Wine Law Alert: TTB Steps Up Enforcement for Failure to Timely Report Changes in Winery Ownership

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The Alcohol and Tobacco Tax and Trade Bureau (TTB) has recently ramped up enforcement against wineries and bonded wine cellars (BWC) that fail to report changes in proprietorship or changes in control to TTB within 30 days of the change. While TTB's regulations on changes in proprietorship or control have not changed, TTB has informed the industry that it is starting to strictly enforce the regulatory deadlines applicable to such changes.

A change in proprietorship occurs when there is either a change in ownership or a change in entity. In other words, TTB has certain requirements when a winery or BWC changes hands from one owner to another, or when the type of owner entity changes (for example, when a sole proprietor becomes a limited liability corporation (LLC) or corporation). When a change in proprietorship takes place, the new owner should file a new application packet including a bond for approval by TTB before the change occurs. If the new basic permit and registration is not approved before the change, TTB may immediately halt the winery's or BWC's operations.

A change in actual or legal control of a winery or BWC also requires the timely filing of documents with TTB to avoid enforcement action and potential interruption in operations. A change in control can occur when there are changes in stock ownership, LLC membership ownership, and the officers or directors of a corporation and the managers of an LLC. This change differs from a change in proprietorship in that the owner-entity of the winery or BWC remains in existence, and continues to operate the business, but actual or legal control of the entity shifts. For a change in control, TTB requires that an amended Application to Establish and Operate Wine Premises (TTB F 5120.25) be filed within 30 days of the change. An Application for Amended Basic Permit (TTB F 5100.18) must also be filed within 30 days, in order for the former Basic Permit to remain in effect until TTB approves the new Permit.

TTB's existing regulations provide for the above timelines and requirements. However, TTB has made clear in recent Winery Compliance Seminars that it is now strictly enforcing any failure to timely file a new Basic Permit application and other required documents. For more information on these and other changes to report, visit the TTB's website to view an informational flyer at https://www.ttb.gov/wine/what_happens_after.shtml.

Key Contributors

Susan M. Johnson
Bernard J. Kipp
Stephanie J. Meier
Allison C. Smith
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