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All in a day's work: Alcohol and cigs page 3

 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


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."

When the alcohol and tobacco bureau was split from the Bureau of Alcohol, Tobacco and Firearms, it held on to the former agency's tax collection duties, including for firearms and ammunition. It's still the government's third-biggest revenue collector, after the IRS and Customs and Border Protection. It took in $23.5 billion in federal taxes on alcohol, tobacco, weapons and ammo in the fiscal year ended Sept. 30, 2011, the most recent data available. That amounts to $468 for every dollar the agency spent collecting taxes--more than twice the IRS' ratio, officials note.

The bureau also works with government trade officials to protect and expand international markets for American alcohol and tobacco. Its expertise is crucial in negotiating with Europeans about wine labeling, or standing up to countries that refuse to recognize American "straight bourbon" for what the government says it is: corn whiskey stored in charred new oak containers for at least two years.

In this role, the agency has come to the rescue over the years of whiskey lovers in China, Colombia and Brazil. Those countries' governments tried to ban booze containing too much fusel alcohol, the pungent byproduct of fermentation that gives some whiskey its spicy, solvent-like aroma. Working through international trade groups, armed with data from TTB scientists, U.S. officials spent years convincing them to reverse their policies and allow the importation of whiskey that meets American standards. That was a win for American alcohol producers.

Sometimes, to protect U.S. producers, the bureau erects trade barriers of its own. Under a proposal by the bureau last spring, anything labeled Pisco must have originated in Chile and Peru. (Pisco is a South American grape brandy whose signature cocktail, the Pisco Sour, is so celebrated that it has its own official Peruvian holiday.)

Aspiring Pisco producers in Bolivia, in the U.S. government's eyes, can take a hike.

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