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We hope this list of resources will assist your in-house compliance staff with these tasks. If you are finding the tasks overwhelming, call on Williams Compliance. There are many different ways to simplify the compliance management tasks at your wine, beer or spirits business. Give us a call…we can help!

Definitions

Alternation of Premises

Multiple operations alternating the equipment and premises operated by the same person (i.e., Bonded Wine Premises/DSP/Brewery/Taxpaid Wine Bottling House).

Alternation of Proprietors

Multiple persons alternating the use of/sharing bonded premises and equipment.

Certificate of Authority

A corporation or limited liability company is domestic to the state where it was formed. However, if you decide to open up an office in another state, with the express intent to transact business there, you might be required to obtain a Certificate of Authority. Without it, your business may be subject to fines and legal action by the state in which you would be illegally transacting business. In addition, you may forfeit many of your legal rights if you are not qualified to do business in that other state. If a Certificate of Authority is filed, the corporation or LLC is subject to taxes and annual report fees in both the state of formation and any states where the corporation or LLC is qualified. In some states, Certificates of Authority are also known as Foreign Qualifications.

Consent of Surety

A document that extends the terms of a bond.

Distributor/Wholesaler

Entity licensed in a state to purchase product from suppliers and or importers for resale to retail licenses. In many cases, principles must be residents of the state issuing the license in order to obtain the license.

Distilling Material

Any fermented or other alcoholic substance capable of, or intended for use in, the original distillation or other original processing of spirits.

Distilled Spirits Plant (DSP)

An establishment qualified under part 19 of 27 CFR for producing, warehousing, or processing of distilled spirits (including denatured spirits), or manufacturing of articles. An establishment qualified under part 19 for distilling, warehousing, processing or any combination of these. Also required for alcohol reduction in wine.

Extension of Premises

Realignment of the bonded premises, to place more of the property on bond.

Federal Excise Tax Rates

$1.07 per gallon for wine 14% Alcohol by Volume or less
$1.57 per gallon for wine 14.1% to 21% Alcohol By Volume
$3.40 per gallon for Sparkling Wine

In Bond – For Wine

When used with respect to wine or spirits, “in bond” refers to wine or spirits possessed under bond to secure the payment of the taxes imposed by 26 U.S.C. Chapter 51, and on which such taxes have not been determined. The term includes any wine or spirits on the bonded wine premises or a distilled spirits plant, or in transit between bonded premises (including in the case of wine, bonded wine premises). Additionally, the term refers to wine withdrawn without payment of tax under 26 U.S.C. 5362 and to spirits withdrawn without payment of tax under 26 U.S.C. 5214 (a)(5) or (a)(13) with respect to which relief from liability has not yet occurred.

In Bond – For Distilled Spirits

When used with respect to spirits, denatured spirits, articles, or wine refers to spirits, denatured spirits, articles, or wine possessed under bond to secure the payment of the taxes imposed by 26 U.S.C. Chapter 51, and on which such taxes have not been determined. The term includes such spirits, denatured spirits, articles, or wine on the bonded premises of a distilled spirits plant, such spirits, denatured spirits, or wines in transit between bonded premises (including, in the case of wine, bonded wine cellar premises). Additionally, the term refers to spirits in transit from Customs custody to bonded premises, and spirits withdrawn without payment of tax under 26 U.S.C. 5214, and with respect to which relief from liability has not occurred under the provisions of 26 U.S.C. 5005(e)(2).

Processor

Except as otherwise provided under 26 U.S.C. 5002(a)(6), any person qualified under this part who manufactures, mixes, bottles, or otherwise processes distilled spirits or denatured spirits, or manufactures any article.

Proof

The ethyl alcohol content of a liquid at 60° Fahrenheit (F), stated as twice the percent of ethyl alcohol by volume.

Proof Gallon

A gallon of liquid at 60°F, which contains 50 percent by volume of ethyl alcohol having a specific gravity of 0.7939 at 60°F, referred to water at 60°F, as unity, or the alcoholic equivalent.

Small Producer Tax Credit (Federal)

Wineries producing (fermenting) less than 150,999 gallons per year are eligible for a tax credit of $ 0.90 per gallon for the first 100,000 gallons of wine removed from bond during the year. Wineries producing 151,000 to 250,000 gallons per year are eligible for $0.89 to $0.01 credit per gallon of the first 100,000 gallons removed.

Surety Bond

A surety bond is a contract among at least three parties:
The principal – the primary party who will be performing a contractual obligation
The obligee – the party who is the recipient of the obligation, and
The surety – who ensures that the principal’s obligations will be performed. A surety is a person who agrees to be responsible for the debt or obligation of another.
Through this agreement, the surety agrees to uphold—for the benefit of the obligee—the contractual promises (obligations) made by the principal if the principal fails to uphold its promises to the obligee. The contract is formed so as to induce the obligee to contract with the principal, i.e., to demonstrate the credibility of the principal and guarantee performance and completion per the terms of the agreement. Contract bonds guarantee a specific contract. Examples include performance, bid, supply, maintenance and subdivision bonds. Commercial bonds guarantee per the terms of the bond form. Examples include license & permit, union bonds, etc.

Tax Tips

The federal government applies wine tax rates depending on the alcohol percentage, type of wine, and size of the winery. Check here for credit eligibility rates and winery tax amounts.

Transfer in Bond

The removal of spirits, denatured spirits, and wines from one bonded premises to another bonded premises.

Unimeric Codes

Unique codes (“universal numeric”) assigned by the Distilled Spirits Council of the United States to both wine and distilled spirits. A number of states require that these codes be supplied at the same time a product is registered for sale in the state. Required by Connecticut and Kansas UPC Codes A ten-digit code which consists of a five-digit manufacture’s code—which must be obtained from the Uniform Product Code Council—and a unique five-digit code assigned by the supplier to each brand, type and size in his product line. This is shown as a scan able bar code and is instrumental to retailers for pricing and inventory control purposes Control State A state in which the state liquor regulatory agency is in the business of wholesaling And or reselling alcoholic beverages at retail. The degree to which the regulatory agency is involved will vary by state.

Unmerchantable

Wine which has been taxpaid, removed from bonded wine premises, and subsequently returned to a bonded wine premises under the provisions of 27 CFR 24.295 for the purpose of reconditioning, reformulation, or destruction.