dhdunbar

How long ago? The "funny" thing is that the fence, in case law, such as it is, serves as a demarcation between portion of the property that is within the curtilage of the residence and that which is not. Not all always is. When a fence is involved, the question the courts ask is whether the outbuilding is located within the boundaries of a fence that surrounds the residence, not whether the outbuilding is within a fence that surrounds it. But your point is well taken. TTB does decide on a case by case basis and the decision is based on "multiple factors," not just whether there is a fence or not. In fact, if you are far enough away, you don't need any fence. How far is far enough? Shrug!

My advice to all is to always get your local issues settled before your begin to consider federal issues. My experience is also that those who came to me for advice and assistance have not incurred any objections from state and local jurisdictions. And,. because we are talking about multi-use buildings, I am talking about urban areas. To be clear, I am not saying some have not been denied, , or even that a majority have not, etc. because I do not know. Maybe nine out of ten times the fire marshals turn thumbs down or the local development agency responds, "You gotta be kidding," but I've not seen that. While my experience is broader than most, it is far from broad enough to offer any sort of reliable opinion on what is generally true. I can only say, don't rule out the possibility because you think a code will slam the door to it. Ask. And the only persons you should be asking, once you understand the issues, is the local authorities who have the jurisdictional power to say yes or no.

Apologies if you think I said you told anyone to violate. I certainly do not think you did and I certainly did not intend to say that. Let me expalin in a little more detail the reasons for my concern. I think that this is not an individual pursuit, which you know from the efforts you put into getting what you wanted. My point is that, since the law is not clear about what is included in processing - that is why I asked if you had evidence of intent - the provisions of regulation will determine what will be construed as processing and what will not, and that persons who have a horse in the race should pay attention to how that unfolds. Why do I raise this question? I'm not even wagering on the race. But I've got a lot of clients who buy some of their spirits in bulk and then bottle them with little further other "processing," at least as that term is currently employed in the regulations. It is my understanding that prior to the new law, TTB had a very broad view of processing, as that term was used in connection with determining eligibility for the reduced rate, and that it included the act of bottling, which is an operation that takes place in the processing account and so is a processing operation. However, I have that understanding only from an informal, and therefore nonbonding, comment from Regulations and Rulings. So, it appears to me that the wording of the statute, which excludes bottling, curtails rather than expands eligibility. Congress, for some reason, stuck the bottling exclusion into the language of the statute. Now, because congress is not knowledgeable about the details of what, under the laws, is and is not processing of distilled spirits, someone obviously lobbied to exclude bottling. Who was that? You say you lobbied for the widest possible interpretation. But it is clear to me that someone did not. And therein lies the question. What was the intent of that exclusion? TTB will say what it thinks the intent was when it issues the regulations and there is a simple rule that applies to that - they get to make the rule. Once an agency with the power to make regulations does so, the courts give great deference to the agency's interpretation and are loathe to get bogged down in detailed disputes. So the time to be active is the period during which TTB is considering the regulations. That is now, not after the fact, because after the fact, if you have lost eligibility, you are screwed. Certainly screwed? No, but you are unlikely to prevail in any fight you chose to make. Why? Because the fight was fought when the regulations were issued, when everyone had a chance to get their two-cents worth in, and when TTB considered all of that before making the regulations final. Because the process for approving regulations is, by design, long, TTB is likely to issue temporary guidelines pending adoption of the final rule. The rule making process, which is engrained in the Administrate Procedure Act. It is long because it is a deliberately deliberative process that allows public input. The law (26 U.S.C. 5) mandates the steps. It includes time for TTB to consider congressional intent; draft the regulations; compose and issue a notice of proposed rule making - which explains how TTB arrived at the regulations it proposes to adopt; for persons to comment on the proposed rules, which time is often extended at the request of organizations like the Distilled Spirits Counsel; and time for TTB to consider each of those comments and issue a final rule in which it explains why it accepted or rejected the proposals made in the comments it received. Once it has gone through that process, unless you have the time and dollars to fight a battle you are not likely to win, the rule is "It is because they say it is." That is a good thing, actually, because it protects you against TTB taking an arbitrarily different position somewhere down the line. Now, because you were involved in the process, you know better than I do what the intent was. So, why was bottling excluded? My intended message - pay attention to the rulemaking process and be prepared to fight then.

