Yes I know, “thankful” and “compliance” don’t usually show up in the same sentence together. But if you’re someone who has spent the past 15 plus years interacting with the TTB from a recordkeeping and reporting standpoint you can appreciate the improvements that have come along to simplify the process. Plus I’m a person who believes in a regular practice of gratitude. So in the spirit of marking this Thanksgiving week I’ve summarized a few of this years compliance “developments” that I’m grateful for.
We’ve reached the “calm after the storm” stage of the 2014 grape harvest here in Northern California. For anyone who works at a winery and has been up to your ears in grapes in the last few weeks this means the dust is starting to settle back down to “normal” and you’ve got a little more breathing room back in your schedule.
Time to take a winery compliance class that could save your winery potentially thousands of dollars & lots of sleepless nights!!
The class is “How to keep your winery Audit safe” and is being offered on Tuesday, November 4th from 9 til noon through the Napa-Sonoma Small Business Development Center (SBDC). Go HERE for full details. It will be offered at the SBDC office on the Napa Valley College campus.
The class will focus specifically on key issues related to TTB (Alcohol & Tobacco Tax & Trade Bureau) and Napa County Planning Audits. These are items that come up most frequently in the course of on site audits by both of these regulating agencies. Topics such as required records and reporting, excise tax payments, and how to determine production levels will be explained and reviewed so attendees can then determine whether their winery has any potential issues that need to be addressed.
Attendees for the class are encouraged to bring the following items:
- Full previous years TTB “702” reports
- Most recent TTB excise tax report
- Examples of required records: bill of lading for cased wine
- Current county Use Permit gallons
This class will go a long way to help wineries fully connect the dots as to how the records and reports they are required to be maintaining and filing either have potential audit holes in them, leaving them vulnerable as well as specific steps they can take now to address them.
Here is a link to the sign up page
This headline in the wine industry last week caught my attention- Wine Cellar owner sentenced to prison . This was related to lack of payment of TTB excise taxes due for over a year’s period of time. The thing was, this business had been including on their customer’s invoices payments made for excise taxes but those taxes were never paid to the TTB, so the owner was just pocketing those amounts.
The owner of this wine storage & shipment business was actually sentenced to 9 months of prison time in addition to restitution payment due to the TTB of closer to $900,000. That dollar figure would come from the past due tax payment amounts, late fees and penalties related to her knowing neglect in paying them.
But what about the wineries that stored their cased wines there? What about their responsibility? Are they in trouble with the TTB as well? No they are not, their responsibility would lie in the details of how they shipped their wines to the warehouse. The paperwork that goes along with a shipment of cased wine to a storage warehouse is called a bill of lading. (or what the TTB call a transfer in bond record) On their bill of lading a winery would have specifically indicated “transfer in bond” on it, meaning that the federal excise taxes had not been paid on those cased wines. This in turn generally means that when the winery receives an order for those wines it is forwarded to the warehouse for fulfillment and then they, the warehouse as the site that actually shipped the wines are required to file the federal excise tax report and submit payment to the TTB on the amount of wine shipped.
This is what all the winery customers of this warehouse in Salinas thought was happening, especially since they were seeing the tax payment amounts coming back to them on their invoices. Why would they have suspected otherwise?
The only way a winery can be 100% sure that all their TTB (And California BOE by the way too) excise tax payments have been made is if they are filing them themselves.
What this scenario looks like is all of a winery’s cased wine shipments going to a wine warehouse for storage & fulfillment are all sent “Taxpaid”. This “taxpaid” statement is also indicated on the bill of lading sent with the wine to the warehouse, so the warehouse will know how to log in into their system and keep track. Plus it is also the start point indicator for the warehouse that they do NOT have to submit any of the tax filings/payments on shipments of those wines. The TTB excise tax reporting and tax payments are then fully the responsibility of the winery itself.
Another item of note related to this same issue I have heard several times in recent months is that some wine storage warehouses in Napa and Sonoma county are no longer willing to file TTB excise tax payments under the small producers tax credit. So for any of their winery clients that qualify for this hefty 0.90 cent a gallon tax credit they would essentially be telling them “if you want to take advantage of this huge tax savings on your wines, you’ll need to send them into us “Taxpaid””. Which would mean that the winery would document their bills of lading of cased wines being sent to their warehouse as “Taxpaid” and then follow up on those shipments for their next reporting period by submitting the TTB excise tax report along with payment.
