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dhdunbar last won the day on September 4

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About dhdunbar

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    Retired from ATF and began consulting for DSP's in 2012. When I'm not working, I like to head outdoors. That can mean simply sitting on the deck reading. Regulation bores me. Helping others deal with it does not.

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  1. TexCF' link is to an informative analysis of the court'rs ruling. Before becoming too joyous, read it. It is straightforward and not so dense that you need a law degree to understand what the decision does and does not do. Nothing in the case involved interstate shipments. It involved licensing only. Nothing struck down the three-tier system, although, the article points out, it did not "unquestionably" support the legitimacy of the system as the Granholm decision on wine shipments did. As to the "dissolution of the pathetic money sucking 3-tier system" being "being next to go." the article goes on to discuss, briefly, two cases the challenge bans on interstate shipments. They are based on the fact that they discriminate by allowing intrastate shipments while banning interstate shipments. The article then points out the obvious fly in that ointment, statting "Even if the outcome of these cases is that state laws are found invalid, it will not necessarily mean that these states will allow out-of-state retailer direct shipments. Upon a court ruling that a state’s laws are discriminatory and unconstitutional, the state could decide to rectify the issue by “leveling down” to prohibit all retailer alcohol shipments to consumers, from both in-state and out-of-state retailers. As such, the law would apply equally to all retailers regardless of location, so it would not be discriminatory. “Leveling down” to remove all retailer alcohol shipping privileges would likely be unpopular with consumers, but it may find support from some segments of the alcohol industry. Thus, this outcome remains a possibility even if litigation challenging laws prohibiting out-of-state retailer shipping is successful." So, the warning aboutt throwing the baby out with the bathwater applies. So does the adminitipon about being careful what you wish for. This is not for amateurs and I am an amateur, but I suggest that you understand what your state legislature is likely to do before throwing your support behind efforts to allow interstate shipments. I'd also suggest, again as an amateur, that unless you've got a lot of marketing money just laying around waiting for a place to land, you spend your marketing dollars and time pursuing consumers much closer to home. I also recommend that you consider how locavore sentiments make small enterprises possible. Is your version of Irish whiskey really better than Redbreast 12 year old? Next, why would I, a Washington resident, buy spirits from a small California distiller, when I can support small local distilleries that are producing every bit as good a product? Why would I join a California distillery's club when I can join a local distillery's club? Why would I buy a Mississippi whiskey instead of Redbreast? Finally, there are many small producers who do not hold that wholesalers are pathetic money suckers. Yes, there is the argument that a wholesaler does not have nearly the investment in equipmentment, etc, that a producer does, and that they should not be entitled to the same profit margins,. But they have, or should have, expertise that you probably do not. Consider the consequences of bypassing the supply chain. If, by making direct shipments, you eliminate wholesalers and brokers and retailers who hand sell your costly product too, you become the marketer and incur the marketing costs in any market that you might seek to enter. You also lose focus. You have to spend time developing marketing strategies instead of managing costs and creating products. What is that worth to you? Are the small wholesalers who gain you traction in another state really only bloodsuckers? I think you might want to consider how you can be a more effective partner with the wholesaler/broker, with each focusing on what each knows best. But I'm an amateur and it ain't my dollars on the line..
