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The Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau

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The Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau THE DEPARTMENT OF THE TREASURY ALCOHOL AND TOBACCO TAX AND TRADE BUREAU HEARING BEFORE THE SUBCOMMITTEE ON OVERSIGHT OF THE COMMITTEE ON WAYS AND MEANS U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS SECOND SESSION MAY 20, 2008 Serial No. 110–85 Printed for the use of the Committee on Ways and Means ( U.S. GOVERNMENT PRINTING OFFICE 58–277 WASHINGTON : 2011 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 07:41 Jan 31, 2011 Jkt 058277 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 I:\WAYS\OUT\58277.XXX APPS06 PsN: 58277 dkrause on GSDDPC29PROD with HEARING COMMITTEE ON WAYS AND MEANS CHARLES B. RANGEL, New York, Chairman FORTNEY PETE STARK, California JIM MCCRERY, Louisiana SANDER M. LEVIN, Michigan WALLY HERGER, California JIM MCDERMOTT, Washington DAVE CAMP, Michigan JOHN LEWIS, Georgia JIM RAMSTAD, Minnesota RICHARD E. NEAL, Massachusetts SAM JOHNSON, Texas MICHAEL R. MCNULTY, New York PHIL ENGLISH, Pennsylvania JOHN S. TANNER, Tennessee JERRY WELLER, Illinois XAVIER BECERRA, California KENNY HULSHOF, Missouri LLOYD DOGGETT, Texas RON LEWIS, Kentucky EARL POMEROY, North Dakota KEVIN BRADY, Texas STEPHANIE TUBBS JONES, Ohio THOMAS M. REYNOLDS, New York MIKE THOMPSON, California PAUL RYAN, Wisconsin JOHN B. LARSON, Connecticut ERIC CANTOR, Virginia RAHM EMANUEL, Illinois JOHN LINDER, Georgia EARL BLUMENAUER, Oregon DEVIN NUNES, California RON KIND, Wisconsin PAT TIBERI, Ohio BILL PASCRELL JR., New Jersey JON PORTER, Nevada SHELLEY BERKLEY, Nevada JOSEPH CROWLEY, New York CHRIS VAN HOLLEN, Maryland KENDRICK MEEK, Florida ALLYSON Y. SCHWARTZ, Pennsylvania ARTUR DAVIS, Alabama Janice Mays, Chief Counsel and Staff Director Jon Traub, Minority Staff Director SUBCOMMITTEE ON OVERSIGHT JOHN LEWIS, Georgia, Chairman JOHN S. TANNER, Tennessee JIM RAMSTAD, Minnesota RICHARD E. NEAL, Massachusetts ERIC CANTOR, Virginia XAVIER BECERRA, California JOHN LINDER, Georgia STEPHANIE TUBBS JONES, Ohio DEVIN NUNES, California RON KIND, Wisconsin PAT TIBERI, Ohio BILL PASCRELL JR., New Jersey JOSEPH CROWLEY, New York Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records of the Committee on Ways and Means are also published in electronic form. The printed hearing record remains the official version. Because electronic submissions are used to prepare both printed and electronic versions of the hearing record, the process of converting between various electronic formats may introduce unintentional errors or omissions. Such occur- rences are inherent in the current publication process and should diminish as the process is further refined. ii VerDate Nov 24 2008 07:41 Jan 31, 2011 Jkt 058277 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 I:\WAYS\OUT\58277.XXX APPS06 PsN: 58277 dkrause on GSDDPC29PROD with HEARING C O N T E N T S Page Advisory of May 13, 2008, announcing the hearing ............................................. 2 WITNESSES The Honorable Lloyd Doggett, a Representative in Congress from the State of Texas ................................................................................................................. 6 John J. Manfreda, Administrator, Alcohol and Tobacco Tax and Trade Bu- reau, United States Department of the Treasury ............................................. 24 SUBMISSIONS FOR THE RECORD Authentix, statement ............................................................................................... 92 Charles N. Whitaker, statement ............................................................................ 94 Consumer Federation of America, statement ........................................................ 100 Matthew L. Myers, statement ................................................................................ 101 SICPA Product Security, statement ....................................................................... 104 U.S. Immigration and Customs Enforcement, news release ................................ 107 Maurice A. John, Sr., statement ............................................................................. 109 The Honorable Mike Thompson and George Radanovich, joint letter ................ 