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Federal Register/Vol. 73, No. 139/Friday, July 18, 2008/Rules

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Federal Register/Vol. 73, No. 139/Friday, July 18, 2008/Rules Federal Register / Vol. 73, No. 139 / Friday, July 18, 2008 / Rules and Regulations 41259 accordance with Executive Order 13132, DEPARTMENT OF THE TREASURY § 1.881–5T [Removed] it is determined that this amendment I Par. 2. Section 1.881–5T is removed. does not have sufficient federalism Internal Revenue Service implications to require consultations or LaNita Van Dyke, warrant the preparation of a federalism 26 CFR Part 1 Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief summary impact statement. Executive [TD 9391] Order 12372, regarding Counsel, (Procedure and Administration). intergovernmental consultation on RIN 1545–BF85 [FR Doc. E8–16305 Filed 7–17–08; 8:45 am] Federal programs and activities, does BILLING CODE 4830–01–P Source Rules Involving U.S. not apply to this amendment. Executive Order 12866: This Possessions and Other Conforming amendment is exempt from the review Changes; Correction DEPARTMENT OF THE TREASURY under Executive Order 12866, but has AGENCY: Internal Revenue Service (IRS), Alcohol and Tobacco Tax and Trade been reviewed internally by the Treasury. Department of State to ensure Bureau ACTION: Correcting amendment. consistency with the purposes thereof. Executive Order 12988: The SUMMARY: This document contains a 27 CFR Parts 7, 16, and 25 Department of State has reviewed the correction to final regulations (TD 9391) [TTB Ruling 2008–3] proposed regulations in light of sections that were published in the Federal 3(a) and 3(b)(2) of Executive Order Register on Wednesday, April 9, 2008 Classification of Brewed Products as 12988 to eliminate ambiguity, minimize (73 FR 19350) providing rules under ‘‘Beer’’ Under the Internal Revenue litigation, establish clear legal section 937(b) of the Internal Revenue Code of 1986 and as ‘‘Malt Beverages’’ standards, and reduce burden. Code for determining whether income is Under the Federal Alcohol Paperwork Reduction Act: This rule derived from sources within a U.S. Administration Act does not impose any new reporting or possession or territory specified in recordkeeping requirements subject to AGENCY: Alcohol and Tobacco Tax and section 937(a)(1) (generally referred to Trade Bureau, Treasury. the Paperwork Reduction Act, 44 U.S.C. in this preamble as a ‘‘territory’’) and ACTION: Chapter 35. whether income is effectively connected Ruling on the classification of brewed products. List of Subjects in 22 CFR Part 122 with the conduct of a trade or business within a territory. Arms and munitions, Exports, SUMMARY: This document reproduces a Reporting and recordkeeping DATES: This correction is effective July ruling issued by the Alcohol and requirements. 18, 2008, and is applicable on April 9, Tobacco Tax and Trade Bureau on July 2008. I Accordingly, for the reasons set forth 7, 2008, to clarify that that certain above, Title 22, Chapter I, Subchapter FOR FURTHER INFORMATION CONTACT: J. brewed products classified as ‘‘beer’’ M, Part 122 is amended as follows: David Varley, (202) 622–7790 (not a toll- under the Internal Revenue Code of free number). 1986 do not meet the definition of a PART 122—REGISTRATION OF SUPPLEMENTARY INFORMATION: ‘‘malt beverage’’ under the Federal MANUFACTURERS AND EXPORTERS Alcohol Administration Act. Background DATES: The ruling was effective on July I 1. The authority citation for Part 122 The final regulations and removal of 7, 2008. continues to read as follows: temporary regulations that are the FOR FURTHER INFORMATION CONTACT: Authority: Secs. 2 and 38, Public Law subjects of this document are under Ramona Hupp, Regulations and Rulings 90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778); sections 1, 170A, 861, 871, 876, 881, Division, Alcohol and Tobacco Tax and E.O. 11958, 42 FR 4311, 1977 Comp. p. 79, 884, 901, 931, 932, 933, 934, 935, 937, Trade Bureau, 1310 G Street, NW., 22 U.S.C. 2651a. 957, 1402, 6012, 6038, 6046, 6688, and Room 200–East, Washington, DC 20220; I 2. Section 122.3 is amended by 7701 of the Internal Revenue Code. telephone (202) 927–2166. revising paragraphs (a) and (b) to read Need for Correction SUPPLEMENTARY INFORMATION: On July 7, as follows: 2008, the Alcohol and Tobacco Tax and As published, final regulations (TD § 122.3 Registration fees. Trade Bureau (TTB) issued TTB Ruling 9391) contain an error that may prove to 2008–3 to clarify that certain brewed (a) A person who is required to be misleading and is in need of products classified as ‘‘beer’’ under the register may do so for a period of 1 year clarification. Internal Revenue Code of 1986 do not upon submission of a completed Form List of Subject in 26 CFR Part 1 meet the definition of a ‘‘malt beverage’’ DS–2032, transmittal letter and payment under the Federal Alcohol of $1,750. Income taxes, Reporting and Administration Act. We made this (b) Expiration of registration. A recordkeeping