  2. Equivalency. I think it is probably easier to win a tax fight than a blue law fight. As a long ago college student who ended up, let's just say, throwing more than caution to the wind out of a car window, I can attest to the truth of getting just as drunk on beer as rum. But rum carries the demon monicor, both in temperance cartoons and public perception. Wine carefully cultivated the notion that it is food. Wine cultivated an image - people don't drink wine to get drunk and if they do, then local governments will legislate against the sale of Mad Dog in areas where the homeless congregate. But wine is otherwise refinement. Jesus turned water to wine. He didn't invent the whiskey sour. And beer was the beverage of the country music songs, salons and frat parties, beaches in summer and, well you get the idea, it was everybody's beverage, the stuff of good times. So, I think you are not doing battle with a reality; you are doing battle with perceptions and in with spirit's symbolic association with social "depravity." Warning - Don't underestimate the power of symbols. Think of the reaction to what is perceived as desecration of the flag. I need say no more than that. Misconceptions that get tangled with symbols do not give way to rationale argument. You can argue that spirits should be equivalent to wine because ... going on to list a string of rational arguments the should bludgeon the lingering Pilgrim ethos - I've got at least five lines back to the Mayflower so I'm taking one my own heritage here - that we've not yet managed to shake. You can argue as rationally as you can, but at some point you reach an impasse. Logic be damned - in all likelihood your appeal will not make a dent in the attitude of those who are convinced otherwise by, well, their common sense. Appeals to common sense are appeals to what Einstein called our prejudices at the age of 18. I place no faith in my common sense. It is what I have to challenge the most. Ask, "Why do spirits websites make me affirm I'm of legal age." Ask, "Who's checking and what does that accomplish?" Ask about voluntary bans on spirits ads on TV? Ask, "Why did distillers, and other producers, seek to regulate the production and distribution of alcoholic beverages?" Think about whether, coming out of prohibition, the alcohol industry sought regulation because bit loved it or it wanted cover? Think SEC; think FDIC. Do self and governmental regulation play symbolic rolls that make things possible or at least make more draconian rules less probable?. I think you will not get spirits the same legal status as wine until you deal with the socially innate perceptions. I think your tasting rooms help with that. I think the promotion of cocktails as an accompaniment to food helps with that. I think locavore helps. I think getting people to buy into what you are doing, to feel they are participating with you - what I've elsewhere called the "Cheers Factor" - helps. Familiarity does not necessarily breed contempt and I'm in water far over the head of any claim I can make to expertise. but i think the more people learn about your industry, the less power symbolic notions of demon rumh old. Symbols lose power when people become more familiar with the thing itself, in your case with your spirits. That tells me "breed familiarity" is a good way forward for you. But that's only common sense, right?
  3. Whoa - things are spinning here. There is a need for more discipline and rigour. Yes, adding sugar to wine is chaptalization or amelioration. But neither of those words appear in the standard of identity for brandy, which you find in §5.22(d). Fruit brandy §5.22(d)(1), is, among other things, “brandy distilled solely from the fermented juice or mash of whole, sound, ripe fruit, or from standard grape, citrus, or other fruit wine." The standard goes on to discuss pumice additions, etc., which are not relevant to the question. If real estate is "location, location, location," regulation is "definition, definition, definition." So, you must ask, "What is "standard wine?" Terms like "stand wine," which contain a modifier, almost beg the reader to look for a definition within the regulations. The regulation could have said wine, but it said, instead, "standard wine," and the notion that the wine must be "standard" reflects a conscious choice to include it. That sends us to part 24, the wine regulations (part 4, do not define the term). Part 24 defines it. Standard wine is "Natural wine, specially sweetened natural wine, special natural wine, and standard agricultural wine, produced in accordance with subparts F, H, and I of this part.. Now, that leads us on a merry chase, which I will not pursue to the end here, but "natural wine" "specially sweetened natural wine" and "special natural wine" are all defined too. "Natural Wine" is The product of the juice or must of sound, ripe grapes or other sound, ripe fruit (including berries) made with any cellar treatment authorized by subparts F and L of