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6 Common TTB Compliance Issues (And How to Avoid Them)

03/10/2016 • Shawn Patrick

Running a successful craft distillery requires the mastery of two things: recipes and record keeping. Maintaining compliance with the TTB seems like an entire job in itself. There's many common mistakes and issues with distillers reports, but there are ways to avoid them.

Top 6 Compliance Issues

There are at least six common and major issues with reports. These are so frequent the TTB created a whole webpage dedicated to explaining them. We've collected some of that information and put it all together for you here, along with a few fool-proof ways of avoiding such issues.

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1. Inadequate Physical Inventory Records

The TTB cites the failure to keep adequate physical inventory records as one of the most common compliance issues among distilleries. Inadequate inventory records includes the amount of records, signatures, and a variety of other issues. Signatures on inventory summaries and penalties of perjury statements are often missed, and inventory summaries also frequently don’t include information required by 27 CFR 19.623, most commonly the type of spirits, identification of containers, date, among others.

2. Differences in Reports

If things are recorded inaccurately or omitted from daily reports they can be less than helpful when creating monthly reports of production, storage, processing, and processing (denaturing) operations. The TTB notes that common omissions and inaccuracies occur:

Between monthly summary reports and monthly production, storage, and processing reports.

Between daily distillation logs and monthly production logs.

With mathematical calculations (adding across rows, incorrect subtraction, etc.).

Entry errors, such as beginning inventory for one month not matching the ending inventory for the previous month.

3. Transfers In Bond

When spirits change hands between qualified DSPs, it’s important that all necessary information appears on transfer reports. Transfers require that very specific information be included on the part of the consignor (entity sending the spirits) and consignee (entity receiving the spirits). These requirements are outlined in detail on the TTB’s website, in 27 CFR 19.620 for the consignor and 27 CFR 19.621 for the consignee. Paperwork with bond-to-bond transfers is frequently missing things like the signature of the consignee, notes about gains or losses, registry numbers, and the amount of proof gallons transferred.

4. Forgetting Finished Products

A daily record of finished products must be kept and used to support monthly reports. With so much going on around the distillery, it’s easy to forget about some of your product. For example, spirits disposed of by sampling or dumping for further processing may be overlooked, as may product that’s kept in an area for single bottles/partial cases, or the area where leaking product is stored. The TTB notes that records of losses or destruction are frequently incomplete, or not mentioned separately on the Monthly Report of Processing Operations.

5. Tax Rate

Shipping documents and bills of lading frequently suffer from two missing bits of information: signatures and enough information for TTB officials to calculate the appropriate tax rate. Showing the proof gallons and effective tax rate on shipping forms is the best practice, but at the very least the proof of each product and volume of each bottle should be noted so that proof gallons can be calculated.

6. Destruction

No matter how careful distillers and their employees are sometimes product will need to be destroyed. Whether it’s broken bottles or contamination issues, the information required for voluntary destruction is the same. According to the TTB, destruction records must include:

The kind, quantity, elements of gauge, name, and permit number of the producer, warehouseman, or processor, and identification and type of container.

The date, time, place, and manner of the destruction.

A statement of whether or not the spirits were previously withdrawn and returned to bond.

The name and title of the proprietor's representative who accomplished or supervised the destruction.

Documenting destroyed product with the proper information helps when distillers create the Monthly Report of Storage Operations. Not having documentation to support reported destruction of your product can result in excise taxes coming due on destroyed spirits.

Avoid Common TTB Report Errors

This may sound overwhelming - there are a lot of forms and information needed to stay completely compliant with TTB regulations. But staying on track doesn’t need to be difficult or time consuming. With the right tools and systems, it can be seamless.

Train Your Staff

You can’t be everywhere at once, which is why it’s important to have well-trained staff. Creating systems and structure around reporting on the front end and walking employees through the procedures and forms can prevent mistakes. The TTB recommends providing employees sample forms — such as loss, destruction, and leaker reporting forms — to help them learn what information is required on each. Prevent headaches later by making sure all of your staff members have the training they need to execute.

Think of the Entire Picture

When filling out daily logs, finished product records, and the like, think about your spirits’ possible lifecycles. Some may go to other DSPs, making transfer records a necessity. Others could end up in broken bottles or need to be voluntarily destroyed for other reasons, which means creating destruction records. Take a look at the entire picture and you’ll be less likely to miss important information on source documents.

Use Technology

It’s time to ditch the stacks of binders and confusing Excel spreadsheets. Busy days can quickly lead to missing information and hastily scrawled daily logs, making the creation of monthly reports an absolute nightmare. The right distillery management software makes keeping track of every barrel, bottle, and raw material simple. Most software options these days have automated reporting features that populate reports as the month progresses. But for extra security, look for software that can handle post-submission edits and an easy way to submit to TTB. OnBatch integrates directly with, so you can submit your report with one click, right from the software. No need to download an extension or deal with the website itself.

Stay Updated

Revisiting TTB regulations annually can serve as a refresher course on what information needs to be recorded and when different reports need to be generated. You'll also see any changes that have been made to tax rates or proper documentation. The TTB also recommends periodically requesting a compliance officer review your records for accuracy and routinely gauge your spirits.