Public Law 109-59

SAFE, ACCOUNTABLE, FLEXIBLE, EFFICIENT TRANSPORTATION EQUITY ACT: A
LEGACY FOR USERS

[[Page 119 STAT. 1144]]

Public Law 109-59
109th Congress

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TITLE XI--HIGHWAY REAUTHORIZATION AND EXCISE TAX SIMPLIFICATION

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Subtitle B--Excise Tax Reform and Simplification

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PART 4--TAXES RELATING TO ALCOHOL

SEC. 11125. REPEAL OF SPECIAL OCCUPATIONAL TAXES ON PRODUCERS AND
MARKETERS OF ALCOHOLIC BEVERAGES.

(a) Repeal of Occupational Taxes.--
(1) In general.--The following provisions of part II of
subchapter A of chapter 51 (relating to occupational taxes) are
hereby repealed:
(A) <<NOTE: 26 USC 5081.>> Subpart A (relating to
proprietors of distilled spirits plants, bonded wine
cellars, etc.).
(B) <<NOTE: 26 USC 5091-5093. 26 USC 5111-5113,
5117. 26 USC 5121-5123.>> Subpart B (relating to
brewer).
(C) Subpart D (relating to wholesale dealers) (other
than sections 5114 and 5116).
(D) Subpart E (relating to retail dealers) (other
than section 5124).
(E) <<NOTE: 26 USC 5141, 5147-5149.>> Subpart G
(relating to general provisions) (other than sections
5142, 5143, 5145, and 5146).
(2) Nonbeverage domestic drawback.--Section 5131 is amended
by striking ``, on payment of a special tax per annum,''.
(3) Industrial use of distilled spirits.--Section 5276 is
hereby repealed.

(b) Conforming Amendments.--
(1)(A) The heading for part II of subchapter A of chapter 51
and the table of subparts for such part are amended to read as
follows:

``PART II--MISCELLANEOUS PROVISIONS

``Subpart A. Manufacturers of stills.
``Subpart B. Nonbeverage domestic drawback claimants.
``Subpart C. Recordkeeping by dealers.
``Subpart D. Other provisions.''.

(B) The table of parts for such subchapter A is amended by
striking the item relating to part II and inserting the
following new item:

``Part II. Miscellaneous provisions.''.

(2) Subpart C of part II of such subchapter (relating to
manufacturers of stills) is redesignated as subpart A.
(3)(A) Subpart F of such part II (relating to nonbeverage
domestic drawback claimants) is redesignated as subpart B and
sections 5131 through 5134 are redesignated as sections 5111
through 5114, respectively.
(B) The table of sections for such subpart B, as so
redesignated, is amended--
(i) by redesignating the items relating to sections
5131 through 5134 as relating to sections 5111 through
5114, respectively, and

[[Page 119 STAT. 1954]]

(ii) by striking ``and rate of tax'' in the item
relating to section 5111, as so redesignated.
(C) Section 5111, as redesignated by subparagraph (A), is
amended--
(i) by striking ``and rate of tax'' in the section
heading,
(ii) by striking the subsection heading for
subsection (a), and
(iii) by striking subsection (b).
(4) Part II of subchapter A of chapter 51 is amended by
adding after subpart B, as redesignated by paragraph (3), the
following new subpart:

``Subpart C--Recordkeeping and Registration by Dealers

``Sec. 5121. Recordkeeping by wholesale dealers.
``Sec. 5122. Recordkeeping by retail dealers.
``Sec. 5123. Preservation and inspection of records, and entry of
premises for inspection.
``Sec. 5124. Registration by dealers.''.

(5)(A) Section 5114 (relating to records) is moved to
subpart C of such part II and inserted after the table of
sections for such subpart.
(B) Section 5114 is amended--
(i) by striking the section heading and inserting
the following new heading:

``SEC. 5432. RECORDKEEPING BY WHOLESALE DEALERS.'';

and
(ii) by redesignating subsection (c) as subsection
(d) and by inserting after subsection (b) the following
new subsection:

``(c) Wholesale Dealers.--For purposes of this part--
``(1) Wholesale dealer in liquors.--The term `wholesale
dealer in liquors' means any dealer (other than a wholesale
dealer in beer) who sells, or offers for sale, distilled
spirits, wines, or beer, to another dealer.
``(2) Wholesale dealer in beer.--The term `wholesale dealer
in beer' means any dealer who sells, or offers for sale, beer,
but not distilled spirits or wines, to another dealer.
``(3) Dealer.--The term `dealer' means any person who sells,
or offers for sale, any distilled spirits, wines, or beer.
``(4) Presumption in case of sale of 20 wine gallons or
more.--The sale, or offer for sale, of distilled spirits, wines,
or beer, in quantities of 20 wine gallons or more to the same
person at the same time, shall be presumptive evidence that the
person making such sale, or offer for sale, is engaged in or
carrying on the business of a wholesale dealer in liquors or a
wholesale dealer in beer, as the case may be. Such presumption
may be overcome by evidence satisfactorily showing that such
sale, or offer for sale, was made to a person other than a
dealer.''.
(C) Paragraph (3) of section 5121(d), as so redesignated, is
amended by striking ``section 5146'' and inserting ``section
5123''.

