Rev. Proc. 61-1

SECTION 1. PURPOSE.

The purpose of this Revenue Procedure is to furnish instructions regarding the procedure to be followed by producers of special industrial solvents manufactured with specially denatured alcohol who desire to ship the product in bulk conveyances to their agents for packaging and distribution.

SEC. 2. BACKGROUND.

The Distribution and Use of Denatured Alcohol and Rum Regulations restrict the packaging of special industrial solvents to producers, except in the case of distributors who may repackage in containers of not more than five gallons in capacity for shipment as samples to prospective customers. Section 211.185 of the regulations provides that shipments of special industrial solvents in bulk conveyances may be made only by producers. After consideration of the matter, the Internal Revenue Service has concluded that special industrial solvents may be shipped in bulk conveyances to agents of producers and may be packaged, or reshipped in bulk conveyances to users, by agents of producers as an alternate procedure subject to the provisions of section 211.22(a) of the regulations.

SEC. 3. PROCEDURE.

.01 Producers desiring to make bulk shipments of special industrial solvents to their agents for packaging and distribution should make application through the office of the Assistant Regional Commissioner, Alcohol and Tobacco Tax, for approval by the Director, Alcohol and Tabacco Tax Division, of an alternate procedure under the provisions of section 211.22(a) of the regulations.

.02 The following conditions must be complied with by producers in connection therewith:

(1) The contract of agency must reflect a true agency agreement and must contain provisions indicating the right of access of internal Revenue officers for inspection purposes at each agency location and must provide for the maintenance of records covering the receipt and disposition of all special industrial solvents as well as furnishing any reports to the Assistant Regional Commissioner as may be required by him.

(2) A consent of surety in the following form must be filed in respect of the bond given for the user's premises at which the special industrial solvents are manufactured: `To extend the terms of the bond to cover shipment of special industrial solvents to agents of the principal and to the receipt, storage, sale and disposition of such solvents by such agents.'

(3) The special industrial solvents packaged must be labeled to show brand and name and address of the producer. It may also show, either on the principal label or on a separate label, the name and address of the agent as the packager.

(4) As provided by the regulations, the special industrial solvents will be packaged in containers of 50 gallons or more except in the case of samples as provided by sections 211.183 and 211.185 of the regulations. Such containers of 50 gallons or more will be serially numbered from 1 to 1,000,000 preceded by a letter or letters identifying each drumming location (to be assigned by the producer), such as, A-1, B-1, C-1, etc.

(5) The shipment of special industrial solvents in bulk conveyances to users by agents of producers will be in conformity with the provisions of section 211.185 of the regulations.

(6) The producer for each producing location will file with the appropriate Assistant Regional Commissioner an application conforming with the requirements of section 211.22(a) of the regulations to have the packaging and distribution of special industrial solvents done by his agent, in lieu of doing all packaging and distribution himself, as an alternate procedure, and to indicate the reasons therefor.

SEC. 4. DATA TO ACCOMPANY APPLICATIONS.

The application of the producer should be accompanied by a separate list of agents who will do such packaging since the agents may change from time to time and, therefore, such information should not be included in the application. Sufficient copies of each agency contract should be submitted with the application in order that the Assistant Regional Commissioner of the producing region as well as all other Assistant Regional Commissioners in whose regions the agents are located may be furnished with a copy thereof.

SEC. 5. INQUIRIES.

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