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No More Daily Reports !!!!!

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That's not how I read it....

It just seems that dividing your daily reporting by KIND of spirit is removed. In other words, you can lump your rum and vodka into one report. But I didn't see any amendment regarding the absolution of daily reporting, or recordkeeping.

I'll be curious to see if the electronic reporting forms get integrated a bit more, with this.

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Noting has changed except TTB has amended §19.601 to remove the requirement that a DSP record the kind of spirits bottled in its daily summary records of cased goods held in the processing account. The bottling record still must show the quantity and kind bottled from any batch.

Let’s take a trip through the regulations together.

Sec. 19.354, which is headed “Bottling or packaging records,” requires a record for each batch of spirits bottled or packaged. The requirements for this record are in §19.599. These recrods still must include, among a long list of other bits of information, the kind of spirits in the batch (19.599(e) and the total quantity bottled. This must include the dates the bottles were filled, but it can be more than one date, so it is not a daily record and would not, in any case, summarize the cases of bottled spirits you are holding onto pending withdrawal from processing.

Section 19.601 requires the daily record that shows, on any given day, the cases of spirits that you have in the processing account. They are the “Finished products records.” As written, §19.601(a) requires that you keep “daily transaction records and a daily summary record of the kind and quantity of finished products bottled or packaged within the processing account at the distilled spirits plant,” along with the beginning and ending quantity of bottled spirits on hand, and any overages. It is a record you would post daily from your bottling records.

The change announced removes the “kind” requirement from the finished product records but not from the bottling record.

As I read the changes, prior to this latest announcement, as of April 8, 2014, you would have been required to keep a finished goods record that included separate summaries for each of the different kinds of spirits you held in the packages in the processing account, i.e., five different types would have required five different daily summary records, or one record with five columns. With this announcement, TTB is simply saying that you can keep one record that lumps together all of the kinds. Don’t bother to break it down by type; just report the quantity. It is still a required daily record.

TTB’s explanations in the ruling is interesting. In brief, the ruling explains:

· The requirement to record kinds was added in 2011. It had not been there before.

· TTB added it because the law required it (See 26 USC 5207). TTB considered it a conforming change that would not cause major difficulties.

· Subsequently, major players complained it would cost $20,000 to $50,000 each to develop the new systems required to capture the information.

· In 2012 TTB listened, and said, we can’t change the regulation back to the way it was, because these changes we've made reflect what the law requires. For the same reason, we can’t grant a variance to the requirement, but we will establish a grace period in which we won’t take adverse action if your records omit kind but otherwise comply.

· So TTB first gave everyone until April 8, 2012 to comply and then extended that to April 8, 2014 when industry said, “Hey, it’s going to cost us even more than we first thought.” .

· So TTB reviewed its position and issued the ruling on March 27, about 12 days before the grace period was to expire.

By ruling, TTB removed the requirement it had said it could not, quietly forgetting its claim that it can’t ignore what the law says. It is doing so, it says, because it has been able to audit just fine without the additional information of the kind of spirits. This is a new standard for regulations. TTB’s regulations, it seems, no longer must require what the law requires, as long as omissions don’t create administrative difficulties or create danger to the revenue. It is an interesting precedent.

But, here is the curious part, to me at least. TTB waited until about two weeks before the grace period was to expire to issue this final rule. I ask rhetorically, “Hasn’t everyone already made the changes necessary to capture the information they would have needed to capture by April 8, if TTB had not relented?” So how does this cut the cost to industry? It is money that a prudent person would already have spent. Did anyone tell you – and I mean you personally - not to amend your records to capture this bit of information? Were you told, don’t go to the bother? Was anyone told don’t go to the bother? And if no one received a selected whisper not to bother, why does TTB go to the bother of issuing this notice now, after everyone, presumably, has spent the money to voluntarily comply come the fast approaching April 8 deadline. It would seem hard to make $50,000 or more worthy of changes between now and then, although I'll bet yo could do it for a lot less.

Anyway, if you are a small player, I think you will want a perpetual inventory by kind or “sku” so that you can plan your production schedule. Not having such a record would seem to be potentially more costly than the dollars you would spend to keep track of how much bourbon, vodka, gin, and rye you have available for sale.

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