Can I Store Tax-Determined Product on My TTB Bonded Premises?

Those who have applied for a TTB permit likely know that a diagram of the premises is generally required, depending on the permit time. If applicable, TTB requires that the bonded space be distinguished from the non-bonded areas. One of the requirements for this bonded space is that, generally speaking, it can only be used to store non-tax paid products, while all tax-paid products typically must be stored outside of the bonded space.

Allowing non-tax-paid products to be stored on the bonded premises helps separate products that have had their federal excise taxes paid from those that haven’t, ensuring that federal excise taxes are properly paid on products removed from the premises. However, if the bonded premises need to be expanded, moved, or shrunk, all proprietors must file an amendment with TTB explaining the changes along with a newly amended diagram.

In certain circumstances, proprietors can submit an “alternating premises” request to TTB, which allows for facilities to alternate in a way that varies from TTB requirements. This can include alternating from TTB’s requirements of storing tax-paid and non-tax paid products. When applying for an “alternating premises”, TTB has outlined a few major points to consider:

1. Proprietors should have a good cause basis for the alternate premises.

2. Proprietors should have a good compliance history.

3. Proprietors should have a system to efficiently identify the products and the alternating areas.

4. Proprietors should provide equipment that will be used to receive, track, and remove the products.

5. Proprietors should have a system to tell the tax-paid and non-tax paid products apart based on physical markings or appearance.

6. Tax-paid and non-tax paid products should not be stored or otherwise comingled in the same space at the same time.

7. Recordkeeping must be active and efficient, and any inventory discrepancies can result in the proprietor paying federal excise taxes on the discrepancies.

It is important to know that these alternating premises approvals can be rescinded or modified by TTB if the approval can jeopardize revenue or hinder effective administration of regulations.

To learn more about alternating premises guidelines visit Industry Circulars 18-3 | TTB: Alcohol and Tobacco Tax Trade Bureau or consult with an experienced attorney familiar with TTB requirements.