Are you sure of this? The legislating makes specific reference to processing operations, other than bottling, as set forth in §5002(a)(5). That section provides, in pertinent part: (5)Processor (A)In general [a term I hate] TheThe term “processor”, when used with respect to distilled spirits, means any person who manufactures, mixes, or otherwise processes distilled spirits, (B)Rectifier, bottler, etc., The term “processor” includes (but is not limited to) a rectifier, bottler, and denaturer. (6)Certain operations not treated as processing - In applying paragraph (5), there shall not be taken into account any process which is the operation of a distiller. [That is well defined in subsection (4)] ____________________________ It is not clear to me that storage is considered as processing operation. Provisions like "a processor includes (but is not limited to) a rectified and bottler" are not helpful. They do not say what else may be included under the umbrella of the phrase "not limited to." And statements like "the term processor means any person who manufactures, mixes, or otherwise processes distilled spirits" are obviously circular, i.e., of course as processor is someone who processes, but what qualifies as processing, mixing, manufacturing for purposes of determining eligibility for the reduced rate? Because the language is not clear, TTB will have to issue regulations which it purports comport to the intent. You may wast to fight for the right, as you put it, but courts are loathe to impose their judgement where an agency has some grounds of its different judgment. So make sure that you fight for what you want when TTB issues the notice of proposes rulemaking. That is your best shot if TTB takes a narrower view than you do of what congress intended. Previous regulations have not rigorously defined what processing is. It was not necessary because that distinction was largely an accounting convenience. But now there is a tax consequence, so TTB will have to determine if aging is a processing operation (done in the storage account) for purposes of the reduced rate. It will have to determine if adding water, without anything else, is processing. Ditto for filtering. That is why I have elsewhere said that you will have to wait for the other shoe, the regulations, to fall before you can known what constitutes processing for purposes of determining eligibility for the reduced rate. Do you have any documents which show the legislative intent that you describe? If so, bring them to the table when TTB proposes regulations.

I usually cite the sections of regulation that lead to my statements. I did so here. The rules are in §§ 19.75, 19.122, 19.181, 9.182, 19.592 and 19.593, as cited. You can find a link to the regulations on TTB's web site, but here it is for our convenience: https://www.ecfr.gov/cgi-bin/text-idx?c=ecfr;sid=33fc0c0194b58b6fe95208945b5c637a;rgn=div5;view=text;node=27:1.0.1.1.15;idno=27;cc=ecfr Now, what constitutes a tank is not defined. §19.75 says you don't have to report any portable bulk contains of under 101 gallons capacity unless they are tanks as defined in §19.182. But §19.182 only says that if you have a tank, then you must equip it as described therein. It does not say what a tank is. To restate the obvious, TTB is not enforcing these requirements. That is why I said that there are rules, sort of. I did not make this clear, or even allude to it, but those totes of more than 101 gallons capacity are neither small, portable constrainers of less than 101 gallons, or as far as I can see, tanks either. But since they are greater than 101 gallons, how do you list them on the list of major equipment. What are they? Portable bulk containers of over 101 gallon capacity, I guess. So, you have to equip tanks for locking per §19.192(d), but what about those big totes? I will speculate, the intent is that you have a way of securing and gauging portable bulk containers of any size. You can find that requirement, sort of, in §19.192(e)(3), which provides that you must have approved locks on any doors from which access may be gained from the outside to rooms or buildings containing spirits stored in portable bulk containers. What are approved locks? Don't get me started on that one.

You can't begin operations at the new location until TTB approves the application for that location. If you do not want a disruption, you need to apply well in advance and ask TTB to grant you 60 days to make the move, during which time you want to conduct operations at both locations under the same permit and registration. You can also qualify the new location as a discontinuous premises to the first, then curtail the first premises after approval. Just plan ahead.

A cat in dogs clothing, perhaps.

