Electronic Submission of Forms, the Finished Products Records for Distilled Spirits Plants, and Closures on Certain Distilled Spirits Products, 17029-17034 [2014-06869]

Download as PDF Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Rules and Regulations Proliferation Act of 1978, as amended, or are government transfers authorized pursuant to these Acts. * * * * * Dated: March 21, 2014. Eric H. Holder, Jr., Attorney General. that a part of the closure remain attached to the container when opened. This amendment will align the regulations for such products with those applicable to domestic distilled spirits products. Effective Date: April 28, 2014. Kate M. Bresnahan, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, at 202–453–1039, ext. 151. DATES: FOR FURTHER INFORMATION CONTACT: [FR Doc. 2014–06778 Filed 3–26–14; 8:45 am] BILLING CODE 4410–FY–P DEPARTMENT OF THE TREASURY SUPPLEMENTARY INFORMATION: Alcohol and Tobacco Tax and Trade Bureau Background TTB Authority 27 CFR Parts 19, 26, 27, and 73 [Docket No. TTB–2014–0004; T.D. TTB–119] RIN 1513–AB97 Electronic Submission of Forms, the Finished Products Records for Distilled Spirits Plants, and Closures on Certain Distilled Spirits Products Alcohol and Tobacco Tax and Trade Bureau, Treasury. ACTION: Direct final rule; Treasury decision. AGENCY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is amending its regulations regarding the electronic submission of forms to provide for the electronic submission to TTB of copies of certain forms, where the original is to be retained by the submitter along with other records. This amendment removes a barrier that industry members have faced when trying to apply for permits completely by electronic means. TTB is also amending its regulations to address circumstances where TTB requires certain information to be submitted to other agencies. Specifically, the amendments provide that TTB requirements for information to be submitted to another agency may be met by the electronic submission of the information, as long as the other agency has provided for such a submission of information by electronic means. In addition, TTB is amending its regulations governing the records that distilled spirits plant (DSP) proprietors must keep of finished products. Specifically, TTB is removing the requirement that DSP proprietors keep a daily summary record of the kind of distilled spirits bottled or packaged. Finally, TTB is amending its regulations regarding closures that must be affixed to containers of imported distilled spirits products or of such products brought into the United States from Puerto Rico or the Virgin Islands. The amendments remove a requirement sroberts on DSK5SPTVN1PROD with RULES SUMMARY: VerDate Mar<15>2010 16:40 Mar 26, 2014 Jkt 232001 The Internal Revenue Code of 1986, as amended (IRC), at 26 U.S.C. chapters 51 and 52, provides for the regulation of certain alcohol- and tobacco-related businesses. In addition, the Federal Alcohol Administration Act (FAA Act), at 27 U.S.C. chapter 8, provides for the regulation of certain operations of beverage alcohol businesses. Chapters 51 and 52 of the IRC and sections 103 and 104 of the FAA Act (27 U.S.C. 203 and 204) vest the Secretary of the Treasury with authority to prescribe regulations related to the issuance of permits, registrations, and notices for such businesses. The IRC provisions also include requirements for persons operating in certain alcohol and tobacco industries to obtain bonds and to submit reports and other documents related to regulated operations. In addition, section 4222 of the IRC (26 U.S.C. 4222) establishes registration requirements for persons who make tax-free sales of firearms and ammunition. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers these provisions, 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 December 10, 2013, to the TTB Administrator to perform the functions and duties in administration and enforcement of these laws. Electronic Submission of Forms and Use of Electronic Signatures on Forms TTB regulations implementing the permit, registration, and notice requirements of the IRC and the FAA Act are promulgated in chapter I of title 27 of the Code of Federal Regulations (27 CFR chapter I). These regulations require certain current and prospective industry members to obtain approval before commencing a new TTBregulated industry operation and to update permit information for an PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 17029 existing TTB-regulated business. These regulations also require that certain forms, reports, and other documents be submitted to TTB, depending on the operation. These documents may include operational reports, bonds, and powers of attorney, where applicable. In addition, some provisions require that the regulated industry members submit documents to other agencies. For example, provisions relating to the importation of the regulated commodities require that, in some circumstances, documents must be submitted to U.S. Customs and Border Protection (CBP) during the entry process. The TTB regulations currently implementing those requirements generally provide for the submission to TTB of applications and other documents in paper form. Under certain conditions, forms may be submitted electronically through an electronic document receiving system. The electronic submission of forms to TTB is governed by the TTB regulations at part 73 (27 CFR part 73). Part 73 sets forth the conditions under which TTB will allow current and prospective industry members to submit forms to TTB electronically, and to use electronic signatures or digital signatures to sign those forms, in lieu of submitting paper forms with handwritten signatures. These regulations do not currently address the electronic submission of TTB-required forms and documents to other agencies. Pursuant to the TTB regulations at 27 CFR 73.31, TTB-regulated industry members may submit an electronic form instead of a paper form to satisfy any reporting requirement in chapter I of Title 27 CFR under certain conditions. Currently, the conditions are as follows: (1) TTB has published a notice in the Federal Register and on its Web site (http://www.ttb.gov) announcing that it is prepared to receive a particular form electronically; (2) the person required to submit the form has registered to do so, pursuant to the instructions in that notice; (3) that person submits the electronic form to an electronic document receiving system that TTB has designated for the receipt of that specific form; and (4) the electronic form bears valid electronic signatures, as provided in subpart B of part 73, to the same extent that the paper form for which it substitutes would bear handwritten signatures. Amendments to Part 73 Recently, TTB has facilitated electronic communications and transactions in many ways. For example, TTB has made a number of E:\FR\FM\27MRR1.SGM 27MRR1 sroberts on DSK5SPTVN1PROD with RULES 17030 Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Rules and Regulations electronic document receiving systems available to industry members. These secure, web-based applications include: Permits Online, which allows members of the alcohol, tobacco, and firearms and ammunition industries to submit electronically original and amended applications to operate TTB-regulated businesses and to make tax-free sales of firearms and ammunition; COLAs Online, which allows industry members to submit electronically applications for certificates of label approval for alcohol beverages; and Formulas Online, which electronically accepts applications for approval of beverage and non-beverage alcohol product formulas. Through these systems and other Web-based means, current and prospective industry members may fill out applications and related forms online by answering a set of questions that mirror those on the hardcopy forms, by inserting the information requested into an electronic image of a form, or by uploading copies of forms and other documents. The amendments to part 73 that are made in this rulemaking are intended to facilitate all of these ways of electronically submitting forms and information to TTB. One type of form specifically addressed by this rulemaking requires the signature of a third party (that is, a party other than (1) the applicant or regulated entity, or (2) TTB). For example, with many types of applications, TTB requires the filing of a bond. When the applicant uses a corporate surety bond to meet this requirement, the original signature of an agent or officer of the surety company may be required on the bond form. In addition, certain TTB regulations require that whenever an agent or an officer executes the bond on behalf of the surety, the bond must be supported by a signed power of attorney authorizing the agent or officer to execute the bond, prepared on the surety’s own form, and with the surety company’s seal affixed to the form. See, for example, 27 CFR 19.156, 24.150, and 40.401. Another example of a form requiring third-party signatures is the power of attorney form, TTB F 5000.8, used by current and prospective industry members to designate the person or persons authorized to execute applications, notices, bonds, tax returns, tax information disclosure authorizations, and other instruments on behalf of the industry member, and to act for the industry member in dealing with TTB. Powers of attorney are submitted with many applications for permits or authorizations to operate regulated businesses in order to allow VerDate Mar<15>2010 16:40 Mar 26, 2014 Jkt 232001 persons other than officers, directors, sole proprietors, partners, or members to sign or speak on behalf of the applicant businesses. See, for example, 27 CFR 1.30, 19.78, and 25.65. This form requires the signatures of not only a person with authority to execute the power of attorney on behalf of the industry member, but also the person designated as the industry member’s attorney in fact, as well as either the signature of a notary or the signatures of two disinterested witnesses. Because some required forms must be signed by third parties, and because these third parties are not authorized to, and do not currently have the means to, sign the forms electronically, these forms cannot, under current regulations, be executed and submitted electronically. As a result, it is not currently possible for many