REGULATIONS NO. 6 : : : REVISED OCTOBER 8, 1909 UNITED STATES INTERNAL REVENUE Regulations and Instructions • m s 'K', u' n concerning Tax on Fermented Liquors UNDER THE REVISED STATUTES OF THE UNITED STATES AND SUBSEQUENT ACTS October 8, 1909 WASHINGTON GOVERNMENT PRINTING OFFICE 1909 (Regulations, No. 6. Revised October 8,1909.) REGULATIONS AND INSTRUCTIONS CONCERNING THE MANUFACTURE, REMOVAL OF, AND TAX ON FERMENTED LIQUORS, UNDER THE UNITED STATES REVISED STATUTES AND SUBSEQUENT ACTS. Treasury Department, Office of tiie Commissioner of Internal Revenue, Washington, D. C., October 8, 1909. TAX ON FERMENTED LIQUORS. Section 3339, Revised Statutes of the United States, as amended, provides that— There shall be paid on all beer, lager-beer, ale, porter, and other similar fermented liquors, brewed or manufactured and sold, or stored in warehouse, or removed for consumption or sale, within the United States, by whatever name such liquors may be called, a tax of one dollar for every barrel containing not more than thirty-one gallons; and at a like rate for any other quantity or for any fractional part of a barrel. In estimating and computing such tax, the fractional parts of a barrel shall be halves, thirds, quarters, sixths, and eighths; and any frac- ^ tional part of a barrel, containing less than one-eighth, shall be accounted one-eighth; more than one-eighth, and not more than one-sixth, shall be accounted one-sixth; more than one-sixth, and not more than one-fourth, shall be accounted one-fourth; more than one-fourth, and not more than one-third, shall be accounted one- third; more than one-third, and not more than one-half, shall be accounted one-half; more than one-half, and not more than one barrel, shall be accounted one barrel; and more than one barrel, and not more than sixty-three gallons, shall be accounted two barrels, or a hogshead. The said tax shall be paid by the owner, agent, or superintendent of the brewery or premises in which such fermented liquors are made, and in the manner and at the time here¬ inafter specified: Provided, That in lieu of or in addition to the pres¬ ent requirements of law in that respect, all stamps used for denoting the tax upon fermented liquors or other taxes may, in the discretion of the Commissioner of Internal Revenue, be canceled by perfora¬ tions to be made in such manner and form as the Commissioner may by regulations prescribe. il • i TSL 3 4 TAX ON FERMENTED LIQUORS. For convenience of reference, legislation of recent years affecting the rate of tax on fermented liquors is given below: [Act of June 13,1898 (30 Stat., 448).] Section 1 . That there shall be paid, in lieu of the tax of one dollar now imposed by law, a tax of two dollars on all beer, lager beer, ale, porter, and other similar fermented liquors, brewed or manufactured and sold, or stored in warehouse, or removed for consumption or sale, within the United States, by whatever name such liquors may be called, for every barrel containing not more than thirty-one gallons; and at a like rate for any other quantity or for the fractional parts of a barrel authorized and defined by law. And section thirty-three hundred and thirty-nine of t^^Revised Statutes is hereby amended accordingly: Provided , Thata discount of seven and one-half per centum shall be allowed upon all sales by collectors to brewers of the stamps provided for the payment of said tax: Provided further , That the additional tax imposed in this section on all fermented liquors stored in warehouse to which a stamp had been affixed shall be assessed and collected in the manner now provided by law for the collection of taxes not paid by stamps. * * * Sec. 51. That this act shall take effect on the day next succeeding the date of its passage, except as otherwise specially provided for. [Act of March 2, 1901 (31 Stat., 938).] Section 1 . That section one of the act entitled “An act to provide ways and means to meet war expenditures, and for other purposes,” approved June thirteenth, eighteen hundred and ninety-eight, is hereby amended so as to read as follows: “That there shall be paid, in lieu of the tax of one dollar now im¬ posed by law, a tax of one dollar and sixty cents on all beer, lager beer, ale, porter, and other similar fermented liquors, brewed or man¬ ufactured and sold, or stored in warehouse, or removed for consump¬ tion or sale, within the United States, by whatever name such liquors may be called, for every barrel containing not more than thirty-one gallons; and at a like rate for any other quantity or for the fractional parts of a barrel authorized and defined by law. And section thirty- three hundred and thirty-nine of the Revised Statutes is hereby amended accordingly: Provided , That in lieu of or in addition to the present requirements of law in that respect, all stamps used for denoting the tax upon fermented liquors or other taxes may, in the discretion of the Commissioner of Internal Revenue, be canceled by perforations to be made in such manner and form as the Commis¬ sioner may by regulations prescribe.” * * * Sec. 15. That the provisions of this act shall take effect on and after the first day of July, nineteen hundred and one, except where otherwise expressly provided. [Act of April 12, 1902 (32 Stat., 96).] Section 1 . That section one of the act entitled “An act to provide ways and means to meet war expenditures, and for other purposes,” approved June thirteenth, eighteen hundred and ninety-eight, as amended by the act of March second, nineteen hundred and one, enti¬ tled “An act to amend an act entitled ‘An act to provide ways and TAX ON FERMENTED LIQUORS. 5 means to meet war expenditures, and for other purposes/ approved June thirteenth, eighteen hundred and ninety-eight, and to reduce taxation thereunder,” be, and is hereby, further amended so as to read as follows: “Section 1 . That there shall be paid on all beer, lager beer, ale, porter, or other similar fermented liquor, brewed or manufactured and sold, or stored in warehouse, or removed for consumption or sale, within the United States, by whatever name such liquors may be called, in lieu of the tax now imposed by law, a tax of one dollar for every barrel containing not more than thirty-one gallons; and at a like rate for any other quantity or for any fractional part of a barrel, as authorized and defined by section thirty-three hundred and thirty-nine of the Revised Statutes of the United States: Provided, That in lieu of or in addition to the present requirements of law in that respect all stamps used for denoting the tax upon fermented liquors or other taxes may, in the discretion of the Commissioner of Internal Revenue, be canceled by perforations to be made in such manner and form as the Commissioner may, by regulations, prescribe.” * * * Sec. 11 . That this act, except as otherwise specially provided for in the preceding section, shall take effect July first, nineteen hundred and two. DEFINITION OF THE WORD GALLON. Section 21, act of March 1, 1879, provides— That the word “gallon,” wherever used in the internal-revenue law, relating to beer, lager-beer, ale, porter, and other similar fermented liquors, shall be held and taken to mean a wine-gallon, the liquid measure containing two hundred and thirty-one cubic inches. DEFINITION AND QUALIFICATION OF A BREWER. (a) Brewer defined. Section 3244, Revised Statutes, provides that— * * * Every person who manufactures fermented liquors of any name or description for sale, from malt, wholly or in part, or from any substitute therefor, shall be deemed a brewer. * * * (b) Notice of intention to carry on business. Section 3335, Revised Statutes, provides that— Every brewer shall, before commencing or continuing business, file with the collector, or proper deputy collector, of the district in which he designs to carry it on a notice in writing, stating the name of the person, company, corporation, or firm, the names of the members of any such company or firm, the places of residence of such persons, a description of the premises on which the brewery is situated, and of his or their title thereto, and the name of the owner thereof. This notice should be made in duplicate on Form 27 c. The deputy collector who receives the notice in duplicate on this form will forward one copy to the Commissioner of Internal Revenue and the other to the collector of the district. 6 TAX ON FERMENTED LIQUORS. This notice will be given in all cases before commencing business, and on the first of July of each succeeding year in cases where the business of brewing is to be continued, regardless of the time of giv¬ ing bond. The blank space on Form 27 c for the name or style under which the business is to be carried on is not intended to be filled with the name of the brewery, if it has one, but with the individual, firm, or corporate name under which the person or persons interested intend to conduct his or their operations. The name of every person interested or to be interested in the busi¬ ness, etc., must be stated in the proper space, except in case of notices given by incorporated companies, when the names and addresses of the officers of the corporation should be given. As bottling is not permitted on any portion of the brewery premises, description of bottling establishments must not be made on Form 27 c, and the land on which any bottling house is situated, or on which any bottling business is conducted, must not be included within the description of brewery premises on Form 27 c. The statement of the whole quantity of malt liquors annually made and sold or removed should in all cases be made for the two special-tax years immediately preceding the date of the notice. The signature to the notice, when given by an individual, must in all cases be made by the brewer in person or in his name by his authorized agent or attorney. In case of a firm the signature must be made in the firm name by a member of the firm or by some person duly authorized, as above. In case of a corporation the signature must be made in the name and under the seal of the corporation by the proper officer thereof. The collector, or proper deputy collector, will enter on the third page of the notice, in the appropriate spaces, the amount of special tax paid by the brewer for the period covered by the notice, and the date and penal sum of the bond last given. (c) Special taxes. At the time of filing the above notice the brewer will pay the special tax required by law, which is $100 per annum where he manufactures 500 barrels or more per year, and $50 per annum where he manufac¬ tures less than 500 barrels per year. 11 Every person who sells, or offers for sale, malt liquors in less quan¬ tities than five gallons at one time, but who does not deal in spirituous liquors, shall be regarded as a retail dealer in malt liquors,” and shall pay a special tax of twenty dollars. “ Every person who sells, or offers for sale, malt liquors in quan¬ tities of not less than five gallons at one time, but who does not deal in spirituous liquors at wholesale, shall be regarded as a wholesale TAX ON FERMENTED LIQUORS. 