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dhdunbar last won the day on January 16

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    Eclectic - from square dancing to Miles Davis; browsing the library for books of interest - Tony Hillerman crime novels to popular books on quantum physics. Simply sitting. Cooking dinner when someone else will wash the dishes. Walking the dog. Poetry and epistemology. Writing.

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  1. The above is good advice. I'm a bit late, but will offer a couple comments. On the issue of discrepancies. If I were auditing your accounts and did not find discrepancies between the book and physical inventory I would become very suspicious that you are not making the required gauges. Stuff disappears in lines, evaporates, errors get made on gauges, etc. so that everything coming out spot on is very unlikely. That said, you have to determine what your tolerance is for losses. Do pursue those that are too large. I'll underline the fact that you do not inventory spirits in barrels. You take your losses there only when you empty the barrel and record and report the angels share on the monthly reports of storage and processing operations. Any spirits in the production account are spirits that have not been recorded as produced, i.e., tanks holding heads or tails and any hearts from the stripping run. They are reported as spirits in process, line 17b, if I recall, of the operating report. You only make an entry there quarterly. Any finished spirits must be entered into storage or dumped into processing, not held in the production account. Finally, remember that you must pay taxes on any shortages in the cased goods account. Cased goods do not experience losses due to evaporation, etc. Since you record accidental losses, TTB presumes that any shortages on inventory result from unreported removals and are taxable.
  2. Pints and half pints are not authorized sizes for liquor bottlers. § 5.47a Metric standards of fill (distilled spirits bottled after December 31, 1979). (a) Authorized standards of fill. The standards of fill for distilled spirits are the following: (1) For containers other than cans described in paragraph (a)(2), of this section— 1.75 liters 1.00 liter 750 milliliters 500 milliliters (Authorized for bottling until June 30, 1989) 375 milliliters 200 milliliters 100 milliliters 50 milliliters (2) For metal containers which have the general shape and design of a can, which have a closure which is an integral part of the container, and which cannot be readily reclosed after opening— 355 milliliters 200 milliliters 100 milliliters 50 milliliters
  3. Well, it is a strange language. I answered this in another way, in response, I think, to a similar question you posted before. If you don't know what the words mean, then you are obviously at a loss to complete the forms that you must file. TTB provides information about when and what you must file and has some tutorials on the report. If you are not familiar with the TTB website, you should become familiar with it. It does not answer all questions, but it will tell you when and what reports and returns you must submit, as does part 19, another source with which you should become familiar. I will offer this - briefly, you must file forms for all of the operations for which you qualified. If you said you will produce, store and processes, you have to file those operating reports, even if they are full of zero's (you can get away without doing so, but TTB may demand them at some time in the future, especially if you propose to get a waiver to the bond requirements). You also need to file a zero tax return at least quarterly, which would mean that you have to file operating reports and the tax return by January 14. Since you are not going to be doing anything for a few months, that gives you the opportunity to learn what you must know to do what you must do. That will depend on the operations you conduct and the transactions in which you engage. TTB provides a list of the due dates for all tax returns each year, taking into proper account holidays, etc. You need to obtain that and keep it and file when it says you must. Someone pointed you toward Jim McCoy's articles. Read them. They omit some things you will need to know, but they provide you with a basis for at least asking questions that are not so open ended that answering them requires a discussion of half or more of what the regulations provide. TTB puts the ball in your court and expects that you will keep it in play. TTB also thinks that your doing what the law and regulations require is every bit as important as you think producing and selling your product is. You may not agree with that, but, as someone pointed out a long time ago, TTB bats last. They expect you to make the effort required.
