Federal Wine Bond - Statewide in All States

Brief Summary

The question most wineries get wrong is not the amount but the timing. Since January 1, 2017, a winery owing $50,000 or less a year in federal wine excise tax can operate without a bond for nonindustrial wine. The moment taxes for the year pass $50,000, the clock starts, and TTB F 5120.36 has to be on file within 30 days.

The Federal Wine Bond, filed on TTB F 5120.36 with the Alcohol and Tobacco Tax and Trade Bureau, guarantees the federal excise tax on wine held at bonded wine premises. Under 26 U.S.C. 5354 and 27 CFR 24.148, the penal sum must be at least the tax on all wine and spirits possessed, in transit or unaccounted for at any one time, with a $1,000 minimum and a $50,000 maximum, rising to a $100,000 maximum when that tax exceeds $250,000.

We can help with all All States bonds!

How to Apply for a Federal Wine Bond:

• Check whether prior and expected wine excise tax are each $50,000 or less for the calendar year.
• Confirm none of the wine is for industrial use, since industrial wine always requires a bond.
• If a bond is required, calculate the tax on all wine and spirits possessed, in transit or unaccounted for at any one time.
• Set the penal sum at that tax figure, no less than $1,000 and no more than $50,000, or $100,000 if the tax exceeds $250,000.
• Add tax deferral coverage on the same form if wine will be removed before the tax is paid.
• Execute TTB F 5120.36 with a Treasury authorized corporate surety and file it with TTB.
• Watch year to date tax and file the bond within 30 days of passing $50,000 if previously exempt.

Detailed Information About the All States Federal Wine Bond:

Who is exempt

Under 27 CFR 24.146(d), a proprietor who pays tax on a deferred basis and is eligible for an annual or quarterly return period does not need a bond for wine produced or withdrawn for nonindustrial use, which includes beverage wine. Under 27 CFR 24.271, the quarterly return period is open to a proprietor that owed not more than $50,000 in wine excise tax in the preceding calendar year and reasonably expects the same in the current year. TTB announced that this exemption took effect January 1, 2017, and it lets applicants claim it in Permits Online.

The exemption does not cover industrial wine. A proprietor must bond operations and withdrawals of wine for industrial use, such as wine products not for beverage use, even if it qualifies for quarterly or annual returns. Wine that is not designated solely for nonindustrial use when it is produced or received is treated as industrial for this purpose.

When an exempt winery must bond

Under 27 CFR 24.154(b), once the aggregate tax due during a calendar year exceeds $50,000, the proprietor must furnish a bond and file an amended application to change its bond status. The wine bond is treated as furnished if TTB F 5120.36 is submitted no later than 30 days after that date. The grace period does not apply to a tax deferral bond. Until TTB approves that bond, tax determined but unpaid removals are limited to $1,000 of liability.

How the amount is set

The penal sum is not a flat figure. Under 26 U.S.C. 5354 and 27 CFR 24.148, it must be not less than the tax on all wine or spirits possessed, in transit or unaccounted for at any one time. The minimum is $1,000 and the maximum is $50,000, except that the maximum becomes $100,000 when that tax exceeds $250,000. A winery that removes wine after the tax is determined but before it is paid also needs tax deferral coverage, which can be written on the same TTB F 5120.36. Section 24.148 sets that coverage at $500 to $250,000.

Filing the bond

The United States is the obligee. The surety must be a corporate surety authorized by the Secretary of the Treasury. In place of a surety, TTB F 5120.36 also accepts deposited Government obligations or cash payable to TTB. Duplicate original bonds go to the TTB Office of Permitting and Taxation, 550 Main St., Ste. 8970, Cincinnati, OH 45202-3222, or through Permits Online with the winery application.

How the premium is set

The surety prices the bond on the penal sum, the owners' personal credit, the winery's financial statements and its record of paying excise tax on time. A larger penal sum driven by higher inventory tax means a larger premium.

Eligibility and Requirements for a All States Federal Wine Bond:

• TTB F 5120.36, Wine Bond, with the United States as obligee.
• Corporate surety authorized by the Secretary of the Treasury, or Government obligations or cash as collateral.
• Penal sum calculated under 27 CFR 24.148.
• Amended application under 27 CFR 24.132 when an exempt proprietor becomes bonded.
• Separate TTB F 5510.2 bond if wine is withdrawn tax free for vinegar manufacture.

All States Federal Wine Bond FAQs:

Official and Additional Resources for the All States Federal Wine Bond: