TTB Audits and Offers in Compromise on the Rise

In a recent article, I covered the increase in funding for the Alcohol and Tobacco Tax and Trade Bureau’s (or “TTB”) trade practice enforcement division.  In the article, I referenced the increase of appropriations of $5 million for both 2018 and 2019, and specifically for TTB’s trade practice enforcement, as well as the high number of pending trade practice cases in 2018, and speculated on an increase of TTB Offers in Compromise.

What is a TTB Offer in Compromise?  Much like when dealing with the IRS, TTB has a legal mechanism to settle a civil or criminal liability with an industry member prior to referring the case to the Department of Justice for prosecution.  This typically takes the form of a settlement offer from an industry member who was assessed back taxes and/or penalties and fees for various trade practice violations or nonpayment of federal excise taxes.  The Warsteiner Offer in Compromise referenced in my previous article is a great example of just how devastating the consequences can be ($900,000 for trade practice violations).

Today, TTB released data relating to its Offer in Compromise process, which should surprise no one to learn that TTB has accepted far more Offers in Compromise through the first six months of 2018 than previous years.

In fact, halfway through 2018, TTB has accepted 18 Offers in Compromise.  To put that number in perspective, there were 12 accepted Offers in Compromise in 2017 and 2016, and only 10 in 2015.

This means that TTB is on pace to accept more Offers in Compromise in 2018 than the past three years combined.

What does this mean for the future?  I would only expect to see this number increase over the next 18 months, as TTB has already secured the funding through the end of Fiscal Year 2019.

If you are in the alcohol industry and have not taken a moment to review your compliance plan, now is a great time to do so.