Rev. Rul. 61-81

Advice has been requested whether a refund or credit of tax paid before July 1, 1959, may be allowed on wines returned to bond in a bonded wine cellar as unmerchantable.

Section 5044 as originally contained in the Internal Revenue Code of 1954 provided for the refund or credit of tax in the case of any champagne or other sparkling wine or artificially carbonated wine produced in the United States and returned to a bonded wine cellar as unmerchantable. This provision was specifically limited to the refund or credit of tax paid on or after January 1, 1955.

Effective July 1, 1959, section 5044 of the Code was amended by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, C.B. 1958-3, 92, at 149, to provide that the tax imposed by section 5041 of the Code and paid on any wine produced in the United States and returned to bond as unmerchantable under section 5361 of the Code, shall be refunded or credited, without interest, to the proprietor of the bonded wine cellar to which such wine is delivered.

Section 240.805 of the Wine Regulations provides as follows:

The tax paid or determined on any wine procuded in the United States which is returned to bond in a bonded wine cellar as unmerchantable may be refunded, or credited, without interest, as provided in this subpart. All provisions of this part applicable to wine in bond on the premises of a bonded wine cellar and to removals thereof shall be applicable to such wine returned to bond for refund or credit of tax under the provisions of section 5044, I.R.C.

The specific language of section 5044 of the Code provides for credit or refund of the tax imposed by section 5041 of the Code. This language bars credit or refund of tax paid prior to January 1, 1955, since tax paid prior to that date would not have been imposed by section 5041 of the Code.

Accordingly, it is held that a refund or credit of tax under section 5044 of the Code may be allowed on any unmerchantable wines returned to bond in a bonded wine cellar on and after July 1, 1959, if such wines had been taxpaid or tax determined on or after January 1, 1955.