applicants to submit complete applications through electronic means. In such cases, applicants have submitted all other forms electronically through Permits Online and have had to mail separately paper versions of the forms requiring third-party signatures. To streamline the application process and to enable current and prospective industry members to submit all required application forms electronically, TTB is amending § 73.31 to add two alternatives to the requirement that the form bear a valid electronic signature for every handwritten signature required on the form. The new § 73.31(b) contains three subparagraphs. The first subparagraph restates the current requirement that the form bear a valid electronic signature. The second subparagraph provides that, if the form requires a signature of a person who is not registered to submit the electronic form under § 73.31(a), or if the form requires a corporate seal, a copy of the completed form (bearing all required signatures and seals) may be submitted electronically, along with a certification or acknowledgement that the copy submitted electronically is an exact copy of the original, and that the original bears signatures of all required parties and any required corporate seal. New § 73.31(b)(2) also provides that if a copy of the completed form bearing all required signatures and seals is submitted electronically, the submitter must maintain the original completed form on the submitter’s premises and make it available for inspection by TTB or submission to TTB upon request. If all of these conditions are not met for documents requiring third-party signatures or corporate seals, the submission of such forms electronically will not satisfy the requirements for submission of the forms to TTB. PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 A third new subparagraph, at § 73.31(b)(3), provides for the electronic submission both of copies of TTB forms that are not available in an electronic format and of documents other than TTB forms that are required to be submitted to TTB. This latter category includes, for example, a commercial document that may be submitted to satisfy a reporting requirement. In effect, this new subparagraph allows the regulated industry to submit electronically copies of a wide range of documents, as long as the copies are submitted along with a certification that the copy is an exact copy of the original, the original is maintained along with any other records required by TTB, and the original is made available or submitted to TTB upon request. This provision would allow industry members to submit a copy of an original document, for example, when required to do so by a TTB representative or by an instruction that appears in the electronic document receiving system. TTB continues to enhance and upgrade its electronic document receiving systems to improve both functionality and the user experience. The regulatory change set forth in this rulemaking should allow users to take advantage of new functionalities related to the submission of information electronically, as those functionalities are introduced. In addition to the changes to § 73.31 described above, TTB is removing references in §§ 73.31 and 73.35 to TTB’s publishing of certain notices in the Federal Register. Specifically, § 73.31 currently states that certain forms will be accepted electronically upon condition that, among other things, TTB has published a notice in the Federal Register announcing that it is prepared to receive the particular form electronically. Section 73.35 currently provides that, if the TTB regulations require the keeping of records in paper format, TTB may authorize the keeping of electronic copies of such documents ‘‘through a general notice in the Federal Register or through a variance.’’ TTB is now removing both references to Federal Register notices to allow greater flexibility for TTB to provide for the use of electronic forms. This final rule also adds new 27 CFR 73.40 and updates 27 CFR 73.1 to provide that documents required by TTB to be submitted to other agencies may be submitted electronically to those agencies, if the agency authorizes such submission. Finally, TTB is making technical changes to §§ 73.30, 73.31, 73.33 and 73.34, to make it clear that the E:\FR\FM\27MRR1.SGM 27MRR1 Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Rules and Regulations provisions regarding electronic submission of forms cover all forms that must be submitted to TTB, not only those commonly associated with ‘‘reporting.’’ sroberts on DSK5SPTVN1PROD with RULES Distilled Spirits Finished Products Records Section 5207 of the IRC (26 U.S.C. 5207) requires that distilled spirits plant (DSP) proprietors keep records in such form and manner as the Secretary of the Treasury prescribes by regulation, including records of ‘‘* * * the kind and quantity of distilled spirits packaged or bottled * * *.’’ Regulations that implement the provisions of section 5207 of the IRC as they relate to distilled spirits finished products records are set forth in part 19 of title 27 of the Code of Federal Regulations (CFR), at 27 CFR 19.601. The Part 19 Revision On May 8, 2008, TTB published in the Federal Register a notice of proposed rulemaking (Notice No. 83, 73 FR 26200), which proposed to revise the DSP regulations contained in 27 CFR part 19. In that notice, TTB stated that it intended to modernize the requirements for operating DSPs and, in effect, remove burdens and make the regulations easier to understand, allowing DSP proprietors to operate more efficiently. As part of this proposed revision, TTB proposed to amend the regulations providing for the maintenance of finished products records by adding a requirement, in new 27 CFR 19.601(a), that DSP proprietors maintain a daily summary record of the kind of finished products bottled or packaged within the processing account at the DSP. The recordkeeping regulations in effect at the time of the proposed rulemaking in Notice No. 83 (then at 27 CFR 19.751) required DSPs to maintain daily summary records of the quantity, but not the kind, of products bottled or packaged. TTB had believed that this recordkeeping change proposed in Notice No. 83 merely aligned the regulatory text more closely with the statutory provision set forth at 26 U.S.C. 5207(a)(4)(B) and would assist TTB auditors during tax compliance audits, but would not result in any significant additional burden on industry members. DSP proprietors already were required under the existing regulations to maintain records of the kind of distilled spirits bottled or packaged for each lot of spirits bottled or packaged, although not in the form of a daily summary record as proposed in Notice No. 83. See current 27 CFR 19.599, formerly 27 CFR 19.732. VerDate Mar<15>2010 16:40 Mar 26, 2014 Jkt 232001 During the comment period for the regulatory changes proposed in Notice No. 83, TTB did not receive any comments addressing the addition of the new requirement to maintain a daily summary record by kind. Accordingly, this requirement was adopted as part of the final rule issued as Treasury Decision (T.D.) TTB–92, published in the Federal Register at 76 FR 9080, on February 16, 2011. T.D. TTB–92 became effective on April 18, 2011. Subsequent Correspondence Regarding § 19.601 Shortly after publication of T.D. TTB– 92, TTB received a letter, dated April 21, 2011, from both the Distilled Spirits Council of the United States, Inc. (DISCUS) and the Presidents’ Forum of the Beverage Alcohol Industry (Presidents’ Forum). DISCUS and the Presidents’ Forum requested that TTB either provide an industry-wide variance from the new daily summary record by kind requirement, given the Bureau’s past success in collecting distilled spirits excise taxes, or issue a formal 18-month extension for compliance with § 19.601, which would give industry time to develop data systems for the new recordkeeping requirement. In their April 21 letter, DISCUS and the Presidents’ Forum also stated that complying with the new requirement would be expensive for industry. Industry members would need to develop new data systems capable of recording the information necessary to comply. Developing these data systems could cost from $20,000 to $50,000 per industry member. In a letter, dated June 16, 2011, TTB responded to the letter from DISCUS and the Presidents’ Forum. In that letter, TTB stated: While TTB is not authorized to issue a waiver from the provisions of § 19.601, we understand that proprietors may need extra time to comply with the new provisions of the regulation. Accordingly, if a DSP is otherwise compliant with the TTB regulations, TTB will not take adverse action solely on the basis of the failure to have the daily summary as to kind required by § 19.601(a) until October 18, 2012. After issuing the June 16, 2011 letter, TTB received additional information from DISCUS and the Presidents’ Forum indicating that modifications of DSP recordkeeping systems would be more expensive than anticipated. TTB then decided to take regulatory action to amend § 19.601 to remove the requirement that DSPs maintain daily summary records by kind. In a second letter to DISCUS and the Presidents’ Forum, dated August 28, 2012, TTB PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 17031 extended the deadline to comply with the provisions of § 19.601(a) regarding the daily summary records by kind for another 18 months, until April 18, 2014. As previously stated, TTB had not believed that the change in the regulations requiring a daily summary record by the kind of distilled spirits bottled and packaged would create a significant recordkeeping burden on industry members. During past audits, TTB has been able to determine, on a case-by-case basis from source documents and records, the information that TTB had intended to be included in the daily summary record of the kind of distilled spirits bottled or packaged. TTB Determination Upon further consideration of this matter, TTB determined that it can continue to effectively administer the chapter 51 provisions without DSP proprietors creating a daily summary record of the kind of distilled spirits bottled and packaged. Accordingly, in this rulemaking, TTB is removing the requirement in § 19.601 that a DSP must maintain such a daily summary record. Closures on Containers of Distilled Spirits Products Brought Into the United States