116 iii VerDate Nov 24 2008 12:11 Feb 18, 2011 Jkt 058277 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 I:\WAYS\OUT\58277.XXX APPS06 PsN: 58277 dkrause on GSDDPC29PROD with HEARING VerDate Nov 24 2008 07:41 Jan 31, 2011 Jkt 058277 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 I:\WAYS\OUT\58277.XXX APPS06 PsN: 58277 dkrause on GSDDPC29PROD with HEARING THE DEPARTMENT OF THE TREASURY ALCOHOL AND TOBACCO TAX AND TRADE BUREAU TUESDAY, MAY 20, 2008 U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, SUBCOMMITTEE ON OVERSIGHT, Washington, DC. The Subcommittee met, pursuant to notice, at 10:35 a.m., in room 1100, Longworth House Office Building, Hon. John Lewis (Chairman of the Subcommittee), presiding. [The advisory announcing the hearing follows:] (1) VerDate Nov 24 2008 07:41 Jan 31, 2011 Jkt 058277 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 I:\WAYS\OUT\58277.XXX APPS06 PsN: 58277 dkrause on GSDDPC29PROD with HEARING 2 ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON OVERSIGHT FOR IMMEDIATE RELEASE CONTACT: (202) 225–5522 May 13, 2008 OV–8 Lewis Announces a Hearing on the Department of the Treasury Alcohol and Tobacco Tax and Trade Bureau House Ways and Means Oversight Subcommittee Chairman John Lewis (D–GA) today announced that the Subcommittee on Oversight will hold a hearing on the De- partment of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB). The hearing will take place on Tuesday, May 20, 2008, at 10:30 a.m., in the main Committee hearing room, 1100 Longworth House Office Building. In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only. The Honorable Lloyd Doggett, a Rep- resentative from the State of Texas, and John J. Manfreda, Administrator of TTB, have been invited to testify. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. BACKGROUND: On January 24, 2003, the Homeland Security Act of 2002 separated the functions of the Bureau of Alcohol, Tobacco and Firearms into two organizations—TTB and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). TTB was estab- lished as a new bureau within the Department of the Treasury to: (1) collect excise taxes on alcohol, tobacco, firearms, and ammunition; (2) regulate alcohol and tobacco products; and (3) protect consumers. TTB is the primary Federal authority in the regulation of the alcohol and tobacco industries. ATF was established as a new bu- reau within the Department of Justice with jurisdiction over firearms enforcement and regulation, arson and explosives, and interstate trafficking of cigarettes. TTB is the third largest tax collection agency in the Federal Government with nearly $15 billion in excise taxes collected last year from approximately 6,100 busi- nesses. In addition, TTB regulates over 45,000 alcohol and tobacco business oper- ations. It has approximately 550 employees and a budget of $93.5 million. The Ad- ministration’s fiscal year 2009 proposed budget for TTB is $96.9 million, an increase of 3.6 percent over current levels. In announcing the hearing, Chairman Lewis said, ‘‘TTB has a broad range of responsibilities from tax collection to consumer protection and plays a crit- ical role in our economy. I look forward to reviewing TTB’s operations, in- cluding the impact of its separation from ATF. TTB must have the re- sources and authority it needs to protect the public and the revenue.’’ FOCUS OF THE HEARING: The hearing will review TTB’s overall operations on its 5-year anniversary. The Subcommittee will examine: (1) TTB’s budget and workload; (2) enforcement pro- grams and compliance issues related to the collection of alcohol, tobacco, firearms, and ammunition excise taxes; (3) the immediate and long-term impact of the divi- sion of resources and responsibilities between TTB and ATF; and (4) administrative and other proposals related to TTB’s operations. VerDate Nov 24 2008 07:41 Jan 31, 2011 Jkt 058277 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 I:\WAYS\OUT\58277.XXX APPS06 PsN: 58277 dkrause on GSDDPC29PROD with HEARING 3 DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: Please Note: Any person(s) and/or organization(s) wishing to submit comments for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select ‘‘110th Congress’’ from the menu en- titled, ‘‘Committee Hearings’’ (http://waysandmeans.house.gov/Hearings.asp?congress =18). Select the hearing for which you would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Follow the online in- structions, completing all informational forms and clicking ‘‘submit’’ on the final page. ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by close of business Tuesday, June 3, 2008. Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical
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