Revised 01/02/03

WINE

W1: How do I convert bottles of wine in metric sizes to U.S. gallons?

Conversion tables for computation of taxable quantity of spirits, wine & beer

W2: How do I apply to get a grape growing area designated as a viticultural area?

VITICULTURAL AREAS

A viticultural area is a delimited grape-growing region distinguishable by geographical features, the boundaries of which have been recognized by the Bureau of Alcohol, Tobacco and Firearms (ATF) and defined in 27 CFR Part 9. A listing of approved viticultural areas is in the Code of Federal Regulations, Title 27, Part 9, American viticultural areas, which is available from this web site, U.S. Government bookstores or on the Government Printing Office web site  (http://www.access.gpo.gov).

Any interested person may petition ATF for the establishment of a viticultural area. No ATF forms are necessary. The petition should be in letter form, and should include:

1. Evidence that the area is known by the proposed name;

2. Historical or current evidence that the proposed boundaries of the viticultural area are correct;

3. Evidence that the geographical features of the area produce growing conditions which distinguish the proposed area from surrounding areas

4. A narrative description of the boundaries based on features which can be found on United States Geological Survey (U.S.G.S.) maps of the largest applicable scale; and

5. A copy of the appropriate U.S.G.S. map(s) with the boundaries marked in any prominent color.  These maps are sold by commercial dealers and by the U.S.G.S. (1-800-HELP-MAP or http://www.usgs.gov).

 A viticultural area should be based on features which affect the growing conditions of the area (climate, soil, elevation, physical features). A viticultural area may extend across political boundaries, and there is no maximum or minimum size for a viticultural area. However, the entire area should possess a unifying feature which distinguishes it from surrounding areas, and the evidence submitted with the petition should show this contrast.

The narrative description of the boundaries should be detailed enough so someone with the same U.S.G.S. maps could draw the viticultural area's boundaries by following the description. Political boundaries, survey lines, constructed features (such as roads), contour lines, and any other such features may be used as boundaries where they reasonably coincide with the actual geographical or viticultural limits of an area.

On receipt of a petition for establishment of a new viticultural area, the Regulations Division in ATF Headquarters reviews the petition and may contact the petitioner for more information. Once the petition is complete, ATF publishes a notice of proposed rulemaking and provides an opportunity for interested persons to comment on the proposal. If the petition, evidence and comments support establishment of the area, ATF publishes a final rule which amends the regulations to define the new viticultural area.

For more information on the viticultural area approval process, contact the Bureau of Alcohol, Tobacco and Firearms, Regulations Division, 650 Massachusetts Avenue, Washington, DC 20226, voice telephone, (202) 927-8210, fax, (202) 927-8525.

W3: What American Viticultural Areas are already approved?

Listing of Approved Viticultural Area

Updated: 03/28/03

Download Listings of the Approved Viticultural Areas:

Alphabetical Listing by Name Chronological Listing by Effective Date

W4: What are the Federal Guidelines for Home Winemakers' Centers?
The Bureau of Alcohol, Tobacco and Firearms (ATF) has been asked if there are any Federal requirements covering operation of a Home Winemakers' Center. Home Winemakers' Centers are places where an individual pays a fee to use space and equipment to make wine for personal or family use.

Although we refer to the individual making wine for personal or family use as a "home winemaker," the wine may be made somewhere other than the individual's residence, including a Home Winemakers' Center. We find that a Home Winemakers' Center may operate without qualifying under federal rules as a bonded wine cellar or paying federal excise tax on wine produced at the Center by individuals under the following conditions:

Compliance with State and local law
The ability to produce wine for personal or family use and without payment of tax under Federal law does not authorize production of wine by individuals or operation of a Home Winemakers' Center in violation of State or local law. The operator of a Home Winemakers' Center must learn and comply with any permit, license or tax requirements of State and local law and conduct operations in compliance with State and local law.

Use by qualified individuals
The customers who make wine at the center must be qualified to produce wine for personal or family use under federal, State and local rules. If State and local rules impose different requirements or limitations than the federal rules noted here, the stricter rules and limits should be applied. Under Federal law, any adult may, without payment of tax, produce wine for personal or family use under regulations in 27 CFR 24.75, which provide the following:

• The individual must follow applicable State and local laws.

• The individual must be 18 years of age or the legal age to purchase wine in the locality, whichever is older.

• The individual may produce, without payment of tax, per household, up to 100 gallons of wine per calendar year if there is one adult residing in the household, or 200 gallons if there are two or more adults residing in the household.

