27 C.F.R. Subpart H—Bonds and Consents of Surety
Title 27 - Alcohol, Tobacco Products and Firearms
Every person intending to establish a distilled spirits plant shall file an operations or unit bond as prescribed in this subpart, covering distilled spirits operations at such plant, with the appropriate TTB officer, at the time of filing the original application for registration of the plant, and at such other times as are required by this part. Such bond shall be conditioned that he shall faithfully comply with all provisions of law and regulations relating to activities covered by such bond, will pay all taxes imposed by 26 U.S.C. Chapter 51, and shall pay all penalties incurred or fines imposed for violation of any such provisions. The appropriate TTB officer may require, in connection with any operations or unit bond, a statement, executed under the penalties of perjury, as to whether the principal or any person owning, controlling, or actively participating in the management of the business of the principal has been convicted of or has compromised any offense set forth in §19.237(a)(1) or has been convicted of any offense set forth in §19.237(a)(2). In the event the above statement contains an affirmative answer, the applcant shall submit a statement describing in detail the circumstances surrounding such conviction or compromise. No person shall comence or continue distilled spirits operations at such plant unless he has a valid operations or unit bond (and consent of surety, if necessary), as required in respect of such operations by this part. (Sec. 201, Pub. L. 85–859, 72 Stat. 1394, as amended (26 U.S.C. 5551); sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) [T.D. ATF–198, 50 FR 8464, Mar. 1, 1985; 50 FR 23410, June 4, 1985] In addition to the requirements of §19.231, the operations bond shall be conditioned on payment of the tax now or hereafter in force, except as provided by law, including taxes on all unexplained shortages of bottled distilled spirits. (Sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) (a) Surety bonds required by this part may be given only with corporate sureties holding certificates of authority from, and subject to the limitations prescribed by, the Secretary as set forth in the current revision of Treasury Department Circular 570 (Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies). (b) Treasury Department Circular No. 570 is published in the (Ch. 390, Pub. L. 80–280, 61 Stat. 648 as amended (31 U.S.C. 9304, 9306)) In lieu of corporate surety, the principal may pledge and deposit, as surety for his bond, securities which are transferable and are guaranteed as to both interest and principal by the United States, in accordance with the provisions of 31 CFR part 225. (Ch. 390, Pub. L. 80–280, 61 Stat. 650 (31 U.S.C. 9301, 9303)) Consents of surety to changes in the terms of bonds shall be executed on Form 1533 by the principal and by the surety with the same formality and proof of authority as is required for the execution of bonds. (Sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) (a) Filing. Each bond, and each consent to changes in the terms of a bond, shall be accompanied by a power of attorney authorizing the agent or officer who executed the bond or consent to so act on behalf of the surety. The appropriate TTB officer who is authorized to approve the bond may require additional evidence of the authority of the agent or officer to execute the bond or consent. (b) Execution. The power of attorney shall be prepared on a form provided by the surety company and executed under the corporate seal of the company. If the power of attorney submitted is other than a manually signed original, it shall be accompanied by certification of its validity. (Ch. 390, Pub. L. 80–280, 61 Stat. 648 (31 U.S.C. 9304, 9306)) (a) Disapproval. The appropriate TTB officer may disapprove any bond or consent of surety submitted in respect to the operations of a distiller, warehouseman, or processor, if the principal or any person owning, controlling, or actively participating in the management of the business of the principal shall have been previously convicted, in a court of competent jurisdiction of— (1) Any fraudulent noncompliance with any provision of any law of the United States, if such provision related to internal revenue or customs taxation of spirits, wines, or beer, or if such an offense shall have been compromised with the person on payment of penalties or otherwise, or (2) Any felony under a law of any State or the District of Columbia, or the United States, prohibiting the manufacture, sale, importation, or transportation of spirits, wine, beer, or other intoxicating liquor. (b) Appeal. Where a bond or consent of surety is disapproved by the appropriate TTB officer, the person giving the bond may appeal to the Administrator, who will hear such appeal. The decision of the Administrator shall be final. (Sec. 201, Pub. L. 85–859, 72 Stat. 1394, as amended (26 U.S.C. 5551))
Title 27: Alcohol, Tobacco and Firearms
PART 19—DISTILLED SPIRITS PLANTS
Subpart H—Bonds and Consents of Surety
§ 19.231 Filing of operations or unit bonds.
