New Tax Audit Division

By John Daffron (202) 927-5000

During August of this year, the Director and Executive Staff approved a proposal to establish a new "Tax Audit Division" within the Office of Alcohol and Tobacco. This new division will, when fully implemented, assume responsibility for field audits of excise taxpayers with annual tax liability over $250,000.
This organizational change is intended to address concerns over decline in field audit activity in recent years and to ensure adherence to audit standards in the work performed. We believe that an effective and efficient audit program is in the best interest of both the Government and the industry. The industry benefits from a level playing field for all and from having errors and disputed tax matters resolved in a timely fashion before liabilities and penalties get out of hand. The Bureau benefits from the ability to assert with some level of confidence that it is fulfilling its obligation to collect all of the tax that is due.

Employees who have the requisite accounting qualifications for "auditor" positions will staff the new division. A division chief will exercise general management oversight from an office located in Bureau Headquarters with field offices strategically located throughout the country.

The plan is to phase in the new division over a 4 to 5 year period, opening one or two field offices at a time. The first office is targeted for Greensboro, North Carolina, during fiscal year 2002. The following year, two additional offices will be opened, with one on the West Coast and one in the Northeast.

During each phase of implementation we will be visiting industry members in the affected territory to answer questions and introduce our new audit staff. q

E-Filing of Certificates of Label Approval and Formulas

By Tom Stewart (202) 927-8193

ATF previously announced a project to provide industry members a means to interact electronically with the Bureau by submitting and returning approved or rejected COLAs and formulas. This endeavor will be the first E-Government application for ATF. We have started the initial phases of development with the contractor. The requirements phase is scheduled to run through January 2002. Once ATF has identified our requirements, we will schedule meetings with industry members, as well as state regulatory agencies, to discuss these requirements. The design phase is scheduled to run from January-March.

Development is to commence in the second quarter of 2002, with testing to begin in the third quarter. We will be looking to have industry members from all commodities, including importers, volunteer to assist with the testing. Electronic filing of COLAs and formulas is scheduled to be available to all industry members by January 2003.

ATF is still working on an off line registration process to participate in electronic filing. We will continue to use this publication to provide updates on the progress of this important project, however, we are developing a site on our webpage (www.atf.treas. gov) that will also have information on the development of electronic filing of COLAs and formulas. q

Offers-in-Compromise

By Ed O'Toole (202) 927-8130

The Bureau has accepted two Offers-in-Compromise from Rabbit Ridge Vineyards Winery, Healdsburg, CA. The first offer was in the amount of $750,000 to compromise violations relating to mislabeling wines, inaccurate record keeping, and operating as bonded winery and wholesaler without the proper permits required by the Federal Alcohol Administration Act. The second offer was in the amount of $60,000 to compromise penalties relating to failure to properly file semi-monthly wine tax returns.

The Bureau has accepted a $35,000 Offer-in-Compromise from Chambers & Chambers, Inc., a wholesaler operating in San Francisco, CA, and Honolulu, HI, to settle wine labeling violations. These violations occurred when they removed wine labels from bottles that had been shipped in interstate commerce and replaced them with different labels. They also received a shipment of unlabeled wine and falsely labeled that wine as well. q

Using Copies of COLA Applications

By Susan Stewart (202) 927-8140

The Alcohol Labeling and Formulation Division has noticed an increase in the number of ATF Forms 5100.31, Application for and Certification/ Exemption of Label/Bottle Approval (COLA), that are not identical to those provided by ATF. The regulations require generally that an approved