From Puerto Rico or the Virgin Islands or Imported Into the United States Section 5301(d) of the IRC (26 U.S.C. 5301(d)) addresses the closures of containers of distilled spirits. That paragraph states that the immediate container of distilled spirits withdrawn from bonded premises, or from customs custody, on determination of tax shall bear a closure or other device which is designed so as to require breaking in order to gain access to the contents of the container. This requirement does not apply to containers of bulk distilled spirits. In addition to this specific provision, section 7805 of the IRC (26 U.S.C. 7805) provides more general authority to the Secretary of the Treasury to prescribe all ‘‘needful rules and regulations’’ for the enforcement of the IRC. Regulations that implement the statutory provisions regarding closures on distilled spirits product containers are set forth in part 19 of the TTB regulations (relating to distilled spirits products removed from domestic DSPs), part 26 (relating to distilled spirits products brought into the United States from Puerto Rico or the Virgin Islands), and part 27 (relating to distilled spirits products imported into the United States) (27 CFR parts 19, 26, and 27). E:\FR\FM\27MRR1.SGM 27MRR1 17032 Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Rules and Regulations Part 19 Revision On May 8, 2008, TTB published in the Federal Register a notice of proposed rulemaking (NPRM) (Notice No. 83, 73 FR 26200), which proposed to revise the DSP regulations contained in 27 CFR part 19. At the time of that NPRM, the regulations in 27 CFR part 19 required that domestic distilled spirits products having a capacity of one gallon (3.785 liters) or less must have a closure attached to the container, which must be broken in order to access the product, and that a part of the closure must remain attached to the container once it is opened. The same requirement appeared in parts 26 and 27 applicable to distilled spirits products brought into the United States from Puerto Rico or the Virgin Islands and distilled spirits products imported into the United States, respectively. As part of the revision of the part 19 regulations, TTB thoroughly reviewed the regulations with regard to the operation of DSPs in the United States and, in that context, the requirements regarding closures of distilled spirits containers. TTB explained in Notice No. 83 that it was proposing to remove from the part 19 regulations the requirement that a part of the closure remain attached to the container once opened, stating: sroberts on DSK5SPTVN1PROD with RULES In our proposed regulation at § 19.523, we require that the container have a closure that must be broken to gain access to the contents. However, we have deleted the requirement that a portion of the closure remain on the container when opened. The particular feature of the current regulation is not a requirement of the IRC at 26 U.S.C. 5301(d). Further, we have received several requests for an alternate method or procedure from this particular requirement, and we see no continued need for this feature on the closure. TTB adopted the proposed change to the part 19 regulations in a final rule (T.D. TTB–92, 76 FR 9080) published in the Federal Register on February 16, 2011. T.D. TTB–92 became effective on April 18, 2011. As a result of these actions, closures on domestic distilled spirits products are not required to include a part that remains attached to the container once it is opened. However, because parts 26 and 27 were outside the scope of the rulemaking actions described above, closures on distilled spirits products brought into the United States from Puerto Rico or the Virgin Islands or imported into the United States are still required to include a part that remains attached to the container once it is opened. See 27 CFR 26.136, 26.231, and 27.62. Since publishing T.D. TTB–92, TTB has received requests from Diageo Americas Supply, Inc. and from DISCUS VerDate Mar<15>2010 16:40 Mar 26, 2014 Jkt 232001 asking TTB to take action on this issue to provide consistent treatment of all distilled spirits containers. TTB Determination TTB believes that the same considerations should apply to containers of imported distilled spirits or of such products brought into the United States from Puerto Rico or the Virgin Islands as apply to containers of domestic distilled spirits. As a result, TTB is amending its regulations at §§ 26.136, 26.231, and 27.62, respectively, to remove the requirements that closures on containers of distilled spirits brought into the United States from Puerto Rico or the Virgin Islands or imported into the United States include a part that remains attached to the container once opened. Regulatory Flexibility Act Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply. Pursuant to 26 U.S.C. 7805(f), TTB submitted this final rule to the Chief Counsel for Advocacy of the Small Business Administration (SBA) for comment on the impact of the regulations on small businesses, and TTB received no comments from the SBA on this final rule. Paperwork Reduction Act This final rule imposes no new collection of information. The amendments to part 73 merely offer an additional method for submitting required forms to TTB and other agencies and will not result in a substantive or material change to any underlying information collection. With regard to this final rule’s amendment of § 19.601, when TTB had revised part 19 of the TTB regulations in T.D. TTB–92, TTB did not believe that the addition of the requirement that DSPs maintain a daily summary record as to kind would be at all burdensome to industry, as discussed above. Consequently, TTB did not make any change to the information collection associated with § 19.601 (Office of Management and Budget Control Number 1513–0041, which covers recordkeeping requirements at DSPs). Since T.D. TTB–92 became effective, TTB has not enforced the requirement to keep daily summary records for the reasons discussed above, and TTB is now removing this requirement from § 19.601. Therefore, no change to information collection number 1513– 0041 is necessary as a result of this regulatory action. PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 Finally, amendments to 27 CFR parts 26 and 27 that remove a requirement related to the closures on containers of distilled spirits brought into the United States from Puerto Rico or the Virgin Islands or imported into the United States have the effect of reducing a regulatory burden on industry members and have no bearing on any information collection. Under the Paperwork Reduction Act, an agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a valid OMB control number. Executive Order 12866 It has been determined that this final rule is not a significant regulatory action as defined in Executive Order 12866 of September 30, 1993. Therefore, a regulatory assessment is not necessary. Prior Notice and Comment Procedures TTB is issuing this final rule without notice and prior opportunity for public comment in accordance with section 553(b)(A) of the Administrative Procedure Act (5 U.S.C. 553(b)(A)). This provision authorizes an agency to issue a rule without prior notice and comment when it issues rules of agency procedure. Most of the regulatory changes contained in this final rule amend the manner in which TTB will accept and process various forms required by the TTB regulations. Those changes are procedural because they impact only the method of filing applications and other documents with TTB. Section 553(b)(B) of the Administrative Procedure Act (5 U.S.C. 553(b)(B)) also authorizes an agency to forgo notice and comment when the agency for good cause finds that those procedures are unnecessary. TTB believes prior notice and comment are unnecessary with respect to all changes contained in this final rule because we expect the affected public will benefit immediately from (1) having an additional option for document submission that facilitates an allelectronic environment as an alternative to hard-copy submission of these forms; (2) the removal of a recordkeeping requirement; and (3) the removal of a regulatory requirement related to the types of closures that must be used on certain containers of distilled spirits. Accordingly, TTB has determined that it is unnecessary to follow prior public notice and comment procedures. For the reasons set forth above, the 5 U.S.C. 553(b) notice requirement does not apply. E:\FR\FM\27MRR1.SGM 27MRR1 Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Rules and Regulations Drafting Information Kate M. Bresnahan of the Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this document. List of Subjects 27 CFR Part 19 Administrative practice and procedure, Alcohol and alcoholic beverages, Authority delegations (Government agencies), Caribbean Basin initiative, Chemicals, Claims, Customs duties and inspection, Electronic filing, Electronic funds transfers, Excise taxes, Exports, Gasohol, Imports, Labeling, Liquors, Packaging and containers, Puerto Rico, Reporting and recordkeeping requirements, Research, Security measures, Spices and flavorings, Stills, Surety bonds, Transportation, Vinegar, Virgin Islands, Warehouses, Wine. 27 CFR Part 26 Alcohol and alcoholic beverages, Caribbean Basin initiative, Claims, Customs duties and inspection, Electronic filing, Electronic funds transfers, Excise taxes, Packaging and containers, Puerto Rico, Reporting and recordkeeping requirements, Surety bonds, Virgin Islands, Warehouses. 27 CFR Part 27 Alcohol and alcoholic beverages, Beer, Cosmetics, Customs duties and inspection, Electronic filing, Electronic funds transfers, Excise taxes, Imports, Labeling, Liquors, Packaging and containers, Reporting and recordkeeping requirements, Wine. 27 CFR Part 73 Electronic filing, Reporting and recordkeeping requirements. Amendments to the Regulations For the reasons set forth in the preamble, TTB is amending 27 CFR, chapter I, parts 19, 26, 27, and 73 as follows: sroberts on DSK5SPTVN1PROD with RULES PART 26—LIQUORS AND ARTICLES FROM PUERTO RICO AND THE VIRGIN ISLANDS or other device securely affixed to the container. The closure or other device must be constructed in such a manner as to require breaking in order to gain access to the contents of the container. PART 73—ELECTRONIC SIGNATURES; ELECTRONIC SUBMISSION OF FORMS 8. The authority citation for part 73 is revised to read as follows: ■ Authority: 26 U.S.C. 6011(f), 6061(b), 7502(c); 44 U.S.C. 3504 Note. § 73.1 [Amended] 9. Section 73.1, paragraph (a)(2), is amended by adding the words ‘‘or, where applicable, to other agencies’’ before the period. ■ 10. Section 73.30 is revised to read as follows: ■ 3. The authority citation for part 26 continues to read as follows: ■ Authority: 19 U.S.C. 81c; 26 U.S.C. 5001, 5007, 5008, 5010, 5041, 5051, 5061, 5111– 5114, 5121, 5122–5124, 5131–5132, 5207, 5232, 5271, 5275, 5301, 5314, 5555, 6001, 6301, 6302, 6804, 7101, 7102, 7651, 7652, 7805; 27 U.S.C. 203, 205; 31 U.S.C. 9301, 9303, 9304, 9306. 