Rev. Proc. 59-36

SECTION 1. PURPOSE.

The purposes of this Revenue Procedure are to (1) inform persons desiring to withdraw spirits without payment of tax for (a) export, (b) use on vessels and aircraft, (c) transfer to foreign trade zones, or (d) transfer to customs manufacturing bonded warehouses, of the need for filing consents of surety to continue in effect certain export and transportation bonds on and after July 1, 1959, and (2) inform plant proprietors and others with respect to bonds required for distilled spirits and wines withdrawn for export with benefit of drawback.

SEC. 2. BACKGROUND.

.01 Under the Internal Revenue Code of 1954, prior to amendment by the Excise Tax Technical Changes Act of 1958, Public Law 85-859, C.B. 1958-3, 92, all persons who exported distilled spirits free of tax or without payment of tax, were required to file specific bonds for such purposes.

1. The regulations in Part 201, Distilled Spirits Plants Regulations, which became effective on July 1, 1959, provide that withdrawals of spirits without payment of tax for exportation, for use on vessels and aircraft, or for transfer to a foreign-trade zone (and withdrawals of specially denatured spirits free of tax for exportation or transfer to a foreign-trade zone) by the proprietor of the distilled spirits plant from which such withdrawals are made will be covered by his Form 2601, Distilled Spirits Bond, so that specific bonds for such withdrawals by the proprietor of the plant will not be required on or after July 1, 1959. However, the bond requirements in Part 182, Industrial Alcohol Regulations; Part 220, Production of Distilled Spirits Regulations; Part 221, Production of Brandy Regulations; Part 225, Warehousing of Distilled Spirits Regulations; and Part 253, Removals of Liquors and Articles to Foreign-Trade Zones, relating to such withdrawals by persons other than the distilled spirits plant proprietor, and to withdrawals for transfer to customs manufacturing bonded warehouses without payment of tax, by the proprietors thereof, will remain in effect.

2. Since the specific bond forms are not being revised at this time, it will be necessary to give consents of surety recognizing changes in plant nomenclature to continue in effect such bonds approved prior to July 1, 1959, and to modify, by consent of surety or otherwise, such bonds filed on or after that date.

.02 Those provisions of the Internal Revenue Code of 1954 which authorize exporters to claim drawback of internal revenue taxes on liquors exported, have been extended by section 201 of Public Law 85-859 to include (1) spirits bottled in bond for export, (2) spirits bottled for domestic consumption (including bottled-in-bond spirits) which have been restamped and marked for export, (3) spirits in packages filled in internal revenue bond, and (4) wines produced or manufactured in the United States contained in packages or unbroken cases filled on premises qualified under Chapter 51 of the Code to package or bottle wines. The regulations in Part 252 provide that, before exporters may exercise the additional privileges, on or after July 1, 1959, their bonds must be extended by appropriate consents of sureties.

SEC. 3. AFFECTED BONDS.

01. Where persons other than the proprietor of the distilled spirits plants from which withdrawal is to be made, on and after July 1, 1959, wish to withdraw spirits from internal revenue bond without payment of tax for export, for use on vessels and aircraft, or for transportation to a foreign trade zone, bonds filed by them for such purposes must be modified by consents of sureties or otherwise. Likewise, a proprietor of a customs manufacturing bonded warehouse who wishes, on and after July 1, 1959, to withdraw spirits from internal revenue bond, without payment of tax, for transfer to his customs manufacturing bonded warehouse, must modify his bond filed for such purpose by a consent of surety. A list of affected bonds follows:

  Bond Form No.           Title                        Prescribed by

  Bond Form No.           Title                        Prescribed By

.01 Bonds listed in section 3.01 and approved before July 1, 1959, which are to remain in effect on and after that date shall be modified as follows:

1. All bonds except those on Form 658 shall be modified by consent of surety worded as follows:

          To modify the terms and conditions of said bond (including

.02 Bonds listed in section 3.01 which are filed on or after July 1, 1959, shall be modified as follows:

1. Bonds on Forms 1702 and 1703 require no modification since no plant nomenclature is printed on them.

2. Bonds on Forms 1459, 1460, 1495, 1497, and 1661 shall be modified by striking the obsolete plant nomenclature and inserting in its place the term `distilled spirits plant.'

3. Bonds on Forms 547, 548, 643, 657, 1496, 1498, 1618 and 1660 shall be modified by substituting the term `distilled spirits plant' for the printed nomenclature in identifying the premises from which withdrawals are to be made. Such bonds shall be further modified by consents of sureties worded as follows:

          To modify the terms and conditions of said bond (including

.03 Drawback bonds on Form 1581 must be modified by consents if they are to be extended to include the additional privileges enumerated in section 2.02. Consents shall be worded as follows:

     To extend the terms and conditions of said bond to cover (1)

.04 Drawback bonds on Form 1581A must be modified by consents if they are to be extended to include any wines produced in the United States. The wording for such consents shall be as follows:

     To extend the terms and conditions of said bond to include any

Plant proprietors will be covered by bond on Form 2601, on and after July 1 for their withdrawals from their plants of spirits without payment of tax for exportation, for use on vessels and aircraft, or for transfer to and deposit in a foreign trade zone, and their withdrawals of specially denatured spirits free of tax for exportation or for transfer to and deposit in a foreign trade zone. Therefore, they will no longer need withdrawal bonds filed for such purposes prior to July 1. The Assistant Regional Commissioner, Alcohol and Tobacco Tax, will initiate action necessary for the termination of such withdrawal bonds effective as of the close of business on June 30, 1959.

SEC. 6. 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.