Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 66-99

1966-1 C.B. 315

IRS Headnote

Where denatured distilled spirits are sold subject to approval as to the quality of the undenatured alcohol used to produce them, distilled spirits plant proprietors may withdraw samples of the undenatured alcohol, free of tax, and furnish such samples to their customers.

Revenue Ruling 61-63, C.B. 1961-1, 806, amplified.

Full Text

Rev. Rul. 66-99

Advice has been requested as to whether a distilled spirits plant proprietor may withdraw samples of undenatured alcohol from his closed distilling system, or from containers on his bonded premises, and furnish such samples free of tax to his specially denatured alcohol user customers for their use in determining if such alcohol will be suitable for producing the specially denatured alcohol which they will purchase from him.

In defining the terms `spirits' or `distilled spirits,' as used in 26 CFR Part 201, 26 CFR 201.11 states that such terms shall not include denatured spirits unless specifically stated.

With reference to tax-free samples of distilled spirits, 26 CFR 201.601 includes, among others, a provision which states that `* * * where spirits are sold subject to approval as to quality a sample may be furnished the purchaser.' Since this provision does not include a specific reference to denatured spirits, it would seem that it does not apply to denatured spirits. It is held, however, that it is not the intent of the regulations to be more restrictive as to the furnishing of samples of spirits where denatured spirits are being sold than where undenatured spirits are being sold. Therefore, within the provision of 26 CFR 201.601, distilled spirits plant proprietors who have entered into bona fide agreements, either written or oral, to sell specified quantities of denatured spirits, subject to the purchasers' approval of the quality of the undenatured spirits used therein, may furnish tax-free samples of the undenatured spirits to such purchasers.

This Revenue Ruling amplifies Revenue Ruling 61-63, C.B. 1961-1, 806, to the extent that it recognizes that tax-free samples of distilled spirits may be furnished to purchasers of specially denatured spirits under the conditions stated above.