this part and containing not more than 21 percent by weight (21 degrees Brix dealcoholized wine) of total solids. Natural wine is produced in accordance with subparts F and G of part 24. Now,. things get deep. §24.176, which is headed " Crushing and fermentation," provides, in pertinent part, that , " At the start of fermentation no material may be added except water, sugar, concentrated fruit juice from the same kind of fruit, malo-lactic bacteria, yeast or yeast cultures grown in juice of the same kind of fruit, and yeast foods, sterilizing agents, precipitating agents or other approved fermentation adjuncts." The addition to juice or natural wine before, during, or after fermentation, of either water or pure dry sugar, or a combination of water and sugar to adjust the acid level" is called amelioration. A winery may only do it within limits. What are those limit? Let's go a little further down the rabbit hole. §24.178(a), which is headed "Amelioration," provides, "In producing natural wine from juice having a fixed acid level exceeding 5.0 grams per liter, the winemaker may adjust the fixed acid level by adding ameliorating material (water, sugar, or a combination of both) before, during and after fermentation. The fixed acid level of the juice is determined prior to fermentation and is calculated as tartaric acid for grapes, malic acid for apples, and citric acid for other fruit. Each 20 gallons of ameliorating material added to 1,000 gallons of juice or wine will reduce the fixed acid level of the juice or wine by 0.1 gram per liter (the fixed acid level of the juice or wine may not be less than 5.0 gram per liter after the addition of ameliorating material). There's more on amelioration, but there is also a limit to how far down I want to go to make my point. However, before leasing part 24, you can also add sugar to sweeten a wine. "§24.179 provides: (a) General. In producing natural wine, sugar, juice or concentrated fruit juice of the same kind of fruit may be added after fermentation to sweeten wine. When juice or concentrated fruit juice is added, the solids content of the finished wine may not exceed 21 percent by weight. When liquid sugar or invert sugar syrup is used, the resulting volume may not exceed the volume which would result from the maximum use of pure dry sugar only. (b) Grape wine. Any natural grape wine of a winemaker's own production may have sugar added after amelioration and fermentation provided the finished wine does not exceed 17 percent total solids by weight if the alcohol content is more than 14 percent by volume or 21 percent total solids by weight if the alcohol content is not more than 14 percent by volume. (c) Fruit wine. Any natural fruit wine of a winemaker's own production may have sugar added after amelioration and fermentation provided the finished wine does not exceed 21 percent total solids by weight and the alcohol content is not more than 14 percent by volume. So you can use wine to which sugar has been added to produce brandy. However, before leaving the issue altogether, all of this that raises a question that is not answered clearly. Yes, you could receive in bond standard wine produced at a winery, with acceptable additions of sugar, and you could then distill it, as standard wine, to make a standard fruit brandy. But, could you, as a DSP proprietor, ferment juice, in the manner of standard wine, which would allow the addition of sugar within limits imposed on standard wine, to make distilling material. I don't know. If you can, and you did, you would create a need for a lot of records to prove that the addition of the sugar was within the limits allowed by part 24. So ask TTB. But before you do, understand what the regulations say. When you understand, sort of - and I'd say that is the sort of understanding that I have, a sort of understanding - what the regulations say, you have a clue about the TTB employee to whom you are talking has a clue about what is required, prohibited, or allowed.
  4. Per the above site, http://www.ncsl.org/research/financial-services-and-commerce/direct-shipment-of-alcohol-state-statutes.aspx, which I now see is the National Association of State Legislators, not the AGs. Out of the 54 states, territories and commonwealths, three states—Alabama, Oklahoma and Utah—specifically prohibit the direct shipment of alcoholic beverages to consumers. Mississippi, Guam, Puerto Rico and the U.S. Virgin Islands do not have statutes that specify that direct shipments are allowed. Massachusetts and Pennsylvania have had statutes ruled unconstitutional by state courts in those states. Delaware have statutory provisions that require orders to be processed and shipped through licensed wholesalers. Arizona, Arkansas, Georgia, Kentucky and South Carolina have statutory provisions that allow wine to be shipped into the state when purchased by the customer on-site at the winery. Rhode Island allows intoxicating beverages to be shipped when purchased on-site. Five