Surety Questions/ Brewer's Bond

[3DogsBarking]

I'm in the due dillegence stage for startup and have some questions about the TTB's Brewer's Bond and sureties in general. Many more questions will come as I'm finding the regulatory environment a bit overwhelming.

As I understand it, the brewer's bond covers only excise tax. Is this statement correct? At 10%, or the minimum coverage of $1000 for brewers with less than $10,000 per annum federal excise tax, is a surety required or can the brewer just post a $1000 bond? If the brewer posts the $1000 himself, is this what is being referred to as a "collateral bond"?

With respect to the state bond, I understand that all states are very different but read that surety bond providers generally cost 0.5 to 2% of the contract amount, which seems awful small to me. For microbreweries, I saw examples ranging from $3000 to $30,000. Could someone provide me with a little info on this or point me in the right direction?

Thanks.

[nick79brew]

This was a bit confusing for us as well. As I see it you can post your own bond as long as it covers your brewery for that tax period. In our case we posted $1000 and will pay exsice taxes every quarter. We are a small brewpub with limited distribution. Our $1000 bond will cover us for 142.85bbl in the tax period ($1000 divided by $7 tax per bbl) or 571 bbl/yr. Now if we begin to produce more than this amount we can "stengthen" the bond, ie: add another $500 or whatever it takes to cover our tax period. Or we can elect to pay taxes bi monthly...which we would rather not do so much paper work. If you are starting a large production brewery you may need to look into surety bonds, which I am a little bit fuzzy on. I will say that the TTB is very helpful after you have submitted you notice. I had a hard time contacting them before my submission, but after the communication was awesome.