Defending Your Business from TTB’s Claims of Federal Alcohol Law Violations
Understanding TTB’s Role
The Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) is the federal agency that regulates alcohol.
The TTB issues permits to manufacturers, wholesalers, and importers. It collects excise taxes on alcoholic beverages and reports from permittees, makes rules, and issues legal guidance to the industry. It also enforces federal alcohol laws.
The TTB frequently cooperates with state alcohol agencies (ABCs) and tax agencies.
Complying with Federal Permit Rules and Other Alcohol Regulations
Federal alcohol rules are complicated and outdated. Permitted businesses need to learn about rules for alcohol permits, including who can own a permit and what they can do with their permitted business, and regulations governing wine, beer, and distilled spirits manufacturing, labelling, packaging, distribution, importation, transportation, storage, marketing, sales, and record keeping.
Understanding TTB’s Enforcement of Federal Alcohol Laws
The TTB usually only brings one or two dozen cases against permitted businesses each year.
The most common claims involve alleged failures to pay taxes and violations of federal unfair trade practice laws. Unfair trade practice laws involve four prohibited categories: (1) exclusive retail outlet,
(2) tied house, (3) commercial bribery, and (4) consignment.
TTB lawyers usually file claims in administrative proceedings before administrative law judges. TTB does not have its own judges, so judges from other agencies are assigned to alcohol cases. The judges often know little about federal alcohol regulations or the alcohol/hospitality industry.
Penalties for violations include fines, permit suspensions, and permit revocations. The TTB enforces rules against brewers by denying requests to renew their bonds. And the TTB enforces rules against retailers by filing enforcement actions in federal district court, seeking fines of up to $1,000 per offense and orders to make alcohol businesses do or refrain from doing certain actions. TTB also cooperates with state alcohol agencies to enforce rules against retailers.
To minimize the potential penalties to your business, it’s important to consult an attorney who understands federal alcohol law and knows how TTB’s enforcement procedures work.
Navigating TTB Inspections
Federal law requires suppliers to allow investigators, auditors, and special agents from the TTB to inspect their licensed premises, even if they arrive with no notice and no search warrant. Federal officials usually have a reason for a visit, such as a complaint from a customer, competitor, or law enforcement. And the TTB officials rarely call ahead in an unfair trade practice investigation; they often appear in person and unannounced.
Be firm but polite; cooperation is essential, but you do not have to respond immediately to everything TTB officials ask.
Although industry members must allow TTB officials to inspect their licensed premises without notice, you and your employees do not have to answer their questions right away. It is reasonable to tell TTB officials that you want to cooperate, but first must notify a supervisor, upper management, or a lawyer before talking further with them or surrendering any documentation.
It’s a good idea to minimize your initial communications with TTB officials so that your attorney can manage your defense.
Why Choose Gillian Garrett Law, PC for TTB Defense
Gillian has extensive experience representing industry members in TTB enforcement proceedings.
Gillian specializes in federal and California alcohol law. She recently published an eBook on federal unfair trade practices, which is available here.
Frequently Asked Questions:
Alcohol retailers (restaurants, bars, clubs, hotels, liquor stores, etc.), distributors, winemakers, brewers, distilled spirits manufacturers, rectifiers, blenders, bottlers, importers, and warehousers.
Alleged failures to pay taxes and violations of unfair trade practice laws.
The notice means the TTB is initiating an enforcement action against your licensed business. You should consult legal counsel right away to minimize potential penalties to your business.
Yes, depending on the severity of the alleged misconduct.
Penalties can include fines, suspensions, and, in extreme cases, permit revocations.
The vast majority of TTB’s enforcement cases are settled prior to trial.
Seek assistance from alcohol lawyer right away. You should be proactive about addressing any compliance issues and in communicating with TTB auditors.
If TTB’s allegations also amount to a violation of state law, the California Department of Alcoholic Beverage Control may file a similar claims against you.
Also, if TTB suspends or revokes your permit or brewer’s bond, it means you can’t operate your permitted business during that time.
It depends, but documents related to selling and marketing alcoholic beverages need to be kept for at least three years.
TTB enforces rules prohibiting false or misleading labeling on wine, beer, and spirits.
The California Department of Alcoholic Beverage Control enforces California alcohol laws.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) enforces federal alcohol laws.