For more info on the bill of lading document go here: BOL info
For more info on the TTB excise tax for the small producers credit go here: SPC tax info
To talk more about your winery records and reports please contact me here: firstname.lastname@example.org
It’s game on for crush 2014! I now regularly see trucks carrying those familiar white plastic bins on the roads here in Napa. Once the grapes start rolling in things heat up pretty fast. (No fermentation-related pun intended) Things can also quickly become rather chaotic when it comes to harvest related recordkeeping. Specifically your weigh tags. If you are someone who fills out weigh tags- I’ve got a warning reminder for you: one thing the county and the state do NOT want to see on your weigh tags: numbers that are crossed out. Those numbers would of course be your weights, the gross, tare and net that are filled out on a weigh tag. Continue reading
I’ve recently read some articles about random audits here in Napa county conducted by the planning office. These random audits occur annually on 5% of Napa’s wineries which hold use permits with the county planning office. One of the key items they are looking at during these audits is a winery’s production gallons. The term production gets tossed around a lot in the wine business. It means different things to the different people and different agencies connceted to it, and in my world of compliance it has very specific definitions given to it by government agencies such as the county planning office in this case. It is also a specifically defined term used by the Alcohol Tobacco Tax & Trade Bureau (TTB). Do you know the difference in definition between those two agencies and how it can impact your winery?
Yep- it is game on for harvest 2013 from the sights and stories around here in Napa County. Mostly the “early” varietals so far, your lower alcohol wines. I’ve been hearing from several folks with random crush related questions around their compliance. Nothing like waiting til the last minute! If you haven’t seen it already- take a look at my last post with some suggestions for preparing your harvest compliance tasks. The questions I’m getting are mostly around the topic of weigh tags. Those (regulated) documents used for tracking (& buying & selling) loads of grapes. Do you know whether your weigh tags meet federal, state & county requirements?
Another annual cycle is once again upon us in the wine business: harvest. AKA “crush”. The predictions that have been floating around out in web postings for the past month state that this will be an early and big year for grapes here in Northern California. Early and big. Two words that when used in combination to describe the grape harvest tend to leave winery staff cringing. The unpredictable nature of the grape harvest definitely adds a level of excitement (or frustration) for those who have to deal with the tracking area of winery records. This means you if you are a weighmaster or manage data entry of harvest work orders and keep track of your wines as they become “produced”. If this sounds like you do you know if all your records are ready? Do you know how you can tell?
I just recently read a story about a spill that happened at a winery where a tank holding 7,500 gallons of wine had a bolt break, causing the wine to spill out and head rapidly down the drain.
I’ve actually seen a few of these wine loss events happen over the years at different wineries and definitely the bulk of the activity happens frantically as the scene originally unfolds. Cellar crew scrambling madly to catch the wine spraying out from the tank and re-direct it into another one to minimize the overall loss as much as possible. A pretty incredible event to watch to see the crew spring into action and coordinate their efforts to manage the chaos as best as possible.
But what about afterwards? After the frenzy has died down, wine gallons have gone down the drain, and the rest have been relocated into other tanks/vessels? Do you know what details need to be sent to the TTB to inform them of the wine loss?
Today’s blog post is for anyone who either is an Alternating Proprietor (AP) or is a site that hosts them & offers TTB label approval submission assistance. I just learned this newest TTB update twist last week that can save you some time when planning for your bottlings- by eliminating the need for the label approval step in that process. Here’s the scenario I’m talking about. One of the advantages as an AP is that since you are sharing the space of an already existing winery if you decide you need a change of scenery you can pick up and “move your winery” to another site that hosts AP’s. Now after you’ve made that move, how does it then impact your label approval activities?
5 gallon kegs have become a popular way for wineries to get their product out into the marketplace, specifically the by-the-glass marketplace. I had a client contact me recently for assistance with a new label approval (COLA) for his upcoming bottling. I’ve filed these for him in the past but this year was the first time he’d decided to try out the 5 gallon keg route. He asked me if a label approval was required for them, and I honestly didn’t have an answer for him right away.