[[Page 119 STAT. 1955]]

(6)(A) Section 5124 (relating to records) is moved to
subpart C of part II of subchapter A of chapter 51 and inserted
after section 5121.
(B) Section 5124 is amended--
(i) by striking the section heading and inserting
the following new heading:

``SEC. 5122. RECORDKEEPING BY RETAIL DEALERS.'',

(ii) <<NOTE: 26 USC 5122.>> by striking ``section 5146'' in
subsection (c) and inserting ``section 5123'', and
(iii) <<NOTE: 26 USC 5122.>> by redesignating subsection (c)
as subsection (d) and inserting after subsection (b) the
following new subsection:

``(c) Retail Dealers.--For purposes of this section--
``(1) Retail dealer in liquors.--The term `retail dealer in
liquors' means any dealer (other than a retail dealer in beer or
a limited retail dealer) who sells, or offers for sale,
distilled spirits, wines, or beer, to any person other than a
dealer.
``(2) Retail dealer in beer.--The term `retail dealer in
beer' means any dealer (other than a limited retail dealer) who
sells, or offers for sale, beer, but not distilled spirits or
wines, to any person other than a dealer.
``(3) Limited retail dealer.--The term `limited retail
dealer' means any fraternal, civic, church, labor, charitable,
benevolent, or ex-servicemen's organization making sales of
distilled spirits, wine or beer on the occasion of any kind of
entertainment, dance, picnic, bazaar, or festival held by it, or
any person making sales of distilled spirits, wine or beer to
the members, guests, or patrons of bona fide fairs, reunions,
picnics, carnivals, or other similar outings, if such
organization or person is not otherwise engaged in business as a
dealer.
``(4) Dealer.--The term `dealer' has the meaning given such
term by section 5121(c)(3).''.
(7) Section 5146 is moved to subpart C of part II of
subchapter A of chapter 51, inserted after section 5122, and
redesignated as section 5123.
(8) Subpart C of part II of subchapter A of chapter 51, as
amended by paragraph (7), is amended by adding at the end the
following new section:

``SEC. 5124. REGISTRATION BY DEALERS.

``Every dealer who is subject to the recordkeeping requirements
under section 5121 or 5122 shall register with the Secretary such
dealer's name or style, place of residence, trade or business, and the
place where such trade or business is to be carried on. In the case of a
firm or company, the names of the several persons constituting the same,
and the places of residence, shall be so registered.''.
(9) Section 7012 is amended by redesignating paragraphs (4)
and (5) as paragraphs (5) and (6), respectively, and by
inserting after paragraph (3) the following new paragraph:
``(4) For provisions relating to registration by dealers in
distilled spirits, wines, and beer, see section 5124.''.
(10) Part II of subchapter A of chapter 51 is amended by
inserting after subpart C the following new subpart:

[[Page 119 STAT. 1956]]

``Subpart D--Other Provisions

``Sec. 5131. Packaging distilled spirits for industrial uses.
``Sec. 5132. Prohibited purchases by dealers.''.

(11) Section 5116 is moved to subpart D of part II of
subchapter A of chapter 51, inserted after the table of
sections, redesignated as section 5131, and amended by inserting
``(as defined in section 5121(c))'' after ``dealer'' in
subsection (a).
(12) Subpart D of part II of subchapter A of chapter 51 is
amended by adding at the end the following new section:

``SEC. 5132. PROHIBITED PURCHASES BY DEALERS.

``(a) In General.--Except as provided in regulations prescribed by
the Secretary, it shall be unlawful for a dealer to purchase distilled
spirits for resale from any person other than a wholesale dealer in
liquors who is required to keep the records prescribed by section 5121.
``(b) Limited Retail Dealers.--A limited retail dealer may lawfully
purchase distilled spirits for resale from a retail dealer in liquors.
``(c) Penalty and Forfeiture.--

``For penalty and forfeiture provisions applicable to violations of
subsection (a), see sections 5687 and 7302.''.

