Rev. Rul. 57-174

Various questions have been presented to the Interstate Revenue Service with respect to the establishment of a taxpaid storeroom and the acceptance of orders for taxpaid alcohol at sales offices maintained by proprietors of industrial alcohol plants and industrial alcohol bonded warehouses, in connection with the exemption from the special tax liability provisions of section 182.485 of the Industrial Alcohol Regulations.

Section 182.485 of the regulations provides that the proprietor of an industrial alcohol plant or an industrial alcohol bonded warehouse may sell or offer for sale taxpaid alcohol in the taxpaid storeroom provided in connection with such plant or warehouse without being required to pay special tax as a wholesale or retail liquor dealer, provided the sales are made from the plant or bonded warehouse. It further provides that if taxpaid alcohol is sold elsewhere, the proprietor is not entitled to the exemption. Subsection (a) thereof holds that the exemption is applicable to alcohol taxpaid in the industrial alcohol plant or bonded warehouse and stored in the taxpaid storeroom provided in connection therewith since such taxpaid storeroom is covered by the basic permit required to be held by the proprietor of the industrial alcohol plant or bonded warehouse. However, subsection (a) also provides that the exemption will not apply if the taxpaid alcohol stored in a taxpaid storeroom provided in connection with an industrial alcohol plant or bonded warehouse is transferred to another similar taxpaid storeroom established in connection with another plant or bonded warehouse or to any other premises.

The questions and answers are as follows:

QUESTION No. 1.-It is intended, under the Industrial Alcohol Regulations, that the `taxpaid storeroom' referred to in sections 182.31a, 182.42, 182.456a, 182.485, and 182.648 thereof shall be located on bonded premises?

Answer . Yes, the taxpaid storeroom must be located on bonded premises.

QUESTION No. 2.-It is the intent of section 182.485, in the statement `provided the sales are made from the plant or bonded warehouse,' that such sales shall be consummated on bonded premises?

Answer . Yes, except in the case of sales consummated on contiguous premises as described in the answer to Question No. 4, below.

QUESTION No. 3.-If taxpaid alcohol is stored on premises not on industrial alcohol plant or bonded warehouse premises, and sales of such alcohol are subsequently consummated at a place not on bonded premises, does the exemption of section 182.485 apply?

Answer . No.

QUESTION No. 4.-If taxpaid alcohol is stored in a taxpaid storeroom provided in connection with the industrial alcohol plant or bonded warehouse, and sales of such alcohol are subsequently consummated at a place not on bonded premises, does the exemption of section 182.485 apply?

Answer . No, except that it is the position of the Internal Revenue Service that sales of taxpaid alcohol stored in taxpaid storerooms maintained on industrial alcohol plant or bonded warehouse premises may be consummated on premises contiguous to, but not a part of, the bonded premises without incurring liability for special tax, provided the operations of the plant or warehouse are directed from such contiguous premises.

QUESTION No. 5.-If alcohol, when taxpaid, is delivered directly from the industrial alcohol plant or bonded warehouse to the customer, although the sales of such alcohol have been consummated at a place not on bonded premises, does the exemption of section 182.485 apply:

Answer . No, except in the case of contiguous premises as described in the answer to Question No. 4, above.

QUESTION No. 6.-If the taxpaid alcohol is not stored on bonded premises, does not proximity of the place of storage to the bonded premises affect the liability for special tax?

Answer . No.

QUESTION No. 7.-If the place where the sales of taxpaid alcohol are consummated is not on industrial alcohol plant or bonded warehouse premises, does the degree of its proximity to such bonded premises affect the liability for special tax?

Answer . No, except in the case of contiguous premises as described in the answer to Question No. 4.

QUESTION No. 8.-If sales of taxpaid alcohol are consummated at premises other than industrial alcohol plant or bonded warehouse premises, is special tax liability by reason of such sales incurred at each place where such sales are consummated?

Answer . Yes, except in the case of contiguous premises described in the answer to Question No. 4.