4. Section 26.136 is revised to read as follows: ■ § 26.136 Affixing closures. Each container of distilled spirits having a capacity of one gallon (3.785 liters) or less must have a closure or other device securely affixed to the container. The closure or other device must be constructed in such a manner as to require breaking in order to gain access to the contents of the container. ■ 5. Section 26.231 is revised to read as follows: § 26.231 Affixing closures. Each container of distilled spirits having a capacity of one gallon (3.785 liters) or less must have a closure or other device securely affixed to the container. The closure or other device must be constructed in such a manner as to require breaking in order to gain access to the contents of the container. 6. The authority citation for part 27 continues to read as follows: Authority: 19 U.S.C. 81c, 1311; 26 U.S.C. 5001, 5002, 5004–5006, 5008, 5010, 5041, 5061, 5062, 5066, 5081, 5101, 5111–5114, 5121–5124, 5142, 5143, 5146, 5148, 5171– 5173, 5175, 5176, 5178–5181, 5201–5204, 5206, 5207, 5211–5215, 5221–5223, 5231, 5232, 5235, 5236, 5241–5243, 5271, 5273, 5301, 5311–5313, 5362, 5370, 5373, 5501– 5505, 5551–5555, 5559, 5561, 5562, 5601, 5612, 5682, 6001, 6065, 6109, 6302, 6311, 6676, 6806, 7011, 7510, 7805; 31 U.S.C. 9301, 9303, 9304, 9306. Jkt 232001 Finished products records. (a) Bottling and packaging. A proprietor must maintain daily transaction records and a daily summary record of the quantity of finished products bottled or packaged within the processing account at the distilled spirits plant. * * * * * * * * ■ 1. The authority citation for part 19 continues to read as follows: ■ 16:40 Mar 26, 2014 § 19.601 PART 27—IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEERS PART 19—DISTILLED SPIRITS PLANTS VerDate Mar<15>2010 2. The first sentence of § 19.601(a) is revised to read as follows: ■ 17033 Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C. 5001, 5007, 5008, 5010, 5041, 5051, 5054, 5061, 5121, 5122–5124, 5201, 5205, 5207, 5232, 5273, 5301, 5313, 5555, 6302, 7805. 7. Section 27.62 is revised to read as follows: ■ § 27.62 Affixing closures. Each container of imported distilled spirits having a capacity of one gallon (3.785 liters) or less must have a closure PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 § 73.30 What does subpart C cover? This subpart provides the conditions under which TTB will allow you to satisfy certain requirements to submit forms in this chapter by submitting forms electronically to TTB. ■ 11. Section 73.31 is revised to read as follows: § 73.31 May I submit forms electronically to TTB? Yes; to satisfy any requirement to submit forms in this chapter (including a requirement to submit an original form or copies), you may submit an electronic form or you may submit, by electronic means, a copy of an original form, but only if: (a) You submit the form through an electronic document receiving system that TTB has designated for the receipt of that specific form and for which you have registered if so required; and (b) The conditions in any one of the following paragraphs apply: (1) It is an electronic form that bears valid electronic signatures, as provided in subpart B of this part, to the same extent that the paper submission for which it substitutes would bear handwritten signatures; (2) It is a copy of an original form that requires the signature of a third party who is not the person required to submit the form (such as a bond form or a power of attorney form) or a corporate seal; you submit the copy of the form electronically along with a certification that the copy is an exact copy of the original; the original bears all signatures of all required parties and any required corporate seal; and you maintain the original along with any other records required by TTB and make it available or submit it to TTB upon request; or E:\FR\FM\27MRR1.SGM 27MRR1 17034 Federal Register / Vol. 79, No. 59 / Thursday, March 27, 2014 / Rules and Regulations (3) It is a copy of a TTB form that is not available in an electronic format or it is a document other than a TTB form (that is, other than a document issued by TTB that bears an Office of Management and Budget control number) that is required to be submitted to TTB; you submit the copy electronically along with a certification that the copy is an exact copy of the original; and you maintain the original along with any other records required by TTB and make it available or submit it to TTB upon request. § 73.33 [Amended] [Amended] 13. Section 73.34 is amended by removing the words ‘‘your report’’ and adding in their place the words ‘‘the document’’. ■ § 73.35 [Amended] 14. Section 73.35 is amended by removing the words ‘‘a general notice in the Federal Register or through a variance’’ in the second sentence and adding in their place the words ‘‘an approved alternate method or procedure’’. ■ 15. New Subpart D is added to read as follows: ■ Subpart D—Electronic Filing of Documents With Other Agencies § 73.40 May I satisfy TTB requirements to submit forms to other agencies by submitting those forms electronically? sroberts on DSK5SPTVN1PROD with RULES You may satisfy any requirement in the TTB regulations to submit a form to another agency by submitting such form to such agency by electronic means, as long as the agency provides for, and authorizes, the electronic submission of such form and you satisfy any registration or related requirement by that agency for that electronic submission. The submission of a form electronically to another agency does not alter any requirement regarding copies you must maintain. Signed: November 20, 2013. John J. Manfreda, Administrator. Approved: December 18, 2013. Timothy E. Skud, Deputy Assistant Secretary (Tax, Trade and Tariff Policy). [FR Doc. 2014–06869 Filed 3–26–14; 8:45 am] BILLING CODE 4810–31–P VerDate Mar<15>2010 16:40 Mar 26, 2014 Coast Guard 33 CFR Part 117 [Docket Number USCG–2014–0144] Drawbridge Operation Regulation; Upper Mississippi River, Rock Island, IL Coast Guard, DHS. Notice of deviation from drawbridge regulation. AGENCY: ACTION: The Coast Guard has issued a temporary deviation from the operating schedule that governs the Rock Island Railroad and Highway Drawbridge across the Upper Mississippi River, mile 482.9, at Rock Island, Illinois. The deviation is necessary to allow the Front Street 5K Run/Walk to cross the bridge. This deviation allows the bridge to be maintained in the closed-to-navigation position for one hour. DATES: This deviation is effective from 7 p.m. to 8 p.m., June 12, 2014. ADDRESSES: The docket for this deviation, [USCG–2014–0144] is available at http://www.regulations.gov. Type the docket number in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on Open Docket Folder on the line associated with this deviation. You may also visit the Docket Management Facility in Room W12–140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: If you have questions on this temporary deviation, call or email Eric A. Washburn, Bridge Administrator, Western Rivers, Coast Guard; telephone 314–269–2378, email Eric.Washburn@ uscg.mil. If you have questions on viewing the docket, call Cheryl Collins, Program Manager, Docket Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: The U.S. Army Rock Island Arsenal requested a temporary deviation for the Rock Island Railroad and Highway Drawbridge, across the Upper Mississippi River, mile 482.9, at Rock Island, Illinois to remain in the closed-to-navigation position for a one hour period from 7 p.m. to 8 p.m., June 12, 2014, while the Front Street 5K Run/Walk is held between the cities of Davenport, IA and Rock Island, IL. The Rock Island Railroad and Highway Drawbridge currently operates in accordance with 33 CFR 117.5, which SUMMARY: 12. Section 73.33 is amended by removing the word ‘‘reporting’’ in the first sentence. ■ § 73.34 DEPARTMENT OF HOMELAND SECURITY Jkt 232001 PO 00000 Frm 00026 Fmt 4700 Sfmt 4700 states the general requirement that drawbridges shall open promptly and fully for the passage of vessels when a request to open is given in accordance with the subpart. There are no alternate routes for vessels transiting this section of the Upper Mississippi River. The Rock Island Railroad and Highway Drawbridge, in the closed-tonavigation position, provides a vertical clearance of 23.8 feet above normal pool. Navigation on the waterway consists primarily of commercial tows and recreational watercraft. This temporary deviation has been coordinated with waterway users. No objections were received. In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35. Dated: March 11, 2014. Eric A. Washburn, Bridge Administrator, Western Rivers. [FR Doc. 2014–06840 Filed 3–26–14; 8:45 am] BILLING CODE 9110–04–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [USCG–2014–0119] Drawbridge Operation Regulation; Housatonic River, Stratford, CT Coast Guard, DHS. Notice of deviation from drawbridge regulation. AGENCY: ACTION: The Coast Guard has issued a temporary deviation from the operating schedule that governs the Metro-North (Devon) Bridge across the Housatonic River, mile 3.9, at Stratford, Connecticut. The deviation is necessary to facilitate structural repairs at the bridge. This temporary deviation authorizes the bridge to remain in the closed position Monday through Thursday for eight weeks to facilitate repairs at the bridge. DATES: This deviation is effective from 6 a.m. on April 1, 2014 through 6 p.m. on May 22, 2014. ADDRESSES: The docket for this deviation, USCG–2014–0119 is available at http://www.regulations.gov. Type the docket number in the ‘‘SEARCH’’ box and click ‘‘SEARCH’’. Click on Open Docket Folder on the line associated SUMMARY: E:\FR\FM\27MRR1.SGM 27MRR1

