All Distilled Spirits proprietors need to know about two substantial changes in in TTB Enforcement standing policy.
1. Change in Ownership Reporting
If you have a change in ownership of your business, you must report that change to TTB via a Permit Amendment within 30 days. Reportable changes include: change of controlling interest, change of 10%+ interest, & change of proprietorship. It is important to note that getting married or divorced is often a reportable change, and if you have a complex ownership structure (business owns a business, or a trust, etc.) then you have to flow-through changes in control from those entities.
In the past, TTB gave leeway and was known to approve ownership change amendments even after the 30-day statutory period. But, thanks to increased budget & TTB enforcement resources, they will begin strict enforcement of 27 CFR § 19.126 and § 19.127 which means terminating the permits of any DSP that fails to report ownership changes within 30 days. If your permit is terminated, you must immediately cease operations and re-apply for your permits, and you cannot resume any spirits production, sales or operations until the new permit is approved. It goes without saying that it is hard to recover from a business setback that large.
2. Permit Amendment = Compliance Review
When you submit a Permit Amendment (e.g. to add a Transfer-in-Bond application or to report a change), TTB will now conduct a Compliance Review before considering your amendment. If you have any missing or late Excise Tax or Operational Reports, your amendment will not be processed until you have brought your reporting up to date. In the future, the Compliance Review may include additional items beyond Excise Tax Returns & Monthly Operational Reports.
Fx5 Consultant Tyler Derheim advises, “Pay attention to this and take action now if you have any unreported changes in ownership or control. If you wait, you are likely to wind up with your permit revoked. I can’t overstate the importance of understanding this change and taking the appropriate action.”
Please note that no regulations have changed. The only change is in TTB’s enforcement of existing regulations.
Need help? Book a free 20-minute intro call with me. I have helped numerous clients with permit amendments and reporting issues and can analyze your business and permits to ensure you are minimizing your compliance risk, and give you actionable insights to ensure you stay on the TTB’s good side.
Tyler Derheim is Fx5’s in-house consultant, using his expertise to help distilleries of all sizes make it easier to make great things. Tyler first entered the regulated beverage industry in 2010, when he started working harvest and crush at a midsize winery in Slovenia. After returning to California in 2017 he joined a startup DSP, with responsibilities for formulation, production, compliance, lab services, and more. In 18 months, he led the DSP from mason jars and buckets to tankers and trailers, then moved into a freelance consulting role, helping distilleries of all sizes with every aspect of production, operations, and compliance. A long-time Fx5 user, Tyler brings a wealth of experience unmatched in the industry.