Bonded Wine Premises, Alternating Proprietor Wine Premises, and Custom Crush Operations
All companies must file an application with TTB and receive permission before starting any of the following operations:
- Producing wine for commercial purposes (not for personal or family use),
- Storing, blending, or bottling untaxpaid wine, or
- Wholesaling or importing wine products.
Last reviewed/updated 08/29/2012
- Bonded Winery: Some people dream of owning their own winery and producing wine for sale. They will qualify with TTB as a Bonded Winery.
- Alternating Proprietor: Others would also like to make wine for commercial purposes, but are not interested in building or buying a winery of their own. These companies find that sharing a winery facility with other companies will suit their purposes, and will qualify with TTB as an Alternating Proprietor winery.
- Custom Crush Client (Wholesaler): Still others have grapes or other winemaking materials that they would like to have made into wine, but would prefer that someone else make the wine for them. These companies are Custom Crush Clients, and will qualify as Wholesalers. The Bonded Wineries that produce the wine for the Wholesalers are known as Custom Crush wineries.
- Bonded Wine Cellar: Some companies will qualify with TTB as a Bonded Wine Cellar, which is a bonded storage warehouse established to store, blend, or bottle untaxpaid wine.
(Note: the Internal Revenue Code identifies all premises where untaxpaid wine operations take place as "bonded wine cellars," and those premises where wine is produced as "bonded wineries." For our purposes here, the term "bonded wine cellar" will be used to identify those premises which store, blend, or bottle untaxpaid wine, but do not produce wine. These terms include such premises even if the proprietor, as authorized under the exemption in 27 CFR 24.146(d), is not required to provide a bond for the premises.)
Last reviewed/updated 08/29/2012
- Independent Winery or Bonded Wine Cellar: When a company qualifies as a stand-alone winery, it is responsible for all production activities that take place on the bonded premises and the recordkeeping that documents those activities and filing reports about the activities to TTB. This may include obtaining label approval for the wine prior to bottling and paying excise tax on the wine. The proprietor incurs expenses for all necessary winemaking equipment and premises.
- Alternating Proprietors: When two or more wineries are approved by TTB to share the use of portions of the same bonded wine premises on an alternating basis, they are known as Alternating Proprietors. The wine company which owns or controls the building is known by TTB as the "Host," and the other wineries which share the premises are referred to as "Tenants" or "Alternators."
The Host and the Tenant wineries are each fully qualified as bonded wineries with TTB, and each company is responsible for its own production, recordkeeping, reporting, labeling, and taxes, independent of one another. The tenant proprietor must direct and be fully responsible for those things that are usual and customary for the production, bottling, and storage of wine (as applicable) and the managing of the business. See TTB Industry Circular 2003-7 for more information.
In most situations, the Host agrees to rent space and equipment to the Tenant proprietor. This allows existing wineries to use excess space and capacity and gives new entrants to the wine business an opportunity to begin on a small scale without investing in a winery building and all of the necessary winemaking equipment.
- Custom Crush Operations: Wineries are sometimes approached by a customer who would like to have wine produced. The customer often has access to grapes or other materials and would like to have them made into wine, but does not want to produce the wine. These customers are known as Custom Crush Clients.
The custom wine producer must be fully qualified as a bonded winery. The winery is responsible for all production, records, reports, labeling, and taxes, even though it is producing the wine for a customer. The wine premises that bottles the wine obtains approval from TTB for the wine’s label, and the wine premises that removes the wine from bond pays the Federal excise tax on the wine, regardless of who owns the wine. The producing winery incurs the expenses for winemaking equipment and winery premises.
In most cases, the custom crush client needs to qualify for a Federal Basic Permit as a Wholesale Liquor Dealer (Wholesaler) under the Federal Alcohol Administration Act. Please see TTB’s Wine Frequently Asked Questions for further information and exceptions.
A custom crush client Wholesaler has minimal TTB recordkeeping requirements. The custom crush client Wholesaler has no production, labeling, tax, or reporting responsibilities. All of these matters are the responsibility of the bonded winery or wineries with whom the customer is working to have the wine produced, labeled, and taxpaid.
This table illustrates how the primary responsibilities differ:
Company Type | Wine Premises Expenses | Recordkeeping | Label Approval | Excise Tax | Operations Reports |
|---|---|---|---|---|---|
Stand-Alone Bonded Wine Premises | Yes | Yes | Yes | Yes | Yes |
Alternating Proprietor Host | Yes | Yes | Yes | Yes | Yes |
Alternating Proprietor Tenant | Minimal | Yes | Yes | Yes | Yes |
Custom Crush Producer | Yes | Yes | Yes | Yes | Yes |
Custom Crush Client | No | Minimal | No | No | No |
Last reviewed/updated 08/29/2012
TTB's application forms satisfy the requirements of the two Federal laws that have jurisdiction over the wine industry, the Internal Revenue Code (IRC) and the Federal Alcohol Administration Act (FAA Act). In addition, TTB collects information from wine producers about the environmental impact of their operations, which is sometimes referred to as other concerned Federal, State, and local agencies.
