Home.Distilled Spirits.Common Compliance and Tax Issues Found During Distilled Spirits Plant (DSP) Audits
In support of TTB's mission to assist industry members in understanding and complying with the Federal tax, product, and marketing requirements associated with the commodities we regulate, we present here some of the common compliance and tax issues we have encountered during distilled spirits plant (DSP) audits conducted over the past few years. We have grouped the issues into four categories:
Within these categories, we list common audit issues, beginning with the ones we encounter most frequently. We also provide advice on how to avoid these problems.
If you have questions about this tutorial, please contact the closest Tax Audit Division office. View map. For general questions regarding recordkeeping, reporting, excise tax, or other compliance matters, please contact the National Revenue Center at 1–877–882–3277. You also may contact TTB by email at TTBInternetQuestions@ttb.gov. You may directly access the Federal regulations TTB enforces via our Web site, http://www.ttb.gov.
This tutorial details common tax and compliance issues associated with distilled spirits production and discusses how to avoid them. We also include links to the applicable TTB regulations in Chapter I of Title 27 of the Code of Federal Regulations (CFR), TTB forms, and other helpful resources.
TTB forms used in this tutorial
Statutes and regulations cited in this tutorial
Common Compliance and Tax Issues at DSPs
Records
1. Physical Inventory Records
2. General Records and TTB Reports
3. Type of Records Required
4. Transfers between Bonded Premises
5. Finished Product Records
6. Record of Tax Determination
7. Record of Destruction
Inventory
1. Storage Inventory
2. Processing Inventory
3. Denatured Spirits Operations Inventory
4. Production Inventory
5. Beverage and Industrial Spirits Case Identification Markings
6. Gauge Records for Production, Storage, and Packaged Spirits
Reporting
1. Monthly Reports Submitted to TTB
2. Losses in Bond
3. Timing for Submitting Excise Tax Return TTB F. 5000.24
Application, Equipment, and Security
1. Registration and Permits of DSP and Identification of Structures, Areas, Apparatus, and Equipment
2. Security
TTB finds that the most common recordkeeping issue among DSP operators is failure to keep adequate records of physical inventories in support of the:
Inventory record requirements are discussed in 27 CFR 19.623.
The most frequent violation of inventory recordkeeping requirements found at small and new DSPs is the lack of a signature on the inventory summary along with the written penalties of perjury statement as described in 27 CFR 19.45. Another problem that TTB finds, even at large DSPs, is that inventory summaries do not provide all of the information required in 27 CFR 19.623, such as the kind of spirits in the tank, identification of the container(s), and the date of the inventory.
Some DSPs do not provide sufficient detail relating to losses, gains, or shortages reported on the production, storage, and processing forms. TTB often finds this violation if the DSP has no inventory controls in place. Even when controls are in place, they may not be effective due to employee turnover, sickness, vacations, or lack of adequate training.
If a DSP finds a loss, gain, or shortage when taking inventory, that DSP sometimes erroneously fails to show it on the storage report (TTB F 5110.11) or sometimes records only the calculated figure, e.g., the book value minus the physical inventory count, instead of the actual figure disclosed by the physical inventory. Regulations require that proof gallons reported as losses on TTB F 5110.11 be derived from total losses, which DSPs must calculate:
DSPs must insure that they record transfer-in-bond losses and gains before they enter the gain or loss into the bulk inventory account.
DSPs must take a physical inventory of bulk tanks, processing tanks, and bottling tanks as required in:
DSPs also must provide to TTB, upon demand, a record of each inventory containing all information (including the date of the inventory, container identification, kind of spirits, losses, and signature) listed in 27 CFR 19.623. DSPs must retain the inventory records required in 27 CFR 19.623 or for TTB inspection as stated in 27 CFR 19.573, 27 CFR 19.574.
General recordkeeping requirements for DSPs are discussed in 27 CFR 19.571. DSPs must prepare daily records that "accurately reflect the operations and transactions occurring at the plant."
