TTB bond??

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TTB bond??

Postby ozone39 » Sat Apr 03, 2010 6:03 am

Anyone know how much of a bond the TTB requires for a beverage alcohol permit??? :?:
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Re: TTB bond??

Postby Husker » Sat Apr 03, 2010 7:23 am

13.50 per every proof gallon you expect to have.

If you are going to age 500 barrels of 50 gallons at 100 proof (made adjustments to make the math easier), you have 25000 proof gallons. I believe are required to bond to $337500.

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Re: TTB bond??

Postby ozone39 » Sat Apr 03, 2010 4:09 pm

what's a proof gallon???
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Re: TTB bond??

Postby rubber duck » Sat Apr 03, 2010 5:10 pm

100 proof is a proof gallon. 1 gallon of 100 proof.
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Re: TTB bond??

Postby ozone39 » Sat Apr 03, 2010 6:10 pm

is the proof based off a percentage?? ie 80 proof liquor would be 1.20 proof gallons taxed....
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Re: TTB bond??

Postby Dnderhead » Sat Apr 03, 2010 6:27 pm

50%alcohol = 100 proof,1 gallon of that is a proof gallon. ,, so at 80 proof, it is 40% so one gallon lacks a bit of being a proof gallon.
with out doing a bunch of math Id say 6 fifths (750ml)of 40% or 80proof whould make a proof gallon. so i you were producing
80 proof ? you are responsible for the tax until collected, witch in some states is 40$. so you'd have to have a bond to cover
each 6 fiths you produced at 40$. (this is based on what you predict your going to make)
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Re: TTB bond??

Postby lacedspirits » Sat Apr 03, 2010 7:00 pm

I'm not sure what you mean by TTB Bond but Husker is right on with what he said about Proof Gallons.
To get our permits in order to open our distillery went like this:
$5,000+ for the application
$2,500+ to the Lawyers
and almost a year in just waiting around for approval.
It isn't feesable to pet a permit just to make liquor for yourself. You are taxed on every proof gallon you MAKE, not sell. I'm in Michigan and I pay $13.50/proof gallon to the Feds, $10.00/proof gallon to the State, $4/for each empty 750mL bottle, and $1/for each cork-cap.

None of that includes the still, boiler, grain, water, electricity, yeast, ect.

Still, I'm curious to know what is meant by TTB Bond.
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Re: TTB bond??

Postby Dnderhead » Sat Apr 03, 2010 7:11 pm

alcohol,tobacco,,Tax and Trade Bureau
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Re: TTB bond??

Postby rubber duck » Sat Apr 03, 2010 7:27 pm

Dnderhead wrote:alcohol,tobacco,,Tax and Trade Bureau



lacedspirits wrote:
Still, I'm curious to know what is meant by TTB Bond.


We're talking about the bond required by the TTB to warehouse alcohol In a legitimate distilling operation.
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Re: TTB bond??

Postby lacedspirits » Sat Apr 03, 2010 7:27 pm

i know what TTB stands for, Dnder. I've just never heard the expression "TTB BOND".
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Re: TTB bond??

Postby rubber duck » Sat Apr 03, 2010 7:33 pm

lacedspirits wrote:i know what TTB stands for, Dnder. I've just never heard the expression "TTB BOND".



What's the proper term for the bond? I'm not being a smart ass, I just don't know what else to call the bond. If you can clarify please do so.

Thanks, RD
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Re: TTB bond??

Postby ozone39 » Sat Apr 03, 2010 10:53 pm

I know what a construction bond is. Put up %10 of contract bid prior to the job starting as a guarantee or back up that you'll finish the job. If you default then the owner takes that %10 and hires out some one else.
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Re: TTB bond??

Postby still crazy » Sun Apr 04, 2010 3:02 am

I am not sure if this info is correct I just remember it from a class I took regarding bookkeeping and the instructor used a distillery as the example for pre-paid taxes.

When a distillery produces a product which they are going to warehouse for say 12 years. ie 12 year old scotch
The product is placed inside a locked and monitored facility.
However since the taxes will not be paid until the product is sold the government requires the distillery to post a bond against the actual expected taxes to be paid.
When that product is bottled for distribution the actual taxes are paid based upon the tax stamps that are paid per bottle.
The distillery can adjust its taxes against any losses it incurred during the storage period. ie angel share, barrel breakage and so forth.
In short the bond is posted just in case the product "disappears" during the storage.
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Re: TTB bond??

