In general, the Internal Revenue Code (IRC) at 26 U.S.C. 5001 imposes Federal excise tax on distilled spirits produced or imported into the United States. However, under the IRC at 26 U.S.C. 5214(a)(2) and (a)(3), distilled spirits may be withdrawn free of tax for nonbeverage purposes for use by Federal, State, and local governments, and for use by certain educational organizations and institutions, research laboratories, hospitals, blood banks, sanitariums, and nonprofit clinics, subject to regulations prescribed by the Secretary of the Treasury. In addition, the IRC at 26 U.S.C. 5275 requires those that procure or use distilled spirits withdrawn free of tax under sections 5214(a)(2) and (3) to keep records and make reports regarding the receipt and use of such spirits as the Secretary requires by regulation. Under that IRC authority, in order to maintain accountability over tax-free spirits and prevent their diversion to taxable beverage use, the TTB regulations in 27 CFR part 22 require tax-free alcohol users to maintain certain usual and customary records regarding the receipt, loss, shipment, destruction, return, consignment, and inventories of such alcohol. Such accountability is necessary to protect the revenue.
There are no program changes associated with this information collection, and TTB is submitting it for extension purposes only. However, due to a change in agency estimates resulting from continued growth in the number of tax-free alcohol users, TTB is increasing the number of annual respondents and responses to this information collection, from 5,268 to 5,600. Also due to changes in agency estimates, TTB is increasing the number of private sector respondents to this collection from 2,634 to 3,800, but is lowering the number of State, local, and tribal government respondents from 1,317 to 1,200, and is lowering the number of Federal government respondents from 1,317 to 600. In addition, TTB is removing the one hour of annual burden previously reported for this information collection as a place holder since, under the OMB regulations at 5 CFR 1320.3(b)(2), regulatory requirements to maintain usual and customary records kept during the normal course of business place no annual burden on respondents.
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
1513-0059 Supporting Statement (04-2020).docx
Usual and Customary Business Records Relating to Tax-Free Alcohol (TTB REC 5150/3)