27 CFR 19.572 provides that there is no specific required format for records. Proprietors may keep records on paper, on microfilm or microfiche, or on a computer or other electronic medium, so long as the records are readily retrievable in hardcopy format for TTB review. 27 CFR 19.580 requires a proprietor to make entries required on a daily basis for each transaction or operation and not later than the close of the next business day after the transaction or operation occurred. Details of the entries in the daily records are provided in 27 CFR 19.581. The regulation says that the proprietor must:
Daily records should also list for containers or cases, the type, serial number, and the number of containers (including identifying marks on bulk conveyances) or cases. A proprietor must record package identification numbers, number of packages, and proof gallons per package on deposit records in the storage account. For materials intended for use in the production of spirits, list the kind and the quantity, with liquids recorded in gallons and non-liquid materials recorded by weight.
For each receipt or removal of material, spirits, denatured spirits, articles, spirits residues, and wine, record the name and address of the sender (for receipts) or the delivery address (for removals). Record the plant number or industrial use permit number of the consignee or consignor, and the serial number of any tank used. Also recorded is the rate of duty paid on imported spirits and place of origin if it is from Puerto Rico or the Virgin Islands. You also must identify spirits that are to be used exclusively for fuel use.
A typical records violation found during an audit occurs when the amounts recorded in the daily records do not equal the summary amounts recorded in the:
The differences between daily records and monthly reports often result from common errors (inaccuracies) or omissions.
Examples of common errors are:
Examples of common omissions are:
27 CFR 19.285 states, in part, that, except in cases where the proof changes as a result of a storage or processing operation, the initial determination of proof for distilled spirits, wine, or eligible flavor may be used whenever a subsequent gauge is required. Under 27 CFR 19.283, such required proof and quantity gauges include when spirits, wine, and alcoholic flavoring are:
The regulation governing storage inventories, 27 CFR 19.333, states that the DSP proprietor "must take a physical inventory of all spirits and wines held in the storage account in tanks and other containers (except packages) at the close of each calendar quarter."
DSPs are required to maintain extensive source records to support required reports, tax assessments, and claims. When records that support TTB reports are missing or do not exist, the DSP is in violation of 27 CFR 19.571.
Each DSP must maintain certain supporting records, including:
Group records into the three primary accounts of production, storage, and processing to match the required operating reports:
Common issues that TTB finds during audits include:
Form Tutorials:
TTB F 5110.11 – Monthly Report of Storage Operations
TTB F 5110.28 – Monthly Report of Processing Operations
TTB F 5110.40 – Monthly Report of Production Operations
TTB F 5110.43 – Monthly Report of Processing (Denaturing) Operations
When spirits are transferred in bond between qualified DSPs, as per 27 CFR 19.402, certain information is required to appear on the transfer records of both the consignor (the facility sending the spirits) and the consignee (the facility receiving the spirits). Frequently, DSPs do not include all the necessary information on the transfer records. The information required on the transfer record is very specific and is spelled out for the consignor in 27 CFR 19.620 and the consignee in 27 CFR 19.621.
Consignor: 27 CFR 19.405 requires that the consignor (the facility shipping spirits in bond) prepare a transfer record for each bond-to-bond transfer, retaining one copy of the transfer record and one copy of any accompanying document, and forward the original transfer record and any accompanying document to the consignee. Except when secure seals or secured transport are used, spirits transferred in bond in packages must be weighed. Furthermore, the proprietor must assign temporary serial numbers to the packages and show the gross shipment weight on a package gauge record prepared according to 27 CFR 19.619.
27 CFR 19.620 states that the transfer record of the consignor (the facility shipping spirits in bond) must show:
Consignee: 27 CFR 19.407 states that the consignee (the receiver of the spirits) must examine each conveyance to determine whether the securing devices, if any, are intact. If the securing devices are not intact, the consignee must immediately notify the appropriate TTB District Director, Trade Investigations Division; or District Director, Tax Audit Division before removing any spirits from the conveyance. The consignee should determine, record, and report any losses. The consignee must retain the original of the transfer record and any accompanying documents for his or her files.
