Rev. Proc. 59-17

SECTION 1. PURPOSE.

In order for users of specially denatured spirits to continue to use and procure specially denatured spirits (formerly called specially denatured alcohol) on or after July 1, 1959, such users are required to make application on Form 1479 (Revised April 1959), Application For Permit to Use Specially Denatured Spirits, for an industrial use permit (formerly caller a basic permit) to use specially denatured spirits and to file an application on Form 1485 (Revised April 1959), Application And Withdrawal Permit of User To Procure Specially Denatured Spirits, for a permit to procure specially denatured spirits.

SEC. 2. BACKGROUND.

Section 5271 of the Internal Revenue Code of 1954, as amended by the Excise Tax Technical Changes Act, Public Law 85-859, C.B. 1958-3, 92, provides that no person shall procure or use specially denatured spirits on or after July 1, 1959, until he has filed an application and received a permit to do so.

SEC. 3. QUANTITIES TO BE SHOWN ON THE APPLICATIONS.

The application for an industrial use permit on Form 1479 requires that the user state the quantity of specially denatured spirits, including recovered or restored denatured spirits and recovered or restored articles, that will be on hand, in transit, and unaccounted for at any one time. This quantity will determine the penal sum of the specially denatured alcohol user's bond. It may be large enough to permit the user to order containers of the size usually purchased, to have specially denatured spirits in transit, and at the same time, to have a sufficient quantity on hand to care for present needs.

The application on Form 1485 requires that the user state the total quantity to be withdrawn during a calendar month and the total quantity to be withdrawn during a year. The proposed regulations on specially denatured spirits state that the quantity of any formula to be withdrawn during any calendar month should not be more than one-twelfth of the annual requirements but provide that where the user desires to withdraw more than one-twelfth of his annual quota during any month, he should state his needs and furnish sufficient information for the Assistant Regional Commissioner, Alcohol and Tobacco Tax, to determine whether such withdrawals should be authorized. If one-twelfth of the user's annual quota is less than a 55 gallon drum and sufficient reasons exist for purchasing a 55 gallon container, he should enter 55 gallons as the quantity to be withdrawn per calendar month and he should furnish sufficient information for the Assistant Regional Commissioner to determine whether that portion of the application should be approved. The same procedure would hold true if the user has a seasonal business that requires the use of specially denatured spirits in only a few months during a year. The user of specially denatured spirits should determine his annual quota and the need for each of the few months that he expects to use the material and adequately explain his desires.

SEC. 4. PERIOD TO BE ENTERED ON FORM 1485.

The entry for the beginning of the period should be July 1, 1959, but the ending date should be left blank at this time.

SEC. 5. USER'S BOND.

Each user of specially denatured spirits should file a new bond, Form 1480, Bond of Specially Denatured Spirits User, or he may continue his current bond in effect by filing Form 1533, Consent of Surety, extending the terms of the bond to cover specially denatured spirits on hand, in transit, and unaccounted for on and after July 1, 1959. Where a user has submitted a strengthening bond, such bond should also be covered by a separate consent. Where the quantity is increased, the user should submit a strengthening bond with the same surety or submit a new bond.

SEC. 6. FILING OF QUALIFYING DOCUMENTS.

The above described applications and bond or consent of surety with the necessary supporting documents outlined in the proposed regulations should be filed in duplicate with the appropriate Assistant Regional Commissioner, Alcohol and Tobacco Tax. These qualifying documents should be filed as soon as possible in order to expedite handling in the office of the Assistant Regional Commissioner.

SEC. 7. RESULT IF APPLICATIONS ARE NOT FILED PRIOR TO JULY 1, 1959.

If the two applications and bond or consent of surety on the bond or bonds are not filed prior to July 1, 1959, the user will not be entitled to use specially denatured spirits on and after July 1, 1959, and the vendor named on the user's current withdrawal permit will be notified by the Assistant Regional Commissioner that the user may not continue to withdraw specially denatured spirits.

SEC. 8. CONTINUATION OF PERMITS ON AND AFTER JULY 1, 1959.

The proposed regulations on specially denatured spirits provide that if one holds both a permit as a user and has a valid withdrawal permit on Form 1485 on June 30, 1959, and has filed the required applications, he may continue to use and withdraw specially denatured spirits on and after July 1, 1959, under such permits until final action is taken on his application.

SEC. 9. INQUIRIES.

Inquiries in regard to this Revenue Procedure should refer to its number and be addressed to the office of the appropriate Assistant Regional Commissioner, Alcohol and Tobacco Tax.