  4. The principal problem with completing TTB operating reports is understanding how TTB uses words and the rules for how the spirits flow through the accounts that TTB requires you to use, creating an "audit trail" of the operations you conduct, from the materials used to the products shipped out the door. You have to have a basic understanding of operations and transactions take place in each of the three accounts that you report - production, storage and processing - and also understand what TTB means by the terms it uses, like redistillation and tax determined, the differences between packages and bottles, etc, and when you take and report physical inventories as opposed to when you report book inventories. The problem with instructional sets, and any attempt at simplified pamphlet, is that any set of instructions (or records database for that matter) is going to have to include all possibilities for entries you might have to make to record any possible operation or transaction in which any DSP might engage, even though most DSPs do not engage in most transactions and small DSPs usually engage in darned few. The forms are imposing because they have all those cells in to which you might have to put information, which creates doubt and second guessing, but if you eliminate the products that you don't make and the transactions and operations in which you don't engage (few remove spirits to a customs bonded warehouse, for example, or for use by the United States), you get a whole lot fewer cells into which you might need to place information. Thus reduced, the task becomes far less daunting. The more daunting task is determining what records you must keep to capture the information, but again, ignoring what you don't need is key. Often a simple set of analog, pen and pencil records, suffices. Other times, if you engage in many activities, a database makes sense, if you can afford it. I know this does not answer your question, but I hope that it explains a way in which you can approach the problem and gain some assurance that what you are doing is what is required. I keep threatening to do a set of separate modular instructions for recording and reporting vodka, gin, whiskey, rum, brandy, and specialty items, etc, but haven't found the time or energy to do that with the rigor that would be required to make sure that all possibilities are covered for each product, or how to market the darned things to pay for the effort it would take. It's far easier to respond when a client asks, "How do I report my vodka production when I do it by redistillation of neutral spirits I buy in totes?" When I have specific info, the answers are easy, which is just a restatement of what I said above, you simplify first, then dig out the answers to the specifics.
  5. Re: a 20-day approval. Miracles do happen, but don’t expect them. To understand the unlikelihood of your application being approved in 20 days, you must understand the way in which TTB processes applications. The system makes it all but impossible. That is why 20 days to approval is miraculous. When you submit the application, it is assigned, within a day, to a specialist. TTB used to use a triage system, but it appears to have abandoned that. The assignment to the specialist appears to now be made before anyone looks at it. The assignment to the specialist is made like dealing a deck of cards. The applications that come in each day are dealt round robin to the specialists. Who gets it is a lottery. The specialist who gets the application doesn’t look at it when she or he (I’ll chose she) receives it. It comes dealt face down and remains face down. She doesn’t look at it to say, oh, this one is great or lousy. It’s simply inserted into the bottom of the stack of applications she already has pending in her pile. She works this stack from top to bottom. This is a matter of “fair play.” One application is not favored over another. Since the specialists carry an “inventory” of 150 plus pending applications – I’ve heard figures as high as 250 - it takes a while for new ones to rise to the top, no matter how well prepared, to become the old ones at which they take a first look. This first look often does not occur for 180 days or so, although the October average time to approval was 180 days, so the average first look probably came at closer to five months after receipt rather than to six, for those applications, but that varies too, since in September the average was 206 days to approval. Now, is it possible that any particular application can bore through the pile to make it to the top in 20 days? Sure, anything is possible. But it would be an anomaly that would fall more than several standard deviations from the expected. But, let’s assume, for purpose of argument, that such a miraculous event does occur. What then? TTB says 75% of applications require correction notices. That was a 2015 figure. My experience says it probably is now a higher number than that. Some of that is because of real errors or omissions, but a lot is not. I submit quite a few conscientiously and competently prepared applications. I have found that what one specialist wants may not be what another specialist wants, so an entry that generates a “correction request” from one specialist, will not from another. Worse yet, the “corrections” that one specialist might require might be entries that are anathema to another, i.e., precisely the entries that would generate a correction request from the second specialist. In short, there is no “right” way to make entries when the specialists, or their immediate supervisors, are free to invent their own rules about what is required and the form in which it should appear. [Note, in fairness, I do make errors, from time to time, that generate needed requests for correction, so not all such requests are nonsense, but in my opinion many are]. In this situation, I proceed as follows. I read what the instructions ask for, provide that, and do so in a form that most specialists accept most of the time. I then handle any correction request, nonsense or not, in a couple of days. But I can’t prevent it. And I can’t get an approval in 20 days or 40 days or 60 days or 80 days. That is my reality. I can’t perform miracles. Next, let’s assume, for purposes of further argument, that the specialist who has reviewed the application within the miraculous 20 days, finds no fault with it and sends it off for “management disposition,” which is yet another hurdle that the applications must clear before it crosses the finish line. While it is possible to get management to dispose of the application quickly, if one has been expressing legitimate concerns about how long it has been pending, getting expedited service is not likely. The manager’s review serves as a “quality control” check. The managers return the application to the specialists if they find any problem and “gig” the specialist for the error, be it real or imagined. But that is not the problem. The problem is that the “gig” system is a Machiavellian management style that has the specialists working in fear of even the tiniest error and managers, who are also subject to gigs, working in fear that they will miss an error the specialist also missed. The absurd consequences that result from working in fear of errors, a nitpicking, excruciatingly slow review, do not matter in TTB's present mileau. Specialists and managers, in turn, look at each application in detail to find reasons the application should not be approved, not to find reasons that it should. Next, like the specialists, the managers have stacks of applications on their desks. Yes, if you guess that the most recent ones go to the bottom of the pile, you are correct. Unless someone is complaining about how much the processing time for their application has exceeded the average time, i.e. 180 days, not something less than 20 for others, things do not get expedited by merit. So, absent legitimate concerns about how long the processes has already taken, again in the sense of fair play, the managers take up the applications in the order received. My experience says that the times in which the manager acts in less than 20 days from the date the manager received the application are not common, unless, again, there are extenuating circumstances. So, management disposition alone general takes as much or more time than the 20-day application took from its conception to its approval. While the 20-day approval suggests that the application may have been immaculately prepared, in the manner of which the submitter justifiably is proud, the care with which it was prepared does not account for TTB not carrying it full term. The application was in fact "blessed." Unless your application is similarly blessed, by whom or what I cannot suggest, your application will not receive such favored treatment. I can all but guarantee it. As I said, I can’t get an approval in 20 days or 40 days or 60 days or even 80 days, because they do not even look at the applications until well after such time frames are in the rear-view mirror.
  6. What does TTB say the issue is? Silk City's suggestion that it is a GRAS matter seems likely. I did a Google Search and found an USDA website, https://npgsweb.ars-grin.gov/gringlobal/taxonomydetail.aspx?17105, which contained the following: Common names: meadowsweet (Source: Dict Gard) - English queen-of-the-meadow (Source: World Econ Pl) - English älggräs (Source: Vara kulturvaxt namn) - Swedish xuan guo wen zi cao (Source: F ChinaEng) - Transcribed Chinese Economic Importance: Food additives: flavoring (fide HerbSpices) Environmental: ornamental (fide Dict Gard; Hortus 3) Medicines: folklore (fide CRC MedHerbs ed2; Herbs Commerce ed2) The site contains a long list of references that I am not about to read. But, If the issue with TTB is whether meadowsweet has the FDA's blessing for use in foods, you are going to have to demonstrate it does, so you might want to crack those books. If you want to use "exotic" ingredients, be prepared to fight for them. TTB rightfully has concerns about what people put into spirits. Outright poisons in spirits were, in fact, one of the driving forces behind the Pure Food and Drug Act of 1906, the government's first foray into regulating ingredients in food and drug products. That also is how it became illegal to sell spirits in quantities of more than one gallon to persons not specifically authorized to possess bulk spirits.
