article: SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. (a) Short Title.--This Act may be cited as the ``Distilled Spirits Tax Payment Simplification Act of 1997''. (b) Reference to 1986 Code.--Except as otherwise expressly provided, whenever an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. SEC. 2. TRANSFER OF DISTILLED SPIRITS BETWEEN BONDED PREMISES. (a) In General.--Section 5212 is amended to read as follows: ``SEC. 5212. TRANSFER OF DISTILLED SPIRITS BETWEEN BONDED PREMISES. ``Distilled spirits on which the internal revenue tax has not been paid as authorized by law may, under such regulations as the Secretary shall prescribe, be transferred in bond between bonded premises in any approved container. For the purposes of this chapter, except in the case of any transfer from a premise of a bonded dealer, the removal of distilled spirits for transfer in bond between bonded premises shall not be construed to be a withdrawal from bonded premises.''. (b) Conforming Amendment.--The first sentence of section 5232(a) (relating to transfer to distilled spirits plant without payment of tax) is amended to read as follows: ``Distilled spirits imported or brought into the United States, under such regulations as the Secretary shall prescribe, may be withdrawn from customs custody and transferred to the bonded premises of a distilled spirits plant without payment of the internal revenue tax imposed on such distilled spirits.''. SEC. 3. ESTABLISHMENT OF DISTILLED SPIRITS PLANT. Section 5171 (relating to establishment) is amended-- (1) in subsection (a), by striking ``or processor'' and inserting ``processor, or bonded dealer''; (2) in subsection (b), by striking ``or as both'' and inserting ``as a bonded dealer, or as any combination thereof''; (3) in subsection (e)(1), by inserting ``, bonded dealer,'' before ``processor''; and (4) in subsection (e)(2), by inserting ``bonded dealer,'' before ``or processor''. SEC. 4. DISTILLED SPIRITS PLANTS. Section 5178(a) (relating to location, construction, and arrangement) is amended by adding at the end the following: ``(5) Bonded dealer operations.--Any person establishing a distilled spirits plant to conduct operations as a bonded dealer may, as described in the application for registration-- ``(A) store distilled spirits in any approved container on the bonded premises of such plant, and ``(B) under such regulations as the Secretary shall prescribe, store taxpaid distilled spirits, beer, and wine, and such other beverages and items (products) not subject to tax or regulation under this title on such bonded premises.''. SEC. 5. BONDED DEALERS. (a) Definitions.--Section 5002(a) (relating to definitions) is amended by adding at the end the following: ``(16) Bonded Dealer.--The term `bonded dealer' means any person who has elected under section 5011 to be treated as a bonded dealer. ``(17) Control State Entity.--The term `control State entity' means a State, a political subdivision of a State, or any instrumentality of such a State or political subdivision, in which only the State, political subdivision, or instrumentality is allowed under applicable law to perform distilled spirit operations.''. (b) Election To Be Treated as a Bonded Dealer.--Subpart A of part I of subchapter A of chapter 51 (relating to distilled spirits) is amended by adding at the end the following: ``SEC. 5011. ELECTION TO BE TREATED AS BONDED DEALER. ``(a) Election.--Any wholesale dealer or any control State entity may elect, at such time and in such manner as the Secretary shall prescribe, to be treated as a bonded dealer if such wholesale dealer or entity sells bottled distilled spirits exclusively to a wholesale dealer in liquor, to an independent retail dealer subject to the limitation set forth in subsection (b), or to another bonded dealer. ``(b) Limitation in Case of Sales to Retail Dealers.-- ``(1) By bonded dealer.--Any person, other than a control State entity, who is a bonded dealer shall not be considered as selling to an independent retail dealer if-- ``(A) the bonded dealer has a greater than 10 percent ownership interest in, or control of, the retail dealer; ``(B) the retail dealer has a greater than 10 percent ownership interest in, or control of, the bonded dealer; or ``(C) any person has a greater than 10 percent ownership interest in, or control of, both the bonded and retail dealer. For purposes of this paragraph, ownership interest, not limited to stock ownership, shall be attributed to other persons in the manner prescribed by section 318. ``(2) By control state entity.--In the case of any control State entity, subsection (a) shall be applied by substituting `retail dealer' for `independent retail dealer'. ``(c) Inventory Owned at Time of Election.--Any bottled distilled spirits in the inventory of any person electing under this section to be treated as a bonded dealer shall, to the extent that the tax under this chapter has been previously determined and paid at the time the election becomes effective, not be subject to such additional tax on such spirits as a result of the election being in effect. ``(d) Revocation of Election.