It does not mean that you cannot and it does not mean that you can. I helped qualify a DSP in a building with apartments above it in 2012 and have done so a number of times since then. But TTB states, in a private letter ruling from 2012, that it makes the decision on a case by case basis. That means there are no guarantees and TTB has not provided guidelines that you can follow. My experience is that if you can show a separate entrance to the DSP, which does not require that you share an entry with the apartments, TTB will approve it. From my experience, the issue of residency seems to come down to whether their is sufficient separation between the DSP and a residence located on the same property that the residents do not have a right to limit TTB's right of access on the grounds that the constitution prohibits warrantless entry whiteout consent. In legal terms, the issue seems to be whether the DSP is within the curtilage of the residence. But I know of no cases that have been decided, so I say this based on experience. Again, to the best of my knowledge, TTB has made no public statement and you will not find the word curtilage in any public, TTB document, of which I am aware. I've qualified a dozen or so DSP's that are located on the same tract as a residence. Each time that was done after full disclosure of the circumstances. When I try that, I look at all the circumstances and construct arguments, which I make in a formal letter. The NRC specialists sometimes refer the question to the Regulations and Rulings Division and that can extend the time needed to get approval. But we have moved the bar a long way from the times in 2009, when at a TTB Expo, TTB declared that the ban was absolute and included a DSP that was located in back of the woodlot at the rear of the house. I would not hesitate to say that in most such circumstances, we could now get approval. I've got to add here that I am not an attorney and this is not legal advice. That is usually accompanied by a statement that if you have any questions, consult your attorney. That is usually sound advice, but in this instance, an attorney would have to answer, I don't know. There is no case law; it is all administrative precedent, and no administrative precedent is binding.

Here is the news information from the website. It follows what TTB said in the last newsletter. Note that the changes to the transfer in bond of bottled products is effective now, but the change in what constitutes an an authorized processing operation does is not effective until 1/1/2020. That will give some of you who source whiskey that you store but do not process, other than by bottling, a chance to get your business plans in order. I missed the effective date on my first reading of the bill language. That is why we wait for TTB to say what they say it means :-). Reduced Distilled Spirits Tax Rates General: The 2020 Act makes permanent the reduced tax rates previously enacted on a temporary basis, with a change to the definition of eligible processing effective in 2022. Reduced rates are allowed 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 $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.) Beginning in 2022, only DSPs who perform a processing activity other than bottling are entitled to take a CBMA reduced rate on distilled spirits that they process and remove. Imports and Foreign Manufacturer Election: In the case of distilled spirits produced outside the United States and imported, the 2020 Act makes permanent the provisions that allow foreign distilled spirits manufacturers to assign the reduced tax rates to importers who elect to receive them, with a transition in 2023 to a refund system of providing the benefit of assigned reduced rates to importers. U.S. Customs and Border Protection (CBP) maintains administration over imports subject to CBMA for 2021-2022. See CBP guidance, for example CSMS #45315560 of December 31, 2020. Transfer in Bond of Non-Bulk Distilled Spirits: The temporary CBMA provisions authorized the transfer in bond of distilled spirits for beverage purposes between distilled spirits plants irrespective of whether the distilled spirits are transferred in bulk or non-bulk containers. (Prior to 2018, transfers of non-bulk or bottled distilled spirits for beverage purposes were prohibited.) Under the 2020 Act, effective January 1, 2021, transfers of bottled spirits for beverage purposes are not authorized except transfers between bonded premises belonging to the same person or members of a controlled group, and except certain transfers for storage or bottling where the spirits are transferred back to the original transferor. Exhale and start to figure out what you are going to need to do to make your business plan work, what changes in pricing you made need, etc.

Correct. The "without distinctive" verbiage was largely without meaning. As I said, TTB does not conduct taste tests. Re: less than 190 - Note that the production gauge (§19.289(d) and §19.304) is a gauge required by part 19, and so you must have a gauge record (§19.618(b)(1)). That record will have to show the proof at the time you transfer it from the production account into either the storage or processing account. If it does not shows that the spirits were 190 or more at the time of production, then the vodka was not a neutral spirit, i.e., it is not entitled to the vodka designation.

It has been done. I've submitted a number that have been approved without question.

