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All in a day's work: Alcohol and cigs page 2

 Dr. Abdul Mabud, director of the scientific services division of the U.S. Department of Treasury^BENT^0027^EENT^s Alcohol and Tobacco Tax and Trade Bureau, holds up a bottle of snake liquor from east Asia at a laboratory, in Beltsville, Md.
Photos by Charles Dharapak/ASSOCIATED PRESS
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Date published: 12/9/2012


Some of its decisions are open to negotiation. A tequila-like liquor with a scorpion floating in it made scientists balk until the producer convinced them that the scorpions are farm-raised and non-toxic.

In other words, this may be the only federal agency that responds favorably to receiving scorpion candy in the mail--an edible tool for persuading scientists that the arthropods were fit for human consumption.

If labs, rules and taxes weren't enough for the bureau's 500-odd employees, they also have law enforcement authority. TTB investigators can send people to jail for things like removing alcohol from the production line and reselling it before it has been taxed by authorities.

With all these responsibilities, it's no surprise the agency's priorities sometimes clash. The bureau gives companies a wide berth on some rules and taxes, officials and experts say, mainly because of its small size and history of collaborating with business. It has granted millions in tax givebacks because of concerns that companies will sue and tie up government resources.

"Because we're regulated by such a friendly agency, and because enforcement isn't huge, there's a level of non-compliance that's sort of acceptable," says Rachel Dumas Rey, president of Compli, a California company that helps wineries comply with Treasury policy.

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.

Yet 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, violating several U.S. laws, according to documents on the bureau's website.

Since 2010, under similar deals with alcohol and tobacco companies, the agency has forgiven more than $25.4 million; the total amount is unclear because some public documents do not list the size of the tax bill or penalty that is being reduced. Nine companies persuaded the agency to slash their bills by more than 95 percent, including Procter & Gamble's Olay subsidiary, which uses alcohol in its skin care products.

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