welcome! four federal ways to enter the wine business or we have the grapes- now what ?
TRANSCRIPT
Key Concepts Production-turning materials into wine
Bond-legal agreement protecting excise tax liability.
Bonded Premises-winery/wine cellar covered by a bond.
Key Concepts
In Bond-untaxpaid wine at a BW/BWC
Transfer in bond-moving wine from one bonded facility to another
Removal from bond-identifying wine and creating a removal record
Taxpaid-wine removed from bond
Key Concepts
Wine is always either taxpaid or in bond.
Whoever removes the wine from bond pays the taxes
Whoever bottles the wine gets the COLA-always before bottling
“Stand Alone” Bonded Winery Produce/blend/bottle wine
Do so ONLY on own premises
CANNOT loan/rent/share premises, except with specifically authorized alternator
Is responsible for all wine there
Stand Alone: ADV:
Complete autonomy
Small producer tax credit
DISADV:
Complete responsibility
Larger capital outlay
Bonded Wine Cellar Receive, store, blend wine in bond MAY receive bulk, bottled, labeled or
unlabeled wine MUST pay taxes on all removals Is NOT an extension of any other winery
premises
Bonded Wine Cellar
ADV:
Less capital outlay
Simple system
DISAD:
Limited label claims
No producer credit
Alternating Proprietor
Two or more wineries alternate use of a portion of bonded wine premises
“Host” is a bonded winery
Alternating Proprietor is also a bonded winery
Use of Equipment and Space is alternated for 24-hour (minimum) periods
Host Winery’s or Alternating Proprietor’s Premises, as needed
AP AP AP
Alternating Proprietor-Host
Must fully qualify as a winery
Host winery proprietor files documents with TTB to curtail its bonded premises
Responsible for own production, recordkeeping, reporting, labeling and taxes,
$$$ Investment- in major winemaking equipment or winery premisesAP
AP
AP
AP-Host
ADV:
Fuller use of expensive equipment
Improved cash flow
DISAD:
Much more complicated record system
Must coordinate with tenant
May lose certain label claims
Alternating Proprietor-Tenant
Must fully qualify as a winery
Responsible for own production, recordkeeping, reporting, labeling and taxes, independent of host winery
Less investment in major winemaking equipment or winery premises
AP
AP
AP
Alternating Prop-Tenant
ADV:
Less capital outlay
Quick entry to the wine business
DISAD:
Much more complicated records
Must coordinate with host
May lose certain label claims
Other Factors for Alternators Economies of scale-bulk glass, etc Crush pad chaos
No “Divorce Court” No “virtual wineries”
Custom Crush Operations
Client contracts with a Bonded Winery to have wine produced
Winery produces the wine to client’s specifications
Client receives finished, taxpaid wine
Bonded Winery
WLD
Taxpaid Wine
Custom Crush Winery
Qualifies as a bonded winery Responsible for ALL production, records,
reports, labeling, taxes Bottling winery obtains the COLA Incurs expenses for winemaking
equipment and winery premises
Custom Crush Winery
ADV:
Cash flow from extra capacity
DISAD:
Must count all production as theirs
Full recordkeeping, reporting responsibility
Must deal with client
Custom Crush Client
Qualifies with TTB as a Wholesaler
Minimal recordkeeping requirements as a Wholesaler; no report to file
No responsibility for production, recordkeeping, reporting, labeling or tax
No investment in winemaking equipment or premises
Custom Crush Client
ADV
Quickest, cheapest way in to the industry
DISAD
Limited label claims
May be “lowest priority” for crusher
Must deal with crusher
Other Factors for Crusher/Client Client may receive wine in bond as “starter
inventory” after issuance Client has to allow name to be used Some states restrict ownership of brands BOTTLER MUST GET COLA REMOVER MUST PAY TAXES
RECAP In Bond Tax Paid Bonded Premises 4 Options:
1) Stand Alone BW
2) BWC
3) Alternator
4) Custom Crush