The consignees must weigh each package, except sealed containers. When the consignee receives spirits in bulk conveyances or by pipeline, he or she must gauge the spirits and record the gauge on the transfer record.
27 CFR 19.621 states that when the consignee receives spirits, denatured spirits, or wine, he or she must record the following information on the transfer record:
The required information that consignees most frequently fail to record includes:
Transfer records required by 27 CFR 19.620 may consist of the proprietor's commercial documents. However, such documents must fully comply with the requirements of 27 CFR 19.620.
DSP proprietors must maintain daily summary information of finished products in support of the monthly reports. The required information is described in 27 CFR 19.601. Audits have disclosed that sometimes the summary records do not support what is reported to TTB on forms TTB F 5110.40, TTB F 5110.11, TTB F 5110.28, and TTB F 5110.43.
Under 27 CFR 19.601, each processor must maintain the following information on a daily summary record of the kind and quantity of spirits bottled or packaged:
In lieu of showing the proof gallons of spirits on daily transaction records of withdrawals from bonded premises, proprietors may show the wine gallons or liters and the proof of spirits in cases. Proprietors must use summary records to compile the reports required in 27 CFR 19.632.
Many recordkeeping issues we encounter relate to the remnant area (the area where individual bottles or partial cases are stored) and the leaker area (the area where leaking product is stored). Employees sometimes fail to properly record spirits transferred into and out of the remnant or leaker areas. Due to the small amount of wine or spirits maintained in these areas on a daily basis, warehouse supervisors may fail to establish good inventory accountability processes or to stress the importance of maintaining an accurate daily inventory; however, the regulations require full compliance with inventory requirements for product in these areas.
We also find that records of losses or destructions are frequently lacking or incomplete:
A high volume of destructions may indicate a quality control issue and a high volume of losses may indicate process control problems within the plant. Neither can be determined by financial analysis unless both are reported separately.
Another common issue we find during audits is that the monthly summary records do not support the totals reported on the Monthly Report of Processing Operations (TTB F 5110.28). In other words, the DSP did not compare the quantities reported on Part I, line 9 and on Part II, line 28.
An agent or employee of the proprietor must sign or initial the record of tax determination required in 27 CFR 19.611, which must be a serially numbered invoice or shipping document (such as a bill of lading). It is best to show the proof gallons and effective tax rates on the shipping document. However, if the proof gallons and tax rate are not shown, "Each invoice or shipping document must contain information sufficient to enable TTB officers to determine the total proof gallons and, if applicable, each effective tax rate and the proof gallons removed at each effective tax rate." That information could be the proof of each bottle of the product and the net contents of each bottle (750ml, liter, etc.) so TTB may multiply proof by volume to obtain proof gallons.
The most common issues that TTB encounters on audits in the area of records of tax determination are that shipping documents do not contain the proof gallons or tax rates (or proof and volume of the product), and they are not signed or initialed. If the proof gallons or type information is missing, the alcohol proof and product volume information should appear in order to enable TTB to determine the total proof gallons and each effective tax rate.
DSPs may need to destroy product from time to time due to contamination, broken bottles, or other problems that make the product unsellable. DSPs may only voluntarily destroy spirits, denatured spirits, articles, or wines in accordance with 27 CFR 19.459. TTB requires certain records to be maintained when DSPs voluntarily destroy products.
27 CFR 19.617 details the records required for voluntary destruction. It states that the proprietor must record details of the voluntary destruction of spirits, denatured spirits, articles, or wines as follows:
Common audit issues found in this area include:
TTB finds that the most common inventory issue at DSPs is the failure to take physical inventories of bulk spirits in tanks and other vessels. Also, sometimes the inventory records do not contain a signature or the statement that the record is signed under penalties of perjury.
The regulation governing storage inventories, 27 CFR 19.333, states that you "must take a physical inventory of all spirits and wines held in the storage account in tanks and other containers (except packages) at the close of each calendar quarter." The DSP must maintain a record of that inventory including all of the information (date, container identification, kind of spirits, losses, and signature) listed in 27 CFR 19.623.