--The election made under this section may be revoked by the bonded dealer at any time, but once revoked shall not be made again without the consent of the Secretary. When the election is revoked, the bonded dealer shall immediately withdraw the distilled spirits on determination of tax in accordance with a tax payment procedure established by the Secretary. ``(e) Equitable Treatment of Bonded Dealers Using LIFO Inventory.-- The Secretary shall provide such rules as may be necessary to assure that taxpayers using the last-in, first-out method of inventory valuation do not suffer a recapture of their LIFO reserve by reason of making the election under this section or by reason of operating a bonded wine cellar as permitted by section 5351. ``(f) Approval of Application.--Any person submitting an application under section 5171(c) and electing under this section to be treated as a bonded dealer shall be entitled to approval of such application to the same extent such person would be entitled to approval of an application for a basic permit under section 104(a)(2) of the Federal Alcohol Administration Act (27 U.S.C 204(a)(2)), and shall be accorded notice and hearing as described in section 104(b) of such Act (27 U.S.C. 204(b)).''. (c) Conforming Amendment.--The tables of sections of subpart A of part I of subchapter A of chapter 51 is amended by adding at the end the following: ``Sec. 5011. Election to be treated as bonded dealer.''. SEC. 6. DETERMINATION OF TAX. The first sentence of section 5006(a)(1) (relating to requirements) is amended to read as follows: ``Except as otherwise provided in this section, the tax on distilled spirits shall be determined when the spirits are transferred from a distilled spirits plant to a bonded dealer or are withdrawn from bond.''. SEC. 7. LOSS OR DESTRUCTION OF DISTILLED SPIRITS. Section 5008 (relating to abatement, remission, refund, and allowance for loss or destruction of distilled spirits) is amended-- (1) in subsections (a)(1)(A) and (a)(2), by inserting ``bonded dealer,'' after ``distilled spirits plant,'' both places it appears; (2) in subsection (c)(1), by striking ``of a distilled spirits plant''; and (3) in subsection (c)(2), by striking ``distilled spirits plant'' and inserting ``bonded premises''. SEC. 8. TIME FOR COLLECTING TAX ON DISTILLED SPIRITS. (a) In General.--Section 5061(d) (relating to time for collecting tax on distilled spirits, wines, and beer) is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following: ``(5) Advanced payment of distilled spirits tax.-- Notwithstanding the preceding provisions of this subsection, in the case of any tax imposed by section 5001 with respect to a bonded dealer who has an election in effect on September 20 of any year, any payment of which would, but for this paragraph, be due in October or November of that year, such payment shall be made on such September 20. No penalty or interest shall be imposed for the period from such September 20 until the due date determined without regard to this paragraph to the extent that tax due exceeds the tax which would have been due with respect to distilled spirits in the preceding October and November had the election under section 5011 been in effect.''. (b) Conforming Amendment.--Section 5061(e)(1) (relating to payment by electronic fund transfer) is amended by inserting ``or any bonded dealer,'' after ``respectively,''. SEC. 9. EXEMPTION FROM OCCUPATIONAL TAX NOT APPLICABLE. Section 5113(a) (relating to sales by proprietors of controlled premises) is amended by adding at the end the following: ``This subsection shall not apply to a proprietor of a distilled spirits plant whose premises are used for operations of a bonded dealer.''. SEC. 10. CONFORMING AMENDMENTS. (1) Section 5003(3) is amended by striking ``certain''. (2) Section 5214 is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the following: ``(b) Exception.--Paragraphs (1), (2), (3), (5), (10), (11), and (12) of subsection (a) shall not apply to distilled spirits withdrawn from premises used for operations as a bonded dealer.''. (3) Section 5215 is amended-- (A) in subsection (a), by striking ``the bonded premises'' and all that follows through the period and inserting ``bonded premises.''; (B) in the heading of subsection (b), by striking ``a Distilled Spirits Plant'' and inserting ``Bonded Premises''; and (C) in subsection (d), by striking ``a distilled spirits plant'' and inserting ``bonded premises''. (4) Section 5362(b)(5) is amended by adding at the end the following: ``The term does not mean premises used for operations as a bonded dealer.''