  7. I'll use your example. "Example Distillery, LLC," is the legal name of the business. It is the "person" that is engaging in business. You, as the organizer, give birth to Example Distillery, LLC by submitting organizational documents to a state, which issues the birth certificate, i.e., the articles of organization, or whatever they may be called in that state, bestowing person-hood on Example Distillery, LLC. Examples Distillery, LLC's right to free speech is now constitutionally protected, but on the flip side, when I discover road kill in a bottle of Example's finest, Example Distillery, LLC is the person I sue. if Example Distillery, LLC holds forth to the public that the entity conducting the business is Example Distillery, sans any mention of the fact it is an LLC, it is operating the business as Example Distillery. Hence the TTB designation "Operating Trade Name." If Example Distillery, LLC does not hold forth that it is Example Distillery (sans the LLC), or some other fictional name, then it has no operating trade name. In any case, Example Distillery, without the LLC, is a fiction, It does not exist. If I sue Example Distillery, I get nothing. TTB does not object to the fiction, but it it wants the fiction to be transparent to inquiring minds, so it requires that the legal entity, which qualifies to conduct the business, list the operating trade name, if any, under which the legal entity will conduct business. Examples that use similar names may make the rules appear trivial, but what if Example Distillery, LLC were to do business under the operating trade name, Typical Spirits. There is no way that the public would be able to deduce, from the names alone, that Typical Spirits likely was nothing more than an ethereal, assumed name of Example Distillery, LLC. Because of things like roadkill in bottles, governments want to provide a way for the litigious consumer, who finds remains in a product, to identify the responsible party. Unless someone requires that Example Distillery, LLC register the trade name Typical Spirits before it engages in business as Typical Spirits, identifying the responsible party is difficult. How the means of identification are established varies from state to state. It used to be that some states did not require that an entity register a trade name, with the sole consequence being that the entity could not sue or be sued under the unregistered name, but I think most, if not all states, now require that entities register trade names. At any rate, TTB's requirement that you list the operating trade name, if any, remedies any instance in which the state has not imposed a requirement. If I find squashed toad in a bottle of Typical Spirits finest, I ask TTB, "Who bottled this?" and TTB can tell me. By rule, TTB allows only one operating trade name per legal entity. Why? Because it says so and it make the rules. But It allows many bottling trade name. Let's assume that Example Distillery, LLC, which is doing business as Example Distillery, enters into an agreement with Munchies Restaurants to Bottle Scrumptious Vodka. Scrumptious is the brand name. You do not list brand names with TTB, but you better get a trademark on the brand name or you are asking for trouble these days. If Munchies wants s the mandatory name and address required by the regulations to appear as "Distilled and Bottled by Munchies Spirits Company, Up Chuck, Wisconsin," Example Distillery can accommodate that. Example Distillery, LLC, dba Example Distillery, registers, with TTB, the bottling trade name Munchies Spirits Company. Example Distillery could do the same thing, with different bottling trade names, for 10 other clients. Or, f it wanted to project different identities for its premium products and well brands, Example Distillery could do so by bottling under different bottling trade names that were its own intellectual property. So, in the scenario we've constructed Example Distillery, LLC is the legal entity (you can only have one legal trade name), that is engaging in business under the operating trade name "Example Distillery (you can only have one operating trade name). Example Distillery, LLC, dba Example Distillery, which is how the federal basic permit will be issued, bottles some product for Munchies account under the bottling trade name "Munchies Spirits Company," which can be one of many bottling trade names under which it bottles. When you have a bottling trade name, neither the legal name or the operating trade name need appear on the bottle but they may appear on the bottle if you prefer. When you have an operating trade name, that name may appear as the name of the bottler, without reference to the legal name, but the you may use the legal name if you prefer. When you have neither a bottling trade name or a operating trade name, the legal name must appear as the name of the bottler. As to "bottling for the account of," this is already running long for a free answer :-) If anyone is interested in doing this sort of thing, and wants a guiding hand, my doors are open for business.
  8. You are correct. Be sure that the brewery invoices and/or other shipping documents substantiate that the grain bill used meets the standard of identity for the product. Because it is a brewery, we know it will be grain, but what grains matter when it comes to whether you can designate it as bourbon, etc.