7 dealer in malt liquors, ” and shall pay a special tax of fifty dollars: “Provided, That no brewer shall be required to pay a special tax as a dealer by reason of selling in the original stamped packages, whether at the place of manufacture or elsewhere, malt liquors manufactured by him or purchased and procured by him in his own casks or ves¬ sels, under the provisions of section thirty-three hundred and forty- nine of the Revised Statutes; but the quantity of malt liquors so pur¬ chased shall be included in calculating the liability to brewer’s special tax of both the brewer who manufactures and sells the same and the brewer who purchases the same: And it is hereby 'provided, That no further collection of special tax as retail dealers in malt liquors shall be made from brewers for selling malt liquors of their own manufac¬ ture in the original stamped eighth-barrel package.” (See sec. 3244 Rev. St at., as amended.) (d) Brewers’ bond. Section 3336, Revised Statutes, as amended by act of April 29, 1886, provides that— Every brewer, on filing notice as aforesaid of his intention to com¬ mence or continue business, shall execute a bond to the United States, to be approved by the collector of the district, in a sum equal to three times the amount of the tax which, in the opinion of the collector, said brewer will be liable to pay during any one month, and conditioned that he shall pay, or cause to be paid, as herein provided, the tax required by law on all beer, lager-beer, ale, porter, and other fer¬ mented liquors made by or for him, before the same is sold or removed for consumption or sale, except as hereinafter provided; and that he shall keep, or cause to be kept, a book, in the manner and for the pur¬ poses hereinafter specified, which shall be open to inspection by the proper officers, as by law required; and that he shall in all respects faithfully comply, without fraud or evasion, with all requirements of law relating to the manufacture and sale of any malt liquors aforesaid ; and he shall execute a new bond once in four years and whenever required so to do by said collector, in the amount above named and conditioned as above provided, which bond shall be in lieu of any former bond or bonds of such brewer in respect to all liabilities accru¬ ing after its approval by said collector. Such bond will be according to Form 20, and in compliance with the following instructions: The Christian names must be written in the body of the bond in full, and so signed to the bond. The residence of each signer must be stated in the bond. A seal of wax or wafer (or corporate seal in case of a corporation) must be attached to each signature. Each signature must be made in the presence of two witnesses, who must sign their names as such, except as to bonds executed on behalf of a corporation, either as principal or surety, in which case the corporate seal will be a sufficient attestation. 11749—09 - 2 8 TAX ON FERMENTED LIQUORS. There must be at least two sureties (except in cases where a surety company is accepted as sole surety under act of August 13, 1894), and the bond must be dated. The sufficiency of personal sureties must be shown by affidavits made on the bond, or on Form 33. The penal sum named in the bond should be equal to three times the amount of the tax which, in the opinion of the collector, the brewer will be liable to pay during any one month, and a new bond must be given at the expiration of the fourth year, or whenever it shall be required by the collector. The surety or sureties on the bond must have no interest whatever in the business. In case of incorporated companies the bond must be executed in their corporate capacity and under their corporate seals and signatures. In case of a brewing company not incorporated, the name of the firm as well as of each member thereof must be recited in the bond, which should be signed by each member of the firm. Executors, administrators, and assignees continuing the business must execute a new bond. . Each bond having a corporate surety will be executed in duplicate; one copy with the collector’s approval indorsed thereon will be filed in the collector’s office, and the other copy, similarly indorsed, will be immediately forwarded to the Commissioner of Internal Revenue. When personal sureties are offered, the bond need not be executed in duplicate, and in such cases the bond will not be forwarded to the Commissioner, unless special instructions requiring such action are given in any particular case. brewers’ books and returns. Section 3337, Revised Statutes, provides that— Every person who owns or occupies any brewery, or premises used or intended to be used for the purpose of brewing or making such fermented liquors, or who has such premises under his control or superintendence, as agent for the owner or occupant, or has in his possession or custody any brewing materials, utensils, or apparatus, used or intended to be used on said premises in the manufacture of beer, lager-beer, ale, porter, or other similar fermented liquors, either as owner, agent, or superintendent, shall, from day to day, enter, or cause to be entered, in a book to be kept by him for that purpose, the kind of such malt liquors, the estimated quantity produced in barrels, and the actual quantity sold or removed for consumption or sale in barrels or fractional parts of barrels. He shall also, from day to day, enter, or cause to be entered, in a separate book to be kept by him for that purpose, an account of all materials by him purchased for the purpose of producing such fermented liquors, including grain and malt. And he shall render to the collector, or the proper deputy collector, on or before the tenth day of each month, a true statement, in writing, in duplicate, taken from his books, of the estimated quan¬ tity in barrels of such malt liquors brewed, and the actual quantity TAX ON FERMENTED LIQUORS. 9 sold or removed for consumption or sale during the preceding month; and shall verify, or cause to be verified, the said statement, and the facts therein set forth, by oath, to be taken before the collector of the district, or proper deputy collector, according to the form required by law. Said books shall be open at all times for the inspection of any collector, deputy collector, inspector, or revenue agent, who may take memorandums and transcripts therefrom. Section 333S, Revised Statutes, provides that— The entries made in such books shall, on or before the tenth day of each month, be verified by the oath of the person by whom they are made. The said oath shall be written in the book at the end of such entries, and be certified by the officer administering the same, and shall be in form as follows: “ I do swear (or affirm) that the foregoing entries were made by me; and that they state truly, according to the best of my knowledge and belief, the estimated quantity of the whole amount of such malt liquors brewed, and the actual quantity sold, and the actual quantity removed, from the brewery owned by-, in the county of-; and, further, that I have no knowledge of any matter or thing required by law to be stated in said entries which has been omitted therefrom.” And the owner, agent, or superintendent aforesaid shall also, in case the original entries made in his book were not made by himself, sub¬ join thereto the following oath, to be taken in manner as aforesaid: “I do swear (or affirm) that, to the best of my knowledge and belief, the foregoing entries fully set forth all the matters therein required by law; and that the same are just and true, and that I have taken all the means in my power to make them so.” Section 3340, Revised Statutes, as amended, provides that— Every owner, agent, or superintendent of any brewery, vessels, or utensils used in making fermented liquors, who evades, or attempts to evade, the payment of the tax thereon, or fraudulently neglects or refuses to make true and exact entry and report of the same in the manner required by law, or to do, or cause to be done, any of the things by law required to be done by him * * * or who inten¬ tionally makes false entry in said, book or in said statement, or know¬ ingly allows or procures the same to be done, shall forfeit, for every such offense, all the liquors made by him or for him, and all the ves¬ sels, utensils, and apparatus used in making the same, and be liable to a penalty of not less than five hundred nor more than one thousand dollars, to be recovered with costs of suit, and shall be deemed guilty of a misdemeanor, and be imprisoned for a term not exceeding one year. And every brewer who neglects to keep books, or refuses to furnish the account and duplicate thereof as provided by law, or refuses to permit the proper officer to examine the books in the man¬ ner provided, shall, for every such refusal or neglect, forfeit and pay the sum of three hundred dollars. (a) Brewers’ books. Two books are required to be kept (sec. 3337) by every person engaged in brewing, as above described. Form No. 104 is recommended for the book for recording the quan¬ tities made, removed, or sold. 10 TAX ON FERMENTED LIQUORS. In a separate book is to be entered, from day to day, an account of all materials purchased by him for the purpose of producing fermented liquors, including grain and malt, in such form as shall be distinct and explicit and convenient for reference. Brewers must make apparent on the material book the disposition made of all materials entered thereon which are not used in the production of fermented liquor. The entries made in these books must, on or before the tenth day of each month, be verified by the oath or affirmation of the person or per¬ sons by whom such entries were made, which oath or affirmation must be written in the books respectively at the end of such entries, and be certified by the officer administering the same. And said books are required to be open at all times for the inspection of any collector, deputy collector, or revenue agent, who may take memoranda there¬ from. For verification of the book containing the entries of materials pur¬ chased, the same form is to be used as is given in Form 104, except that for the words “malt liquors brewed and the actual quantity sold, and the actual quantity removed from,” the words “material purchased for the purpose of producing fermented liquors in” should be substituted. And the owner, agent, or superintendent, when the entries are not made by himself, must further verify them in the manner as shown by Form 104. ( b ) Brewers’ monthly returns. Every brewer shall, on or before the 10th day of each month, render to the collector or proper deputy collector, in duplicate, a true state¬ ment in writing (Form 18), taken from his books, for the preceding month, of the matters called for by said form, which return will be duly verified as in said form prescribed. Collectors, after having examined the return to see that it is cor¬ rectly made and properly verified and indorsed, will forward the duplicate copy to the Commissioner of Internal Revenue, and retain the original on file. Whenever business commences after the first of the month, or is discontinued before the last of the month, the date of such commence¬ ment or discontinuance will be entered in the proper “On hand” line in columns 1 and 12. The entire stock of fermented liquor on hand will be so reported on this form in barrels, containing 31 gallons to the barrel, whether the same is in merchantable packages or otherwise. Fermented liquors removed without stamps to a warehouse in the district will be returned on Form 18, as part of the stock “onhand” at the brewery. Where such removal is to another collection district, the particular district to which the removal is made will be stated in the appropriate space. TAX ON FERMENTED LIQUORS. 