[Federal Register Volume 77, Number 236 (Friday, December 7, 2012)]
[Proposed Rules]
[Pages 72999-73005]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29487]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 25

[Docket No. TTB-2012-0006; Notice No. 131; Re: T.D. TTB-109]
RIN 1513-AB94


Small Brewers Bond Reduction

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Elsewhere in this issue of the Federal Register, the Alcohol 
and Tobacco Tax and Trade Bureau (TTB) is publishing a temporary rule 
that for a period of three years modifies the penal sum for a brewer's 
bond where the excise tax liability of the brewer is reasonably 
expected to be not more than $50,000 in the current calendar year and 
the brewer was liable for not more than $50,000 in such taxes in the 
preceding calendar year. Under the temporary rule, for the next three 
years, the penal sum of the required bond is $1,000 for such brewers 
who file excise tax returns and remit taxes quarterly. In this 
document, TTB proposes to adopt the $1,000 penal sum amount for the 
brewer's bond for such brewers as a permanent regulatory change. This 
document also proposes amendments to the regulatory text to require 
that such brewers file Federal excise tax returns and payments 
quarterly, as well as submit reports of operations quarterly. Finally, 
TTB is soliciting comments on how the TTB regulations governing 
brewers' operations might be modified to reduce the burden on brewers 
and, at the same time, meet all statutory requirements and protect the 
revenue.

DATES: TTB must receive comments on or before February 5, 2013.

ADDRESSES: You may send comments on the proposals contained in this 
document to one of the following addresses:
     http://www.regulations.gov: To submit comments via the 
Internet, use the comment form for this document as posted within 
Docket No. TTB-2012-0006 at ``Regulations.gov,'' the Federal e-
rulemaking portal;
     U.S. Mail: Director, Regulations and Rulings Division, 
Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, 
Washington, DC 20005;
     Hand Delivery/Courier in Lieu of Mail: Alcohol and Tobacco 
Tax and Trade Bureau, 1310 G Street NW., Suite 200-E, Washington, DC 
20005.
    See the Public Participation section of this document for specific 
instructions and requirements for submitting comments, and for 
information on how to request a public hearing.
    You may view copies of this document, the related temporary rule, 
selected supporting materials, and any comments TTB receives about this 
proposal within Docket No. TTB-2012-0006 at http://www.regulations.gov. 
A link to this Regulations.gov docket is posted on the TTB Web site at 
http://www.ttb.gov/beer/beer-rulemaking.shtml under Notice No. 131. You 
also may view copies of this document, the related temporary rule, all 
supporting materials, and any comments TTB receives about this proposal 
by appointment at the TTB Information Resource Center, 1310 G Street 
NW., Washington, DC 20005. Please call 202-453-2270 to make an 
appointment.

FOR FURTHER INFORMATION CONTACT: Ramona Hupp, Regulations and Rulings 
Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., 
Box 12, Washington, DC 20005; telephone 202-453-1039, ext. 110 or email 
BeerRegs@ttb.gov.

SUPPLEMENTARY INFORMATION:

Background

TTB Authority

    Chapter 51 of the Internal Revenue Code of 1986 (IRC), pertains to 
the taxation of distilled spirits, wines, and beer (see title 26 of the 
United States

[[Page 73000]]