. (5) Section 5551(a) is amended by inserting ``bonded dealer,'' after ``processor'' both places it appears. (6) Subsections (a)(2) and (b) of section 5601 are each amended by inserting ``, bonded dealer,'' before ``or processor'' . (7) Paragraphs (3), (4), and (5) of section 5601(a) are each amended by inserting ``bonded dealer,'' before ``or processor'' . (8) Section 5602 is amended-- (A) by inserting ``, warehouseman, processor, or bonded dealer'' after ``distiller''; and (B) in the heading, by striking ``by distiller''. (9) Sections 5115, 5180, and 5681 are repealed. (10) The table of sections for part II of subchapter A of chapter 51 is amended by striking the item relating to section 5115. (11) The table of sections for subchapter B of chapter 51 is amended by striking the item relating to section 5180. (12) The item relating to section 5602 in the table of sections for part I of subchapter J of chapter 51 is amended by striking ``by distiller''. (13) The table of sections for part IV of subchapter J of chapter 51 is amended by striking the item relating to section 5681. SEC. 11. REGISTRATION FEES. (a) General Rule.--The Director of the Bureau of Alcohol, Tobacco, and Firearms shall, in accordance with this section, assess and collect registration fees solely to defray a portion of any net increased costs of regulatory activities of the Government resulting from enactment of this Act. (b) Persons Subject to Fee.--Fees shall be paid in a manner prescribed by the Director by the bonded dealer. (c) Amount and Timing of Fees.--Fees shall be paid annually and shall not exceed $1,000 per bonded premise. (d) Deposit and Credit.--The moneys received during any fiscal year from fees described in subsection (a) shall be deposited as an offsetting collection in, and credited to, the account providing appropriations to conduct the regulatory activities of the Government resulting from enactment of this Act. (e) Limitation.--The aggregate amount of fees assessed and collected under this section may not exceed in any fiscal year the aggregate amount of any net increased costs of regulatory activity referred to in subsection (a). SEC. 12. COOPERATIVE AGREEMENTS. (a) Study.--The Secretary of the Treasury shall study and report to Congress concerning possible administrative efficiencies which could inure to the benefit of the Federal Government of cooperative agreements with States regarding the collection of distilled spirits excise taxes. Such study shall include, but not be limited to, possible benefits of the standardization of forms and collection procedures and shall be submitted 1 year after the date of enactment of this Act. (b) Cooperative Agreement.--The Secretary of the Treasury is authorized to enter into such cooperative agreements with States which the Secretary deems will increase the efficient collection of distilled spirits excise taxes. SEC. 13. EFFECTIVE DATE. (a) In General.--Except as provided in subsection (b), the amendments made by this Act take effect on the date which is 120 days after the date of enactment of this Act. (b) Exceptions.-- (1) Establishment of distilled spirits plant.--The amendments made by section 3 take effect on the date of enactment of this Act. (2) Special rule.--Each wholesale dealer who is required to file an application for registration under section 5171(c) of the Internal Revenue Code of 1986 whose operations are required to be covered by a basic permit under sections 103 and 104 of the Federal Alcohol Administration Act (27 U.S.C. 203, 204) and who has received such basic permits as an importer, wholesaler, or as both, and has obtained a bond required under subchapter B of chapter 51 of subtitle E of such Code before the close of the fourth month following the date of enactment of this Act, shall be qualified to operate bonded premises until such time as the Secretary of the Treasury takes final action on the application. Any control State entity (as defined in section 5002(a)(17) of such Code, as added by section 5(a)) that has obtained a bond required under such subchapter shall be qualified to operate bonded premises until such time as the Secretary of the Treasury takes final action on the application for registration under section 5171(c) of such Code.
summary: Distilled Spirits Tax Payment Simplification Act of 1997 - Amends the Internal Revenue Code to modify or impose requirements regarding: (1) the transfer of distilled spirits (including imported distilled spirits) between bonded premises; (2) operations as a bonded dealer conducted on the bonded premises of a distilled spirits plant; (3) establishment and operation of such a plant by a bonded dealer; (4) election to be treated as a bonded dealer; (5) the time at which the tax on distilled spirits is determined; (6) distilled spirits lost or destroyed in bond or returned to bonded premises; (7) the time for tax payment and payment by electronic transfer; and (8) application to a plant used by a bonded dealer of provisions relating to sales by proprietors of controlled premises. Directs the Director of the Bureau of Alcohol, Tobacco, and Firearms to assess and collect registration fees to defray a portion of the costs resulting from the enactment of this Act. Directs the Secretary of the Treasury to study and report to the Congress concerning cooperative agreements regarding the collection of distilled spirits excise taxes.