states—Arizona, Florida, Hawaii, Nebraska and New Hampshire—and the District of Columbia authorize the direct shipment of all spirits as specified. Eight states allow the direct shipment of beer and wine as specified: Delaware, Massachusetts, Montana, North Dakota, Ohio, Oregon, Vermont and Virginia. The remaining states only allow direct wine shipments. It goes on to provide full text copies of what it deems to be the relevant statutes, if any, from all states. It then warns in bold letters (from which I can't remove the formatting): Please note the summaries should be used for general informational purposes and are not intended as a legal reference. NCSL is unable to provide assistance, give advice or answer questions regarding individual cases. If you have questions regarding the direct shipment of alcoholic beverages to consumers, please contact an attorney in your state or your state attorney general. I would assume that Fed EX policy is in place because as a shipper, Fed Ex wants to avoid the possibility of seizure of a truck by a state that takes exception to direct to consumers and decides to put an end to it but cutting off the delivery routes. Next, as is clear from the above NASL summary, while wine and spirits are both alcohol, they do not receive equivalent treastement in state law. Ever since prohibition, state wine and spirits laws have usually been different, because of differences in (1) taxation and (2) public perception, which led to different "blue laws." Because of the number of wineries within some states, many states acted in concert with other states to grant reciprocity . Then, the Supreme Court held that a state that allows intrastate direct delivery can't prohibit interstate direct delivery. Presumably, the court would hold to that precedent with spirits. But not nearly as many states allow intrastate direct delivery of spirits as they do wine, and given the strong tax incentive to prohibit interstate shipments, not to mention blue law perceptions, I'd suspect the Court's wine decision might act as an anchor on approval of intrastate shipments, not as a facilitator. . Next, I'd think any statement to Fed EX that a spirit is wine would trigger possible fraud statutes (those are my screaming capitals). I'd talk to an attorney before going down that rabbit hole. Finally, if I understand the Mississippi case, and I may not, it (1) relies on a finding that the purchaser is the shipper, not the dealer who acts as the purchaser's agent in arranging for the shipment, and (2) that finding likely rests on the sales provisions of the UCC, which, if what I read is correct, has been adopted by most states, . So you have potentially battling laws and the prospect of court cases that determine which holds sway and which are likely to be appealed by the losing party. In short, we are all amateurs. Going to court is for professionals. Again, if you can afford to be the lead case, then you may want to go for it. On the other hand, if you don't have those sorts of funds available, or just might have a better way to spend them to promote growth in pother ways,, you probably want to sit to the side and let the issue play out as it will. For now, retailers, who have been charged and so are fighting back, are at the forefront of this. They have no federal permits that they put at risk and no any real prospect of federal enforcement action because the federal law that applies, the Webb-Kenyon Act, is a protective statute, intended to protect the ability of states to regulate shipments of alcohol into their states, and so has no penalty provisions. However, as TTB points out, the Webb-Kenyon Act is a federal statute and basic permits are conditioned on compliance with federal law, even if that law does not contained a penalty provision.
  5. As I recall, DISCUS got involved, objected to some provisions, wanted others changed, such as allowing for a 200 miles separation between discontinuous premises and other comments also objected. You can read them all in the attached links. Whatever happened, the proposal is no longer on the table. It was withdrawn 02/26/2019. See https://www.regulations.gov/docket?D=TTB-2011-0010. If you want to see a copy of the simpler form that was hat was proposed, see https://www.regulations.gov/document?D=TTB-2011-0010-0005, where you can find a link to a pdf copy. I'd point out that just about every change that TTB has made or propoxzsed, on its own initiative, in the last 20 years, has been a reduction in what is required. I'll also smilingly observe that bulk of the complexity of the regulations is the result of industry asking for a new or different standard. Pogo's statement about who is the enemy applies. Weigh the beer regulations against the wine and spirits regulations. The beer regulations, in the most part, reflect core governmental concerns. What is beyond that is industry driven. Anyway, TTB was ready and willing to make the change. I think industry put the stake through its heart.
