Those in the distilled spirits production and distribution business already know that merely receiving Federal TTB alcohol permits and then operating a business can be a daunting task for even the most experienced in the industry. The distilling industry is governed by a myriad of complex federal laws and regulations under the jurisdiction of the Alcohol and Tobacco Tax and Trade Bureau (TTB). To start with, alcohol producers including distillers are all required to rst obtain a basic permit from TTB and otherwise qualify with the agency before operations can begin. Recent case law demonstrates that if your distilled spirits making business is contemplating a change to its business structure, the business would do well to rst become familiar with the area of the law involving TTB changes of control and changes of proprietorship. Such rules can place unsuspecting business owners in situations where their TTB permit has terminated without them even being aware of it! Sometimes such11.30 - 12.15pm

changes of control can happen even in the most passive of ways. Recent case law notes that this can lead to405

disastrous consequences. Among other things, the case law illustrates the potential excise tax pitfalls in such change of control situations. For example, for smaller alcohol producers who enjoy the small producer rate for distilled spirits production, TTB may disallow the small producer rate $2.70 per proof gallon and instead impose and assess taxes at the much higher rate of $13.50 for distilled spirits. Even for small producers this imposition of the higher tax rate could result in TTB’s assessments of very large tax liabilities. Moreover, as can be seen from the above, a failure to timely comply with TTB’s change of control and change in ownership/proprietorship requirements can result in severe consequences: the automatic termination of the TTB permits, ceased operations, and even signi cant tax consequences. Alcohol business entities, particularly distillers need to be very vigilant when it comes to identifying and timely reporting changes to their business structure to TTB. Other relevant topics, time permitting, can include:

1. Tax issues related to the newly implemented Tax Cuts and Jobs Act and its signi cant impact on

Distillers;

2. The TTB o er in compromise process in tax matters.