11 In case, however, the removal without stamps is to more than one district, the word “other” will be inserted in the blank instead of the number of the district, and a voucher showing a detailed statement of districts and the quantity removed to each will accompany this form. Every brewer who sells fermented liquor at retail, besides affixing and canceling the proper stamps on the vessels in which the same is contained, is required to keep an account of the quantity so sold by him, and of the number and size of the vessels in which the same may have been contained, and to make a report thereof, verified by oath, monthly (on Form 18), to the collector. (See sec. 3348, Rev. Stat.) The quantity in barrels of each kind of fermented liquor produced during the month will be entered in column 11 on this form; and the total given at the foot of the column must agree in all cases with the total entered in column 9 on the line “Made during the month.” The kind, as well as the quantity, of each class of material used in the production of fermented liquor during the month will be entered under “Statement of materials used.” When material is used other than enumerated under said heading, the kind and quantity thus used will be stated under “Other material.” Entries under the heading “Number and kind of stamps” must be 'in detail, and the stamps entered on the line “Used during the month” should correspond in number and denomination to number and size of the packages of liquor returned as taxably disposed of. The return must be signed by the person by whom it is rendered, and if not verified by himself, he must cause it to be verified by some person having personal knowledge of the business and being other¬ wise fully qualified by his position to make the oath. This includes being fully empowered by the principal to verify the statement, which authority, in case of a corporation, should be conferred by resolution. The person thus verifying should append his title to his signature as attorney, agent, etc., and collectors are expected to know that the person thus signing is acting in the capacity thus indicated. The last return, Form 18, of a brewer who has permanently dis¬ continued business will be marked “Final,” and in case another brewer succeeds to the business on the same premises, that fact will be made to appear by entering on the face of the return the words “Succeeded by-,” inserting in the blank the name of the suc¬ cessor in business. The first return of a brewer on Form 18 will be marked “First,” and where the brewer rendering his first return has succeeded, on the same premises, a former brewer, that fact will be indicated by entering on the face of the return the words “Succeeding-,” inserting in the blank the name of the predecessor in business. 12 TAX ON FERMENTED LIQUORS. PROCUREMENT OF STAMPS. Section 3341, Revised Statutes, as amended, provides that— The Commissioner of Internal Revenue shall cause to be prepared, for the payment of such tax, suitable stamps denoting the amount of tax required to be paid on the hogsheads, barrels, and halves, thirds, quarters, sixths, and eighths of a barrel of such fermented liquors (and shall also cause to be prepared suitable permits for the purpose hereinafter mentioned), and shall furnish the same to the collectors of internal revenue, who shall each be required to keep on hand at all times a sufficient supply of permits and a supply of stamps equal in amount to two months’ sales thereof, if there be any brewery or brew¬ ery warehouse in his district; and such stamps shall be sold, and per¬ mits granted and delivered by such collectors, only to the brewers of their districts, respectively. Such collectors shall keep an account of the number of permits delivered and of the number and value of the stamps sold by them to each brewer. Every brewer desiring to obtain stamps denoting payment of the tax on fermented liquors will first apply to the collector of the district in which his brewery is situated. Failing to obtain them of such col¬ lector, he may apply to the collector of another district, and the last- named collector, upon satisfying himself of a previous application and refusal, as before specified, may furnish to him the desired stamps. Collectors are hereby instructed to deliver stamps and brewers’ per¬ mits only upon the written order of the brewer entitled to the same, made on Form 7. Stamps will be transmitted by ordinary mail, unless otherwise directed. If ordered by registered mail, money or postage stamps to pay the registry fees must in all cases accompany the order. When transmitted by mail in any manner it will be at the risk of the person or firm ordering the same. Stamps may be forwarded by express, at the expense of the taxpayer. To avoid all fractions, brewers should order stamps in such numbers as that the “totalface value ” of each purchase will amount to $1 or a multiple thereof. Form 7 will be furnished to collectors in necessary quantities as they may order. Collectors will keep accounts of stamps sold to brewers in the record furnished by this office. Stamps may be sold to persons who have ceased to hold a special-tax stamp as brewers, to be affixed to merchantable packages of fer¬ mented liquor lawfully manufactured by them in a previous special- tax year. Such persons, however, will only be competent to sell the liquor thus stamped upon payment of the dealers’ special-tax. When a legal transfer of a brewery business and the stock on hand is made, the fermented liquor in stock may be transferred unstamped and taken up and accounted for by the successor in business. TAX ON FERMENTED LIQUORS. 13 The reuse of stamps being prohibited by law, brewers must destroy the stamps on packages of fermented liquor returned to them, if the stamps are removed from the packages, or if the contents are with¬ drawn therefrom or are in any manner changed or altered. A stamp once applied to a package can never be legally removed and applied to another. CANCELLATION AND AFFIXINO OF STAMPS. Section 3342, Revised Statutes, as amended by act of March 3, 1875, provides— That every brewer shall obtain, from the collector of the district in which his brewery or brewery warehouse is situated, and not other¬ wise unless such collector shall fail to furnish the same upon applica¬ tion to him, the proper stamps, and shall affix, upon the spigot hole in the head of every hogshead, barrel, keg, or other receptacle in which any fermented liquor is contained, when sold or removed from such brewery or warehouse, (except in case of removal under permit, as hereinafter provided), a stamp denoting the amount of the tax required upon such fermented liquor, which stamp shall be destroyed by driving through the same the faucet through which the liquor is to be withdrawn, or an air faucet of equal size, at the time the vessel is tapped, in case the vessel is tapped through the other spigot hole, (of which there shall be but tv r o, one in the head and one in the side), and shall, also, at the time of affixing such stamp, cancel the same by writing or imprinting thereon the name of the person, firm, or corpora¬ tion by whom such liquor was made, or the initial letters thereof, and the date when canceled. Every brewer who refuses or neglects to affix and cancel the stamps required by law in the manner aforesaid, or who affixes a false or fraudulent stamp thereto, or knowingly permits the same to be done, shall pay a penalty of one hundred dollars for each barrel or package on which such omission or fraud occurs, and be imprisoned not more than one year. The proviso contained in the first section of the act of March 2, 1901, reads as follows: Provided , That in lieu of or in addition to the present requirements of law in that respect, all stamps used for denoting the tax upon fer¬ mented liquors or other taxes may, in the discretion of the Commis¬ sioner of Internal Revenue, be canceled by perforations to be made in such manner and form as the Commissioner may by regulations prescribe. In the exercise of the authority thus conferred it was prescribed that on and after September 1 , 1901, and until otherwise ordered, all stamps used for denoting the tax upon fermented liquors shall be can¬ celed by perforations, to be made in the form of the name of the per¬ son, firm, or corporation by whom such liquors were made, or some suitable abbreviation thereof, or of the initial letters of the name, and the date when canceled, which date may be indicated by numerals, if preferred, signifying the number of the month in the calendar, the 14 TAX ON FERMENTED LIQUORS. day of the month, and the last two figures of the number of the current year, as, for example, 5 2 01, meaning May 2, 1901. Such cancellation is in lieu of the method of cancellation required before September 1, 1901. The several letters and figures of the cancellation thus prescribed must be each not less than one-fourth of an inch in height and of pro¬ portionate width and suitably spaced for legibility and distinctness, and must be clearly and sharply outlined, either (1) by perforations cut through the substance of the stamp, cutting out a portion of the stamp, and not merely puncturing same, each perforation to be not less than one thirty-second of an inch in width or diameter, and clearly and evenly cut out; or (2) by perforations in the form of incisions through the stamp at least one thirty-second of an inch in width, cut¬ ting out the form of the letters and figures from the substance of the stamp, which letters and figures must be of the same