  6. Re: the direct shipment laws of all the states, see: http://www.ncsl.org/research/financial-services-and-commerce/direct-shipment-of-alcohol-state-statutes.aspx. Since it expresses the opinion of state attorney generals, it is straight from the right end of the horse, not my end. Re the Mississippi case as precedent. The article says "Rankin County Chancery Court Judge John S. Grant III dismissed the lawsuit Monday." I'm not an attorney, but did work, for a time, as a hearing officer, and had to apply case law. Precedent is not straightforward. There can be different precedents within the same legal system. Here is how one website describes it: Precedent is a legal principle, created by a court decision, which provides an example or authority for judges deciding similar issues later. Generally, decisions of higher courts (within a particular system of courts) are mandatory precedents on lower courts within that system. That means the principle announced by a higher court must be followed in later cases. Decisions of lower courts are not binding on higher courts, although from time to time a higher court will adopt the reasoning and conclusion of a lower court. Decisions by courts of the same level (usually appellate courts) are considered a persuasive authority. That is, they should always be carefully considered by the later court but need not be followed. I don't intend to emphasise or scream. I just can't get rid of the bold text format. See the source at https://www.upcounsel.com/legal-def-precedent for more on this. Now, you can argue that the argument that the seller is serving as the agent of the buyer may offer a promise of favorable decisions by other courts. In fact, one of the attorneys representing the defendants, national, in this case, is optomisitc about that. See https://www.beveragelaw.com/booze-rules/2018/8/28/mississippi-rising-a-victory-for-legal-retailer-to-consumer-sales-and-passage-of-title-under-the-uniform-commercial-code. I receive the blog and you may wish to too if you want to follow significant legal developements in alcohol law. In the meantime, you can find TTB's position on direct shipment and the underlying statutes and case law on which it bases it position at https://ttb.gov/publications/direct_shipping.shtml. I have cut and pasted it for the convenience of those who care. Those with more interest can follow the links TTB provides. I know of no instance in which TTB has taken action against a permittee for making shipments in violation of state law. But my advice is simple. Before you decide to make mail order sales, if you can find a way to get the merchandize to the buyer, talk with your lawyer about the risk and hassle that might arise if the state takes exception and acts on its own, or if it asks TTB to intercede, on its behalf, with an out-o-f state entity, i.e. you, that the state holds to be in violation of its laws. If you have deep pockets, perhaps you can afford to be the lead case. If you don't, you can't afford it. Let someone else chart the course and assume the risks. That would be my advice. Direct Shipping The Liquor Law Repeal and Enforcement Act, also referred to as the Webb-Kenyon Act, which the Alcohol and Tobacco Tax and Trade Bureau (TTB) administers, prohibits shipments of alcohol beverages from one State into another State in violation of any law of the receiving State. 27 U.S.C.§122. The Federal Alcohol Administration Act (FAA Act) at 27 U.S.C.§203, requires a basic permit in order to engage in the business of importing distilled spirits, wine or malt beverages for non-industrial use into the United States. Likewise, a basic permit is required to engage in the business of distilling, rectifying, blending, bottling or warehousing and bottling distilled spirits or producing or blending wine for non-industrial use. Finally, a basic permit is required for persons who engage in the business of purchasing for resale at wholesale distilled spirits, wine, or malt beverages for non-industrial use. Retailers are not required to obtain basic permits under the FAA Act. The FAA Act also provides that basic permits are conditioned upon, among other things, compliance with the Twenty-first Amendment and Federal laws relating to its enforcement as well as all other Federal laws related to distilled spirits, wine, and malt beverages. 27 U.S.C.§204(d). Thus, TTB could, in appropriate circumstances, take administrative action against a basic permit holder for violations of the Webb-Kenyon Act. In 2000, our predecessor agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), issued ATF Ruling 2000-1 to announce its enforcement policy relating to violations of State law that result from shipments of alcohol made directly to consumers in one State from sellers located outside that State. This ruling remains in effect and reflects the policy of TTB today. Also in 2000, Congress enacted the 21st Amendment Enforcement Act that provided the States with a specific tool to address interstate shipments and transportation of alcohol beverages in violation of State law. Thus, contemporaneous with our enforcement policy pronouncement, Congress indicated its support for States to act in this enforcement area because they likely are in a better position to interpret and defend their own laws. In Granholm v. Heald, the U.S. Supreme Court (May 16, 2005 decision) declared unconstitutional State laws that prohibited direct shipment of wine to consumers within the State from out-of-state businesses but permitted direct shipment to those consumers from in-state businesses. This decision has led to the reexamination of laws in several States. Many States are reviewing and amending their alcohol beverage rules in light of the decision, and litigation continues as suits have been brought by retailers and consumers in several States. As a result, the regulatory schemes in place in many States are in some degree of flux. 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. Page last reviewed/updated: 09/04/2012
