Just Opened Your Brewery – Here’s Five Tings To Do Before Production.
1) There are a lot of new pieces of equipment and other items around the brewery. The government has an expectation that you will handle them in a certain way. Every tank, vat, or cask that is going to be used as a container for wort, beer or concentrate produced from beer shall be marked with a serial number and its capacity. Further, that container must have a measuring device, unless the brewer has a portable device that can measure the contents of the tank or other container. And, be sure to keep your filled containers segregated from your empty containers.
2) You finally have your Brewer’s Notice in hand, now find a safe place to keep it and everything you submitted with it, at the brewery or somewhere else the government would consider to be “readily available” for inspection. TTB may come to the brewery or other place where beer is stored by the brewery and make inspection of items at the agent’s discretion to confirm that all operations are conducted according to law. Refusal of a government agent to examine beer will result in the forfeiture of $500 for each refusal, among other potential penalties culminating in a loss of license or criminal charges.
3) The start up phase for any producer is extremely expensive. Cutting costs where appropriate is a prudent course to take. But, in this business you have to be careful. If you have decided to purchase used kegs or barrels, the regulations require the obvious – you must either permanently remove or durably cover the name of the former brewer who used the container and replace that label with a properly approved label. There is an easy opportunity to violate regulations here because the regulation calls for the container use to be approved by the government before the keg or barrel is used.
4) Everyone hates paying taxes – so don’t pay more than you have to. Ongoing brewery operations have continued experimentation, but new breweries may create more beer unfit for consumption than a more mature operation. It is not necessary to pay tax on this production, but the brewery must track this activity appropriately. Sour or damaged beer must be removed in casks or containers of not less than a barrel and those containers must be different than those ordinarily used for packaging beer. Alternatively, the sour or damaged beer may be removed in tanks, tank cars, tank trucks, etc. In order to substantiate this activity, and avoid paying tax on the production, the brewer should make record in the daily records and on the Brewer’s Report of Operations.
5) One of the most important pieces of information that the government will inspect when it comes to a review of paperwork is the daily records of the brewer. As you open the brewery you should have a system in place to record the activity of the brewery. A summary doesn’t do this justice, so here is what the regulations require:
(a) Daily records. A brewer shall maintain daily records of operations which show by quantity the following:
- Each kind of material received and used in the production of beer and cereal beverage (including the balling and the quantity of each type of material used in the production of wort or concentrated wort).
- Beer and cereal beverage produced (including water added after production is determined).
- Beer and cereal beverage transferred for and returned from bottling.
- Beer and cereal beverage transferred for and returned from racking.
- Beer and cereal beverage bottled.
- Beer and cereal beverage racked.
- Cereal beverage removed from the brewery.
- Beer removed for consumption or sale. For each removal, the record will show the date of removal, the person to whom the beer was shipped or delivered (not required for sales in quantities of one-half barrel or less for delivery at the brewery), and the quantities of beer removed in kegs and in bottles.
- Beer removed without payment of tax. For each removal, the record will show the date of removal, the person to whom the beer was shipped or delivered, and the quantities of beer removed in kegs, bottles, tanks, tank cars, tank trucks, tank ships, barges or deep tanks of vessels.
- Packaged beer used for laboratory samples at the brewery.
- Beer consumed at the brewery.
- Beer returned to the brewery from which removed.
- Beer returned to the brewery after removal from another brewery owned by the brewer.
- Beer reconditioned, used as material, or destroyed.
- Beer received from other breweries or received from pilot brewing plants.
- Beer and cereal beverage lost due to breakage, theft, casualty, or other unusual cause.
- Brewing materials sold or transferred to pilot brewing plants (including the name and address of the person to whom shipped or delivered) and brewing materials used in the manufacture of wort, wort concentrate, malt syrup, and malt extract for sale or removal.
- Record of tests of measuring devices.
- Beer purchased from other brewers in the purchasing brewer’s barrels and kegs and such beer sold to other brewers.
(b) Daily summary records. A brewer shall maintain daily summaries of the following transactions:
- Beer and cereal beverage bottled;
- Beer and cereal beverage racked;
- Beer removed for consumption or sale;
- Beer returned to the brewery from which removed;
- Beer returned to the brewery after removal from another brewery owned by the brewer; and
- Brewing materials, beer and cereal beverage in process, and finished beer and cereal beverage on hand.
Keeping these records, along with the organization of the brewery facilities in order can be the key to a short visit by a government inspector. Should you have questions about the expectations of the government relating to the above information, or whether or not you are properly tracking what is required by the government, feel free to contact our office.