size, spacing, and distinctness as above specified. The full name of the person, firm, or corporation, or suitable abbreviation thereof, or the initial letters of the name, must be cut out of the stamp; the name alone of some prominent member of a firm or corporation will not be sufficient. Section 3348, Revised Statutes, requires that— Every brewer who sells fermented liquor at retail at the brewery or other place where the same is made, shall affix and cancel the proper stamps upon the hogheads, barrels, kegs, or other vessels in which the same is contained, and shall keep an account of the quantity so sold by him, and of the number and size of the hogsheads, barrels, kegs, or other vessels in which the same has been contained, and shall make a report thereof, verified by oath, monthly to the collector. Section 3352, Revised Statutes, provides that— The ownership or possession by any person of any fermented liquor after its sale or removal from the brewery or warehouse, or other place where it was made, upon which the tax required has not been paid, shall render such liquor liable to seizure wherever found, and to forfeiture, removal under said permits excepted. And the absence of the proper stamps from any hogshead, barrel, keg, or other vessel containing fermented liquor, after its sale or removal from the brewery where it was made, or warehouse as aforesaid, shall be notice to all persons that the tax has not been paid thereon, and shall be pr im a facie evidence of the nonpayment thereof. These provisions make it necessary that the stamps should be well secured to the vessels, and not easily removed therefrom except by intentional effort for that purpose. The following method of prepar¬ ing and affixing them is therefore recommended: Dissolve 1 pound of chloride of sodium (common salt) in 2 gallons of cold water; spread this over the backs of the sheets of stamps with a broad, thin brush, and then dry them. They are now ready to be affixed. TAX ON FERMENTED LIQUORS. 15 In applying the stamp to the cask, first take liquid silicate of soda of medium density; rub it well into the irregularities of tho surface of the wood with a brush, and apply the stamp quickly while the wood is quite wet. When the stamp is dry, a second coating of the silicate should he spread over the face of the stamp; and if the barrels are to he exposed to the action of the weather, or to he stored in damp places for con¬ siderable periods, the stamp should he secured by four tacks, to pre¬ vent its peeling off. The stamp must be affixed upon the spigot hole in the head of the package; and the spigot or the air faucet must in all cases he driven through the stamp in such a manner as to effectually destroy such stamp. In renewing the stamp upon a barrel used a second time, the tacks should be withdrawn and the stamp carefully scraped off. The stamp at the time of being affixed is to be canceled by perforations in the manner above described. The affixing to a package of two or more stamps having an aggre¬ gate face value equal to the amount of tax due thereon is not a suffi¬ cient compliance with the provisions of law concerning the stamping of packages of fermented liquor. The tax on each package must be represented by a single stamp of the proper denomination, duly can¬ celed, and affixed upon the spigot hole in the head of the package. Refusal or neglect to affix and cancel the stamps required by law in the manner provided exposes the brewer to a penalty of SI00 for each package, and imprisonment for not more than one year. CASKS TO BE MARKED. Section 3349, Revised Statutes, provides that— Every brewer shall, by branding, mark or cause to be marked upon every hogshead, barrel, keg, or other vessel containing the fermented liquor made by him, before it is sold or removed from the brewery or brewery warehouse, or other place of manufacture, the name of the person, firm, or corporation by whom such liquor was manufactured, and the place of manufacture; and every person other than the owner thereof, or his agent authorized so to do, who intentionally removes or defaces such marks therefrom, shall be liable to a penalty of fifty dollars for each cask or other vessel from which the mark is so re¬ moved or defaced: Provided, That when a brewer purchases fer¬ mented liquor finished and ready for sale from another brewer, in order to supply the customers of such purchaser, the purchaser may, upon written notice to the collector of his intention so to do, and under such regulations as the Commissioner of Internal Revenue may prescribe, furnish his own vessels, branded with his name and the place where his brewery is situated, to be filled with the fermented liquor so purchased, and to be so removed; the proper stamps to be affixed and canceled, as aforesaid, by the manufacturer before removal. (For liability to special tax in such cases, see page 7 herein.) 11749—09 - 3 16 TAX ON FERMENTED LIQUORS. The notice in this case will be in the following form: -,-, 190—. Sir: You are hereby notified that I have purchased- barrels of-from M-, brewer, and that I intend to furnish my own vessels, branded with my own name, for the reception of said liquor; said vessels to be delivered from the premises of said brewer at o’clock — m., on the day of-190—. -, Brewer. To-, Collector. The manufacturer of the beer so delivered will enter in his “Record of fermented liquors made, removed,” etc., Form 104, under the head¬ ing “Quantity of malt liquor sold or removed for consumption or sale,” and under the date of delivery the name of the brewer to whom delivered and his place of business, the kind or kinds of liquor deliv¬ ered, and the number and kind of packages filled. He will also enter the liquor so sold as a separate item in his monthly return, Form 18, for the month in which the delivery is made, with the name and place of business of the brewer to whom sold opposite the title “Sold at brewery at wholesale,” and under the proper denomina¬ tions of liquor and of packages. The purchaser, likewise, will also enter in his record, Form 104, under the date of the delivery of such liquor, the name and place of business of the manufacturer of the liquor, and on the same line, under the heading “Quantity of malt liquors brewed,” as a separate item, the number of full barrels and fraction of a barrel, if any, of each kind of liquor so purchased; and under the heading “Stamps purchased” the number of stamps of each denomination which were affixed to the packages by the manufacturer. The purchaser will not hereafter be required to enter such transac¬ tions in the body of his return on Form 18, but when the liquor thus acquired, or any part thereof, is disposed of he will enter such sale in a footnote on the return for the month in which the liquor is sold in the following form: Sold in addition to the above-barrels of liquor purchased, regularly stamped, from - brewer, in the - district of -. These special entries in the records and returns should be made in red ink. Collectors will cause the notices of intent to purchase to be carefully compared with the returns of the respective brewers on Form 18 for the month in which the delivery was made, to see that all proper entries have been made. They will also from time to time, and as occasion may seem to require, direct an officer to attend and verify a delivery of fermented liquor of which notice has been received. TAX ON FERMENTED LIQUORS. 17 PERMIT TO CARRY ON BUSINESS AT ANOTHER PLACE ON ACCOUNT OF ACCIDENT. Section 3350, Revised Statutes, provides as follows: Where, by reason of an accident by fire or flood, or by reason of bis brewery undergoing repairs, or other circumstances which may, in the opinion of the collector of the proper district, require or render it proper that a brewer shall be permitted to conduct his business wholly or partially at some other place within the same or adjoining district for a temporary period, it shall be lawful for such collector, under such regulations and subject to such limitation of time as the Commissioner of Internal Revenue may prescribe, to issue a permit to such brewer authorizing him to conduct his business wholly or partially, according to the circumstances, at such other place for a period in such permit to be stated, and such brewer shall not be required to pay another special tax for the purpose. The permit in the case will be made in duplicate, one copy to be delivered to the brewer and one forwarded to the Commissioner of Internal Revenue, and will be in the following form, viz: Office of Collector of Internal Revenue, - District of -, -, 190—. • In accordance with your request, and in consequence of - -(here set forth the nature of the accident or other cause), you are hereby authorized to manufacture-on the premises owned by-, situated at No.-street, in the-of -, county of-, and- district of the State of-, during a period extending from the - day of-, 190—, to the - day of -, 190—, without paying any special tax other than that by which you are authorized to conduct the business of brewing on the premises owned by-, situated at No.-street, in the-of-, county of-, and-district of the State of-, it being expressly understood that the liquor produced on the premises herein men¬ tioned to be temporarily used by you shall be put up in vessels branded with your name and regular place of business, reported on your books and returns as constructively produced and sold at such place of business, but actually at the place temporarily occupied under section 3350, the stamps or permits in case of removal to be procured from me. -, Collector. To-, Brewer. In case the premises to be temporarily used are situated in an adjoining district, the collector will not issue the permit without the written consent of the collector of that district or special authority of this office. No such permit will be given until consent to the business being conducted as proposed shall be indorsed on the brewers bond by the principal and sureties thereof. 