  7. I am too busy to answer fully, but here are some quick comments: 1. Others are correct. You do not use the term "distilled spirits specialty on the label." You designate it with a fanciful name and truthful and adequate statement of composition. See §5.35. 2. If the specialty contains, as an ingredient, a spirit that conforms to a standard in §5.22, you may list that spirit in the statement of composition. 3. Bourbon is a distinctive product of the US and so TTB protects it in ways that it does not protect other whiskey. Look to the fairly recent revenue ruling on general use formulas for guidance on that. Bottom line, you may not add, to bourbon, any flavor, such as that which might be obtained from storage in a sherry barrel, without changing the class and type designation. 4. Other whiskeys may or may not be deemed to undergo a change in class and type when finished in a used sherry barrel. ISee 5.23(a)(2) - There may be added to any class or type of distilled spirits, without changing the class or type thereof, (ii) harmless coloring, flavoring, or blending materials such as [and therefore not limited too] caramel, straight malt or straight rye malt whiskies, fruit juices, sugar, infusion of oak chips when approved by the Administrator, or wine, which are not an essential component part of the particular distilled spirits to which added, but which are customarily employed therein in accordance with established trade usage, if such coloring, flavoring, or blending materials do not total more than 21⁄2 percent by volume of the finished product. 5. What is customarily employed, in whiskey other than bourbon, in accordance with established usage. I don't want to venture a prediction, but ... 6. Look at Angel's Envy approvals for the bourbon whiskey and other whiskey finished in other than new charred oak. Also look at the way in which many labels split the required statements of composition and what TTB has taken to be the "fanciful name." I did that once. Ii don't recall the details, but seem to recall that bourbon was treated differently from other whiskeys. I'd look too, but right now I'm trying to keep my head above water. So I'll just offer the route I'd try to follow to determine how to proceed if I had the time.
  8. J Norris and others have it right. The direct statement of the prohibition is Sec. 19.351(c), which is headed removals from processing. It states, "Except as provided in paragraph (b)(2) and (3) of this section, spirits may not be transferred from the processing account to the storage account." Why they bury such a basic tenant so deeply in the text is a mystery to me, but they do. The two exceptions mentioned relate to deposits into the production account, not the storage account, but I'd read (c) as saying you can pass them through the storage account on the way to production. I think someone must have had a need for that and petitioned for it. It otherwise makes no sense, but then I can't think of a rationale for the one way gate into processing rule either. The regulation sites nine sections of law on which it is based and none have a one way rule. The operations you may conduct in the storage account are limited. There are rules that allow filling packages, changing packages, mingling and blending, and adding oak chips to spirits and caramel to rum or brandy, all subject to restrictions, etc. That's it. Under §19.325 you can change packages and barrels are packages. However, and I can't find any direct provision affirming this, if the repackaging results in a change in the class and type, it must be done in the processing account. That suggests a detour into the way repackaging bourbon is different than repackaging rye, but I'll not go there now. I can't find any direct requirement that all operations that change class and type, must be done in processing, but there is an indirect path to that conclusion. The indirect is through the requirement you must designate spirits by kind when you put them into a package (barrel) and that you may not change the designation you have given them without the written permission of TTB (§§19.487(a) and (b) respectively]. An approved formula constitutes such written permission. Section §19.348, which is a processing account rule, requires that you must have an approved formula before you "Blend, mix, purify, refine, compound, or treat spirits in any manner which results in a change of character, composition, class, or type of the spirits, including redistillation as provided in Sec.19.314; or produce gin or vodka by other than original and continuous distillation. Section 19.343, which also a processing account rule, provides that you must make a dump record when you dump spirits for use in the manufacturing of a distilled spirits product and when when spirits are dumped for redistillation in the processing account. It also provides that you must prepare a batch record to record the dumping of spirits that are to be used in their entirety in preparing a batch of product manufactured under an approved formula and the use of such spirits in preparing a batch of product manufactured under an approved formula. The dump/batch record is a processing account record (§19.598). Finally, all "manufacturing," which is a term defined only by the context in which it occurs, occurs in the processing account. But its meaning, as TTB uses it, is clear from the definition of processor. A processor is "any person qualified under this part who manufactures, mixes, bottles, or otherwise processes distilled spirits (§19.1)." Further 19.591, which is in the subpart that addresses processing operations discusses manufacturing records. Thus, one an, be a string of syllogistic logic, deduce that specialty items, which are formula products, are all manufactured in the processing account, and so may not be transferred to the storage account after they are manufactured, unless you want to redistill them to neutral spirits.,any It's all a tangle of rules that someone, not me, should set out by type of spirit. A "for bourbon you may," "for American type whiskey other than bourbon you may not," "for whiskey designated as distilled from malt mash you may, but need not," set of rules, saying what you must, must not, and may do with that type of spirit; the criteria and rules for doing anything that you must or may do; the account in which you do it; what records you must keep of the operations and transactions; and what those records must show.
