Tax Free Alcohol

TFA refers to ethanol/ethyl alcohol that is 190 proof or higher. It is regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB). Authorized users include any:

  • Scientific university or college of learning
  • Educational institution exempt from income tax under section 501(a) of the Internal Revenue Code 
  • Laboratory for use exclusively in scientific research. 

Departments and laboratories that purchase TFA under the University industrial alcohol user permit must meet requirements to maintain this permit. Authorized purchasers are subject to an audit at any time by officials of the TTB. 

NOTE: Researchers and other users are urged to substitute reagent grade alcohol where possible to minimize the amount of recordkeeping and liability.

Prohibited Use of TFA

  • Tax-Free alcohol may not be used for beverage purposes, or in any food product, or in any preparation used in preparing a beverage or a food product. 
  • Tax-Free alcohol may not be sold. 
  • Tax-Free alcohol may not be used in the manufacture of any product which will be sold or in any product resulting from the use of tax-free alcohol which will be sold. 
  • Tax-Free alcohol may not be removed from the premises authorized under the permit. 


The regulations require the secure storage of tax-free alcohol while unattended or removing an amount from the inventory for use. Secure storage includes:

  • Cabinet under a fume hood
  • Lockable flammable storage cabinet 
  • Locked lab where tax-free ethanol is stored


All reagents and dilutions made from tax-free ethanol should be appropriately and accurately labeled to ensure they are not transported off the premises. 

Records and Inventory

The regulations require that all persons who obtain tax-free ethanol must maintain an inventory of the tax-free ethanol they have in storage and records of its use, sufficient to identify any lost, stolen or destroyed ethanol. All records must identify tax-free alcohol by proof, date of receipt/usage, and quantity involved. Records shall be kept current at all times. Report any discrepancies in the inventory to EHS. 

  • Records of receipt: Consist of the invoice, bill or bill of lading, or another document used for the intended purpose. Records of receipt shall record the proof, date of transaction, and quantity of tax-free alcohol actually received. 
  • Records of usage: Identify the tax-free alcohol by quantity, proof, and purpose of removal.
  • A physical inventory of tax-free alcohol in a labs possession must be taken semi-annually and for periods ending June 30 and December 31 of each year. These inventories may be recorded separately or as an entry in the record of usage with any necessary adjustments (losses or gains). 
  • TTB Inventory log (excel spreadsheet)


Use of tax-free alcohol in any manner prohibited including selling, removing from authorized premises will be required to pay the tax on the alcohol.

Questions: Contact Rudy Guerrero (