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InsuranceMan 2.0

Tuesday Morning Insurance Tidbit - To Bond or Not To Bond - FET

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Happy Tuesday to all of you, my dearest readers,

 

     As you may have noticed, we have gone a couple of weeks without the weekly installment of the TMIT, and for that I apologize.  As it turns out, InsuranceMan 2.0!!! was otherwise occupied fighting many facets of    E V I L  !!!!!  From some family illness, to working on several very important top secrete projects (hopefully to be announced first here in the future), I have had to take a bit of a reprieve and structure some things differently for a time.  Alas, I am back, and with a VENGEANCE (insert cool sound effect here)!!!!!!!!!

     For this installment of the TMIT I am going to address a topic that is at the top of everyone’s mind as we move closer to the end of the year …  TO BOND, OR NOT TO BOND? That is the question—Whether 'tis nobler in the mind to suffer The slings and arrows of outrageous potential Federal Excise Taxes, Or to take arms against a sea of taxation, And, by opposing, keep them low?

     What in the heck am I talking about?  Well, as seen from my stolen and slightly modified Shakespeare quote, I am going to address the impending Federal Excise Tax Rate cut that many have enjoyed for the past many years.  As most of you know, or should know, on December 22nd of 2017 a bill was passed that reduced the Federal Excise Tax rate on distilled spirits (amongst many other things) for the years of 2018 and 2019.  The taxation rate was reduced from $13.50 per proof gallon down to $2.70 for the same, thereby leaving a lot of extra money in many a distillers pocket/businesses.  Oh how we rejoiced and made merry at this news!!!!! 

     Not only was the tax burden lessened upon the good and hearty distillery folk of this land, but they also passed a provision stating that if a distillery removed less than $50,000 worth of taxable product (which works out to roughly 18,518 proof gallons of product at 100 proof, or 23,148 gallons at 80 proof … which is A LOT of booze) in a years’ time, you were no longer were required to carry a Federal Distiller Spirits Plant (or DSP) Bond.  Again, the “huzzah’s” rang throughout the land!!!!!!

     Many distilleries took these newly found riches and either upgraded their equipment, hired much needed assistance, put it into marketing, or simply enjoyed having some extra “walkin’ around” money.  Whatever the case, it was a windfall in many cases and one that was enjoyed and well deserved.

     Fast forward from that time of celebration to now.  We are late into 2019 and within a month and a half of this amazing bill, H.R.1 — 115th Congress (2017-2018), expiring.  Yup!  EXPIRING!!!!!!  This bill was only good for 2018 and 2019 and has an expiration date of December 31st of 2019 unless action is taken by those duly elected national officials to either implement this change permanently or allow for it to expire.

     At this point in time, this bill has a lot of positive backing with several high-powered officials signing on to make this tax cut permanent, however …  things like “impeachment hearings” and other political nonsense can get in the way of actual legislation taking place, and we are quickly running out of time before the House and Senate adjourn for Thanksgiving and then the long break over Christmas and New Year’s.  PEOPLE, THERE REALLY IS NOT MUCH TIME LEFT HERE!!!!!!!!!  This is one of the things that I, InsuranceMan 2.0!!! have been working on.  So, what can you do???? Contact your representatives.  How do you do that????  Go here: https://whoismyrepresentative.com/ to find out who you can send a letter to, AND SEND IT!!!!!!!!!

     OK, you have the background now, and the knowledge to go forward to make a difference, but how does this all tie in with the whole, “To bond or not to bond” question?  Well, for those of you who are up and running and loving the reduced rate, that is great.  For those that are just finalizing their paperwork in order to get their licensing and permitting, now is a precarious time due to the fact that they do not know if they need to submit a bond or not in order to have everything pass thought smoothly.  Will the FET cut be made permanent?  Will not submitting a bond screw things up and lengthen the process?  Will a bond be needed or not come 2020?!?!?!?!?  WHO KNOWS!!!!!!!!!  So, the question becomes, to bond or not to bond at this point in time.  The answer …  I don’t have the answer.

     Here is the sage advice of the all-knowing and all-wise InsuranceMan 2.0!!!, DSP bonds for the past “minimum” required Federal bond stipulated that you must carrier at least $15,000 worth of “Operations” and $1,000” in withdrawal.  That bond usually ran about $192 for the year.  If you are new to the game and you want to make sure that you are not going to get caught up in sticky red-tape on your permitting, I would say get a bond if you are not a risk taker.  The other side of that is, if you are submitting via the PONL system prior to the very end of 2019, take the risk and submit it without a bond since you are still technically under the deadline of the FET cut and you “should” be fine.

     The crappy part about this is, no one really knows what is going to happen and there is not much out there that addresses if this will get passed in time or not.  So that leaves all of us sitting and waiting to find out what the future holds and if the tax rates will remain the same or be jacked up to the prior rates of years past.  All I can tell you is this, get a hold of your representative and try to make a difference.  Otherwise, if you just sit on your laurels and hope others will contact their public officials, you may end up having to contact me instead in order to purchase a Federal DSP bond!!!!!!!  Which call would you rather make, one that will save you money, or one that will cost you money?????  You decide.

     I am hopeful that this tax cut remains intact the way it sits at the $2.70 rate per proof gallon and I don’t have to write a single DSP bond this year.  If it does expire however, take a number and get in line because InsuranceMan 2.0!!! is going to be one busy sonuvabeach, cranking out bonds across this nation.  Trust me, I would rather see you keep that money in your pocket than to put some into mine and a whole lot into the pockets of the surety companies. 

     Make your calls, send your emails, and tell them to keep the rates low.  Hopefully in one month and 16 days we can all raise a glass and toast the permanent tax cuts and have yet another amazing reason to welcome in the new year!

     Until next time …

 

Stay Vigilant,

 

Aaron Linden

a.k.a. InsuranceMan 2.0!!!

307-752-5961

aaron@roaringforkins.com     or     insuranceman2.0@yahoo.com

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