Code (U.S.C.), chapter 51 (26 U.S.C. chapter 51)). With regard to beer, 
IRC section 5051 (26 U.S.C. 5051) imposes a Federal excise tax on all 
beer brewed or produced, and removed for consumption or sale within the 
United States or imported into the United States. The rate of the 
Federal excise tax on beer is $18 for every barrel containing not more 
than 31 gallons, and a like rate for any other quantity or for 
fractional parts of a barrel, with an exception that the rate of tax is 
$7 a barrel for the first 60,000 barrels of beer for a domestic brewer 
that does not produce more than 2 million barrels in a calendar year. 
Section 5054 (26 U.S.C. 5054) provides that, in general, the tax 
imposed on beer under section 5051 shall be determined at the time the 
beer is removed for consumption or sale, and shall be paid by the 
brewer in accordance with section 5061 (26 U.S.C. 5061).
    Section 5061 pertains to the time and method for filing tax returns 
and payment of the applicable excise taxes. Section 5061 states that 
Federal excise taxes on distilled spirits, wines, and beer shall be 
collected on the basis of a return, and that the Secretary of the 
Treasury (the Secretary) shall, by regulation, prescribe the period or 
event for which such return shall be filed. Section 5061(d)(1) 
generally requires that the excise taxes owed on alcohol beverages, 
including beer, withdrawn under bond be paid no later than the 14th day 
after the last day of the semimonthly period during which the 
withdrawal occurs. Under a special rule, September has three return 
periods (Section 5061(d)(5)), resulting in a total of 25 returns due 
each year. Section 5061(d)(4) provides an exception to the semimonthly 
rule for taxpayers who reasonably expect to be liable for not more than 
$50,000 in alcohol excise taxes in a given calendar year and who had an 
excise tax liability of not more than $50,000 the previous calendar 
year. Under this provision, such taxpayers may pay the excise taxes on 
alcohol beverages withdrawn under bond on a quarterly basis.
    Section 5401(b) (26 U.S.C. 5401(b)) provides that all brewers shall 
obtain a bond to insure the payment of any taxes owed. The amount of 
such bond shall be ``in such reasonable penal sum'' as prescribed by 
the Secretary in regulations ``as necessary to protect and insure 
collection of the revenue.''
    Section 5415 of the IRC (26 U.S.C. 5415) requires brewers to keep 
records and to make true and accurate ``returns'' of their brewing and 
associated operations at the times and for such periods as the 
Secretary prescribes by regulation. The implementing regulations refer 
to these ``returns'' as ``reports'' of operations.
    The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers 
chapter 51 of the IRC and its implementing regulations pursuant to 
section 1111(d) of the Homeland Security Act of 2002, codified at 6 
U.S.C. 531(d). The Secretary has delegated various authorities through 
Treasury Department Order 120-01 (Revised), dated January 21, 2003, to 
the TTB Administrator to perform the functions and duties in 
administration and enforcement of these laws. Regulations that 
implement the provisions of sections 5051, 5054, 5061, 5401, and 5415 
of the IRC, as they relate to beer, are set forth in part 25 of title 
27 of the Code of Federal Regulations (CFR).

Reducing Burdens on Regulated Industries

    Executive Order 13563, Improving Regulation and Regulatory Review 
(E.O. 13563), signed by the President on January 18, 2011, required 
Federal agencies to conduct retrospective analyses of rules that may be 
outmoded, ineffective, insufficient, or excessively burdensome, and to 
modify, streamline, expand, or repeal them as appropriate. E.O. 13563 
also required each agency to develop plans to review its regulations. 
The Department of the Treasury (Treasury) issued its Plan for 
Retrospective Analysis of Existing Rules (the Plan) on August 22, 2011. 
In developing the Plan, Treasury requested input from its Bureaus and 
Offices to help identify regulations that should be modified or 
updated. TTB identified a number of rulemaking proposals that were 
specifically included in the Plan, one of which concerned revision to 
the beer regulations contained in 27 CFR part 25. The proposal included 
in the Plan states:

    Revisions to the Beer Regulations (Part 25): Under the authority 
of the Internal Revenue Code, TTB regulates activities at breweries. 
The regulations of Title 27 of the Code of Federal Regulations, Part 
25, address the qualification of breweries, bonds and taxation, 
removals without payment of tax, and records and reporting. Brewery 
regulations were last revised in 1986 and need to be updated to 
reflect changes to the industry, including the increased number of 
small (``craft'') brewers. In an advance notice of proposed 
rulemaking, TTB plans to solicit comments regarding potential ways 
to decrease the regulatory burden on industry members (including but 
not limited to streamlining and/or reducing the reporting and 
recordkeeping requirements for the industry, including small 
business members) and increase efficiency for both the industry and 
TTB. Upon consideration of comments received, TTB intends to develop 
and propose specific regulatory changes.

