Several weeks after TTB announced its third ruling of Year 2014, the Bottling Taxpaid Wine in Growlers or Similar Containers for Consumption Off of the Premises, TTB issued a subsequent announcement declaring the suspension of the ruling. (The original ruling held that filling growlers and similar containers for consumption off of the premises is classified as a bottling activity, subject to the taxpaid wine bottling house provisions of the Internal Revenue Code of 1986; this required businesses that fill growlers to apply as a taxpaid wine bottling house, as well as label their growlers, maintain certain records, and comply with additional regulations.) On Friday, April 25, 2014, the agency determined that it would be more appropriate to engaged in rulemaking with respect to growlers so TTB can “modernize [its] regulations to specifically address the filling of growlers with taxpaid wine.” See TTB Suspends Ruling 2014-3 Pending Rulemaking. TTB believes that, by pursuing the rulemaking process, the agency will be able to evaluate what types of regulations are not unduly burdensome to alcohol beverage businesses while still protecting the government’s revenue. Id. You can read more about the original ruling from March 2014 here.
TTB cites the concern of industry members for its reason for suspending its ruling on bottling taxpaid wine in growlers. In particular, industry explained the ruling is unduly burdensome for industry members, especially for members in states where state and local laws permit the bottling of growlers without additional requirements (i.e., application for a taxpaid wine bottling house, labeling, etc.). See TTB Suspends Ruling 2014-3 Pending Rulemaking. In its suspension, TTB responded that its existing regulations were intended to monitor “traditional” taxpaid wine bottling activities, as opposed to the filling of wine growlers. As such, the agency will engage in the rulemaking process to formalize a rule that is more flexible and appropriate for the industry with respect to wine growlers.
Rulemaking is the process agencies use to promulgate regulations. Generally, a proposed rule will be published in the Federal Register, and will invite comments from the public so the agency can evaluate the thoughts and concerns of interested parties as well as additional data. After a specified period of time, the agency will review the submitted comments and respond to each. Subsequently, the agency may modify the proposed rule, taking the public comments into account, and will publish a finalized rule in the Federal Register. This is a fairly common process, and one from which TTB hopes to receive adequate insight from interested parties like consumers, industry members, and State regulatory agencies.
DISCLAIMER: This blog post is not intended as legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.