Week of March 20, 2009
Greetings! We hope you have had a radiant and prosperous week! This week's editions include guidance concerning bailment warehouses as well as information for retail dealers.
|
In the TTB Newsletter, we compile the top TTB news of the week and other helpful information about the Bureau and the Federal alcohol and tobacco laws and regulations we enforce. Please send any questions and/or comments to Executive Liaison for Industry Matters (IndustryLiaison@ttb.gov) and/or (StateLiaison@ttb.gov). |
 |
BAILMENT WAREHOUSES
We have recently received inquiries concerning bailment warehouses. While TTB does not approve contracts or business models as a general policy, we will offer guidance as to what is acceptable under the various laws and regulations we enforce.
In our view, private bailment warehouse agreements do not violate the consignment sale provisions of 27 U.S.C. 205(d) so long as they satisfy the following conditions:
1. The producer must retain title to the alcohol in the bailment warehouse until it is transferred to the distributor;
2. The alcohol subject to the bailment agreement must be segregated from alcohol owned by the distributor by suitable enclosures;
3. The alcohol must be readily accessible by the producer without consent of the distributor (in other words, the producer must be free to sell the alcohol to other purchasers);
4. The producer and distributor must maintain adequate commercial records that show the transfers of the products to and from the bailment warehouse to the distributor's inventory of products (stocks); and
5. The transfer from the bailment warehouse to the distributor's inventory of products (stocks) must be a final bona fide sale.
Failure to satisfy these conditions could result in a violation of the consignments sale or other trade practice provisions of the Federal Alcohol Administration Act.
Also keep in mind that States may have their own regulations concerning bailment warehouse operations.
Please direct your questions to the Director, Trade Investigations Division at 202-927-1797.
LIQUOR LAWS AND REGULATIONS FOR RETAIL DEALERS
1. General
Retail dealers of distilled spirits, wine or beer must comply with certain requirements of federal laws and regulations. Failure to comply with these requirements carries severe penalties and renders the dealer liable to criminal prosecution. This publication summarizes the more important provisions of federal laws and regulations applicable to retail dealers.
2. Retail Dealers Must Register with TTB
Although the special tax for retail dealers has been repealed, every retail dealer is still required to file a special tax registration and return (TTB Form 5630.5) as a registration, showing the tax due as $0. The form is available online at http://www.ttb.gov/forms/f56305.pdf or you may call (800) 937-8864 for forms and information.
3. Requirement to Amend Registration
You must amend your registration if you move your place of business or if there is a change in ownership or control of the business.
4. Requirements on Retail Dealers Who Sell to Other Dealers
(a) Registration as wholesale dealer - A retail dealer becomes a wholesale dealer when selling distilled spirits, wine or beer to another dealer other than a limited retail dealer. Under law, a retailer who sells or offers for sale distilled spirits, wine or beer in quantities of 20 wine gallons (75.7 liters) or more to the same person at the same time is presumed to be engaged in business as a wholesale dealer. The seller may overcome this presumption only by furnishing satisfactory evidence that the sale was made to a person who is not a dealer.
(b) Permit requirements - Retail dealers may not sell any distilled spirits, wine or beer to another dealer for purposes of resale until they obtain a wholesaler's basic permit under the Federal Alcohol Administration Act. Persons who violate any of the permit requirements of the Act become liable to penalties. Forms on which to apply for permits may be obtained from TTB's National Revenue Center listed on the final page of this publication, for use by dealers who intend to conduct business.
5. Closures on Bottles of Distilled Spirits
Distilled spirits plants and importers are required to securely affix a tamper-evident closure or similar device to all bottles or other containers of distilled spirits. This would apply to bottles of whiskey, gin, rum, brandy, vodka, cordials containing distilled spirits, and all other similar liquors. The closure must be a type that is broken when the container is opened, leaving a portion of the closure on the container. Products may be closed with a proprietary paper seal, metal roll-on, plastic pilfer-proof cap, lead foil capsule with zip tab, cello-seal with zip tab, strip stamp or similar device. Retailers, who receive liquor bottles without the required closures, or with broken closures, should report these containers to a TTB officer.