    In September 2011, TTB met with representatives and members of the 
Brewers Association, a trade organization that promotes the interests 
of small and independent brewers in the United States, to discuss 
reducing the regulatory burdens on smaller brewers. During this 
meeting, the representatives and members put forth a number of 
suggestions toward that goal. TTB also met with members of the Oregon 
Brewers Guild in February 2012, and discussed the current regulatory 
burdens imposed on smaller brewers.
    There is no specific statutory or regulatory definition as to who 
is a ``small'' brewer. However, for taxpayers whose annual alcohol 
excise tax liability is not reasonably expected to be more than $50,000 
in the current calendar year, and who were liable for not more than 
$50,000 in such taxes in the preceding calendar year, there is, under 
section 5061(d)(4) of the IRC, a quarterly tax return and tax payment 
exception to the semimonthly rule. TTB believes that the requirements 
for qualifying for this exception provide a reasonable standard for 
determining when a brewer may be considered ``small''. A recent 
analysis of tax returns submitted to TTB by brewers reveals that the 
vast majority of brewers would be deemed ``small'' under this standard. 
At the end of calendar year 2011, there were 2,026 brewers submitting 
Federal excise tax returns to TTB, and 1,846 of those brewers (91 
percent) paid less than $50,000 in excise tax annually. In fact, the 
vast majority of those 1,846 ``small'' brewers actually paid much less 
than $50,000, given that 1,616 of those brewers (87.5 percent) paid 
annual taxes of $7,000 or less. (Hereafter, for the purposes of this 
document, the term ``small brewers'' refers to brewers who are eligible 
to file excise tax returns on a quarterly basis.)
    TTB's tax return statistics also indicate that the total sum of 
excise tax collected from small brewers represents a small amount of 
the total sum of excise tax collected on beer each year. Small brewers, 
though making up more than 90 percent of the total number of brewers 
who pay tax, cumulatively paid just over six percent (approximately 
$11.5 million) of the $177.8 million in total excise tax on beer 
collected in 2011. In 2010, small brewers paid 5.6 percent 
(approximately $10.15 million) of the $180.6 million in excise tax 
collected that year.
    Statutory requirements for brewers include filing tax returns and 
paying excise taxes, obtaining a brewer's bond,

[[Page 73001]]

and filing reports of operations. Under TTB's current regulations, 
there are options that a small brewer must consider. First, the 
regulations provide that a small brewer may file tax returns and pay 
taxes either semimonthly or quarterly. However, different bond amounts 
may apply, depending on which option the small brewer selects. With 
regard to filing reports of operations, the general regulatory rule is 
that monthly reports are required, but a brewer who produces less than 
10,000 barrels a year may opt to file reports of operations quarterly 
(27 CFR 25.297). Under these regulations, a small brewer must be aware 
of different eligibility standards regarding tax returns, tax payments, 
and reporting. Taken in their entirety, these regulations may be 
difficult for small brewers to fully understand and use to their best 
advantage.
    Accordingly, TTB is proposing to simplify its beer regulations for 
the more than 90 percent of brewers who were liable for not more than 
$50,000 in taxes with respect to beer imposed by 26 U.S.C. 5051 and 
7652 in the preceding calendar year and reasonably expect to be liable 
for not more than $50,000 in such taxes during the current calendar 
year. As discussed in greater detail below, under the proposed 
regulations these brewers:
     Must obtain a bond with a penal sum of $1,000, the minimum 
amount of bond under our current regulations, with no required 
adjustments to the amount of the bond; and
     Must file their tax returns, remit tax payments, and 
submit reports of operations on a quarterly basis.
    With regard to the bond requirement, TTB is issuing a temporary 
rule that, for a period of three years, sets the penal sum for a 
brewer's bond for small brewers at a flat $1,000 (see T.D. TTB-109 
published in the rules section of this issue of the Federal Register). 
As discussed in greater detail below, TTB proposes in this document to 
adopt the $1,000 penal sum amount of the bond for small brewers as a 
permanent regulatory change.
    By lowering the required bond amount and lessening the number of 
required excise tax returns and operations reports for small brewers, 
TTB believes these proposals will lessen costs and increase 
efficiencies for those businesses. TTB notes that the regulatory 
proposals contained in this document also will reduce the 
administrative burden on TTB. If small brewers submitted quarterly 
returns and operations reports, TTB would reduce the overall time the 
Bureau spends processing these forms.
    As noted above and stated in the Plan, TTB initially intended to 
publish an advance notice of proposed rulemaking (ANPRM) to solicit 
written comments from the public before proposing changes to its 
regulations in part 25. After discussions with industry groups and 
members, analyzing available data, and reviewing its existing 
regulations and requirements, TTB believes that it should propose for 
immediate consideration changes to its regulations that would reduce 
the excise tax return filing and operations reporting burdens on small 
brewers. Compared to publishing an ANPRM and awaiting comments before 
proposing specific changes to the regulations, the proposals in this 
document would accelerate change in the regulations and thus provide 
more immediate and significant relief from existing regulatory burdens. 
However, TTB does not intend that the proposed regulatory changes 
outlined in this rulemaking cover all the changes to part 25 
regulations that may be appropriate. Therefore, in this document, TTB 
also is soliciting comments from the brewing industry and the public on 
other changes TTB could make to its part 25 beer regulations that could 
further reduce the regulatory burden on brewers and at the same time 
meet statutory requirements and regulatory objectives.