Postby glassman » Sun Apr 04, 2010 4:13 am

i'd liken it to insurance......incase the alchohol disappears. gman
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Re: TTB bond??

Postby goose eye » Sun Apr 04, 2010 6:03 am

ole boy kin worked in legal distillerys a long while back and they was called bonded stills.
so folks called it bonded likker.


so im tole
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Re: TTB bond??

Postby lacedspirits » Sun Apr 04, 2010 8:40 am

Thanks Goose eye, I was a little confused. Once your application and permits are approved, you become [i]bonded[/i ie, you have a bonded still and sell bonded liquor.
I was up late last night and didn't understand the grammer. My apologies.
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Re: TTB bond??

Postby goinbroke2 » Sun Apr 04, 2010 12:00 pm

In Canada it's $5000 for the bond. One price for alcohol. Either 50L or 50000gallons...that doesn't benefit the bigger commercial guys much does it? :roll: Same as the distilling permit is $1000 for the first year then $2000 each year thereafter....so you must sell X amount just to be profitable...again, who does that benefit again? Oh yeah, the companies with the money to bribe..ahem..I mean "donate" money to parties..
58L keg propane "Samantha" /25ft of 1/2" copper tube in 20L pail for worm. Update: a second 58L keg that's electric I call "Candy" because she's a stripper, 205L fermenting barrel, parrot, total cost now - $128.00
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Re: TTB bond??

Postby praefect » Wed Sep 22, 2010 11:28 am

goinbroke2, your post is interesting, $5000 you say... I was reading about the excise act of our beloved federal government and this is what I found:

http://lois.justice.gc.ca/eng/E-14/page ... bo-ga:l_II

here is an excertp regarding the distillers licence:

A licence to carry on the trade or business of a distiller may, with the approval of the district inspector of the district or excise division in which the trade or business is to be carried on, be granted to any person who has complied with the requirements of this Act if that person has, jointly with a guarantee company approved by the Minister, entered into a bond to Her Majesty in right of Canada in an amount determined by the Minister that is not less than two hundred thousand dollars, and in such form that the proposed licensee and the guarantee company are both bound to the full amount of the bond.

just like the draft laws back in the days, if you have the money, no problem... if you're a regular guy, you're screwed..

just my 2 cents. I would really like to see the micro distilleries exist and grow to emulate what happened with micro breweries in Canada (and everywhere)... I'm 35, I may live long enough to see it one day.

Have a nice one
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Re: TTB bond??

Postby goinbroke2 » Thu Sep 30, 2010 8:46 am

Naw, something ain't right, there. I'll ask friends of mine at Ironwork Distillery what they paid for the bond but I'm sure they told me $5000.00
They are a brand new micro just opened in June 2010 in Lunenburg NS. They certainlt went through the money getting set up, but they bought their bottles/corks from france, yeast from germany etc. I did an interview with them (if you want to call it that) because I too want to open a micro in NS. Jost Winery also has a Karl Christian still and they sell brandy etc.
There is a couple in PEI too. The list is growing in Canada. I was talking to the guys in Toronto at sweetwater distillery and again, think exactly what we're doing but at a larger scale.

Bonds are all different depending on what country etc. The US, as I've found out, have different rules for every state and a lot of what's on ADI doesn't apply. I was worried about not being able to build a micro on my own property or how to make enough to sell to the liquor stores...in Canada, you CAN have it on your own property. You CAN sell from your own store front, it's not a three level system here like in the states.
58L keg propane "Samantha" /25ft of 1/2" copper tube in 20L pail for worm. Update: a second 58L keg that's electric I call "Candy" because she's a stripper, 205L fermenting barrel, parrot, total cost now - $128.00
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Re: TTB bond??

Postby JCD » Fri Oct 08, 2010 9:39 am

Hey There,

I was doing some research on micro-distilling in NS and came across your posts. I'm working on a small study on the economics of setting up craft distilleries in the province - I know of Ironworks, Jost, and Glenora (although they seem larger scale). Any chance you'd have some info you'd be willing to share on the costs / regs for setting up?

Thanks,
Chris
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Re: TTB bond??

