27 C.F.R. Subpart H—Bonds and Consents of Surety
Title 27 - Alcohol, Tobacco Products and Firearms
(a) General. Every person intending to commence the business of a brewer shall file a bond, Form 5130.22, as prescribed in this subpart, covering operations at the brewery, at the time of filing the original Brewer's Notice, Form 5130.10. Every brewer intending to continue the business of a brewer shall, once every 4 years, or as provided in §25.95, execute and file a new bond, or continuation certificate as provided in §25.97. (b) Conditions of the bond. The Brewer's Bond, Form 5130.22, will be conditioned upon the brewer faithfully complying with all provisions of law and regulations relating to the activities covered by the bond, and upon paying all taxes imposed by 26 U.S.C. Chapter 51 and all interest and penalties incurred or fines imposed for violations of those provisions. (c) Additional information. The appropriate TTB officer shall require, in connection with any brewer's 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 §25.101(a)(1), or has been convicted of any offense set forth in §25.101(a)(2). In the event the above statement contains an affirmative answer, the applicant shall submit a statement describing in detail the circumstances surrounding the conviction or compromise. (d) Bond required before beginning business. A person may not begin business or continue business as a brewer until first receiving notice that the appropriate TTB officer has approved the bond, continuation certificate, or consent of surety, as required by this part. (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401); sec. 4(a), Pub. L. 91–673, 84 Stat. 2057 (26 U.S.C. 5417)) [T.D. ATF–224, 51 FR 7673, Mar. 5, 1986, as amended by T.D. ATF–437, 66 FR 5479, Jan. 19, 2001] A brewer may change the terms of any bond filed under this part by filing a consent of surety. Consents of surety will be executed on Form 1533 (5000.18) by the brewer and the surety on the bond, with the same formality and proof of authorization as required for the execution of a bond. (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) (a)(1) Brewers filing semimonthly tax returns. For brewers filing tax returns and remitting taxes semimonthly under §25.164(c)(2), the penal sum of the brewers bond must be equal to 10 percent of the maximum amount of tax calculated at the rates prescribed by law which the brewer will become liable to pay during a calendar year during the period of the bond on beer: (i) Removed for transfer to the brewery from other breweries owned by the same brewer; (ii) Removed without payment of tax for export or for use as supplies on vessels and aircraft; (iii) Removed without payment of tax for use in research, development, or testing; and (iv) Removed for consumption or sale. (2) Brewers filing quarterly tax returns. For brewers filing tax returns and remitting taxes quarterly under §25.164(c)(3), the penal sum of the brewers bond must be equal to 29 percent of the maximum amount of tax calculated at the rates prescribed by law which the brewer will become liable to pay during a calendar year during the period of the bond on beer: (i) Removed for transfer to the brewery from other breweries owned by the same brewer; (ii) Removed without payment of tax for export or for use as supplies on vessels and aircraft; (iii) Removed without payment of tax for use in research, development, or testing; and (iv) Removed for consumption or sale. (b) Concentrate. A brewer who concentrates beer under subpart R of this part shall calculate the penal sum of the bond by computing 10 percent of the amount of tax at the rates prescribed by law, on the maximum quantity of beer used in the production of concentrate during a calendar year. The brewer shall add this amount to the penal sum calculated under paragraph (a) of this section to determine the total penal sum of the brewer's bond. (c) Maximum and minimum penal sums. The maximum penal sum of the bond (or total penal sum if original and strengthening bonds are filed) is not to exceed $150,000 when the tax on beer is to be prepaid, or $500,000 when the tax is to be deferred as provided in §25.164. The minimum penal sum of a bond is $1,000. (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) [T.D. ATF–224, 51 FR 7673, Mar. 5, 1986, as amended by T.D. TTB–41, 71 FR 5603, Feb. 2, 2006] (a) Requirement. When the penal sum of the brewer's bond (calculated as provided in §25.93) in effect is not sufficient, the principal may prepay the tax on beer as provided in subpart K of this part, or give a strengthening bond in sufficient penal sum if the surety is the same as on the bond in effect. If the surety is not the same, a new bond covering the entire liability is required. (b) Restrictions. A strengthening bond may not in any way release a former bond or limit a bond to less than the full penal sum. (c) Date of execution. Strengthening bonds will show the current date of execution and their effective date. (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) The appropriate TTB officer may at any time, at his or her discretion, require a new bond. A new bond is required immediately in the case of insolvency of a surety. Executors, administrators, assignees, receivers, trustees, or other persons acting in a fiduciary capacity shall execute a new bond or obtain a consent of surety on all bonds in effect. When the interests of the Government so demand, or in any case when the security of the bond becomes impaired for any reason, the principal will be required to give a new bond. When a bond is found to be not acceptable by the appropriate TTB officer, the principal will be required immediately to obtain a new and satisfactory bond or discontinue business. (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) When the principal submits a new bond to supersede a bond or bonds in effect, the appropriate TTB officer, after approving the superseding bond, will issue a notice of termination for the superseded bond under the provisions of this subpart. Superseding bonds will show the current date of execution and their effective date. If the contract of surety between the brewer and the surety on an expiring bond or continuation certificate is continued in force for a succeeding period of not less than 4 years from the expiration date of the bond or continuation certificate, the brewer