ATF Ruling 80-19
The Bureau of Alcohol, Tobacco and Firearms issues this ruling to state its position concerning the use of bonded wine cellar premises for hosting occasional special events such as dinners, luncheons, and similar group functions at which wine and food are served.
The Bureau has received requests from proprietors of bonded wine cellars for permission to utilize selected portions of their bonded premises as sites for dinners, luncheons, and similar special events. On these occasions, wine is served to create goodwill and/or to introduce a new product. Although the event could be held in an off-bond area of the general winery premises, a portion of the bonded is selected so that the guests may enjoy the novelty and ambience of a bonded wine cellar.
In most instances, the Bureau has approved a winemaker's application and has permitted the proprietor to serve wine, free of tax, at the special event. The Bureau has evaluated its position, concerning these events and issues this ruling to facilitate the hosting of special events by proprietors of bonded wine cellars
In addition to the operations specifically described in Section 5351 of the Internal Revenue Code, Section 5361 authorizes such other operations as may be conducted in a manner that will not jeopardize the revenue or conflict with wine operations. The implementing regulation, 27 CFR 240.134, authorizes the Director to make a finding that other operations not specifically provided for in the provisions of Part 240, may be conducted in a manner that will not jeopardize the revenue, conflict with wine operations or be contrary to the law.
The Director has found that the holding of an occasional special event, such as a dinner, luncheon, or similar group function, on the bonded premises of a bonded wine cellar at which wine and food are served, is an operation which is not contrary to law and may be conducted on bonded premises in a manner that will not jeopardize the revenue or conflict with wine operations provided the proprietor serves only tax-free wine, maintains records to document the types and quantities of wine used for such purposes, and receives no reimbursement for food, wine, or use of the bonded premises for the special event. (Under the provisions of 26 U.S.C. 5351, 5361, and 27 CFR 240.130, taxpaid wine may not be served on bonded winery premises.)
Accordingly, it is held that, upon the receipt of an application filed pursuant to 27 CFR 240.134, the ATF regional regulatory administrator may grant the proprietor continuing authority to conduct occasional special events on bonded wine cellar premises on the conditions that the proprietor serve only tax-free wine, maintain records of the types and quantities of wines used for such purposes, and receive no reimbursement for the food, wine, or use of the bonded premises for these special events.
In addition, Section 5372 specifically states that wine may be utilized in any bonded wine cellar for testing, tasting, or sampling, free of tax. The serving of wine, free of tax, at such a luncheon, dinner, or other special event, on bonded winery premises, may be considered as a bona fide use of wine within the scope of the tax-free testing, tasting, and sampling provisions of 26 U.S.C. 5372.
Accordingly, it is further held, pursuant to 26 U.S.C. 5372, that a proprietor may serve wine, free of tax, on the bonded premises of a bonded wine cellar on the occasion of such special events.
27 CFR 240.134