• The individual may remove wine from the place where it is made for personal or family use, including use in contests or tastings.

• The individual may not produce wine for sale or offer wine for sale.

Non-commercial use
The operations must never "cross the line" to commercial production or sale of wine. Proprietors and employees of Home Winemakers' Centers:

• May furnish space, equipment, ingredients, bottling supplies and advice to customers.

• May provide certain assistance to customers including:
  - Moving containers of wine between storage areas.
  - Cleaning, maintenance, and repair of equipment.
  - Climate and temperature control.
  - Disposal of wastes.
  - Quality control (including laboratory analysis and tasting of wine for quality control purposes).

• May not provide physical assistance to, or on behalf of, customers in the production, storage, or bottling of wine; for example, employees may not ferment juice, filter or bottle wine, add ingredients to wine, or provide other physical assistance in producing or bottling wine.

• May not provide non-taxpaid wine to customers or prospective customers for sampling or other reasons.

Operation of a Home Winemakers' Center in a manner contrary to the conditions outlined may cause the facility to be considered a commercial winery, subject to all statutory and regulatory provisions relating to winery operation, including registry requirements and possible liability for back taxes.

Under some circumstances, an ATF qualified bonded wine cellar may operate a Home Winemakers' Center. All wine produced at a Home Winemakers' Center on wine premises is taxable under Federal law and is subject to other requirements. For further information regarding qualification of a bonded wine premises or operation of a Home Winemakers' Center at bonded wine premises, contact:

The National Revenue Center Bureau of Alcohol, Tobacco and Firearms 550 Main Street, Cincinnati, OH 45202-3263 Telephone 1- (800) 398-2282.

W5: What are the rules covering on premises sales and tasting of wine?
Regulations covering operations at a bonded wine cellar are in 27 CFR part 24, available on our website at:
http://www.atf.treas.gov/regulations/27cfr24.htm

See section 24.97(b) and (c) for the requirements related to tax-free use of wine for tasting. You must record the quantity of wine transferred to the tasting area and taxpay any wine so transferred and not used for tasting on premises.

If you also plan to sell wine for your visitors to take home, that wine must be taxpaid. You must make arrangements for recording the taxable removal of such wine at the time of sale or designate a suitable taxpaid storage area and count the stocks of wine held there as removed when they are transferred to the taxpaid storage area.

If you charge for a winery tour (in order to taste the wine) or for the wine that you serve in the tasting room, or if you sell wine to visitors to take home, you are considered a retailer. The special occupational tax you pay as a bonded wine cellar also covers retail and wholesale operations related to your wine operations AT THE SAME PREMISES. If you have additional locations, or if you sell beer or spirits as part of your retail operations, you must pay the applicable dealer's special occupational tax. See the dealers' regulations at 27 CFR 194:
http://www.atf.treas.gov/regulations/27cfr194.htm
Section 194.183 covers the bonded wine cellar exemption.

If the development of your tasting area (and any related taxpaid area to supply retail sales) affects information on your bonded wine cellar application, you should submit a notice of the change under section 24.131 to the Chief of the ATF National Revenue Center. If you have questions about the notice, contact the National Revenue Center by e-mail at natlrevctr@cinc.atf.treas.gov or by telephone at (800) 398-2282.

 

W7: What are the rules for producing and selling fermented cider?

FEDERAL REGULATION OF FERMENTED CIDER

The Bureau of Alcohol, Tobacco and Firearms (ATF) regulates production of almost all alcohol beverages under the Internal Revenue Code (IRC), which covers taxes and qualification requirements for producers, and the Federal Alcohol Administration Act (FAA Act), which covers labeling, advertising, permits and trade practices. Fermented cider may be subject to some of the requirements of these laws, and exempt from others.

TAX EXEMPT CIDER
In the IRC, Congress exempted cider from Federal excise tax and the strict qualification requirements imposed on producers of all other alcohol beverages, if it meets the following description:

... the noneffervescent product of the normal alcoholic fermentation of apple juice only, which is produced at a place other than a bonded wine cellar and without the use of preservative methods or materials, and which is sold or offered for sale as cider and not as wine or as a substitute for wine....

Alcohol content is not limited by this section of the law, except to the extent that fermentable sugars must come only from the apple juice. Likewise, the place of sale is not limited, except by the requirement that no preservative methods or materials may be used in tax exempt fermented cider.

