Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 62-37

1962-1 C.B. 345

IRS Headnote

Where a custom bottler of distilled spirits collects the full amount of tax determined at the time of regauge from a purchaser and allows no credit or refund to the purchaser of the spirits for losses incurred in bottling operations, the allowance of the bottler's claim for credit or refund of tax for such losses is precluded by section 5008(c)(2)(A) of the Internal Revenue Code of 1954.

Full Text

Rev. Rul. 62-37

Advice has been requested whether a custom bottler of distilled spirits, who collects the full amount of tax determined at the time of regauge and makes no adjustment or refund of tax to his customer for losses incurred in the bottling operations, may receive an allowance of tax credit or refund in view of the limitation in section 5008(c)(2)(A) of the Internal Revenue Code of 1954.

Section 5008(c)(2)(A) of the Code provides that no abatement, remission, credit or refund of taxes shall be made where the claimant is indemnified or recompensed for the tax.

Section 201.482 of the Distilled Spirits Plants Regulations provides, in part, that abatement, remission, credit, or refund of tax shall not be made in respect of losses to the extent that the claimant is indemnified or recompensed for the tax.

Revenue Ruling 60-201, C.B. 1960-1, 712, precludes the allowance of a claim for refund or credit of tax where a brewer does not allow a credit to his customer for beer removed from the market. The brewer is considered indemnified by the customer through payment for the beer.

Accordingly, it is held that where a bottler of distilled spirits collects from his customer the full amount of tax determined at the time of regauge and allows no credit to the purchaser of the spirits for losses incurred in bottling operations, the bottler is considered recompensed for the tax, and an allowance of the bottler's claim for credit is precluded by section 5008(c)(2)(A) of the Code. If a bottler of distilled spirits does not make a practice of passing on to the persons, who advance money to pay the tax on the distilled spirits withdrawn from bond, an appropriate amount in respect of allowable loss under section 5008(c) of the Code, he must bear the burden of establishing the amount of allowable loss in respect of which he was not recompensed.

However, where the bottler has a systematic and regular procedure for crediting or refunding an appropriate amount in respect of allowable loss to the persons who advanced the money to pay the tax, such practice or procedure may be accepted by the Service as meeting the requirements of section 5008(c)(2)(A) of the Code if the claimant states in the claim that he has followed (or in the case of an interim claim that he will follow) such practice or procedure with respect to the claim.

This Revenue Ruling is applicable only to custom bottling operations and not to regular bottling operations where the full amount of the tax determined at the time of regauge is not paid to the bottler by a customer.