27 CFR 19.45 and 27 CFR 19.623, require that all records of inventory contain the signature of the proprietor or of the person taking the inventory and a statement indicating that the record is signed under penalties of perjury. The declaration required by 27 CFR 19.45 reads: "I declare under the penalties of perjury that this [insert type of document, such as report, or claim], including supporting documents, has been examined by me and, to the best of my knowledge and belief, is true, correct, and complete."
All of the supporting documentation for inventories, which DSPs also may use to support the amount reported on line 23, "On Hand End of Month," on the Monthly Report of Storage Operations (TTB F 5110.11), must be retained for TTB inspection.
Some DSPs move bulk spirits from storage tanks (which must be reported on TTB F 5110.11) to processing tanks or to bottling (which must be reported on TTB F 5110.28). Others skip storage and put bulk inventory directly into processing tanks. Although both stored bulk and process bulk inventories are part of making spirits, the inventories reported on TTB F 5110.28 are taken from the processing tanks and bottled or packaged spirits.
The regulations require two different physical inventories in the processing account:
A common issue found during audits is that the DSP does not take the required inventories on these dates or within the time periods allowed by 27 CFR 19.372(a) (1) and (a) (2). 27 CFR 19.372(b) allows you to request a count of the physical inventories of finished goods (bottled or packaged spirits) on a different schedule than June 30 and December 31; however, you must first receive TTB approval. You may request alternative physical inventory dates by submitting a letterhead application to TTB's National Revenue Center (NRC) in Cincinnati, Ohio.
For producers of denatured alcohol, one of the most frequent issues TTB finds during audits is the timing of physical inventories. 27 CFR 19.394 states that you must take a physical inventory of all denatured spirits in the processing account at the close of each calendar quarter.
The most frequent issues related to unfinished spirits (spirits in production) that we find during audits is that DSPs do not take physical inventories on the correct date or they do not take them at all. 27 CFR 19.312 states that, "A proprietor must take a physical inventory of the spirits and denatured spirits in tanks and other containers in the production account at the close of each calendar quarter. A proprietor …must show separately spirits and denatured spirits received for redistillation. TTB may require additional inventories be taken at any time."
You must report the results of each physical inventory on line 17(b) of the Monthly Report of Production Operations (TTB F 5110.40). DSPs also sometimes neglect to report the inventory results as required. Remember that tax attaches as soon as the spirits come into existence, and you are liable for the tax at that time, so it is imperative to have an accurate accounting of spirits on-hand.
The TTB-required markings that must appear on cases of finished beverage distilled spirits are different than those that must appear on cases of industrial distilled spirits, and these differences can cause confusion for distilled spirits producers. (see TTB Forms Tutorial ). Cases of alcohol fall into two categories:
Beverage Alcohol: Under 27 CFR 19.489, the following marks must appear on each case of beverage spirits that is filled in processing:
In addition to the required marks on cases of finished goods filled in processing, the proprietor may include other marks such as:
Industrial Alcohol: 27 CFR 19.496 states that the following mandatory marks must appear on cases or encased containers of industrial alcohol:
How to Ensure Proper Markings on Cases
DSPs must keep records of gauges that are required to be performed on both beverage and industrial alcohol. Frequently, DSPs do not keep gauging records or they do not perform gauging when it is required.
Gauges are required (among other times):
27 CFR 19.618 "Gauge record" outlines the requirements for records that DSPs must maintain for production gauges and gauges performed before filling packages from storage tanks. The record must contain all the information required in this regulation.
Gauge records at the time of production must include the:
If spirits are put into barrels (cooperage) for aging, DSPs must keep records that designate the type of cooperage:
27 CFR 19.619, "Package gauge record," requires that DSPs prepare a record to document the gauge of packages of spirits and to convey information on package gauges. The information required to appear in the record can be found in 27 CFR 19.619.