Discussion of Proposed Regulatory Changes

Penal Sum of the Brewer's Bond

    Penal sum amounts of the brewer's bond are set forth in the TTB 
regulations at 27 CFR 25.93. In the related temporary rule, T.D. TTB-
109, published in the rules section of this issue of the Federal 
Register, TTB explains its reasons for modifying the bond amount to a 
flat $1,000 penal sum for small brewers. By doing so, TTB hopes to 
encourage such brewers to file tax returns and pay taxes quarterly 
rather than semimonthly without the need to obtain a bond with a 
greater penal sum. The temporary rule contains a discussion of how the 
previous bond requirements for these small brewers could require such 
brewers to increase their bond amount coverage when they file Federal 
excise tax returns and remit taxes quarterly rather than semimonthly. 
The modified bond amount set forth in the temporary rule is effective 
for three years from December 7, 2012.
    In this document, TTB proposes to eliminate the option to file 
excise tax returns and remit taxes semimonthly for small brewers, and 
thus require such brewers to file excise tax returns and pay taxes 
quarterly. Consistent with that proposal, TTB also proposes to adopt 
the flat $1,000 penal sum of the bond requirement for such brewers as a 
permanent rule. This change to the regulations governing the penal sum 
of the bond facilitates the change to quarterly excise tax returns and 
payment of tax because it eliminates differences between bond amounts 
based on when the brewer files tax returns and how much tax is owed. 
Thus, a small brewer who files excise tax returns and pays taxes 
quarterly will not have to increase its bond coverage under any 
circumstance.
    Through this document, TTB seeks comments on the temporary rule, 
which modifies bond requirements for a period of three years, as well 
as the proposal outlined in this document that TTB permanently adopt 
the change in the required bond amount to a flat $1,000 for small 
brewers.

Quarterly Tax Returns for Small Brewers

    In 2005, section 11127 of the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users, Public Law 
109-59, 119 Stat. 1144 (``the Act'') amended section 5061(d) of the IRC 
to allow certain Federal alcohol excise taxpayers to pay taxes 
quarterly. Prior to the Act semimonthly tax returns were required. In a 
temporary rule, T.D. TTB-41, published in the Federal Register on 
February 2, 2006 (71 FR 5598), TTB implemented the new quarterly tax 
payment procedures of IRC section 5061(d)(4) by amending its 
regulations, including 27 CFR 25.164(c) pertaining to brewers. Section 
25.164(c) requires all brewers who defer payment of tax to file returns 
and pay tax semimonthly, with the exception that a brewer may choose to 
use a quarterly return period if the brewer was liable for not more 
than $50,000 in taxes imposed by 26 U.S.C. 5051 and 7652 with respect 
to beer in the preceding calendar year and if that brewer reasonably 
expects to be liable for not more than $50,000 in such taxes during the 
current calendar year. TTB adopted this regulatory change as a final 
rule in T.D. TTB-94, published in the Federal Register on August 24, 
2011 (76 FR 52862).
    In adopting the quarterly tax payment provisions, T.D. TTB-41 also 
made corresponding changes to the required penal sum of the brewers 
bond specifically applicable to quarterly taxpayers in order to fully 
secure the increase in deferred tax liability. T.D. TTB-41 provided 
that if a taxpayer otherwise eligible for the new quarterly payment 
procedure did not wish to

[[Page 73002]]

adjust the penal sum of their bond, that taxpayer should be allowed to 
continue to make tax payments and file returns on a semimonthly basis, 
and the quarterly payment procedure was treated as optional rather than 
mandatory for taxpayers who did not wish to adjust their bond coverage.
    TTB estimates that filing quarterly excise returns reduces a 
brewer's paperwork burden from 18.75 hours per year (based on an 
estimate of 45 minutes to prepare and submit a semimonthly return) to 
just three hours per year. However, many small brewers do not file 
quarterly; in 2011, of the 1,846 brewers eligible to file quarterly 
excise returns more than half (1,095) chose to file semimonthly excise 
tax returns.
    Section 5061(a) provides that ``[t]he Secretary shall, by 
regulation, prescribe the period or event for which such return shall 
be filed, the time for filing such return, the information to be shown 
in such return, and the time for payment of such tax.'' As discussed 
above, TTB is proposing to permanently remove the bond disincentive for 
filing Federal excise tax returns and remitting tax payments quarterly. 
In the interest of reducing regulatory burdens on small brewers, and 
creating reporting and administrative efficiencies for both small 
brewers and TTB, TTB also proposes to amend the regulatory text in 
Sec.  25.164(c) to require quarterly filing of Federal excise tax 
returns and payments for all small brewers.