The exemption in the IRC allows farmers and growers who had traditionally produced fermented cider for sale at roadside stands an exemption from the tax imposed on apple wine, but, at the same time, prevents those who make this product for more conventional commercial distribution and sale from avoiding the excise tax imposed on all other alcohol beverages.

Even if your cider is exempt from our other requirements, if it contains 0.5 percent or more alcohol by volume you must place the Health Warning Statement on the bottle.

There are several reasons a cider producer might choose to qualify as an alcohol beverage producer and pay tax rather than meet the requirements for exemption under current Federal law. For commercial distribution and better "shelf life," a producer might use preservative methods or materials such as pasteurization, addition of carbon dioxide, or use of "smart caps," and so lose the exemption. The use of sugar or apple concentrate as ingredients would remove a cider from the tax exempt category. A producer who wanted to make an effervescent cider would also lose the exemption. For a product to obtain the benefit of the exemption, it must meet all elements of the definition.

TAXABLE CIDER
If a producer does not choose to make cider within the IRC exemption, there are several alternatives:

Cider may be made at a bonded wine premises and taxpaid as either hard cider at $0.226 per gallon or still wine at $1.07 per gallon ($.17 for small producers), artificially carbonated wine at $3.30 per gallon ($2.40 for small producers), or sparkling wine at $3.40 per gallon (no special rate for small producers). Still wine is wine that contains not more than 0.392 gram of carbon dioxide per hundred milliliters. If cider contains 7 percent or more of alcohol by volume, it is subject to FAA Act wine labeling and permit requirements. Under 7 percent alcohol, wine labeling is in the jurisdiction of the Food and Drug Administration. A person who bottles any beverage that contains 0.5 percent or more alcohol by volume must place the Health Warning Statement on the bottle.

Some brewers are experimenting with malt-based ciders, which are taxable as beer. The Federal tax rate for beer is $18 ($7 for small brewers) per 31?gallon barrel. Effervescence does not make a difference to the beer tax rate. For a malt-based cider made at a brewery and containing 0.5 percent or more of alcohol by volume, the FAA labeling rules for beer, including the Health Warning Statement, will apply, and the product may not be labeled as cider. A name such as "apple beer" may be used instead. In order for a product to qualify as a malt beverage instead of a wine, at least 25% of the fermentable material must be barley malt and at least 7 1/2 pounds of hops must be used per 100 (31-gallon) barrels.

In order to qualify with ATF as an alcohol beverage producer, you must file an application, a bond, and information about the physical setup of the production facility and the background of persons who will be responsible for operating the business. Forms and specific requirements are different for wine and malt beverages, and the two commodities cannot be produced or stored on the same premises. You must receive approval from ATF before beginning operations. Once qualified, you will pay an annual occupational tax of $500 or $1,000, keep records, file reports and tax returns, and pay tax on wine or beer removed as required in Federal regulations. You are allowed to sell wine or beer stored at your premises at retail or wholesale if such sales are a part of your operations.

ADDITIONAL INFORMATION
It is important for you to learn about State taxes and qualification requirements, and any local business licenses. Distribution rules and other treatment for cider may vary from State to State. A cider that is tax exempt under Federal rules may still be taxed or regulated under State rules.

ATF OFFICES
The Alcohol Labeling and Formulation Division (202?927?8140) handles formulas for wine, statements of process for malt beverages, and FAA Act labels for either commodity. ATF's National Revenue Center (513?684?3334) handles applications for qualification and verifies reports and tax returns. They can provide necessary forms and information if you wish to apply.

CIDER FOR PERSONAL USE
Under Federal rules, an adult may produce wine (including cider) or beer for personal use and not for sale. See our limitations in 27 CFR 24.75(wine) and 25.205-207 (beer), and be sure to check with your State, because their rules may be different.

REGULATIONS
Copies of the Federal regulations covering production of alcohol beverages may be purchased from local U.S. Government bookstores or from:

U.S. Government Printing Office
Superintendent of Documents,
Mail Stop: SSOP
Washington, DC 20402-9328
GPO Order Desk: (202) 512-1800

The ATF regulations are also online at http://www.access.gpo.gov/nara/cfr/waisidx_02/27cfrv1_02.html

ATF regulations are codified as 27 CFR, and Volume 1, Parts 1 to 199, contains the most important regulations for beer and wine.

	Beer	Wine
Production	Part 25	Part 24
Labeling	Part 7	Part 4

Health Warning Statement rules for both wine and beer are in Part 16.