6. Refilling, Reusing and Disposing of Liquor Bottles
(a) Refilling or reusing liquor bottles - Any retail dealer, or agent or employee of such dealer, who refills any liquor bottle with distilled spirits, or who reuses any liquor bottle by adding distilled spirits or any substance (including water) to the original contents is subject to a fine of not more than $1000 or imprisonment for not more than 1 year, or both.
(b) Disposition of liquor bottle - The possession of used liquor bottles by any person other than the one who emptied the contents thereof is prohibited, except that this prohibition shall not:
(1) prevent the owner or occupant of any premises on which such bottles have been lawfully emptied from assembling the same on such premises
(i) for delivery to a bottler or importer on specific request for such bottler or importer;
(ii) for destruction either on the premises on which the bottles are emptied or elsewhere, including disposition for purposes which will result in the bottles being rendered unusable as bottles; or
(iii) in the case of unusual or distinctive bottles, for disposition as collectors' items or for other purposes not involving the packaging of any products for sale;
(2) prevent any person from possessing, offering for sale, or selling such unusual or distinctive bottles for purposes not involving the packaging of any product for sale; or
(3) prevent any person from assembling used liquor bottles for the purpose of recycling or reclaiming the glass or other approved liquor bottle material.
Any person possessing liquor bottles in violation of law or regulations is subject to a fine of not more that $1000, imprisonment for not more than 1 year, or both.
7. Prohibited Purchases of Distilled Spirits
Retail dealers may purchase distilled spirits only from wholesale dealers who are required to keep records pursuant to regulations under former section 5114 or current section 5121 of the Internal Revenue Code of 1986 (26 U.S.C. 5114 and 5121) or from (a) proprietors of distilled spirits plants; (b) administrators, executors, or receivers in bankruptcy who are disposing of assets; and (c) dealers who are going out of business and selling their entire stock. A dealer who makes prohibited purchases of distilled spirits is subject to a fine of not more than $1000, imprisonment for not more than 1 year, or both.
8. Required Records
All retail dealers must either keep a record in book form showing the date and quantity of all distilled spirits, wine and beer received on their premises, and from whom received, or keep all invoices of, and bills for all distilled spirits, wine or beer received. Also, every retail dealer is required to keep a record of sales of distilled spirits, wine or beer in quantities of 20 wine gallons or more to the same person at the same time, which shows (a) the date of sale, (b) name and address of purchaser, (c) kind and quantity of liquors sold and (d) the serial numbers of any full cases of distilled spirits in the sale. A dealer who, with fraudulent intent, fails or refuses to keep the required records, is subject to a fine of not more than $10,000 and imprisonment for not more than 5 years, and a dealer who, without fraudulent intent, fails to keep the required records is subject to a fine of not more than $1000, imprisonment for not more than 1 year, or both.
9. Inspection by Alcohol and Tobacco Tax and Trade Officers
A retail dealer's place of business and the stock of liquors are subject to inspection by TTB officers having proper credentials. The TTB officers are authorized to examine records and to accept tender of offers in compromise of liability arising from a violation of Federal liquor laws. The TTB officer will issue a receipt to a dealer for any type of remittance received if the dealer requests a receipt.
If any dealer forcibly rescues any liquor or other property seized by a TTB officer, or attempts to do so, he is subject to a fine of either not more than $500 or double the value of the property rescued, whichever is greater, or imprisonment for not more than 2 years. Any retailer who forcibly obstructs or attempts to obstruct a TTB officer in the performance of his duties is subject to a fine of not more than $5000 or imprisonment for not more than 3 years, or both, except that if the offense is committed only by threats of force, the person convicted thereof shall be fined not more than $3000 or imprisoned for not more than 1 year, or both.
For further information, contact:
Alcohol and Tobacco Tax and Trade Bureau
National Revenue Center
550 Main Street Suite 8002
Cincinnati, Ohio 45202
Toll Free: 1-877-TTB-FAQS (1-877-882-3277)
(513)-684-3334
ttbquestions@ttb.gov