Agencies

[Federal Register Volume 79, Number 59 (Thursday, March 27, 2014)]
[Rules and Regulations]
[Pages 17029-17034]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-06869]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 19, 26, 27, and 73

[Docket No. TTB-2014-0004; T.D. TTB-119]
RIN 1513-AB97


Electronic Submission of Forms, the Finished Products Records for 
Distilled Spirits Plants, and Closures on Certain Distilled Spirits 
Products

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

ACTION: Direct final rule; Treasury decision.

-----------------------------------------------------------------------

SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is amending 
its regulations regarding the electronic submission of forms to provide 
for the electronic submission to TTB of copies of certain forms, where 
the original is to be retained by the submitter along with other 
records. This amendment removes a barrier that industry members have 
faced when trying to apply for permits completely by electronic means. 
TTB is also amending its regulations to address circumstances where TTB 
requires certain information to be submitted to other agencies. 
Specifically, the amendments provide that TTB requirements for 
information to be submitted to another agency may be met by the 
electronic submission of the information, as long as the other agency 
has provided for such a submission of information by electronic means.
    In addition, TTB is amending its regulations governing the records 
that distilled spirits plant (DSP) proprietors must keep of finished 
products. Specifically, TTB is removing the requirement that DSP 
proprietors keep a daily summary record of the kind of distilled 
spirits bottled or packaged.
    Finally, TTB is amending its regulations regarding closures that 
must be affixed to containers of imported distilled spirits products or 
of such products brought into the United States from Puerto Rico or the 
Virgin Islands. The amendments remove a requirement that a part of the 
closure remain attached to the container when opened. This amendment 
will align the regulations for such products with those applicable to 
domestic distilled spirits products.

DATES: Effective Date: April 28, 2014.

FOR FURTHER INFORMATION CONTACT: Kate M. Bresnahan, Regulations and 
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, at 202-453-
1039, ext. 151.

SUPPLEMENTARY INFORMATION:

Background

TTB Authority

    The Internal Revenue Code of 1986, as amended (IRC), at 26 U.S.C. 
chapters 51 and 52, provides for the regulation of certain alcohol- and 
tobacco-related businesses. In addition, the Federal Alcohol 
Administration Act (FAA Act), at 27 U.S.C. chapter 8, provides for the 
regulation of certain operations of beverage alcohol businesses. 
Chapters 51 and 52 of the IRC and sections 103 and 104 of the FAA Act 
(27 U.S.C. 203 and 204) vest the Secretary of the Treasury with 
authority to prescribe regulations related to the issuance of permits, 
registrations, and notices for such businesses. The IRC provisions also 
include requirements for persons operating in certain alcohol and 
tobacco industries to obtain bonds and to submit reports and other 
documents related to regulated operations. In addition, section 4222 of 
the IRC (26 U.S.C. 4222) establishes registration requirements for 
persons who make tax-free sales of firearms and ammunition.
    The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers 
these provisions, 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 December 10, 2013, to the TTB Administrator to perform the 
functions and duties in administration and enforcement of these laws.

Electronic Submission of Forms and Use of Electronic Signatures on 
Forms

    TTB regulations implementing the permit, registration, and notice 
requirements of the IRC and the FAA Act are promulgated in chapter I of 
title 27 of the Code of Federal Regulations (27 CFR chapter I). These 
regulations require certain current and prospective industry members to 
obtain approval before commencing a new TTB-regulated industry 
operation and to update permit information for an existing TTB-
regulated business. These regulations also require that certain forms, 
reports, and other documents be submitted to TTB, depending on the 
operation. These documents may include operational reports, bonds, and 
powers of attorney, where applicable. In addition, some provisions 
require that the regulated industry members submit documents to other 
agencies. For example, provisions relating to the importation of the 
regulated commodities require that, in some circumstances, documents 
must be submitted to U.S. Customs and Border Protection (CBP) during 
the entry process.
    The TTB regulations currently implementing those requirements 
generally provide for the submission to TTB of applications and other 
documents in paper form. Under certain conditions, forms may be 
submitted electronically through an electronic document receiving 
system. The electronic submission of forms to TTB is governed by the 
TTB regulations at part 73 (27 CFR part 73). Part 73 sets forth the 
conditions under which TTB will allow current and prospective industry 
members to submit forms to TTB electronically, and to use electronic 
signatures or digital signatures to sign those forms, in lieu of 
submitting paper forms with handwritten signatures. These regulations 
do not currently address the electronic submission of TTB-required 
forms and documents to other agencies.
    Pursuant to the TTB regulations at 27 CFR 73.31, TTB-regulated 
industry members may submit an electronic form instead of a paper form 
to satisfy any reporting requirement in chapter I of Title 27 CFR under 
certain conditions. Currently, the conditions are as follows: (1) TTB 
has published a notice in the Federal Register and on its Web site 
(http://www.ttb.gov) announcing that it is prepared to receive a 
particular form electronically; (2) the person required to submit the 
form has registered to do so, pursuant to the instructions in that 
notice; (3) that person submits the electronic form to an electronic 
document receiving system that TTB has designated for the receipt of 
that specific form; and (4) the electronic form bears valid electronic 
signatures, as provided in subpart B of part 73, to the same extent 
that the paper form for which it substitutes would bear handwritten 
signatures.
Amendments to Part 73
    Recently, TTB has facilitated electronic communications and 
transactions in many ways. For example, TTB has made a number of

[[Page 17030]]

