Surety Bond Encyclopedia

Brewer's Bond Bond - Federal in All States

Brief Summary

Plenty of small breweries do not need this bond at all, and plenty of growing ones need it sooner than they think. Once your federal beer tax for the year passes $50,000, the clock starts, and having the bond lined up ahead of that point keeps tax deferred removals moving.

The Brewer's Bond, TTB Form 5130.22, guarantees that a brewer pays federal excise tax on beer and follows the rules in 27 CFR Part 25. The penal sum is 10 percent of the maximum tax the brewer expects to owe in a calendar year, with a $1,000 minimum and a cap of $150,000 for prepaid tax or $500,000 for deferred tax. Brewers who expect no more than $50,000 in beer tax for the year and pay on a quarterly or annual return are exempt.

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How to Apply for a Brewer's Bond Bond:

Estimate the brewery's beer tax for the current and prior calendar year to see if the $50,000 exemption applies.
If a bond is needed, calculate 10 percent of the maximum annual tax liability, within the $1,000 minimum and the applicable maximum.
Complete TTB Form 5130.22 with the surety.
File the bond with the Brewer's Notice, Form 5130.10, or an amended notice if moving out of exempt status.
Wait for TTB approval before beginning operations or removing beer on deferred tax.
Renew with a new bond or continuation certificate every 4 years.

Detailed Information About the All States Brewer's Bond Bond:

Check the exemption first

Under 27 CFR 25.91(e), a brewer that pays tax on a deferred basis and qualifies for a quarterly or annual return period is not required to provide this bond. The quarterly period under 27 CFR 25.164(c)(3) is open to a brewer that owed no more than $50,000 in beer tax in the prior calendar year and reasonably expects to owe no more than $50,000 in the current one. Most small and mid sized craft breweries fall into this group.

The exemption ends partway through the year if tax due passes $50,000. Under 27 CFR 25.95(b), the brewer must then furnish a bond and file an amended Brewer's Notice, Form 5130.10. There is a 30 day grace period to submit the bond on Form 5130.22, but it does not cover tax deferred removals. A brewer in this spot may not remove beer for consumption or sale on deferred payment of tax until TTB approves the bond.

How the penal sum is calculated

For a brewer paying on semimonthly returns, 27 CFR 25.93 sets the bond at 10 percent of the maximum tax the brewer will owe in a calendar year on beer removed for consumption or sale, transferred in from its other breweries, removed tax free for export or vessel and aircraft supplies, and removed for research, development or testing. A brewer that concentrates beer adds 10 percent of the tax on the beer used to make concentrate.

The minimum penal sum is $1,000. The maximum is $150,000 when tax is prepaid and $500,000 when tax is deferred. A brewer bonded but paying on quarterly or annual returns uses a flat $1,000 penal sum.

If business grows and the bond no longer covers the liability, 27 CFR 25.94 allows either a strengthening bond from the same surety or prepayment of tax. A different surety means a new bond for the full amount.

Filing and renewal

A new brewer files the bond with the original Brewer's Notice, Form 5130.10, and may not begin business until TTB approves it. An ongoing brewer files a new bond or continuation certificate once every 4 years. The bond guarantees payment of all taxes under 26 U.S.C. Chapter 51 along with interest, penalties and fines. Premium is set by the surety based on the penal sum and the brewer's credit and financial strength.

Eligibility and Requirements for an All States Brewer's Bond Bond:

Bond on TTB Form 5130.22 payable to the United States.
Penal sum of 10 percent of maximum annual beer tax, minimum $1,000.
Maximum of $150,000 with prepaid tax or $500,000 with deferred tax.
A statement under penalty of perjury about certain criminal convictions or compromises, as required by 27 CFR 25.91(c).
Credit and financial review by the surety.

All States Brewer's Bond Bond FAQs:

Does my brewery need a bond?

Not if you pay tax on a deferred basis and qualify for quarterly or annual returns. That means no more than $50,000 in beer tax in the prior year and an expectation of no more than $50,000 this year. Above that, the bond is required.

What happens when we cross $50,000 in the middle of the year?

You must furnish a bond and file an amended Brewer's Notice. You get 30 days after crossing the threshold to submit Form 5130.22, but you cannot remove beer on deferred tax until TTB approves the bond.

How much bond do I need?

Ten percent of the most tax you will owe on covered beer in a calendar year. The floor is $1,000. The ceiling is $150,000 if you prepay tax and $500,000 if you defer it.

How often is the bond renewed?

Every 4 years, with a new bond or a continuation certificate, unless TTB calls for a superseding bond sooner.