18 TAX ON FERMENTED LIQUORS. REMOVAL OF FERMENTED LIQUORS FROM BREWERY PREMISES WITHOUT STAMPS.. (a) Under permit to a depot, warehouse, etc. Section 3345, Revised Statutes, provides that— Any brewer may remove or transport, or cause to be removed or transported, from his brewery or other place of manufacture to a depot, warehouse, or other place used exclusively for storage or sale in bulk, and occupied by him, in another part of the same collection district, or in another collection district, but to no other place, malt liquor of his own manufacture, known as lager-beer, in quantities of not less than six barrels in one vessel, and malt liquor of his own manufacture, known as ale or porter, or any other malt liquor of his own manufacture not heretofore mentioned, in quantities not less than fifty barrels at a time, without affixing the proper stamps on said vessels of lager-beer, ale, porter, or other malt liquor, at the brewery or place of manufacture, under a permit, which shall be granted, upon application, by the collector of the district in which said malt liquor is manufactured, and under such regulations as the Commissioner of Internal Revenue may prescribe; and thereafter the manufacturer of said malt liquor shall stamp the same, when it leaves such depot or warehouse, in the same manner and under the same penalties and liabilities as when stamped at the brewery as herein provided. And the collector of the district in which such depot or warehouse is situated shall furnish the manufacturer with the stamps for stamping the same, as if the said malt liquor had been manufactured in his dis¬ trict. And said permit must be affixed to every such vessel or cask so removed, and canceled or destroyed in such manner as the Commis¬ sioner of Internal Revenue may prescribe, and under the same penal¬ ties and liabilities as provided herein as to stamps. Collectors will be supplied with permits in books containing 400 each, upon requisition, in the same manner as stamps are furnished. For the removal of fermented liquor, permits must be obtained from the collector of the district wherein such liquor was manufactured, on application to that officer, which application is to be made in the fol¬ lowing form: APPLICATION FOR PERMIT TO REMOVE FERMENTED LIQUOR FROM BREWERY TO WAREHOUSE. - -—, 190—. To the collector of internal revenue, - collection district, State °f -•' The undersigned, manufacturer of-, at-, in said dis¬ trict, owning (or occupying or hiring) a depot or warehouse for the storage and sale of the same in the -— district of the State of -, to wit: at-, in the - of —-, and county of -, hereby applies for the necessary permits to remove-bar¬ rels of-from his brewery aforesaid to his place of storage and sale aforesaid, without affixing stamps thereto. The quantity of fermented liquors now at said brewery is as follows: [Quantity stated here]; and the quantity of same at said warehouse is as follows: [Quantity at warehouse stated here.] (Signed) -. TAX ON FERMENTED LIQUORS. 19 Upon the receipt of this application, the collector will fill out and sign the required permits, and deliver them to the applicant, who will append or indorse his receipt therefor on the application in the fol¬ lowing form, viz: -,-, 190—. Received this day from --, collector of the-district, and State of —--, permits numbered as follows:-to-, both serial numbers inclusive, which are to be immediately affixed to the within-mentioned barrels of-, for removal as within specified. -, Brewer. The brewer, upon receiving the permits, will at once securely affix them to the heads of the barrels near the chime and immediately under the bung stave. At the time the permit is affixed, he will cancel it by perforations in the same manner as is required in cancelling stamps denoting payment of tax upon fermented liquors. As soon as the permits are affixed, and within five days after their delivery to the brewer, he will notify the collector of the fact, in order that the collector may record the date of affixing on the stubs of such permits retained in his office. Permits are intended merely to protect the liquor while in transit from the brewery to the warehouse, and any package found out of the warehouse under permit at any time after it should have been in ware¬ house may be detained, and the claimant required to prove absence of fraudulent intent. The date of affixing the permit, or, in case this date is accidentally obliterated, the date of issuing the permit is the point of time from which calculations should be made in determining as to whether the package has been too long on the way from the brewery to the ware¬ house. In case both dates are illegible the package may be detained and the claimant required to prove that no fraud has been practiced or is intended. The serial number of the permit will indicate the means of release where there is no fraud in the case, the collector who issued the permit being able to give the date thereof from the serial number on the stub in his possession. In case the warehouse is situated in his own district, the collector will take such precautions as he sees fit to secure the prompt delivery of the liquor into the warehouse. In case the warehouse is in another district a notification on Form No. 29 will be forwarded by the collector to the collector of the district to which the removal is to be made; and the brewer will promptly notify the last-named collector of the receipt at his store or warehouse of such fermented liquor. If this last notice is not seasonably received information of this fact will be given by the collector in whose district the warehouse is situated to the collector who granted the permits. Collectors and brewers are requested to write or stamp the dates on these permits with great distinctness. 20 TAX ON FERMENTED LIQUORS. The permits will be retained on the packages until they are with¬ drawn from the warehouse and the tax-paid stamps affixed, at which time the permits will be scraped off and utterly destroyed. A record of all permits granted must be kept by the collector grant¬ ing them. Stamps for use at the place of storage in these cases should be obtained of the collector of the district within which the warehouse is situated. Brewers will enter all liquor removed to other collection districts under permits on the book (Form 104) and report the same on the return (Form 18), as directed under the head of “ Brewer’s monthly returns” herein. Fermented liquors removed without stamps to a warehouse in the district in which manufactured will be considered a part of the stock “on hand” in the brewery. Where the removal is to a warehouse in another collection dis¬ trict, the brewer will make monthly returns, in duplicate, on Form 18a to the collector of such district, or to the proper deputy collector, showing the quantity so received and the disposition of same, as well as the number of stamps of various denominations purchased, used, and on hand at the beginning and end of the month. * One of the duplicate returns will be retained in the collector’s office and the other will be forwarded, after examination, to the Commis¬ sioner of Internal Revenue. (b) Removal of sour or damaged fermented liquor. Section 3347, Revised Statutes, provides that— When fermented liquor has become sour or damaged, so as to be incapable of use as such, brewers may sell the same for manufacturing purposes, and may remove the same to places where it may be used for such purposes, in casks, or other vessels, unlike those ordinarily used for fermented liquors, containing respectively not less than one barrel each, and having the nature of their contents marked upon them, without affixing thereon the permit, stamp or stamps required. (c) Sale and removal of unfermented worts. Section 3351, Revised Statutes, provides that— When malt liquor or tun liquor, in the first stages of fermentation, known as unfermented worts, of whatever kind, is sold by one brewer to another for the purpose of producing fermentation or enlivening old or stale ale, porter, larger-beer, or other fermented liquors, it shall not be liable to a tax to be paid by the seller thereof, but the tax on the same shall be paid by the purchaser thereof, when the same, hav¬ ing been mixed with the old or stale beer, is sold by him as provided by law, and such sale or transfer shall be subject to such restrictions and regulations as the Commissioner of Internal Revenue may pre¬ scribe. TAX ON FERMENTED LIQUORS. 21 Any brewer desiring to transfer unfermented worts from one brew¬ ery to another may do so upon obtaining a permit therefor from the collector of the district in which the brewery from which the worts are to be removed is situated, which permit will state specifically the quantity to be removed and the time in which the removal is to lie made. Collectors will be careful to ascertain the exact time required, and fill up the permit accordingly. To avoid trouble, brewers are desired, as far as possible, to use in such cases vessels unlike those ordinarily used for fermented liquors, containing not less than 1 barrel each, and having the nature of their contents marked upon them. BOTTLING. Section 3354 of the Revised Statutes of the United States, as amended by the act approved June 18, 1890, provides that— Every person who withdraws any fermented liquor from any hogs¬ head, barrel, keg, or other vessel upon which the proper stamp has not been affixed, for the purpose of bottling the same, or who carries on, or attempts to carry on, the business of bottling fermented liquor in any brewery or other place in which fermented liquor is made, or upon any premises having communication with such brewery, or any warehouse, shall be liable to a fine of five hundred dollars, and the property used in such bottling or business shall be liable to forfeiture: Provided , how¬ ever, That this section shall not be construed to prevent the withdrawal » and transfer of fermented liquors from any of the vats in any brewery, by way of a pipe line or other conduit, to another building or place, for the sole purpose of bottling the same; such pipe line or conduit to be constructed and operated in such manner, and with such cis¬ terns, vats, tanks, valves, cocks, faucets, and gauges, or other utensils or apparatus, either on the premises of the brewery or the bottling house, and with such changes of or additions thereto, and such locks, seals, or other fastenings, and under such rules and regulations as shall be from time to time prescribed by the Commissioner of Internal Reve¬ nue, subject to the approval of the Secretary of the Treasury, and all locks and seals prescribed shall be provided by the Commissioner of Internal Revenue, at the expense of the United States: Provided further, That the tax imposed in section thirty-three hundred and thirty-nine of the Revised Statutes of the United States shall be paid on all fermented liquor removed from a brewery to a bottling house by means of a pipe or conduit, at the time of such removal, by the cancellation and defacement, by the collector of the district, or his deputy, in the presence of the brewer, of the number of stamps denoting the tax on the fermented liquor thus removed. The stamps thus canceled and defaced shall be disposed of and accounted for in the manner directed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury. And any viola¬ tion of the rules and regulations hereafter prescribed by the Com¬ missioner of Internal Revenue, with the approval of the Secretary of the Treasury, in pursuance of these provisions, shall be subject to the penalties above provided by this section. Every owner, agent, or superintendent of any brewery or bottling house who 22 TAX OX FERMENTED LIQUORS. removes, or connives at the removal of, any fermented liquor through a pipe line or conduit, without payment of the tax thereon, or who attempts in any manner to defraud the revenue as above, shall forfeit all the liquors made by and for him, and all the vessels, utensils, and apparatus used in making the same. Beer intended for bottling, except when removed by pipe line, must be drawn into stamped packages and removed in such packages from the brewery to the bottling establishment. The attention of collectors is called to the fact that the law does not under any circumstances permit bottling on any portion of the premises described in the Form 27 c. Bottling must be performed in a building entirely distinct and sepa¬ rate from any brewery, or any warehouse, and having no communica¬ tion therewith. The bottling of fermented liquor from open and unstamped vessels * is not permitted by law; neither is the addition of water, fermenting agents, extracts, etc., allowed previous to bottling. The steaming, washing, and storage of bottles on a brewery prem¬ ises are no more permissible than the filling of the same. SEPARATION OF BREWERY PREMISES AND BOTTLING ESTABLISHMENT. In view of the fact that the law (sec. 3354 above quoted) strictly prohibits, under severe penalties, the bottling of fermented liquor in any brewery or upon any premises having communication with such « brewery, or any warehouse, it is highly important, where a bottling house is about to be located in the vicinity of a brewery or brewery warehouse, that the two should not be so situated with reference to each other as to admit of communication between them. To insure such an absence of communication it is prescribed that bottling premises must be so separated from any brewery that the beer in its passage from the brewery premises to the bottling house must be carried upon a street or road which is a public highway, and is actually and commonly used as a thoroughfare by the public. In other words, the location of the brewery premises as described on notice, Form 27c, with reference to any bottling house must be such that it is a physical impossibility to remove fermented liquor from the former to the latter, in the ordinary packages, except by carrying it out over the surface of a street or road which is a public highway, in actual and common use by the general public as a thoroughfare. This rule must be observed, whether a pipe line exists or not, and is also applicable as between a bottling house and any warehouse for the storage of fermented liquor under section 3345, Revised Statutes. Collectors are hereby required whenever it comes to their knowledge that a bottling business lias been established, or is about to be estab- TAX ON FERMENTED LIQUORS. 23 lished, in the vicinity of any brewery or brewery warehouse to cause examination to be made of the premises and their surroundings in order to assure themselves that proper separation between the brewery and bottling premises exists. If such examination reveals the fact that the location or proposed location of the bottling house is contrary to the law and regulations as above set forth, the collector will at once notify the bottler to that effect and see that bottling operations are not allowed on the site in question, unless it is possible to effect a proper separation by mechanical means and the owner of the premises immediately makes the requisite changes. If there is any doubt in the mind of the examining officer as to the propriety of the location of the bottling house with respect to the brewery premises or warehouse, he should make a rough diagram of the premises showing all contiguous and intersecting streets and the doors, windows, and other openings, if any, in the walls of the build¬ ings, and in case of a brewery, correctly indicating by a definite line inclosing the same, the boundary line of the brewery premises, as described on Form 27 c, and also marking in the margin the cardinal points of the compass. This diagram will be transmitted at once by the collector to the Commissioner of Internal Revenue, accompanied by a statement of the question involved. PIPE LINES. By virtue of the authority conferred in section 3354, Revised Stat¬ utes, above quoted, the following regulations are prescribed govern¬ ing the removal of fermented liquor from the brewery where produced to a bottling establishment by way of a pipe line or other conduit: (a) Notice to be given by brewer. Every brewer, before transferring fermented liquor by way of a pipe line or other conduit, as herein provided, shall file with the col¬ lector of the district, or proper deputy collector, a “supplemental” notice on Form 27 c, in duplicate, to be disposed of as required in case of ordinary notices on said form. No entry will be required on the second page of this supplemental notice, except the following: Fermented liquor will be transferred from these premises for bot¬ tling by way of pipe line or conduit, under the act of June 18, 1890, and it is expected that application will be made to thus remove- barrels of liquor once in-days. This entry will also be made on all subsequent notices given on Form 27 c by the brewer during the continuance of the removal of fermented liquor as above. The collector, or the proper deputy collector, will certify in the blank space at the foot of the third page of the supplemental notice, 24 TAX ON FERMENTED LIQUORS. above mentioned, that the brewer has constructed a pipe line or conduit, and a measuring cistern or cisterns and attachments, in strict compliance with the regulations, and that the gauge attached to each cistern is found by actual test to correctly indicate the contents of the cistern at all points. (b) Construction of cisterns. Each brewer intending to remove fermented liquor by way of a pipe line or other conduit, as herein provided, must erect, either upon his brewery premises or upon the premises where the bottling is to be performed, for the reception of the liquor to be thus removed, a meas¬ uring cistern or cisterns of such shape as to admit of ready measure¬ ment, and capable of containing as much liquor as will be removed for bottling for each twenty-four hours. Each cistern must be securely covered, and if an opening is desired in the top for any purpose, the opening must be so covered and arranged that it can be securely locked. A suitable glass gauge, or tube, must be so attached to each cistern that the liquor will enter the gauge, or tube, and stand therein on the same level at which it stands in the vessel. On the surface of such gauge will be etched such lines and figures as will constantly indicate the exact number of barrels of liquor, of 31 gallons each, in the vessel. Stopcocks, arranged so as to completely control the flow of liquor both into and out of the measuring cistern, and capable of being locked, must be provided. The vessel designed for use as a measuring cistern must have a capacity of at least 10 barrels, and in the event that it should be impracticable to construct the same of sufficient capacity to supply the requirements of the bottling house for a period of twenty-four hours, more than one vessel may be constructed and used when authorized by the collector of the district. In case the measuring cistern is erected upon the bottling premises the pipe or conduit conveying liquor thereto from the brewery can be placed underground only by running the same through a tunnel of sufficient size to admit the convenient passage through its entire length of the officer who is required to examine the pipe line. Or in case it is impossible or impracticable to construct such a tunnel, in lieu thereof, the pipe for the conveyance of liquor may be placed within a conduit, not less than fifteen inches in diameter, made of steel or iron pipe or other equally permanent material placed end to end and protected either at the bottling house end or at the brewery end by a solid iron door, or doors, with hinges bolted, or otherwise securely fastened to the end of the conduit, provision being made to securely fasten the doors by a seal lock, the key to which must at all times be in the custody of the proper officer. TAX ON FERMENTED LIQUORS. 25 Where a conduit is employed as above, the same must be em¬ bedded in cement or concrete and the sections of piping, if more than one section is employed, must be securely connected. The conduit must pursue a straight course from end to end, and provision must be made for lighting it at both ends in such manner that ready examination of the interior of the conduit may be made. When a tunnel is employed under the above requirements, the pipe line or other conduit must be so placed therein as to admit of ready examination of the same at all points from end to end, and communication through the tunnel between the brewery premises and bottling house, except through the authorized pipes, must be prevented by the erection within the tunnel, or at either end thereof, of a suitable door, secured by a seal lock, the key to which must at all times be in possession of the proper deputy collector, who will not allow the door to be unlocked or to remain unlocked except in his presence. It is further required that the stopcock controlling the flow of fermented liquor into the measuring cistern shall be secured by a seal lock, as well as the one controlling the outlet thereof. In no instance will both of said cocks be unlocked at the same time, but either may be opened, and remain open, as best suits the convenience of the brewer, it being expected that collectors will exercise such care and supervision in the matter as not to afford opportunity to pass any fermented liquor through the pipe line and connected cistern, except such as has its exact quantity duly noted and the tax thereon paid as provided by law. In no instance will the deputy collector unlock a cock controlling the flow of fermented liquor either into or out of the measuring cistern without first observing that the seal in the lock is intact. No cistern shall be used for the purpose indicated until after it has been carefully examined and gauged or measured by a deputy collector, who has attached thereto his certificate that the same is constructed in strict compliance with these regulations, and that the gauge registers accurately. The vessel thus provided and its attachments may be examined, and the accuracy of the gauge verified at any and all times by internal revenue officers and agents, and for this purpose the brewer shall, on demand, empty the vessel and provide suitable appliances for its examination. ( c ) Construction of the pipe line or conduit. The pipe line or conduit employed for the conveyance of fermented liquor, under the provisions of the law above quoted, must be so constructed as to admit of ready examination throughout its entire length. 