Jump to content

Distilling for Wineries


gordon

Recommended Posts

Hello,

Is anyone distilling products for wineries for the wineries own use to fortify wines? If so, are you using a transfer-in-bond (TIB) on BOTH the input and output side of the production process to handle this? Or, are you receiving it in under a TIB and then selling it back to the [wine] manufacturer (non-retail sale)? If the later, obviously no retail sales tax would be collected or due, but would the distiller be required to pay excise taxes on this sale?

Technically, it's the same alcohol (that was initially received in the form of wine) that is going back to them? So, it seems a TIB should be used in both directions and ultimately it is the wineries responsibility to pay the excise tax.

Who is doing this and how are you handling this situation?

Thanks!

Link to comment
Share on other sites

It really should be bulk, in bond both ways. (to the best of my knowledge) A DSP can't accept taxpaid bottled wine to distilled, and a BW can't use bottled, taxpaid wine for fortification. I think the lower and upper proof limits for wine spirits are set in the USC. They sure aren't obvious in the CFR - but I have seen them.

The BW is also -supposed- to have the storage (including segregation and security) and use of wine spirits for fortification documented as part of their BW registration BEFORE they receive and use them. AND they need to have bond coverage for what's kept in storage - at the spirit rate. Not there is any way to remove them once they've been received other than use and destruction. That I can tell. i don't think they can sell them on and do another bonded transfer. I -believe- you can also transfer aldehyde containing spirits (I read that as heads) to a BW and thoise can be added to wine for re-fermentation. Yeast can eat the aldehydes. Haven't tried it myself.

Brian - I report the volumes on the BW operation reports and the DSP storage and production reports. I do all the rest as 'commercial' records - invoices/BOL. I require the BW to include biz name, address, registration number, a statement that the wine is suitable for distilling into wine spirits (no disqualifying additions, records exist to support type/varietal or other claims, etc), volume and alcohol, package identifying marks, description of seals and an initial at each end that the seals are intact. I keep the records - but I don't -think- that the 5100.16 DSP-DSP transfer is applicable or required. I send the equivalent in reverse.

Link to comment
Share on other sites

Thanks again Charles, your info is very helpful.

One last question, does the winery use the 5100.16 form on their end to receive the spirits back to them or do they use some other form? In looking at this form, it shows the Registry/Permit Number as starting with "DSP-" which is not an appropriate prefix for a winery. If not, what for should they be using?

Link to comment
Share on other sites

Again, insert the 'I'm fallible' caveat here, but no DSP has ever sent me a 5100.16 - or its equivalent - for a transfer in bond of wine spirits. I don't send one from my DSP to my 'adjacent' BW, nor to the 1-2 other BW I've worked with. St. Julian always sent a 'Certificate of...' well, I can't remember what the last word was, but it had the type of spirits and their gauge. Other DSPs did not. I put the equivalent wording on the return invoice and initial it.

I think it's easier than you are expecting it to be.

Link to comment
Share on other sites

Thanks again Charles, your info is very helpful.

One last question, does the winery use the 5100.16 form on their end to receive the spirits back to them or do they use some other form? In looking at this form, it shows the Registry/Permit Number as starting with "DSP-" which is not an appropriate prefix for a winery. If not, what for should they be using?

5100.16 is only for DSP-to-DSP transfers. So unless the winery is ALSO a DSP (there are some), don't use that form.

Link to comment
Share on other sites

I think Charles gave you the answer: there is no separate form, but there are entries in the other forms for such transfers. For the DSP: 5110.11 has an entry for brandy or alcohol/spirits transferred to a bonded winery out of storage. 5110.28 records bulk wine received or on hand. It also records wines mixed with spirits (because when you do that, you increase the total proof gallons as spirits, and decrease the total proof gallons as wine). 5110.4 has an entry for use in wine production (because it went there directly without going to storage).

Link to comment
Share on other sites

5100.16 is only for DSP-to-DSP transfers. So unless the winery is ALSO a DSP (there are some), don't use that form.

Relevant passage in CFR section 19.620:

The serial number and date of form TTB F 5100.16 (not required for wine spirits withdrawn without payment of tax for use in wine production);

Link to comment
Share on other sites

Thanks. I think we have it covered on our end and I appreciate the further clarification, as it all helps!! (Especially for a newbie like me!)

I guess what I was also trying to accomplish was to help the wineries from their end. All the wineries we have talked to have never dealt with this and therefore are not sure what they need to do on their end. They normally just purchase GNS and therefore have never had to deal with a transfer-in-bond situation. Maybe they don't need a form, but I'd find that unusual being how tightly regulated DSP's are. But then again... maybe wineries have it much easier than us!

