1513-0039 Ss (01-31-2013)

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DEPARTMENT OF THE TREASURY

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

Supporting Statement -Information Collection Requirement

OMB Control Number 1513 - 0039

TTB REC 5110/02 Distilled Spirits Plants Warehousing Records and

TTB F 5110.11 Monthly Report of Storage Operations

A. JUSTIFICATION:

1. What are the circumstances that make this collection of information necessary and what legal or administrative requirements necessitate the collection? Also include the following: Align the information collection to Treasury’s Strategic Goals, Line of Business/Sub-function, and IT Investment, if one is used.

Distilled spirits, other than those used for certain authorized nonbeverage purposes, are taxed at a rate of $13.50 a proof gallon, a rate far exceeding production costs. To safeguard the revenue from this tax Congress prescribed, in 26 U.S.C. 5207, that the proprietor of a distilled spirits plant (DSP) must maintain records and submit reports of production activities, storage activities, denaturation activities, and processing activities and to render reports covering those operations.

Regulations in 27 CFR 19.590 through 19.593, as amplified by other sections in part 19, prescribe those records which are unique to warehousing (storage) activities, and §§ 19.632 and 19.720 prescribe the reporting requirements for those operations. General provisions for the content, format, organization, maintenance and retention of these records are provided in §§ 19.571 through 19.581 and §§ 19.714 through 19.719. Records required by part 19, which are unique to warehousing operations, are the summary records of distilled spirits in packages (§ 19.591), spirits of less than 190 degrees of proof stored in tanks (§ 19.592), and spirits of 190 or more degrees of proof stored in tanks (§ 19.593). The source records for these summaries are those transaction records discussed in TTB REC 5110/05 (OMB control number 1513-0056). The summary records and source documents, taken together, will reflect those data elements enumerated in § 19.590, and will include that information required to be recorded by §§ 19.305 (Identification of spirits), 19.324 (Filling of packages from tanks), 19.327 (Packages dumped from mingling), 19.329 (Mingled spirits or wines held in tanks), and 19.411 (Recording gauge). Spirits are deposited in accordance with § 19.322, and the required records are necessary for the determination of losses in accordance with § 19.462. Respondents are the DSP's qualified under 26 U.S.C. 5171 for the warehousing of distilled spirits.

This information collection is aligned with:

Treasury Strategic Goal: Effectively Manage U.S. Government Finances.

Line of Business/Sub-function: General Government/Taxation Management.

IT Investment: Tax Major Application Systems.

2. How, by whom, and for what purpose is this information used?

Collections of information on DSP warehousing operations are used by TTB for the protection of the revenue and for the compilation of statistics for use by TTB, other government agencies, and industry. Records required of warehousing operations by part 19 are used by TTB personnel to verify the quantity and kind of distilled spirits and wine in storage at a DSP. Since provisions of 26 U.S.C. 5005(c) prescribe that the proprietor of a DSP is liable for the taxes on all spirits while stored on the premises of the DSP, the verification of storage operations is essential in establishing a proprietor's tax liability and adequacy of bond coverage.

DSP proprietors are required by 27 CFR 19.632 to submit a Monthly Report of Storage Operations on TTB F 5110.11, essentially a summary of various data elements from the proprietor's daily warehousing records. This report of warehousing operations is used by TTB management and specialists in district offices to monitor industry operations for compliance with the law and regulations, to analyze trends within the industry, to allocate field resources most effectively, to compile statistics, and by TTB personnel, as an audit tool in revenue protection inspections.

TTB Form 5110.11 is examined by our specialists for mathematical accuracy and indications of unusual activities. If discrepancies are found, the specialist may resolve them by contacting the permittee (either by letter or by telephone) or by initiating an investigation by TTB personnel.

Bureau management uses the monthly report of storage operations to analyze trends in the industry and to plan the most efficient allocation of field resources. The number of field personnel is quite small in relationship to the number of establishments over which we have jurisdiction. It is, therefore, absolutely essential that management personnel have some means of determining who most needs to be inspected. Operational reports give that information and serve as a management tool for determining the inspection priorities.

