Rev. Rul. 55-739

Revenue Ruling 54-290, C.B. 1954-2, 469, provides that where an application for voluntary destruction of distilled spirits in an internal revenue bonded warehouse is timely filed before the expiration of the eight-year storage period, but the necessary steps to effect the destruction thereof cannot be completed within such period, the spirits may continue to remain in the warehouse temporarily pending final action on the application. While that Revenue Ruling was issued under the Internal Revenue Code of 1939, the principles expressed therein, respecting the timely filing of applications to destroy spirits and the taxability of spirits remaining in a warehouse at the expiration of the eight-year storage period are of equal application under the Internal Revenue Code of 1954. However, the 1954 Code does not require the spirits to be unfit for beverage purposes in order to be eligible for destruction. Section 5011(b) thereof provides that a distiller, warehouseman, or other person responsible for the tax imposed by Chapter 51 with respect to any distilled spirits in bond, may voluntarily destroy such spirits, but only if such destruction is under such supervision and under such regulations as the Secretary or his delegate may prescribe.

If spirits are not withdrawn upon payment of the tax, or as otherwise provided, within eight years from the date of original entry, the tax becomes due and payable on the basis of the regauge for tax determination, without further loss allowance. This obligation upon the warehouseman cannot be altered by reason of his inability to collect the tax from the owner, or to acquire title to abandoned spirits prior to the eight-year force-out. If a warehouseman intends to file an application for destruction, it is necessary that such application be filed prior to the expiration of the eighth anniversary of storage. Such application would be timely filed and would enable the warehouseman to hold the spirits temporarily, if necessary, in order to complete arrangements for the destruction of the spirits.

The filing of a timely application will not preclude taxpayment and withdrawal of the spirits covered by the application if, before destruction is actually effected, it is desired to taxpayer and withdraw the spirits. However, failure to effect destruction of spirits covered by a timely application within a reasonable time after expiration of the eight-year period will result in assessment of tax on the spirits and the consequent loss of the privilege of voluntary destruction without payment of tax