This is post number three following up on the TTB’s announcement related to updates in their wine bond requirements. This post is designed to help answer the question, will my winery qualify to no longer need a TTB wine bond? As is the case with winery compliance each TTB winery permit holder has their own details that determine how their TTB compliance works, in this instance specific to their TTB wine bond.
Here is a path to follow to determine whether your winery will qualify.
- TTB excise tax payments are made on cased wines. (In almost all situations) Does your winery use an off site wine storage warehouse for your cased wines? If yes then your first step is to refer to one or two years of invoices from them, specifically looking for all the TTB excise tax payments they billed you back for. Sum those up (ideally 2 years worth is best for comparison) and if the total for either year is not more than $50,000 your winery likely qualifies to cancel your wine bond come the end of 2016.
- If you ship your cased wines directly from your winery this means you are responsible for filing and paying your TTB excise taxes under your own bonded winery permit. Here again reference your TTB excise tax reports for at least 2 years worth and compare each year’s total amounts to determine whether or not you’re over the $50,000 per year amount.
To give you an idea on what these excise tax calculations look like here are some examples of amounts of wine shipments per year that would be less than $50,000 due in TTB excise taxes.
- Up to 13,390 cases of over 14% wine @ $1.57/gallon (the full tax rate)
- Up to 6,700 cases of over 14% wines @ $1.57/gallon and 9,300 cases of below 14% wine @ $1.07/gallon
- Up to 21,030 cases of over 14% wine & 21,030 cases of below 14% wine both @ 0.90/gallon (under the small producers tax credit)
- Up to 42,060 cases of below 14% wines @ 0.90/gallon
As you see the excise taxes that your winery owes per year are based for one on the alcohol content (tax class) of the wines you ship out to customers each year. This ratio may or may not be a steady one year to year for your winery. However the majority (79%) of US wineries make less than 5,000 cases per year and the next group up from that (18%) makes less than 50,000 cases per year. See chart here. As long as your winery and your wines qualify for the small producers tax credit, your winery can ship out up to 42,060 cases of wine per year and owe less than $50,000 in excise taxes. (more details to come on this in a future blog) Based on the above, more than likely the majority of US wineries will qualify to cancel their TTB wine bond come the end of 2016.