Postby goinbroke2 » Thu Oct 14, 2010 3:08 pm

Well that's weird.....I posted at work this afternoon and now it's gone..... :cry:

What I said was, everything is different depending on where you are. I had a bunch of examples from what I found, but they all relate to me. For example I was talking to Marie-france Pelletier. She's an excellent source for bottles/tops/etc out of Montreal. Now what I was costing, came to around $900 for a pallet of bottles. I have a local farmer who will take all the spent grain I can make. I have an "in" and can get grain quite cheap if I buy it by the ton before it's bagged. So now I have to cost a grain silo and cement pad...is it cost effective or buy the bags....
Now, I can give you numbers, but it won't mean anything because you have your own variables.
Certain costs you can account for. $1000.00 for first year permit then $2000.00 after that. The cost of the calibrated hydrometer (you must buy from a specific place and have it sent to them to test it and then they send it to you) $5000.00 for the bond, crap I don't know..do you have your own place or are you renting/buying? Are you going to sell from your own storefront or are you going to send to liquor stores? (they have a minimum volume before they'll accept a contract with you.

Since I'm still in the business plan stage I can only make guesses on actual operating costs etc. If you want specific's you'll have to ask an operating distillery.

As far as the business side of it, Carol Andrews in Bayers Lake (NSLC) is THE person to talk to. She is the actual one who does the permits etc. One thing to warn you though. She is at work, this is what she does for a living, so if you call her have your "poop in a group" so to speak. Write all your questions down so you don't waste her time. She is more the person to talk to as you start and expects you to have a good business plan for her to look at. Just asking questions is ok, just make sure you don't waste her time.
Here's a link;
http://www.mynslc.com/Content_Communica ... rmits.aspx

and

http://www.mynslc.com/Documents/DistilleryChecklist.doc

You said your doing research? Is it to open a micro or for school or what? The reason I ask is because it's one thing to talk to someone in NZ or the US, even in Ontario or BC, but in my own province raises the hairs on my neck. I'm sure you can appreciate that, just saying until I'm legal I won't be saying it cost this much because I'm here where there is lots of farms or there where there is lots of people. I'm in NS, that's close enough. :wink:

Besides, I stopped doing anything so I don't jeopardize going legal. :wink:

And if you are thinking of opening a micro, where are you?
58L keg propane "Samantha" /25ft of 1/2" copper tube in 20L pail for worm. Update: a second 58L keg that's electric I call "Candy" because she's a stripper, 205L fermenting barrel, parrot, total cost now - $128.00
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Re: TTB bond??

Postby goinbroke2 » Thu Oct 14, 2010 3:15 pm

Oops, forgot a plug for Marie.
http://www.unitedbottles.com
Check out their site, lots of selection and prices are about the best you will find for Canada.
58L keg propane "Samantha" /25ft of 1/2" copper tube in 20L pail for worm. Update: a second 58L keg that's electric I call "Candy" because she's a stripper, 205L fermenting barrel, parrot, total cost now - $128.00
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Re: TTB bond??

Postby Backwoods Distillers » Wed Nov 23, 2011 12:57 pm

I call it, "Legal Fraud" :twisted:
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Re: TTB bond??

Postby Ian Jay » Thu Nov 24, 2011 2:27 am

Bonded whiskey is not blended. It has been stored continuously for at least four years in wooden barrels and which is bottled at 100 proof ; it must all be the product of a single distillery, by the same distiller, during a single season and year. It is then entitled to be labeled as “bottled in bond” and sealed with the U.S. government’s green strip stamp.

Bottled in bond whiskey must be bottled under supervision of the U.S. government within the distillery in a bottling-in-bond department specially constructed according to federal specifications which provides accommodations for inspectors of the Internal Revenue Service.

Under federal regulations, the distiller, if so chooses, is allowed to bottle this whiskey without paying the excise tax, provided he keeps the bottled product in a bonded warehouse until ready to be moved into the distribution channels. When the bottled in bond whiskey is removed, it the tax-paid by the owner. The term bottled in bond is not a guarantee of quality but refers only to the regulatory procedure under which it is bottled and taxed


http://www.pinkiesonline.com/whiskey.htm

Does this help?
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Re: TTB bond??