(13) Subsection (b) of section 5002 is amended--
(A) by striking ``section 5112(a)'' and inserting
``section 5121(c)(3)'',
(B) by striking ``section 5112'' and inserting
``section 5121(c)'', and
(C) by striking ``section 5122'' and inserting
``section 5122(c)''.
(14) Subparagraph (A) of section 5010(c)(2) is amended by
striking ``section 5134'' and inserting ``section 5114''.
(15) Subsection (d) of section 5052 is amended to read as
follows:

``(d) Brewer.--For purposes of this chapter, the term `brewer' means
any person who brews beer or produces beer for sale. Such term shall not
include any person who produces only beer exempt from tax under section
5053(e).''.
(16) The text of section 5182 is amended to read as follows:

``For provisions requiring recordkeeping by wholesale liquor dealers,
see section 5112, and by retail liquor dealers, see section
5122.''.

(17) Subsection (b) of section 5402 is amended by striking
``section 5092'' and inserting ``section 5052(d)''.
(18) Section 5671 is amended by striking ``or 5091''.
(19)(A) Part V of subchapter J of chapter 51 <<NOTE: 26 USC
5691.>> is hereby repealed.
(B) The table of parts for such subchapter J is amended by
striking the item relating to part V.
(20)(A) Sections 5142, 5143, and 5145 are moved to
subchapter D of chapter 52, inserted after section 5731,
redesignated as sections 5732, 5733, and 5734, respectively, and
amended by striking ``this part'' each place it appears and
inserting ``this subchapter''.
(B) Section 5732, as redesignated by subparagraph (A), is
amended by striking ``(except the tax imposed by section 5131)''
each place it appears.

[[Page 119 STAT. 1957]]

(C) Paragraph (2) of section 5733(c), as redesignated by
subparagraph (A), is amended by striking ``liquors'' both places
it appears and inserting ``tobacco products and cigarette papers
and tubes''.
(D) The table of sections for subchapter D of chapter 52 is
amended by adding at the end the following:

``Sec. 5732. Payment of tax.
``Sec. 5733. Provisions relating to liability for occupational taxes.
``Sec. 5734. Application of State laws.''.

(E) Section 5731 is amended by striking subsection (c) and
by redesignating subsection (d) as subsection (c).
(21) Subsection (c) of section 6071 is amended by striking
``section 5142'' and inserting ``section 5732''.
(22) Paragraph (1) of section 7652(g) is amended--
(A) by striking ``subpart F'' and inserting
``subpart B'', and
(B) by striking ``section 5131(a)'' and inserting
``section 5111''.

(c) <<NOTE: 26 USC 5002 note.>> Effective Date.--The amendments made
by this section shall take effect on July 1, 2008, but shall not apply
to taxes imposed for periods before such date.

SEC. 11126. INCOME TAX CREDIT FOR DISTILLED SPIRITS WHOLESALERS AND FOR
DISTILLED SPIRITS IN CONTROL STATE BAILMENT WAREHOUSES FOR
COSTS OF CARRYING FEDERAL EXCISE TAXES ON BOTTLED DISTILLED
SPIRITS.

(a) In General.--Subpart A of part I of subchapter A of chapter 51
(relating to gallonage and occupational taxes) is amended by adding at
the end the following new section:

``SEC. 5011. INCOME TAX CREDIT FOR AVERAGE COST OF CARRYING EXCISE TAX.

``(a) In General.--For purposes of section 38, the amount of the
distilled spirits credit for any taxable year is the amount equal to the
product of--
``(1) in the case of--
``(A) any eligible wholesaler, the number of cases
of bottled distilled spirits--
``(i) which were bottled in the United States,
and
``(ii) which are purchased by such wholesaler
during the taxable year directly from the bottler
of such spirits, or
``(B) any person which is subject to section 5005
and which is not an eligible wholesaler, the number of
cases of bottled distilled spirits which are stored in a
warehouse operated by, or on behalf of, a State or
political subdivision thereof, or an agency of either,
on which title has not passed on an unconditional sale
basis, and
``(2) the average tax-financing cost per case for the most
recent calendar year ending before the beginning of such taxable
year.

