Change in Proprietorship
A change in proprietorship occurs when there is a change in the entity which owns and operates the business. It is synonymous with change in ownership, or it may be due to a change of entity type (for example a change from sole proprietor to LLC; from a partnership to a corporation, etc.). Either way, the entity which owned the business no longer operates or owns the operations at that location.
The Internal Revenue Code (IRC) provides that no individual, firm, partnership, corporation, or association, shall commence or continue the business of a winemaker until all bonds required have been approved.
In addition, the IRC and corresponding regulations require the successor bonded winery, bonded wine cellar or tax paid wine bottling house to qualify in the same manner as the proprietor of a new bonded winery, bonded wine cellar or tax paid wine bottling house before commencing or continuing business.
To ensure continuity of operations, all conditions and/or requirements of Federal laws and regulations must be met; therefore, it is imperative that the registration, bond and other qualifying documents be filed well in advance of the proposed effective date of the change.
Under the Federal Alcohol Administration Act (FAA Act), a successor owner may continue to operate, if within 30 days of the change an application is filed for a new Basic Permit. In that case the outstanding Basic Permit will remain in effect until such time as TTB takes final action on the new application.
If a change in proprietorship occurs prior to the filing and approval of the new registration and bond, or if the Basic Permit application is not filed within the required 30-day period, all regulated operations must cease until approval is granted in writing by TTB. Failure to do so will result in automatic termination of the predecessor’s permit and possible adverse action and significant tax consequences.
Change in Control
A change in actual or legal control occurs when there are changes in stock ownership, LLC membership ownership, or possibly major changes in the corporate officers or directors of a corporation. In such situations, the legal business entity which operated the business in the past continues to operate the subject business. In other words, the same legal entity remains in existence which continues to operate the business in question.
Federal regulations require an amended Application to Establish and Operate Wine Premises, TTB Form 5120.25, to be submitted within 30 days of the change. The application should show the next sequential serial number and describe the change of stock or interest ownership, or any major changes in the officers or directors which could result in a change in the actual control of the corporation.
A Basic Permit issued under the Federal Alcohol Administration Act is not transferable by reason of a change in actual or legal control of the company. The proprietor’s Basic Permit will automatically terminate unless within 30 days of the change an application for a new Basic Permit is filed with TTB. If an application is filed within the required 30-day period, the outstanding Basic Permit will remain in effect until TTB takes final action on the new application.
In addition, if a new LLC member or stockholder holds more than 10 percent stock or interest, and is not already on record, a Personnel Questionnaire, TTB Form 5000.9, must be filed.
How to File These Changes with TTB
If you are filing as the new owner in a change of proprietorship situation, we recommend you file your application electronically in Permits Online.
If you are filing an application due to a change in control, we recommend you file the Amended Application for Entity Information in Permits Online. Alternatively, if you filed your original application using paper forms, you may send an Application to Establish Wine Premises on TTB Form 5120.25 to TTB at the address listed on the form.