  9. States vary. Talk to the state directly. Federally, there is no prohibition against a distillery holding an interest in a wholesaler. There are potential problems with ownership of an interest in both a distillery and a retailer. Federally, "It is unlawful for any industry member to induce, directly or indirectly, any retailer to purchase any products from the industry member to the exclusion, in whole or in part, of such products sold or offered for sale by other persons in interstate or foreign commerce by any of the following means." Those mean include "acquiring or holding any interest in any license with respect to the premises of the retailer." 27 CFR 6.21. Merely doing something that constitutes a means to induce is not, per se, illegal. For a violation of the tied house law to occur, all three elements enumerated in 6.21 - the common ownership, exclusion, and interest commerce - must be present. If the government want to prove a violation, it must prove that it is more likely than not that each of those elements is present. Put most directly, that can be a pain the butt. TTB is not likely to expend the time and energy necessary to do that on some small time distillery that has, as a principal, someone who owns a local bar. Sections 6.26 and following expand on the subject. The act by an industry member of acquiring or holding any interest in any license (State, county or municipal) with respect to the premises of a retailer constitutes a means to induce within the meaning of the Act (27 CFR 6. 26). However, a distillery may own, with impunity, complete interest in a retailer. "Outright ownership of a retail business by an industry member is not an interest which may result in a violation of section 105(b)(1) of the Act." (6.27). A potential problem arises only if the the distillery owns less than 100% interest in the the retailer "Less than complete ownership of a retail business by an industry member constitutes an interest in a retail license within the meaning of the Act." (6.33). A distillery need not hold the interest directly to create a potential problem. Industry member interest in retail licenses includes any interest acquired by corporate officials, partners, employees or other representatives of the industry member. Any interest in a retail license acquired by a separate corporation in which the industry member or its officials, hold ownership or are otherwise affiliated, is an interest in a retail license. (6.32) Note that it would appear that the indirect interest provision applies only when a person associated with the distiller "acquires" an interest in the retailer. This leads to the question, "What about instances in which a person who already holds an interest in a retailer acquires an interest in a distillery?" I would argue that this is not prohibited, but I am not an attorney and that is no legal advice. Next, the mere existence of a means to induce does not create a violation by itself alone. The means to induce must actually cause exclusion. The meaning of the term "exclusion" as it is now used in the regulations was shaped by case law. Exclusion only occurs when the ownership (1) places the retailers independence at risk and (2) results in the retailer purchased less than it would have of the product of the distillery's competitors. The regulations go on to say that a distillers holding less than 100% interest in a retailer places the Independence at risk, but only where the ownership is used [my empahsis] as a means to influence the purchases of the the retailer. See 27 CFR 6.51 and 6.52. Note that since the language requires that the distiller "use" the ownership to influence the purchases of the retail, it would seem to follow that a retailer could simply chose, independently, to buy the products of the the distiller, without triggering a violation. But do not take that to the bank - again, I am not an attorney and that is not legal advice. I only argue that it appears that TTB does have the burden of proving that the distillery used its direct or indirect ownership to influence the purchasing decisions, else it would seem unlikely that the distillery placed the retailers independence at risk. In short, as someone who used to construct trade practice cases, and who could spend six months to a year, in same cases, pursuing a single case, I can see all manner of defenses against alleged violations of 6.21 that might result from partial ownership, unless their is some overt threat or use of force, which would more likely result in an exclusive outlet charge. I am sorry if this is not the clear type of "yes or no" answer you might prefer, but it is the best I can do.
  10. It should update. In your applications, the last entry on the line should now read "create amendment" instead of "review in process." Your documents should be available on the supporting documents tab. I said should in all cases.
  11. About fire codes I know nothing. About regulation in general I know a lot. Here is a rule that is in tune with the last couple of comments. "It is because they say it is." Period. Most times you will not win an argument; occasionally you can; but winning an argument can take a long time and a lot of effort that is not worth the victory. Adages come tumbling out of my mind - "Win the battle and lose the war" and "Chose your fights" are among them. I can talk ideology, but when I'm working on behalf of a client I walk the pragmatic line.
  12. I'll reply, since no one else has, but I can't answer your question, because one size does not fil all. If it did, every application would be essentially the same and you could boilerplate them like using a template to write a lease. It doesn't work that way. I answer a lot of general questions here as a service to the industry that puts food on our table (okay, I retired once, so maybe it puts food on a table in a restaurant a little more often). But setting that aside, the "complete example" you're seeking from others is probably not going to happen because so much of what TTB ask is proprietary or personal to the person submitting the application. But it would take me a few hours to explain to you what TTB wants from YOU given YOUR individual circumstances. That's why I don't answer individual questions - I wouldn't have time to work. I don't intend this as an advertisement of my services and I encourage people to do for themselves what they can. You can do it if you want to; you just have to want to enough that you are willing to educate yourself about what TTB means by the words it uses, so that you know what TTB is asking that YOU give them give, as opposed to what the distillery down the street gave them, which would not describe YOUR circumstances. That can be a daunting task, as you say, but it is something you can do if you are willing to spend the time to do it. A lot of people do. I will, however, continue to comment on items of general interest as I see issues raised. This is just one of those circumstances that is not amenable to the kinds of answers I can give here.