Thanks Again!

Link to comment
Share on other sites

As long as you mean Grape Neutral Spirits :-)

My take on the whole process would be:

BW (lbs or wine gallons)

Fruit received on 5120.17 IV.2

Fruit used on 5120.17 IV.5

Estimated wine in Fermenter at end of period on 5120.17 V II.1

Bulk Wine Produced on 5120.17 1A.2

Bulk Wine transferred in bond on 5120.17 1A.15 (wine gallons!)

(alternate - bulk wine dumped to distilling material 5120.17 1A.16, DM gain on 5120.17 V I.2, DM transfer on 5120.17 V I.6 - i would do this if I were adding materials that are allowed for DM, but not wine, or were sending watered lees) (wine gallons!)

DSP

Wine received in DSP storage on 5110.11.2 (proof gallons - probably you should gauge it yourself)

Wine dumped to production on 5110.11.18 (pg)

Wine received for distilling on 5110.40 VI.9 (back to wine gallons, just to be confusing, and there's no on hand, or used, just received))

Spirits in production at end of quarter on 5110.40 I.17b (I use this just like 5120.17 V II.1)

Spirits entered into storage on 5110.40 I.11 (With matching summaries in section IV) (I think you could transfer in bond from here - but I gauge into and out of the storage account, so I do it from there) (pg)

Spirited received in storage on 5110.11.2

Spirits transferred to BW on 5110.11.14

BW

Spirits received by BW on 5120.17 III.2

Spirits used for wine on 5120.17 III.5

Wine used for spirit addition on 5120.17 IA.19 (must already be in the 1A inventory, or have a matching line 2 production and priot V II In-fermentor)

Wine produced by spirit addition on 5120.17 1A.4

Which takes you from fruit to bulk 14-21% wine. My way. But I have a database that does all the sums by line number, tax class and type, if needed.

Link to comment
Share on other sites

And yes - wineries have it easier. No prescribed forms (those I have seen hints of old, obsolete ones in the regs and other spots) Just document in 'commercial records' (like invoices) and sum up on the operations report. You are supposed to have a numer of material operations and inventory reports available, too - but it's all invoice backed, not TTB forms.

Link to comment
Share on other sites

  • 1 month later...

Charles, I was just reviewing your procedural comments above and notice you stated 'Spirits in production at end of quarter on 5110.40...' Are you only filing these once a quarter? If so, how did you manage that? I'm doing the 5100 series once a month and the 5000.24 twice each month. It sure would be nice if I didn't have to do these so frequently! Thanks.

Link to comment
Share on other sites

I'm filing the production/strage/processing reports once a month. I only fill in values for line 5110.40.17b at the end of the quarter - to go with the inventory that's once a quarter. I leave it blank the other months. Maybe some day I'll get spanked for it - but it makes sense to me.

I'm so small that I qualify for filing the excise tax quarterly. In the comments section I just note the removals for the three months of the quarter and tally them up.

The winery is slightly simpler, in that I qualify for quarterly filing both Ops and Excise. So there is symmetry. I seem to recall from somewhere that when the TTB rolled out the quarterly filing for small wineries and breweries, that they said they'd like to offer it to the DSPs, too - but that the monthly ops reporting was written explicitly into the underlying law, and they didn't have the legal flexibility to change it.

Link to comment
Share on other sites

  • 4 weeks later...

Thanks Charles!

I greatly appreciate your responses and the information you are willing to share. I'd really to come visit you sometime and checkout your operations. It sounds like you have a good handle on things and I'd greatly appreciate learning more on how you do things. If there's a good time of the year that works best for you, and assuming you would allow us to visit, please let me know. Thanks again and Happy Holidays!

Link to comment
Share on other sites

Visitors welcome. We are both a weekend and a seasonal operation. May-December. Appointments can be had Jan-April depending on schedule and weather. We are mostly a cidery. Fermentations in fall, bottling in spring are the busy times. Distilling is less scheduled.

I answer questions that don't take too much time - my wife thinks I give away too much knowledge :-) Also, she's our distillatrix. I handle fermentation and paperwork.

Link to comment
Share on other sites

  • 5 weeks later...
  • 2 weeks later...

Charles, or anyone who may know. How do the yeast or your fermentation benefit from the addition of the aldehydes? Is it just nutrient to them?

I -believe- you can also transfer aldehyde containing spirits (I read that as heads) to a BW and thoise can be added to wine for re-fermentation. Yeast can eat the aldehydes. Haven't tried it myself.
Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...