614, or 2615, covering deferred payment of taxes is not in a sufficient penal sum, shall give a new bond in a sufficient penal sum on Form 2613, 2614, or 2615, as applicable, or a strengthening bond to increase the total penal sum of the bonds in force to a sufficient penal sum. (b) Returns on Form 2527. A proprietor who desires to file returns, Form 2527, with remittances, with benefit of extended deferral, may give a new bond on Form 2601 or give a consent of surety as provided in paragraph (c) of this section to extend the terms of the bond, Form 2601, then in force. (c) Consents of surety. A proprietor who desires to file returns on Forms 2522 and 2527 under an existing bond, with benefit of extended deferral, shall file a consent of surety on Form 1533 to extend the terms of such bond. Each consent on Form 1533 shall identify the particular bond to which it applies and shall contain a statement of purpose as follows: To continue in effect said bond (including all extensions or limitations of terms and conditions previously consented to and approved), notwithstanding that the time for payment of the tax may be deferred as provided for by regulations in 26 CFR 170.645 (b). (d) Effective date for extended deferral. A proprietor may file returns with benefit of extended deferral only after the applicable bonds and consents of surety required by this section have been filed with and approved by the assistant regional commissioner. The benefit of extended deferral shall commence with the return for the first return period fully covered by such bonds and consents of surety, but in no case shall the extended deferral apply to the return period which begins September 24, 1965. § 170.647 Other regulations applicable. All provisions of Part 201 of this chapter not inconsistent with the provisions of this subpart shall remain in full force and effect, and all such provisions applicable to returns, remittances, bonds, and consents of surety, shall be applicable to returns, remittances, bonds, and consents of surety, under the provisions of this subpart. Subparts X-Y-[Reserved] Subpart Z-Regulations Respecting Wine and Wine Products Rendered Unfit for Beverage Use AUTHORITY: The provisions of this Subpart Z issued under sec. 5362, I.R.C., as amended; 72 Stat. 1380, as amended; 26 U.S.C. 5362. SOURCE: The provisions of this Subpart Z contained in T.D. 6936, 32 F.R. 16260, Nov. 29, 1967, unless otherwise noted. Redesignated at 40 FR 16835, Apr. 15, 1975. This subpart provides, pursuant to section 5362(d), I.R.C., temporary regulations for the removal free of tax from bonded wine cellars of wine, or wine products made from wine, which have been rendered unfit for beverage use and procedures relating thereto. Notwithstanding any provisions of Part 240 of this chapter, nonbeverage wine may be produced on and withdrawn from bonded wine cellar premises in accordance with the provisions of this subpart. § 170.682 Meaning of terms. When used in this subpart, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, terms shall have the meanings ascribed in Part 240 of this chapter and in this subpart. Nonbeverage wine. Wine, or wine products made from wine, which have been rendered unfit for beverage use as provided in this subpart. § 170.683 Notice and bond. Each proprietor who intends to produce nonbeverage wine for withdrawal free of tax from his bonded wine cellar shall, before commencing such operations, file with the assistant regional commissioner a written notice, in duplicate, of such intent. In addition, each proprietor who intends to operate under the provisions of this subpart shall file a consent of surety on Form 1533 to extend the terms of his existing bond, Form 700 or Form 2601, as applicable, or give a new bond. Each consent shall identify the particular bond to which it applies and shall contain a statement of purpose as follows To continue in effect said bond (including all extensions or limitations of terms and conditions previously consented to and approved), notwithstanding that nonbeverage wine will be produced on and withdrawn from bonded wine cellar premises under the provisions of Subpart Z of 26 CFR Part 170. § 170.684 Facilities. A proprietor qualified to produce nonbeverage wine may use his existing bonded wine cellar facilities for such purpose but shall so conduct his operations as to prevent contamination of wine or wine products for beverage use. Each tank and receptacle being used in the production of nonbeverage wine will be marked to show its use in accordance with the provisions of Part 240 of this chapter. Wine, or wine products made from wine, may, in accordance with approved formulas, be treated with methods or materials which render such wine or wine products unfit for beverage use and suitable for their intended use. No wine or wine products so treated shall contain more than 21 percent of alcohol by volume at the time of withdrawal free of tax from the bonded wine cellar; nor shall any wine or wine products so withdrawn be used in the compounding of distilled spirits or wine for beverage use or in the manufacture of any product intended to be used in such compounding. § 170.686 Formulas. Before producing any nonbeverage wine the proprietor must receive approval of the formula by which the wine, or wine product made from wine, is to be rendered unfit for beverage use. The formula and process shall be described on Form 698-Supplemental, which shall be filed, in triplicate, with the Director, Alcohol, Tobacco and Firearms Division. Each formula filed under the provisions of this section shall be numbered in serial order, starting with No. 1, and shall be prefixed with the symbol "NB." One %quart sample of the base wine or wine |