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Electronic Code of Federal Regulations

e-CFR data is current as of April 2, 2020

Title 27Chapter ISubchapter APart 19Subpart X → Subject Group


Title 27: Alcohol, Tobacco Products and Firearms
PART 19—DISTILLED SPIRITS PLANTS
Subpart X—Distilled Spirits for Fuel Use


Bonds

§19.699   General bond requirements.

(a) Operations bond. Any person who plans to establish a large plant, a medium plant, or a small plant without production operations must provide an operations bond on form TTB F 5110.56, Distilled Spirits Bond, in duplicate, with the original permit application. If a proprietor fails to pay any liability covered by the bond, TTB may seek payment from the proprietor, from the surety on the bond, or from both the proprietor and the surety. Additional provisions applicable to bonds for alcohol fuel plants are found in subpart F of this part in §§19.155 through 19.157 and §§19.167 through 19.173.

(b) Corporate surety. A company that issues bonds is called a “corporate surety.” Proprietors must obtain the surety bonds required by this subpart from a corporate surety approved by the Secretary of the Treasury. The Department of the Treasury publishes a list of approved corporate surety companies in Treasury Department Circular 570, Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies. Treasury Department Circular 570 is published in the Federal Register annually on the first business day in July, and supplemental changes are published periodically thereafter. The most recent circular and any supplemental changes to it may be viewed on the Bureau of the Fiscal Service Web site at https://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm.

(c) Alternative to a corporate surety. A proprietor may also guarantee payment under a bond without using a corporate surety, by filing a bond that guarantees payment of the liability by pledging and depositing one or more acceptable negotiable securities having a par value (face amount) equal to or greater than the penal sums of the required bonds. Should the proprietor fail to pay one or more of the guaranteed liabilities, TTB may take action to sell the deposited securities to satisfy the debt. Pledged securities will be released to the proprietor if there are no outstanding liabilities when the bond is terminated; the provisions of §19.173 apply to the release of pledged securities under this subpart. A list of securities acceptable as collateral in lieu of surety bonds is available from the Bureau of the Fiscal Service. Current information and guidance from the Bureau of the Fiscal Service Web site may be found at https://www.fiscal.treasury.gov.

(26 U.S.C. 5173, 5181; 31 U.S.C. 9301, 9303, 9304, 9306)

[T.D. TTB-92, 76 FR 9090, Feb. 16, 2011, as amended by T.D. TTB-146, 82 FR 1123, Jan. 4, 2017]

§19.700   Amount of bond.

A proprietor must determine the penal sum of the bond based on the total quantity of distilled spirits that will be produced and received during a calendar year. The method for computing required bond amounts is as follows:

(a) Small plants without production operations. A proprietor that operates a small plant that receives not more than 10,000 proof gallons of spirits per year and does not conduct bona fide production operations must provide a bond with a penal sum of $1,000.

(b) Medium plants. A proprietor that operates a medium plant that produces and receives more than 10,000 but not more than 20,000 proof gallons of spirits per year must provide a bond with a penal sum of at least $2,000.00. The proprietor must increase the penal sum of the bond by $1,000 for each additional 10,000 gallons, or fraction of 10,000 gallons, (over 20,000 gallons) that will be produced or received. The maximum bond for a medium plant is $50,000.00, representing the penal sum applicable to 500,000 proof gallons. The following table provides examples of required minimum bond amounts:

Annual Production and Receipts in Proof Gallons

More thanBut not
over
Amount of
bond
10,00020,000$2,000
20,00030,0003,000
90,000100,00010,000
190,000200,00020,000
490,000500,00050,000

(c) Large plants. A proprietor that operates a large plant that produces and receives more than 500,000 but not more than 510,000 proof gallons of spirits per year must provide a bond with a penal sum of at least $52,000.00. The proprietor must increase the penal sum of the bond by $2,000 for each additional 10,000 gallons, or fraction of 10,000 gallons (over 510,000 gallons) that will be produced and received. The maximum bond for a large plant is $200,000.00. The following table provides examples of required minimum bond amounts:

Annual Production and Receipts in Proof Gallons

More thanBut not
over
Amount of
bond
500,000510,000$52,000
510,000520,00054,000
740,000750,000100,000
990,0001,000,000150,000
1,240,000200,000

(d) New or strengthening bonds. A proprietor must obtain a new bond or a strengthening bond in accordance with §19.167 if the level of production and receipts at the alcohol fuel plant increases so that the current bond no longer is in the amount of at least the required minimum penal sum.

(26 U.S.C. 5173, 5181)

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