Records for each package must include (among other things):
DSPs frequently record the gauge incorrectly when they transfer alcohol from place to place. DSPs must gauge alcohol and must record that gauge when the DSP:
These records must show the:
Common issues related to the TTB monthly reports include that the DSP does not file the required operational reports or fails to file the reports on time. Also, the information that DSPs provide is frequently incomplete or incorrect.
There are four reports required in 27 CFR 19.632, Submission of monthly reports:
Under which conditions are you required to file these forms?
When and where do you send the reports?
You must file TTB reports no later than the 15th day of the month following the reporting period, even if there is no activity during the month. If there is no activity during the month, you are required to file the report showing zeros. Send all forms to:
Director, National Revenue Center
550 Main Street, Room 8002
Cincinnati, Ohio 45202
Send the original form to the NRC.
Are there tutorials available to help complete the reports?
Filling out the monthly reports requires that the DSP proprietor follow the instructions on the back of the forms. Tutorials, which include a checklist, frequently asked questions, tools, and a glossary of terms for each form may be found at these links:
Errors when filling out forms.
Audits uncover many errors on these forms or in the reports; some of these errors are described below:
General errors:
Monthly Report of Storage Operations, TTB F 5110.11:
Monthly Report of Processing (Denaturing) Operations, TTB F 5110.43:
Form Tutorials:
TTB F 5110.11 – Monthly Report of Storage Operations
TTB F 5110.28 – Monthly Report of Processing Operations
TTB F 5110.40 – Monthly Report of Production Operations
TTB F 5110.43 – Monthly Report of Processing (Denaturing) Operations
TTB notes that it is sometimes difficult to understand the difference between a loss and a shortage. Losses are spirits, denatured spirits, or wines that are lost, destroyed or otherwise unaccounted for while in bond. Losses are generally taken for bulk inventory. A shortage is a loss that is an unaccounted for discrepancy (missing quantity) that is disclosed by physical inventory. Shortages are usually found in cased finished goods inventory.
In storage tanks, because there is a gauge performed when the tank is filled and another when the tank is emptied, gains and losses encountered in storage are measurable and must be recorded on tank summary records. Each quarter, the proprietor must add up the summary sheets and determine gains and losses.
In the DSP production process, a loss is a measureable difference between the gauge of the outcome of the production process and the gauged sum of the raw ingredients. For example, when a batch of alcohol is produced, the proof gallons of alcohol are measured. Then the amounts of other materials are gauged and added, the sum of which is the estimated amount produced and transferred to a bottling tank. The amount transferred is measured (gauged) and is compared to the sum and proof of the ingredients in the batch record. If the amount transferred is less than the sum of the ingredients, a loss occurs. Leaks in the line, breakage, or errors in pumping between tanks are explainable losses due to accident.
A disappearance that is disclosed by physical inventoryis a shortage. DSPs must pay taxes on unexplained shortages of bottled distilled spirits. 27 CFR 19.465 states that such unexplained shortages "must be made by comparing the spirits recorded as being on hand to either the results of the physical inventory required by §19.372 or the results of any other complete physical inventory taken by the proprietor. When the recorded quantity is greater than the quantity determined by physical inventory, the difference is an unexplained shortage. The proprietor must adjust its records to reflect the results of the physical inventory."
Shortages represent a difference between the "book" inventory and the physical count. If the proprietor cannot explain these shortages, he or she must pay tax on them. In addition to unexplained shortages of bottled spirits, a proprietor may also be required to pay tax on other losses (or corresponding shortages) of spirits. Under 27 CFR 19.462, losses shall be determined:
When it appears that any container in bond has sustained a loss resulting from theft or unauthorized voluntary destruction, such loss shall be taxpaid or the container shall be segregated with the loss reported promptly to District Director, Trade Investigations Division; or District Director, Tax Audit Division.