Yes, seemingly simply, except ... Which operations that a DSP conducts are included in the the operations, other than bottling, described in 5002(a)? The problem, as I see it, is that the categories of operations - production, storage and processing - created, by law, in 1980, with the change from supervisor to "all in bond" system, were not created with any tax consequences in mind. Actually, there was, before that time, a rectification tax, and the system had, before that time, defined the acts of rectification that gave rise to liability for that tax. Those acts took place after the tax was determined, which at that time was done when a government employee and the proprietor, together, made a bulk gauge of the spirits, in a scale tank, before the the government released the spirits from its lock and key and turned them over to the proprietor, who then conducted operations on them and was allowed to make a claim for operational losses that occurred during the processing of the spirits that took place after the tax determination. What a long sentence. When the system changed, and the rectification tax was repealed, the distinctions between production, storage, and processing were made largely on the basis of how the operations had been treated before the change to all in bond, with those operations that had been conducted after the release of the spirits to the proprietor, now being treated as processing operations. However, the matter was simply one of establishing a consistent accounting system, so that persons reading the operating reports knew what operations and transactions the reports purported to represent. It was a consistency requirement. That accounting was not established with the consideration of the possibility that someday, someone might decide that there would be any eligibility for a reduced rate of tax on spirits that a DSP withdrew on determination of tax, if the DSP had either distilled or conducted some processing operation other than bottling. But someone did do that and now TTB has to figure out what operations congress intended to include among those that create the eligibility. So, while in the past the question "what is processing?" had been a simple matter of classification for purposes of reporting and could thus be somewhat arbitrary, the new rules create a tax consequence and many DSPs will be affected by how TTB interprets the intent of the term "processing operations under §5002(a)," when the only definition of processing offered by either the law or regulations is circular? I think whiskey will be the biggest hurdle, since, unless it is flavored or used as an ingredient in a specialty item, it is not generally subject to further "processing" after it is dumped out of the barrel in which it has been aged. If you want to make the reduced rate as broad as possible, you can push for a determination that filtration is a qualifying operation. Or that additional storage of whiskey that is received in barrels, and which it has been aged for less than two years, should qualify if it is held long enough to acquire two years of age, or ... It will be interesting to see where TTB goes with this and how they justify where they go. I think more than a few of you will have an interest in how that plays out. And I don't see that as simple :-). Stay tuned. It is all you can do.

I did not address transfers in bond of bottled spirits and the truth be told, what I am saying about any of this is worth how much you paid to read it, which I assume is zip. However, there are provisions that say that if DSP A sends, to DSP B, for bottling, spirits that DSP A could have bottled and then claimed the reduced rate it, if removed them on determination of tax, from DSP A, and if DSP B bottles those spirits and returns them, in bond, to DSP A, which then withdraws them on determination of tax, and if DSP A maintained title to the spirits at all times, then DSP A may make that withdrawal at the reduced rate to which it is entitled at the time of the removal. Sentences like that get dense with embedded clauses and phrases, which tend to mask clarity by their intended, at least, precision. Apply the worth zip rule to that, but I'm pretty sure I'm correct. So, transfers in bond are not prohibited. But, if DSP A sends to DSP C, the spirits it processed and had DSP B bottle, DSP C is not entitled to the reduced tax rate. That is not a change. The transfer of bottled spirits in bond is allowed, but you need to know the fact situation to determine the tax consequences.

Insightful? No, but I think probably necessary as a warning of potential. Here is something insightful. I don't know what TTB will do with this , but when they do, the answer to the question, "Why?" will be "It is because they say it is." They get one one regional director once described as "last bats."

