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alert! fyi from the feds re: tours and tastings...


doubleD

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We recently were questioned re: our tours and tasting operations by the big guys in Cinci. According to law you cannot have anyone other than employees on your bonded premises. This would mean that your distillery is completely off limits anywhere you have etoh that's not tax-paid--such as your production room, barrel room, etc. This would also mean that every tour i've personally been on at a distillery, brewery, or winery has been in violation. You can have a retail premise, if your state allows, and you can put product there that is tax-paid, but the space must be non bonded. BTW...happy ****ing tax day.

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We recently were questioned re: our tours and tasting operations by the big guys in Cinci. According to law you cannot have anyone other than employees on your bonded premises. This would mean that your distillery is completely off limits anywhere you have etoh that's not tax-paid--such as your production room, barrel room, etc. This would also mean that every tour i've personally been on at a distillery, brewery, or winery has been in violation. You can have a retail premise, if your state allows, and you can put product there that is tax-paid, but the space must be non bonded. BTW...happy ****ing tax day.

And do you by chance have the quoted chapter and verse of the law as told to you? Would be interested in seeing the exact passage and understanding their interpretation.

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And do you by chance have the quoted chapter and verse of the law as told to you? Would be interested in seeing the exact passage and understanding their interpretation.

I'd like to see this too. :unsure:

doubleD, would you please give us some specifics? Maybe share some of their correspondence, or at least their references to specific laws they claim you're violating?

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They're taking a few days to gather the specifics for us. As soon as they report I'll post all the details. I can tell you that it's a federal law, and not a policy, so you cannot request a variance. They stated that guests could view the bonded premises through a window, but there has to be a floor to ceiling wall between bonded and nonbonded areas--tape on the floor, a walkway, or half wall would not be sufficient. If they decide to enforce this then most brew pubs, all wineries and all distilleries I've been in will be in violation.

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I've been to Maker's Mark twice. You can taste the fermenting mash and I have pictures of the tour guide pulling white dog out of the safe to allow folks to sample...at the 2008 ADI conference. People are walking all over the bonded premises of manufacturing and storage.

I'm not sure which laws they are saying enforce these rules, but I don't think I've read it. Also, without trying to be a jerk, how can you say it's federal law, not policy, if they or you haven't pointed out the phrase the covers this action. I'm not saying it doesn't exist, just that it seems odd considering the way all of the big guys and little folks like us have promoted our product. They are usually pretty quick to point out (exactly) the law that covers an act or action.

Most of the folks here that I know promote tours big time...so it's gotta be a big concern.

Keep us posted.

Thanks.

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Wonder if someone new is trying to make a name for themselves. For purposes of cross reference - here are the rules for Bonded Winery - taken from the ttb site. here's the link:

http://www.ttb.gov/rulings/80-19.htm

And here's the text. Note that not only are functions allowed on the bonded premises - and the IRC code is referenced, but that serving of tax free wine is allowed. I wouldn't expect that (the taxfree bit) for spirits, since there aren't the equivalent testing and tasting allowances for spirits. But I betcha that the rest of the principle applies.

ATF Ruling 80-19

The Bureau of Alcohol, Tobacco and Firearms issues this ruling to state its position concerning the use of bonded wine cellar premises for hosting occasional special events such as dinners, luncheons, and similar group functions at which wine and food are served.

The Bureau has received requests from proprietors of bonded wine cellars for permission to utilize selected portions of their bonded premises as sites for dinners, luncheons, and similar special events. On these occasions, wine is served to create goodwill and/or to introduce a new product. Although the event could be held in an off-bond area of the general winery premises, a portion of the bonded is selected so that the guests may enjoy the novelty and ambience of a bonded wine cellar.

In most instances, the Bureau has approved a winemaker's application and has permitted the proprietor to serve wine, free of tax, at the special event. The Bureau has evaluated its position, concerning these events and issues this ruling to facilitate the hosting of special events by proprietors of bonded wine cellars

In addition to the operations specifically described in Section 5351 of the Internal Revenue Code, Section 5361 authorizes such other operations as may be conducted in a manner that will not jeopardize the revenue or conflict with wine operations. The implementing regulation, 27 CFR 240.134, authorizes the Director to make a finding that other operations not specifically provided for in the provisions of Part 240, may be conducted in a manner that will not jeopardize the revenue, conflict with wine operations or be contrary to the law.

