From the tanks to the tasting room.

Your TTB bond and tax return schedule

Before the first batch, a brewery needs TTB approval. Under 27 CFR 25.61, operations as a brewer may be conducted only by a person who has given notice on the Brewer's Notice, Form 5130.10, and no one may start the business until TTB approves the brewery and the notice. Section 25.91 adds a brewer's bond on Form 5130.22, filed with the original notice, with a new bond or continuation certificate once every 4 years. A winery's bond for excise taxes is the Wine Bond, TTB F 5120.36, under 27 CFR 24.146.

Whether you need the bond turns on your return period. The beer rule (25.164) and the wine rule (24.271) both make semimonthly returns the default for deferred tax payment, generally due by the 14th day after the period ends, with a special September schedule. Two other options exist:

• Quarterly: if you were liable for no more than $50,000 in that excise tax in the prior calendar year and reasonably expect no more than $50,000 in the current year.
• Annual: the same test at $1,000.

A brewer paying tax on a deferred basis is not required to provide a bond for any part of a calendar year in which it is eligible for annual or quarterly returns (25.91(e)), and 24.146(d) has a matching rule for wine for nonindustrial use. Once tax due during the year exceeds the limit, you cannot use that return period for the rest of the year, and the regulations set out when bond coverage must then be in place.

What this means for your file: under 25.91(b), the brewer's bond is conditioned on complying with the law and paying the tax. If a new distribution deal could push your tax past $50,000, plan the bond before the volume arrives, and tell me, because the same growth changes the sales and payroll figures on your product liability and workers' comp applications.

Tanks, fermenters and confined spaces

Oregon OSHA's hazard alert on winery vessels warns that workers cleaning or emptying tanks, or checking fermentation, are sometimes sent into a tank, and that the air inside may not support life when gases such as carbon dioxide have displaced oxygen. It adds that carbon dioxide is odorless, so smell is no warning, and that generally all winery tanks are permit-required confined spaces. A brewery fermenter is a tank too. Cal/OSHA's rule, Title 8 Section 5157, lists tanks, vessels, silos and pits as examples of spaces with limited means of entry; a confined space is also large enough to enter and work in and not designed for continuous occupancy. It becomes a permit-required space if it contains or could contain a hazardous atmosphere, which includes oxygen below 19.5 percent or above 23.5 percent.

What Section 5157 requires of the employer:

1. Evaluate the workplace to find any permit-required confined spaces.
2. Inform employees of each permit space, by posting danger signs or another equally effective means.
3. If employees will enter, develop and carry out a written permit space program, available for inspection by employees.
4. Test conditions before entry; when testing the atmosphere, test oxygen first, then combustible gases and vapors, then toxic gases and vapors.
5. Provide at least one attendant outside the space for the duration of entry operations.
6. Ensure at least one standby person at the site is trained and immediately available for rescue and emergency services.

Federal OSHA and other state plans have their own confined space rules, so outside California check the standard that applies to you. When I market a brewery or winery, I ask whether there is a written program, a gas meter and a named attendant, because carriers writing workers' compensation for a production facility ask the same questions.

Official sources

• 27 CFR 25.61, General requirements for notice (Cornell LII)
• 27 CFR 25.91, Requirement for bond (Cornell LII)
• 27 CFR 25.164, Beer deferred payment return periods (Cornell LII)
• 27 CFR 24.146, Wine bonds (Cornell LII)
• 27 CFR 24.271, Wine deferred payment return periods (Cornell LII)
• California ABC, License Types
• Cal/OSHA Title 8 Section 5157, Permit-Required Confined Spaces
• Oregon OSHA Hazard Alert 2993-6, Confined Spaces: Winery Vessels
• 21 CFR 1.230, When to register or renew (Cornell LII)
• 21 CFR 117.5, Exemptions (Cornell LII)