I'm surprised not to find someone commenting on this, but perhaps it comes as no surprise. Here is what TTB has had to say, in summary: Temporary reduced tax rates and tax credits made available by the Craft Beverage Modernization Act (CBMA) are now permanent. While some CBMA provisions have been made permanent, statutory changes include restrictions on the transfer of bottled distilled spirits in bond, changes to the type of processing activities that qualify for reduced tax rates for distilled spirits, and changes to the single taxpayer provision. We will issue updated guidance in the near future. In the meantime, if you have questions about CBMA, please contact us. For more information on imported products, please contact U.S. Customs and Border Protection. The important stuff is about the permanent reduction. But do not ignore the phrase " restrictions on the transfer of bottled distilled spirits in bond, changes to the type of processing activities that qualify for reduced tax rates for distilled spirits, and changes to the single taxpayer provisions." I prefer to let TTB speak first, so I am not going to suggest an answer to what that might mean. But, if I were "sourcing bulk spirits" which I then bottle, I'd want to know before the first of the year what I need to do to make sure that I've "processed" them within the meaning of that term as it is used in the CBMA. I think - I've got to emphasis the I think - that after the amendments the CBMA has made, the reduced rate provisions of §5001(c) provides, in pertinent part, that the reduced rate applies to spirits which have been distilled or processed by such operation and removed during the calendar year for consumption or sale. However, a distilled spirit shall not be treated as processed for purposes of this subsection unless a process described in section 5002(a)(5)(A) (other than bottling) is performed with respect to such distilled spirit.’’ "Shall" means will. It is an instruction given to the tax collector! The "other than bottling" exclusion seems to preclude bottling from the processing operations that lead to the reduced rate. The problem with this approach is that, while we can read the regulations to say that some operations other than bottling are processing operations, the list we can make is not necessarily inclusive of all operations that may be construed to be qualifying processing operation. It's almost necesarry to list what you can do in the production and storage accounts and then say everything else is processing. But then, we still can't be sure that one of the leftovers might not be an operation that gives rise to the reduced rate. In the code, processing is described to be manufacturing, mixing, or otherwise processing distilled spirits [§5002((a)(5)(A)], which is of course circular - processing is processing tells us nothing - and so of little use. §19.1 defines processor to be, “Except as otherwise provided in 26 U.S.C. 5002(a)(6), any person qualified under this part who manufactures, mixes, bottles, or otherwise processes distilled spirits - yup, the damned circularity again. [The exceptions include apothecaries and retailers who mix drinks for immediate consumption on their premises]. I think it is a rabbit hole we do not want to pursue. None of these are trails that lead us out of the woods. Consider this. Storage while aging in oak is not a processing operation. It is a warehousing operation. Thus, TTB may hold that storing spirits, which are then further manufactured in the processing account, does not entitle the bottler to withdraw the spirits at the reduced rate of tax. You tell me the impact that would have on your operations. If I were forced to wager, and I do not bet on such things, I would wager that, for beverage spirits, if you did not distill the spirits, then the processing operations necessary to entitle you to the reduced rate, other than bottling, are operations that changes the class or type of the spirits. So, for vodka, the filtration of a neutral spirit not yet designated as vodka, through charcoal, according to a general use formula, to further purify it, thus changing the class and type from distilled spirits to vodka, could be construed to be a manufacturing operation. However, the filtration of bourbon might not be. This seems absurd, but it is not beyond possibility, because, unless TTB can rub the bottle and make a genie pop out, no operation conducted in storage can be processing. That would defy the organization of the system the law and regulations put into place. Things get hazy from here on, at least for me. You bottle in the processing account so you need to dump the spirits into the bulk account before you bottle them. When you do that, you create a dump record. However, you need only make batch records to report (1) the dumping of spirits that are to be used immediately and in their entirety in preparing a batch of a product manufactured under an approved formula; (2) the use of spirits or wines previously dumped - what is "use?" and (3) the use of any combination of ingredients under paragraph (b)(1) or paragraph (b)(2) of this section in preparing a batch of product manufactured under an approved formula. Formulas are required (§19.348) only when 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, or you produce gin or vodka by other than original and continuous distillation. So, it could be possible to receive spirits into the processing account on a dump record and transfer them to a bottling tank record without making a batch record. Example, dump bourbon out of barrels and bottle it without any further manipulation. Ditto for gin produced by original distillation. What then? In a debate, I could argue that §19.597, which is headed “Manufacturing records,” requires daily records of of the spirits, wines, and alcoholic flavoring materials received into the processing account for the manufacture of distilled spirits products. Since you must keep records of all spirits received into the processing account – the system demands that – the provisions of §198.597 imply that all spirts received in the processing account are received for the manufacturing of distilled spirits products. Such arguments are perhaps clever, but surely shaky and subject to challenge based on intent. Remember, none of the rules in part 19 were written while considering the the implications for reduced rates. There is simply no direct statement of what is processing. I am convinced it is something more than bottling; I am not convinced of what that something more might be. Here's an example - transfer rye whiskey from the original new charred barrel to an apple barrel. It may not change the class and type (for bourbon it would), so is that processing within the meaning intended by the reduced rate provisions. These are the sorts of issues that TTB must work out and work out soon. You are closing in fast on January 1 and not doing the minimum necessary to qualify could create tax liabilities. Now, that leads me to ask, if one has spirits already in a bottle, which one has not processed as required by some change to the type of processing activities that qualify for the reduced tax rate, what should one do now? Should one withdraw the spirits on determination of tax before close of business 12/31/2020? I do not know the answer. Maybe someone who was involved in making the reduction permanent can shed some light on that.

Rules? Well, there are a few. You must register any tank of greater than 101 gallons capacity by filing an amended registration (§§ 19.75 and 19.122. The rules say you must do that before you use the tank. You must equip all tanks as required by §19.181. Read that and see that it includes such things as an attached method to gauge. You must make tank records (§§ 19.592 and 198.593) instead of package records. If you move a tank you must get it recalibrated before you use it (§19.182(c)). You must make a quartely physical inventory of all spirits held in tanks in either the storage account (§19.333) or processing account (19.371). So why did I begin this reply with "Rules?" Take a look around you at all of the DSP's that are storing in large totes. Do I need to add a rhetorical smiley face to that statement? I've not asked TTB about this because there is a sound principle involving an admonition about kicking sleeping dogs. Amend the registration to list the tanks, make the records, take the inventories.