26 TAX ON FERMENTED LIQUORS. The pipe or conduit must also be securely connected with the cistern described above, and a stopcock capable of being fastened by a padlock must be placed at the point of connection, as above directed. No opening whatever will be permitted in the pipe line or conduit throughout its entire length, and if a hot-water connection is necessary near one end of the pipe for cleansing the same, it must be secured by a seal lock. Where the nature and extent of a brewer’s business is such as to require the use of more than one measuring cistern, a separate supply pipe for each cistern may be authorized by the collector, if necessary, in which event each additional cistern and pipe will be constructed, secured, and operated in the same manner as is required in the case of a single measuring cistern and supply pipe. If the successful prosecution of the business renders it necessary to connect any portion of the apparatus upon the bottling premises with the refrigerating machine, or with the air pump, upon the brewery premises, the connecting pipes must also be exposed to view for their entire length, and be subject to ready examination by revenue officers and agents at all times. Every pipe for the transmission of air or gas must be equipped, before it reaches the first measuring cistern, with an automatic valve, so arranged as to prevent the flow of any liquid through the pipe. Such additional appliances will be correctly delineated upon the required plan with the same exactness as is provided for in the case of the other apparatus pertaining to the pipe line. • (d) Plan of brewery and course of pipe line. Prior to being authorized to remove fermented liquor, as herein pro¬ vided, the brewer must prepare at his own expense an accurate plan and description, in triplicate, showing in detail the exact location of all pipes, cisterns, vats, tanks, valves, cocks, faucets, gauges, or other utensils or apparatus, either on the premises of the brewery, the bottling house, or intermediate, used in the transfer of fermented liquor as above. In order to insure the construction of the pipe line and apparatus in such manner as to comply fully with law and regulations, it is sug¬ gested that the plan and description be prepared and submitted to the collector of the district in advance of such construction. When the plan is thus submitted, the collector will carefully exam¬ ine the same, and if it be found to meet the requirements of the law and regulations he will so certify on each copy of the plan, and trans¬ mit one copy of it to this office for its approval. TAX ON FERMENTED LIQUORS. 27 Such plan must be on good paper or tracing linen, 15 by 20 inches in size, and drawn to a scale to be indicated thereon. The exact capacity of each measuring cistern will be stated on the plan, and the course of the pipe line or conduit leading therefrom or thereto, as the case may be, will also be correctly delineated thereon, exhibiting the thoroughfares crossed by the pipe line or conduit. The plan will also include a diagram or plat of the brewery and bottling premises, showing all contiguous and intersecting streets, and the doors, windows, and other openings, if any, in the walls of the buildings, and correctly indicating, by a definite line inclosing the same, the boundary line of fhe brewery premises, as described on Form 27 c, and the nature of the business conducted in all buildings located within 10 feet of the pipe line or conduit aforesaid. On the margin of the plat the cardinal points of the compass will be indicated. One of said plans will be conspicuously displayed on the brewery premises, one will be filed with the collector of the district, and the third will be transmitted to the Commissioner of Internal Revenue. Any alteration of, or addition to, any portion of the apparatus employed in the removal of fermented liquor, as above, will be shown on a supplemental plan to be prepared and disposed of as above directed. ( e) Locks and seals. Requisition for locks and seals for the purposes indicated will be addressed to the Commissioner of Internal Revenue by collectors, and the name of the brewer will be indicated in all cases, as w T ell as the precise part of the apparatus upon wdiich each lock is to be used. A supply of seals sufficient for six months’ requirement will be ordered at a time. In the event that perfect locks or seals procured for use at distil¬ leries and for which there is no present demand are in the district, the same may be employed for the service indicated. Locks and seals procured for use at breweries will be returned on Form 152 in the same manner as required in the case of those ordered for service at distilleries. The locks will be used by deputy collectors as hereinafter directed. Seals will be used consecutively in the order in which they are numbered, and deputy collectors wdio superintend the transfer of fermented liquors under these regulations w T ill be required to render monthly reports of seals used, on Form 145. Deputy collectors having charge of locks, keys, and seals, procured for the use above indicated, are strictly prohibited from intrusting the same to any person other than an internal-revenue officer entitled to receive the same, and under no circumstances will they permit locks to remain open, whether hanging by the shackle or otherwise. 28 TAX ON FERMENTED LIQUORS. (/) Testing of measuring cistern and examination of apparatus. After the measuring cistern and pipe line or conduit have been constructed and a plan thereof filed, as above directed, the collector will detail a deputy collector to carefully examine the entire appa¬ ratus to see that it is constructed in strict compliance with these regulations. The deputy will also test the accuracy of the gauge required to be attached to the cistern, and if it be found that the same is not strictly accurate , or that any portion of the apparatus does not conform to these'requirements, he will see that the proper changes are made. The test must be an actual one, and it is suggested that it be made by filling the cistern with water and drawing off a quantity of exactly 31 gallons at a time, observing after each withdrawal that the surface of the remaining liquid is correctly indicated by the gauge and that the number of barrels withdrawn when the cistern has been emptied agrees with the capacity claimed for it and indicated by the gauge. The attention of collectors is especially invited to the absolute necessity for accuracy in the construction and application of the gauge relied upon for indicating the contents of the measuring cistern and also to the importance of requiring occasional tests, from time to time, to demonstrate the fact that the gauge still remains accurate. When the deputy becomes satisfied that the cistern or cisterns and attachments are properly constructed, as above, he will so report to the collector of the district in writing, and also securely attach to each cistern a certificate in the following form: Form 251. UNITED STATES INTERNAL REVENUE. Deputy collector's certificate as to result of examination of measuring cistern and appliances employed at - by -, brewer , for conveyance of fermented liquor to the bottling house. I hereby certify that on the-day of-, 190—, I care¬ fully examined the cistern to which this certificate is affixed, and the attachments thereto, including the pipe line or conduit, and found the same constructed in strict compliance with the regulations gov¬ erning their construction. I also certify that I made an actual test of the gauge tube affixed to this cistern, and found that it accurately indicates at all points the contents of the cistern. Deputy Collector. (g) Transfer of fermented liquor to bottling house. Upon compliance with the foregoing requirements the brewer may be permitted to transfer fermented liquor from the brewery, by way TAX ON FERMENTED LIQUORS. 29 of the pipe line or conduit, for the sole purpose of bottling the same, upon making application to the collector of the district or the proper deputy collector. This application will be made on Form 252, and the brewer will state thereon the number of barrels of 31 gallons each of fermented liquor which he desires to transfer, which number must, in all cases, include a sufficient quantity of liquor to meet the demands of the bottling house for a period of at least twenty-four hours. In no instance, however, will less than 10 barrels of liquor be removed at one time. Request will also be made on said form for the attendance of a deputy collector to superintend the transfer and to deface stamps indicating the tax on the liquor thus removed. Upon receipt of said application a deputy collector, to be indicated by the collector of the district, will proceed to the brewery and super¬ intend the transfer of the liquor mentioned in the brewer’s application and deface stamps representing the tax thereon as provided below. Before unlocking the lock controlling the flow of liquor from the measuring cistern the deputy collector must not fail to exercise four precautions, viz: 1. Securely lock the stopcock controlling the flow of liquor into the measuring cistern and the opening in the top of said cistern, if any. 2. Note the quantity of liquor in the cistern or cisterns and see that it agrees with the quantity specified in the application, Form 252. 3. Require payment of tax on the quantity so noted, by the brewer, who will deliver the requisite stamps, duly canceled, to the deputy collector. 