TTB Offers Temporary Voluntary Disclosure Program for Owner/Operator Changes
July 16, 2019
By Maureen Herrera, Director of Compliance
According to the Alcohol and Tobacco Tax and Trade Bureau (TTB), a significant number of wholesalers and importers have failed to keep their Federal Basic Permits up to date. Failure to report changes to a Federal Basic Permit to TTB can result in suspension of the federal license and hefty fines.
To address this issue in a less punitive way, the TTB has opened a temporary voluntary disclosure window for wholesalers and importers through the end of 2019. During this window, TTB will exercise enforcement discretion for penalties that result from unreported changes to a Federal Basic Permit for eligible industry members that participate in this temporary program.
The special edition TTB newsletter, released on July 7, 2019, addressed wholesalers and importers who had a change in control of a business or a change in ownership, but did not file a new permit application within 30 days of the change, as required by law.
What is Voluntary Disclosure?
TTB describes voluntary disclosure as “the intentional disclosure to authorized TTB officials of material facts by industry members regarding their non-compliance with the laws and regulations TTB administers.” During the temporary voluntary disclosure window, eligible wholesalers and importers may initiate voluntary disclosures of non-compliance with TTB laws and regulations as well as any irregularities they find in their operations that are potential violations of law or regulations.
Any industry member with a federal permit out of compliance can file a voluntary disclosure with the TTB. What’s different about this temporary voluntary disclosure program is the streamlined document exchange process to complete the new permit. The temporary program for wholesalers and importers fast-tracks the process for eligible applicants by combining the voluntary disclosure with the filing of the new application. This streamlined procedure reduces the burden on eligible industry members while also providing TTB a short-term process to specifically address the increased volume of submissions related to these disclosures.
Who is Investigating?
The Federal Alcohol Administration Act (FAA Act) is the educational and enforcement vehicle of TTB for those engaged in the beverage alcohol industry and for the protection of the consumer. The post-prohibition-era FAA Act has been in place since 1933. The departments tasked with investigations are split into three teams:
1. Tax Audit Division (TAD). Created in 2001, the TAD is comprised of auditors who run full-scope audits, including the examination of many areas of a taxpayer’s record. The auditors examine a taxpayer’s general ledgers, inventory and production systems, and automated data processing procedures as they relate to compliance with federal laws and regulations. The TAD auditors also examine internal controls as they relate to the preparation of operating reports and tax returns.
2. Trade Investigations Division (TID). The TID is comprised of investigators who ensure industry members comply with the laws and regulations administered by TTB. The TID is responsible for applicant investigations, label and advertising investigations, Certificate of Label Approval (COLA) examinations, product safety issues, field investigation, and trade practice questions and complaints
3. Intelligence Division (ID). The ID of TTB collects, analyzes, and shares intelligence with other TTB divisions to enforce laws and regulations. The intelligence this division collects includes information and data from the IRS, law enforcement, and other state agencies. The ID includes the Risk Management (RM) branch that develops, implements, and analyzes risk for Field Operations, including preparations for criminal case prosecution.
In recent years, TTB received an appropriation of funds for improved enforcement. Through the efforts of the three divisions above, an increased number of violations have been identified, investigated, and resolved.
As a wholesaler, importer, or manufacturer of beverage alcohol, changes to your company’s proprietorship or control must be submitted within 30 days of the change in order for your business to be compliant. The process to report changes may differ based on your company’s business structure. TTB’s website offers great assistance to help your business through this process.