For practical labeling purposes, the standard did not change. There had been an unvoiced assumption that any spirit distilled at over 190 was neutral. The added "without distinctive character, aroma, taste or color" was a sort of regulatory puffery, dating back to 1949, when the first vodka standard was written. Prior to that, all manner of spirits were being labeled vodka and the government said it was concerned that people did not know what to expect when they bought it. I suspect that concern was industry driven, but I do not know. Most standards are. Anyway, by policy, TTB does not make organoleptic evaluations of any product. The significant change comes in the way in which back label statements can represent and the which you can advertise the product. You can now talk about vodka as if it were a wine, with hints of this and that, which most of us who buy spirits will never be able to taste. Whether something is neutral or not is demonstrably subjective. For evidence of that, look at ATF's attempts, in 1997, to limit, by regulation, the quantity of citric one can add to vodka without altering the class and type. A real bruhaha broke out - not because the industry was devoted to the merits of citric in making the spirits more neutral, which was the only stated justification, but because they wanted the 5010 tax credits they got for the alcohol content of the citric addition. Strangely, batteries of taste panels arrived at different conclusions. Follow the money! Disclosure - I'm not one who can find nuanced differences- the sort of yummy warmth Silk City described - in any neutral spirits. I've got the sort of taster that likes to eat jalapenos and things bursting with flavor because there is no way that I can taste chocolate, citrus, tobacco or grass in any glass of wine. I'd wager that is true of a significant majority of us. So I'm one who would reach for bottom shelf vodkas if I reached for any vodka at all. If I wanted a little yummy warmth, I could add a pinch of sugar myself and sip it straight. If I wanted citrus, I could add orange juice. A pretty straightforward approach to getting flavor, aroma, and taste at a bargain price. Further disclosure - I've not understand how, what most would call yukky whiskey when marketed as a craft spirit distilled to 189.9, becomes yummy vodka when distilled to 190.0. But I do understand the need to justify price that can't be reduced by economy of scale. I do understand that price creates perceptions. I do understand the marketing of status. I do understand locavore. I also understand that Smirnoff kicked ass in a blind tasting, by sophisticated palates, of otherwise "premium" vodkas and I do know the history of how Grey Goose came to market. So, to the extent that you can "manage" consumer perception by claims that remind one of those found in reviews of wines and on the their labels and in their advertising, you've got a new way to market. But, for all practical purposes, there has been no change in the stuff that's in the bottle. Distill to over 190, add nothing more, and describe it with all the puffery you want. But add a harmless flavoring, coloring, or blending ingredient, other than the sugar and citric already allowed in §5.23, and you have a flavored vodka to which the rules for that standard apply. The change is not a license to all sorts of flavors. It is a license to marketing claims.

