Category Archives: Laws of Wine Compliance

Purchase bulk wine? Here’s how to document it to meet TTB & CA requirements
Posted on 2016-05-25 by Ann Reynolds

Bulk wine. That’s the wine industry term for wine that isn’t in a bottle yet. Instead it is sitting at a permitted winery site in some sort of container, be that a stainless steel tank, a barrel, a drum or a keg or these days perhaps a cement “egg”. Wineries will decide to sell some of their bulk wine that they don’t plan to use in their bottled blends. They’ll put it on the bulk wine market through a wine broker. Every day on the Wine Business website they list a link to the “Recent sales of grapes and bulk wine“.

When wineries purchase wine from the bulk wine market there is a specific document that comes with the delivery of that wine, called a bill of lading or a transfer in bond record to the TTB. That document is required to have specific details on it to satisfy TTB regulation requirements. Here in California there is also a state requirement for documenting the sale which is a weighmaster certificate. 

Wineries on both ends of the sales transaction have responsibility for ensuring that both of these regulated documents are completed correctly. What exactly are the details that must be listed on each of these documents?

For the TTB they have a specific set of items that are required to be listed on any “transfer in bond” record which is what they call a bill of lading for shipping wine between wineries. Here are a few of the items they require:

  • The name, address & registry number of the proprietor and consignee 
  • Shipping date
  • Alcohol content OR tax class
  • volume shipped in gallons or liters
  • The varietal, vintage, appellation or any other information that may be stated on the label

To meet the requirements for the weighmaster certificate, which are regulated by the California Department of Food & Agriculture this document must contain 13 items, a sample of which can be seen here: Weighmaster certificate requirements

The reason for the weighmaster certificate requirement here in California is that a bulk wine sale is just that, a sales transaction and the completion of a weighmaster certificate means that the full set of weights for a load of bulk wine were completed by a site with a weighmaster license. Those weights will then be used to convert them into the gallons delivered which will be the number used to base the payment of the sales transaction between the wineries. 

In working with wineries I regularly see completed bills of lading for bulk wine movements. These are both bills of lading they received from another winery or ones that they completed themselves. Now perhaps it is just my years of winery compliance background but the errors I regularly see on these completed forms is my business’ world version of nails on a chalkboard. 

Some of the most common issues I see on these (translation: they were filled out incorrectly) are:

  • The registry number requirement. Wineries- your registry number is the one that starts with either BW or BWN (!!) It is NOT the one that starts with your state’s abbreviation! 
  • The name and address of the winery the wine is sent to. Sounds simple enough right? Time and time again I see the wrong winery name listed in the receiving winery section. What is required to be listed there is the actual name that is listed on that winery’s TTB permit. The address then also of course needs to be the actual physical address of the winery site, not the “office” address which these days is often another site.
  • The vintage, varietal and appellation summary. Some common mistakes I see here are they are either illegible or incomplete.  Many bills of lading are still hand written thus the common illegible issue. Plain and simple they are chicken scratch. In my years at wineries whenever I was on the receiving end of a BOL that I couldn’t read I simply called the sending winery and requested that they send me a clearly written revised one. (their responsibility)  As far as the wine blend summaries being incomplete the issue I’ll see here is that they won’t match up with the blend summary originally provided by the wine broker when the purchasing winery sampled it. For example a wine broker’s blend summary listed a wine blend as 80% Cabernet Sauvignon & 20% Petite Sirah, 90% Napa Valley & 10% Lake County, & 100% 2014. In contrast to this the BOL sent with the shipment will list the varietal and vintage details accurately but the appellation will list 100% Napa County. The issue with this is that it will directly impact what the purchasing winery will qualify to list on the label that this purchased wine becomes a part of. It would NOT qualify to list Napa Valley as the appellation as it’s “source document” (what the TTB calls the BOL in these situations) does not document it as Napa Valley.  Here again the receiving winery needs to call the sending winery and request that they send them a revised BOL with the full accurate blend details.

If you’re reading this and have any follow up questions for your winery related to properly documenting this common activity of purchasing bulk wine feel free to respond to this post or sign up for one of my “Compliance Check in Calls”





US Wineries: Do your WINES qualify for the small producers tax credit: Part 2
Posted on 2016-03-30 by Ann Reynolds

In last week’s post I wrote about how to determine if your winery qualifies to file and pay your TTB excise taxes under the small producers tax credit (SPC). There are two main areas that need to be understood related to qualifying for the SPC, the first is whether your winery qualifies (the focus of last week’s post) and second (if the answer to the first part is yes) whether your wines themselves qualify. That is the focus of this week’s post.

Even though your winery may meet the requirements for the SPC that doesn’t mean that all of the wines you bottle will. Here is where you need to be keeping a close tab on the individual winemaking details behind each final blend of wine you bottle for sale. Before clarifying what I mean by this I also need to point out that from a winemaking perspective one of the other main requirements of the SPC is showing wine production every year. Not sure what is meant by “wine production”? See my earlier post here

In taking a look at any of your individual wines that TTB excise taxes are due to be paid on here is the question flow to walk through:

  1. Did we produce all of this wine at our winery? Translation: Were all of the gallons in this wine blend once listed on line 2, Produced by fermentation of our TTB 5120.17 reports? If the answer is definitely yes then the wine will qualify for the SPC.
  2. If your answer is part yes and part no then you’ll need to dig into the details of the “no” gallons. For those gallons that were not “produced by fermentation” at your winery site where were they produced?
  3. Were they produced for your winery by another winery site under a custom crush type of arrangement? If the answer is yes then they can qualify for the SPC but ONLY if you remove their gallons from your winery site as taxpaid, which then means that your winery site files and pays the TTB excise taxes due. This is especially important to point out for all wineries that follow the very common route of sending their cased wines “in bond” to a wine storage warehouse and have them file and pay their TTB excise taxes.  I refer you to a good article on a case from 2015 where this very scenario was the issue that caused a winery a 6 figure late tax bill.
  4. REVISED from Feb 15 posting. Were the “no” gallons a purchase from the bulk wine market? If this is the scenario then those gallons may or may not be eligible for the SPC depending on who files the TTB excise taxes on the bottled wine blend they go into. In order to keep in compliance with filing your TTB excise taxes correctly (under the SPC) for a wine blend that contains those bulk purchased gallons your winery again would need to file and pay the TTB excise taxes for them from your winery bonded site and thus send them to your wine storage warehouse “taxpaid”.  Same scenario as the above example in # 3.
  5. The main significant difference to be aware of here in either of the two scenarios above where your winery owes TTB excise taxes on wines you did NOT produce is that if those cased wines are sent to your warehouse “In Bond” then ONLY the gallons that were produced at your site will qualify for the SPC. Your warehouse would need to be informed  of the percent of your wine blend that does qualify for the SPC. Here’s an example with some math to show what I mean by this. Your winery bottles 5,500 gallons of a blend that 3,465 gallons is wine you produced and 2,035 gallons is wine that was purchased from the bulk market. That would mean when you send this cased wine in bond to your wine storage warehouse you’d need to include on the documentation (the bill of lading)  prominent wording which states that only 63% of it qualifies for the SPC. So when the warehouse then files and pays the TTB excise taxes on it they’ll pay them at the SPC rate on only 63% of the amount of wine shipped.
  6. Your excise tax savings in the long run are significant if you send these “combo” wines to your warehouse Taxpaid. For the above scenario of the 5,500 gallon blend the tax savings would be $4,950 vs  $3,119, which would mean your total tax bill due to the TTB on the 5,500 gallons would either be $3,685 or $5,517 almost a $2K savings.  Certainly for a wine blend like this one I’d recommend it.

As you can see following all the ins and outs of the SPC is no simple task. US Wineries need to be familiar with it however, as it can either save them or cost them a significant amount.

Questions about your winery’s TTB excise taxes? Full contact info for my office is here.

 

 





Tax Paid Wine? Where?
Posted on 2012-05-02 by Ann Reynolds

There is a type of wine business that until recently I had only read about on the TTB’s (Alcohol & Tobacco Tax & Trade Bureau) website. They are called taxpaid wine bottling houses, or TPWBH on their TTB permits instead of BWN’s or BWC’s. What are they and what do they do you ask?

Continue reading





What’s Bond Got To Do With Your Winery?
Posted on 2012-03-19 by Ann Reynolds

There is no shortage of terminology used in the wine industry and that tends to go double when talking specifically about winery compliance subjects. One of those commonly used terms is bond. Some common phrases you might hear are, “What’s your bond number?” “The wine is still in bond” or “What is your bond coverage?”. What does it all mean?

Continue reading





The Meaning of an ABC Posting Sign
Posted on 2012-02-05 by Ann Reynolds

Have you ever seen one of these ABC posting signs while driving around? Chances are you have if you live in an area that has a lot of wineries. You may have seen them posted in any number of locations: in front of your neighbor’s house, in a storefront window or out in front of a winery. Perhaps you wondered, “what’s the deal?”.

Continue reading





Who Has The Power at Your Winery?
Posted on 2011-08-18 by Ann Reynolds

Who runs the show at your winery when it comes to TTB compliance? Contrary to what or who may have come to mind after reading the title here the direction I’m heading with this post is geared towards your winemaking records and reporting activities. Particularly those which are regulated by the TTB, which happens to be most of them. My next question is do you know who has power of attorney filed with the TTB for your site? If you don’t know here is why you not only need to and why it makes good compliance sense to know.

Continue reading





Multiple Options For Using Multiples on Wine Labels
Posted on 2011-04-18 by Ann Reynolds

At current count there are well over 6,000 wineries in the US and those numbers only continue to go up. Keep in mind that number is just the count of wineries, not the actual count of all of the wines that they each make. And they generall will each make several different wines. This means for the lucky consumers that they have no shortage of choices when it comes to wines. This explains why you may have seen someone standing in the wine aisle and staring at the long row of bottles before them with a glazed expression on their face. How do they make a choice with so many options?  Wineries themselves have a range of choices when it comes to designing the labels for those bottles.   This includes the option of multiples displayed on the front label of their wines. Multiples in three different areas; varietals, appellations or vineyard sites.

Continue reading





Deciding on a Label Alcohol for Your Wine.
Posted on 2011-04-14 by Ann Reynolds

Wine labels are required to have a specific set of items. One of those is an alcohol content. This must appear on the front (or brand) label. When it comes time to design all of the details that go into a wine’s label there are two areas which wineries focus on in making their decision for what alcohol content to use. The first is around marketing considerations and the second is taking into account the federal regulations guiding their percentage options.

Continue reading





Tips for Successful Label Approvals.
Posted on 2010-10-31 by Ann Reynolds

For those of you reading this that can tell me what the acronym COLA stands for, this post is for you. Even for anyone whose first thought was “what does soda have to do with wine?”, but work in the wine industry this post is still a good one to read through.

Continue reading





Why a Wine Label Might Not Be Given Approval
Posted on 2010-09-19 by Ann Reynolds

In 2008 the TTB received and processed over 130,000 label approval applications, 80% of which were for wine. (the remaining 15% were for beer & spirits labels.) Those numbers have been going up steadily as the number of US wineries only continues to rise. So it potentially comes as no surprise that the room for error in these label applications has also grown.

Continue reading