Greenspoon Marder Hospitality, Alcohol & Leisure Blog: TTB Expands Voluntary Disclosure – Be Aware!

Jul 11, 2019 Miami, FL

On July 5th The Alcohol and Tobacco Tax and Trade Bureau (TTB) announced through industry circular that a temporary and voluntary disclosure program for specific unreported entity changes will be in effect until December 31, 2019 that allows for the submission of a new permit application without prior notice to TTB. Specifically, TTB believes that there are a significant number of federally licensed wholesalers and importers that have undergone a change in control or a change in proprietorship that have failed to file for a new permit within 30 days of the actual change.

In a previous blog post, (October 30, 2018), we addressed the issue of certain reporting requirements after initial qualification. In that post, we noted that that both changes described above must be reported to TTB within 30 days from the date of change or the permit automatically becomes invalid by law. All business activity thereafter would be considered to be unlicensed activity exposing the entity or person(s) to civil and perhaps criminal action.

It is important to understand the distinction between the two types of changes. In simple terms a change in control occurs when the individuals or entities that control the business changes or shifts. As an example, a new shareholder may buy into the business and control in excess of 50% of the voting shares. A spousal transfer that places 50% or more of corporate shares in the hands of the spouse is another example. A change in proprietorship occurs when a new person(s) or entity either through stock or asset purchase becomes the new owner of the federally licensed entity.

Voluntary disclosure and new permit filing is limited to wholesalers and importers only. All other types of permitees must follow the already existing disclosure requirements.

TTB has further announced a discretionary enforcement position. They will not seek civil or criminal penalties for continuing to operate while TTB reviews the materials and applications submitted nor will TTB seek to deny applications on the sole basis that the entity operated without a permit.

TTB of course will maintain its authority to investigate and prosecute any other violation it may find during the aforementioned process. The caveat is to proceed with extreme caution.

The Upper Tier Industry sub-practice group of Greenspoon Marder’s Hospitality, Alcohol & Leisure Industry Group stands ready to assist in acting on this TTB program.

About Greenspoon Marder

Greenspoon Marder LLP is a full-service law firm with over 240 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has upheld a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.

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