TTB to Continue Enforcement Actions:

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Blog 40

TTB has been in the headlines recently stemming from a Northern California wine cellar operator’s failure to pay excise taxes.  On September 16 of this year, owner and operator of Monterey Wine Services, Brenda Jo Kibbee, received a sentence of nine month’s imprisonment for “intentionally failing to pay Federal excise tax on wine.”  In addition, Kibbee was fined $877,126.94 consisting of $581,177.08 in excise taxes owed, and $295,949.86 in other penalties arising from the court finding that she acted with the intent to defraud the federal government.

The government imposes excise taxes on goods such as alcohol and tobacco that are sold within the country. In the case of alcohol, the excise tax rate for distilled spirits and wines is based on the percent alcohol by volume and for beer is based on the volume of beer in a barrel. 26 USC §5041. For a bonded wine cellar, like Monterey Wine Services, an excise tax is due whenever wine is removed for domestic use. 27 CFR 24.270. Normally, the wine cellar will pay the excise taxes directly to TTB but charge their winery customers for the expense in order to compensate for the cost of the excise tax. In the case of Monterey Wine Cellar, Kibbee charged the winery customers for the excise taxes but failed to deliver those payments to TTB.

The Kibbee case represents just one example of TTB’s strategic efforts to increase enforcement of excise taxes through its Criminal Enforcement Program, which was established in 2011. Although TTB has had criminal enforcement authority for years under the IRC, it wasn’t until 2011 that they gained the resources necessary to effectuate that authority. Historically, TTB has to rely on voluntary compliance from taxpayers in paying their excise taxes and on other Federal enforcement agencies that had overlapping authority to collect taxes due. This changed in 2011, when TTB entered into an interagency agreement with the IRS in which the IRS agreed to use its agents to enforce the criminal provisions under TTB’s jurisdiction in exchange for reimbursement from TTB. According to TTB’s 2011 annual report, the program initiated 21 new cases for fraud investigation with a total tax liability of $20 million for the 2011 fiscal year alone.  In addition, data from TTB’s “Program Summary by Budget Activity” shows that on average TTB collects about $450 of revenue per $1 spent on the enforcement program. As a result, the Criminal Enforcement Program continues to be a driving force for TTB’s mission to collect excise taxes.

For the 2015 fiscal year, TTB has once again listed “enforcing compliance with alcohol, tobacco, firearms, and ammunition laws and regulations, in the interest of collecting all appropriate excise taxes” a key agency goal. With that goal in mind, TTB’s proposed 2015 budget includes a proposal to amend section 251 of the Balanced Budget Emergency Deficit Control Act of 1985, to provide for an additional $2 million to be used for TTB’s Criminal Enforcement Program. TTB believes that expending $2 million in enforcement will reduce the federal deficit through increased revenue collections, because the enforcement program has brought in such a high amount of revenue per dollar spent. Now that TTB can more effectively enforce the collection of excise taxes, it is possible that we will see more cases like Kibbee appear in the coming years.

If you have any questions about compliance with TTB regulations and taxes please don’t hesitate to contact our office!

We're Here to Help

Dear friends in the alcoholic beverage industry,

As we as an industry, nation and planet collectively try to navigate this unprecedented period the coronavirus has brought us, We’d like you to know that we at Craft Beverage Consultants (the other CBC!) are here to answer any question you may have (or not know you have) about not just surviving this time but positioning yourself to thrive as soon as social distancing measures allow your business to function at full capacity again.

If you schedule a free 60-minute phone or video conferencing consultation with me or any of my 11 highly specialized colleagues, we’ll help you figure out any of your immediate and/or longterm business needs, or “everything but the staffing,” as we like to say. We’re not high-pressure sales kind of people, especially these days, so you don’t have to worry about fending off annoying pitches. Make an appointment on our website or Facebook page, or just call us the old-fashioned way at 314-768-0220.

Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production, and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality, and even values-based executive coaching. 

For example, we can coach you through this season when chain accounts have canceled their spring, in some cases, fall resets and distributors have drastically cut orders. Our director of business strategy and compliance can save you money – now – on excise taxes, caution you to avoid naming your beers in ways that risk alienating your buyers (Wuhan Wheat? Coronavirus Cream Ale? Groan. No.), and secure TTB approval for the tastefully named beers you do make. Our creative director and web team can get your e-commerce site up and running and launch a social media campaign that keeps you top of mind for current and future customers. Our director of storytelling can put you in front of the press so you can tell your story to your community. 

Once you’re ready, we can look forward together. Now is the time to talk about post-virus. We all suspect the legal landscape to look different. But how? And how do you prepare yourself in a way that positions you to charge out of the gate ready to maximize the potential and profit of whatever the “new normal” turns out to be? Please get in touch so we can talk about it. 

CBC’s roster includes local and regional clients like Epic Brewing, Logboat Brewing, Piney River Brewing, SudWerk Brewing, Waves Cider and Common Cider Company, just to name a few.  The agency was founded in 2004 by Jacob and Beth Halls, formerly known as Convergence Consulting; Rick Laxague, joined as a partner in charge of sales, marketing and distribution consulting in 2019. 

Rick hase close to 20 years of experience, a bulk of which was with Crescent Crown Distributing in Arizona. His last role there was Area Sales Manager for the dedicated craft beer division, coaching and leading a sales team to be nationally recognized. In early 2014 Rick helped take a regional brewery national as their Director of National Accounts and increase that segment of their business from 30,000 cases to almost 300,000 cases in two years, an increase that equates to $4.8 million in IRI dollar sales. 

Co-founder Jacob Halls brings 17 years of experience in regulatory compliance, business strategy, marketing and craft brand management to the company. In his former position as craft brand manager for the N.H. Scheppers Distributing Company in Columbia, Missouri, Jacob helped lead his team to winning the 2016 Distributor of the Year award from New Belgium and to a nomination for the Brewers Association’s Distributor of the Year award. Jacob is also the founder and director of the South East Craft Beer Fest and several other industry specific charitable event marketing festivities. Beth Halls is Director of Business Operations and Coordinator of Charity Operations for the festivals and events run by CBC, such as the South East Craft Beer Fest, MO Bacon & Bourbon, and many more. 

Again, please reach out to us for anything.  CBC can be reached at (314) 768-0220 or at

We look forward to meeting/talking soon.


Rick Laxague, Jacob Halls, and Beth Halls