In any instance in which spirits, denatured spirits, or wines are lost or destroyed in bond, whether by theft, unauthorized voluntary destruction, or otherwise, the appropriate TTB officer may require the proprietor or other person liable for the tax to file a claim for relief from the tax in accordance with 27 CFR 19.263. The following losses must also be reported and, potentially, taxpaid:
The most frequent violations of the regulations that TTB finds during audits are:
If there are cased goods stored in the processing account and a physical inventory shows that the physical inventory is less than the book inventory and there is no explanation (such as breakage, theft, etc.), the result is a shortage and tax is due on this shortage.
How to avoid problems with Losses in Bond
Late filing of the excise tax form, TTB F 5000.24, is frequently the reason that auditors conduct audits. A DSP that consistently files tax returns late indicates to TTB that the DSP may have problems. 27 CFR 19.236 "Due dates for returns," states that when DSP proprietors withdraw spirits from their bonded premises, the tax payments are due during the same semimonthly or quarterly period (depending of amount of removals and unless the DSP must pay by prepayment return). The regulation states, "[T]he proprietor must file a semimonthly or quarterly tax return * * * on TTB F 5000.24" and pay tax "not later than the 14th day after the last day of the return period." If the due date falls on a weekend, the payment is due the Friday before the weekend. 27 CFR 19.238 describes how to file TTB F 5000.24 by mail or courier and 27 CFR 19.240 describes how to make payment by electronic funds transfer (EFT).
The following tables summarize the due dates for filing semi-monthly returns:
For return periods ending on-- |
Returns and payments are due on-- |
The 15th of the month |
The 29th of the same month |
The last day of the month |
The 14th of the next month |
For the return period ending on-- |
Returns and payments are due on-- |
The 15th of September |
The 29th of September |
The 26th of September |
The 29th of September |
The 30th of September |
The 14th of October |
For the return period ending on-- |
Returns and payments are due on-- |
The 15th of September |
The 28th of September |
The 25th of September |
The 28th of September |
The 30th of September |
The 14th of October |
For example, the return for the period ending January 15 is due January 29, and the return for the period ending January 31 is due February 14. TTB considers the date of the official postmark stamped on the envelope as the date of delivery of the return and the date of delivery of the remittance, if enclosed with the return.
The following table summarizes the due dates for filing quarterly returns:
For the return period-- |
Returns and payment are due on-- |
January 1st to March 31st, |
April 14th |
April 1st to June 30th, |
July 14th |
July 1st to September 30th, |
October 14th |
October 1st to December 31st, |
January 14th |
However, under 27 CFR 19.237(b) "Safe harbor rule":
Failure to file and make tax return payments timely, on or before the close of business on the prescribed last day for filing, subjects DSP proprietors to penalties, interest, and additions to the tax imposed by the following statutory provisions: 26 U.S.C. 5684, 26 U.S.C. 6651, or 26 U.S.C. 6656. In addition, penalties can be assessed under 26 U.S.C. 5603 and 26 U.S.C. 5687 of $1,000 or 1 year imprisonment for each occurrence for failure to comply with requirements for filing returns and penalties of up to $10,000 and 5 years imprisonment if fraud is involved.
How are returns filed?
DSPs must complete each return on TTB F 5000.24 in accordance with 27 CFR 19.234 or 27 CFR 19.240, and the instructions on the form. Failure to follow directions is a compliance violation.
When DSPs send TTB F 5000.24 by U.S. mail, TTB considers the official postmark of the U.S. Postal Service stamped on the cover in which the return was mailed to be the date the return is filed and, if the remittance is enclosed, the date payment is received. TTB keeps copies of the envelope in case of a dispute.
Any DSP may use EFT payment, but it is required of all DSPs or controlled groups (multiple DSPs registrations grouped under one ownership) liable, during this or the prior calendar year, for a gross amount equal to or exceeding $5 million in distilled spirits taxes. Any EFT paying DSP that drops below $5 million in tax payments in a given year may choose to make payments by EFT, cash, check, or money order. The DSP's bank makes EFT payments to the specified Treasury Account at a Federal Reserve Bank. Remittances shall be considered as made when the Treasury Account receives the tax payment by EFT.