  9. TexCF has it pegged. The citation for allowable returns is §19.452, which lists the reasons you can return something to bond.. :The reasons do not include accepting product back with the intent of removing it again to another customer without first redistilling,, reconditioning or rebottling the spirits, When you make a return for a purpose authorized by §19.452, you may, bjut need not, file a claim for refund of the taxes you had paid 19.452(c). Once the spirits are returned to bond, you treat them in the same manner as any spirits held on the boned premises, i.e., you must withdraw them on determination of tax unless you withdraw them as authorized without payment of tax or free of tax. 19.452(d). So if you don't file a claim, you will pay taxes twice. If you file a claim, you do so under 19.264. You must file that claim within six months of the return to bond. You may file either for a credit or a refund. You must wait for the refund, but you may not anticipate a credit. You may not take it on your tax return until TTB approves the claim (19.266). You take the credit on the next return you file after TTB approves the claim. You annotate the adjustment decreasing taxes as required by 19.267. Note that you can return spirits to the bonded premises for relabelling or reclosing (19.453). If you do that, you do not make a claim. You do not return them to bond. No tax is due on the subsequent removal. You must relabel or close immediately and promptly remove from the bonded premises. The rules at 19.363 apply and you must keep the record required by 19.604. also, you must make a record of the disposition of the spirits after you remove them. It should not be an invoice out of the sequence you are using as your record of tax determination. If you do not know what I'm talking about here, see 19.611 and 19.622. This is already getting too long. Also note that you can find all of this information for yourself by first looking at the rules for returns to bond in the table of contents of part 19, then following that to where it leads,. The sections are usually linked. When you move from one section to the next, look at other sections in the immediate vicinity of both. A word copy of the regulations works wonders when used with "find" functions.
  10. I'm busy but, quickly put, the regulations make no provisions for filing a claim for refund of spiritsz that are not in bond at the time of their destruction. You might think you had to read through all provisions to find this, but the law makes it clear. 26 USC 5008(a)(1)(B) provides that no tax shall be collected in respect of distilled spirits lost or destroyed while in bond. " It goes on to provide that tax shall be collected in the case of voluntary destruction, unless such destruction is carried out as provided in subsection, which provides that you can distill spirits ion bond, but only under such regulations as TTB masy establish. Note that you can remove spirits from the bonded premises for destruction, but only if the surety consents to being liable for the tax if you don't destroy them. The spirits, that is, remain in bond. Spirits that you have taxpaid are not in bond. To destroy them without need to pay tax you must return them to bond, file a claim to get a refund of the taxes previously paid, based on returning them for an authorized reason, in this case for destruction, and then destroying them in the manner permitted by part 19. It is the way the law is written. It is not a decision TTB has made. It's got to follow the law too.
  11. Contact TTB and ask them to provide you with information about how to proceed. If the product happens to be bourbon, TTB itself will have an interest, because bourbon is a distinctive product of the US and TTB will work to protect that. If it is not bourbon, they can tell you who to contact in the markets where the presumed counterfeiter is selling the product and may even ask for an investigation on your behalf. For example, at the request of a foreign government, I once made inquiry into sales of wine that were deemed to be excess production from certain French vineyards that had limited tons per acre requirements. I also once looked into expensive, rare vintage wines - collector quality - that were being imported and sold here aty prices that indicated they were not genuine, and were also diverted into England, it appeared, to avoid the value added tax. I've forgotten the details, but the point is not in the details, it is in the fact that governments take interest in such matters and will investigate them, particularly because counterfeit product is often smuggled product. I know that from working "diversion" cases. Contact TTB's International Trade office, 202-453-2260, and see if they can point you in the correct direction.