The Director has found that the holding of an occasional special event, such as a dinner, luncheon, or similar group function, on the bonded premises of a bonded wine cellar at which wine and food are served, is an operation which is not contrary to law and may be conducted on bonded premises in a manner that will not jeopardize the revenue or conflict with wine operations provided the proprietor serves only tax-free wine, maintains records to document the types and quantities of wine used for such purposes, and receives no reimbursement for food, wine, or use of the bonded premises for the special event. (Under the provisions of 26 U.S.C. 5351, 5361, and 27 CFR 240.130, taxpaid wine may not be served on bonded winery premises.)

Accordingly, it is held that, upon the receipt of an application filed pursuant to 27 CFR 240.134, the ATF regional regulatory administrator may grant the proprietor continuing authority to conduct occasional special events on bonded wine cellar premises on the conditions that the proprietor serve only tax-free wine, maintain records of the types and quantities of wines used for such purposes, and receive no reimbursement for the food, wine, or use of the bonded premises for these special events.

In addition, Section 5372 specifically states that wine may be utilized in any bonded wine cellar for testing, tasting, or sampling, free of tax. The serving of wine, free of tax, at such a luncheon, dinner, or other special event, on bonded winery premises, may be considered as a bona fide use of wine within the scope of the tax-free testing, tasting, and sampling provisions of 26 U.S.C. 5372.

Accordingly, it is further held, pursuant to 26 U.S.C. 5372, that a proprietor may serve wine, free of tax, on the bonded premises of a bonded wine cellar on the occasion of such special events.

27 CFR 240.134

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Wonder if someone new is trying to make a name for themselves. For purposes of cross reference - here are the rules for Bonded Winery - taken from the ttb site. here's the link:

http://www.ttb.gov/rulings/80-19.htm

And here's the text. Note that not only are functions allowed on the bonded premises - and the IRC code is referenced, but that serving of tax free wine is allowed. I wouldn't expect that (the taxfree bit) for spirits, since there aren't the equivalent testing and tasting allowances for spirits. But I betcha that the rest of the principle applies.

ATF Ruling 80-19

The Bureau of Alcohol, Tobacco and Firearms issues this ruling to state its position concerning the use of bonded wine cellar premises for hosting occasional special events such as dinners, luncheons, and similar group functions at which wine and food are served.

The Bureau has received requests from proprietors of bonded wine cellars for permission to utilize selected portions of their bonded premises as sites for dinners, luncheons, and similar special events. On these occasions, wine is served to create goodwill and/or to introduce a new product. Although the event could be held in an off-bond area of the general winery premises, a portion of the bonded is selected so that the guests may enjoy the novelty and ambience of a bonded wine cellar.

In most instances, the Bureau has approved a winemaker's application and has permitted the proprietor to serve wine, free of tax, at the special event. The Bureau has evaluated its position, concerning these events and issues this ruling to facilitate the hosting of special events by proprietors of bonded wine cellars

In addition to the operations specifically described in Section 5351 of the Internal Revenue Code, Section 5361 authorizes such other operations as may be conducted in a manner that will not jeopardize the revenue or conflict with wine operations. The implementing regulation, 27 CFR 240.134, authorizes the Director to make a finding that other operations not specifically provided for in the provisions of Part 240, may be conducted in a manner that will not jeopardize the revenue, conflict with wine operations or be contrary to the law.

The Director has found that the holding of an occasional special event, such as a dinner, luncheon, or similar group function, on the bonded premises of a bonded wine cellar at which wine and food are served, is an operation which is not contrary to law and may be conducted on bonded premises in a manner that will not jeopardize the revenue or conflict with wine operations provided the proprietor serves only tax-free wine, maintains records to document the types and quantities of wine used for such purposes, and receives no reimbursement for food, wine, or use of the bonded premises for the special event. (Under the provisions of 26 U.S.C. 5351, 5361, and 27 CFR 240.130, taxpaid wine may not be served on bonded winery premises.)

