Alcohol and Tobacco Tax and Trade Bureau: Fiscal Year 2010 Proposed Licensing and Registration Fees Program.

GAO-09-1023R September 28, 2009

Over the last several weeks, we reviewed the President's fiscal year 2010 budget request for the Alcohol and Tobacco Tax and Trade Bureau (TTB) to provide pertinent and timely information that the Congress could use during budget deliberations. Our objectives were to (1) examine any programs with significant increases from the prior year and any significant unexpended balances and (2) review any new programs in the budget request. To do our work, we compared prior and current year budget requests, reviewed key budget-related documents, and interviewed TTB officials. Given the objectives and scope of this work, we conducted this work in accordance with all sections of GAO's Quality Assurance Framework that are relevant to our objectives. The framework requires that we plan and perform the engagement to obtain sufficient and appropriate evidence to meet our stated objectives and to discuss any limitations in our work. We believe that the information and data obtained, and the analysis conducted, provide a reasonable basis for any findings and conclusions. Based on our review, we are not recommending any reductions, realignments, or restrictions to TTB's fiscal year 2010 budget. However, given our nation's current fiscal challenges and the government's need to make the most effective use of its limited resources, we provide the following comments on TTB's legislative proposal for a licensing and registration fees program for alcohol businesses contained in the President's fiscal year 2010 budget request, which may be useful to TTB and the Congress during fiscal year 2011 budget preparations and deliberations. We provided TTB an opportunity to provide its views on our work and have incorporated these views, where appropriate.

The TTB legislative proposal would establish a permanent licensing and registration fee program to offset amounts appropriated from the general fund. The Department of the Treasury's congressional budget justification explains the legislative proposal as requiring entities in the alcohol business, including retail dealers in liquors and beer, wholesale dealers in liquors and beer, alcohol producers, and brewers, to pay an annual licensing and registration fee. TTB would be responsible for implementing and administering this fee program. Generally, the legislative proposal recommended fixed-dollar annual fees for alcohol retailers at $300, wholesalers at $500, and producers at $1,000. According to TTB officials, TTB included this proposal in its budget request after consultation with the Office of Management and Budget (OMB). OMB maintained that TTB's funding would, then, be in line with other regulatory agencies' funding schemes. If the Congress enacted the language proposed by TTB in the President's budget request, the collection of these fees was expected to raise an estimated $80 million, or about three-fourths of TTB's budget request for fiscal year 2010, and reduce amounts derived from the general fund. In the next year, fiscal year 2011, collections from the alcohol industries were estimated to cover TTB's entire costs, including the portion relating to the tobacco, firearms, and ammunition industries.

Categories: Tax Policy and Administration, Cost analysis, Fees, Financial management, Funds management, Future budget projections, General fund appropriation accounts, Licenses, Presidential budgets, Program management, Proposed legislation, Regulatory agencies, Tax administration, Tobacco industry, User fees