electronic document receiving systems available to industry members. 
These secure, web-based applications include: Permits Online, which 
allows members of the alcohol, tobacco, and firearms and ammunition 
industries to submit electronically original and amended applications 
to operate TTB-regulated businesses and to make tax-free sales of 
firearms and ammunition; COLAs Online, which allows industry members to 
submit electronically applications for certificates of label approval 
for alcohol beverages; and Formulas Online, which electronically 
accepts applications for approval of beverage and non-beverage alcohol 
product formulas.
    Through these systems and other Web-based means, current and 
prospective industry members may fill out applications and related 
forms online by answering a set of questions that mirror those on the 
hardcopy forms, by inserting the information requested into an 
electronic image of a form, or by uploading copies of forms and other 
documents. The amendments to part 73 that are made in this rulemaking 
are intended to facilitate all of these ways of electronically 
submitting forms and information to TTB.
    One type of form specifically addressed by this rulemaking requires 
the signature of a third party (that is, a party other than (1) the 
applicant or regulated entity, or (2) TTB). For example, with many 
types of applications, TTB requires the filing of a bond. When the 
applicant uses a corporate surety bond to meet this requirement, the 
original signature of an agent or officer of the surety company may be 
required on the bond form. In addition, certain TTB regulations require 
that whenever an agent or an officer executes the bond on behalf of the 
surety, the bond must be supported by a signed power of attorney 
authorizing the agent or officer to execute the bond, prepared on the 
surety's own form, and with the surety company's seal affixed to the 
form. See, for example, 27 CFR 19.156, 24.150, and 40.401.
    Another example of a form requiring third-party signatures is the 
power of attorney form, TTB F 5000.8, used by current and prospective 
industry members to designate the person or persons authorized to 
execute applications, notices, bonds, tax returns, tax information 
disclosure authorizations, and other instruments on behalf of the 
industry member, and to act for the industry member in dealing with 
TTB. Powers of attorney are submitted with many applications for 
permits or authorizations to operate regulated businesses in order to 
allow persons other than officers, directors, sole proprietors, 
partners, or members to sign or speak on behalf of the applicant 
businesses. See, for example, 27 CFR 1.30, 19.78, and 25.65. This form 
requires the signatures of not only a person with authority to execute 
the power of attorney on behalf of the industry member, but also the 
person designated as the industry member's attorney in fact, as well as 
either the signature of a notary or the signatures of two disinterested 
witnesses.
    Because some required forms must be signed by third parties, and 
because these third parties are not authorized to, and do not currently 
have the means to, sign the forms electronically, these forms cannot, 
under current regulations, be executed and submitted electronically. As 
a result, it is not currently possible for many applicants to submit 
complete applications through electronic means. In such cases, 
applicants have submitted all other forms electronically through 
Permits Online and have had to mail separately paper versions of the 
forms requiring third-party signatures.
    To streamline the application process and to enable current and 
prospective industry members to submit all required application forms 
electronically, TTB is amending Sec.  73.31 to add two alternatives to 
the requirement that the form bear a valid electronic signature for 
every handwritten signature required on the form. The new Sec.  
73.31(b) contains three subparagraphs. The first subparagraph restates 
the current requirement that the form bear a valid electronic 
signature. The second subparagraph provides that, if the form requires 
a signature of a person who is not registered to submit the electronic 
form under Sec.  73.31(a), or if the form requires a corporate seal, a 
copy of the completed form (bearing all required signatures and seals) 
may be submitted electronically, along with a certification or 
acknowledgement that the copy submitted electronically is an exact copy 
of the original, and that the original bears signatures of all required 
parties and any required corporate seal. New Sec.  73.31(b)(2) also 
provides that if a copy of the completed form bearing all required 
signatures and seals is submitted electronically, the submitter must 
maintain the original completed form on the submitter's premises and 
make it available for inspection by TTB or submission to TTB upon 
request. If all of these conditions are not met for documents requiring 
third-party signatures or corporate seals, the submission of such forms 
electronically will not satisfy the requirements for submission of the 
forms to TTB.
    A third new subparagraph, at Sec.  73.31(b)(3), provides for the 
electronic submission both of copies of TTB forms that are not 
available in an electronic format and of documents other than TTB forms 
that are required to be submitted to TTB. This latter category 
includes, for example, a commercial document that may be submitted to 
satisfy a reporting requirement. In effect, this new subparagraph 
allows the regulated industry to submit electronically copies of a wide 
range of documents, as long as the copies are submitted along with a 
certification that the copy is an exact copy of the original, the 
original is maintained along with any other records required by TTB, 
and the original is made available or submitted to TTB upon request. 
This provision would allow industry members to submit a copy of an 
original document, for example, when required to do so by a TTB 
representative or by an instruction that appears in the electronic 
document receiving system.
    TTB continues to enhance and upgrade its electronic document 
receiving systems to improve both functionality and the user 
experience. The regulatory change set forth in this rulemaking should 
allow users to take advantage of new functionalities related to the 
submission of information electronically, as those functionalities are 
introduced.
    In addition to the changes to Sec.  73.31 described above, TTB is 
removing references in Sec. Sec.  73.31 and 73.35 to TTB's publishing 
of certain notices in the Federal Register. Specifically, Sec.  73.31 
currently states that certain forms will be accepted electronically 
upon condition that, among other things, TTB has published a notice in 
the Federal Register announcing that it is prepared to receive the 
particular form electronically. Section 73.35 currently provides that, 
if the TTB regulations require the keeping of records in paper format, 
TTB may authorize the keeping of electronic copies of such documents 
``through a general notice in the Federal Register or through a 
variance.'' TTB is now removing both references to Federal Register 
notices to allow greater flexibility for TTB to provide for the use of 
electronic forms.
    This final rule also adds new 27 CFR 73.40 and updates 27 CFR 73.1 
to provide that documents required by TTB to be submitted to other 
agencies may be submitted electronically to those agencies, if the 
agency authorizes such submission.
    Finally, TTB is making technical changes to Sec. Sec.  73.30, 
73.31, 73.33 and 73.34, to make it clear that the

[[Page 17031]]

provisions regarding electronic submission of forms cover all forms 
that must be submitted to TTB, not only those commonly associated with 
``reporting.''

Distilled Spirits Finished Products Records

    Section 5207 of the IRC (26 U.S.C. 5207) requires that distilled 
spirits plant (DSP) proprietors keep records in such form and manner as 
the Secretary of the Treasury prescribes by regulation, including 
records of ``* * * the kind and quantity of distilled spirits packaged 
or bottled * * *.'' Regulations that implement the provisions of 
section 5207 of the IRC as they relate to distilled spirits finished 
products records are set forth in part 19 of title 27 of the Code of 
Federal Regulations (CFR), at 27 CFR 19.601.
The Part 19 Revision
    On May 8, 2008, TTB published in the Federal Register a notice of 
proposed rulemaking (Notice No. 83, 73 FR 26200), which proposed to 
revise the DSP regulations contained in 27 CFR part 19. In that notice, 
TTB stated that it intended to modernize the requirements for operating 
DSPs and, in effect, remove burdens and make the regulations easier to 
understand, allowing DSP proprietors to operate more efficiently. As 
part of this proposed revision, TTB proposed to amend the regulations 
providing for the maintenance of finished products records by adding a 
requirement, in new 27 CFR 19.601(a), that DSP proprietors maintain a 
daily summary record of the kind of finished products bottled or 
packaged within the processing account at the DSP. The recordkeeping 
regulations in effect at the time of the proposed rulemaking in Notice 
No. 83 (then at 27 CFR 19.751) required DSPs to maintain daily summary 
records of the quantity, but not the kind, of products bottled or 
packaged.
    TTB had believed that this recordkeeping change proposed in Notice 
No. 83 merely aligned the regulatory text more closely with the 
statutory provision set forth at 26 U.S.C. 5207(a)(4)(B) and would 
assist TTB auditors during tax compliance audits, but would not result 
in any significant additional burden on industry members. DSP 
proprietors already were required under the existing regulations to 
maintain records of the kind of distilled spirits bottled or packaged 
for each lot of spirits bottled or packaged, although not in the form 
of a daily summary record as proposed in Notice No. 83. See current 27 
CFR 19.599, formerly 27 CFR 19.732.
    During the comment period for the regulatory changes proposed in 
Notice No. 83, TTB did not receive any comments addressing the addition 
of the new requirement to maintain a daily summary record by kind. 
Accordingly, this requirement was adopted as part of the final rule 
issued as Treasury Decision (T.D.) TTB-92, published in the Federal 
Register at 76 FR 9080, on February 16, 2011. T.D. TTB-92 became 
effective on April 18, 2011.
Subsequent Correspondence Regarding Sec.  19.601
    Shortly after publication of T.D. TTB-92, TTB received a letter, 
dated April 21, 2011, from both the Distilled Spirits Council of the 
United States, Inc. (DISCUS) and the Presidents' Forum of the Beverage 
Alcohol Industry (Presidents' Forum). DISCUS and the Presidents' Forum 
requested that TTB either provide an industry-wide variance from the 
new daily summary record by kind requirement, given the Bureau's past 
success in collecting distilled spirits excise taxes, or issue a formal 
18-month extension for compliance with Sec.  19.601, which would give 
industry time to develop data systems for the new recordkeeping 
requirement.
    In their April 21 letter, DISCUS and the Presidents' Forum also 
stated that complying with the new requirement would be expensive for 
industry. Industry members would need to develop new data systems 
capable of recording the information necessary to comply. Developing 
these data systems could cost from $20,000 to $50,000 per industry 
member.
    In a letter, dated June 16, 2011, TTB responded to the letter from 
DISCUS and the Presidents' Forum. In that letter, TTB stated:

    While TTB is not authorized to issue a waiver from the 
provisions of Sec.  19.601, we understand that proprietors may need 
extra time to comply with the new provisions of the regulation. 
Accordingly, if a DSP is otherwise compliant with the TTB 
regulations, TTB will not take adverse action solely on the basis of 
the failure to have the daily summary as to kind required by Sec.  
19.601(a) until October 18, 2012.