Postby bluestar » Sat Dec 10, 2011 2:06 pm

You have to have a bond with the TTB to get your license to ensure that you will pay your taxes. The bond is for your taxes. You need a minimum of $5000 bond for each type of activity, so if you are both distilling and warehousing, you need $10,000 bond. You can actually establish the bond by buying a treasury bond in that amount and giving it to the TTB for safe keeping, which you get back with interest when you end the license. But almost no one does that, the TTB doesn't even like the hassle. Instead, you take out a surety bond policy with a private insurer, the going rate is a penny on the dollar per year. So, you get a bond policy for $100 per year if you need $10,000 bond, etc. You must keep your bond up to date: that is, the amount is based on a formula for how much tax you expect to pay annually, above the minimums already described.

All of this information is on the TTB website, in gory detail. Although there is a mountain of information there, it is not as impenetrable as it was even a few years ago. Also, you can now apply for your license on line using a web application. This in principle can eliminate the need for a lawyer to get you through the process, and since the TTB does not charge a fee for the license (they want the taxes, mind you), your state and local permits will be your major cost.
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Re: TTB bond??

Postby fla_pyre8 » Wed May 01, 2013 3:52 pm

Is the money for the bond refundable?
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Re: TTB bond??

Postby stillwagon » Tue May 07, 2013 10:13 am

Dont forget the bond required by the state as well. The bond ensures they get paid in case you screw up somehow. They want their taxes. You also need liability insurance that is a state requirement and probably differs from state to state. Liquor license is required where I am at as well, that is an annual renewal. Servers permit is required if you plan on a sampling room. I have an agent that is taking care of all of that. They just tell me how much to pay.

My plan is to go in with no debt. I have paid cash for all my equipment, no rent on my location for the first 5 years, and a "grass roots" marketing plan. I have been looking at several distillery marketing plans. The ones in massive debt hope to be profitable in 5-7 years. The smaller cash startups are seeing profits in the first to second year. I also see a few of the distilleries that have a large number of investors or a great deal of debt, are selling. This economy is not one to take a big risk in right now. No debt, watch the others go under, and pick up their market share.

The cool thing about this industry is that it is just taking off. There is a lot of opportunity to make it successfully as a craft distiller. Just start small, grow out of pocket, make a good product, take care of your customers, and make a difference in your local economy if you can. Sponsor local events and groups, engage with the local farmers, remember, distilling is considered an "agricultural practice." Our forefathers used it as a way to get their "produce" to market.
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Re: TTB bond??

Postby stillwagon » Tue May 07, 2013 10:16 am

If you post a cash bond it is your money, you just cant touch it. For those of us without that kind of cash, it is like buying insurance. You pay a premium, or what ever they call it, and they guarantee your bond. So, in this case, your money is gone just like it is when you pay for your insurance.
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Re: TTB bond??

Postby knightmare1015 » Wed Jun 19, 2013 8:33 pm

ozone39 wrote:Anyone know how much of a bond the TTB requires for a beverage alcohol permit??? :?:


The minimum bond requirement depends on wether you're making fuel or liquor and how big your operation is. The minimum that I've seen so far is $2,000 dollars. Now if you have applied for a small Alochol fuel permit which is 10,000 gallons or less then you're not required to have a bond unless you don't own the property, then a minimum bond of $2,000 dollars is required. Here's a link to some frequently asked questions:

http://www.ttb.gov/industrial/fuel-alcohol-faqs.shtml

The bond requirements are listed in the link I provided. To answer your other question, if you are approved for an AFP (alcohol fuel permit) you go by Wine gallons which is a standard U.S. gallon. Proof gallons is more complicated. Here's the formula for calculating proof gallons:

Proof x number of gallons divided by 100.

Proof example: 190 proof = 1.9

Anyway I hope this helps. Right now I am on hold until the changes take affect to my alcohol fuel license. In order for me to be legal, I had to register my still which could take up to 6 weeks. Another thing is that since I'm dealing with fuel, I don't have to deal with the ABC either which seriously cuts down the red tape.
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Re: TTB bond??

Postby woodshed » Wed Aug 28, 2013 8:06 pm

Our bond in 2013 was $16,000.00 to produce up to 10,000 gallons a year and distribute. A tasting room only bond was $ 5,000.00. The bond is in place for warehousing alcohol. Bond is released on alcohol which taxes have been paid.
Tax paid alcohol is ready for distribution.

We did the entire process out of pocket ( no investors just retirement savings). Do your research and it's no big deal. Just lot's of paper work. Colorado state fees $2,075.00 for approval. Approval free from the feds.

6 months for fed approval, about 6 weeks for state. 30 days for label.
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