Here’s an overview of some TTB brewery requirements related to tax determination. We regularly hear from start-up breweries concerned about complying with TTB’s tax-determination requirements and this is understandable, as the regulations and attendant record-keeping requirements are confusing. Beyond that, this is one of the areas where a homebrewer entering the commercial brewing environment for the first time has a lack of experience and skills. The notes here are no substitute for checking in with your brewery attorney, and potentially taking a cruise through the Code of Federal Regulations to get hip to all of this. Still, here’s an overview of what you’re looking at. More notes on record-keeping will be posted on the Brewery Law Blog before long.
TTB Tax-Determined Beer Overview
Keep in mind that TTB is the Alcohol and Tobacco, Tax and Trade Bureau. Tax is the biggie here. TTB is concerned about protecting the revenue, and they want to make sure you’re not evading tax by serving untaxed beer or miscalculating how much beer you’re producing.
1. Brewery Tax-determination Vessel
In your Brewers Notice, you’ll be asked to tell TTB how you’re measuring your tax-determined beer. For more breweries, this is through calibrated brite tanks. Your equipment supplier can help you understand how these work if you’re not familiar.
2. Calibrating Your Brewery Tax-Determined Beer Measuring System
Note that if you’re using a meter, gauge glass, or the like to measure your tax-determined beer, this is the sort of thing you’ll need to test periodically. This works both ways, no one wants to be overpaying taxes, and TTB doesn’t want to see you underpay, either. In accordance with 27 C.F.R. §25.42, you need to test it “periodically” and maintain the following records in the brewery available for inspection by TTB: (1) Date of test; (2) identity of the meter or the measuring device; (3) result of test; and (4) corrective action taken, if necessary. Note that the variation in the beer meter can’t exceed +/- .5 percent. If it does, that’s when you need to take corrective action to get it as close to zero variation as possible.
3. Using/Labeling Your Brewery’s Tax-Determination Tanks
Pursuant to 27 C.F.R. §25.25, TTB wants your tax-determination tanks labeled in a durable way with the words “tax-determination” tank. Bear in mind that the purpose of the tank is to determine tax every time you add beer to it, and TTB expressly forbids simultaneously pumping into and out of a tax-determination tank. And, note, while it’s always fun to have a “brewer’s tap” in back for the gang to sip on or to offer to visitors, if that’s your beer for consumption, that must be tax-determined beer.