I'm not a wine whiz so, as I start to type this, I don't know how to answer your question I start with what I think I now. I think know this: Part 24 (IRC) and part 4 (FAA Act) should be consistent. Since §24.225 leaves little doubt about the same type of spirits requirement, §4.21 should be consistent and include the same restriction. How can I demonstrate that they are consistent? I don't know, so I'll take you on a search, which I must make, to show how I go about answering this sort of question. I note that the phrase used in §4.21(f) is "added brandy or alcohol." Your website give a convenient link to terms, which is a clue to how I normally proceed. Unless I know what a term means within the context of the regulation, and sometimes when I think I know, I go looking at the definitions. In this case, I look first at §4.10. Added brandy. Brandy or wine spirits for use in fortification of wine as permitted by internal revenue law. Now, internal revenue law is the basis for §24.225. so let's look there. §24.225 is authorized by 26 U.S.C. 5214, 5366, 5373, 5382, 5383. You find that at the bottom of the section. So we begin a slog and hope we get to an answer quickly. Hint - since 5382 and 5383 are close in number, I take a flier and go there first. §5382(b)provides an answer. It contains, in pertinent part, the following provisions. "Specifically authorized treatment. The practices and procedures specifically enumerated in this subsection shall be deemed proper cellar treatment for natural wine: (2) The addition to natural wine ... from one kind of fruit, of wine spirits ... distilled in the United States from the same kind of fruit; [there are other restrictions stated of which a person wanting to add spirits should be aware]. (7) The blending of natural wines with each other or with heavy-bodied blending wine or with concentrated or unconcentrated juice, whether or not such juice contains wine spirits, if the wines, juice, or wine spirits are from the same kind of fruit. Next, your source provides a link to the definitions of the term "same kind of fruit." To find the definition in the regulations - I know it is a term used in part 24 because I just know that - I go to the definition section (§4.10) and find: "Same kind of fruit. In the case of grapes, all of the species and varieties of grapes. In the case of fruits other than grapes, this term includes all of the several species and varieties of any given kind; except that this will not preclude a more precise identification of the composition of the product for the purpose of its designation." Now let's deal with the distinction between brandy and alcohol. Brandy is a spirit produced from fruit at less than 190 proof. It is defined by standard in part 5. Alcohol is defined in §4.10 as "Alcohol. Ethyl alcohol distilled at or above 190° proof." So the provisions of §4.21(g) allow you to use any spirit derived from the same type of fruit regardless of the proof of distillation. So, to string this together: You make aperitif wine by compounding grape wine with "added brandy or alcohol." [§4.21(g)]. The term "added brandy or alcohol is a defined term. It means "Brandy or wine spirits for use in fortification of wine as permitted by internal revenue law." [§4.10]. The internal revenue regulation is part 24. Spirits additions (a broad term that includes both brandy and alcohol) are regulated under §24.,225. §24.225 is authorized by §5382 of the IRC So §5382 is the relevant section for purposes of the definition of the term "added brandy or alcohol" set forth in §4.10 and as the term is used §4.21(g). §5382 contains a same fruit requirement. §4.10 defines same fruit to mean grapes for grapes and apples for apples, etc. Making the appropriate substitutions in §4.21(g), it comes to read, "(1) Aperitif wine is wine having an alcoholic content of not less than 15 percent by volume, compounded from grape wine and grape brandy or grape neutral spirits. I do not know why the regulations don't just state he requirement that simply, but they do not. If I were a producer of such products, I would confirm this with TTB. If they gave a different answer, I would ask them the sources they used to arrive at a different answer.

It is legal. If you are using intellectual property (names, for example) that belong to someone else, then when you apply for label approval, TTB will require that the owner of the intellectual property provide a letter stating that it authorizes you to use the name when bottling for their account. How you structure the deal is a matter of business, but you probably want to avoid the organization acquiring title, because then they would have to sell it, probably triggering state licensing requirements and federal wholesaler permit requirements if they wholesale. Talk with attorneys about structuring it as a royalty deal in which you pay the organization a per case fee for the use of the name. If you do that, other than the label letter, TTB will treat it as it would any other bottling.

It must be spirits derived from the same type of fruit as the wine to which it is being added. §24.225 General. The proprietor of a bonded wine premises may withdraw and receive spirits without payment of tax from the bonded premises of a distilled spirits plant for uses as are authorized in this part. Wine spirits produced in the United States may be added to natural wine on bonded wine premises if both the wine and the spirits are produced from the same kind of fruit.

All of the above advice holds. LLC's are by far the most common form of organization. From TTB's standpoint, the only difference in qualification is the persons who must be included in the information submitted with the application. For an LLC applicant, the information must include the names of the 10 persons who hold the greatest interest in all classes of membership. If you understand classes of membership, you know what that means. If you do not understand it, you have no need to understand it. For a corporation, on the other hand, you must list all officers and directors, but you need list only the persons who hold 10% or more of the outstanding voting stock if they are not officers and directors. If you must list a person as a member of an LLC or as an officer, director, or stockholder of more than 10% of the outstanding voting stock in a corporation, that person must complete a minimally invasive personnel questionnaire -it does include a question about arrests and convictions and where there was either, the person must disclose the details - and you must state the amount of the investment and the source from which the funds were derived. TTB is no longer requiring documents that show the source. The simple statement suffices. They could begin asking for documents again in the future, but I doubt they will.

