Manufacturers of Nonbeverage Products - Records to Support Claims for Drawback, TTB REC 5530/2

The Internal Revenue Code (IRC) at 26 U.S.C.5001 imposes a Federal excise tax of $13.50 per proof gallon on distilled spirits produced or imported into the United States. However, the IRC at 26 U.S.C. 5111–5114, allows manufacturers of certain nonbeverage products that are unfit for beverage use—medicines, medicinal preparations, food products, flavors, flavoring extracts, or perfume—to claim drawback (refund) of all but $1.00 per proof gallon of the excise tax paid on the distilled spirits used in the production of such products. Under these IRC authorities, TTB has issued regulations governing nonbeverage product drawback claims, contained in 27 CFR part 17, which includes a requirement to keep source records supporting such claims. The required source records include information about distilled spirits received, gauge records, evidence of taxes paid, the date spirits were used, the quantity and kind used in each product, receipt and usage of other ingredients (to validate formula compliance), inventory records, records of recovered alcohol, the quantity of intermediate products transferred to other plants, the disposition of each nonbeverage product produced, and the purchasers (except for retail sales). These records are necessary to protect the revenue; the required records help prevent fraudulent claims and the diversion to beverage use of spirits on which nonbeverage product drawback is claimed.

The latest form for Manufacturers of Nonbeverage Products - Records to Support Claims for Drawback, TTB REC 5530/2 expires 2021-02-28 and can be found here.