The Host and the Tenant wineries are each fully qualified as bonded wineries with TTB, and each company is responsible for its own production, recordkeeping, reporting, labeling, and taxes, independent of one another. The tenant proprietor must direct and be fully responsible for those things that are usual and customary for the production, bottling, and storage of wine (as applicable) and the managing of the business. See TTB Industry Circular 2003-7 for more information.
In most situations, the Host agrees to rent space and equipment to the Tenant proprietor. This allows existing wineries to use excess space and capacity and gives new entrants to the wine business an opportunity to begin on a small scale without investing in a winery building and all of the necessary winemaking equipment.
The custom wine producer must be fully qualified as a bonded winery. The winery is responsible for all production, records, reports, labeling, and taxes, even though it is producing the wine for a customer. The wine premises that bottles the wine obtains approval from TTB for the wine’s label, and the wine premises that removes the wine from bond pays the Federal excise tax on the wine, regardless of who owns the wine. The producing winery incurs the expenses for winemaking equipment and winery premises.
A custom crush client Wholesaler has minimal TTB recordkeeping requirements. The custom crush client Wholesaler has no production, labeling, tax, or reporting responsibilities. All of these matters are the responsibility of the bonded winery or wineries with whom the customer is working to have the wine produced, labeled, and taxpaid.