    After issuing the June 16, 2011 letter, TTB received additional 
information from DISCUS and the Presidents' Forum indicating that 
modifications of DSP recordkeeping systems would be more expensive than 
anticipated. TTB then decided to take regulatory action to amend Sec.  
19.601 to remove the requirement that DSPs maintain daily summary 
records by kind. In a second letter to DISCUS and the Presidents' 
Forum, dated August 28, 2012, TTB extended the deadline to comply with 
the provisions of Sec.  19.601(a) regarding the daily summary records 
by kind for another 18 months, until April 18, 2014.
    As previously stated, TTB had not believed that the change in the 
regulations requiring a daily summary record by the kind of distilled 
spirits bottled and packaged would create a significant recordkeeping 
burden on industry members. During past audits, TTB has been able to 
determine, on a case-by-case basis from source documents and records, 
the information that TTB had intended to be included in the daily 
summary record of the kind of distilled spirits bottled or packaged.
TTB Determination
    Upon further consideration of this matter, TTB determined that it 
can continue to effectively administer the chapter 51 provisions 
without DSP proprietors creating a daily summary record of the kind of 
distilled spirits bottled and packaged. Accordingly, in this 
rulemaking, TTB is removing the requirement in Sec.  19.601 that a DSP 
must maintain such a daily summary record.

Closures on Containers of Distilled Spirits Products Brought Into the 
United States From Puerto Rico or the Virgin Islands or Imported Into 
the United States

    Section 5301(d) of the IRC (26 U.S.C. 5301(d)) addresses the 
closures of containers of distilled spirits. That paragraph states that 
the immediate container of distilled spirits withdrawn from bonded 
premises, or from customs custody, on determination of tax shall bear a 
closure or other device which is designed so as to require breaking in 
order to gain access to the contents of the container. This requirement 
does not apply to containers of bulk distilled spirits. In addition to 
this specific provision, section 7805 of the IRC (26 U.S.C. 7805) 
provides more general authority to the Secretary of the Treasury to 
prescribe all ``needful rules and regulations'' for the enforcement of 
the IRC.
    Regulations that implement the statutory provisions regarding 
closures on distilled spirits product containers are set forth in part 
19 of the TTB regulations (relating to distilled spirits products 
removed from domestic DSPs), part 26 (relating to distilled spirits 
products brought into the United States from Puerto Rico or the Virgin 
Islands), and part 27 (relating to distilled spirits products imported 
into the United States) (27 CFR parts 19, 26, and 27).

[[Page 17032]]

Part 19 Revision
    On May 8, 2008, TTB published in the Federal Register a notice of 
proposed rulemaking (NPRM) (Notice No. 83, 73 FR 26200), which proposed 
to revise the DSP regulations contained in 27 CFR part 19. At the time 
of that NPRM, the regulations in 27 CFR part 19 required that domestic 
distilled spirits products having a capacity of one gallon (3.785 
liters) or less must have a closure attached to the container, which 
must be broken in order to access the product, and that a part of the 
closure must remain attached to the container once it is opened. The 
same requirement appeared in parts 26 and 27 applicable to distilled 
spirits products brought into the United States from Puerto Rico or the 
Virgin Islands and distilled spirits products imported into the United 
States, respectively. As part of the revision of the part 19 
regulations, TTB thoroughly reviewed the regulations with regard to the 
operation of DSPs in the United States and, in that context, the 
requirements regarding closures of distilled spirits containers. TTB 
explained in Notice No. 83 that it was proposing to remove from the 
part 19 regulations the requirement that a part of the closure remain 
attached to the container once opened, stating:

    In our proposed regulation at Sec.  19.523, we require that the 
container have a closure that must be broken to gain access to the 
contents. However, we have deleted the requirement that a portion of 
the closure remain on the container when opened. The particular 
feature of the current regulation is not a requirement of the IRC at 
26 U.S.C. 5301(d). Further, we have received several requests for an 
alternate method or procedure from this particular requirement, and 
we see no continued need for this feature on the closure.

    TTB adopted the proposed change to the part 19 regulations in a 
final rule (T.D. TTB-92, 76 FR 9080) published in the Federal Register 
on February 16, 2011. T.D. TTB-92 became effective on April 18, 2011. 
As a result of these actions, closures on domestic distilled spirits 
products are not required to include a part that remains attached to 
the container once it is opened. However, because parts 26 and 27 were 
outside the scope of the rulemaking actions described above, closures 
on distilled spirits products brought into the United States from 
Puerto Rico or the Virgin Islands or imported into the United States 
are still required to include a part that remains attached to the 
container once it is opened. See 27 CFR 26.136, 26.231, and 27.62.
    Since publishing T.D. TTB-92, TTB has received requests from Diageo 
Americas Supply, Inc. and from DISCUS asking TTB to take action on this 
issue to provide consistent treatment of all distilled spirits 
containers.
TTB Determination
    TTB believes that the same considerations should apply to 
containers of imported distilled spirits or of such products brought 
into the United States from Puerto Rico or the Virgin Islands as apply 
to containers of domestic distilled spirits. As a result, TTB is 
amending its regulations at Sec. Sec.  26.136, 26.231, and 27.62, 
respectively, to remove the requirements that closures on containers of 
distilled spirits brought into the United States from Puerto Rico or 
the Virgin Islands or imported into the United States include a part 
that remains attached to the container once opened.

Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the 
provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do 
not apply. Pursuant to 26 U.S.C. 7805(f), TTB submitted this final rule 
to the Chief Counsel for Advocacy of the Small Business Administration 
(SBA) for comment on the impact of the regulations on small businesses, 
and TTB received no comments from the SBA on this final rule.

Paperwork Reduction Act

    This final rule imposes no new collection of information. The 
amendments to part 73 merely offer an additional method for submitting 
required forms to TTB and other agencies and will not result in a 
substantive or material change to any underlying information 
collection.
    With regard to this final rule's amendment of Sec.  19.601, when 
TTB had revised part 19 of the TTB regulations in T.D. TTB-92, TTB did 
not believe that the addition of the requirement that DSPs maintain a 
daily summary record as to kind would be at all burdensome to industry, 
as discussed above. Consequently, TTB did not make any change to the 
information collection associated with Sec.  19.601 (Office of 
Management and Budget Control Number 1513-0041, which covers 
recordkeeping requirements at DSPs). Since T.D. TTB-92 became 
effective, TTB has not enforced the requirement to keep daily summary 
records for the reasons discussed above, and TTB is now removing this 
requirement from Sec.  19.601. Therefore, no change to information 
collection number 1513-0041 is necessary as a result of this regulatory 
action.
    Finally, amendments to 27 CFR parts 26 and 27 that remove a 
requirement related to the closures on containers of distilled spirits 
brought into the United States from Puerto Rico or the Virgin Islands 
or imported into the United States have the effect of reducing a 
regulatory burden on industry members and have no bearing on any 
information collection.
    Under the Paperwork Reduction Act, an agency may not conduct or 
sponsor and a person is not required to respond to a collection of 
information unless it displays a valid OMB control number.

Executive Order 12866

    It has been determined that this final rule is not a significant 
regulatory action as defined in Executive Order 12866 of September 30, 
1993. Therefore, a regulatory assessment is not necessary.

Prior Notice and Comment Procedures

    TTB is issuing this final rule without notice and prior opportunity 
for public comment in accordance with section 553(b)(A) of the 
Administrative Procedure Act (5 U.S.C. 553(b)(A)). This provision 
authorizes an agency to issue a rule without prior notice and comment 
when it issues rules of agency procedure. Most of the regulatory 
changes contained in this final rule amend the manner in which TTB will 
accept and process various forms required by the TTB regulations. Those 
changes are procedural because they impact only the method of filing 
applications and other documents with TTB.
    Section 553(b)(B) of the Administrative Procedure Act (5 U.S.C. 
553(b)(B)) also authorizes an agency to forgo notice and comment when 
the agency for good cause finds that those procedures are unnecessary. 
TTB believes prior notice and comment are unnecessary with respect to 
all changes contained in this final rule because we expect the affected 
public will benefit immediately from (1) having an additional option 
for document submission that facilitates an all-electronic environment 
as an alternative to hard-copy submission of these forms; (2) the 
removal of a recordkeeping requirement; and (3) the removal of a 
regulatory requirement related to the types of closures that must be 
used on certain containers of distilled spirits. Accordingly, TTB has 
determined that it is unnecessary to follow prior public notice and 
comment procedures.
    For the reasons set forth above, the 5 U.S.C. 553(b) notice 
requirement does not apply.