may submit, in lieu of a new bond, a Brewer's Bond Continuation Certificate on Form 5130.23, executed under the penalties of perjury, by the brewer and the surety attesting to continuation of the bond. Each continuation certificate will constitute a bond and all provisions of law and regulations applicable to bonds on Form 5130.22 given under this part, including the disapproval of bonds, are applicable to continuation certificates. (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) (a) Bond coverage. Bonds required by this part will be given with corporate surety or collateral security. (b) Corporate surety. Surety bonds may be given only with surety companies holding certificates of authority from the Secretary as acceptable sureties on Federal bonds, subject to the limitations set forth in the current revision of Treasury Department Circular No. 570, Companies Holding Certificates of Authority as Acceptable Reinsuring Companies. (c) Revisions of Circular No. 570. Treasury Department Circular No. 570 is published in the (d) More than one corporate surety. A bond may be executed by two or more corporate sureties. Each corporate surety may limit its liability in terms on the face of the bond in a specified amount. This amount may not exceed the limitations set forth for corporate security by the Secretary which are set forth in the current revision of Treasury Department Circular No. 570. The sum of the liabilities for the sureties will equal the required penal sum of the bond. (e) Deposit of collateral securities in lieu of corporate surety. Bonds or notes of the United States, or other obligations which are unconditionally guaranteed as to both interest and principal by the United States, may be pledged and deposited by principals as collateral security in lieu of corporate surety in accordance with 31 CFR Part 225. (96 Stat. 1068, 1085 (31 U.S.C. 9304–9308); sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) Each bond, continuation certificate, and each consent of surety will be accompanied by a power of attorney authorizing the agent or officer to execute the document. The power of attorney will 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 will be accompanied by a certificate of its validity. (96 Stat. 1068, 1085 (31 U.S.C. 9304–9308)) (a) Reasons for disapproval. The appropriate TTB officer may disapprove a bond or consent of surety if the individual, firm, partnership, corporation, or association giving the bond or consent of surety, or if any of the above entities owning, controlling or actively participating in the management of a business giving a bond as a brewer, has been previously convicted in a court of competent jurisdiction of: (1) Any fraudulent noncompliance with any provision of law of the United States if it related to internal revenue or customs taxation of distilled spirits, wines or beer, or if the offense shall have been compromised with the individual, firm, partnership, corporation, or association 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 distilled spirits, wines, beer, or other intoxicating liquor. (b) Appeal of disapproval. If the bond or consent of surety is disapproved, the person giving the bond or consent of surety may appeal the disapproval to the appropriate TTB officer, who will grant a hearing in the matter if requested by the applicant or brewer, and whose decision will be final. (Sec. 201, Pub. L. 85–859, 72 Stat. 1394, as amended (26 U.S.C. 5551)) [T.D. ATF–224, 51 FR 7673, Mar. 5, 1986, as amended by T.D. ATF–437, 66 FR 5479, Jan. 19, 2001] The liability of a surety on a bond required by this part will be terminated only as to liability arising on or after: (a) the effective date of a superseding bond; (b) the date of approval of the discontinuance of business of the brewer; or (c) following the giving of notice by the surety as provided in §25.103. (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) A surety may, at any time, in writing, notify the principal and the appropriate TTB officer that the surety desires after a specified date (not less than 60 days after the date of service on the principal) to be relieved of any liability under the bond which is incurred by the principal after the date named in the notice. The surety shall include proof of service of the notice on the principal with the notice filed with the appropriate TTB officer. The notice will become effective on the date named, unless the surety withdraws the notice, in writing. The surety on the bond remains liable under the bond with respect to any liability incurred by the principal while the bond is in effect. (Sec. 201, Pub. L. 85–859, 72 Stat. 1388, as amended (26 U.S.C. 5401)) Brewer's bonds may be terminated as to liability for future removals or receipts (a) pursuant to application of the surety as provided in §25.103, (b) on approval of a superseding bond, or (c) on notification by the principal that the business has been discontinued. On termination of the surety's liability under a bond, the appropriate TTB officer will notify the principal and sureties. (31 U.S.C. 9301, 9303) Bonds, notes, and other obligations of the United States, pledged and deposited as security in connection with bonds required by this part will be released in accordance with 31 CFR Part 225. When the appropriate TTB officer determines there is no outstanding liability against the bond and that it is no longer necessary to hold the security, he or she shall fix the date or dates on which a part or all of the security will be released. At any time prior to the release of the security, the appropriate TTB officer may, for proper cause, extend the date of release of the security for an additional length of time as may be appropriate. (31 U.S.C. 9301, 9303)
Title 27: Alcohol, Tobacco and Firearms
PART 25—BEER
Subpart H—Bonds and Consents of Surety
§ 25.91 Requirement for bond.
§ 25.92 Consent of surety.
§ 25.93 Penal sum of bond.
§ 25.94 Strengthening bonds.
§ 25.95 New bond.
§ 25.96 Superseding bond.
§ 25.97 Continuation certificate.
§ 25.98 Surety or security.
§ 25.99 Filing powers of attorney.
Disapproval or Termination of Bonds or Consents of Surety
§ 25.101 Disapproval of bonds or consents of surety.
§ 25.102 Termination of surety's liability.
§ 25.103 Notice by surety for relief from liability under bond.
§ 25.104 Termination of bonds.
§ 25.105 Release of collateral security.