4. Observe if the proper seal is in the lock which he is about to open and that it is intact. Having observed these precautions, the deputy collector will enable the brewer to open the stopcock controlling the flow of liquor from the measuring cistern by removing the lock securing the same and allow¬ ing the stopcock to remain unlocked until all the contents of the cistern have been withdrawn. While the withdrawal is in progress the deputy collector must remain at the brewery, except where circumstances are such that during the withdrawal he can discharge official duties at other places; but in such case he should return to the brewery in season to change the locks so as to allow the refilling of the cistern when desired. After all of the liquor in the measuring cistern has been withdrawn, the deputy collector will close the stopcock controlling the flow of liquor from the cistern and secure the same by the lock provided for such purpose, first inserting the proper seal. lie will then unlock the stopcock controlling the flow of liquor into the measuring cistern, and permit the same to remain unlocked until 30 TAX ON FERMENTED LIQUORS. such time as liquor shall be again withdrawn from the cistern, pur¬ suant to application on Form 252 and order from the collector to the deputy collector, as above described. The procedure above detailed in case of only one measuring cistern is applicable to any number of such cisterns which may be approved at any particular pipe line, and is to be followed in all cases, except when the brewer provides two or more measuring cisterns for opera¬ tion alternately, in sets, and desires that they be so operated, in which case the deputy collector will lock the inlets and unlock the outlets of one set of cisterns, previously filled, and at the same time will lock the outlets and unlock the inlets of the other set, previously emptied, leaving the cisterns of the latter set in position to be filled while those of the former set are being emptied. (h) Cancellation and defacement of stamps. The brewer will deliver to the deputy collector, before the lock con¬ trolling the outlet of the measuring cistern is unlocked, the requisite number of beer stamps denoting the full amount of tax upon the entire quantity of fermented liquor to be withdrawn from the cistern. The stamps so delivered must previously have been canceled on the margin by the brewer in the manner prescribed for the cancellation of stamps for fermented liquors. The deputy collector, having satisfied himself by inspection of the stamps that they have been properly canceled, will cancel and deface the stamps so delivered, in the presence of the brewer, by driving through the same a die or punch, to be provided for that purpose, in such manner as to cut from the center of each stamp a piece thereof 1 inch square. ( i ) Disposition to be made of canceled and defaced stamps. The deputy collector will retain the stamps thus canceled and de¬ faced, and transmit the same to the collector of the district, securely attached to Form 252, upon which he will certify as to the exact quantity of fermented liquor removed under his superintendence. The deputy collector will further certify on said form that he super¬ intended the transfer of the liquor, stating the quantity, and that the stamps denoting the tax on the entire quantity of fermented liquor thus transferred were canceled and defaced, as above provided. The several returns on Form 252 and the accompanying canceled and defaced stamps will be retained by the collector until the 10th day of the succeeding month, when all of the returns on Form 252 rendered for the previous month, and the canceled and defaced stamps appertaining thereto, wilTbe forwarded by registered mail, and in one TAX ON FERMENTED LIQUORS. 31 package, to the Commissioner of Internal Revenue, care being taken to have the returns of each particular brewer separated from the others. The stamps canceled and defaced as above, accompanying each return, Form 252, will be secured by passing a string through the holes cut by the die or punch and tying the ends. ( j) Return on Form 18 of fermented liquor transferred by pipe line or conduit. Every brewer who transfers fermented liquor to a bottling house by way of pipe line or conduit, as herein provided, will return on Form 18, in a separate item, the entire quantity of fermented liquor thus trans¬ ferred, as well as the number and kind of stamps used, as directed, in the payment of the tax thereon. In case of a transfer of fermented liquor to be bottled for export the figures representing the quantity so transferred will be entered separately and notice on Form 252 of such intended removal will not be required. All such removals will be made under regulations designated as No. 29. (k) Supervision of breweries operating pipe lines. The deputy collector in charge of any brewery operating a pipe line as above is expected frequently to make such a careful examination of all pipes leading from the brewery premises to the bottling establish¬ ment as to be constantly assured that said pipes afford no opportunity for the surreptitious removal of untaxed fermented liquor. He is also required to exercise such a strict surveillance over the operations of the brewery and pipe line as to insure a full and literal compliance with the law and regulations governing the same. EXPORTATION OF FERMENTED LIQUORS IN BOND WITHOUT PAYMENT OF TAX. For form of bond, and other papers, and instructions relative to the exportation of fermented liquors in bond without payment of tax under the act approved June 18, 1890, see Regulations, No. 29. PENALTIES. In addition to the penalties hereinbefore stated, section 3342, Revised Statutes, provides that— Every brewer who refuses or neglects to affix and cancel the stamps required by law in the manner aforesaid, or who affixes a false or fraudulent stamp thereto, or knowingly permits the same to be done, shall pay a penalty of one hundred dollars for each barrel or package on which such omission or fraud occurs, and be imprisoned not more than one year. 32 TAX ON FERMENTED LIQUORS. Section 3343, Revised Statutes, provides that— Whenever any brewer, cartman, agent for transportation, or other person, sells, removes, receives, or purchases, or in any way aids in the sale, removal, receipt, or purchase, of any fermented liquor con¬ tained in any hogshead, barrel, keg, or other vessel from any brewery or brewery warehouse, upon which the stamp, or permit, in case of removal, required by law, has not been affixed, or on which a false or fraudulent stamp, or permit, in case of removal, is affixed, with knowledge that it is such, or on which a stamp, or permit, in case of removal, once canceled, is used a second time, he shall be fined one hundred dollars and imprisoned for not more than one year. Section 3344, Revised Statutes, provides that— Whenever any retail dealer, or other person, withdraws or aids in the withdrawal of any fermented liquor from any hogshead, barrel, keg, or other vessel containing the same, without destroying or defa¬ cing the stamp affixed thereon, or withdraws or aids in the withdrawal of any fermented liquor from any hogshead, barrel, keg, or other vessel, upon which the proper stamp has not been affixed or on which a false or fraudulent stamp is affixed, he shall be fined one hundred dollars and imprisoned not more than one year. Section 3346, Revised Statutes, as amended by act of March 1, 1879, provides that— Every person who makes, sells, or uses any false or counterfeit stamp or permit, or die for printing or making stamps or permits, which is in imitation of or purports to be a lawful stamp, permit, or die of the kind before mentioned in this chapter, or who procures the same to be done, and every person who shall remove, or cause to be removed, from any cask or package of fermented liquors, any stamp denoting the tax thereon, with intent to reuse such stamp, or who, with intent to defraud the revenue, knowingly uses, or permits to be used, any stamp removed from another cask or package, or receives, buys, sells, gives away, or has in his possession, any stamp so removed, or makes any fraudulent use of any stamp for fermented liquors, shall be fined not less than one hundred dollars nor more than one thousand dollars, and imprisoned not less than six months nor more than three years. Section 3353, Revised Statutes, provides that— Every person, other than the purchaser or owner of any fermented liquor, or person acting on his behalf, or as his agent, who intentionally removes or defaces the stamp or permit affixed upon the hogshead, barrel, keg, or other vessel, in which the same is contained, shall be liable to a fine of fifty dollars for each such vessel from which the stamp or permit is so removed or defaced, and to render compensation to such purchaser or owner for all damages sustained by him there¬ from. Collectors will compare the monthly return made by brewers with their own account of the stamps sold to the same brewers, and will take special care, when applications are made for permits to remove fermented liquors from one collection district to another, to satisfy TAX ON FERMENTED LIQUORS. 33 themselves that no fraud is intended, and that none is committed, in case the permits are granted. The collector will take suitable measures, including seizure, if necessary, for the prevention of fraud in the sale and removal of fermented liquor alleged to be unfermented worts, or to be sour or damaged. The collector will, from time to time, examine the barrels and other vessels used in the sale of fermented liquors, to see if they are prop¬ erly marked, as required by section 3349, Revised Statutes, as well as to determine if their capacity is greater than indicated by the stamps placed thereon, and, when satisfied that the Government is deprived of its just amount of tax, the collector will report the fact to the Com¬ missioner of Internal Revenue, when the deficiency will be assessed and returned to the collector on the monthly list, “Form 23.” Collectors are especially directed, either personally or by deputy, to visit breweries and make examinations thereof at other than stated times, to see that nothing required to be entered in the books is omitted, and that all the entries made are in strict accordance with the facts. Each collector will, on the first day of August, in each year here¬ after, report to the Commissioner the name of every brewer in his dis¬ trict, arranging the names in the list in alphabetical order. Each collector will furnish every brewer in his district with a copy of these regulations. Royal E. Cabell, Commissioner. Approved, October 8, 1909: Charles D. Hilles, Acting Secretary of the Treasury. . *• : ' • * . ■ ?h *r.: . INDEX. Page. Accident, permit in case of. 17 Affixing of permits. 19 stamps. 13-15 Books to be kept by brewer. 9,10 Bottling. 21, 22 Brewer, bond of. 7,8 books to be kept by. 9,10 definition of. 5 notice by (27c). 5,6 qualification of. 5-8 returns of. 10,11, 20, 31 Brewery premises, removal of liquor from unstamped. 18-21 separation from bottling house. 22, 23 Cancellation of permits. 19 stamps. 13-15 Dealer in malt liquors defined. 6,7 Exportation of fermented liquors in bond. 31 Gallon defined.*. 5 Marks on packages of fermented liquor. 15 Notice, Form 27c. 5, 6, 23 Packages, legal sizes specified. 3 marking of. 15 Penalties.— 31,32 Permit to carry on business, case of accident. 17 to remove liquors unstamped. 18-21 Pipe lines. 23-31 Cisterns. 24, 28 Construction of pipe line. 25, 26 Locks and seals. 27 Notice by brewer. 23 Plan. 26,27 Return of liquors transferred. 31 Stamps, cancellation and disposition of. 30, 31 Supervision. 31 Valve in air and gas pipes. 26 Returns, Forms 18 and 18a. 10,11, 20, 31 Separation of brewery and bottling house. 22, 23 Sour liquor removed unstamped. 20 Special taxes. 6, 7 Stamps, affixing and cancellation of. 13-15, 30 procurement of.-. 12,13 Tax on fermented liquors. 3-5 Unfermented worts. 20, 21 o 35