  13. I missed this discussion. 27 CFR 19.166 talks about the penal sum for bonds. There is no requirement for a statement of the type you describe in the application to establish a DSP. Your reference to 19.166 is from the regulations prior to the current revision. The provisions of 19.166 were incorporated into the current 19.75. According to that section, for any tank, all you need list is the serial number (one you give to the tank) and its capacity. I quote: The serial number and capacity of each tank in the plant. The list does not need to include any bulk containers having a capacity of less than 101 wine gallons on the plant premises if those containers do not meet the criteria of a tank under Sec. 19.182 (perks, small totes, etc.). By the way, the above provisions of 19.75 an 19.182 leave everyone who bothers to read them wondering about those ubiquitous 275 gallon or more totes. But putting that aside, you need not make a statement certifying the accuracy of the tanks. However, if you are using a scale tank, or a package tank for that matter, you should get it certified from time to time for your own purposes. Finally, you need not tell TTB how you are going to gauge. You just must do so as required by the gauging manual.
  14. I'm not the one to advise on how to divide a DSP for efficient operations, but I doubt you are asking about that. From the government point of view, you will need to make an application for discontinuous premises, since you propose separate buildings. See 19.53: Continuity of plant premises:. As a general rule, the premises of a distilled spirits plant must be continuous except for separations by public waterways, roads, or carrier rights-of-way. However, the appropriate TTB officer may approve the registration of the plant where there are separations of the plant premises and all parts of the plant are in the same general location if: (a) There is no jeopardy to revenue caused by the separation of premises; and (b) The separation of premises does not create administrative problems for TTB. TTB routinely grants that if they are located within 10 miles (and there is no state line between them, which is extremely unlikely for about 109 different reasons). Doing that also requires a consent of surety, which also is routinely given by the surety at no additional charge, at least my agent doesn't charge extra. In the chopped up space, you will want to have a door between the two bays that you intend to include in the DSP because it you do not, you have to move the spirits off the bonded premise to get them from one bay to the next. With approved discontinuous premises, you can then move product back and forth between the two areas or the bays into which they may be divided. TTB asks that you describe the use of each premise. Some specialists also want you to designate space within the bonded premise for different operations, but that is simply a misstatement of what is required. You conduct all distilled spirits operations, which is a defined term to mean production, storage, and processing operations, on the bonded premise. But you do not need separate areas or equipment, notwithstanding what a specialist may want. When TTB rewrote the DSP regulations (part 19) in 2011, they published the final rule in a Treasury Decision, which contained the following explanation at one point: Recordkeeping accounts. All operations at a DSP are accounted for within four recordkeeping accounts— production, storage, denaturation, and processing. Since the facilities (tanks and rooms) of a DSP may be used for multiple purposes, the accountability for spirits must be maintained of necessity by appropriate records within the four accounts instead of by physical separation." So your space works and you can use any part of it for any distilled spirits operation, as long as you describe the DSP in a way that omits the tasting room, but you understand that. The space is otherwise "fungible." If you want specific help with this or with the application or other TTB requirements, send me a message.
  15. fstmatt does what should be done. He goes to a source document that clearly states the policy of Fed Ex. I'll do the same for TTB. https://ttb.gov/publications/direct_shipping.shtml The bottom line- because it appears at the bottom of the page - is clear and unambiguous: We want to remind industry members who engage in direct shipping that they are responsible for remaining in compliance with current State rules. Furthermore, industry members should remember that their Federal basic permits could be at risk if they fail to comply with State rules. For up to date information on the rules in a given state, contact the appropriate State alcohol regulatory authority. For a more complete statement of policy, see: https://ttb.gov/rulings/2000-1.htm I said it before and I'll say it again. You do not want to follow others down this rabbit hole.