Report of Operations

    Section 25.297 of the TTB regulations (27 CFR 25.297) implements 
the statutory requirement in 26 U.S.C. 5415 that brewers file periodic 
reports of their brewing and associated operations. Under Sec.  25.297, 
as a general rule, brewers are required to submit monthly a Brewer's 
Report of Operations (TTB Form 5130.9). Section 25.297(a) and (b), 
provide an exception to the monthly reporting requirement, allowing 
brewers who produce less than 10,000 barrels of beer per calendar year 
to submit their report of brewery operations quarterly instead of 
monthly.
    The baseline for optional quarterly operations reporting under 
Sec.  25.297 (less than 10,000 barrels of production per calendar year) 
is different from the baseline established for optional filing 
quarterly tax returns under Sec.  25.164 (liable for not more than 
$50,000 in taxes with respect to beer imposed by 26 U.S.C. 5051 and 
7652 in the preceding calendar year and reasonably expect to be liable 
for not more than $50,000 in such taxes during the current calendar 
year). The less than 10,000 barrels a year baseline was adopted by 
TTB's predecessor agency, the Bureau of Alcohol, Tobacco and Firearms 
(ATF) in T.D. ATF-345, and published in the Federal Register on July 
28, 1993 (58 FR 40355). The rationale for adopting the less than 10,000 
barrels per year baseline is contained in ATF Notice No. 755, published 
in the Federal Register on September 28, 1992 (57 FR 44525). In Notice 
No. 755, ATF stated that nearly 99 percent of beer excise tax is paid 
by breweries producing more than 10,000 barrels of beer per year, and 
that monthly reports from large breweries would still provide most of 
the data needed for the monthly statistics that ATF (and currently TTB) 
provides to the industry.
    TTB proposes to change Sec.  25.297 in several ways. First, TTB 
proposes to use as the baseline for filing quarterly reports of 
operation the ``not more than $50,000 in taxes with respect to beer 
imposed by 26 U.S.C. 5051 and 7652 in the preceding calendar year and 
reasonably expect to be liable for not more than $50,000 in such taxes 
during the current calendar year'' standard, rather than the ``less 
than 10,000 barrels of beer'' per annum standard that currently exists. 
TTB believes that there is no justifiable rationale for maintaining 
separate standards for which brewers shall file quarterly tax returns 
and which brewers shall file quarterly operations reports. Both 
standards are intended to reduce burdens on small brewers; however, the 
flexibility to change one of the standards is available only to the 
operations reporting standard that has been set through regulation. The 
``not more than $50,000 in taxes with respect to beer imposed by 26 
U.S.C. 5051 and 7652 in the preceding calendar year and reasonably 
expect to be liable for not more than $50,000 in such taxes during the 
current calendar year'' standard applicable to quarterly tax return 
filing is set by law in section 5061(d)(4) of the IRC and therefore 
cannot be changed by TTB through regulation.
    TTB has reviewed its quarterly operations reporting statistical 
records, and these records indicate that changing the current quarterly 
operations reporting eligibility standard to be consistent with the 
quarterly tax return eligibility standard would impact only a small 
number of brewers. At the current reduced tax rate of $7 a barrel, 
removal of 10,000 barrels per year equates to $70,000 in taxes owed per 
annum. In 2011, there were 41 brewers whose annual tax liability was 
between $50,000 and $70,000, and only 7 of those filed operations 
reports on a quarterly basis. Similarly, in 2010, there were 27 brewers 
whose annual tax liability was between $50,000 and $70,000; and of whom 
only 3 filed operations reports on a quarterly basis.
    Secondly, TTB proposes to make quarterly operations reporting for 
eligible brewers mandatory rather than optional. TTB believes that 
mandating quarterly operations reporting would reduce regulatory 
burdens on small brewers, and create administrative efficiencies for 
TTB.
    Simplifying the bond requirement, and creating consistencies 
between the tax return and remittance requirement and the operations 
reporting requirement, will make it easier for small brewers to 
understand and comply with the TTB regulations. These changes also make 
it easier for TTB to administer its regulatory program while providing 
adequate protection to the revenue.
    Finally, TTB proposes to include a reference in Sec.  25.297 to TTB 
Form 5130.26, which is available to certain brewers as an alternative 
to TTB Form 5130.9.

Part 25 Update

    Consistent with the intent of the ANPRM described in the Plan, as 
discussed above, TTB also seeks comments on other changes regarding 
part 25 regulations that brewers and other interested parties believe 
TTB should consider. Because the Administrative Procedure Act (5 U.S.C. 
553) generally requires that the public have notice of and an 
opportunity to comment on regulatory changes prior to their adoption as 
final rules, TTB may not be able to adopt in any final rule the 
recommended changes that are outside the scope of the changes proposed 
in this document. However, TTB will consider such comments to determine 
if it should propose additional regulatory changes and conduct separate 
rulemaking on those proposed changes.