  12. No form - you amend the application on line. It is a check the box statement, but you have to get through the template builder they have built in. If you did not apply on permits online, recent changes still allow you to amend using it. I've never done that. But you will have to register as a user first.
  13. No - the spirits must be aged in the oak. Buying wine that has been stored in oak means only that you paying someone else to store something you will still have to store for an additional two years,. I'm not competent to comment on whether distilling wine that has been in oak will benefit the brandy produced. Stipping out the excess verbiage to get to the basic, we get, "In the case of brandy distilled from wine of grapes, which has been stored in oak containers for less than 2 years, the statement of class and type shall be immediately preceded, in the same size and kind of type, by the word “immature”. So, I see your logic. Does the phrase "which has been stored in oak containers for less than two years," modify "brandy" or modify "wine of grape." The answer to that lies in the age statement, in §5.40, again simplified for clarity, and referring only to grape brandy, not other fruit brandy: (b) Statements of age for brandy, Age may, but need not, be stated on labels of brandies, except that an appropriate statement with respect to age shall appear on the brand label in case of brandy (other than immature brandies which are not customarily stored in oak containers) not stored in oak containers for a period of at least 2 years." And age means, by the definition at 5.11, "The period during which, after distillation and before bottling, distilled spirits have been stored in oak containers.
  14. I'll try to get this into perspective before tings spin out of control. You are required to put two kinds of marks on a barrel. One is the lot identification number. The lot identification number ties the barrel to the package record and the package record ties it to the package gauge record. Any number of barrels of the same product filled to the same fill on the same day can have the same lot identification number. See §19.485. the lot identification number is a coded number. If you don't have a number that looks like this, "02A02B," which translates as this is from the 3rd lot filled in on 1/2/2002. You are supposed to follow that code. Next, §19.483(b) and (c) provide that you may use labels as the means for applying prescribed marks if the labels meet the requirements of paragraph (a) of that section (they have to be legible, etc). A proprietor must place the prescribed marks on one side of the case or encased container, or on the head of the package. Now, in addition to the lot identification number I'm sure you are all usng, §19.484 requires a bunch more information and §19.486 requires still more if you repackage the product into another container. But none of this establishes a tax liability and TTB can't assess taxes on the mere prospect that something may have escaped the system. They need to prove the liability; you need to prove the deductions, or, in the case of excise taxes on spirits, prove that any quantities to which the tax has attached, and which were not withdrawn on determination of tax, are accounted for in ways that demonstrate tax was not due. TTB can suspend permits, or collect offers in compromise, or even fine you, if they can find a US Attorney willing to take such a case into federal court, which is not going to happen unless the omission of markings is a part of a fraud that has far more serious consequences. However, Bluestar is correct. If your records don't allow TTB to trace the spirits through the system, AND you can't account for what you are liable, then there is a potential for an assessment on the quantities for which you can't account. Even tough that requires a lot more than leaving a label off a barrel, there is no reason not to affix the label with the staples Bluestar suggests. Hoochware alos prints labels, so most database systems probably do. But you can do it with the permanent marker on a piece of paper you attach with staples.
  15. Any grape brandy not aged in an oak container must be labeled "immature brandy." Acceleration, even if it works, is not an acceptable alternative under TTB's rules. Note that I'm the neutral messenger here. I don't take a position that one is better than the other; I just say that there are legal consequences to not aging grape brandy in an oak container for two years or more. 5.22(d)(1) ... . Fruit brandy, derived from grapes, shall be designated as “grape brandy” or “brandy”, except that in the case of brandy (other than neutral brandy, pomace brandy, marc brandy, grappa brandy, Pisco, Pisco Perú, or Pisco Chileno) distilled from the fermented juice, mash, or wine of grapes, or the residue thereof, which has been stored in oak containers for less than 2 years, the statement of class and type shall be immediately preceded, in the same size and kind of type, by the word “immature”.
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