Monthly Archives: December 2016
We follow up our Tennessee high gravity beer news with minutia that only a serious industry member like a Brewery could appreciate. The info in this post is compliments of Bone McAllester Alcoholic Beverage team member Rob Pinson, after consulting with reliable sources. This is all subject to change, as the “law” is being interpreted. We applaud Revenue for the guidance.
$100 Brand Fee
Revenue will not require this. Whether it is for new brands, existing brands, or renewals of beer between 5-8%, Revenue will not require the $100 fee (and we do not believe that the ABC has the authority to collect it either).
For beer at or below 5% ABW
Proceed as usual. Submit territorial designation form to Revenue. No renewals.
If introducing a new beer between 5% and 8% ABW
The brewery should send in the beer territorial designation form, the ABW % for the product, a copy of the COLA (if required by TTB), a copy of the label, the wholesaler contract (which is still required under the law, even though it is technically beer), and the brand registration form (ALC119). There is no fee with this registration. Revenue will register the beer brand in both the liquor brand list and the beer brand list.
If you have an existing brand that is between 5% and 8% ABW
The brewery should send Revenue a list of their brands and the ABW % for each brand. The beer brand will remain on the liquor brand list (minus wholesaler and counties) and get added to the beer brand list. Revenue is working on a letter to go out about this and we will share this when it becomes available.
Revenue will send out renewal forms for the 5/31 renewal deadline for the liquor brand list. Breweries should follow the above guidelines to make sure they receive this in the mail. There are no renewals for beer brands at or below 5% ABW.
Beer Barrelage Tax
I have also confirmed that Revenue expects wholesalers to pay the $4.29 beer barrelage tax and not manufacturers. Although we disagree with this interpretation of the law, we are not the Tax Man. Tax on beer self-distributed by the brewery or sold on site is still subject to the tax and paid by the brewery.
We think of the classic tax song Fortunate Son by Creedence Clearwater Revival:
Some folks are born silver spoon in hand
Lord, don’t they help themselves, oh
But when the taxman comes to the door
Lord, the house looks like a rummage sale, yes
On January 1, 2017, the legal definition of beer in Tennessee changes from 5% to 8% alcohol by weight. Meaning that beers with less than roughly 10% alcohol by volume no longer fall into that crazy category known as high gravity beer.
In Tennessee, beers stronger than 5% by weight or around 6.5% by volume were taxed and distributed as alcoholic beverages. For consumers, it meant higher prices and not being able to buy a high grav beer at a grocery or convenience store.
No longer. Although there are a few serious suds stronger than 8% by weight, the vast majority of high gravity beers will magically become regular “beer” in the New Year. You can Kroger for high grav. You will no longer pay the 15% alcoholic beverage tax at restaurants and bars.
The ancient and odd (at least to us) New Year’s traditional tune Auld Lang Syne comes to mind:
we’ll take a cup of kindness yet,
for auld lang syne.
And surely you’ll buy your pint cup!
and surely I’ll buy mine!
The new law fails to anticipate a number of details, which we expect will confuse industry members for some time. But, please, everyone say thanks to the Tennessee Legislature for fixing the high gravity beer problem.
We often get this question during the holidays? Can my restaurant or bar give a bottle of wine or spirits to a vendor or good customer for Christmas in Tennessee?
We recommend not.
First, we suspect that an ABC agent will presume that the restaurant is giving away alcohol for off-premises consumption, which is a huge no no.
Legally, we think that an owner of a restaurant should be able to purchase alcohol at a liquor store and give it as a gift. The dilemma is that the owner will certainly include a card that indicates that the gift is on behalf of the restaurant. It looks like the restaurant is making the gift.
Although you may be able to contest the citation, the gift of alcohol raises too many problems and we recommend against it.
A Christmas classic cones to mind:
Mom got drunk and Dad got drunk at our Christmas party
We were drinking champagne punch and homemade eggnog
Little sister brought her new boyfriend
He was a Mexican
We didn’t know what to think of him until he sang
Feliz Navidad, Feliz Navidad
We love the transparency of the new Tennessee ABC regime under relatively new Director Clay Byrd. For example, at the regular December ABC meeting, Assistant Director Zach Blair announced the following issues for the 2017 legislative session.
Please keep in mind that this is our take on the announcement and not official positions of the ABC.
· Conflicts of interest at ABC – currently relatives of ABC staff and commissioners cannot hold server permits. The ABC wants to permit this.
