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GGD-82-60 1 (1982-05-07)

handle is hein.gao/gaobabdfn0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFIcE WASHINGTON, D.C. 90 COAL GSNOMWO~ MAY 7,1982 B--207193 The Honorable Donald T. Regan Secretary of the Treasury Dear Mr. Secretary: Subject: The Federal Government Can Save $1.7 Million Annually by Eliminating Strip Stamps (GAO/GGD-82-60) As you know, we are reviewing the administration of non- income based taxes by the Internal Revenue Service; the Bureau of Alcohol, Tobacco and Firearms (BATF); and other Federal agen- cies. One area we are reviewing is the administration of ex- cise taxes on distilled spirits. During our work, we found that Government-issued strip stamps being placed on containers of dis- tilled spirits no longer serve their intended purpose. The Fed- eral Government could avoid the possibility of public misinter- pretation of what the strip stamps signify and save at least $1.7 million annually by eliminating the stamps. Our work included analysis of legislation, discussions with BATF and Treasury officials, discussions with two distillers, and solicitation of the views of a major distillers' trade as- sociation. We did our work in accordance with the Comptroller General's Standards for Audit of Governmental Organizations, Programs, Activities, and Functions. Section 5205 of the Internal Revenue Code provides for the use of strip stamps, which are the paper strips placed over the neck and cap of distilled spirits containers. The stamps are printed by the Bureau of Engraving and Printing at a current cost of $1.7 million annually. The stamps are distributed to distill- ers and bottlers at no charge. Although section 5205 authorizes the use of alternate closure devices, Government-supplied stamps are the closure devices most frequently used. For many years strip stamps were numbered and generally con- trolled by Federal employees physically located at the distillers' premises. The stamps were applied to containers after the Fed- eral employees were satisfied that the spirits had been bottled in conformance with Federal laws and had determined the appropri- ate tax.

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