Public Participation

Comments Invited

    TTB invites comments from interested members of the public on the 
proposed regulatory changes contained in this document. Please provide 
specific information in support of your comments. Comments that merely 
express a preference for or against the proposed regulation do not 
provide a basis for agency action.
    TTB specifically invites comments on the expected economic impact 
of the proposed rule, especially the impact on small businesses. TTB is 
interested in hearing from small brewers as to how they would be 
impacted by the proposed rule, and in particular on what

[[Page 73003]]

the economic impact of these proposals on small brewers might be. 
Please explain in detail and provide specific cost data.
    In addition to comments on the proposed regulatory amendments, TTB 
solicits comments on other changes to the beer regulations in part 25 
that could further reduce the regulatory burden on brewers and at the 
same time meet statutory requirements and regulatory objectives. As 
indicated above, while such comments may not be the subject of the 
final rulemaking document on these proposed regulatory changes, TTB may 
use such comments for the purpose of proposing additional regulatory 
changes in a separate rulemaking action.

Submitting Comments

    Please submit your comments by the closing date shown above in this 
document. You may submit comments in one of the following three ways:
     Federal e-Rulemaking Portal: You may send comments via the 
online comment form associated with this document in Docket No. TTB-
2012-0006 on ``Regulations.gov,'' the Federal e-rulemaking portal, at 
http://www.regulations.gov. A direct link to that docket is available 
under Notice No. 131 on the TTB Web site at http://www.ttb.gov/beer/beer-rulemaking.shtml. Supplemental files may be attached to comments 
submitted via Regulations.gov. For information on how to use 
Regulations.gov, click on the site's Help tab.
     U.S. Mail: You may send comments via postal mail to the 
Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and 
Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005.
     Hand Delivery/Courier: You may hand-carry your comments or 
have them hand-carried to the Alcohol and Tobacco Tax and Trade Bureau, 
1310 G Street NW., Suite 200-E, Washington, DC 20005.
    Your comments must reference Notice No. 131 and include your name 
and mailing address. Your comments also must be made in English, be 
legible, and be written in language acceptable for public disclosure. 
TTB does not accept anonymous comments, does not acknowledge receipt of 
comments, and considers all comments as originals.
    In your comment, please indicate if you are commenting on your own 
behalf or on behalf of an entity such as a small brewer or other 
business. If you are commenting on behalf of an entity, your comment 
must include the entity's name as well as your name and position title. 
If you comment via Regulations.gov, please also enter the entity's name 
in the ``Organization'' blank of the comment form. If you comment via 
U.S. mail, please submit your entity's comment on letterhead.
    You may also write to the Administrator before the comment closing 
date to ask for a public hearing. The Administrator reserves the right 
to determine whether to hold a public hearing.

Confidentiality

    All submitted comments and attachments are part of the public 
record and subject to public disclosure. Do not enclose any material in 
your comments that you consider confidential or inappropriate for 
public disclosure.

Public Disclosure

    On the Federal e-rulemaking portal, Regulations.gov, TTB will post, 
and the public may view, copies of this document, the related temporary 
rule, and any electronic or mailed comments we receive about these 
proposals. A direct link to the Regulations.gov docket containing this 
document and the posted comments received on it is available on the TTB 
Web site at http://www.ttb.gov/beer/beer-rulemaking.shtml under Notice 
No. 131. You may also reach the docket containing this document and its 
related comments through the Regulations.gov search page at http://www.regulations.gov.
    All posted comments will display the commenter's name, organization 
(if any), city, and State, and, in the case of mailed comments, all 
address information, including email addresses. TTB may omit voluminous 
attachments or material that the Bureau considers unsuitable for 
posting.
    You and other members of the public may view copies of this 
document, the related temporary rule, and any electronic or mailed 
comments TTB receives about these proposals by appointment at the TTB 
Information Resource Center, 1310 G Street NW., Washington, DC 20005. 
You may also obtain copies at 20 cents per 8.5- x 11-inch page. Contact 
the TTB information specialist at the above address or by telephone at 
202-453-2270 to schedule an appointment or to request copies of 
comments or other materials.