§ 19.232 Additional condition of operations bond.
§ 19.233 Corporate surety.
§ 19.234 Deposit of securities in lieu of corporate surety.
§ 19.235 Consents of surety.
§ 19.236 Filing and execution of powers of attorney.
§ 19.237 Disapproval of bonds or consents of surety.
§§ 19.238-19.240 [Reserved]
§ 19.241 Operations bond—distilled spirits plant and adjacent bonded wine cellar.
(a) General. A wine cellar under the provisions of 27 CFR part 24 shall be treated as being adjacent to a distilled spirits plant if—
(1) Such distilled spirits plant is qualified under subpart G for the production of distilled spirits; and
(2) Such wine cellar and distilled spirits plant are operated by the same person (or in the case of a corporation, by such corporation and its controlled subsidiaries). For the purpose of this section a controlled subsidiary is a corporation where more than 50 percent of the voting power is controlled by the parent corporation.
(b) Bond in lieu of wine cellar bond. In the case of an adjacent bonded wine cellar, a bond furnished under this subpart which covers operations at such bonded wine cellar shall be in lieu of any bond which would otherwise be required under 26 U.S.C. 5354 with respect to such wine cellar (other than supplemental bonds required under the second sentence of 26 U.S.C. 5354) and the operations bond listed in §19.245(a)(1).
(c) Liability. Bonds given under this section shall contain the terms and conditions of the bonds in lieu of which they are given. The total amount of such operations bond shall be available for the satisfaction of any liability incurred under the terms or conditions of such bond.
(Sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173))
[T.D. ATF–198, 50 FR 8464, Mar. 1, 1985, as amended by T.D. ATF–299, 55 FR 24989, June 19, 1990]
§ 19.242 Area operations bond.
Any person (or, in the case of a corporation, a corporation and its controlled subsidiaries) operating more than one plant in a region may give an area operations bond covering the operation of any two or more of such plants, and any bonded wine cellars which are adjacent to such plants and which otherwise could be covered by an operations bond. For the purpose of this section, a controlled subsidiary is a corporation where more than 50 percent of the voting power is controlled by the parent corporation. Bonds given under this section shall be in lieu of the bonds which would be required under §19.245(a) and shall contain the terms and conditions of such bonds. If the area operations bond covers the operations of more than one corporation, each corporation shall be shown as principal, and the bond shall be signed for each corporation. The total amount of the area operations bond shall be available for the satisfaction of any liability incurred under the terms or conditions of such bond.
(Sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173))
§ 19.243 Withdrawal bond.
Any person (or, in the case of a corporation, a corporation and its controlled subsidiaries) operating one or more distilled spirits plants within a region and who intends to withdraw spirits from bond on determination, but before payment, of the tax shall, before making any such withdrawal, furnish a withdrawal bond to secure payment of the tax on all spirits so withdrawn. Such bond shall be in addition to the operations bond, and if the distilled spirits are withdrawn under the withdrawal bond, the operations bond shall no longer cover liability for payment of the tax on the spirits withdrawn. For the purpose of this section, a controlled subsidiary is a corporation where more than 50 percent of the voting power is controlled by the parent corporation. The bond, if it covers more than one plant, shall show as to each plant covered by the bond the part of the total sum which represents the penal sum (computed in accordance with §19.245) for each such plant. If the penal sum of the bond covering a plant, or the penal sum allocated to any plant (where the bond covers more than one plant), is in an amount less than the maximum prescribed in §19.245, withdrawals from such plant shall not exceed the quantity permissible, as reflected by the penal sum in the bond for such plant. Such withdrawal bond shall be conditioned that the total amount of the bond shall be available for satisfaction of any liability incurred under the terms and conditions of such bond.
(Sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173))
§ 19.244 Unit bond.
Any person (or, in the case of a corporation, a corporation and its controlled subsidiaries) who would otherwise be required to give bonds for both operations at one or more distilled spirits plants (and any adjacent bonded wine cellars) and withdrawals from one or more distilled spirits plants within a reigon may, in lieu of furnishing separate bonds for operations and withdrawals, furnish a unit bond containing the terms and conditions of the bonds in lieu of which it is given. For the purpose of this section, a controlled subsidiary is a corporation where more than 50 percent of the voting power is controlled by the parent corporation. The unit bond shall show as to each plant covered by the bond the part of the total sum which represents the penal sum (computed in accordance with §19.245) for operations at and withdrawals from each plant. If the penal sum of the bond covering a plant, or the penal sum allocated to any plant (if the bond covers more than one plant), is in an amount less than the maximum prescribed in §19.245, operations at and/or withdrawals from such plant shall not exceed the quantity permissible as reflected by the penal sum in the bond for such plant. The unit bond shall be conditioned that the total amount of the bond shall be available for satisfaction of any liability incurred under the terms and conditions of such bond.
(Sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173))
§ 19.245 Bonds and penal sums of bonds.
The bonds, and the penal sums thereof, required by this subpart, are as follows:
Penal Sum---------------------------------------------------------------------------------------------------------------- Type of bond Basis Minimum Maximum----------------------------------------------------------------------------------------------------------------(a) Operations bond: (1) One plant bond_ (i) Distiller............................. The amount of tax on spirits produced $5,000 $100,000 during a period of 15 days. (ii) Warehouseman: (A) General............................. The amount of tax on spirits and wines 5,000 200,000 deposited in, stored on, and in transit to bonded premises. (B) Limited to storage of spirits in ......do.............................. 5,000 50,000 packages to a total of not over 50,000 proof gallons. (iii) Distiller and warehouseman.......... The amount of tax on spirits produced 10,000 200,000 during a period of 15 days, and the amount of tax on spirits and wines deposited, in stored on, and in transit to bonded premises. (iv) Distiller and processor.............. The amount of tax on spirits produced 10,000 200,000 during a period of 15 days, and the amount of tax on spirits, denatured spirits, articles, and wines deposited in, stored on, and in transit to bonded premises. (v) Warehouseman and processor: (A) General............................. The amount of tax on spirits, 10,000 250,000 denatured spirits, articles, and wines deposited in, stored on, and in transit to bonded premises. (B) Limited to storage of spirits or ......do.............................. 10,000 50,000 denatured spirits in packages to a total of not over 50,000 proof gallons, and processing of spirits or denatured spirits so stored. (vi) Distiller, warehouseman, and The amount of tax on spirits produced 15,000 250,000 processor. during a period of 15 days, and the amount of tax on spirits, denatured spirits, articles, and wines deposited in, stored on, and in transit to bonded premises. (2) Adjacent bonded wine cellars_ (i) Distiller and bonded wine cellar...... The sum of the amount of tax 6,000 150,000 calculated in (a)(1)(i) and with respect to bonded wine cellar operations, the amount of tax on wines and wine spirits possessed and in transit. (ii) Distiller, warehouseman and bonded The sum of the amount of tax 11,000 250,000 wine cellar. calculated in (a)(1)(iii) and with respect to bonded wine cellar operations, the amount of tax on wines and wine spirits possessed and in transit. (iii) Distiller, processor and bonded wine The sum of the amount of tax 11,000 250,000 cellar. calculated in (a)(1)(iv) and with respect to bonded wine cellar operations, the amount of tax on wines and wine spirits possessed and in transit. (iv) Distiller, warehouseman, processor The sum of the amount of tax 16,000 300,000 and bonded wine cellar. calculated in (a)(1)(vi) and with respect to bonded wine cellar operations, the amount of tax on wines and wine spirits possessed and in transit.