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Summary: A review was conducted of the adequacy of regulatory inspections of the alcohol and tobacco industries and of legislation concerning distillery regulation. On-site government inspections at 13 regulated facilities were monitored, and the physical safeguards, production operations, government forms, and required production records maintained at each location were examined.
The Bureau of Alcohol, Tobacco, and Firearms (BATF) inspectors are assigned to the premises of distilled spirits and industrial alcohol facilities to protect excise tax revenues. The statutory requirement for this practice dates to 1866 when government presence was needed to stop rampant tax evasion. There is no longer such a need. The government could protect the revenues more effectively with fewer people. BATF inspections of the affected firms were too narrow in scope, being restricted to production-related activities and records. By not examining financial records, it did not have the increased insurance that excise tax payments were proper.