I've been absent from the Forum for more than a little while, trying to get personal things into perspective. I'll try and answer questions again. If you send wine to a DSP, they can distill it and return it to you, but only for use in wine production, which means that you use it for what the wine regulations call a wine spirits addition. The product must be wine to which you have added distilled spirits, not spirits to which you have added wine. Let's take a stroll though the regulations. The bulk sales and bottling provisions of part 1 of TTB's regulations prohibit a distillery from transferring bulk spirits (spirits in containers of more than one gallon) to anyone not not authorized to receive them: §1.80 Sales of distilled spirits in bulk. It is unlawful for any person to sell, offer to sell, contract to sell, or otherwise dispose of distilled spirits in bulk, for nonindustrial use, except for export or to the classes of persons enumerated in §§1.82, 1.83, and 1.84. Wineries can receive them under the provisions of §1.83 §1.83 Acquiring or receiving distilled spirits in bulk for addition to wine. Persons holding permits as producers and blenders of wine, may, pursuant to such permit, acquire or receive in bulk alcohol or brandy for addition to wines. Wineries are not otherwise authorized to receive bulk spirits. So, you have to add them to wine, but how does one determine if a product is a wine to which spirits have been added or a spirit to which wine has been added? The definitions provide the answer: §5.11 - Distilled spirits. Ethyl alcohol, hydrated oxide of ethyl, spirits of wine, whisky, rum, brandy, gin, and other distilled spirits, including all dilutions and mixtures thereof, for nonindustrial use (Beverage use) . The term “distilled spirits” shall not include mixtures containing wine, bottled at 48 degrees of proof or less, if the mixture contains more than 50 percent wine on a proof gallon basis. The term “distilled spirits” also does not include products containing less than 0.5 percent alcohol by volume. To close the loop, §24.10 defines wine. "Wine. When used without qualification, the term includes every kind (class and type) of product produced on bonded wine premises from grapes, other fruit (including berries), or other suitable agricultural products and containing not more than 24 percent of alcohol by volume. The term includes all imitation, other than standard, or artificial wine and compounds sold as wine. A wine product containing less than one-half of one percent alcohol by volume is not taxable as wine when removed from the bonded wine premises." That part then places a limitation on the quantity of wine spirits that the proprietor of a winery can add to wine." Finally, §24.225 authorizes the receipt of spirits from a DSP, but only for uses as are authorized in that part. §24.233(b) allows the addition of spirits only if the alcohol content of wine after the addition of spirits may not exceed 24 percent by volume. Bottom line - a winery may not bottle brandy of flavored brandy or any distilled spirits specialty that contains brandy. If a winery does, the tax rate is $13.50 a proof gallon, because the winery is not entitled to a reduced rate on spirits.

Good. Because that means you are not doing what I hoped you were not doing. It sounded as if you might not be bottling on the DSP premises - "We are at that point where we want to slowly begin bottling." .The "taproom" reference was "concerning" because of, well, the tap. But I see that you make reference to " filled into standard size bottles that we pour out of. " So I take it that you are filling the bottles on the DSP premises, then bringing them to the tasting room, then pouring them from the hand filled bottles into glasses for on premises consumption. A couple of points - precision hydrometers and thermometers are the only instruments that you may use to determine proof, unless you want to spend a lot of money on a desktop densitometer - see https://www.ttb.gov/images/pdfs/2014-7-21-device-approval-guidlines.pdf for a discussion of approved units. This has been discussed on other threads before. It is just as important to have an accurate thermometer as it is to have an accurate hydrometer. Make your cuts by weight and ease into them. With a little practice, you should not have a problem with getting accurate proof readings. I'm a klutz and I was able to do it.

If taproom, etc, as you describe, means what I think you mean by it, I hate to wade into this. There no provisions for growler type operations in distilled spirits. This is a classic case of the difference between "can" and "may." You "can" fill growers out of a tap in your tasting room because there is no one there to stop you. For the same reason, you also "can" make beer on your DSP premises. But you "may" not do either. Because TTB is short handed, they might never find out about the growler type operation. But if they do, they will have a few more words than this to say about it.

Here we go again. from TTB's newsletter today:: EXTENSION OF HAND SANITIZER GUIDANCE On March 26, 2020, TTB issued guidance providing certain exemptions and waivers to distilled spirits permittees to facilitate the production of alcohol-based hand sanitizers, see TTB G 2020-1A, Production of Hand Sanitizer to Address the COVID 19 Pandemic. On March 27, 2020, the CARES Act was signed into law, providing for additional flexibility with regard to removals of distilled spirits free of tax for use in or contained in hand sanitizer that is produced and distributed in a manner consistent with Food and Drug Administration guidance related to COVID-19. We are therefore working to update our original guidance and also provide guidance on the additional flexibilities of the CARES Act. In the interim, we are extending any exemptions, waivers, or other authorizations currently provided in TTB G 2020-1A, through December 31, 2020. _______________________