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Is it legal to do a TIB on bottled products?  

Distillery A receives a barrel, via a TIB, from Distillery B and bottles the contents of the barrel.  Distillery A now wants to send bottled products back to Distiller B.  Who is responsible for paying the tax? Can "A" TIB it back to "B?"

Thanks.

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Gordon -

Transfers in bond are only for bulk spirits.  Federal excise taxes are accrued/due as soon as bottled product leaves the bonded premise.  Once tax is paid on bottles, those bottles can not re-enter a bonded premise.

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The DSP that is removing a bonded product from a bonded area is responsible for FET (and likely SET).  DSP A should be contracted to bottled spirits on behalf of DSP B.  DSP B should get a bottling line or establish a "dba".

Yes, you can transfer in bond but I believe the only practical scenario would be for export when you transfer finished goods to a bonded warehouse for export... other than that, you should consult a lawyer versed because you're in a dicey area that I doubt many people could offer sound legal advice via a forum. Sorry if that sounded salty - I blame the tequila.

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17 hours ago, gordon said:

Distillery A now wants to send bottled products back to Distiller B.  Who is responsible for paying the tax? Can "A" TIB it back to "B?"

At this point the easiest solution is probably for Distillery A to invoice Distillery B for the taxes due and remit them.

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Haven't looked at CFR this morning, but looking at form 5110.28 Processing Report Line 32 under Part II, Finished Product Column (b) (Bottled) would suggest it is possible to TIB prior to tax determination.

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On 7/11/2017 at 9:40 AM, fstmatt said:

Haven't looked at CFR this morning, but looking at form 5110.28 Processing Report Line 32 under Part II, Finished Product Column (b) (Bottled) would suggest it is possible to TIB prior to tax determination.

I just posted a topic on this same issue, sorry for the redundancy.  There is a footnote for line 32 Part II that reads "1 Bottled nonindustrial (beverage) use spirits may not be received or transferred in bond."

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This thread is showing up on the forums first page (6/14/2018) today for reasons unknown.  The rules changed.  You may now transfer bottled spirits in bond.  But beware of possible tax consequences.  If the person receiving the bottled spirits in bond neither produced or processed them, they are not eligible for the reduced rate of tax.  

TTB says - the emphasis is mine:

 

  • Reduced Distilled Spirits Tax Rates
    • General: The Act provides for reduced tax rates on distilled spirits distilled or processed and removed during the calendar year or imported by the importer into the United States during the calendar year.  These rates are equal to $2.70 per proof gallon on the first 100,000 proof gallons removed or imported, and $13.34 per proof gallon on the next 22.13 million proof gallons removed or imported.  The tax rate for distilled spirits not subject to the reduced rates is $13.50 per proof gallon.
       
    • Foreign Manufacturer Election: In the case of distilled spirits produced outside the United States and imported, the Act provides for foreign distilled spirits manufacturers to assign the reduced tax rates to importers who elect to receive them.
       
    • Amendment of Section 7652(f)(2): The Act amends section 7652(f)(2) of the IRC to provide that the reduced rates of tax for distilled spirits are not taken into account when determining the amounts covered into the treasuries of Puerto Rico and the U.S. Virgin Islands.
  • Transfer in Bond of Non-Bulk Distilled Spirits: The Act authorizes the transfer in bond of distilled spirits between distilled spirits plants irrespective of whether the distilled spirits are transferred in bulk or non-bulk containers.

See:  https://www.ttb.gov/alcohol/craft-beverage-modernization-and-tax-reform.shtml

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