1. (a) Each permittee subject to the provisions of Alcoholic Beverage Code §§201.03, 201.04, or 201.42, and each licensee subject to the provisions of Alcoholic Beverage Code §203.01, shall be entitled to receive a tax exemption or a tax credit for alcoholic beverages destroyed in accordance with subsections (c) - (g) of this section.
2. (b) Each permittee or licensee eligible to destroy alcoholic beverages following a natural disaster pursuant to Alcoholic Beverage Code §109.09, shall be entitled to receive a tax exemption or a tax credit for alcoholic beverages destroyed in accordance with subsections (i) - (l) of this section.
3. (c) To be claimed as a destruction for purposes of receiving a tax exemption or a tax credit, the alcoholic beverages must be destroyed in such a manner that the product is rendered unrecoverable or unfit for human consumption.

4. (d) Prior to the destruction of alcoholic beverages for which a tax exemption or tax credit is claimed, the permittee or licensee must comply with the requirements of this subsection.

   1. (1) At least three full working days prior to the destruction, the permittee or licensee must notify the nearest authorized representative of the commission of the intent to destroy the alcoholic beverages. This notification must be made in writing on an Application for Destruction of Alcoholic Beverages and contain a complete listing by brand, quantity, container size, and package size of the alcoholic beverages to be destroyed. This requirement for a complete listing may be satisfied by attaching a computerized listing that provides all the required documentation to the Application for Destruction of Alcoholic Beverages.
   2. (2) The permittee or licensee must receive written approval from the nearest authorized representative of the commission to conduct the destruction.

5. (e) To support a claim for a tax exemption or tax credit for a destruction, the permittee or licensee must retain the documentation referenced in this subsection and make it available to an authorized representative of the commission upon request.

   1. (1) A signed copy of the Application for Destruction of Alcoholic Beverages indicating that it was approved shall be provided to the permittee or licensee by the nearest authorized representative of the commission when the destruction is approved.
   2. (2) If the alcoholic beverages were destroyed at a location which charges a fee for this service, the permittee or licensee shall retain a copy of the receipt for payment of this fee.
   3. (3) An employee of the permittee or licensee who witnessed the destruction of the alcoholic beverages must execute an affidavit of destruction. The affidavit shall include the date of destruction, the destruction location, and a description of how the alcoholic beverages were destroyed. A separate affidavit must be prepared for distilled spirits and wine, for ale and malt liquor and for beer.
6. (f) The approved Application for Destruction of Alcoholic Beverages (including any attachments) shall be submitted with the monthly excise tax report filed with the commission upon which the exemption for the destruction is claimed. If the permittee or licensee is unable to claim the destruction as an exemption on a tax report, it may submit a letter to the Commission requesting issuance of an authorized tax credit.
7. (g) A copy of the approved Application for Destruction of Alcoholic Beverages (including any attachments) should be retained in the permittee's or licensee's files and made available upon request for inspection by an authorized representative of the commission.
8. (h) The commission may require that the alcoholic beverages designated for destruction be physically inspected and inventoried by a representative of the commission prior to the scheduled destruction and/or that the actual destruction be witnessed by an authorized representative of the commission.
9. (i) All uninsured malt beverages subject to destruction under §109.09 must be destroyed in such a manner that the product is rendered unrecoverable.
10. (j) An employee of the permittee or licensee who witnessed the destruction of the malt beverages must execute an affidavit of destruction. The affidavit shall include the date of destruction, the destruction location, and a description of how the alcoholic beverages were destroyed.
11. (k) Not later than 30 days following the destruction of malt beverages under this section, the permittee or licensee shall submit to the commission the affidavit required under subsection (i) with a completed and signed commission Notification of Destruction of Uninsured Product after a Natural Disaster form.

12. (l) The permittee or licensee must retain the following documentation and make it available to the commission upon request:

    1. (1) A copy of the receipt for the cost of destruction, if the malt beverages were destroyed at a location that charged a fee for the service;
    2. (2) A copy of the completed and signed Notification of Destruction of Uninsured Product after a Natural Disaster; and
    3. (3) A copy of all destruction affidavits executed by the person who witnessed the destruction.

Source Note:The provisions of this §41.54 adopted to be effective April 17, 2016, 41 TexReg 2591; amended to be effective June 9, 2020, 45 TexReg 3769.