Regulatory Flexibility Act

    Pursuant to the requirements of the Regulatory Flexibility Act (5 
U.S.C. chapter 6) TTB certifies that this notice of proposed rulemaking 
will not have a significant economic impact on a substantial number of 
small entities. As discussed below in the Paperwork Reduction Act 
section of this document, the changes TTB proposes in this rulemaking 
would have the effect of lessening current reporting requirements on 
small businesses. The proposal that small brewers submit their excise 
tax returns quarterly would reduce their current reporting burden from 
18.75 hours per year to 3 hours per year and the proposal that small 
brewers submit their report of operations quarterly would reduce 
current reporting burdens from 12 hours per year to 4 hours. 
Accordingly, a regulatory flexibility analysis is not required.

Executive Order 12866

    It has been determined that this document is not a significant 
regulatory action as defined in E.O. 12866. Therefore, a regulatory 
assessment is not necessary.

Paperwork Reduction Act

    There are two collections of information approved by the Office of 
Management and Budget (OMB) that would be affected by the adoption of 
these proposed regulatory changes. These collections of information, 
approved in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3506), are the Excise Tax Return (TTB Form 5000.24) and the 
Brewer's Report of Operations and the Brewpub Report of Operations (TTB 
Form 5130.9 and TTB Form 5130.26), which are associated with OMB 
control numbers 1513-0083 and 1513-0007, respectively.

OMB Control Number 1513-0083

    TTB bases the estimated reporting burdens submitted to OMB for the 
Excise Tax Return (OMB Control Number 1513-0083) on the total number of 
all TTB-regulated industry members who pay taxes, including beverage 
alcohol producers and tobacco products manufacturers. In order to 
estimate the burden-hour savings specific to brewers, we have based the 
estimates below solely on the current number of individuals holding 
Brewer's Notices. TTB estimates that it takes 45 minutes to complete 
TTB Form 5000.24. The proposed mandate that small brewers submit their 
excise tax returns quarterly would reduce their current reporting 
burden from 18.75 hours per year to just 3 hours per year. In addition, 
it would reduce the estimated annual reporting burden to 8,913 hours; 
this represents an estimated savings of 15,777 hours.
    TTB estimates that, as a result of the proposed regulatory 
amendments (and reflecting the estimated number of monthly and 
quarterly tax return filers),

[[Page 73004]]

the total annual burden for tax return submissions will be as follows:
     Estimated number of respondents: 2,026 (180 filing semi-
monthly; 1,846 filing quarterly).
     Estimated annual frequency of responses: 25 for semi-
monthly reporting; 4 for quarterly reporting.
     Estimated total annual reporting burden: 8,913 hours 
(3,375 hours filing semi-monthly and 5,538 hours filing quarterly).
     Estimated annual burden hours per respondent: 18.75 hours 
for semi-monthly filing; 3 hours for quarterly filing.

OMB Control Number 1513-0007

    TTB estimates that it takes 1 hour to complete the Brewer's Report 
of Operations or the Brewpub Report of Operations (TTB Form 5130.9 and 
TTB Form 5130.26). Therefore, the proposed mandate that small brewers 
submit their report of operations quarterly would reduce their current 
reporting burdens from 12 hours to 4 hours per year. That is a savings 
of 8 hours for each small brewer not currently filing these reports 
quarterly. In addition, it would reduce the estimated annual reporting 
burden to 9,544 hours, which is an estimated savings of 2,608 hours.
    Based on the current number of individuals holding Brewer's 
Notices, TTB estimates that, as a result of the proposed regulatory 
amendments (and reflecting the estimated number of brewers filing 
monthly and quarterly operations reports), the total annual burden for 
the brewers operations reporting will be as follows:
     Estimated number of respondents: 180 reporting monthly; 
1,846 reporting quarterly.
     Estimated annual frequency of responses: 12 for monthly 
reporting; 4 for quarterly reporting.
     Estimated total annual reporting burden: 9,544 hours 
(2,160 hours for monthly reporting and 7,384 hours for quarterly 
reporting).
     Estimated annual burden hours per respondent: 12 hours for 
monthly reporting; 4 hours for quarterly reporting.
    Comments on the two collections of information should be sent to 
OMB to Office of Management and Budget, Attention: Desk Officer for the 
Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503; or email to OIRA_submission@omb.eop.gov. A copy also should be sent to the Alcohol and 
Tobacco Tax and Trade Bureau by any of the methods previously 
described. Comments on the information collection should be submitted 
not later than February 5, 2013. Comments are specifically requested 
concerning:
     Whether the two collections of information submitted to 
OMB are necessary for the proper performance of the functions of the 
Alcohol and Tobacco Tax and Trade Bureau, including whether the 
information will have practical utility;
     The accuracy of the estimated burdens associated with the 
two collections of information submitted to OMB;
     How to enhance the quality, utility, and clarity of the 
information to be collected;
     How to minimize the burden of complying with the proposed 
revisions of the collections of information, including the application 
of automated collection techniques or other forms of information 
technology; and
     Estimates of capital or start-up costs and costs of 
operation, maintenance, and purchase of services to provide 
information.