requirements. ruling available through the TTB Web registrant must submit its request for Correction of Publication site on July 8, 2008. This ruling is registration renewal at least 30 days but reproduced below: no earlier than 60 days prior to the I Accordingly, 26 CFR part 1 is expiration date. corrected by making the following TTB Ruling 2008–3 * * * * * correcting amendment: Classification of Brewed Products as Dated: July 3, 2008. PART 1—INCOME TAXES ‘‘Beer’’ Under the Internal Revenue John C. Rood, Code of 1986 and as ‘‘Malt Beverages’’ Acting Under Secretary for Arms Control and I Paragraph 1. The authority citation Under the Federal Alcohol International Security, Department of State. for part 1 continues to read, in part, as Administration Act [FR Doc. E8–16537 Filed 7–17–08; 8:45 am] follows: In recent months, the Alcohol and BILLING CODE 4701–25–P Authority: 26 U.S.C. 7805 * * * Tobacco Tax and Trade Bureau (TTB) VerDate Aug<31>2005 16:19 Jul 17, 2008 Jkt 214001 PO 00000 Frm 00025 Fmt 4700 Sfmt 4700 E:\FR\FM\18JYR1.SGM 18JYR1 rwilkins on PROD1PC63 with RULES 41260 Federal Register / Vol. 73, No. 139 / Friday, July 18, 2008 / Rules and Regulations has received inquiries from brewers Chapter 51 of the IRC, section 5051 (26 It should be noted that sake´ and regarding the labeling standards that U.S.C. 5051) imposes a tax on all beer similar products are included within the apply to beers produced from brewed or produced, and removed for definition of ‘‘beer’’ under the IRC. See substitutes for malted barley, such as consumption or sale, within the United 26 U.S.C. 5052(a). However, sake´ is also rice or corn. We also have fielded States, or imported into the United included within the definition of a wine questions from brewers and importers States. Section 5412 of the IRC (26 under the FAA Act, which, among other regarding the appropriate labeling of U.S.C. 5412) provides that beer may be things, covers only wines with an beers that are made without hops. This removed from the brewery for alcohol content of at least seven percent ruling explains the statutory criteria for consumption or sale only in hogsheads, alcohol by volume. See 27 U.S.C. classification of products as ‘‘beer’’ and packages, and similar containers, 211(a)(6). Thus, sake´ and similar ‘‘malt beverages’’ under the applicable marked, branded, or labeled in such products with an alcohol content of at laws and regulations. manner as the Secretary of the Treasury least seven percent alcohol by volume may by regulation require. Regulations are subject to the labeling and other Laws and Regulations that implement the Chapter 51 requirements of the FAA Act. Federal Alcohol Administration Act provisions pertaining to beer are set TTB Jurisdiction Over These Products Sections 105(e) and (f) of the Federal forth in part 25 of the TTB regulations (27 CFR part 25) and include, in Beers (other than sake´ and similar Alcohol Administration Act (FAA Act), products) that do not conform to the 27 U.S.C. 205(e) and (f), vest broad § 25.142 (27 CFR 25.142), label requirements for beer in bottles. definition of a ‘‘malt beverage’’ in the authority in the Secretary of the FAA Act are outside the scope of the Section 5052(a) of the IRC (26 U.S.C. Treasury to prescribe regulations with FAA Act and, therefore, are not subject 5052(a)) defines the term ‘‘beer,’’ for respect to the labeling and advertising of to the labeling, advertising, and other purposes of Chapter 51, as ‘‘beer, ale, wine, distilled spirits, and malt provisions of the TTB regulations porter, stout, and other similar beverages that are introduced into promulgated under the FAA Act. This fermented beverages (including sake´ or interstate or foreign commerce or means, among other things, that brewers similar products) of any name or imported into the United States. Section and importers of such products are not description containing one-half of 1 105(e) also provides that no person may required to obtain a certificate of label percent or more of alcohol by volume, bottle, or remove from customs custody approval for these beers. in bottles, distilled spirits, wine, or malt brewed or produced from malt, wholly Brewery products that are not malt beverages unless he has obtained a or in part, or from any substitute beverages under the FAA Act but that certificate of label approval issued in therefor.’’ The same definition appears conform to the IRC definition of ‘‘beer’’ accordance with regulations prescribed in the TTB regulations at 27 CFR 25.11. are still subject to all applicable by the Secretary. Regulations that In addition, with reference to what may requirements of the IRC and part 25 of implement the provisions of §§ 105(e) be a substitute for malt, § 25.15(a) of the the TTB regulations, including the and (f), as they relate to malt beverages, TTB regulations (27 CFR 25.15(a)) states labeling of bottles (§ 25.142) and the are set forth in part 7 of the TTB that ‘‘[o]nly rice, grain of any kind, bran, approval of formulas (27 CFR 25.55).
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