To conduct business as a brewer, professionals who sell, manufacture or distribute beer must obtain a brewer’s notice (i.e. permit) from the Alcohol and Tobacco Tax and Trade Bureau (TTB). An important step in the permit process is the filing and maintaining of a Federal Brewer’s Bond with the TTB. The purpose of this surety bond is to provide the government with a guarantee that excise taxes will be paid and assurance that the principal (brewer) will comply with federal laws and regulations. If the principal fails to pay their taxes or conduct business in a lawful manner, the harmed party can file a claim with the surety company. If the claim is validated, the surety company will pay out up to the penal sum of the bond, and any monies paid out must be reimbursed by the principal.
The bond amount for this type of surety bond varies and is based on how many barrels of beer is produced per quarter and the federal tax obligation on that beer. The determined quarterly tax obligation is the amount needed on the bond. If a brewery anticipates an increase in its quarterly production, and tax obligations are going up in a quarter, they need to strengthen their bond. The first bond a brewer files is an original. A superseding bond replaces that bond, and a strengthening bond strengthens the amount of the one that is on file. Federal Brewer’s Bonds have a term of four years, and the bond is renewed by filing a Brewer’s Bond Continuation Certificate with the TTB.
Pacific Surety offers industry low rates and can obtain approvals for almost all credit situations. Once our simple application has been completed, we can have pricing to you within hours. If you have any specific questions, please contact our knowledgeable underwriting staff.