[[Page 17033]]

Drafting Information

    Kate M. Bresnahan of the Regulations and Rulings Division, Alcohol 
and Tobacco Tax and Trade Bureau, drafted this document.

List of Subjects

27 CFR Part 19

    Administrative practice and procedure, Alcohol and alcoholic 
beverages, Authority delegations (Government agencies), Caribbean Basin 
initiative, Chemicals, Claims, Customs duties and inspection, 
Electronic filing, Electronic funds transfers, Excise taxes, Exports, 
Gasohol, Imports, Labeling, Liquors, Packaging and containers, Puerto 
Rico, Reporting and recordkeeping requirements, Research, Security 
measures, Spices and flavorings, Stills, Surety bonds, Transportation, 
Vinegar, Virgin Islands, Warehouses, Wine.

27 CFR Part 26

    Alcohol and alcoholic beverages, Caribbean Basin initiative, 
Claims, Customs duties and inspection, Electronic filing, Electronic 
funds transfers, Excise taxes, Packaging and containers, Puerto Rico, 
Reporting and recordkeeping requirements, Surety bonds, Virgin Islands, 
Warehouses.

27 CFR Part 27

    Alcohol and alcoholic beverages, Beer, Cosmetics, Customs duties 
and inspection, Electronic filing, Electronic funds transfers, Excise 
taxes, Imports, Labeling, Liquors, Packaging and containers, Reporting 
and recordkeeping requirements, Wine.

27 CFR Part 73

    Electronic filing, Reporting and recordkeeping requirements.

Amendments to the Regulations

    For the reasons set forth in the preamble, TTB is amending 27 CFR, 
chapter I, parts 19, 26, 27, and 73 as follows:

PART 19--DISTILLED SPIRITS PLANTS

0
1. The authority citation for part 19 continues to read as follows:

    Authority: 19 U.S.C. 81c, 1311; 26 U.S.C. 5001, 5002, 5004-5006, 
5008, 5010, 5041, 5061, 5062, 5066, 5081, 5101, 5111-5114, 5121-
5124, 5142, 5143, 5146, 5148, 5171-5173, 5175, 5176, 5178-5181, 
5201-5204, 5206, 5207, 5211-5215, 5221-5223, 5231, 5232, 5235, 5236, 
5241-5243, 5271, 5273, 5301, 5311-5313, 5362, 5370, 5373, 5501-5505, 
5551-5555, 5559, 5561, 5562, 5601, 5612, 5682, 6001, 6065, 6109, 
6302, 6311, 6676, 6806, 7011, 7510, 7805; 31 U.S.C. 9301, 9303, 
9304, 9306.


0
2. The first sentence of Sec.  19.601(a) is revised to read as follows:


Sec.  19.601  Finished products records.

    (a) Bottling and packaging. A proprietor must maintain daily 
transaction records and a daily summary record of the quantity of 
finished products bottled or packaged within the processing account at 
the distilled spirits plant. * * *
* * * * *

PART 26--LIQUORS AND ARTICLES FROM PUERTO RICO AND THE VIRGIN 
ISLANDS

0
3. The authority citation for part 26 continues to read as follows:

    Authority:  19 U.S.C. 81c; 26 U.S.C. 5001, 5007, 5008, 5010, 
5041, 5051, 5061, 5111-5114, 5121, 5122-5124, 5131-5132, 5207, 5232, 
5271, 5275, 5301, 5314, 5555, 6001, 6301, 6302, 6804, 7101, 7102, 
7651, 7652, 7805; 27 U.S.C. 203, 205; 31 U.S.C. 9301, 9303, 9304, 
9306.


0
4. Section 26.136 is revised to read as follows:


Sec.  26.136  Affixing closures.

    Each container of distilled spirits having a capacity of one gallon 
(3.785 liters) or less must have a closure or other device securely 
affixed to the container. The closure or other device must be 
constructed in such a manner as to require breaking in order to gain 
access to the contents of the container.

0
5. Section 26.231 is revised to read as follows:


Sec.  26.231  Affixing closures.

    Each container of distilled spirits having a capacity of one gallon 
(3.785 liters) or less must have a closure or other device securely 
affixed to the container. The closure or other device must be 
constructed in such a manner as to require breaking in order to gain 
access to the contents of the container.

PART 27--IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEERS

0
6. The authority citation for part 27 continues to read as follows:

    Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C. 5001, 
5007, 5008, 5010, 5041, 5051, 5054, 5061, 5121, 5122-5124, 5201, 
5205, 5207, 5232, 5273, 5301, 5313, 5555, 6302, 7805.


0
7. Section 27.62 is revised to read as follows:


Sec.  27.62  Affixing closures.

    Each container of imported distilled spirits having a capacity of 
one gallon (3.785 liters) or less must have a closure or other device 
securely affixed to the container. The closure or other device must be 
constructed in such a manner as to require breaking in order to gain 
access to the contents of the container.

PART 73--ELECTRONIC SIGNATURES; ELECTRONIC SUBMISSION OF FORMS

0
8. The authority citation for part 73 is revised to read as follows:

    Authority: 26 U.S.C. 6011(f), 6061(b), 7502(c); 44 U.S.C. 3504 
Note.


Sec.  73.1  [Amended]

0
9. Section 73.1, paragraph (a)(2), is amended by adding the words ``or, 
where applicable, to other agencies'' before the period.

0
10. Section 73.30 is revised to read as follows:


Sec.  73.30  What does subpart C cover?

    This subpart provides the conditions under which TTB will allow you 
to satisfy certain requirements to submit forms in this chapter by 
submitting forms electronically to TTB.

0
11. Section 73.31 is revised to read as follows:


Sec.  73.31  May I submit forms electronically to TTB?

    Yes; to satisfy any requirement to submit forms in this chapter 
(including a requirement to submit an original form or copies), you may 
submit an electronic form or you may submit, by electronic means, a 
copy of an original form, but only if:
    (a) You submit the form through an electronic document receiving 
system that TTB has designated for the receipt of that specific form 
and for which you have registered if so required; and
    (b) The conditions in any one of the following paragraphs apply:
    (1) It is an electronic form that bears valid electronic 
signatures, as provided in subpart B of this part, to the same extent 
that the paper submission for which it substitutes would bear 
handwritten signatures;
    (2) It is a copy of an original form that requires the signature of 
a third party who is not the person required to submit the form (such 
as a bond form or a power of attorney form) or a corporate seal; you 
submit the copy of the form electronically along with a certification 
that the copy is an exact copy of the original; the original bears all 
signatures of all required parties and any required corporate seal; and 
you maintain the original along with any other records required by TTB 
and make it available or submit it to TTB upon request; or

[[Page 17034]]

    (3) It is a copy of a TTB form that is not available in an 
electronic format or it is a document other than a TTB form (that is, 
other than a document issued by TTB that bears an Office of Management 
and Budget control number) that is required to be submitted to TTB; you 
submit the copy electronically along with a certification that the copy 
is an exact copy of the original; and you maintain the original along 
with any other records required by TTB and make it available or submit 
it to TTB upon request.


Sec.  73.33  [Amended]

0
12. Section 73.33 is amended by removing the word ``reporting'' in the 
first sentence.


Sec.  73.34  [Amended]

0
13. Section 73.34 is amended by removing the words ``your report'' and 
adding in their place the words ``the document''.


Sec.  73.35  [Amended]

0
14. Section 73.35 is amended by removing the words ``a general notice 
in the Federal Register or through a variance'' in the second sentence 
and adding in their place the words ``an approved alternate method or 
procedure''.

0
15. New Subpart D is added to read as follows:

Subpart D--Electronic Filing of Documents With Other Agencies


Sec.  73.40  May I satisfy TTB requirements to submit forms to other 
agencies by submitting those forms electronically?

    You may satisfy any requirement in the TTB regulations to submit a 
form to another agency by submitting such form to such agency by 
electronic means, as long as the agency provides for, and authorizes, 
the electronic submission of such form and you satisfy any registration 
or related requirement by that agency for that electronic submission. 
The submission of a form electronically to another agency does not 
alter any requirement regarding copies you must maintain.

    Signed: November 20, 2013.
John J. Manfreda,
Administrator.
    Approved: December 18, 2013.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade and Tariff Policy).
[FR Doc. 2014-06869 Filed 3-26-14; 8:45 am]
BILLING CODE 4810-31-P