· Delinquencies with wholesalers – current law requires an automatic admin hearing if more than two delinquencies occur in a given period of time. The ABC wants to remove the mandatory hearing and be able to issue citations.
· Indirect interests – the ABC wants to define this by statute, probably similar to what the draft proposed rules say.
· Underage sale citations – the ABC wants to expand the civil penalty options.
· Donated alcohol to special occasion licenses – the ABC wants to permit this expressly for auctioning off the bottles.
· Private party – the ABC wants to codify a definition for this; we are not sure what it will be.
· Seasonal closings – the ABC wants to expand the areas where this is permitted; currently only allowed in river resort districts.
· Eligibility for server permits – the ABC wants to codify the felonies that prohibit someone from getting a server permit.
· Revocations – the ABC wants to codify the draft proposed rule that surrendering a license can be treated as a revocation when there is an agreed order signed.
Special thanks to Bone alcoholic beverage team member Rob Pinson for this summary.
Brings to mind the AC/DC classic “Breaking the Rules”
Just keep on breakin’ the rules
C’mon get ready to rule
Just keep on breakin’ the rules
A small but important silver lining for moonshiners in Sevier County. After the tragic fire, we asked the TTB to consider easing the deadlines on reporting and paying excise taxes – to give impacted distilleries time to recover. We blogged about it here.
The announcement from TTB is great news and here is the e-mail:
The Alcohol and Tobacco Tax and Trade Bureau (TTB) recognizes that the devastation caused by wildfires in and around Gatlinburg, Tennessee, may have affected your operations. As a result, you may not be able to timely file returns or timely pay or deposit the excise taxes administered by TTB, as required by the Internal Revenue Code. TTB will consider waiving late filing, payment, or deposit penalties on a case-by case basis. Waivers will be approved based on the statutory standard of reasonable cause and a lack of willful neglect.
To qualify for such a waiver, you must:
1) Demonstrate, to the satisfaction of the appropriate TTB officer, that the wildfires or related events directly affected your ability to timely file tax returns and/or pay or deposit excise taxes; and
2) Contact the TTB National Revenue Center at
One of Willa’s favorites by Alan Jackson comes to mind:
Pop a top again
I think I’ll have another round
Set ’em up my friend
Then I’ll be gone and you can let some other fool sit down.
The new leadership at the Tennessee ABC has been issuing informal guidelines on a variety of subjects. We love the informal rules and hope they keep coming.
At the links are FAQS for wholesalers and liquor-by-the-drink, aka restaurants, bars, hotels, venues and other on-premise license holders.
Made our buddy Willa think about Charlie Daniel’s hit Drinkin’ My Baby Goodbye:
Well I’m a
Sitting on a bar stool
Acting like a dern fool
Reliable industry sources indicate that miraculously, all of the numerous distilleries in Sevier County, Tennessee escaped wildfires that ravished Gatlinburg, Pigeon Forge and surrounding areas. The fires on the strip of Gatlinburg came perilously close. Here is a photo from the security cameras at one distillery on the strip:
At this time, we understand that a few restaurants were mostly likely destroyed by the fires, but we have no specific information. Keep in mind that civilians have not been allowed back into Gatlinburg since the fires.
Although distillery facilities escaped direct impact from the fires, we expect that there may be smoke damage, difficulty with retrieving records and certainly time-related pressure for filing returns. We have reached out to our contacts at TTB and have requested that TTB consider a procedure for late filing and payment of taxes for impacted distilleries. You can learn more about the TTB claims process at this link:
Rob Pinson and Will Cheek have agreed to provide complimentary legal services to assist impacted distilleries with immediate legal needs resulting from the fires. If you have questions concerning TTB, ABC or Tennessee Department of Revenue issues from the fire, please reach out to us at firstname.lastname@example.org or email@example.com.
Although distilleries escaped the worst of the fires, several distillery employees lost their homes and nearly everything they own. Our thoughts go out to these folks and we encourage everyone to consider making a donation to help these industry members. We know of the following assistance funds that have already been set up.
1) Monetary donations can be mailed to:
CNB, 2661 Parkway, Pigeon Forge, TN 37865
Sugarlands Employee Emergency Assistance Fund – Account Number 4036124
2) Gift card donations can be mailed to:
Sugarlands Employee Emergency Assistance, C/O Sugarlands Distilling Company,
P.O. Box 1517, Pigeon Forge, TN 37865
If any distillery has a fund to add to this list, please e-mail us at firstname.lastname@example.org.
We wish the best to our friends during this tragic time.