(b) Area operations bond: The penal sum shall be calculated in accordance with the following table:---------------------------------------------------------------------------------------Total penal sums as determined under (a) Requirements for penal sum of area operations bond---------------------------------------------------------------------------------------Not over $300,000............................. 100 percent.Over $300,000 but not over $600,000........... $300,000 plus 70 percent of excess over $300,000.Over $600,000 but not over $1,000,000......... $510,000 plus 50 percent of excess over $600,000.Over $1,000,000 but not over $2,000,000....... $710,000 plus 35 percent of excess over $1,000,000.Over $2,000,000............................... $1,060,000 plus 25 percent of excess over $2,000,000.---------------------------------------------------------------------------------------(c) Withdrawal bond: (1) One plant qualified for distilled The amount of tax which, at any one 1,000 1,000,000 spirits operations. time, is chargeable against such bond but has not been paid. (2) Two or more plants in a region qualified Sum of the penal sums for each plant (\1\ ) (\2\ ) for distilled spirits operations. calculated in (c)(1) of this section.(d) Unit bond: (1) Both operations at a distilled spirits Total penal sums of (a) and (c)(1) of 6,000 1,300,000 plant (and any adjacent bonded wine cellar) this section. and withdrawals from the bonded premises of the same distilled spirits plant. (2) Both operations at two or more distilled Total penal sums of (b) and (c)(2) of (\3\ ) (\4\ ) spirits plants (and any adjacent bonded this section in lieu of which given. wine cellar) within the same region and withdrawals from the bonded premises of the same distilled spirits plants.----------------------------------------------------------------------------------------------------------------\1\ Sum of the minimum penal sums required for each plant covered by the bond.\2\ Sum of the maximum penal sums required for each plant covered by the bond. (The maximum penal sum for one plant is $1,000,000.)\3\ Sum of the minimum penal sums for operations and withdrawal bonds required for each plant covered by the bond.\4\ Sum of the maximum penal sums for area operations bonds and withdrawal bonds required for the plants covered by the unit bond.
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(Sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) [T.D. ATF–198, 50 FR 8464, Mar. 1, 1985; 50 FR 23410, June 4, 1985] § 19.246 Strengthening bonds.In all cases when the penal sum of any bond becomes insufficient, the principal shall either give a strengthening bond with the same surety to attain a sufficient penal sum, or give a new bond to cover the entire liability. Strengthening bonds will not be approved where any notation is made thereon which is intended, or which may be construed, as a release of any former bond, or as limiting the amount of any bond to less than its full penal sum. Strengthening bonds shall show the current date of execution and the effective date. (Sec. 201, Pub. L. 85–859, 72 Stat. 1394, as amended (26 U.S.C. 5551); sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) New or Superseding Bonds§ 19.247 General.New bonds shall be required in case of insolvency or removal of any surety, and may, at the discretion of the appropriate TTB officer, be required in any other contingency affecting the validity or impairing the efficiency of such bond. Executors, administrators, assignees, receivers, trustees, or other persons acting in a fiduciary capacity, continuing or liquidating the business of the principal, shall execute and file a new bond or obtain the consent of the surety or sureties on the existing bond or bonds. When, under the provisions of §19.250, the surety on any bond given under this subpart has filed an application to be relieved of liability under said bond and the principal desires or intends to continue the business of operations to which such bond relates, he shall file a valid superseding bond to be effective on or before the date specified in the surety's notice. New or superseding bonds shall show the current date of execution and the effective date. (Sec. 201, Pub. L. 85–859, 72 Stat. 1353, as amended, 1394, as amended (26 U.S.C. 5175, 5176, 5551); sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) § 19.248 New or superseding bond.