Any transfer data record furnished to the DSP will serve as the record of payment, and shall be retained as part of required records. For instructions, see Pay.gov Submission User Guide and TTB Procedure 2011-1.
Using Pay.Gov may be beneficial to many DSPs because it facilitates reporting and helps the DSP avoid minor reporting problems.
In regard to penalties, interest, and additions:
According to 26 U.S.C. 5687, the DSP proprietor could be fined $1,000 or 1 year imprisonment for each occurrence of failure to comply with applicable regulations. Fines for failure to make tax deposits (such as EFT deposits if the annual tax is over $5,000,000 – see above) are described in the law at 26 U.S.C. 6656, which states that any failure to deposit on the due date any amount of tax imposed into the prescribed government depository as required will result in a financial penalty. A penalty will be assessed equal to:
There are also penalties associated with such fraud. The criminal provision at 26 U.S.C. 5602 states that "Whenever any person engaged in or carrying on the business of a distiller defrauds, attempts to defraud, or engages in such business with intent to defraud the United States of the tax on the spirits distilled by him, or of any part thereof, he shall be fined not more than $10,000, or imprisoned not more than 5 years, or both." The law at 26 U.S.C. 5603 specifically states that these penalties apply to failure to keep records or alteration of records with the intent to defraud. The penalties also apply if the employees of the DSP "hinder or obstruct any [TTB] officer from inspecting any such document * * * or fail or refuse to preserve or produce any such document, as required by * * * regulations."
Additional Resources:
Helpful Hints in Preparing Form 5000.24, Excise Tax Return
Pay.gov Excise Tax Return and Payment Electronic Submission User Guide
TTB Procedure 2011–1
DSPs are required to keep TTB informed about changes that occur with their business or distillery. We frequently find that DSPs fail to file the required paperwork when these changes take place.
What changes to my DSP registration and/or permit must I report to TTB?
Before commencing operations as a DSP, proprietors are required to file the original:
The DSP must maintain the registration and permit on the plant premises, as required by 27 CFR 19.81.
When certain changes occur in ownership, plant, or operations:
The DSP must notify TTB's National Revenue Center (NRC) within 30 days of the change. 27 CFR 19.112 states that "If there is a change in any of the information in the proprietor's current, approved notice of registration, the proprietor must amend the registration within 30 days of the change… Except when a letterhead application or letterhead notice procedure is allowed…the proprietor must submit an amended form TTB F 5110.41…"
What are the requirements for identification of Equipment, Tanks, Apparatus, and Structures at my plant?
The management and workers in a DSP know what the equipment does; where the tanks, stills, and fermenters are located; and what is in the tanks. The DSP employees have charts that show tank capacity. However, office workers or government compliance personnel at the plant may not know this information.
DSPs should clearly mark the details of equipment and its location in accordance with 27 CFR 19.189, which states that:
The most frequent violation of this regulation is lack of signage on buildings, rooms, and areas that hold distilling material and unfinished spirit products. DSPs do not always mark buildings on the premises and areas within each building appropriately. One way to mark the room or building is to use the DSP permit number, followed by a sequential number if there is more than one room or building used for spirits or production materials.
Most tanks have the capacity marked on them when installed, but over time, the capacity marking may become illegible, or the numbering systems may change. All tanks and containers associated with production, including flush drums, should be marked with a unique serial number and their capacities. Stills and all tanks, including yeast tanks, must be marked as to use.
Plant security, and the security of all equipment and products, is not only important to the DSP owners and employees, but it is also important to TTB. 27 CFR 19.192 requires adequate security measures that will "protect the revenue."
The locks that DSPs use to secure outdoor tanks or indoor tanks containing spirits and, the enclosures around outdoor tanks and doors from which access may be gained from the outside to the rooms or buildings containing the indoor tanks or portable bulk containers of spirits, shall meet the minimum specifications in 27 CFR 19.192(f).
