Internal Revenue Service
Revenue Ruling
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smRev. Rul. 61-38
1961-1 C.B. 804
IRS Headnote
Proprietors of distilled spirits plants who, after bottling or repacking taxpaid spirits, remove them from the bottling premises to the general premises, or to contiguous premises, for storage for sale are operating taxpaid storerooms and must keep records for such storerooms, as prescribed in the Distilled Spirits Plants Regulations.
Full Text
Rev. Rul. 61-38
Various questions have been raised concerning the operating of a taxpaid storeroom in connection with a distilled spirits plant and the proper records to be maintained by the proprietor of the plant with respect thereto.
Section 5207(a)(6) of the Internal Revenue Code of 1954 provides that every distiller, every bonded warehouseman, every rectifier, every bottler shall keep records in such form and manner as the Secretary of the Treasury or his delegate shall by regulations prescribe of the kind and quantity of distilled spirits removed from bonded premises or bottling premises, as the case may be, and from any taxpaid storeroom operated in connection therewith, and the purpose for which removed.
Sections 201.625 and 201.633(d) of the Distilled Spirits Plants Regulations, each proprietor who operates a taxpaid storeroom in connections with, and contiguous to, adjacent to, in the immediate vicinity of, or on the premises of, his plant, or who operates storage premises at another location at or from which distilled spirits are not sold at wholesale, is required to maintain daily taxpaid storeroom records and to submit a monthly report on Form 338, Wholesale Liquor Dealer's Monthly Report.
A taxpaid storeroom is any room or area, except rooms or areas which are within and a part of the bottling premises, in which the proprietor of a distilled spirits plant stores taxpaid or tax-determined distilled spirits or wines in connection with the operation of the distilled spirits plant. A taxpaid storeroom may be on the general premises of a distilled spirits plant, adjacent to the plant, or located completely off the plant premises.
The following questions and answers illustrate the application of the above definition of a taxpaid storeroom and deal with the proper records to be maintained in its operation:
Question 1 . Is the proprietor of a distilled spirits plant operating a taxpaid storeroom when he receives spirits on his bottling premises only for rectification and bottling and, after such operations removes the spirits for direct shipment to other persons?
Answer . A proprietor of a distilled spirits plant who receives spirits on his bottling premises for rectification or bottling only and, after rectification or bottling of such spirits, removes them directly from the bottling premises of his plant for direct shipment to other persons is not, by virtue of such operations, operating a taxpaid storeroom.
Question 2 . Is the proprietor, who, after bottling or packaging removes taxpaid spirits from his bottling premises to his general premises for storage for sale, operating a taxpaid storeroom and must he keep records for such a storeroom and file Form 338?
Answer . A proprietor who, after bottling or packaging taxpaid spirits, removes them from his bottling premises to his general premises for storage for sale is operating a taxpaid storeroom. He must keep records for such a storeroom as prescribed in section 201.625 of the regulations and file reports on Form 338 as prescribed in section 201.633 of the regulations. In accordance with section 201.623 of the regulations, the proprietor must record the removal of the spirits from his bottling premises at the time he removes them to his taxpaid storeroom and the removal must be reported, as a removal from bottling premises, on Form 2733, Monthly Report of Bottling Premises Operations, for the month in which it occurs.
Question 3 . What would be the answer to question 2 in the event that the bottled or packaged spirits produced on the bottling premises were stored prior to shipment on an adjacent premises operated in connection with the distilled spirits plant?
Answer . The answer to question two would be equally applicable to a proprietor who stores his taxpaid bottled or packaged spirits, after removal from the bottling premises, on premises adjacent to his distilled spirits plant and operated in connection therewith.
Question 4 . Is the proprietor of a bottling premises, who handles products of other bottlers and receives such products on the general premises of his plant, operating a taxpaid storeroom?
Answer . A proprietor of bottling premises who handles (i.e. sells or offers for sale to dealers) the products of other bottlers and receives such products on the general premises of his plant is operating as a wholesale liquor dealer. He must obtain approval for such operations as required by section 201.67 of the regulations and must keep records and render reports of such operations as required for wholesale liquor dealers by the Liquor Dealer Regulations, 26 CFR Part 194. He is also subject to the Regulations relating to Basic Permit Requirements Under the Federal Alcohol Administration Act, 27 CFR Part 1, and the special tax imposed by section 5111(a) of the Internal Revenue Code of 1954, but as to the special tax, he may be entitled to the exemption provided by section 5113 of the Code.
Question 5 . Is the proprietor of a bottling premises, who stores products of his own plant and products of other bottlers on the general premises of his plant for subsequent sale and removal, operating a taxpaid storeroom and must he report transactions on Form 338 or Form 2733?
Answer . A proprietor of bottling premises who stores products of his own plant and products of other bottlers on the general premises of his plant for subsequent sale and removal is, by reason of his dealing in the products of other bottlers, a wholesale liquor dealer, and he is subject to the conditions listed in the answers to question four, above. Separate reporting in such instances is required. The proprietor's reports on Form 2733 and his records as required by section 201.623 of the Distilled Spirits Plants Regulations must be limited to those operations or transactions which occur on the bottling premises.
Form 338 must be used for reporting the receipt and disposition of spirits handled on the general premises.
Question 6 . Must a proprietor who maintains storage premises at another location, at or from which distilled spirits are not sold at wholesale, file separate Forms 338 to report receipts and removals at such storage premises?
Answer . A proprietor who maintains storage premises at another location, at or from which distilled spirits are not sold at wholesale, must keep the records required by section 201.625 of the regulations and file separate Forms 338 to report receipts and removals at such storage premises.