Drafting Information

    Gerald M. Isenberg and Ramona Hupp of the Regulations and Rulings 
Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this 
document.

List of Subjects in 27 CFR Part 25

    Beer, Excise taxes, Reporting and recordkeeping requirements, 
Surety bonds.

Amendments to the Regulations

    Accordingly, for the reasons set forth in the preamble, TTB 
proposes to amend 27 CFR, chapter I, part 25 as set forth below.

PART 25--BEER

    1. The authority citation for part 25 continues to read as follows:

    Authority: 19 U.S.C. 81c; 26 U.S.C. 5002, 5051-5054, 5056, 5061, 
5121, 5122-5124, 5222, 5401-5403, 5411-5417, 5551, 5552, 5555, 5556, 
5671, 5673, 5684, 6011, 6061, 6065, 6091, 6109, 6151, 6301, 6302, 
6311, 6313, 6402, 6651, 6656, 6676, 6806, 7342, 7606, 7805; 31 
U.S.C. 9301, 9303-9308.

    2. Amend Sec.  25.93 by revising paragraph (a)(2) to read as 
follows:


Sec.  25.93  Penal sum of bond.

    (a) * * *
    (2) Brewers filing quarterly tax returns. For brewers who were 
liable for not more than $50,000 in taxes with respect to beer imposed 
by 26 U.S.C. 5051 and 7652 in the preceding calendar year, who 
reasonably expect to be liable for not more than $50,000 in such taxes 
during the current calendar year, and who file tax returns and remit 
taxes quarterly under Sec.  25.164(c)(3), the penal sum of the brewers 
bond is $1,000 on beer:
    (i) Removed for transfer to the brewery from other breweries owned 
by the same brewer;
    (ii) Removed without payment of tax for export or for use as 
supplies on vessels and aircraft;
    (iii) Removed without payment of tax for use in research, 
development, or testing; and
    (iv) Removed for consumption or sale.
* * * * *
    3. Amend Sec.  25.164 by:
    a. Amending the first sentence in paragraph (c)(1) by removing the 
words ``, and chooses to use,''; and
    b. Amending the first sentence in paragraph (c)(2) by removing the 
words ``may choose to'' and replacing them with ``shall''.
    4. Amend Sec.  25.297 by revising the section heading and 
paragraphs (b) and (c) to read as follows:


Sec.  25.297  Report of Operations, Form 5130.9 or Form 5130.26.

* * * * *
    (b) Quarterly report of operations. (1) For calendar quarters 
commencing after [the effective date of the final rule], a brewer who 
was liable for not more than $50,000 in taxes with respect to beer 
imposed by 26 U.S.C. 5051 and 7652 in the preceding calendar year and 
reasonably expects to be liable for not more than $50,000 in such taxes 
during the current calendar year shall file quarterly Form 5130.9 or 
Form 5130.26. For purposes of this section, ``reasonably expects'' 
means that the brewer was liable for not more than $50,000 in taxes the 
previous year and that there is no other existing or anticipated 
circumstances known to the brewer (such as an increase in production 
capacity) that would cause the brewer's liability to increase beyond 
that level.
    (2) If a brewer determines that it will be liable for more than 
$50,000 in taxes with respect to beer imposed by 26 U.S.C. 5051 and 
7652 during the current calendar year, the brewer shall file the 
Brewer's Report of Operations, Form 5130.9, for that month and for each 
subsequent month of that calendar year. When filing the last quarterly 
report, a brewer shall state in the ``Remarks'' section of Form 5130.9 
or Form 5130.26 that it will be liable for more than $50,000 in taxes 
for the current calendar year and will henceforth submit monthly 
filings.
    (3) The appropriate TTB officer may at any time require a brewer 
who is filing Form 5130.9 or Form 5130.26 quarterly to file such report 
monthly on

[[Page 73005]]

Form 5130.9 if there is a jeopardy to the revenue.
    (c) Retention. The brewer shall retain a copy of Form 5130.9 or 
Form 5130.26 as part of the brewery records.

    Signed: September 18, 2012.
John J. Manfreda,
Administrator.
    Approved: September 28, 2012.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 2012-29487 Filed 12-6-12; 8:45 am]
BILLING CODE 4810-31-P