Photo: Paula Abrahao via flickr
The headline for AP reporter Daniel Wagner’s new story about the role of the Alcohol and Tobacco Tax and Trade Bureau (aka the TTB) is deceptively benign: “Booze, smokes on agenda for quirky gov’t group.”But Wagner’s reporting reveals an agency that has found a magic formula for bringing in tax dollars.
The TTB was created in 2003, when the new Homeland Security act split up enforcement duties that previously belonged to the the Bureau of Alcohol, Tobacco and Firearms (aka the ATF).
The new agency took on the ATF’s old civil enforcement duties — collecting taxes, approving labels and standardising chemical components (like how much air can be in a bottle).
It is staffed by “scientists, rule-makers and trade ambassadors” who create assignment details with names like “Tequila Working Group,” Wagner says.
Quirkiness aside, the TTB is the government’s third-biggest revenue collector, after the IRS and Customs and Border Protection, according to Wagner.
It may also be its best:
In fiscal year 2011, it took in $23.5 billion. “That amounts to $468 for every dollar the agency spent collecting taxes – more than twice the IRS’ ratio,” he writes.
By comparison, the SEC has taken in just $5.9 billion since 2010.
How does the TTB do it?
In part, by looking past some more relatively minor incidents.
“Agency officials say they use scant resources where they can make the most difference, generally on the biggest producers or companies where there is an indication of wrongdoing,’ Wagner says.
For instance, he writes:
…last July, the bureau slashed a tax bill for the multinational agribusiness conglomerate Cargill from $839,370 to $63,000. Cargill failed to report or pay taxes on about 23,000 gallons of nearly pure industrial alcohol that leaked from a rail car.
Available documents show that since 2010, the agency has forgiven at least $25.4 million, he says.
But it appears to have a pretty decent system for deciding when to do so.
Tom Hogue, a spokesman for the bureau and former explosives inspector, says it only agrees to reduce companies’ tax bills “if we are satisfied that the (remaining) penalty is commensurate with the violation and is sufficient to deter future illegal conduct.” In cases where settlements are granted, Hogue says, “they allow us to use our resources to counter non-compliance, instead of tying them up in court.”
The agency also saves jobs, Wagner notes: Mexico had threatened to stop exporting bulk tequila – a commodity that supports 500 U.S. bottling jobs. After the bureau agreed in 2006 to regular meetings with Mexico’s tequila industry, Mexico backed down. The jobs were saved.
How many bureaucrats can say that?
Business Insider Emails & Alerts
Site highlights each day to your inbox.