The end of May in the Volunteer State means three things: the Cicadas are out in full force, it’s the beginning of summer break, and alcoholic beverage manufacturers need to renew their brands and varieties with the Department of Revenue.
As a guest author for Last Call, Adams and Reese Alcohol and Hospitality Team Member Eric Evans offers this helpful reminder for suppliers.
Each brand must be renewed each year on or before May 31. Renewing brands is also a good time to make sure all of your varieties are registered. New varieties will not trigger an independent privilege tax payment, but an unregistered variety of a brand is treated as an unregistered brand.
Brand registration renewals are relatively straightforward, but each year manufacturers miss the renewal deadline. Missing the renewal deadline can create considerably more work.
Cue Garth Brooks:
There's no forms or applications
There's no red tape administrations
It's the American
Honky-Tonk Bar Association
Initial Brand Registration.
Every manufacturer, brewer, importer, non-resident seller, and non-resident non-manufacturer seller must register each brand distributed in Tennessee and pay the brand registration tax:
In addition to paying the privilege tax, first time brand registrations must also provide the Department of Revenue with a copy of the federal basic permit or brewers notice, a copy of the brand label (if a brand has more than one label, each label must be submitted), a copy of the brand’s COLA, a Wholesaler’s territorial designation form, and for wine and distilled spirits brands, a copy of the Tennessee manufacturing license.
Brand Renewal.
Once a brand is registered, it must be renewed each year on or before May 31st. To renew a brand, a manufacturer must disclose the amount of cases sold for each of its brands and pay the privilege tax listed above.
Brand v. Variety.
As you go through the registration/renewal processes, you’ll likely notice that you are asked for brand information and variety information. So, what is a brand and what is a variety? In simplest terms, a “brand” is a product with a distinct “brand name” or “trade name” as defined by the TTB. Look to line 6 on your product’s COLA. Products with the same name are treated as the same brand by the Department of Revenue unless they fall within a separate class or subclass as defined by the TTB or if a product uses different marketing images or labels distinct from other products within the same brand name. Clear as mud?
For instance, if Will has a line of spirits with the name “Will’s Whiskey,” which includes a 10-year bourbon, a 13-year rye, and a 15-year wheat whiskey, the Department of Revenue treats this as three separate varieties, but only one brand, because the products are part of the same TTB class. Will’s privilege tax will be for one brand, but the cases sold will be based on the aggregate sales for all three varieties.
If, however, “Will’s Whiskey” has a 10-year bourbon, a 13-year straight rye, and a 15-year blended wheat whiskey, these would all be treated as their own brands, because the products fall under separate TTB classes. In this instance, Will’s privilege tax will be for three brands, and the cases sold for those individual brands.
However, just because a brand has multiple varieties does not mean you can get away with not updating the varieties. In the first example above, if Will’s Whiskey comes out with a 17-year bourbon, he must still register the variety with the Department of Revenue. Registration of a variety will not incur additional privilege tax obligations because it is part of an already registered brand, but unless it is registered, the Department of Revenue will treat the 17-year bourbon variety as an unregistered brand, and it will be subject to all of the fines and penalties that come with that label.
Failure to Register or Renew.
The process to register and renew brands is not particularly complex, but the penalties for failing to do so can be severe.
Not only is it illegal for a wholesaler to order, receive, accept, or offer any brand for sale unless and until a brand has been registered — which could lead to a manufacturer holding the bag for any fines levied on their wholesaler — but the penalties for selling a brand (including varieties of those brands) in Tennessee without initially registering or renewing can have significant financial consequence.
First, the Department of Revenue will order a manufacturer to cease distribution immediately (failure to comply with this order has its own set of consequences) until you properly register or renew.
Second, they will notify the Tennessee Alcoholic Beverage Commission that your license or permit should be suspended until you properly register or renew your brand. For in-state manufacturers, that means you cannot produce or purchase any product (even those properly registered) and for out-of-state manufacturers it means you cannot have any product brought into Tennessee.
Finally, should you fail to properly register or renew a brand and its varieties within 30 days of the stop-order, the Department of Revenue can seize each unregistered or improperly registered product.
And, of course, during the entire process you will draw the ire of the TABC and the Department of Revenue. Much like the Eye of Sauron, it’s best to stay out of their gaze.
