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Changes in Proprietorship and Changes in Control for Wholesalers & Importers

Change in Proprietorship

A change in proprietorship occurs when there is a change in the person or entity that owns the business. A change in proprietorship may be due to a change in ownership or a change of entity type (for example, a change from sole proprietor to limited liability company (LLC), from a partnership to a corporation, etc.). In either case, the person or entity that previously owned the business no longer owns the operations at that location.

The Federal Alcohol Administration Act (FAA Act) provides for continuity of business operations and allows a successor owner to continue to operate, if within 30 days of the change, an application is filed for a new basic permit. In that case, the prior owner's basic permit will remain in effect until TTB takes final action on the new owner's application.

To ensure continuity of operations, all conditions and/or requirements of federal laws and regulations must be met; therefore, it is imperative that an application for basic permit, along with other qualifying documents, is filed timely. If a change in proprietorship occurs, and a new application is not filed within the required 30-day period, all regulated operations must cease until approval is granted by TTB. Failure to do so may initiate an adverse action against the permit.

Change in Control

Unlike a change in proprietorship, in situations where there is a change in control, the entity that owned the business remains in existence and continues to own the business. A change in control can either be a change in legal control or in actual control. A change in legal control occurs when there has been a change in the person or entity that owns or controls the majority of voting stock in a corporation or the majority membership interest in an LLC. A change in actual control occurs when there is a change in the person or entity who exercises managerial control over the operations of the business.

A basic permit issued under the Federal Alcohol Administration Act is not transferable due to a change in actual or legal control of the company. The proprietor's basic permit will automatically terminate, unless within 30 days of the change, an application for a new Basic Permit is filed with TTB. If an application is filed within the required 30-day period, the outstanding basic permit will remain in effect until TTB takes final action on the new application.

To ensure continuity of business operations, all conditions and/or requirements of federal laws and regulations must be met; therefore, it is imperative that an application for basic permit, along with other qualifying documents, are filed timely.

If a change in control occurs, and a new application is not filed within this 30-day period, all regulated operations must cease until approval is granted by TTB. Failure to do so may initiate an adverse action against the permit.

How to File These Changes with TTB

If you are filing as the new owner in a change of proprietorship situation, we recommend you file your application electronically in Permits Online.

If you are filing an application due to a change in control, we recommend you file the Amended Application for Entity Information in Permits Online.  Alternatively, if you filed your original application using paper forms, you may submit an Application for Basic Permit on TTB F 5100.24.

 

Description: http://icons.iconarchive.com/icons/judge/iphone/128/phone-icon.png CONTACT US

For more information about permits and changes after qualifications, please send us a message using the National Revenue Center Contact Form, or call 877-882-3277 / 877-TTB-FAQS (toll free), between the hours of 8 a.m. to 5 p.m. EST, Monday through Friday.

 

Page last reviewed: September 7, 2018
Page last updated: September 7, 2018
Maintained by: National Revenue Center

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