1513-0056 Supporting Statement (2016-03-28)

DEPARTMENT OF THE TREASURY

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

Supporting Statement –– Information Collection Request

OMB Control Number 1513–0056

Information Collection Request Title:

Distilled Spirits Plants – Transaction and Supporting Records (TTB REC 5110/05).

A. Justification

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

The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers chapter 51 (distilled spirits, wine, and beer), chapter 52 (tobacco products, processed tobacco, and cigarette papers and tubes), and sections 4181–4182 (firearms and ammunition excise taxes) of the Internal Revenue Code of 1986, as amended, (IRC, 26 U.S.C.) pursuant to section 1111(d) of the Homeland Security Act of 2002, as codified at 6 U.S.C. 531(d). In addition, the Secretary of the Treasury has delegated certain IRC administrative and enforcement authorities to TTB through Treasury Department Order 120–01.

In general, the IRC at 26 U.S.C. 5001 imposes a Federal excise tax of $13.50 per gallon on distilled spirits produced in or imported into the United States, a tax rate far exceeding the spirits’ production costs. To safeguard the revenue generated by this tax, the IRC at 26 U.S.C. 5207 provides that proprietors of distilled spirits plants (DSPs) must maintain records of their production, storage, denaturing, and processing activities, and must render reports covering those activities, in such form and manner as the Secretary shall by regulations prescribe.

In general, the TTB regulations in 27 CFR parts 19, 26, 27, and 28 require DSP proprietors to keep transaction and supporting records regarding their production, storage, denaturing, and processing activities, and to render monthly operations reports regarding these activities. This collection of information, 1513–0056, consists of the transaction and supporting records that are common to all four activities, which DSP proprietors must maintain to account for those activities, as applicable. These records then serve, in part, to document the data provided by DSP proprietors in the applicable monthly operations reports submitted to TTB, as required under the regulations. The four reports are covered by OMB control numbers 1513–0047 (production activities), 1513–0039 (storage activities), 1513–0049 (denaturing activities), and 1513–0041 (processing activities).

Many of the required transaction records are usual and customary records kept during the normal course of business. These include records of samples, records of destruction, gauge records, package gauge records, inventories, records of oak chip additions, and records regarding shipments of distilled spirits to manufacturers of nonbeverage products. In addition to these usual and customary records, proprietors also must keep certain security records, records regarding wine tax credits, and records concerning alternation of premises.

The following regulatory sections in 27 CFR contain requirements related to the transaction and supporting records approved under this information collection:

19.226 19.283 19.284 19.286 19.287 19.288 19.289 19.303

19.306 19.307 19.312 19.322 19.324 19.331 19.333 19.360

19.371 19.372 19.383 19.389 19.394 19.402 19.405 19.406

19.414 19.419 19.425 19.427 19.431 19.434 19.435 19.452

19.454 19.457 19.459 19.462 19.465 19.571 19.573 19.574

19.575 19.576 19.577 19.616 19.617 19.618 19.619 19.620

19.621 19.623 19.626;

26.79 26.80 26.164a 26.199a 26.199b 26.199d 26.199f 26.204

26.273a 26.273b 26.301 26.302;

27.138 27.139 27.172; and

28.98 28.107 28.192.

This information collection is aligned with ––

• 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?

The transaction and supporting records required under this information collection serve as the source documents for the monthly operations reports covering production, storage, denaturing, and processing activities at DSPs. DSP proprietors use these records to compile their required monthly operations reports. TTB field personnel may examine these records to verify a DSP proprietor’s monthly operations reports in order to protect the revenue and ensure compliance with regulatory requirements.

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?

TTB has approved and will continue to approve, on a case by case basis, the use of improved information technology for the collection and maintenance of required information. This information collection involves transaction and other supporting records that DSP proprietors keep at their premises, which they may do so using information technologies of their choice, provided the required information is readily available to TTB personnel conducting on-site audits and inspections.

4. What efforts are used to identify duplication? Can similar information already available be used or modified for use for the purposes described in Item 2 above?