In addition, our field personnel in conducting tax compliance examinations at DSPs use TTB F 5110.11. The monthly summaries of operations, as reflected on the operational reports, provide an essential tool in conducting examinations, by providing an overview of those operations to determine which areas deserve closest scrutiny due to the relative jeopardy to the revenue and by providing a basis upon which to plan a statistical sampling approach to verifying the data.

3. To what extent does this collection of information involve the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology? What consideration is given to use information technology to reduce burden?

The report is available on our website and can be submitted electronically via Pay.gov.

4. What efforts are used to identify duplication? Why can’t any similar information already available be used or modified for use for the purposes described in Item 2 above?

This information collection provides information that is pertinent to each respondent and applicable to his/her specific operation. As far as we can determine, similar information is not available elsewhere.

5. If this collection of information impacts small businesses or other small entities, what methods are used to minimize burden?

Collections of information on warehousing operations consist of summary accounts of the transactions in the warehouse. A small businessman may be expected to have a lesser number of transactions to enter into these accounts. TTB has determined that the information collected is the minimum necessary to protect the revenue.

6. What consequences to Federal program or policy activities and what, if any, technical or legal obstacles to reducing burden will occur if this collection is not conducted or is conducted less frequently?

Warehousing records required by part 19 are maintained on a continuing basis; they constitute a summary accounting for the storage of distilled spirits. Any less frequent collections would render the accounting meaningless.

Similarly, any less frequent submissions of Monthly Report of Storage Operations would severely restrict the utility of that form for the uses explained in item 2, above. Particularly, less frequent submissions of the report would impair the specialist’s ability to detect discrepancies and to respond to them on a timely basis.

If TTB were not to conduct this collection of information, it would have to rely solely on its field inspectors to monitor compliance with the laws and regulations governing storage operations, at greater cost to TTB and creating a greater burden on industry members.

7. Are there any special circumstances associated with this information collection that would require it to be conducted in a manner inconsistent with OMB guidelines?

There are no special circumstances associated with this information collection.

8. What effort was made to notify the general public about this collection of information? Summarize the public comments that were received and describe the action taken by the agency in response to those comments.

A 60-day Federal Register notice was published for this information collection on Wednesday, November 9, 2012, 77 FR 67442. The notice solicited comments from the general public. TTB received no comments.

9. What decision was made to provide any payment or gift to respondents, other than remuneration of contractors or grantees?

No payment or gift is associated with this collection.

10. What assurance of confidentiality was provided to respondents and what was the basis for the assurance in statute, regulations, or agency policy?

The records are maintained at the proprietor’s premises, however the reports are maintained at our National Revenue Center in secure file rooms with controlled public access. The confidentiality of the information collected is protected by 26 U.S.C. 6103.

11. What justification is there for questions of a sensitive nature?

We do not ask questions of a sensitive nature in this collection.

12. What is the estimated hour burden of this collection of information?

There is no change in burden from the previous submission. 230 (respondents) X 12 (times filed annually) = 2,760 (responses) X 2 hours (processing time) = 5,520 (total burden hours).

13. What is the estimated total annual cost burden to respondents or recordkeepers

resulting from this collection of information (excluding the value of the burden hours

in Question 12 above?

We do not associate any cost with this collection.

14. What is the annualized cost to the Federal Government?

There is no cost to the Federal Government for records maintained by the recordkeeper. The printing, distribution, clerical, and administrative costs of TTB F 5110.11 is estimated at $27,370.

15. What is the reason for any program changes or adjustments?

There are no program changes or adjustments associated with this collection.

16. Outline plans for tabulation and publication for collections of information whose results will be published.

The results of this collection will not be published.

17. If seeking approval to not display the expiration date for OMB approval of this information collection, what are the reasons that the display would be inappropriate?

We will display the expiration date of OMB approval for this collection.

18. What are the exceptions to the certification statement?

(c) See answer 5 above.

(f) Records must be maintained for three years.

(i) No statistics are involved.

B. Collection of Information Employing Statistical Methods

This collection does not employ statistical methods.