(a) Operations bond. When a new or superseding operations bond is not given as required in §19.247, the principal shall immediately discontinue the business or distilled spirits operations to which such bond relates. (b) Withdrawal bond. When a new or superseding withdrawal bond is not given as required by §19.247, the principal may not withdraw any distilled spirits from bonded premises (other than distilled spirits withdrawn under 26 U.S.C. 5214 or 7510) except on prior payment of tax. (c) Unit bond. When a new or superseding unit bond is not given as required by §19.247, the principal shall immediately discontinue the business or distilled spirits operations to which such bond relates and may not withdraw any distilled spirits from bonded premises (other than distilled spirits withdrawn under 26 U.S.C. 5214 or 7510) except on prior payment of tax. (Sec. 201, Pub. L. 85–859, 72 Stat. 1353, as amended (26 U.S.C. 5175, 5176); sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) Termination of Bonds§ 19.249 Termination of bonds.Operations, withdrawal, or unit bonds may be terminated as to liability for future withdrawals and/or to future production or deposits. (a) Pursuant to application of the surety as provided in §19.250. (b) On approval of a superseding bond. (c) On notification by the principal that he has discontinued withdrawals under the bond if such bond was filed solely as a withdrawal bond, or (d) On notification by the principal that he has discontinued business. (Sec. 201, Pub. L. 85–859, 72 Stat. 1353, as amended (26 U.S.C. 5175, 5176); sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) § 19.250 Application of surety for relief from bond.A surety on any operations, withdrawal, or unit bond may at any time in writing notify the principal and the appropriate TTB officer in whose office the bond is on file that he desires, after a date named, to be relieved of liability under said bond. Such date shall be not less than 10 days after the date the notice is received by the appropriate TTB officer in the case of a withdrawal bond, and not less than 90 days after the date the notice is received in the case of an operations or unit bond. The surety shall also file with the appropriate TTB officer an acknowledgment or other proof of service on the principal. If such notice is not thereafter in writing withdrawn, the rights of the principal as supported by said bond shall be terminated on the date named in the notice, and the surety shall be relieved from liability to the extent set forth in §19.251. (Sec. 201, Pub. L. 85–859, 72 Stat. 1353, as amended (26 U.S.C. 5175, 5176); sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) § 19.251 Relief of surety from bond.(a) General. The surety on an operations, withdrawal, or unit bond who has filed application for relief from liability as provided in §19.250 shall be relieved from liability under such bond as set forth in this section. (b) Operations or unit bonds. Where a new or superseding bond is filed, the surety shall be relieved of future liability with respect to production and deposits wholly subsequent to the effective date of the new or superseding bond. Notwithstanding such relief, the surety shall remain liable for the tax on all distilled spirits or wines produced, or for other liabilities incurred, during the term of the bond. Where a new or superseding bond is not filed the surety shall, in addition to the continuing liabilities above specified, remain liable under the bond for all spirits or wines on hand or in transit to the bonded premises or bonded wine cellar, as the case may be, on the date named in the notice until all such spirits or wines have been lawfully disposed of, or a new bond has been filed by the principal covering the same. (c) Withdrawal or unit bonds. The surety shall be relieved from liability for withdrawals made wholly subsequent to the date specified in the notice, or the effective date of a new bond, if one is given. (Sec. 201, Pub. L. 85–859, 72 Stat. 1353, as amended (26 U.S.C. 5176,); sec. 805(c), Pub. L. 96–39, 93 Stat. 276 (26 U.S.C. 5173)) § 19.252 Release of pledged securities.Securities of the United States pledged and deposited as provided in §19.234 shall be released only in accordance with the provisions of 31 CFR part 225. Such securities will not be released by the appropriate TTB officer until liability under the bond for which they were pledged has been terminated. When the appropriate TTB officer is satisfied that they may be released, he shall fix the date or dates on which a part or all of such securities may be released. At any time prior to the release of such securities, the appropriate TTB officer may extend the date of release for such additional length of time as he deems necessary. (Ch. 290, Pub. L. 80–280, 61 Stat. 650 (31 U.S.C. 9301, 9303)) Browse Previous | Browse Next
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