TTB Circular 2018-1 Change to Bonded Wine Cellar’s Ability to Take Tax Credits for Producers

As we reported in our March newsletter as well as direct email communication, the TTB released a notice (known as a circular) on March 2nd annoucing that they are interpreting the new tax code in a way that prohibits bonded wine cellars (BWC’s) from taking tax credits, meaning all untaxpaid wine removed from a BWC will be taxed at the full rate. A winery that uses a BWC will now be forced to either cease usage of a BWC, or pay the full tax rate on their wine. In order for this to be “less burdensome” on small wineries, the TTB is allowing the credit to be applied to wine stored in a BWC until June 30, 2018 through an alternative paperwork process. As a reminder, The alternatiave process for claiming tax credits for wine currently in a bonded wine cellar (BWC) is done by the winery, not the BWC. The TTB is, for a limited time, allowing producing wineries to tax determine and tax pay, upon removal from bond, wine of their production stored untaxpaid at a bonded wine cellar (BWC), as if it were removed from the producing winery’s bonded premises. The full ruling, including how to utilize the alternative process for wineries, can be found by clicking on this link: https://www.ttb.gov/industry_circulars/archives/18-1.shtml

WWI is working with our national trade association WineAmerica on a myriad of solutions that range from TTB reversing their decision, to a short-term fix through extension of the “alternative process” for BWC’s to claim the tax credit for a winery, with a long-term fix through legislation the ultimate goal.