“Man, I love a good TTB audit!” – said no one ever. Buried deep inside a lengthy 2011 report was an audacious plan by the TTB to audit every brewery in the United States by 2016. A more recent report in February 2015 detailed the most common brewery ttb compliance and tax issues encountered during brewery audits. We’ve provided a quick summary of the most common violations and “non-compliance” issues found during TTB brewery audits so you’ll know exactly what to do to avoid the time-consuming fixes in the rare case you find your brewery lucky enough (or unlucky) to get audited.
Top Brewery TTB Compliance Issues:
1. Lack of Brewery Records
Top non-compliance issue: The TTB requires daily records and reports regarding brewery operations be completed and maintained. The TTB also reported that breweries commonly fail to keep accurate records to complete the Brewer’s Report of Operations.
How OBeer Helps: OBeer automatically records transactions for future reporting whenever you produce, sell, consume, destroy, or even transfer beer inventory from a warehouse to a taproom
2. Inaccurate Brewery Inventory Records
Top TTB compliance issue: The TTB also requires physical inventory counts once a month, which must include the date taken, quantity of beer on hand, losses, gains and shortages.
How OBeer Helps: OBeer performs auditable physical inventory counts and even set cycle counts to be automatically recommended for count on an interval (i.e. once a month).
3. Inconsistent Brewers Report of Operations (BROP)
Top TTB compliance issue: The TTB claims the most common mistakes in the BROP are due to inaccurate record keeping, which most commonly occur on lines 2, 5, 8, 16, 18 and 21. Source We’ve found that breweries spend an average of 6-8 hours just collecting the data necessary for TTB reporting, which explains why it’s consistently put off until the last minute.
How OBeer Helps: Every line in the OBeer Brewer’s Report of Operations form is associated with activities that actually occurred during a specified time period. The Brewer’s Report of Operations generated from OBeer provide an audit list of detailed transactions from operations that make up that balance.
4. General Record keeping Mistakes
Top TTB compliance issue: The TTB report claims most general record keeping mistakes occur because the brewer fails to maintain bills of lading, complete summary records and clear explanations of beer shortages among a long list of other items.
How OBeer Helps: All operational processes are managed in a single all-in-one solution with built in checks and balances to ensure accurate brewery recordkeeping. All records are kept digitally and details can be audited at any time.
5. Brewery Record Retention for 3 Years
Top TTB compliance issue: The TTB also requires that records be kept for a period “no less than 3 years.” TTB auditors regularly find that records are not kept for the required amount of time and original commercial records that support the removal of beer are not retained.
How OBeer Helps: OBeer stores detailed historical information about all aspects of your brewery with detailed auditing capabilities for as long as you’d like to keep that detail. Since OBeer is an “all-in-one” solution, you can count on all detailed records that tie out to be maintained in one centralized place.
“How to Avoid Penalties for Improper Brewery Record keeping”
The TTB does recommend ways to avoid penalties for improper recordkeeping like to “Create a reliable system for filing and maintaining required documents, records, and forms.”
However, if the solution to your brewery reporting problems is creating our own system to track, and report data and manually count inventory every month, then you should consider how you will update and maintain your system and how much your time is worth. Even if you consider using alternative web based tools for breweries, you should be wary of how the information maintained in those tools tie in to your bookkeeping software. The discrepancies that occur when maintaining information in disparate systems create challenges when trying to match up data between different systems. Spending unnecessary time connecting the dots can increase the cost of doing business and leave you vulnerable to TTB audits.
Why OBeer is your TTB solution
OrchestratedBEER is the only brewery management software that meets all the TTB requirements. OBeer is the all-in-one industry standard for brewery software that will help accomplish the following:
- Reduce time spent on TTB reporting from hours to minutes
- Centralize all brewery operations into one solution
- Eliminate general record keeping mistakes, oversights and loss records
- Provide full audit details for end-to-end traceability
- Save all the necessary supporting audit trail required for the BROP
- Automated inventory count recommendations
- Prevent the need to tie out records from multiple disparate systems
- Eliminate paper trails and the need for filing cabinets
Download the full whitepaper below for the complete list of the most common non-compliance issues and detailed explanations on how OBeer brewery software helps alleviate these issues.Common Compliance and Tax Issues Found During Brewery Audits