The alcohol beverage industry experienced a transformative year, marked by notable shifts in consumer behavior, innovative product launches, and regulatory changes. During a recent webinar, McDermott’s Alcohol Group provided a retrospective on the pivotal moments of 2024 that impacted the industry, a preview of what’s to come in 2025, and insights into how your company can stay ahead in this dynamic market.
On December 12, 2024, following a nearly two-year-long investigation, the Federal Trade Commission (FTC) initiated its first litigation under the Robinson-Patman Act (RPA) in more than two decades. The FTC sued Southern Glazer’s, a large wine and spirits distributor, alleging the company charged higher prices to smaller retailer customers than it did to large chains, violating the RPA.
The litigation, filed in the last days of the Biden administration’s antitrust regime, may ultimately end with a whimper under the next administration. But for companies managing modern pricing systems, the complaint and the controversy surrounding it provide important insights into how complainants could seek to advance RPA suits in today’s retail environment. The complaint illustrates how current FTC leadership intended to operationalize its new focus on price discrimination and provides a roadmap for how state regulators and private plaintiffs can litigate the issue regardless of how the FTC proceeds under the new administration. Perhaps even more useful, the dissents filed by FTC Commissioners Melissa Holyoak and Andrew Ferguson suggest a blueprint for a legal response to future actions that may resonate with other regulators – and more importantly, with federal and state judges.
We have updated and republished this March 2024 blog post for a year-end summary.
The Alcohol and Tobacco Tax and Trade Bureau’s (TTB) Office of Field Operations is responsible for ensuring industry members comply with the Federal Alcohol Administration Act, the Internal Revenue Code, and all related regulations. It is divided into three groups: the Trade Investigations Division (TID), the Tax Audit Division (TAD), and the Intelligence Division.
Many industry members are most familiar with the TID, as it is comprises investigators who are responsible for enforcing compliance with the trade practice laws and maintaining a level playing field. The TAD may be less familiar, however, as it is comprises auditors who are responsible for ensuring payments of excise taxes and compliance with the laws and regulations in a manner that protects revenue and prevents unlawful activity in the commodities that the TTB regulates. The TAD works with other areas of the TTB and has the resources to assist in the investigations of underpayment of tax or other financial areas that relate to the laws and regulations enforced by the TTB. The TAD also performs random audits, which means that every industry member is susceptible to an audit.
Over the past year, the TAD has issued a number of tax-related citations for failure to timely file and/or pay taxes, use of inappropriate tax rates, largely stemming from the improper use of reduced tax rates under the Craft Beverage Modernization Act (CBMA) and late payments, among other violations. TTB routinely resolved these violations by accepting offer-in-compromise (OIC) settlement payments from the targeted industry members, collectively, to the tune of approximately $11,000,000 since the beginning of 2023.
Based on a review of the OICs, which are published on the TTB website, there were a wide range of tax-related violations over the past year, including:
The Alcohol and Tobacco Tax and Trade Bureau’s (TTB) Office of Field Operations is responsible for ensuring industry members comply with the Federal Alcohol Administration Act, the Internal Revenue Code and all related regulations. It is divided into three groups: the Trade Investigations Division (TID), the Tax Audit Division (TAD) and the Intelligence Division.
Many industry members are most familiar with the TID, as it is comprised of investigators who are responsible for enforcing compliance with the trade practice laws and maintaining a level playing field. The TAD may be less familiar, however, as it is comprised of auditors who are responsible for ensuring payments of excise taxes and compliance with the laws and regulations in a manner that protects revenue and prevents unlawful activity in the commodities that the TTB regulates. The TAD works with other areas of the TTB and has the resources to assist in the investigations of underpayment of tax or other financial areas that relate to the laws and regulations enforced by the TTB. The TAD also performs random audits, which means that every industry member is susceptible to an audit.
Over the past year, the TAD has issued tax-related citations for failure to timely file and/or pay taxes, use of inappropriate tax rates (largely stemming from the improper use of reduced tax rates under the Craft Beverage Modernization Act (CBMA) and failure to maintain adequate records, among other violations. In 2023, the TTB resolved these violations by accepting offer-in-compromise (OIC) settlement payments from the targeted industry members, collectively, to the tune of approximately $850,000.
Based on a review of the OICs which are published on the TTB website, there were a wide range of tax-related violations last year, including:
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