Alcohol Product Returns for Events Cancelled Due to COVID-19
Many things are changing in the alcohol industry due to concerns involving the COVID-19 pandemic. Earlier this month, the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued guidance on returns of alcohol beverage products purchased for events cancelled due to the COVID-19 outbreak.
The TTB will not consider returns of alcohol beverage products to violate federal consignment rules if those products were purchased to sell during events canceled due to COVID-19, provided they were not initially purchased or sold with the privilege of return. Many states are also issuing their own guidance on returns during this pandemic.
In many cases, distributors will pick up product from their retailers and store it with any product they had not already shipped to their retailers. Several large beer producers have changed code dates to increase the window before product must be destroyed. All of this presents a large amount of product that may not be sold. Under normal TTB rules, this product could not be returned to the producer. However, with the latest ruling from the TTB, returns of these products are now allowed.
Considerations to ensure compliance while accepting returns
If you are a producer or distributor and have decided to accept returns, pursuant to specific state laws, there are inventory, recordkeeping and excise tax considerations to ensure you maintain compliance with federal and state regulations. Here are a few things you should consider:
- Ensure the transaction is properly recorded as a receipt into your inventory.
- Ensure you have proper supporting documents such as invoices, credit memos, etc.
- For producers, ensure your daily records, including detailed information on transactions, match what you report on your operational reports.
- Ensure you are crediting your customer for the excise tax within an appropriate timeframe per regulation guidelines (within 30 days of the return for beer).
Our craft beverage team can provide specific guidance and support during this time in order to ensure you stay compliant and minimize disruption to your business. To learn more about how we can support your regulatory compliance efforts, contact Michelle Howard, Consulting Manager, Advisory Services, at email@example.com or 314.983.1202.
To read the full announcement from the TTB, click here.