The Internal Revenue Code regulations require TTB, in general, to determine if the physical premises where wine will be produced and where untaxpaid wine will be stored are adequate to protect the revenue, and to ensure that Federal taxes will be paid by approving a bond before commercial wine operations begin.
The Federal Alcohol Administration Act regulations ask, in general, for information about the ownership of the company rather than about the wine operations. Persons who will produce or blend wine for commercial purposes must qualify for a Basic Permit under the FAA Act. Persons who do not plan to produce wine (bonded wine cellars) are not required to obtain a Basic Permit. Wholesalers must qualify under the FAA Act in order to purchase wine for resale at wholesale.
Last reviewed/updated 08/29/2012
The regulations pertaining to the application process for bonded wineries are found in two places:
- 27 CFR 24.100-.117 (IRC regulations)
- 27 CFR 1.24-.31 (FAA Act regulations)
The requirements found in 27 CFR 24.100-.117 (IRC regulations) also pertain to bonded wine cellar applicants. A bonded wine cellar will only need to obtain a basic permit under the FAA Act if it will blend untaxpaid wine.
The permit requirements for wholesalers are found in the following regulations:
- 27 CFR 1.24-.31 (FAA Act regulations)
Last reviewed/updated 08/29/2012
The following application forms and related information must be submitted to TTB's National Revenue Center:
- Application to Establish and Operate Wine Premises Form 5120.25
- Application for Basic Permit Under the FAA Act Form 5100.24
- Wine Bond Form 5120.36 (not required if proprietor is exempt from bond requirements under 27 CFR 24.146(d))
- Signature Authority:
- Power of Attorney Form 5000.8, or
- Signing Authority for Corporate and LLC Officials Form 5100.1, or
- Signing Authority in Organizational Documents
- Special Tax Registration Form 5630.5 (Registration only – No Tax Due)
- Trade Name Registration for the company's Operating Trade Name and any additional Bottling Trade Names
- Diagram of bonded wine premises from all alternating proprietor hosts and tenants. A diagram is not required from non-alternating applicants, but it is quite helpful during TTB's processing of your application.
- Alternating Proprietor agreement or contract, if alternating
- Lease agreement, if any
- Organizational documents (articles of incorporation, partnership agreement, etc), as applicable
Last reviewed/updated 08/29/2012
The application forms are the same, with the exception of the Application for Basic Permit Under the FAA Act, TTB Form 5100.24. This form is required only if the bonded wine cellar will be blending, but not producing, wine.
Last reviewed/updated 08/29/2012
Several of the same application forms are used to qualify as a Wholesaler:
- Application for Basic Permit Under the FAA Act Form 5100.24
- Power of Attorney Form 5000.8, or Signing Authority for Corporate and LLC Officials Form 5100.1, or Signing Authority in Organizational Documents
- Special Tax Registration Form 5630.5 (Registration only – No Tax Due)
- Trade Name Registration for the company’s Operating Trade Name and any additional Bottling Trade Names
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Retailers must register each location:
- Submit Special Tax Registration Form 5630.5d (Registration only – No Tax Due)
- See Liquor Laws and Regulations for Retail Dealers for additional information
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Visit Permits Online to learn more about submitting your application online.
Last reviewed/updated 08/29/2012
Please mail your completed and signed application forms (in duplicate) to TTB at this address:
Acohol and Tobacco Tax and Trade Bureau (TTB)
National Revenue Center
John Weld Peck Federal Building
550 Main St., Room 8970
Cincinnati, OH 45202
Telephone: 877-882-3277 / 1-877-TTB-FAQS
Online Form: Submit Inquiry
Last reviewed/updated 08/29/2012
When we receive your application, it is entered into TTB's tracking system, a process which may take as many as seven business days. The application is then reviewed by a TTB Wine Applications Unit Specialist. The Specialist will telephone you to discuss your application, and to request any further information that may be needed. Your application may be referred to a TTB Trade Investigations Division (TID) Field Office for on-site inspection.
Last reviewed/updated 08/29/2012
If TTB conducts an application inspection, the TTB investigator will visit your premises to determine if it is adequate for the planned operations, and interview the owners of the company to verify that the information contained in the application is accurate. The investigator will explain the TTB regulations for your operations, and answer any questions you may have about your TTB responsibilities, if your application is approved. Finally, the TTB investigator will recommend to the National Revenue Center whether to approve the application.
In addition to verifying that your physical premises will protect the revenue and are adequate for the planned operations, TTB must determine that the company's principals are not prohibited by Federal law from obtaining a Basic Permit.
Last reviewed/updated 08/29/2012