The most frequent security issues TTB auditors find are:
Form Number |
Form Title |
Power of Attorney |
|
Change of Bond (Consent of Surety) |
|
Excise Tax Return |
|
Pay.gov User Agreement |
|
Signing Authority for Corporate and LLC Officials |
|
Withdrawal of Spirits, Specially Denatured Spirits, or Wines for Exportation |
|
Application for Transfer of Spirits and/or Denatured Spirits in Bond |
|
Monthly Report of Storage Operations |
|
Application for Operating Permit Under 26 U.S.C. 5171(d) |
|
Monthly Report of Processing Operations |
|
Drawback on Distilled Spirits Exported |
|
Notice of Change in Status of Plant |
|
Formula for Distilled Spirits Under the Federal Alcohol Administration Act |
|
Monthly Report of Production Operations |
|
Registration of Distilled Spirits Plant |
|
Monthly Report of Processing (Denaturing) Operations |
|
Distilled Spirits Bond |
CFR |
TITLE |
|
|
Execution under penalties of perjury |
|
Registration and permits in general. |
|
General requirements for registration. |
|
Information required in application for registration. |
|
Maintenance of registration file. |
|
Operating permit. |
|
General rules for amending a registration. |
|
Change in name of proprietor. |
|
Changes in stockholders or persons with interest. |
|
Change in officers, directors, members, or managers |
|
Change in proprietorship. |
|
Partnerships. |
|
Change in location. |
|
Change in premises. |
|
Change in operations. |
|
Change in production procedure. |
|
Change in construction or use of buildings and equipment. |
|
General rules for amending an operating permit. |
|
Change in name of proprietor. |
|
Change in trade name. |
|
Changes in stockholders or persons with interest. |
|
Change in proprietorship. |
|
Partnerships. |
|
Change in location. |
|
Change in operations. |
|
Identification of structures, areas, apparatus, and equipment |
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Security |
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Filing prepayment returns. |
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Filing deferred payment returns. |
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Deferred payment return periods—quarterly and semimonthly. |
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Due dates for returns. |
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Special rule for semimonthly filers for the month of September. |
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Payment by mail or courier. |
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Payment of tax by electronic fund transfer. |
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Assessment of tax for losses or unauthorized removals. |
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Claims on spirits, denatured spirits, articles, or wines lost or destroyed in bond – specific requirements. |
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When gauges are required. |
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Production gauge. |
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Filling of packages from tanks. |
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Physical inventories |
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Bottling tank gauge |
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Bottling or packaging records. |
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Inventories of wines and bulk spirits in processing |
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Physical inventories of bottled and packaged spirits. |
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Inventory of Denatured spirits |
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Authorized transfers in bond. |
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Consignor for in-bond shipments. |
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Consignee premises. |
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Voluntary destruction. |
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Determination of losses in bond |
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Shortages of bottled spirits |
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Marks on cases filled in processing. |
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Cases of industrial alcohol |
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Records in General |
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Time for making entries in records |
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Details of daily records |
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Bottling and packaging records. |
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Finished products records. |
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Records of tax determination in general. |
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Destruction Records. |
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Gauge Record |
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Package gauge record |
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Transfer record—consignor's responsibility. |
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Transfer record—consignee's responsibility. |
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Record of inventories |
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Submission of monthly reports. |
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Exportation of Alcohol |
U.S.C. Reference |
U.S.C. Section |
Credit for wine content and for flavors content |
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Imposition and rate of tax |
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Records and reports |
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Penalty for tax fraud by distiller |
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Penalty relating to records, returns and reports |
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Penalty and forfeiture for violation of laws and regulations relating to wine |
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Penalties relating to the payment and collection of liquor taxes |
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Penalty for offenses not specifically covered |
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Failure to file tax return or to pay tax |
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Failure to make deposit of taxes |
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Industry Circular |
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Accelerated Payments Of Certain Excise Taxes |
Tutorials on filling out DSP reports:
TTB G: 2010–6
OPR: TAD
Updated December 21, 2011