Unit Bond - Distilled Spirits in All States
Table of Contents
Brief Summary
A unit bond rolls a distilled spirits plant's operations bond and withdrawal bond into one TTB filing. It provides every guarantee the two separate bonds would, can also cover adjacent bonded wine cellars, and can stretch across more than one plant you operate. One surety, one form, one renewal cycle.
A unit bond is a federal TTB bond that covers both operations at a distilled spirits plant and tax deferred withdrawals from its bonded premises. For a single plant, 27 CFR 19.166(d) sets the penal sum at the combined operations and withdrawal amounts, not less than $6,000 and not more than $1,300,000. It is filed on TTB F 5110.56 and must be written by a surety listed in Treasury Circular 570.
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How to Apply for a Unit Bond:
- Work out the operations penal sum for each plant under 27 CFR 19.166(a), or the area figure under 19.166(b) for multiple plants.
- Work out the withdrawal penal sum for each plant under 27 CFR 19.166(c).
- Total the figures and show the allocation for operations and withdrawals at each plant on the bond.
- Have a Circular 570 surety execute TTB F 5110.56 with a power of attorney for the signing agent.
- Submit the bond to TTB with the plant registration or an amendment to TTB F 5110.41.
Detailed Information About the All States Unit Bond:
Who uses a unit bond
A distilled spirits plant normally needs an operations bond, and a second withdrawal bond if it removes tax determined spirits before paying the tax. Under 27 CFR 19.165, a proprietor who would otherwise need both can file a single unit bond that gives all the same guarantees. It can also cover operations at adjacent bonded wine cellars and can cover one plant or several. A corporation and its controlled subsidiaries, where the parent controls more than 50% of the voting power, count as one person.
How much it has to be
The penal sum is built from the separate bond calculations in 27 CFR 19.166.
- One plant: the operations bond amount under 19.166(a) plus the withdrawal bond amount under 19.166(c)(1). Not less than $6,000 and need not be more than $1,300,000.
- Two or more plants: the area operations bond amount under 19.166(b) plus the withdrawal amounts for every plant under 19.166(c)(2). The floor is the sum of each plant's minimum operations and withdrawal amounts.
The bond must show, plant by plant, how much coverage goes to operations and how much to withdrawals. If an allocation is below the single plant maximum, tax liability for that plant's operations or withdrawals cannot exceed it. The full penal sum still backs liability at every covered plant.
Small taxpayer exemption
Under 27 CFR 19.151(d), a proprietor paying tax on a deferred basis who is eligible for annual or quarterly returns under 19.235 needs no bond for operations and withdrawals of spirits for nonindustrial use. Industrial use spirits still need coverage. If tax due in a calendar year passes $50,000, the exemption ends and a bond is required under 19.168(b). Withdrawal coverage gets no grace period, so tax deferred withdrawals stop until TTB approves the bond.
If the bond lapses
Under 27 CFR 19.169(c), a proprietor who does not supply a required superseding unit bond must stop the covered operations and pay tax at the time of withdrawal. A surety must give TTB at least 90 days' notice to terminate a unit bond.
Eligibility and Requirements for an All States Unit Bond:
- Surety listed in Treasury Department Circular 570, or a deposit of U.S. Treasury securities or cash under 27 CFR 19.154.
- Single plant penal sum of at least $6,000 and no more than $1,300,000 is required.
- Separate allocation for operations and withdrawals at each covered plant.
- All covered plants operated by the same person or by a parent and its controlled subsidiaries.
- Bond filed on TTB F 5110.56 as a two sided document.
All States Unit Bond FAQs:
It gives the same coverage as an operations bond and a withdrawal bond together, on a single instrument with one surety. The penal sum is the same total you would carry with the two separate bonds.
Under 27 CFR 19.166(d)(1), a unit bond for one plant must be at least $6,000 and need not exceed $1,300,000. The exact figure is the operations amount plus the withdrawal amount for that plant.
Not for nonindustrial spirits if they pay tax on a deferred basis and qualify for annual or quarterly returns under 27 CFR 19.235. Once tax due in a year passes $50,000, bond coverage is required.
Yes. 27 CFR 19.165 allows the unit bond to cover operations at adjacent bonded wine cellars, with that coverage shown separately on the bond.
The surety prices it on the penal sum, the proprietor's credit and financial statements, and its tax payment history with TTB.
