*Please note, that Orchestra Software is only providing recommendations for how to produce this new product in our software. We are not accountants or tax professionals, so before carrying out the actions described in this document, consult with your TTB agent to verify any uncertainty regarding the steps provided, and verify any accounting queries with your accounting professionals.
Due to the unprecedented impact of the COVID-19 pandemic on our global, national, and local communities, many companies around the globe are coming together to provide much needed medical and sanitary equipment to handle the aggressive spread of the virus.
Many distilleries are now shifting gears and producing products such as hand sanitizer to provide to the public. Distillers are in the unique position to provide relief to the stressed market for sanitation products to service our greater community in this time of need.
With this shift, our customers need ways to properly record the production, and in some cases, sales of a product they never planned on making. Thus far, our Orchestrated team has come up with the following recommendations, gathered through correspondence with our valued customers and direct from the TTB.
Please see the following recommendations based on our research.*
Permits: The TTB is waiving permit requirements until December 31st, 2020 at this time (Previously June 30, 2020 and was extended as part of the CARES Act). Please check with your TTB agent and the TTB website for any updates to this requirement change.
Beverage alcohol producers may make hand sanitizer even if they are not specifically permitted for industrial spirits production.
The FDA has yet to approve the use of non-denatured alcohol in the production of hand sanitizer. Please check with the FDA directly before starting production of hand sanitizer with non-denatured spirits.
Normally, a permit to authorize production of beverage spirits does not necessarily authorize you to produce non-beverage/industrial.
This has been waived temporarily by the TTB. See TTB Guidance 3/26/2020: https://www.ttb.gov/public-guidance/ttb-pg-2020-1a
There is a requirement to report production of sanitizer to the FDA. Those requirements have been amended temporarily.
See this link: https://www.fda.gov/media/136289/download
Production of Hand Sanitizer with NON-denatured alcohol:
At this point in time, the FDA has not approved the use of non-denatured alcohol in the production of hand sanitizer. Guidelines may change as the situation evolves, and Orchestra is committed to providing updates as available.
The Distilled Spirits Council is also tracking this issue and may have updates, with the most recent as of this publication listed below:
Process in Orchestrated Using Denatured Alcohol:
- Create a new warehouse
- Set the warehouse to TTB Classification "N/A." This is the warehouse that your bulk sanitizer will reside in until it is packaged.
- Create a new brand for your sanitizer - all items created will be assigned to this brand.
- You will need a few new WIP items to complete this process:
- Create one item for a "PRC" bulk spirit. This will be the alcohol component used to make denatured alcohol. This can either be produced in house, or purchased. This should always be produced in a warehouse classified as "Processing".
- Create one item and Bill of Materials for your DNS denatured alcohol
- Create one item and Bill of Materials for your bulk sanitizer
- Create as many Finished Goods items for your packaged sanitizer as needed. Create a Bill of Materials for each finished good item.
- Create a PdO for each of the items you just created
- Process and express each PdO
- Ready to sell/donate.
How Does This Impact My TTB-DRO?
This process should show the item leaving the DRO on “Processing Part I – Line 11 Used for Denaturation”
At this point the bulk denatured spirit has been produced and is outside the Beverage DRO scope. It was not taxed at removal.
Further PDOs to produce finished items should not have TTB Groups assigned to the items and they should not touch any TTB DRO warehouses.
If they report spirits removed on Processing Part I – Line 11 Used for Denaturation
They must also complete TTB 5110.43 Monthly Report of Processing (Denaturing) Operations
Links relating to temporary production of industrial spirits by non-industrial (beverage) permit holders:
Distilled Spirits Council updates
TTB Coronavirus Updates - check for updates
FDA temporary policy for reporting
Other helpful TTB Links:
Main TTB page for denatured alcohol with links to other pages.
Form 5110.43 Processing report (denaturing) https://www.ttb.gov/images/forms_tutorials/pdf/f511043_printable_checklist.pdf