``(b) Eligible Wholesaler.--For purposes of this section, the term
`eligible wholesaler' means any person which holds a permit under the
Federal Alcohol Administration Act as a wholesaler of distilled spirits
which is not a State or political subdivision thereof, or an agency of
either.
``(c) Average Tax-Financing Cost.--

[[Page 119 STAT. 1958]]

``(1) In general.--For purposes of this section, the average
tax-financing cost per case for any calendar year is the amount
of interest which would accrue at the deemed financing rate
during a 60-day period on an amount equal to the deemed Federal
excise tax per case.
``(2) Deemed financing rate.--For purposes of paragraph (1),
the deemed financing rate for any calendar year is the average
of the corporate overpayment rates under paragraph (1) of
section 6621(a) (determined without regard to the last sentence
of such paragraph) for calendar quarters of such year.
``(3) Deemed federal excise tax per case.--For purposes of
paragraph (1), the deemed Federal excise tax per case is $25.68.

``(d) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Case.--The term `case' means 12 80-proof 750-
milliliter bottles.
``(2) Number of cases in lot.--The number of cases in any
lot of distilled spirits shall be determined by dividing the
number of liters in such lot by 9.''.

(b) Credit Treated as Part of General Business Credit.--Section
38(b) (relating to current year business credit) is amended by striking
``plus'' at the end of paragraph (18), by striking the period at the end
of paragraph (19), and inserting ``, plus'', and by adding at the end
the following new paragraph:
``(20) the distilled spirits credit determined under section
5011(a).''.

(c) Conforming Amendment.--The table of sections for subpart A of
part I of subchapter A of chapter 51 is amended by adding at the end the
following new item:

``Sec. 5011. Income tax credit for average cost of carrying excise
tax.''.

(d) <<NOTE: 26 USC 38 note.>> Effective Date.--The amendments made
by this section shall apply to taxable years beginning after September
30, 2005.

SEC. 11127. QUARTERLY EXCISE TAX FILING FOR SMALL ALCOHOL EXCISE
TAXPAYERS.

(a) In General.--Subsection (d) of section 5061 (relating to time
for collecting tax on distilled spirits, wines, and beer) is amended by
redesignating paragraphs (4) and (5) as paragraphs (5) and (6),
respectively, and by inserting after paragraph (3) the following new
paragraph:
``(4) Taxpayers liable for taxes of not more than $50,000.--
``(A) In general.--In the case of any taxpayer who
reasonably expects to be liable for not more than
$50,000 in taxes imposed with respect to distilled
spirits, wines, and beer under subparts A, C, and D and
section 7652 for the calendar year and who was liable
for not more than $50,000 in such taxes in the preceding
calendar year, the last day for the payment of tax on
withdrawals, removals, and entries (and articles brought
into the United States from Puerto Rico) under bond for
deferred payment shall be the 14th day after the last
day of the calendar quarter during which the action
giving rise to the imposition of such tax occurs.
``(B) <<NOTE: Deadline.>> No application after limit
exceeded.--Subparagraph (A) shall not apply to any
taxpayer for any

[[Page 119 STAT. 1959]]

portion of the calendar year following the first date on
which the aggregate amount of tax due under subparts A,
C, and D and section 7652 from such taxpayer during such
calendar year exceeds $50,000, and any tax under such
subparts which has not been paid on such date shall be
due on the 14th day after the last day of the
semimonthly period in which such date occurs.
``(C) Calendar quarter.--For purposes of this
paragraph, the term `calendar quarter' means the three-
month period ending on March 31, June 30, September 30,
or December 31.''.

(b) Conforming Amendment.--Section 5061(d)(6), as redesignated by
subsection (a), is amended by striking ``paragraph (4)'' and inserting
``paragraph (5)''.
(c) <<NOTE: 26 USC 5061 note.>> Effective Date.--The amendments made
by this section shall apply with respect to quarterly periods beginning
on and after January 1, 2006.

PART 5--SPORT EXCISE TAXES

SEC. 11131. CUSTOM GUNSMITHS.

(a) Small Manufacturers Exempt From Firearms Excise Tax.--Section
4182 (relating to exemptions) is amended by redesignating subsection (c)
as subsection (d) and by inserting after subsection (b) the following
new subsection:
``(c) Small Manufacturers, Etc.--
``(1) In general.--The tax imposed by section 4181 shall not
apply to any pistol, revolver, or firearm described in such
section if manufactured, produced, or imported by a person who
manufactures, produces, and imports less than an aggregate of 50
of such articles during the calendar year.
``(2) Controlled groups.--All persons treated as a single
employer for purposes of subsection (a) or (b) of section 52
shall be treated as one person for purposes of paragraph (1).''.

(b) <<NOTE: 26 USC 4182 note.>> Effective Date.--
(1) In general.--The amendments made by this section shall
apply to articles sold by the manufacturer, producer, or
importer after September 30, 2005.
(2) No inference.--Nothing in the amendments made by this
section shall be construed to create any inference with respect
to the proper tax treatment of any sales before the effective
date of such amendments.

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