Accordingly, it is held that, upon the receipt of an application filed pursuant to 27 CFR 240.134, the ATF regional regulatory administrator may grant the proprietor continuing authority to conduct occasional special events on bonded wine cellar premises on the conditions that the proprietor serve only tax-free wine, maintain records of the types and quantities of wines used for such purposes, and receive no reimbursement for the food, wine, or use of the bonded premises for these special events.

In addition, Section 5372 specifically states that wine may be utilized in any bonded wine cellar for testing, tasting, or sampling, free of tax. The serving of wine, free of tax, at such a luncheon, dinner, or other special event, on bonded winery premises, may be considered as a bona fide use of wine within the scope of the tax-free testing, tasting, and sampling provisions of 26 U.S.C. 5372.

Accordingly, it is further held, pursuant to 26 U.S.C. 5372, that a proprietor may serve wine, free of tax, on the bonded premises of a bonded wine cellar on the occasion of such special events.

27 CFR 240.134

Thx a million for the link, Charles. I'm planning to push hard against their interpretation of the law and have asked for the specific references they have quoted. If they believe their interpretation is correct and they're going to start enforcing it then we'll be forced to unite and take a legal whack at this outdated law. I believe these laws were mostly written at the conclusion of prohibition and need to be revisited.

Another ridiculous law prevents you from have a residence attached in any way to a distillery. We had to move a deed restricted apartment from our building even though it was located on a different level, had it's own independent entrance, and had no communication with the distillery. That took us three months to accomplish. The TTB's official interpretation of that law applies to the most extreme examples I could think of. I asked them, for example, if you operated in a large city and were located in a structure of independently owned units stretching over a mile and had a distillery on one end and there was an apartment on the other end (1 mile away) would you be legal. They said emphatically that you would not be permitted.

Will keep you all informed.

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Another ridiculous law prevents you from have a residence attached in any way to a distillery. We had to move a deed restricted apartment from our building even though it was located on a different level, had it's own independent entrance, and had no communication with the distillery. That took us three months to accomplish. The TTB's official interpretation of that law applies to the most extreme examples I could think of. I asked them, for example, if you operated in a large city and were located in a structure of independently owned units stretching over a mile and had a distillery on one end and there was an apartment on the other end (1 mile away) would you be legal. They said emphatically that you would not be permitted.

I know, off topic, but the above was discussed here and elsewhere on forums. The primary factor of not having a residence in the same building was that there couldn't be any other entrance to the bonded area which would result in being able to remove untaxed product from the premises other than through the primary building. I don't remember which thread, but I do remember specifically reading that. The result though was that a residence could be in the same physical structure.

However, 27 CFR 19.131, makes it illegal to have a distillery in a building on the same piece of property as a house owned by the same person, without regards as to the distance between house and building. In our case, that would be a structure 100ft from the house. Only way around would be to title the barn area to the LLC. The wording of the statute is very clear that's it's a leftover of prohibition. So has there been an updated ruling on that? I know of several artisan distillerys who are only a few feet from the house.

"Distilled spirits plants shall not be

located in any dwelling house, or in

any shed, yard, or enclosure connected

with any dwelling house,"

These type of things are why I constantly question anything form the gov boys, and others would be wise to do so also.

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The CFR says

Distilled spirits plants shall not be located in any dwelling house, or in any shed, yard, or enclosure connected with any dwelling house,

If you have a solid building as described by the other CFRs on the same property as the house, that is legal. The above only says it can't be in a shed, you can't locate it in the yard i.e., no outdoor distilling, and the enclosure can't be connected with the house.

Many distilleries, post Prohibition, had residences on the property. Often the master distiller lived there. Perhaps on the official DSP docs on the plant didn't include the house, thereby making it non-bonded premises. The regs above are designed to describe typical moonshining operations, and prevent such operations from becoming DSPs.

Remember, the TTB officials are people too. They are doing their best to interpret the regs based on their given experience. They aren't always correct.

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