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Distilling without a Bond?


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Hi folks, I've got a quick question about the new-(ish) bond regulations. It seems like my forthcoming nano-distillery will fall well under the $50,000 tax threshold for not needing a bond. Does anyone know how that affects all of the TTB application sections that refer to the "bonded premises"? Will I be asking for trouble if I just write "N/A" for all of those, given there won't be any "bonded premises"?

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If you reasonably expect to pay less than $50K in excise taxes - that's something like 9600 cases at the reduced rate and that is a lot for a small distillery - you do not need a bond.  You are correct, the regulations are full of references to bonds and bonded premises.  When a person is not required to have a bond, any time the regulations state that a bond is required, the person is treated as if the person holds the bond.  So, there is no affect on the application apart from not being required to furnish a bond.

TTB explained this in Industry Circular 2016-2, which stated, "Bond-related Terms in TTB Regulations  - Taxpayers who are exempt from bond requirements under the PATH Act amendments will be treated as if they have sufficient bond coverage for purposes of statutory or regulatory provisions that reference bond coverage. For example, where the law and regulations use such terms as “transfer in bond” or “bonded premises,” taxpayers who are exempt from bond requirements will be treated as having a sufficient bond for withdrawals and transfers (assuming all other requirements are met and applicable applications are approved).

I thought this had been incorporated into the regulations, but I'll be damned if I can find it there, so unless you know how to go diving for information, it can be hard to find :-).

 

TT

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