This information collection contains information pertinent to each respondent and applicable to their specific DSP production, storage, denaturing, and processing operations. As far as TTB is able to 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?

Transaction records are the source documents for a DSP's accounting of spirits in all operational accounts—production, storage, denaturing, and processing. While a small business may be expected to have a lesser number of transactions and a commensurately smaller recordkeeping burden, any lesser recordkeeping requirements would render the accounting incomplete, which would jeopardize the revenue. Therefore, this requirement cannot be reduced on the basis of an entity’s size.

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?

Without these transaction records to document monthly DSP operations reports, TTB would be unable to verify the accounting for spirits used or in a DSP’s production, warehousing, processing, or denaturing activities. If not collected or if collected less frequently, TTB would be severely would unable, or would be hindered in, protecting the revenue derived from distilled spirits excise taxes.

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.

To solicit comments from the general public, TTB published a “60-day” comment request notice for this information collection in the Federal Register on Wednesday, January 13, 2016, at 81 FR 1679. TTB received no comments on this information collection in response.

9. Was any payment or gift given to respondents, other than remuneration of contractors or grantees? If so, why?

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?

No specific assurance of confidentiality is provided for this information collection, which consists of records kept at DSP premises. However, Federal law at 5 U.S.C. 552 protects the confidentiality of proprietary information obtained by the Government from regulated businesses and individuals, and 26 U.S.C. 6103 prohibits disclosure of tax returns and related information, unless disclosure is specifically authorized by law.

11. What is the justification for questions of a sensitive nature? If personally identifiable information (PII) is being collected in an electronic system, identify the Privacy Impact Assessment (PIA) that has been conducted for the information collected under this request and/or the Privacy Act System of Records notice (SORN) issued for the electronic system in which the PII is being stored.

This information collection contains no questions of a sensitive nature. In addition, this information collection does not collect personally identifiable information (PII) in an electronic system. Therefore, no Privacy Impact Assessment (PIA) or System of Records Notice (SORN) is required for this collection.

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

Excepting for the three exceptions noted below, the transaction and supporting records included in this information collection are usual and customary records kept by DSP proprietors during the normal course of business for the purposes of cost accounting and inventory control. Such records, therefore, impose no burden as defined by 5 CFR 1320.7(b) on the 2,198 DSP proprietors currently regulated by TTB.

As for the three types of records included in this information collection that are not usual and customary, TTB estimates that it annually takes each of the 2,198 DSP respondent an average of 12 hours to maintain records of securing devices, 8 hours to document credits for the wine or flavor content of distilled spirits, and 1.8 hours to maintain a logbook record of the alternation of premises, considering that only some DSPs will need to keep this last record. Therefore, the total annual burden these 3 records is 47,916.4 hours. These estimates are based on past experience and the TTB staff’s knowledge of the industry.

	Respondents	Responses/ Respondent	Annual Responses	Hours Per Response	Total Burden
Security Records	2,198	1	2,198	12	26,376
Wine Credit Records	2,198	1	2,198	8	17,584
Alternation of Premises Records	2,198	1	2,198	1.8	3,956.4
Totals	2,198	1	2,198	21.8	47,916.4

13. What is the estimated annual cost burden to respondents or record keepers resulting from this information collection request (excluding the value of the hour burden in Question 12 above)?

There is no cost to respondents associated with this collection.

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

There is no cost to the Federal Government for the maintenance of transaction records.

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

There are no program changes associated with this collection.

As for adjustments, TTB is increasing the collection’s estimated number of respondents and the resulting total annual responses and burden hours due to growth in the distilled spirits industry, which has resulted in an increase in the number of distilled spirits plants regulated by TTB.

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

TTB will not publish the results of this collection.

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?

This information collection consists of records kept by DSP proprietors at their premises. As such, there is no prescribed medium for TTB to display the OMB approval expiration date.

18. What are the exceptions to the certification statement?

(c) See item 5 above.

(f) This is not a recordkeeping requirement.

(i) No statistics are involved.

(j) See item 3 above.

B. Collections of Information Employing Statistical Methods.

This collection does not employ statistical methods.