Usual and Customary Business Records Relating to Tax-Free Alcohol (TTB REC 5150/3)

In general, the Internal Revenue Code (IRC) at 26 U.S.C. 5001 imposes Federal excise tax on distilled spirits produced or imported into the United States. However, under the IRC at 26 U.S.C. 5214(a)(2) and (a)(3), distilled spirits may be withdrawn free of tax for nonbeverage purposes for use by Federal, State, and local governments, and for use by certain educational organizations and institutions, research laboratories, hospitals, blood banks, sanitariums, and nonprofit clinics, subject to regulations prescribed by the Secretary of the Treasury. In addition, the IRC at 26 U.S.C. 5275 requires those that procure or use distilled spirits withdrawn free of tax under sections 5214(a)(2) and (3) to keep records and make reports regarding the receipt and use of such spirits as the Secretary requires by regulation. Under that IRC authority, in order to maintain accountability over tax-free spirits and prevent their diversion to taxable beverage use, the TTB regulations in 27 CFR part 22 require tax-free alcohol users to maintain certain usual and customary records regarding the receipt, loss, shipment, destruction, return, consignment, and inventories of such alcohol. Such accountability is necessary to protect the revenue.

The latest form for Usual and Customary Business Records Relating to Tax-Free Alcohol (TTB REC 5150/3) expires 2023-06-30 and can be found here.

Usual and Customary Business Records Relating to Tax-Free Alcohol (TTB REC 5150/3)

Federal Enterprise Architecture: General Government - Taxation Management